Carbon Black

Carbon Black was founded to address a critical gap in cybersecurity: the need to monitor and protect endpoints (laptops, desktops, servers, and specialized devices like ATMs and control systems) from advanced threats including malware, ransomware, and non-malware attacks. The company's core philosophy centered on the belief that the long-term battle against adversaries would be fought over data.

When Patrick Morley joined as CEO approximately 10-11 years before the interview, the company had already raised about $24 million and employed 20+ people, though these were mostly beta customers rather than paying revenue-generating accounts. The company started as a perpetual software licensing model selling total contract value (TCV) through on-premises deployments. The journey toward product-market fit involved three major evolutions: transitioning from perpetual licenses to SLA agreements, then to a subscription model, and gradually moving from on-premises deployments to a cloud-based SaaS multi-tenant platform.

Carbon Black's go-to-market approach focused on enterprise customers who took cybersecurity threats seriously. The company worked with investors including Jeff Fagnett at Accomplice (the founding investor), Maria Serino at 406 Ventures, and Tetschline at Sequoia to establish credibility in the market. Early metrics shifted from TCV to Annual Contract Value (ACV) and ultimately to Annual Recurring Revenue (ARR) as the company matured its revenue model and understanding of customer value.

The transition from perpetual licensing and on-premises software to subscription cloud-based offerings proved critical. Patrick emphasized the importance of educating employees about key business metrics—particularly ARR, recurring revenue, retention, churn, and gross margins—to align the entire organization around sustainable growth. The company's pricing model of approximately $30 per device per year provided simplicity and scalability. Expansion revenue came through two channels: customers growing and purchasing more devices as they hired, or customers expanding to additional service offerings (multi-SKU expansion). The company achieved strong net retention and customer expansion metrics, though these were not disclosed publicly prior to the IPO.

Carbon Black went public in May 2018, having raised $191 million pre-IPO and $160 million during the IPO itself. At the time of this interview, the company reported just under $200 million in ARR with 4,300 customers globally, including 35-36 of the Fortune 100, and achieved a market capitalization of $1.57 billion. Patrick reflected that the power of persistence and aligning great people around a common journey enabled the company's transformation from a ~$100k ARR startup to a publicly traded cybersecurity leader, demonstrating the rare achievement of the same leadership scaling a company over two orders of magnitude in revenue.