Last week, our latest company, Strike Graph, announced that they raised a $3.9 million seed investment, led by Hope Cochran, Managing Director at Madrona Venture Group. Founded by serial entrepreneurs Justin Beals and Brian Bero, Strike Graph uses intelligent technologies to automate cybersecurity certification processes, such as SOC2, and help businesses achieve initial compliance in under forty-five days. Justin’s and Brian’s domain expertise, drive, sense of urgency, and growth mindsets, combined with Madrona Venture Labs’ (MVL) operating and incubating capabilities, and Hope’s experience leading audit committees on public company boards, formed the ideal partnership to launch Strike Graph.
At MVL, we work hand-in-hand with founders through a rigorous validation process to identify and bring venture scale ideas to market. Core to our process is engaging potential customers early and often, and continuing that dialogue as we find early adopters and partners that are willing to pilot our products. Continuous learning with customers is the central theme of the MVL validation methodology.
In initial research conversations, we listen to customers talk about the pains they undergo and workflows they undertake to perform specific tasks. In subsequent discussions, we test our solution hypotheses using mockups and prototypes to uncover even more detailed reactions and feedback. Eventually, we have sales-like conversations to see if there are repeatable buying patterns that can emerge from the products we help to build.
These first stages of customer development help our founders answer important questions, such as:
When the MVL process is executed, early customer conversations often organically turn into paid pilots, which become even more opportunities to dive deeper and drive towards Product Market Fit (PMF). As an added benefit, nearly every early-stage investor will tell you that having paying customers (or traction) is tangible evidence to support a business’s projected potential.
When Justin first introduced us to his idea of automating evidence gathering for cybersecurity compliance, we quickly understood the pain he was trying to solve. Many of our companies that handle sensitive data, such as UpLevel, Zeitworks, and Stratify, needed security reviews in order to pass enterprise procurement requirements in order to close deals. What a tedious and momentum-killing process! As Justin and Brian like to say, “time kills all deals.” That said, we had many questions: Who has the most to gain through workflow automation - enterprises, SMBs, or security auditors? What value can technology provide after the initial cybersecurity certification is achieved? Is there too heavy of a professional services requirement that will prevent the company from scaling?
Over the next several months, MVL’s team of experienced product, technology, and go-to-market operators, including Maria Hess, Samuel Sunderaraj, and Ishani Gujral partnered with Justin to interview dozens of companies needing security audits, compliance officers at enterprise companies, cybersecurity experts, and audit professionals.
An exciting pattern was emerging from our customer conversations. Specifically, small and mid-market companies selling into the enterprise space were desperate for a solution to help them achieve SOC2 certifications as quickly as possible. Not having one was getting in the way of large revenue opportunities. These potential customers were asking to pay to pilot a product that didn’t yet exist! This helped to quickly clarify Strike Graph’s position in the market, the target buyer, and even the go-to-market pricing. Seemingly overnight, Strike Graph had its first three paying customers.
The MVP, a lightweight front-end interface with all of the customers’ data and workflows handled manually, was built in a matter of weeks. Using the MVP, Justin and Brian worked closely with their customers to prioritize the workflows that needed automation and identify new features, and ultimately drive towards PMF. Customer engagements were the driving force behind both the idea validation and the fluid transition to product execution. In just three months, during the pandemic, Strike Graph signed more than a dozen paying pilot customers. By September, an oversubscribed pilot program led to an oversubscribed seed round. We are proud of Strike Graph’s early commercial success and are confident that customers will continue to be at the center of their future growth.
If you are an entrepreneur who believes that continuous learning and deep customer engagement are the catalysts for great products, get in touch with us - we’d love to work with you!
We are with our founders from day one, for the long run.