The Founder Formula

Arick Goomanovsky - Co-founder of Ermetic

• Trace3 • Episode 36

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This Founder challenges others looking to start a business to ask themselves - Why do you want to start a company? Ermetic Co-Founder Arick Goomanovsky is a two-time founder who appreciates the ever-evolving journey of founding a company. In this episode, co-hosts Todd Gallina and Sandy Salty sit down with Arick to discuss the inner workings of launching Ermetic, a cloud security startup which has raised a total of $97.3M in funding over 4 rounds.

Listen in with this Founder and learn more about the different challenges between starting a services company versus a product company, and the power of people who help you think outside your own box, a good team, a unique culture, and open communication.

Listen to this and all of The Founder Formula episodes through your favorite podcast platform or Trace3.com.

Arick Goomanovsky:

Some people would do that for formal reasons. Fear of missing out. Exactly. They see some of their friends being more successful, some being less successful. And social media has an interesting part to play with that because all the founders post only great things on LinkedIn and it looks so glamorous from the outside. And they're saying to themselves, my friends are doing this. Why can I do this? And frankly, I think that's not the right reason.

Outro:

The founder formula brings you in behind the curtains and inside the minds of today's brave executives at the most future leaning startups. Each interview will feature a transformative leader who's behind the wheel at a fast paced and innovative tech firm. They'll give you an insider's look at how companies are envisioned, created and scaled. We hope you're ready. Let's get into the show.

Todd Gallina:

Hey, everybody. Welcome back to another episode of the Founder Formula. My name is Todd Galena, and with me is the Chief Marketing Officer at Trace3, Sandy Salty.

Sandy Salty:

Hey, Todd. Thanks for having me.

Todd Gallina:

Oh, you're welcome. It's been a blast. We are on a roll.

Sandy Salty:

We're on a roll, a cloud security roll.

Todd Gallina:

That sounds like the best kind of roll. If you're kind of nerds like us.

Sandy Salty:

Yeah, I mean, I prefer Tootsie Roll, but I'm just kidding.

Todd Gallina:

But we're going to kick things off with a little bit of lightning round with our guests.

Sandy Salty:

Yes, or as I like to call it, thunder round. That'll be fun. It'll be a good way to kick off the conversation with some casual, fun banter.

Todd Gallina:

Yes. You ready?

Sandy Salty:

I'm ready.

Todd Gallina:

Okay, our guest is a tenured business leader with two decades of experience in strategy, technology, research, and leadership and government in the private sector. He was co-founder of Syngia Consulting, a cyber consulting and incident response firm, which was acquired for $250 million. Before Syngia, our guest worked at McKinsey & Company in London, where he focused on strategy and operations. He served for 15 years in the IDF Intelligent Core, where he led a team of hundreds of research and development experts. He currently is the co-founder and CBO of Ermedic, a cloud security company based out of Palo Alto, California. Please welcome to the show, Eric Gumanofsky. Eric, thanks for joining us. Thank you so much for having me. You bet. Okay, so as you know, we're going to kick this episode off. with what we call the lightning round questions. And so we have selected three for you. And Sandy, do you want to nail them with the first one?

Sandy Salty:

Sure, sure. This is probably my favorite of all lightning round questions. Eric, small gathering or big party?

Arick Goomanovsky:

Big party, 100%.

Sandy Salty:

Oh,

Todd Gallina:

OK. All right.

Sandy Salty:

Good answer.

Todd Gallina:

I like that. What's the biggest party you've been to? Like, have you been to like these massive, like 300 people mansion pool parties?

Arick Goomanovsky:

Yeah, definitely. Look, I just recently went to my MBA 10 year reunion was actually 11 year reunion because last year we couldn't do it because of COVID. So we had like 500 people in a classic French chateau in Fontainebleau. black tie event turning into a crazy, crazy party or really bringing me back to my crazy MBA days. So yeah, lots of fun.

Sandy Salty:

Sounds great. Where'd you go to school for your MBA?

Arick Goomanovsky:

So Fontainebleau, France. It's called INSEAD. It's outside of the US. It's probably the number one MBA school, always competing with London, you know, business school, LBS. We had people from like 120 countries in my promotion of the 500 people in the promotion. Yeah, it was very exciting. It's a dual campus school. So there is a campus in France and there is a campus in Singapore. And you can, you know, split your time between the two campuses. Lots of fun.

Sandy Salty:

That sounds amazing. Do you speak French?

Arick Goomanovsky:

Not at all. I picked up some French where I studied there. The classes are all in English, but living in France, you have to learn to speak some French. I spent 11 years and I didn't do any practice, so I lost any sense of French that I used to have.

Todd Gallina:

Where was the party located with the two different campuses?

Arick Goomanovsky:

Everyone comes to France once in five years. There is a huge reunion weekend. We all gather on the campus. We all kind of do small gatherings during the two days around the town. And then there is one big, huge party, kind of like an event at a French classic chateau. That's

Sandy Salty:

unbelievable. It's like, Todd, you know the movie Wedding Crashers? I think we should become NBA party crashers.

Todd Gallina:

You would fit in, but I would get selected. They're like, that guy doesn't have an NBA. I can just look at him and tell. That's funny. Okay, okay, that is, wow. Okay, we got a lot out of that one. Okay, so here's your next lightning round question, Eric. If you could pick one snack food to eat for the rest of your life, what would it be and why?

Arick Goomanovsky:

This one is a little bit more tricky. Probably I'll go with the sashimi salad. Yum. I don't know, some proteins, some healthy vegetables, good soy sauce, a little bit salty. Probably that would be the snack. You're very healthy.

Sandy Salty:

Yeah, Eric, you too. Like I do, it's a full meal.

Arick Goomanovsky:

Yeah, exactly. Well, the alternative would be a protein bar, but I don't know. Sashimi salad sounds a little bit more tempting.

Sandy Salty:

Todd eats a lot of protein bars.

Arick Goomanovsky:

This is, you

Todd Gallina:

know, I do.

Sandy Salty:

He works out a lot. He's pretty buff.

Todd Gallina:

Stop it. People are going to be listening to this and they're going to be like, wow, these founders really don't like eat Funyuns and Bugles. Like you

Sandy Salty:

think they do on the TV show. Todd, what snack food would you eat for the rest of your life?

Todd Gallina:

Uh, I'm a, I'm a big popcorn guy. I love popcorn, all, all different kinds except microwave popcorn. So I make my own and, uh, I sometimes I'll look for like special, uh, brands of popcorn, but yeah, total old school, like put it on the, on the stove and cook it in oil. It's my favorite thing. You're like

Sandy Salty:

a popcorn connoisseur. Fancy popcorn.

Todd Gallina:

Yes.

Sandy Salty:

Have

Todd Gallina:

you ever gone to a movie theater and they've given you popcorn and you're like, this isn't fresh

Sandy Salty:

popcorn? Totally. Yeah. The pain is real.

Todd Gallina:

So what about you?

Sandy Salty:

Oh, my favorite snack food? Yeah. Oh, it would have to be tortilla chips, guac, and salsa.

Todd Gallina:

Okay, yeah. Like you said, it's a meal. Very

Sandy Salty:

specific, yeah.

Todd Gallina:

Do you make your own guacamole?

Sandy Salty:

I have, but, you know, I'm good with, like, as long as it's fresh, store-bought as well. Yeah. Yeah.

Todd Gallina:

The avocados out here are legit.

Sandy Salty:

They're legit. I'm not a guac connoisseur to the degree that you are a popcorn connoisseur.

Todd Gallina:

Any guac will do. Okay. All right. Next lightning round question. Okay. I'll have you.

Sandy Salty:

Okay. Eric, if you had to live somewhere else, where would it be and why?

Arick Goomanovsky:

london definitely i've lived there for two years 2012 to 2013 after my mbs worked for mckinsey and company there and i just love the city um it's a combination of a very international city, right? At least it was before Brexit, right? So, you know, there were no British people in London back then. You know, there was a lot of stuff to do. But on the other hand, it's like it has like a big city vibe, but it's not Manhattan that is like so tall and you feel so tiny and insignificant. You can really feel like a human being in that city. So London, definitely. That sounds great. And you've been, right, to London?

Sandy Salty:

Oh, yeah, I love London. I agree. It's sort of like, it's like, The diversity is definitely an element of London that's pretty cool. And then there's the elegance and then the food and it kind of offers a lot for sure. I'm a big stickler for good weather though. And I don't know that London gives me enough sunshine, but I love the city. That's

Arick Goomanovsky:

what people usually think of London, that it's always gray. And it's definitely, you have like three options. The day can start nicely and turn into gray. The day can start gray and stay gray. Or the day can start gray and turn into a nice day. There are rarely days that start nice and kind of end nice. But once you leave there, you learn to enjoy the good, kind of the good weather times, right? So those three periods. Yeah, it makes you realize, you know, how nice it is.

Sandy Salty:

Versus us Californians. It's like, we take it for granted. It's beautiful every day. I

Todd Gallina:

know.

Sandy Salty:

And when we get rain, we're like shocked by it. We all crash. We

Todd Gallina:

all crash on the freeway. Okay. All right. Hey, so thanks, Eric, for playing a lightning round. We are ready to get to the meat of this interview.

Sandy Salty:

Yeah, Eric. So I'll start with the first question. Tell us about Hermetic and why you started it.

Arick Goomanovsky:

Sure, absolutely. With pleasure. So Hermetic basically is a cloud infrastructure security solution. So we work with organizations that are basically utilizing public cloud infrastructure. So Amazon Web Services, Microsoft Azure, Google Cloud Platform. We work with a broad range of organizations, organizations that, you know, traditional, your Fortune 10 enterprises that have been, you know, on premise forever and ever, and recently started their kind of, you know, digital transformation. And as part of that, they're moving more close to the cloud. And also with, you know, startups or hyperscales organization that, You know, we're following it after after 2010, and they never had a single server on cloud. They were in the cloud from day one. And all those organizations surprisingly experienced a lot of similar challenges when moving to the cloud. One of those challenges, maybe from a business perspective, is kind of organizational disconnects that we see between the security teams and people that actually own the new infrastructure, which is in many cases shifting out of the hands of the IT and then going into the hands of the developers. So that creates a lot of challenges for organizations from a business perspective. There are challenges from a technical perspective. The nature of the security perimeter is shifting once you're moving from your on-premise to the cloud. On-premise networking was the major perimeter. Networking was king. Almost everything in security had somehow to do with networking. In the cloud, identities and permissions kind of become the new perimeters, so they replace the traditional networking perimeter. And coming from an incident response company, which I was part of before Medic, I saw how threat actors are compromising great institutions left and right by compromising identities, leveraging sensitive permissions to get access to sensitive data, leveraging the organizational disconnects between security teams and developers, kind of bringing basically very impressive and great organizations with very strong security teams to their needs. And we thought that this is a huge problem as the world is going through this transformation from on-premise to cloud. And we wanted to be part of that transition and really help organizations be better prepared to the new challenges that are moving to the cloud and helps them better secure their sensitive information and their new cloud infrastructure. Yeah, I think we're very lucky in many ways that we kind of live and work in this exciting time because there are very few opportunities like that where the world of IT is undergoing a fundamental transformation. And I think this is a fundamental transformation that we see now with the transition to the cloud and being a part of that, even only from the lens of security is super, super exciting.

Sandy Salty:

Totally agree. There's definitely a palpable paradigm shift and cloud security is absolutely the space to be in. Thank you for that. We're very excited about what Hermetic brings to the table.

Todd Gallina:

Yeah, Eric, this is your second go-around as a founder. Can you share something that you're personally doing differently with this go-around with Hermetic?

Arick Goomanovsky:

Sure, absolutely. So first of all, before Hermetic, just a little bit of background, I was a co-founder of a cybersecurity services company called Signia. In Signia, we did a lot of incident response work for, you know, large multinationals, especially North America, Europe, later also in APAC, and also a lot of preemptive consulting, really helping organizations enhance their general cybersecurity strategy and posture in general. Of course, being a repeat entrepreneur, there are a lot of lessons learned, right? And it starts from how do you structure your team? How do you build a team of founders? How do you divide and conquer in terms of responsibilities among the team? How do you build processes? There are a lot of things that you learn from previous experiences, how to work with customers, how to learn from customers, how to become better. I would say that the immediate outcome of that is that you're making less mistakes, or at least you're trying to make different mistakes, and you try to achieve similar goals, but much faster, right? So growing your revenue much faster, going to market much faster, building the product much faster. I think there is also a strong personal element to that as well. Being a founder of a startup, actually being in an executive role in a startup, not necessarily a founder, but a founder especially, so it's a constant roller coaster, right? So you can be 10 times in a day up and down, right? You have a great always a customer. It's amazing. And then you, a customer that was expected to sign APO turns you down because they have a budget issue. And then in the same day, you deliver a great functionality that a lot of your customers like, and then you have a bug in production that you have to go and fix, right? So it's very, very hectic. And I think what you learn from time to time, kind of as you're becoming more experienced, to take things easily, right? I mean, if it's your first startup, every small hiccup feels like a disaster. But with experience, you learn that they're just part of life and you're, you know, You may not be getting as excited with the wins, but you're at least also not that depressed with the losses. And you're building up your resiliency. And that's very important. Like the mental resilience is super, super important for a founder. You have to be always focused. You have to be always minded on the wins. You have to be always positive and not taken down by small hiccups along the way, right? And I think this is something that you learn with time.

Todd Gallina:

Imagine your reaction to maybe some negative news can potentially cascade down throughout the organization. So I think this second go around, if you do get a major bug after a launch, I think maybe having some calm and the fact that you've been through this before really settles down the team. Is that a fair statement?

Arick Goomanovsky:

Absolutely. Absolutely. It's what you project to the team. It's what you project to your peers. It's what you project to the investors when you meet them once a month or at the board meeting once a quarter. It all matters, right? Now, I'm not saying that you have to be always super, super optimistic and you only have to focus on the positives because if you do not think positively, critically about the situation and then you will never improve because I mean for sure there are always problems that you have to solve and you have to address and you have to have a grain of critical thinking all the time. Even when things are going well, there is a value for review, analysis, trying to learn. You can learn from your wins at least as much, if not more than you learn from your losses. And that's very important because A lot of the very in advance organizations, they don't learn from anything, right? And then the next step of maturity is when you start learning from your losses. But I think the best organizations learn even more from their wins than from their losses, right? And you have to learn all the time. If you don't have the appetite to learning new things all the time, you won't be able to be a founder, at least not in our space.

Sandy Salty:

As a follow-up to that, in another conversation we had with you, Eric, you mentioned you know, as a repeat founder, like the ups don't need to be so high and the downs don't need to be so low. It's like, you know, one's ability to sort of modulate their emotion, their successes and their failures tends to evolve in the second, third, fourth go around as compared to kind of the first round.

Arick Goomanovsky:

Yeah, absolutely. I mean, again, the first time, um, I remember my, uh, first encounters and my first, um, you know, uh, engagements and, and, and my first negotiations with customers in my previous startup, right. When I, you know, I was, um, closing my first, uh, high six digit, uh, or high six figure deal. I remember how nervous I was in the first time I planned and then planned and I planned and I thought, okay, if the customer will say this, I will answer that. And if they will raise one objection, I will try to answer with a different answer. And I ultimately, because of the anxiety, I think I've kind of over complicated the situation, right? I'm not saying that planning is not important. And when you're going into a serious negotiation, you should not have your bases covered and you should have a plan, always have a plan. But you have to focus on what matters most and not get really down when things are not working the way you like. Because things are never working the way you like. I mean, you can get lucky once in a while, but you cannot get lucky all the time and there will be losses and there will be things that will go not according to plan. And you just have to be mentally prepared for that. This is the reality of being an executive in a startup, not only a founder. I look at our CRO who manages our sales organization. He's in a lot of negotiations that do not necessarily go the way he would love them to go, but it doesn't mean that eventually we don't win. We do win because we plan and we come prepared and we don't overreact in either direction.

Sandy Salty:

Eric, you know, you mentioned your first company was a services company, largely successful. Hermetic is obviously a product company. What made you want to take that journey from founding a services company to now a product company? And do you have a preference? I mean, is there one that you're having more fun with or did have more fun with?

Arick Goomanovsky:

So it's an amazing question, and it's a question that I ask myself almost every other day. These are two fundamentally different beasts, right? Services organizations are, when you think about the product of a service organization, it's people. So basically, you're selling yourself, right? You're selling your expertise, you're selling your practice, you're selling your capabilities, and ultimately, Once you've solved that, you're also the one who's responsible for the delivery, right? Most sales organizations, sorry, most services organizations do not have a dedicated sales team, right? It's the practitioners that are actually doing the selling, right? Because this is a very knowledge, forward selling process. If you look at great services organizations like consulting companies like McKinsey, it's the partners who are ultimately responsible for delivering the projects are the ones that are doing most of the selling work as well. So in a product organization, you're building a product and then there is a separate part of the organization. I mean, it's part of the same company, but the sales organization responsible for selling a product that ultimately they don't build, right? So it creates a lot of interesting challenges. And I think the kind of the tension between product organizations and sales organizations, between product teams and sales engineers are, you know, they're as old as, as technology or software sales, right? So they did not start last year and they probably will not end ever. So that does create an interesting perspective. Also, when you're working in a services organization, the ability for scale up is very limited. I mean, a super successful services organization is an organization that grows in tens of percents a year over a year. So 50% growth to 100% growth is amazing because you're ultimately limited by your uh capacity to deliver by your manpower effectively and by the talent you can you can recruit uh a product organization if you have a successful product you can scale up two three four ten times year over year right if you're if you're doing a good job and and executing uh well on the go-to-market side uh uh obviously uh so um there are different challenges right um But then you need, in order to build a successful product company, besides building a great product, you need to build a great pipeline of potential customers. That pipeline has to grow exponentially. If you want your sales and revenue to grow exponentially, you don't necessarily need all that in a successful services organization. You can run a successful services organization with very few customers. So it's a totally different beast from multitude of perspectives. Of course, the intimacy you would get with your customers in a services organization and the depth of relationship you would build is much, much deeper, much greater than in a product organization. But then you still, you have a handful of customers and in a product organization, you can have thousands of customers. It's really

Todd Gallina:

different. It's massive. I didn't realize the limitation and the growth potential with the services company, but now it completely makes sense.

Sandy Salty:

Yeah. I remember we interviewed an amazing, another amazing founder last year. And at one point he said, well, it's really, it's difficult to scale up a services organization because you can't take a human being and partition them, you know, 10 or 15 different ways, which I thought was an interesting sort of perspective.

Todd Gallina:

No, it totally is. And we're talking about, Eric, your response. You talked about the importance of people, manpower. Knowing how tight talent is right now, do you find yourself bringing in folks from your previous company just because you're aware of their capabilities? Or do you tend to start from scratch? What did you do with this go-around?

Arick Goomanovsky:

I couldn't bring a lot of people from my previous organization. There are issues of conflict of interest and things like that. But obviously bringing people that you worked with in the past really allows you to move faster. You bring people that you already have a common language with, you have established trust relationship. it always allows to accelerate the business. So for example, in our product organization or our engineering team, my co-founder Michael has brought with him almost on day one, a core team of five, six people that he has worked with before for years and years. So their ability to deliver a product, a functioning product that we can actually take to market because of that was unbelievable. We had like in less than six months, we had a fully functional product that we could actually sell. These things, when you have to start building the team from scratch can take years. Same goes to the go-to-market organization, right? You see when, you know, sales leaders bring people with them that they have worked with in the past, that they have, again, common language, understanding, trust, then, you know, the business flourishes in those regions. And when sometimes they bring, you know, you hire someone who's super, super talented, but you've never worked with that person before, it just takes time to build the trust, to build the common understanding, right? So and in the startups, especially startups today, it's all about speed and go to market. Right. The faster you can deliver, the faster you can grow the revenue, the more you can raise in the next round, the faster you can raise the next round. And that kind of reinforces, creates this virtuous cycle that allows you to grow and grow and scale more and more. Right. So the ability to do things faster is really important. And, yeah, working with people that you have worked with before is part of that. However, you have to remember that there are also some people that you don't want to work with again, right? Yeah, they're

Todd Gallina:

reaching out to you like, hey, man, I heard you're starting a new company. Love to be part of it. Yeah, that's got to be tough.

Sandy Salty:

Yeah. I would imagine that bringing in new fresh blood is interesting as well in that it brings perhaps a different way of thinking and a fresh perspective to the table as well.

Arick Goomanovsky:

It's a must. It's a must. As I said, people that are not willing to learn and change you know what they say, it's not the strongest that survive, right? It's the ones that are more susceptible to change, right? So you have, we live in a very dynamic world, right? Things are changing all the time. Look at how the markets have changed over the past six months, right? From being extremely bullish when people were raising hundreds of millions left and right to a situation where, you know, investors are not giving money out that easily anymore. The valuations are going down. Some companies are sending people home, right? So you have to be able to cope with a dynamic environment. As far of that is being able to learn and change and adjust the way you operate, adjust the way you think. And part of that is also surrounding yourself with good people that can that sometimes even think differently than you do, right? I think it's an important part of leadership, right? If you're basically surround yourself with a bunch of mini-me's, you won't be as successful, right? I mean, you have to put people around you that sometimes think differently, think out of the box, that will help you evolve and move forward.

Todd Gallina:

That's so true. I keep thinking back to this massive party you went to at the beginning of our conversation, all these MBA students in France. Did you end up bringing anybody from your program over to Hermetic?

Arick Goomanovsky:

Someone from my program over to Hermetic? Not yet. Not yet. But yeah, it's definitely a possibility for the future. I did end up partnering with some people. So for example, speaking about services organizations, one of my peers from school, he runs a pretty interesting software development services organization in London, actually. And we did partner and did some joint go-to-market activities and work with his customers. so there are a lot of opportunities to network and partner uh but uh i do have a friend who started the startup uh um straight out of of uh the mba school and he had like plenty of people from our uh from our class uh working at that startup uh over the years right so um that definitely works

Sandy Salty:

All right, we're going to switch gears now. Eric, given your experience and success over the years, I'm sure you have a lot of friends and peers tell you that they want to start their own company. What do you tell them? What advice do you give them?

Arick Goomanovsky:

Think again. Yeah, but seriously, you know, yeah, that's happened a lot. People reach out, people are thinking, people are dreaming of something. Usually my advice, like my immediate response is, okay, that's a good idea. Let's try to think together. Why do you want to do that? And I think the why reason is very important, right? And there are different why reasons, right? Some people are saying, okay, you know, I've been, you know, I've been working for an enterprise my entire life. I want to be part of a more dynamic environment, right? So yeah, it's a valid reason. I would say, okay, so maybe before you found one, you actually go and found the company, maybe you should work for a startup for a while and and you know see if it's for you right uh overall you don't have to go and work three years for a startup but maybe you go and spend a year in an executive role in a startup, you will learn a lot that will make your future startup more successful. And maybe after that, you will say, you know, I don't want to be in a startup anymore. Some people want to do that for, you know, for financial reasons, right? They said, okay, I've worked for a salary all my life and I'm okay. But I want better for myself, for my family, for my kids, for, you know, for my significant others. And if I'm a successful entrepreneur, probably, you know, I can fundamentally change the economic situation back at home. And that makes a lot of sense, right? So I think it's an absolutely valid reason. Very few people would admit that that's the truth, but a lot of people do that for the financial reason. And that's fine. I would talk to them about the risks, right? So it's a small percentage of startups that are ultimately successful. So whether they're really willing to take the risk. Some people would do that for FOMO reasons. Did you

Todd Gallina:

say FOMO? Fear of missing out?

Arick Goomanovsky:

Exactly. They see some of their friends becoming entrepreneurs and some being more successful, some being less successful. And of course, you know, the social media has an interesting part to play with that because like all the founders all the time post only great things on LinkedIn and it looks so glamorous from the outside, right? And they're saying to themselves, okay, I'm in this well-paid, comfortable, even interesting, right? Very interesting job, but I'm like, I want something more exciting. My friends are doing this. Why can't I do this, right? And frankly, I think that's not the right reason. That's not the right reason. There has to be some intrinsic rationale to go and do a startup because things in reality are not always as glamorous as they appear to be on a LinkedIn page. And there are a lot of harsh times and a lot of risks and a lot of sleepless nights. And you've got to have a good reason to go on other than, hey, my friends are doing this. On the other hand, I have friends who don't necessarily want to go into a startup. And I think they would be immensely successful and it would make them so much happier than they are in their day-to-day jobs. And sometimes I find it hard to convince them because not everyone is so, you know, is risk-taking or opportunistic. And, you know, I think those people might actually be, you know, might be actually missing out because they could really, I don't know, we can say fulfill their destiny or something like that by building a startup because they are made from the right stuff for entrepreneurs and founders. But for whatever reason, they never go that way. And those people actually try actively convince them to go and give it a try. And I do everything I can to help them. You know, some people don't do that for financial reasons. They say, okay, I have a family, I have a mortgage to pay. I cannot go unemployed for six months now, right? Working on an idea, trying to raise money. So I would go and help them with that, right? So- Oh, that's super cool.

Todd Gallina:

That's awesome. So it sounds like the worst reason to start a company according to you is FOMO. Do you have a best reason to start a company?

Arick Goomanovsky:

I would say the best reason to start a company is if you have a good team. If you have a good team that you feel that you can fight together and you can win together. I think that's the best reason to start a company. I think if you have a team, you will find the idea. And ultimately you will be successful. If you don't have a good team, it's going to be a very, very tough fight for you. And no matter how good your idea is, no matter how much money you're able to raise, right? Because you need support. You need to do it together. There is definitely a better together story with founders. Look, I'm in my second startup. We were four co-founders in our first startup. We're four co-founders in our second startup. People say four co-founders, it's a pain in the ass, four opinions, everyone's pulling into a different direction. And that could be so, but there are also four people that can carry the weight. And that's super, super important when you're in a startup.

Sandy Salty:

Well, it's actually a perfect segue to the next question, which is, you know, culture. Like we place such a huge emphasis on culture at Trace3. And I am pretty convinced that it's one of the ingredients for our success over the years. And I'm just curious from your perspective, like how do you develop a good culture? And even more so, like what is a good culture from your perspective? How do you define it?

Arick Goomanovsky:

It's a good question. We recently had a session with management, with all the employees, kind of all hands, where we gave all the employees an opportunity to ask open questions, right? They asked the same question. They said, you know, we feel that we have a very unique culture here in Aromatic, which is great. How are we going to be able to maintain that culture while we are scaling up the company, right? We're growing from 20 to 50, from 50 to 100, from 100 to 200 people. How do we maintain this unique culture that we were able to build when we were, you know, a 20 people company? And one of our C leaders said, you know, raised his hand and said, hey guys, that's very easy. We just don't hire assholes.

Todd Gallina:

One of the C level positions is asshole spotter.

Arick Goomanovsky:

Yeah, exactly. So it's definitely a good answer. It's definitely very difficult not to do that. But I think being transparent to employees and candidates about your company, your values, making sure that as many different people have the opportunity to meet the candidate before you bring them in. it really creates this opportunity to maintain a good culture, right? But you have to define values and you have to hire people that believe in similar values and you have to track people's performance against those values. And you have to address where you see people that are not acting according to those values, right? So for example, in our company, we are surprisingly very non-arrogant team. So we have four co-founders. All of us are repeat entrepreneurs. We were all pretty successful in our careers to date. We're running an amazing company in an amazing market. And many other people that we all know from the industry would be extremely arrogant in this position. But this is not us. We have a very kind of down-to-earth culture in Hermetic. that prioritize open discussions, prioritize hard work. Everyone is extremely approachable. Everyone in every part of the organization can pick up the phone or just walk into the CEO's office, talk to him about anything that is on their mind. It's something that you nurture throughout the way and i think you also have to lead by example right by breaking those barriers by talking to people by engaging people by talking to them about what matters most to you what matters asking them what matters most to them being there for them i think that ultimately uh nurtures the this open down to earth culture that we believe is very important part of hermetic But again, different companies, different styles. I don't think there is a right or wrong answer. There is an answer that is right for a medic, but for another company, there might be a different answer. Like Groucho Marx used to say, I have my principles, but if you don't like them, I have others. That's a Groucho Marx quote? I didn't

Todd Gallina:

know that. That's awesome. We talked earlier about the roller coaster ride of a founder up and down. And when you described one of your ups, it was you would have a great call with a client of yours. On this show, we'd like to celebrate wins. And so do you have a gratifying client success story you'd like to share with our listeners?

Arick Goomanovsky:

Yeah, you know, recently I was on a call with a customer. And as I said, one of the areas where Medic really excels is by helping customers cut through the complexity of identities and permissions in public cloud infrastructure. Again, which we believe is probably one of the biggest, if not the biggest risks to securing your cloud infrastructures today. And, you know, those cloud IAM configurations can be extremely complex in some cloud environments more than others, but definitely it's crazy how complex these things are. And I was recently on a call with a customer and they were looking at our UI and the customer was like, you know, guys, I could never understand what's happening here in AWS IAM, but with Hermetic, my five-year-old girl can understand what happening here. And when you hear something like that, you say, okay, we really nailed it because we really help our customers understand and cut through that complexity in such an easy and approachable way that we make something that is extremely complex, extremely easy for them to solve. And that's an unbelievable feeling, right? When you're saying, okay, we as an organization, right? It's not my personal success. It's It's a product success. It's a sales success. It's a customer success success, right? We as an organization were able to be extremely successful here because we took a major problem. We analyzed the problem. We understood how we can solve that. And we communicate the solution to customers in a very comprehensible way, right? So I think that's a big win.

Sandy Salty:

Totally. I think simplifying the value prop and how it empowers the client is typically one of the bigger challenges for any technology company. So the fact that you were able to do that successfully is awesome to hear. So this next question we get varying answers for. I want to get a sense for how important you think it is to track your competition. We've had founders in the past say, look, we are... maniacally focused on the client. That's what matters. That's all that matters. Founders who believe, no, you've got to take a 360 view to the market you play in. You have to understand where your competition sits and how to outsmart them in addition to knowing what your client needs and how they think, et cetera. What's your answer to that? Is it important to track your competition consistently?

Arick Goomanovsky:

So again, I don't think there is a right or wrong answer. I can tell you what I do. Yes, I'll focus first and foremost on our customers and on our prospects. And I'm making sure that we deliver the best product for them and that they're utilizing the product to the full extent of its capabilities and capacities and that they're happy with the product that we deliver. I do look at the competition, of course. I think it's good to have competition, especially it's good to have big competition because especially in a nascent field or in an evolving or scaling up area or in a new area, you have to build the market. And the more players there are in the market that shouting out and talking about, for example, cloud infrastructure security challenges, the more demand eventually for cloud security solutions will be there. So I think it's great to have competition, especially big competition with very sizable marketing budgets, because as a startup, you're always limited. And if you have a big competitor, a large enterprise that shouts and talks about your problem as well, that ultimately creates market for you as a startup. So competition is great. looking at the competition is also good because um you know you don't have all the answers to everything and there are smart people working for your competitors as well and they i think about similar problems and they may be approaching problems the same way you are or they might be approaching them differently and there is always an opportunity to learn from your competition whether it's around product, whether it's around the ways they're going to go to market, whether it's around the ways they do marketing or brand building, how do they position themselves. These are all very interesting inputs into the broader picture. But I don't think you should be obsessed with your competition. You should be obsessed with your customers. Ultimately, you're not trying to outsmart the competition. You're trying to win business. And yes, part of that is winning bake-offs and winning competition. But the 80%, that's the 20%, the 80% is really addressing customer needs. That's where I focus. So 80% probably on customers and maybe less than 20% or something like that on competition.

Todd Gallina:

That's amazing.

Arick Goomanovsky:

I

Sandy Salty:

love

Arick Goomanovsky:

that.

Todd Gallina:

Gave it a numerical assignment there. I like that. Hey, Eric, we're coming to the end here. You've been wildly entertaining. We've learned a ton. Is there anything that we didn't cover on this podcast that you would like to share with potential founders?

Arick Goomanovsky:

It's a never evolving journey. You know where you start. You never know where you're going to end. The market, even since we started Aromatic three years ago, the market changed like five times. The company that we thought that are going to be our competition when we were one year into the story and enter the journey, like two years ago, are not even getting close to what we think is our competition today, right? The problems that we were focused on three years ago are not necessarily the problems that we as a company are going to be focusing on in a year from now. The story that we told two years ago or even a year ago probably is not going to be the same story we will tell a year from now. That's a never evolving playing ground. And you have to be agile. You have to be always thinking openly and critically about the situation where you are in your market, your customers, your competition, your investors. And be ready and agile and be prepared to the fact that things will change. And I think every company is a different story. But every company is an exciting story, whether it's successful or not successful, ultimately. And I'm envious of any founder that is now about to start something new because it's super, super exciting. It's super tough, but it's super exciting as well.

Sandy Salty:

Well, Eric, thank you so much for sharing your wisdom and your experience with us. We are super excited about the future of Hermetic and what it brings to the cloud security space.

Todd Gallina:

Yeah, Eric, thanks a lot for hopping on the podcast. You were great. Thanks so much. Thanks, guys, for having me. You bet.

Outro:

Trace3 is hyper-focused on helping IT leaders deliver business outcomes by providing a wide variety of data center solutions and consulting services. If you're looking for emerging Thank you. You've been listening to The Founder Formula, the podcast for all things startup from Silicon Valley to innovators across the country. If you want to know what it takes to lead tomorrow's tech companies, subscribe to the show wherever you get your podcasts. Until next time.