Friends, 

Paul Graham described good startup founders with just two words: “relentlessly resourceful.” That trait has been especially important over the past three years. Few other periods in entrepreneurial history have involved quite so much rapid-fire change in social and economic conditions. A founder that started a business in 2019 has had to reckon with the following: 

• A global pandemic

• A speculative frenzy

• A sickening crash

• An extended depression

• An AI revolution

Add to these shifts various national uprisings, changes in working conditions, and a myriad other catastrophes, great and small. This vintage of entrepreneurs has had to contend with almost constant whiplash.

What do the best founders do in such turbulent conditions? How does a CEO remain “relentlessly resourceful” amidst chaos?

Christina Cacioppo and Vanta offer a compelling case study. The trust management platform has endured the macroeconomic downturn and used it to grow stronger. Since we covered the company a year ago, Vanta has expanded into international markets, radically improved its (already excellent) product, and snapped up leading talent. More than ever, Vanta looks on track to be a generational business.

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Brought to you by Vanta

Vanta is the rare company that saves you time and money. One of the reasons we’re admirers of the platform is because of the thoughtful way the company addresses security compliance needs. 

Instead of muddling through dozens of spreadsheets and hundreds of email threads, more than 5,000 customers trust Vanta to streamline their security and unlock business growth. By using the platform, you can automate up to 90% of compliance standards like SOC 2, ISO 27001, GDPR, HIPAA, and more. Better still, you’ll save hundreds of hours of manual work and up to 85% of compliance costs. 

To learn more about how Vanta gets you audit-ready in weeks, instead of months, check out their 3-minute demo to learn more.

How Vanta Grew Through the Downturn

Actionable insights

If you only have a few minutes to spare, here’s what investors, operators, and founders should know about Vanta’s bear-market playbook.

• Time the raise. Christina Cacioppo had offers to raise a Series B during the frenzy of 2021. Aware that conditions might change, the Vanta CEO turned it down, knowing an elevated valuation could be a burden in a downturn. Instead, she raised a $150 million Series B in mid-2022 – after the market had cooled down but before it had frozen over. It’s given Vanta a war chest for the next three-to-four years.

• Go on the offensive. As well as maintaining its market leading position domestically, Vanta has used the last year to expand internationally. With fewer rivals to reckon with, Cacioppo’s firm has been able to build up significant business lines in Europe and Australia. International revenue has subsequently swelled by 800%. 

• Build new moats. Vanta has always prided itself on offering the most complete, thoughtful product in its space. The bear market has given it the space to make both incremental and radical improvements. One of its biggest moves is its “Vendor Risk Management” platform, released just last week. If it takes off, it could create a meaningful network effect for the business. 

• Rev the Corp Dev. In January 2023, Vanta acquired Trustpage. Though it’s early days, it looks set to be part of the minority of purchases that are actually successful. In Trustpage CEO Chase Lee, Cacioppo found a kindred spirit that shares her vision and style of company building. It doesn’t hurt that the startups’ products appear to be perfect complements.

• Stack the team. As its traction continues to build, Vanta has been smart enough to scale its talent, too. Over the past twelve months, Cacioppo snapped up two C-Suite hires, bringing aboard Stevie Case as Chief Revenue Officer and David Eckstein as Chief Financial Officer. Both look like moves that position Vanta to IPO within the next few years.

This piece was written as part of The Generalist’s partner program. You can read about the ethical guidelines I adhere to in the link above. I always note partnerships transparently, only share my genuine opinion, and commit to working with organizations I consider exceptional. Vanta is one of them.

“You can’t overtake 15 cars in sunny weather…but you can when it's rainy.”

On May 16, 2022, those words, belonging to Formula One legend Ayrton Senna, appeared on a deck prepared by Sequoia Capital. With the market floundering, the storied venture firm delivered a presentation designed to galvanize its portfolio executives, urging them to act decisively to avoid calamity and capitalize on the radically new environment. In case the applicability of Senna’s words were unclear, they were accompanied by a more pointed addendum: “There is an opportunity ahead. Recognize it.”

Christina Cacioppo was among those in the audience. Two years earlier, Sequoia had led a $50 million Series A into Vanta, her fast-growing security business. Best known for providing SOC 2 compliance automation at that point, Vanta had never relied on the hype of a bull market to survive. Before raising from Sequoia, Vanta had reached a $10 million revenue run rate and kept a relatively low profile. In part, that had been strategic; as the creator of a new, lucrative category, Cacioppo had been keen to amass market share without alerting inevitable competition. 

Though Vanta had strong fundamentals, Cacioppo knew her business wasn’t immune from the shifts Sequoia’s “Adapting to Endure” presentation outlined. If the CEO wanted to build a defining company, it wasn’t enough to survive a downturn; Cacioppo had to ensure Vanta stepped on the accelerator and recognized the opportunity. To ensure the rest of her team recognized how much the environment had changed, Cacioppo asked one of Sequoia’s investors to come give an abridged version of the presentation at a company all-hands meeting. “I wanted everyone to understand what was happening since the economic uncertainty would affect us all,” she said. 

Almost exactly one year after Sequoia’s presentation (and The Generalist’s first briefing on the company), Vanta looks like a company that has grown stronger during the venture capital winter. In addition to raising a war chest of $150 million, Vanta has leveled up on virtually every front: gaining ground in untapped international markets, expanding its product suite, acquiring Trustpage, lining up partnerships with giants like Atlassian and HubSpot, and snagging C-suite talent capable of taking the company to an IPO, and beyond. In the process, it has doubled its business, growing to more than 5,000 customers. It’s on track to do the same in 2023. 

In doing so, Vanta presents a compelling case study of how an impressive startup took the steps to potentially become a generational one, using a difficult year to emerge stronger.

Capital: Building a war chest

As the great Midwestern statesman and wordsmith Adlai Stevenson said, “Flattery is alright as long as you don’t inhale.” Few propositions are more intoxicating than being told that something you have built is valuable, even beyond your belief. 

For much of the semi-productive bubble of 2021, founders of high-growth startups were confronted with a very fiscal form of flattery: a generous term sheet. 

Christina Cacioppo was a natural recipient of such offers. Not only had Vanta been raised by some of Silicon Valley’s best investors, but the security firm was also a category leader logging rapid growth. In an environment where every tech company seemed destined to reach stratospheric heights, Vanta stood out all the same. 

Toward the end of 2021, financiers came knocking – and Cacioppo turned them down. The CEO sensed a shift was coming that might make high valuations more of a burden than a blessing. “I just couldn’t look someone in the eye and say, ‘Vanta’s a $3 billion company and you should feel great about the value of this.’” 

It indicated Cacioppo’s integrity, discipline, and critical farsightedness. While locking in a considerable valuation bump from the Series A might have garnered headlines, it would have pressured the business to validate that elevated price. It also would have meant that some C-suite candidates Cacioppo was targeting wouldn’t have received as favorably priced option packages. Long-time readers of The Generalist will know that I consider the Vanta CEO one of the most impressive startup founders operating right now. In miniature, Cacioppo’s decision to turn down easy money is one of the reasons why: she has a gift for unflashy decisions that prove highly strategic.

Not that Cacioppo’s choice always felt easy. Fundraising had changed by the time she set out to raise the Series B in mid-2022. “There was some FOMO later,” she recalled. “A few times during the B process, I’d think to myself, ‘Those text message term sheets sound pretty good right now.’” Gone were the days of securing a round over a frenzied long weekend; securing tens of millions of dollars once again required time and diligence.

While Vanta might not have closed its Series B over a few WhatsApp missives, its strength meant Cacioppo could run an efficient process. It helped that she had a preferred firm in mind: Craft Ventures. 

Founded by Bill Lee and David Sacks in 2017, Craft has built a name as a SaaS specialist backing ClickUp, Intercom, Vendr, and Productboard. The firm had vied to lead Vanta’s Series A. While Cacioppo had ultimately chosen Sequoia to partner with, she’d been left impressed by the depth of Craft’s understanding of her business. “They were also just very good,” she said. “Starting in 2019, we started receiving pitch decks from investors analyzing the company from the outside-in. Often, they’d be reasonable but it’s hard for someone external to grasp a business we’re in day to day. But Craft’s was good. It was deeper. It was like, ‘You all get it. And you figured it all out yourselves.’”

In July, Vanta closed a $110 million Series B led by Craft at a $1.6 billion valuation. I made it one of Generalist Capital’s first investments, joining previous investors Sequoia Capital and Y Combinator. A few months later, in October 2022, Cacioppo added $40 million from cybersecurity giant CrowdStrike. 

That strategy of tying up partners has continued. Yesterday, Vanta announced the corporate venture arms of three other strategics had participated in the Series B: Atlassian, HubSpot, and Workday. As with CrowdStrike, these enterprise giants could prove to be extremely valuable as distribution and product partners. Bringing them onto the cap table looks like a shrewd maneuver.

Vanta’s more than $150 million injection put the business on firm footing. “It gave us essentially three and a half to four years of runway, with the goal of doubling the business every year. We’re on track to do that,” Cacioppo said. 

It’s a sign of Vanta’s strong fundamentals that since closing the round, the company’s investors have counseled increasing spend from the original plan. Sequoia partner Andrew Reed has been a particular advocate on this front. “When I presented the annual plan to the board this year, I remember Andrew’s feedback was, ‘This looks great, and if you do it, no complaints on our side. But if you can burn more and make more, at this ratio, do it.’ That was surprising.”

Investors’ guidance has resulted in a subtle but significant strategic reframing from Vanta. Rather than focusing on efficiency during the downturn, the company is minded towards leverage. “The goal is not to cost-cut just to hit a certain number. You cut so that you’re not pointlessly incinerating money. But we’re in a position that if we can spend $10 million to bring in $20 million, we can, and will, do it.” Such willingness to act aggressively has allowed Vanta to expand its horizons.

Expansion: Winning overseas

Walk through one of Vanta’s offices, and there’s a good chance you’ll come across a stuffed llama. The proliferation of these cuddly camelids is not merely the sign of a team that embraces its official mascot – it indicates the increasing competition Vanta faces. 

Allow me to explain. Since Christina Cacioppo created the SOC 2 automated compliance category in 2018, dozens of fast-followers have joined the gold rush. So many that a few years ago, the company spun up a spreadsheet to track the forty-something rivals that have come to market. Vanta offers employees a small prize for keeping it up to date: “If you can add a name to the spreadsheet, you get a stuffed llama,” Cacioppo said. Vanta’s llama bounty is a lighthearted approach to competitive intelligence; it reflects the reality of a hot sector.

While Vanta’s primary differentiation comes from its more comprehensive and performant product suite, Cacioppo has used the downturn to win share in new markets. As replica businesses sprout up across America, international markets have remained comparatively untouched. “The European market feels like the US market in 2019: no one’s there, and founders want this.” Even without a dedicated team, 20% of Vanta’s business came from outside America, rolling in from customers in Europe, Asia-Pacific, and Latin America. “We looked at these markets and thought to ourselves, ‘What if we tried?’” 

In mid-2022, Vanta decided to try. The firm hired Paulo Rodriguez, an Ireland-based go-to-market operative, to lead its international expansion. Cacioppo parachuted in some of the company’s top-performing account executives and client managers to make a dent in the European and Australian markets. The goal was simple, if audacious: reach Vanta’s 2020 revenue trajectory – then surpass it. “Paulo’s team had the benefit of a time machine. They could avoid the mistakes we made over the past three years, so we felt they could hit an even steeper growth curve.” 

Though appreciative of Cacioppo’s ambition, the board wasn’t convinced that was possible. “They basically said, ‘Look, if you can pull it off – great. Godspeed.’”

As it turned out, Cacioppo’s projections may have been too conservative. A year into its global expansion, Vanta has grown international revenue by 800%.

Cacioppo has doubled down on the international opportunity, hiring local employees in Europe and Australia, establishing an HQ in Dublin, building out geographically-specific features, and adding support for new languages. Aspects of Vanta’s products are now available in German, French, Spanish, and English. Earlier this year, Vanta announced the opening of a Frankfurt data center, benefiting EU customers requiring local data storage. 

This is one of Vanta’s most significant evolutions compared to a year ago. Today, the trust management platform is a multi-market player transforming into a truly global business. Though that invites greater complexity and requires more resources, it opens up tremendous opportunities. Vanta is once again leveraging its first-mover advantage. 

Product: Managing trust

One painful mode of corporate obsolescence looks like this: A promising startup finds early success with a killer feature. It capitalizes on scalding product-market fit to grow its customer base and win in its category. Focused on its core product, that company devotes insufficient resources to building a broader suite, even as rivals emerge to chip away at its market share. Eventually, the business is hemmed in, stale, unskilled at building and launching new major features, hanging on to its first product. 

The common wisdom is that to avoid this outcome, companies need to learn to become multi-product relatively early in their life.

It’s little surprise that Christina Cacioppo is attuned to this risk. Before founding Vanta, she was a product manager at Dropbox. Though far from a failure, the cloud storage platform exemplifies how innovative companies can become stuck, unable to push into new territories. Sixteen years into its life, though Dropbox’s storage features are smoother, richer, and more powerful, its fundamental offering hasn’t changed much. Attempts like its Paper product – a spin on docs that Cacioppo helped build – failed to attract widespread usage. That wasn’t for lack of effort. “There were years of trying hard,” Cacioppo recalled, “And it never worked. In many ways, failure is the default case.” 

Keep reading

I hope you enjoy the rest of the piece! We have another exciting case study coming up on Sunday that I can’t wait to share with you.

See you soon,

Mario