This Startup Reached A $1.1 Billion Valuation By Taking The Sting Out Of Email Hacks

Material Security’s co-founders met while working at Dropbox.

Many tech layoffs have led to regrettable CEOs’ lamentations about having hired too quickly during the pandemic. Ryan Noon, founder of startup Material Security, says he doesn’t have such issues. He says that he was hired too soon during the pandemic. Noon, co-founder and CEO of Silicon Valley, believes the past two years will be remembered for being a wasteful time. You don’t have to have many people to accomplish a lot if you have the right people.

Material Security has fewer than 40 employees, but it has risen above its weight to secure enterprise clients like Mars, Stripe, and Chubb. The company’s security software can protect email even if they have been hacked. Noon states that “we’re significantly outnumbered in our customer count by at a minimum a binary order or two” and adds that he hasn’t lost one customer yet.

Noon believes it is now the right time to expand his staff, even as other people consider their large payrolls. Redwood City, California-based investor Noon announced that $100 million of new funds had been poured into the startup. The Series C round, which estimated the company at $1.1 million, was a majority insider round. It was led by existing investors Founders Fund, and included participation from Elad Gil and Andreessen Horowitz, previous lead backers.

Russia-backed hackers broke into the Microsoft Office 365 email accounts in the pandemic era. Meanwhile, hackers linked to China accessed the Gmail accounts of News Corp journalists. Material Security believes that even if hackers can break into the email accounts of organizations, they can still prevent them from stealing valuables. After a brief stint as an engineering manager at Dropbox, Noon discovered the idea while on sabbatical. Noon claims he was obsessed with the U.S. presidential election storylines in 2016. He had previously worked as an engineering manager at Dropbox and became fascinated by the email leak from John Podesta, Clinton’s campaign chair.

Along with former Dropbox colleagues Abhishek Agrawal (chief technology officer) and Chris Park (vice president of engineering), Noon was able to pull off the idea. Their startup was launched in 2017 by Agrawal as chief technology officer and Park as vice-president of engineering. The initial product identifies important messages within an inbox, such as a message that contains a sensitive financial document. It obfuscates these emails so that hackers cannot download the sensitive information. A second step, such as confirming Okta or Duo multi-factor authentication, allows the original user to regain access to the email.

The founders realized that enterprise email accounts could use the same technology as personal email accounts and decided to target large corporations instead of individuals. Noon states that an Office 365 account costs the same as a costly Hotmail account, and a Google Workspace account costs more than a Gmail account. “We have all of the time to go and save grandma. But we decided to start first with the actual businesses.” (Customers include a few “VIP” individuals such as professional athletes and billionaires, Noon says.

Material Security has added new features to its software, including detecting hackers trying to gain access to non-email accounts. Users can also reset their passwords via email. Material Security’s net revenue retention rate is over 150%. Customers often pay more to get more features. The new funding round will expand engineering efforts and build more features for email security. CTO Agrawal says that the same principles used to secure email documents can also be used to safeguard other content stores such as Google Drive or Dropbox. Noon says that all of our patents are pretty generic.

Agrawal stated that Material Security is ready to increase its headcount. The rough plan is for the company to double its size in the next 12 months. Material Security also plans to create a go-to-market team to supplement its technical staff. The founders have primarily dominated the company’s sales, with almost no marketing staff. “Founder-led sales often stop much earlier than they are now,” says Trae Stephens (Founders Fund partner), who was the leader of the latest round. “It’s been amazing to see them gain this much momentum.”

Investors and founders were hesitant to discuss what that momentum meant in revenue. Noon does not offer any information on that. Noon states that growth VCs will use every data point to extrapolate, then they’ll fit a public stock comparison curve, and you’ll regret saying anything.

Noon is still confident enough to state that Material Security has the potential to create its own space in cybersecurity. He says that there are many fake innovations, snake oil and other things in the industry that are highly hateful. Material Security customers have complained about previous security software companies that promised great products but then sold them and cashed out.

Noon states that there have not been many big cybersecurity companies. This is because entrepreneurs are cautious. “I have sold companies before. It’s not great; it just sucks. It’s not great. It just sucks. It’s pronounced and personal.”

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Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

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