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Conversations between the venture investors and operators at Dell Technologies Capital and the people who are building what's next in enterprise technologies.
Rick Berends (00:01):
There's an absolute need for startups. They shake the tree, they present new paths, and they optimize ancient dinosaur technologies into agile, lean, fast, cost-effective solutions that will present a win-win for everybody.
Ronda Scott (00:17):
Welcome to the DTC podcast, a series of conversations between the investors and operators at Dell Technologies Capital and the people who are building what's next in enterprise technologies.
Ronda Scott (00:28):
In this episode, DTCs Victoria Kinnealey talks with Rick Berends, a longtime BISO about why he's always been a champion of large organizations working with startups and what he needs to see from those companies before he can partner with them.
Victoria Kinnealey (00:45):
Hey Rick, thanks so much for being here today.
Rick Berends (00:47):
I'm really happy to be here.
Victoria Kinnealey (00:49):
So I'm super excited to have you on the podcast today, and I'm going to pretty much let you introduce yourself to the crew and tell them a little bit about your background. But I would love to start with the reason you and I connected when we did was because I saw your title on LinkedIn and I saw BISO and I was so curious to know more about what a BISO did versus a CISO or someone else in the cybersecurity industry. And I think that's what really sparked our networking. So yeah, tell the crew what it's,
Rick Berends (01:20):
So a BISO is a CISO who can't spell No, that's just bad start. No, Victoria. So if you think of this, an organization that has the CISO's office where there's an aspirant policy, there's standards, there's all the things that they have to do upwards within the organization talking to the exec, et cetera. The CISO doesn't have the ability to really interface a lot with the ongoing projects and make sure that the feet on the street are actually aligned to policy correctly, et cetera. And that's actually the role of the BISO. So I often say, look, imagine the CISO to be a swan. The bit above the water is graceful, well presentable magic to look at, and then the BISO is the bit under the water, which is the feet going crazy and getting things sorted and working very hard. So that's basically what the BISO is. My days are spent interfacing with projects, making sure that we get catchy exceptions, make sure that we're doing as secure as we can with the means that we have. So yeah, that's what it is. It's the interface with the real-world
Victoria Kinnealey (02:23):
And that Rick makes you the perfect person for what we want to talk about today, which is innovation and startup engagement and partnerships and growth within the enterprise org. How do enterprises sort of innovate and get all the things done that the CISO and the rest of the leadership want to see in the org? So I think it's going to be great to hear your thoughts, and I want to kick this off if it's okay with you, with a question actually from the Dell Tech Capital portfolio. So the question is this one from Indoor Labs, which is a leading software supply chain security startup focused on eliminating the complexity of securing open-source software. What they want to know is what traits a startup must possess to establish a partnership at an early stage.
Rick Berends (03:17):
Wow. Okay. So it's about trust, isn't it? That's where we've got to start our conversation. In reality, a lot of organizations who are startups today have such an advantage over the old guard. They don't have a huge amount of older technology, older, I suppose, products that they're still trying to use as their main sales. So you'll find that a startup has a great example of what has been there in the past. So that's often a fairly straightforward thing for an organization to start writing something that is compatible with or that can improve on that. But the real kind of areas that we really value startups is that they're more agile. They can get more into a product. I mean, we are driving to try and reduce the number of products we've got. If I look at the average machine today, there are so many agents, so many bits and pieces that are integrated with the platform and we're trying to reduce that.
(04:18):
We're trying to get rid of this kind of overhead on our estate by reducing the number of tools. IE, we are looking for tools that are doing more with existing data. We're looking at smarter approaches to how you do certain aspects of security and truth or has, from my perspective, an apsi essential part of the industry. They've learned from their backgrounds, they've come forward, and they've said, look, these are the pieces that absolutely matter, and they've got a very, very good position for their product. And from our perspective, this is one that we really will be looking further into for sure.
Victoria Kinnealey (04:59):
Rick, when you're talking to a startup or an earlier stage company, do you look to them to come to you with ideas and help you kind of build a roadmap or a strategy or a vision, or do you want them to be more passive in that discussion?
Rick Berends (05:16):
I think we like a dialogue. I don't think we need a huge amount of new ideas. Obviously, if they've worked something out that we haven't yet seen, then we absolutely would be interested in knowing about that. I would say almost a predefined set of use cases in a lot of areas where you'd say, what are you looking for in this particular market or for this particular user type that would give us a good place to start a conversation and beyond a doubt, or they would've seen what works, what doesn't, and what the trends are. And they're that agile that they're able to build these things in the timeframes that we need them to be there. Where the older guard would take a long time to vary products that have difficulties with it, they may have a much higher cost base. And that's another little element that we like the ability to, I suppose, to be agile together, to be proactive together. And we hope that our startup relationships will bear some fruit in terms of us being able to contribute and the pricing to be more realistic than a lot of the old stuff or the older guard.
Victoria Kinnealey (06:24):
Yeah. Rick, I know in the past you and I have talked about essentially the ecosystem that makes being a startup, I don't know if easier is the right word, but word. There's so much more resource that a startup can leverage to get to market faster, more agile, more dynamic. Can you talk about that a little bit, what you've seen and how the market's changed?
Rick Berends (06:47):
So, in the not-so-distant past, it used to be very difficult to write a new product. There was so much more work that went into it. So the standards are coming forward; they are much better and easier out-the-box ways of communicating, which lets the startup think much more about what the product does than worrying about how to make it do anything. And this gives them an agility that really does not exist or has not existed until now. So our startup world is a baggage-free world, I suppose. They don't have to worry about all these previous ways of doing things or having to have backward compatibility with previous sets of tools that they may have had that gives them such a huge advantage. I reckon sometimes the legacy side of an organization probably SAPs more out of it than it ever would dream of maintaining backward compatibility, et cetera, and having to keep all the products going for given client X. We have a situation now where a startup can actually vary their product spec so quickly build in requirements that might be delivered a month after they were first discussed in a meeting. And we've seen that a few times.
Victoria Kinnealey (07:59):
And off of that, Rick too, right? Do you find startups are more able to meet the customer where you are and maybe go a little above and beyond sometimes what an enterprise can do because they don't have all this baggage, they don't have to go through 10 levels of approval to sign a contract. How does that play into when you work with a startup, how you work with a startup and what your expectation is frankly when you're working with an earlier stage company?
Rick Berends (08:29):
That's a great question because I think the agility and their ability to, should we say, catch the deal is a lot better than a lot of other organizations. And by that I mean there are times when, and indeed in my past, there are times that giving a client a much bigger license than they'd ever purchased might well have been a dead easy thing to do. It doesn't cost you anything more to double tap the zero key and to make a hundred and to a thousand. And a client will never forget that a client will be yours forever for that, and you'll still have a pot of cash in the bank where chasing down that last of the thousand deals, it gets to some of the bigger organizations that they start counting CPUs, and they start counting mips, and they're trying to, you can see them extracting as much out of a deal as they can. Whereas as a startup, you have this lovely relationship, okay, you've got the pressure on you and Victoria with the grace of respect. You and I get on really well. The VCs put huge pressure on their incubators and on their startups. But actually, I think if you don't chase down every last nickel out of every single deal that you possibly can, you might find that the maturity of your relationships gives you a much longer lifespan with that client. And I think that's super important.
Victoria Kinnealey (09:51):
Yeah, absolutely. And the non-monetary value adds of landing some of these deals, right? The logos, the joint development, the network that you gain exposure to, there's so many other pieces. I think that a startup wins when they close a deal with an enterprise client that might not just be what the dollar amount of the final contract was.
Rick Berends (10:16):
Absolutely. I think there's a huge mileage to that, and we always talk with various of our colleagues from previous roles, et cetera, and guess who we are integrating with Now we talk to end Endor because they cover off these specific areas we're having difficulties with. I mean, I'm using Endor because they came up earlier, but I'm using X company for this product, and another organization will be buying into it as well. And I think that that's a huge thing. So
Victoria Kinnealey (10:42):
On that one, Rick, what else would you say is important as relates to how a startup and the startup team engage you in the same vein that people talk, right? And this is a relationship building as much as it's a business building. What are some of the things you would say a team should have on their radar when they're approaching a sale with an enterprise?
Rick Berends (11:07):
The best approach is always the one that is, I don't want to say honest, but the one that builds trust. So going in and claiming that your organization's 10 times the size that you really are, and then some are trying to fake it. That's so easy to pick up. I remember being ferried through an office full of people who are apparently working on a given system in way. I just stopped and spoke with one of the people. I said, what are you doing today? And the person couldn't answer. The reason why they couldn't answer was that they were a friend of or a brother-in-law or whatever of a given startup. And it's sad when they feel they have to do that because, in truth, the merits of their products were strong enough by themselves. So I'm saying believe your products because that's also something that gets picked up so easily. And please don't keep calling everything AI. That's my current bugbear AI everything. And it's just a scary thing that literally the whole world is saying AI, and we don't believe it. We just
Victoria Kinnealey (12:13):
Don't believe it. Tell me more about that, Rick. What do you mean? Is it that when some company's a cybersecurity X, their whole website just says ai? Is it just that there's too much noise in this space? Tell me more about what you mean when you say
Rick Berends (12:28):
People need that when they're describing what they described a year ago as being we do, we will find new information on your network. We'll find new threats in certain ways by using advanced database queries, or we'll use big data or whatever it is that they're using last year. Now they're calling it ai. It's the same thing. It's still doing the same kind of work, and stop trying to wrap it in a new, sexier word. It just doesn't actually make sense.
Victoria Kinnealey (13:00):
Didn't you tell me, Rick, you saw a toothbrush?
Rick Berends (13:03):
AI toothbrush. Yeah, that's my current; come on, guys. What does this toothbrush find? My teeth all by itself? I don't know. What does an AI toothbrush have to do? How's it going to be any better than a regular toothbrush? Come on.
Victoria Kinnealey (13:17):
Right? If a company can't clearly articulate what an AI toothbrush does versus every toothbrush we've had for hundreds of years, they should maybe take AI out of the title.
Rick Berends (13:29):
I think so. I think you've kind of hit the nail on the head there. Yeah. Again, I guess it's don't oversell. Don't try and overbake something that is fairly easy for people to say; I can't really see how that would be an AI thing.
Victoria Kinnealey (13:45):
And in that vein, Rick, would you say, what's your thought on jargon more broadly, right? How do you feel when someone comes in and very complex presentations with lots of industry language versus maybe a more simplistic approach?
Rick Berends (14:01):
Well, I think you already know where I'm going to go with this. My view is to be as candid and as down-to-earth as possible to explain to the layman. And for every new technology, everyone starts as being a layman. If you had Sam Altman on the program, he would have to dumb down a lot to be able to explain to us some of the stuff that he is doing. In reality, we would be caught up in it just as quickly as he can explain it. But we would all be lay people to begin with. So I'd suggest try and keep the jargon out of it because we used to have this game we used to play, which was counting the buzzwords used during meetings, and you'll find that some people reuse the same buzzwords so many times that by the end of the meeting I'll put my hand up and say, I know what I want. I want big data, what you've said 15 times in this meeting. I don't want big data. Thank you.
Victoria Kinnealey (15:00):
Yeah, that's a great point, Rick. And I think sometimes one that when I'm working with early-stage companies, they don't totally understand until they've been through it. But your end customer and enterprise might understand what you're doing immediately, but they're going to have to get buy-in from procurement and legal and HR and marketing and their boss's boss. And all of those people may not be spending every minute in this vertical or this niche. And the ability to structure it in such a way that the other orgs can say, oh, yep, that makes sense. Moving on, I think sometimes can be a game changer. It's what transitions a company from getting stuck in the mud and lost in all that enterprise can be versus moving through the machine.
Rick Berends (15:53):
And yet, this is one of the most difficult things for a startup to get right, because startups are built on passion and emotion and super intelligence, and they build this amazing product. And then when you put them in front of a client or potential client and they tell their story and before they finish the second sentence, the guys have glazed over and said, we don't know what this guy's talking about. It's not making any sense. He's clearly very, very passionate about it, but he's lost us. Well, now we need somebody to represent the organization in a more consumable manner, in a more presentable way. How do you get that without spending a fortune on having some marketing specialists or whoever that you might want to hire that detracts from the money that you need to build your products with? It's kind of a real catch 22, isn't it?
Victoria Kinnealey (16:46):
Tell me, in your opinion, Rick, in that vein, right? Startups only have so much money; they can only put resources in so many places. What weight would you put on having someone on the team who has that EQ who can come into the room versus maybe the more heavy IQ, right? What does that add? Is it something you need? When do you need it? And when have you seen that be essential versus not?
Rick Berends (17:15):
EQ wins simple. EQ gets the guys into the room, EQ gets the head connection and the heart connection, I suppose. And then the high detail when it comes to the technical side, that thing comes out of the passionate folk, who were the starters, who the first people on the block, the founders, et cetera. If you've got both in one person, that person needs to be really well looked after. That's kind of important that
Victoria Kinnealey (17:40):
When you're buying something, you're buying on behalf of a corporate entity, but you are going to be the individual working with this group or this person. So, of course, you're thinking about the budget and the line item and the cost that you have, but there's also this whole component you're thinking of; this is about to be your reputation, your time, your project. And so you, you're choosing who you work with from that lens just as much as from a cost lens.
Rick Berends (18:10):
Victoria, this is actually a super important thing to bring through. I had a meeting of late where at the back of it, we had about five or six of our folks in a room with a supplier. Supplier was very emphatic, did a great presentation, got to some sticky questions, and the conversation turned pretty hard. It was pretty difficult conversation. Anyway, we got through all of that and the supplier left and suddenly in the room said I couldn't work with them. And it was literally that cold. I could not work with them. And so if they'd rocked up and said, we are going to charge half for the product compared to everybody else, they wouldn't have won the business because I couldn't work with them.
Victoria Kinnealey (18:59):
And what was that? Was it just the tone or the approach or was there anything specific you feel like the company could have done?
Rick Berends (19:06):
Lack of flexibility. Okay, this is how we do stuff and there's no other way of doing it. We know how to make success and the only way to make success is our way.
Victoria Kinnealey (19:18):
Interesting.
Rick Berends (19:20):
And it was so hard and we said, but we can't work that way in this particular case. So we are a UK telco that I work for, and we have a very hard set of regulations coming about us whereby we've got a data residency issue, we've got to keep the data within the UK bounds or borders. We have all sorts of pretty heavy regulatory stuff sitting over us to the point that if we fail in an audit, we automatically get fined. Unlike GDPR, which is only when you have a breach through the fine start, this is significant as a fine. It's bigger than GDPR, and as soon as you fail, you then get fined. So we tried explaining this to this given supplier and said, look, we have to have your cloud instance resident in the UK. Sorry, we can't do that. We work this way. The only way to make success is to follow us in on our thing. Well, which success would we prefer?
Victoria Kinnealey (20:18):
Well, and for a short-term game, right, are you focused on next quarter's board meeting or your IPO journey over the next decade? And I think both of us, I can't imagine how hard that bounce can be for founders, but I think it's something they have to be thinking about, right? Because if you're trying to push just closing the deal for the quarter, you're risking some of those longer-term relationship benefits. And so how do you make sure you're doing both smartly and where one is maybe taking a hit, you're aware of the hit that you're taking and why you're taking it and which is the right decision?
Rick Berends (21:03):
Agreed. Yeah. I think getting back to some of the points made earlier, there are numerous occasions where you can really win over. And my inclination, and I'm not alone in this, my inclination is to support the small guy. I've always been the person who says they are always going to deliver higher because they can give us better attention, they can get much quicker results, they can get me out of trouble when I need them. And there have been times that I'll be struggling to get the earshot of a very big organization that's got our money, and we're not their biggest client by any measure. And there's a huge value in just being really together and trustworthy on that. And I think that that's a really valuable thing as well. From my perspective, I will continue to support smaller organizations. I get much better value for money. That's the bottom line.
Victoria Kinnealey (21:58):
And innovation, I think that's one of the other parts that we're constantly thinking about on this side is having sort of that fresh energy, fresh insight that can be a value in it too. I think a lot of the time enterprise is looking for that. If it's packaged in a flexible partnership, engaging manner, you might not want to be told this is the only way. But you do want these innovative companies to help come in and say, Hey, we have ideas and ways that we can help you get to the next generation, which is, I think, where sometimes the win-win comes into play.
Rick Berends (22:37):
Absolutely agree with that. Can I just throw a complete rock in the puddle right now just as a real Yes,
Victoria Kinnealey (22:44):
Please.
Rick Berends (22:46):
We are preaching the notion of good is good enough, so I'll say it again. Good is good enough. And what we're saying with that is we are never going to stop everything, but what we can do is apply the right amount of security to stop the obvious stuff from going through. And that's good enough. And we are now focusing much more on resilience and recoverability as an organization. So we are worrying a lot more about how we can, I suppose, fend off an ongoing attack. So you'll find that any product it's an 80-20 thing. 80% of the functionality is going to be used flat out all the time, whereas that last 20% might itself be hardly ever used, but the vendors have taken forever, and the supplies have taken forever to write that stuff. There's got to be some value in saying, look, our tooling will get you to that level in a very good way. We are solid on that first 80%, really solid on that last 20%, probably. You'll never use it.
Victoria Kinnealey (23:56):
So, Rick, I love this point, and I just want you to speak it back and tell me if I'm saying this right. It helps in early-stage companies to know precisely what their value add is and how they're going to change something for you in a good way, right? Yes. Would you respond? One company comes in and says, I'm going to solve all your problems. Give them all to me, I'm going to fix 'em all. And the other company comes in and says, I'm going to fix this very specific problem in this way, and in three weeks' time, you're going to see an 80% reduction in X. Which one is exciting to you?
Rick Berends (24:33):
The latter. Absolutely the latter. We've had some very big names coming in, and they're going to boil the ocean. They've got the silver bullet, they've done it all. And when it came down to it, it was just a complete waste of time and effort because they were trying to boil the ocean.
Victoria Kinnealey (24:49):
And you have you, especially as the BISO, right? You're dealing with the ocean. And so you have solutions for different components that are there for a reason. I sort of feel like when a company comes in and says, just let us fill all the cracks, right? That's hard to conceptualize. It's hard to track, it's hard to monitor, and it's hard to have that fit seamlessly with everything else that it's hard to believe. I haven't seen it yet. So it's hard to believe. Whereas something where you can easily see and understand how it fits into the greater scheme; it clicks, and you feel it. You're like, we do need that. And one thing, Rick, you had mentioned to me in a previous call, tell me a little bit about your thoughts on white labeling, pros, and cons. How does that help an early-stage company?
Rick Berends (25:43):
Tooling that is emblazoned with our logos and stuff gets instant. Buy-in with everyone. Absolutely. Instant buy-in. If you have the ability to render your front ends with our logos, very simple piece of code just to add our logo in the right place, that stuff is invaluable. It gets instant. So the kind of integrated products that do integrate with an IDP, so your Okta or your Azure active directory type products or those kinds of IDPs, that integration is very high on our agendas. It's very, very important the ability to roll out either in SaaS or in our data centers. So if people are making decisions about how we will deploy our stuff, go the container route, go the appliance thinking, and get it into our DCS, because we are in a situation where a lot of our stuff can't be put in the cloud. So if you at your design stages are saying, look, we're going to need databases, we're going to need this, we're going to need that.
(26:48):
Don't go cloud native stopping you from being able to come back into our DCS if you have to. I promise you that there are so many pieces of work that we've done that we just couldn't further a really good solution because it was cloud only, it was a SaaS platform, et cetera. Interesting. That's kind of hard. The cloud is certainly out here, and I'm in the UK, so the cloud is being seen as being a bit of an unfulfilled promise. It was meant to reduced costs. It was meant to make things really very straightforward. But actually the costing model of the cloud includes profit for the owners of the hyper scalers themselves. Whereas once you've got your capacities understood, being in a DC is going to be cheaper. Once you know what your capacities are, where the hyper scalers give you this flexibility of scale, that when you don’t know what your capacities need to be, when you don’t know how many servers, how much compute, et cetera you require, then the cloud is a really good thing. So for I guess the audience of this podcast, the cloud is a great place for you to settle yourselves to begin with whilst you go through your growth phases. But at the same time, from our perspective, we have to keep our costs under control. And getting back to the DC is kind of important.
Victoria Kinnealey (28:15):
Keeping that flexibility, again, as we've talked about, having options, well, the
Rick Berends (28:19):
Cloud gives you that, but yeah, we would like the flexibility to install and to run this stuff from pretty much any location. Yes, please.
Victoria Kinnealey (28:27):
Yeah, no, I mean one of the ones, Rick, that I was thinking about when I was asking it too is I know sometimes things like contract length can actually be a win-win a lot of the time. Enterprise wants a longer deal. It's lower risk, it's less compliance, it's less paperwork. If you agree upfront to a three or five-year deal, that can be beneficial. Startups, it's the same thing, but more years is better. It's more guaranteed revenue. Absolutely. And so it's sometimes these funny little things that you're not even thinking about as a win-win negotiation that can be. And I think a lot of it comes back to listening, right? Being more open to hearing what it is your customer is dealing with, what their stressors are, and what are their pain points. And then coming up with creative ways to say, okay, what if we did this? What about that? And giving those options that sort of
Rick Berends (29:21):
Help. So that's a valid point. And indeed, I can tell you that the way we structured deals has changed. Where it used to be kind of annual renewal, bit of a new contract, a few new terms, conditions, et cetera. We are now doing a lot more, let's have pricing over three years. Let's contract for three years with breaks at every year. Otherwise, we'll naturally move to the next. Our primary focus now is proving value.
Victoria Kinnealey (29:50):
Do you have any final thoughts you want to leave the group with or advice you would give to early-stage companies looking to engage with, learn from, or partner with enterprise organizations?
Rick Berends (30:01):
As we were saying before the call, there's that absolute need for startups. They shake the tree, they present new paths, and they optimize ancient dinosaur technologies into agile, lean, fast, cost-effective solutions that will present a win-win for everybody. And I'm going to be the first guy to say, yeah, I'll take the call. Let's have a chat. Let's understand where you're at. Let's understand what you can do and how I can, in turn, optimize what I'm doing around what you have. So I'm the biggest proponent for startups. I really am. I do not see that the Old Guard is that valuable, just continuity. Same old, same old.
Victoria Kinnealey (30:49):
Thank you, Rick. I mean, and be careful because all of a sudden you're going to have 70 of them all coming.
Rick Berends (30:57):
And you know what? I'd be very happy, as you know, I would to appraise, to give applicability and to see where I would value what they have to offer.
Victoria Kinnealey (31:07):
Yeah, yeah, exactly. And that in itself, and I think this is almost a parting message to a lot of the startups, whether they're a DTC investment or not, too insight and advice and guidance from somebody who knows the industry is invaluable. I think it's so important that early-stage companies don't think of every enterprise introduction as a pitch or a sell, right? I got to sell. And if he's not buying, I got to go to the next one because there is so much that can be learned and gained and added to their value from listening and learning from you and getting advice.
Rick Berends (31:45):
It may not apply to us though either. It may be that the product isn't for us, but I would be very happy to say, by the way, go and talk to those guys because they desperately need what you got.
Victoria Kinnealey (31:54):
And I think Rick, our time is sort of coming to an end here. So thank you so much for taking the time today. It's, as always, such a pleasure speaking with you and catching up. And I can't wait for our audience and our investments to hear this because I think you've given a lot of words of wisdom. So thank you.
Rick Berends (32:12):
It was a bit of a meandering conversation. I enjoyed it thoroughly, as I always do. We do get through a huge mileage when we have our discussions about things. I'd love to come back sometime. And indeed, if there are any areas in which your startups want to talk or think about stuff, I'd be very happy to dip my oil in the water and to see if I can help.
Victoria Kinnealey (32:33):
Thank you, Rick. We'll talk soon.
Rick Berends (32:35):
See you soon.
Ronda Scott (32:37):
Thanks for listening to the DTC podcast. If you like what you heard, you know what to do, like, share and subscribe wherever you get your podcast.