Duo Security accumulates millions in investor cash in quest for constant improvement
It's not hard to find
examples of tech startups spending extravagantly. For all of the boasting of lean startup and hacking through long nights on a friend's coach, there are even more stories of young tech firms
blowing huge amounts of seed capital on expensive office space in fashionable neighborhoods in America's most expensive cities.
Duo Security isn't one of those startups.
"We haven't spent most of the cash we have taken from investors," says Dug Song, CEO of
Duo Security.
Which is a lot of money. The cyber security startup has raised nearly $50 million in venture capital investment since its launch in 2010. And the money is coming from VCs both big and small. It has taken money from
Resonant Venture Partners, a new venture capital firm launched out of downtown Ann Arbor by recent University of Michigan grads, and heavy hitters in Silicon Valley, like
Redpoint Ventures,
True Ventures,
Google Ventures,
Radar Partners, and
Benchmark Capital.
"We never approached True Ventures or Google Ventures," Song says. "They found us and flew out here in the middle of winter."
In fact some VCs stalked Song in hopes of landing a chance to invest in Duo Security.
Matt Cohler, a general partner at Benchmark Capital, tried to establish contact with Song several times last year but came up empty.
Benchmark Capital's investment track record includes big startups like Zillow, Zipcar, Yelp, and Twitter. It's probably most famous for investing early in eBay. Cohler established himself as a founding member of Linkedin, and an early hire at Facebook. He joined Benchmark Capital in 2008 and led investments in Dropbox and Instagram.
That didn't impress Song enough to pick up Cohler's call. Song ignored the attempts until friends told him he would be crazy to shut out one of Silicon Valley's high-profile investors. The persistence paid off for Cohler. Song eventually took Cohler's call and let Benchmark Capital lead its $12 million Series B.
Two things are driving interest in Duo Security's future. First is its technology, a two-step verification system for mobile users. The platform utilizes two steps to identify and confirm the right person is accessing protected information online, such as sending a confirmation text or push alert to the account's owner. Check out more about it
here.
Duo Security's software is available for large organizations, small businesses, and even individuals. There is a free personal edition and more expensive options. The broad range is part of a philosophy of Duo Security's co-founders (Song and Jon Oberheide) strive for: make online security more egalitarian. Which makes sense since the Duo Security team puts a heavy emphasis on local involvement. Song is one of the co-founders of
A2 New Tech Meetup, an advisor of promising local startups like
Stratos, and started the campaign that created the
Ann Arbor Skatepark.
The second thing that attracts investors is Duo Security's
company culture. In many ways, the company is a stereotypical new economy startup. Its offices are in downtown Ann Arbor instead of an office park on the edge of town. It employs a lot of hard-charging, idealistic young people. More than 100. And Duo Security has dozens of
job openings these days. All of these employees are working to constantly improve the business, its products, and their performance. It's a culture of constant learning based on trial and error and evolution.
"Everything is under constant review," Song says. "We are very experimental in how we operate."
It also employs a tactic called blameless retrospectives. Every week, and sometimes every day, team members at Duo Security look back at what they did. They are always asking what worked, what didn't, how can it improve?
"Who was right is not important," Song says. "What is important here is we learn what works."
That focus on making sure everyone is rowing in the same direction is what keeps the company growing so fast. It consistently hits triple digits in its annual revenue growth. Song has high expectations that will continue for the foreseeable future as Duo Security grows.
"Anyone with a growth mindset doesn't only focus on what worked," Song says. "They don't focus on the past. They focus on the future."
Welcome to the Year of the Gazelle, an exploration of the fastest-growing startups in southeast Michigan by the Startup team and the New Economy Initiative for Southeast Michigan (NEI). Not only will we identify the local gazelle companies that are perfecting innovative new products, creating jobs, and generating lots of revenue, we will give you a full accounting of each one. The stories behind the entrepreneurs that build these businesses. The investors that back them. The resources they leverage. How they have all worked together to build Metro Detroit's new economy, and how they plan to do it in the future. In return we will only ask you to do one thing: keep up.
- Written by Jon Zemke