Exitwise Productions

Todd Sullivan (00:00.171)
We haven't cared at all about that. And we've done a ton of episodes. So yeah, I think I probably dropped a few.

Dan Cornell (00:05.346)
Okay.

Dan Cornell (00:09.454)
I'll try to keep that. That can also be very bad. I will try to, the greatest degree possible, keep this PG.

Todd Sullivan (00:16.278)
That's.

Dan Cornell (00:19.446)
Okay. Whatever the MPAA standards are for like, we can still rate this. You get two F-bombs or whatever. I'll try to keep it classy.

Todd Sullivan (00:25.568)
Yeah.

That's hilarious. Bye, Stubby.

Todd Sullivan (00:35.679)
All right, so I'm just gonna try. I'll just jump in. Here we go. Dan, I'm really excited to have you. You've joined our Exeter Founder Marketplace and now you're on the podcast. I'm really excited to hear your stories you had.

Multiple exits you've been part of a lot of &A and because of that experience I know you're gonna be really helpful to you know our fellow founders that are thinking about selling their businesses particularly in cybersecurity so I know you've had various varying experiences too So why don't we do kind of a quick start maybe you give a give introduce yourself? And let's start with kind of that first &A experience back in 1999

Dan Cornell (01:23.03)
Right. Yeah. So Dan Cornell grew up in St. Louis, Missouri. Now I live in San Antonio, Texas. I've been here for quite a while. And yeah, that first exit was a company I'd started with two other of my classmates at Trinity University. And I want to say we.

The actual founding is kind of complicated the way all the pieces came together, but working with these folks and we had an exit pretty soon after we had graduated. So I graduated in May of 98 and the exit was in September of 99. So I'd been working prior to while I was at school and whatnot. But the internet, what we did is a custom software development that was internet focused. And so a lot of e-commerce development. we had, at the time it was a lot of design firms that were building websites, but they were like brochure aware.

Todd Sullivan (02:01.587)
Sure, sure.

Dan Cornell (02:09.36)
really have interactivity or it was like your ISP would try to like crap something together to make a website. Like we were at an interesting spot where we had all like computer science degree programmers doing that and so that gave us the capability to build stuff that was certainly regionally interesting. You maybe if we've been in New York or San Francisco but we're you know in the middle of the country in Texas and and you know kind of time went by and we were looking at like

A lot of the big projects are going like nobody got fired for going with IBM, right? Or they're going to Cyan, or Vine, or Razorfish, these big web agencies. And we had discussions with clients where they're like, hey, we love you guys, we love the price of what you do, we love the quality, but like...

Todd Sullivan (02:38.101)
Yeah.

Yep, I remember.

Dan Cornell (02:49.466)
You've got three, you're a 15 person company with like three owners. if like, like Dan gets hit by a car and this guy's wife tells him to get a real job. Yeah. So we're going to go over this way. Right. And so we, we were then approached. had a company that we partnered with a design agency that we partnered with a lot that got acquired. And the acquire of them, you know, then reached out to us. And I remember talking to the other founder and he's like, yeah, I still work like 16 hours a day, but like when the day's over, I don't worry anymore. Like when it was my firm, I worried now that it's now that it's something

Todd Sullivan (03:09.728)
Sure.

Dan Cornell (03:19.32)
else's problem. And so we ended up talking to those folks and we were acquired at an all stock transaction, know, which had its moments when that was a great idea and had its moments ultimately when it was not a great idea.

Todd Sullivan (03:36.427)
Yeah, so I can see how that comes crashing down, You're, finding business success because of the time too, right? You're getting in the heart of the internet bubble and you got a skillset that's in demand. And I understand how, why somebody would approach you to be acquired because they just acquired something and you're like a core vendor of theirs, right? You bring a lot of value. But yeah, all stock deals, right? You're really, you're rolling the dice and the market comes crashing down.

Dan Cornell (04:05.358)
Right, right.

Todd Sullivan (04:06.401)
at the time, like you go over, you're continuing to do the work, but you're seeing the value of it. Did you see it just plummet immediately or was it over time? Like it's gotta be a painful thing while you're still giving your heart and soul, right? And seeing the value disintegrate.

Dan Cornell (04:20.493)
Right.

Yeah, and so when we were acquired, like the trailing 15 day average of the stock or something like that, which was 8 and 15 sixteenths, this was long enough ago that stocks were traded in fractions. And so it 8 and 15 sixteenths and it rode up to, I remember it being like 94 or 50. So they had changed also to decimal places at the time, right? And so at that point, I'm 23, 24 years old.

Todd Sullivan (04:32.084)
Okay.

Todd Sullivan (04:39.809)
Yeah.

Dan Cornell (04:45.998)
And look at real smart, I to all guys, as you would high school up in St. Louis. So I went back to my five year reunion and I was the smartest guy in the room for that. It was like a month or two after our deal had closed. All my buddies were calling me .com. That was a real heady, fun time way up. The way that our deal was set up, it was all stock, but we also couldn't sell the stock.

Todd Sullivan (04:57.024)
Yep.

Dan Cornell (05:10.422)
and contractually couldn't pledge it. So we couldn't use like options to create like a collar on our value. So we watched it ride all the way up and watched it ride all the way down. I want to say I sold my shares in chunks at like 32 cents, 18 cents and nine cents. So I was actually rolling capital losses forward from my basis in that original business.

Todd Sullivan (05:14.497)
Yep.

Todd Sullivan (05:18.965)
Yeah, yeah, you had the whole period.

Todd Sullivan (05:31.253)
All right, so I think listeners will certainly understand, right? You went through serious pain, education, built and sold a company and took it on the chin, unfortunately, when it came to the financial liquidity. Can we jump ahead, tell me what happens over the next period of time to the sec, the big company that you built, and then talk to me about how that, the &A experience began.

Dan Cornell (05:43.532)
You

Dan Cornell (05:59.276)
Right. And so, yeah, and so.

started my next company, Denim Group, with one of the same founders as with Attention, our original company, guy named Sheridan Chambers, and picked up a third partner, guy named John Dixon. Our previous third partner, Tyson Weiss, went on to do, he did amazing things, started a company called ForeFlight that they sold to Boeing. I'm just happy he answers my phone calls these days. He's done real well. And we started out, like was interesting, over the 20 years that business evolved quite a bit, where we started out doing some hosted services stuff that wasn't really compelling. And then we essentially did a lot of,

Todd Sullivan (06:21.153)
Very cool.

Dan Cornell (06:31.916)
custom software development, the stuff that we'd done before. John Dixon's background was in Air Force information warfare, and he'd worked at Air Force and then at KPMG and their information risk management practice. essentially in talking to him, he said, like, I see what you guys are doing in the development space, and I see where the hard problems in security are, and they're really moving above the infrastructure level to be at the code level. everybody has a resume that looks like mine, right? Which is like Air Force and then KPMG as an auditor.

Todd Sullivan (06:56.117)
Mm-hmm.

Dan Cornell (07:01.776)
but not as a software developer. And so that really caused us to build that application security practice. We ended up sunsetting the...

the custom development practice, was just too hard to market and scale. Now folks on the app security, over time we built some e-learning modules for developers. We ended up selling off that asset and we built a software platform to let organizations manage their programs. So, you banks, telecoms, semiconductor companies that have like thousands of applications that let them manage all the data coming from all the testing and stuff. And so that business changed, you know, I mean, it was like four different businesses over the course of those 20

years as we kind of understood what the market looked like and were able to move into that.

Todd Sullivan (07:41.675)
race.

Todd Sullivan (07:47.553)
Can I ask you, were you purposefully going after kind of higher value markets or where you thought you developed a moat or what was the impetus each time to say, I'll call it up skill for lack of a better term.

Dan Cornell (08:02.87)
Right. Yeah.

That's exactly it. mean, because when we looked at the software development, custom software development as a practice, it was comparatively low margin, but large, like large chunks, right? Because you could park five people on a dev project and you're making some arbitrage of their hours and whatnot. But like I said, that's really hard to segment and market, right? Because you're looking for, well, hey, where's a company that doesn't have a dev team that needs a software thing, but understands how much or how expensive software, custom software dev can be and all that.

And so we had a very conscious understanding that, hey, these app security consulting services are higher value, higher margin, and also for us easier to segment and market. Because we could say, OK, we're going to go into firms that are doing all this software development, and we can work with them to help make that safer for them. Similarly, in seeing all these customer environments and understanding the problems that they had to deal with, we saw the real data management challenge these big organizations had.

and dealing with running their security programs. And that caused us to say like, hey, if we built some software that did this, where you could take multiple tools and it would normalize and do duplicate the data and stuff like that. And so that was from us being out in the industry and seeing like, hey, this is a problem that folks run in these really big complicated programs have. That forces them to learn like it's one thing to sell professional services or managed services. It's another thing to sell what is essentially like SaaS software, right? Or software subscription.

Todd Sullivan (09:32.747)
Yep.

Dan Cornell (09:34.464)
that's a very different sales motion like our ABCD like kind of sales ranking we're all different and so along the way you know we were approached by some bankers and they came and said like hey we just sold these guys who are one of your big competitors and we're like we knew those guys we had a lot of respect for those folks and whatnot and they're like what we want to do is take what we did for them and now we can just do this for you guys right I mean so she said like hey we know how to sell app security services company

And so we brought them on board and spent some time kind of cleaning, not cleaning the company up, but kind of getting focused on what we thought buyers were going to want. And we went through a whole process with them.

you know, the whole the road show and the slide presentations and all that stuff. And we had Wipro on board, the big Indian offshore firm. And the original plan was that they were going to buy the company. They were going to buy the whole company, right? The services and the software platform. Unfortunately, at the time, and this was kind of like people on the bus, seats on the bus type of thing. Our sales engine was not executing at the time. Like we had not, you could not give us a number that we couldn't miss.

Right. You cannot find someone that we could not disappoint from that angle at that particular point in time. And so the Wipro folks, through the process, were like, how about we make a minority investment just to get a feel for how your business works? And instead of being valued like this, maybe the value is like this.

Todd Sullivan (10:58.817)
Sure.

Todd Sullivan (11:02.336)
Yeah.

Dan Cornell (11:02.99)
That was a good deal for us at the time because really it gave us access to some capital that we needed to push on the software platform. But really what it also let us do is it let us take some money off the table, right? Because I had that scarring of like, it used to be the guy, I don't need to be the guy that used to be the guy twice. And for us, it was a way to take some money off the table.

Todd Sullivan (11:21.515)
Sure.

Dan Cornell (11:29.038)
and see if, hey, does completing this transaction make sense under some timeframe or not? And it didn't make a lot of sense. I really enjoyed the people that we worked with at Wipro and whatnot, but just the way that they sell and their brand promise was very different than the way that we went to market, right? And so that made it hard.

Todd Sullivan (11:44.641)
Let me interrupt for a second in that those experiences are very...

You know, they're poignant. They're gonna be super helpful for somebody else that is going through You know this journey when you talk about taking some money off the table and taking on investment, right? So obviously there's a negotiation around hey What goes into the business to continue to invest in software and what gets taken off the table? So you you you have that experience, which is great Did you have advisors that were helping you through making that decision or was it just the management team and?

you know, partner discussions.

Dan Cornell (12:22.542)
So on that, so we had in our contract, like essentially like a line of credit that we could provide back to the business that was limited to say like you guys can loan up to this month much without like a board decision or whatever. And so on the broader deal terms, we were working with ourselves and with our investment bankers. So they acted as advisors through the whole transaction. You know, the specific terms of how much can we loan back and whatnot, that was more of the three founders and owners where

Todd Sullivan (12:31.977)
Yeah.

Dan Cornell (12:52.506)
we knew like, okay, like we've got, we know what the dip is that it's going to cost to develop this technology. And here's what we think of how the sales are going to work to pull us out of it. And so like in the specifics of kind of how that movie money moved was something that we really handled internally, but the broader deal terms was obviously our deal attorney and also our bankers.

Todd Sullivan (13:11.925)
That's great. you, I guess the point of my question is you did have a professional help.

Dan Cornell (13:17.782)
Yeah, that would have been, we did the first one where our professional help was our attorney and he got us such wonderful clauses. He's like, I changed the wording so that you can be drunk at work as long as it doesn't impact your performance. And I'm like, all right, well, that's something I don't really think I'm ever gonna use. But he didn't weigh in on like, this is an all stock deal, which means you guys are kind of, you know.

Todd Sullivan (13:42.56)
Yup.

Dan Cornell (13:42.99)
And so we didn't have advisors in that case. Honestly, I think going back, like our deal looked like a template that they had for other deals. And so with that acquire, if we just said like, no, we want cash, we want XYZ or whatever, they would have been like, cool, we'll just go find 15 dudes somewhere else to do this. But no, for the transaction with Wipro and Coalfire, our bankers were super helpful. But like that specific stuff was things where we knew the business and we knew what investment we thought needed to be made.

Todd Sullivan (14:11.361)
So there's a lot to unpack and I think what jumped out at me what you just said on the first acquisition that the buyer has a template. So a lot of buyers do they have a playbook.

Right. And you want to, they want to fit you, whether it's valuation or structure or actually even kind of post transaction integration, they know it works for them and, and your best.

advisors, they know what those playbooks are and they know where to push and pull in order to have you, know, a square peg fit in a round hole, right? They know where to push and pull to get you the best deal. So doing that stuff on your own, can be, you problematic.

Dan Cornell (14:59.352)
Well, because they see a bunch of deals, right? As a founder, I'm fortunate, I've seen a number of different transactions, some good, some bad, but they see a lot of deals. And that's something also...

Todd Sullivan (15:02.177)
Yeah.

Todd Sullivan (15:07.615)
Yep. Yep.

Dan Cornell (15:12.658)
When we did the acquisition, we had inbound interest from the folks at coal fire, but also from a publicly traded company. And our deal attorney actually had just finished a deal with the publicly traded folks, know, different part of their business, right? And they very much came back and because they do a lot of M &A work. And so they came to us and they're like, here's what this looks like. And we're like, well, we've got this other offer and it's better. And they're like, well, this is like, this is what I can get through the board is this template that looks like this. And we're like, we're going to go.

Todd Sullivan (15:18.495)
Okay.

Todd Sullivan (15:24.001)
Got it. Yup.

Dan Cornell (15:41.642)
this other direction. So we definitely saw that where like certain buyers are going to have guardrails.

Todd Sullivan (15:46.155)
So let's jump to the actual, the transaction, right? You're labeled as cybersecurity company at that point, and you've got this strategic partner, I guess we would call him Ian. Talk about the full &A, how does it happen? Are you approached? Is there a moment in time that's the trigger?

Dan Cornell (16:05.902)
Yeah, so we had inbound interest from those two parties, right? And it came kind of like right on the tails of one another. And so we're able to kind of like lump those together and then bring in our bankers and be like, we've got this offer, we've got this offer. Like, here you go, you guys start to run this process with these folks and let us know how we fit into it. And again, we went back and forth. I'm sorry, go ahead.

Todd Sullivan (16:12.577)
Yep.

Todd Sullivan (16:32.171)
Well, I was going to ask the question, did you already have an agreement signed up with your bankers or did you say, hey, we're going to hire you right now, now that we have two offers in hand?

Dan Cornell (16:43.2)
So we use the same bankers that had led us through the process that led to the Wipro investment. We were still working with them.

Todd Sullivan (16:48.193)
Yep, yep. Under that in a similar engagement. the what you would pay in fees was already established whether you brought the buyers or not. Okay, okay.

Dan Cornell (16:53.71)
Thank

Dan Cornell (17:01.164)
Yes, yeah, And I feel like I need to go back and check, yeah, I want to say that they, with the fees for like raising money is one thing and fees for sales and other, I bet they got like double paid on some of that stuff, is the way the world works.

Todd Sullivan (17:15.903)
Yes. Well, it's part of part of what I wanted to mention is that for business owners, when you have an inbound offer, and it's real, right? It has to be real. Then bankers will often discount the fee. And there's a discussion around that. It's not an easy discussion, but it is something it is enormous value that you're bringing to the table and the deal.

&A advisor, investment banker really should accommodate their fees for that. So so but regardless, the better thing is not counting those pennies, but you know, counting the outcome. So tell me you drove a fantastic outcome. Talk, talk me through that process.

Dan Cornell (18:00.91)
I mean the process is it's all consuming and you have your day job.

Todd Sullivan (18:07.637)
Mm-hmm.

Dan Cornell (18:12.2)
You we're presumably you're and maybe not like maybe you're the E-Myth, you're like you sit on top of the business and pull the strings. I was actually doing work from time to time and had to continue doing that work because people would have noticed if I had stopped. But then you've also got this other job, which is the diligence process. Right. And, you know, and my business partner, Sheridan, ran the vast majority of that. And I credit him. He did an amazing job. He managed internal legal accounting, all that stuff. And so, I mean, it really was like very much on him. But then also

Todd Sullivan (18:20.353)
Sure. Yep. Yep.

Todd Sullivan (18:33.793)
Yep.

Dan Cornell (18:42.094)
Also with the consultants and expertise, but also more with the software platform, I had to run all the IP diligence process. So I found myself where I'd be like, the guys in India want to jump on for a call at 3.30 in the morning and request that I would normally tell people to go pound sand. I'm like, yeah.

Todd Sullivan (19:02.079)
Yeah. Yeah. Yeah.

Dan Cornell (19:02.668)
I'll be there. And I'd be on a call from like 3.30 to 5.00 and then spend like, you know, the next four or five hours like going and getting all the to-do items done that that call kicked up.

then do my real job and then like rinse and repeat. And so, you it's like, you've got to keep doing the job that you were doing and don't screw that up, right? Cause if the numbers get weird or something like that, but then you've also got this additional workload and it's really challenging because in a business of size, like I don't have all the answers, right? And you don't necessarily want knowledge throughout the organization that this process has taken place because we don't know what the outcome is going to be. And so it was the diligence process was a, was a real, uh,

Todd Sullivan (19:37.301)
Yeah. Super delicate.

Dan Cornell (19:44.011)
very stressful time.

Todd Sullivan (19:45.653)
Let me ask on that. So one of the things that we like to coach on is having that financial lead on your team is part of the &A process takes so much off of you.

Dan Cornell (19:54.764)
Mm-hmm. Right. Right.

Todd Sullivan (19:58.397)
And you said, you know, we obviously had a partner doing that side. And then you've got your day job and trying to run, get through diligence all hours of the day. think really business owners need to know that this is like all consuming. It is a really time consuming process. We've had certain founders say, it's not hard. It's just a lot of work and you cannot let your day job suffer because if performance goes down, that is ammunition for the other side to, to retrade your deal.

price down and you definitely don't want to do that. know, obviously commend you for being able to juggle that all of that work to get over the goal line. What was it like, you know, when you go to sell, tell me what the realizations were. You got you got the price you're looking for the what's it like at that moment and then on the other side.

Dan Cornell (20:51.822)
Yeah, I mean, was, especially with all, we had a bunch of crazy stuff like right up to the, right up to the wire on the deal. But like when you finally do it, it's like taking a.

it's like taking a real heavy backpack off and setting it down, right? Because you've had this like weight on you of like, hey, here's this great thing, but like, yeah, but if this goes wrong, then this happens. Or if this person doesn't like the way that this is, like there's so much kind of like on top of you. And again, having had two jobs for however many months the process went through, the actual, you know, finished in a transaction, it was just like, okay, all right, that feels really good. I get to put that weight down. Yeah. And then you've got to figure out like what's next. I mean, there's a whole,

Todd Sullivan (21:30.454)
Yep.

Dan Cornell (21:34.292)
big process after that but just you know that that you getting through the process and finishing it you know again just feels like taking a tremendous weight off that you've been carrying for longer than you remember.

Todd Sullivan (21:46.163)
One of the reasons I think you're going to be such a great exited founder for somebody else is that, you you carry that backpack and having, having you alongside for somebody else who's doing that really understanding diligence, particularly IP diligence. it, it's going to be very rare to have that kind of talent on an and a team. So I know people are going to get a ton of value. Now you're on the other side. Tell me about like how your role changed and how you viewed kind of

I love that comment of 16 hours a day, now you don't necessarily worry. But there's a negative side too, of like, who are you and are people listening to your guidance?

Dan Cornell (22:21.772)
Right, right.

Dan Cornell (22:29.87)
Right, yeah, yeah. And so there's a couple dimensions of that. And one is like very much what you said with the guidance is I'm used to being in an environment where I'm the owner or one of the owners. at the end of the day, mean, again, we felt like we had a collaborative culture and one of everybody's ideas. But like at end of the day, like all cards on the table is like.

okay, Dan feels strongly about this technical direction, this is what we're gonna do, right? And then, to go from being the founder, the chief technology officer to the vice president of we needed to give this guy a title, is a very different, it's a different role, it's a different vocation, right? And it's something that I noticed very much in the first acquisition we did as well as the second one. Thankfully, with the second one, I kind of knew

Todd Sullivan (23:04.469)
Yup, yup.

Dan Cornell (23:18.046)
Hey, you're gonna walk in your room, people, yeah, you have to justify what you.

like you have to justify the direction that you think things should go in. You're gonna have to like, you make those ideas stand on their own, you know, and potentially like work against whatever bias or kind of preconceived notions that the, you know, that the acquirers had of like, no, this is the way we think the world works. I'm like, all right, well, I've been in this world and I think it works different, but like, you know, if you're not willing to, if you're not willing to entertain that because your kind of script is very different than that's, you know, whatever, you know, and it's, that's one, just the professional,

role change is a very critical thing to recognize is it's going to require a different set of skills. You're in a different culture. You know, and so got to figure that out. But then there's also, again, that identity stuff of like, I'm the I'm the the founder, right? Like, you know, being the founder of something sounds cooler than the vice president of

who cares, right? And people, I don't know if I'd say, I'd say justifiably, people really identify with their companies, especially, we ran it for almost 20 years, right? Like that was like, I had to change my email address for like all my banks, all my everything. Like I had 20 years of my digital life in this as like the founder of this. like understanding that change in identity is a different dimension of that shift, but something that really has an impact.

You know, and it's something I noticed very much. Again, this first transaction when I was, you 23 or 24, I maybe didn't have sufficient maturity to have comported myself as well as I would have liked in all the situations I was presented with. You know, and so it was handy to have been through that just to know, like, okay, well, hey, here's what the arc looks like, and here's how it's going to turn out.

Todd Sullivan (25:04.214)
for sure.

Dan Cornell (25:09.774)
And in the first case, there was that even added dimension of, you thought you made a lot of money, but no, you didn't. You're right. So it's not even like, oh, well, I might not be the founder anymore, but at least I got to keep a bunch of money. It's like, I'm not even the founder anymore. like, I didn't get to keep any of the money. This is horrible.

Todd Sullivan (25:17.429)
Yes.

Todd Sullivan (25:27.723)
Yeah. All right. So you're on the other side, you're adapting to life over there, and you had a preview of what could happen because you went through it once before, which most people don't have that opportunity. So I think you're going to be really valuable, like I said, just to other people because of all these experiences. Can you tell me what surprised you most or lessons that you learned through?

not only these &A transactions, but you've been part of multiple transactions as what investors, advisors, right? You've seen a lot now.

Dan Cornell (26:03.042)
Right, So I think it's really important to understand like where, where do organizations get their value, right? Like how do they find value, right? And it's also, think, important to recognize like every organization is screwed up, but it's screwed up in a way that the stakeholders of that organization are comfortable with.

Right. you know, and screwed up, there's probably a more diplomatic way to, you know, to explain that. like, so it was, was important to understand, like, what is the acquire buying from you so that you can help kind of optimize along that. And again, smart bankers are going to do your basic accounting stuff of like, okay, well, is this professional services or can we characterize as managed services? Cause that's got a better multiple. Or can we characterize, right? And so there's an aspect of kind of financial storytelling.

Todd Sullivan (26:25.473)
Okay.

Dan Cornell (26:55.216)
that goes into it, but I think underlying that is kind of the core thing of like, what are you bringing to the table and how do you make yourself the most attractive for the organization that you're talking to, right? So that they can see like, with the assets that you guys have, if we combine that with our stuff, that's the chocolate and peanut butter kind of a situation that's better that is gonna allow you to command a better multiples, better terms.

Todd Sullivan (27:24.681)
Yeah, think that's a super important point, right? The bankers are going to try to frame it.

in a way that goes beyond financial multiples for that industry. But I think an exited founder really understands the nuances of how their industry works and have buyer relationships that frankly can see the inefficiencies on the other side and identifying the value that a buyer really wants and help accentuate that, help show why that is so valuable and how it's gonna translate into value after the transaction.

that the bankers are not really worried about. again, like you're going to be super helpful in that framing for both buyer and seller, frankly, and that storytelling is critical to optimizing value. So again, what surprised you the most in your transactions?

Dan Cornell (28:24.302)
And again, I think I would go back to like every organization is messed up in a way that is most comfortable for the stakeholders, right? And that means that like, you we had a set of decision-making in our company of, you know,

Todd Sullivan (28:33.696)
Yup.

Dan Cornell (28:41.134)
The sales folks and the engineers are the pointy end of our stick, right? And this is how we generate values. We get sales folks out, we support them so that they can go sign these big deals and it's the consultants and the engineers, like those are the ones that are like bringing meat back and cooking it so that we can eat it, right? And things like accounting, finance, HR and whatnot were less important to us, right? And so we would make decisions and be like, I know the sales guy was supposed to get his,

Todd Sullivan (28:44.981)
Mm-hmm.

Todd Sullivan (28:58.527)
Yep.

Todd Sullivan (29:06.145)
Yeah.

Dan Cornell (29:11.947)
a expense report in in 30 days and we're at 96. Let's just take it easy. The guy's working on some real big stuff right now, right? And whereas other organizations are gonna have different priorities, we're gonna say like, no, we've got audited financials, like accounting, this is a huge control, especially if you see PE-backed firms and things like that, they're gonna have different.

Todd Sullivan (29:18.773)
Yep, yep, yep, yep.

Dan Cornell (29:35.916)
ways that they understand that value is created for that organization, right? And so when you come over, it's easy to look around and be like, well, look at them. They're stupid. They're doing this. They're doing that. They're doing this other thing. No, they're executing their playbook. And candidly, they bought us, so they got something figured out that we don't have figured out, right?

Todd Sullivan (29:45.525)
I understand.

Todd Sullivan (29:56.511)
Yeah, I'm sorry, Dan, you did kind of answer that, right? You're conforming to a new culture and a new way of doing it, whether you view it as inefficient or not prioritize the way you would have done it, that's gonna be a surprise for a lot of people, I get it.

Can we jump to the industry outlook, right? So cybersecurity, how are things changing? know, AI is an enormous topic. I think Striker was actually hacked today and a lot of their software on Microsoft went down. So like, how are you viewing the industry today and what's making these companies viable?

Dan Cornell (30:35.222)
Right. So there's a lot of things going on, especially with AI these days. And like what we're seeing is with the these LLMs and the agentic AI, you can now well, there's a couple of things like number one, you can create code way faster than you could before, which means you can make and all of these models are trained on code.

that has vulnerabilities in it, right? So these models are understandably like unless like really tightly constrained, they're gonna create more vulnerabilities, right? And so a lot in my specific area, in the AppSec area, what you see is like the...

Like the world is changing as you say, okay, we're making 10x the code that we used to make. We can't just try to run the old tools that we did or try to run the old process that we did 10 times as fast, right? We've got to figure out how to incorporate these new technologies so that we can get more with automation than we did before. And so that's really what we're moving into is a world where on the attack side, a lot of that can be automated. On the defense side, some of the detection and defense stuff can be augmented by this.

But like the tooling that organizations use and the processes that they use to deploy this tooling, like a lot of the assumptions that went into that before are rapidly changing. Right. And what we'll see is that kind of like makes its way from kind of like the cloud AI first companies that are doing, you know, real comfortable with the generative code and stuff like that. That's going to work its way across the Fortune 500 and whatnot. And I think that's really forcing people to live in a world where it's like, okay, well,

But now I can automate things that I couldn't automate before. And so my budget for this automation, like all of a sudden, yeah.

Dan Cornell (32:20.786)
like what budget does it make sense to allocate because the people on the side of this, the attackers are also like seeing the economics change, right? And I think that's going to be real tough for a lot of the legacy companies and create some great opportunities. And I have the opportunity to work with a couple of firms doing interesting stuff in this space. That's going to be a real big change for cybersecurity is like, where does this, with these new capabilities and technologies, where do these lay out? And as the costs start to...

Todd Sullivan (32:23.807)
Mm-hmm.

Dan Cornell (32:50.64)
normalize or reflect actual cost, how is that suddenly going to make stuff snap back into older economics?

Todd Sullivan (32:58.783)
I think Dan, what I love about that answer is that I have the...

enjoyment of going three inches deep in 500 different industries, right? Because I talk to founders every day that are thinking about &A and now I get to bring somebody like you that can talk about those nuances of not only transactions, but what's driving value and how the world of cybersecurity is evolving with all the new tools. So inherently that that perspective is going to help better storytelling, identifying where value

lies and creating better outcomes. Again, I'm really excited. You're gonna add so much value being on somebody's team. I know I can phrase it, like how do you think that you'll add the most value if we put you on an &A team of selling another cybersecurity company?

Dan Cornell (33:55.478)
I mean, I think I'd bullet down to the.

One thing that you talk about that's really important is that storytelling, right? To understand like, here's, I've built this engine and we've got this technology, we've got these people, we've got these processes, like these are the tools that we have. Here's how that can sit. Here's how if we add this to what you already have, right? And if we take what we have and sell it across your installed base, if we have like this technology and combine it with this capability that you have, like this is really, like this is the vision of what we can do, right? And I think that's really important just as humans, I think.

storytelling is an important skill. I think that, you know, obviously financial discipline and whatnot, but I think when you want to talk with like strategic buyers, you have to be able to present a vision of here's why if you bring us on board, we're going to be able to do amazing things together. And so that's one part, again, like kind of knowing the industry and then, you know, bend through a couple of different types of transactions to see like, well, how, you know, how do these guys like make value in their organization? What are the things that these folks are concerned about?

and let's make sure that we're telling a story that we both believe in.

Todd Sullivan (35:02.271)
And that comes from your experience of knowing the people in the companies in the industry at an operational level.

Yeah, I mean, I know as a founder, you think you've got that story wrapped up in your own head, but it's from the perspective of what you've built, not what 10 different buyers, how they see the world. And I think having an exited founder on your team as that mentor, even pressure testing your existing storyline and helping you adapt it, helping the bankers adapt it, test it.

It's so important in selling a company. It's just like when you're raising capital. How important kind of framing your story to a very specific investor makes so much sense. It sounded like you had another way you think you'd add value.

Dan Cornell (35:48.974)
And there's also just kind of knowing what the process looks like and what to expect from a founder standpoint. And again, like our bankers were great. I think we certainly got a much better outcome from having worked with them.

Todd Sullivan (35:55.841)
Yeah.

Dan Cornell (36:07.554)
but they don't need every deal to work. They're like time switching between this deal, your deal and a number of other deals. And that's just understanding. How do these guys make money? They close deals and so they would love to close yours, but like they can close somebody else's and also make money in that. And so I think something like that process for me,

Todd Sullivan (36:17.355)
Yeah.

Dan Cornell (36:32.637)
both through the original sale, the Wipro investment at Denim Group, the final sale to Coalfire, some other transactions along the way. I think it's important to...

to understand the emotions that you're going to get dragged through. And I don't even necessarily want to characterize them as games, but just kind of the tactics that you're going to see along the way of, wait another month. We'll go to another month for the numbers. Like, okay, great. And so just to work or to help people understand like...

Todd Sullivan (36:56.384)
Yep. Yeah.

Dan Cornell (37:03.468)
this is kind of the way the process goes and these are the slings and the arrows and the indignities that you suffer along the way and like don't take this personal, like this is just the way, this is the way that this game is played. And if you can, an ability that I like to think that I have is that to like take a step back and like watch the kind of machinery of the deal go through and understand like...

this is this gear turning and that gear turns this gear and then this is gonna happen and to help provide some perspective to the founders going through it. Because again, as a founder, if it's your first big transaction, you've seen one of these, other people have seen more and the buyer has probably seen more. And I think there's of drive, like, no, I just wanna get this done. No, you can't just wanna get this done. You have to let this work out on the pace that it's gonna work out. Because if you need to get it done,

worst deal done, right? And just understanding some things like that I think is helpful for people.

Todd Sullivan (38:00.171)
The thing that really jumps out at me is what you pointed out that I've never really highlighted is that when our exited founders join an &A team, they're exclusive to that transaction. And so they are your mentor going forward.

until the end and they're paid on your success. So everything counts. It only counts when the deal gets done, whereas all the other providers from attorneys to accountants to bankers are working on multiple deals and they get paid on some and they don't get paid on others and they gotta get a certain take rate to be viable businesses. And I love what we're doing because we are walking in your shoes and we live and die on getting that deal done.

That's why the conversion rate is so much higher. It's the dedication of people like you on the team. Dan, really appreciate you doing this.

I think that for people listening, if this is something that if you're in cybersecurity and you're thinking about &A, you've got an inbound offer, you got to get on the phone with somebody like Dan. So please check us out and look Dan up on our Exeter Founder Marketplace. He's going to be in demand here, so sooner the better. Dan, I don't know if you have any other closing words, but just love having you here today and can't wait to get you in on a deal.

Dan Cornell (39:25.836)
Yeah, no, when that's, mean, I think you hit on it, you know, is why the exited founders stuff is so interesting.

because just having been through the process and knowing the, and again, I had the advantage of at least having business partners who were tremendous, know, tremendous level of trust and whatnot. the, bringing that founder perspective to the process, I think there's tremendous resources for new startups and mentors for new startups and hackathons and all this, all of sudden, and that's great. And I love working in that ecosystem and love meeting people and the energy of people at the starting end of the process. What I really like about

the

Exit and Founder program and what ExitWise is doing is applying that mentorship to like an even more critical or even more consequential part of the process, which is like there's a million startups, a lot of don't turn anything. You're a startup that's hopefully about to like turn into something like let's what can we do to get you the best possible outcome and bring you the perspective of people that again share, you know, have been through the process that you know, like the sinking feeling in your gut.

Todd Sullivan (40:36.853)
Yeah. Yeah.

Dan Cornell (40:38.224)
You know, the mortal terror that you feel is part of the process.

Todd Sullivan (40:44.841)
Dan, seriously, it's like you've been working here for four years. I love how you just described it. I couldn't describe it any better. Yeah, I'm fired up. You're on the team. Thankful you're on the team. Thankful that you take our phone calls. yeah, thank you everyone. This has been great. Dan, really appreciate your time.

Dan Cornell (40:57.569)
Alright.

Dan Cornell (41:03.315)
Thank you all very much.