Talk to your customers. It’s really quite incredible, but if you listen to them, they’ll tell you how to build something so they can pay you! If you impress them and show them you care, you can also consider them as your early brand ambassadors.
As part of my series about the “5 Things You Need To Know To Create a Successful App or SaaS”, I had the pleasure of interviewing Ken Carnesi.
Ken Carnesi is the CEO and founder of DNSFilter, a DNS threat protection solution that uses artificial intelligence to protect organizations from online security threats. Ken previously started the company Anaptyx in 2007 while attending Boston College, earning him a spot on EMPACT’s “30 under 30” list two years in a row. Ken is passionate about emerging technology and markets as well as car and motorcycle racing.
Thank you so much for joining us! Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
Sure. So, before DNSFilter, all the way back in 2007, I had started an ISP called Anaptyx. While working at Anaptyx I started paying more attention to the vendor side of things, particularly after OpenDNS (a DNS filtering service) was purchased by Cisco Umbrella. I was a Cisco Umbrella customer for a little while. And I just hated what they did to the product. There was no more innovation. Pricing was convoluted and not sustainable, and they really couldn’t care less about helping out MSP and ISP partners. So I was done with OpenDNS and Cisco, and it led me to come up with the idea for DNSFilter.
At that point, my ISP business was doing well and quite stable, so I volunteered to mentor at a local tech incubator, which is where I met my first DNSFilter co-founder, Mike Schroll.. And now we compete with Cisco directly!
What was the “Aha Moment” that led you to think of the idea for your current company? Can you share that story with us?
Well, when I left OpenDNS as a customer, I realized there wasn’t anything out there compared to OpenDNS. The competitor landscape was really different back then, so I started to think “What if I competed with them?” At that point, I started slowly working on a minimum viable product that I was using a little bit internally at Anaptyx. Then, one day I read about Cisco’s massive acquisition of OpenDNS and it registered with me just how large this opportunity could be. That’s sort of what really lit a fire under me to get going.
When I met with Mike at the tech incubator, I explained to him this idea I had been working on. I heard he was a technical guy, but little did I know that he really liked DNS and knew a lot about it. When I told him it was a DNS startup, he talked my ear off for a while and he started to think “OK, this could be something.” It’s easy to think an idea is great before you actually start vetting it. But to have that validation from someone who knew a lot about DNS, the landscape and that they were interested in working on it with me? It made me realize it was time to give this a shot!
Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?
There have been so many challenges along the way, it’s crazy. Honestly, I didn’t think it was going to be as difficult and time consuming as it ended up being. We’ve built something way larger and more advanced than I had ever envisioned when we started working on this. That being said, one funny story that stands out to me happened right at the beginning of the journey. We thought we were going to be able to just code this up, deploy it on AWS, and everything was going to work. Then, we found out to be a true player in the industry we needed to build a global network between our data centers and provide our DNS service using a technology known as BGP Anycast. Neither myself nor Mike knew anything about this technology and had never even used it before. This was also a very specialized skillset you couldn’t simply hire for. Even Mike’s contact who ran edge networking at YouTube wasn’t familiar with it.
We felt a bit at a loss, and I said to Mike something like “Well, ok… how about we just look up whoever wrote the book on BGP and find them, maybe they can help us.” Sure enough, there was an O’Reilly manual on BGP. We contacted the author, and the next morning we were having coffee with him on Skype over in Austria. He pointed us in the right direction and we started learning. Mike was the one who took the lead on that part of the business and today, we operate one of the fastest and most reliable DNS content filtering networks in the world! In fact, most months we are in first place in most regions, above Cloudflare, Cisco and Google.
So, how are things going today? How did your grit and resilience lead to your eventual success?
Things are pretty good! I can’t say things get easier (or necessarily harder) as time goes on. It’s just different. I (and now my co-founders) have had to go from more of an individual contributor CEO operating a small team to more of a leadership role operating a much larger team. I can’t be focusing on the day-to-day as much. Now it’s more about what’s going on next month, next quarter, next year. My role in particular now consists of a lot of time spent on providing a clear vision for the rest of the team, 1:1 guidance/coaching, and even chief therapist sometimes. I sort of just jump from one issue to the next and have had to develop a very large variety of skills.
I don’t view myself as necessarily being any more intelligent than others. There are definitely many people on the team at DNSFilter who are more intelligent than I am and likely have a higher IQ. Most of what gets me by is just a sheer ability to put in the hours and constantly learn. So much of my time is spent analytically solving issues, increasing my knowledge and so on. So I’m able to help make the right decisions for the company. It can definitely be exhausting, but it’s very rewarding.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
Well, we’re a cybersecurity company, so there aren’t that many funny mistakes we can make! This isn’t a mistake, but one funny thing that happened was on the first day I decided to dedicate all of my time to DNSFilter. I started looking up testimonial customers on the Cisco (OpenDNS) web site, and emailed them telling them how DNSFilter was a better option and asking if they’d like to switch. One of the things I think we were telling these customers about was how our network was faster than OpenDNS or maybe how our AI was finding more threats. Whatever it was, it was true. However, within hours I got an email from the CEO of OpenDNS (now Cisco Umbrella) telling me to stop. Once I showed the evidence that there was actually something better out there, he was pretty surprised and left me alone. That was funny for me, and also quite validating to cause that much of a disturbance on day one of my full-time career at DNSFilter.
What do you think makes your company stand out? Can you share a story?
I probably have too many stories to share on what makes us different. Overall, and I think this is key, it comes down to the fact that DNSFilter was created to solve a problem that had been experienced by the founders themselves. Everyone at DNSFilter loves what they do, we have a big culture of listening to our customers and we shoot it straight. We’re extremely transparent about what we do, how we price, and what our future plans are. We also aren’t here to create another option, we’re here to challenge the status quo and create a new gold standard within the industry.
Everyone at DNSFilter seems to have entrepreneurial tendencies for sure, and we’re always looking to push the limits of what anyone has thought could be done through DNS. We also really focus on making sure we do this without making the product cumbersome or difficult to use. We don’t believe design is a luxury, and try to ensure the product is as beautiful and simple to use as it is powerful. Every user can get up and running with us in less than 5 minutes.
If you do need one quick story about how much we care about our customers — back at the last RSA in February 2020, we had a few customers who wanted to come visit but were having trouble getting hotel rooms in San Francisco last minute. We had three of four of them actually stay in the spare bedrooms in one of the AirBNBs we rented!
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
I am definitely not the best person to look to for any advice on this topic! If anything, please let me know if you have any good tips for me. All I can say is that, especially as I have received business coaching over the past year, it has become obvious to me that it is extremely important to disconnect and take time for yourself. It shouldn’t be ashamed to take time off, especially as a leader. For me, when I do finally take time off I often find myself coming back to work with perspectives that would never be there had I not stepped away for a few days or a week.
I have also noticed that, as a leader, your team looks to you and often mimics your behavior. Within DNSFilter, the teams who take the most time off work for the leader who takes the most time off and vice versa. There’s definitely a balance, but you need to take time for yourself and make sure your team does as well. However, this is something I still personally struggle with.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
Absolutely, there have been so many people that have helped along the way. Initially, we received a lot of help from Techstars. That’s where I really learned that you can’t always figure everything out yourself. You can save a lot of time and significantly increase your chances of success by simply listening to the advice of those you respect who have done it before. Additionally, I have found that most founders who have been through this before are much more willing to give you their time than you’d think, especially if they feel they’re creating real value for you.
Since Techstars, there have been many who have been helpful. I’d say, consistently, though, it’s been our investors and board members that I’ve recently learned to lean on the most. It’s become clear to me that a massive part of the decision behind which investors you chose should not be on them writing you a check, but the value they can bring beyond that. I’ve had everything from intros to great employees, to intros to founders of multi billion dollar companies, to getting top people at Google on the line in minutes when we’ve had global network issues, and even to having members of our VC literally come and work for us for months at DNSFilter. We couldn’t do it without them.
Ok thank you for all that. Now let’s shift to the main focus of this interview. Approximately how many users or subscribers does your app or software currently have? Can you share with our readers three of the main steps you’ve taken to build such a large community?
Sure — so, today we’re servicing just over 14,000 brands/organizations. The majority of these users are within the United States, but we have customers on every continent and probably most of the countries in the world. We also are operating in well over 50 data centers around the world. It sounds like a lot, but it’s nowhere near where we’d like to be eventually. I attribute a massive part of our growth, however, to be due to our customers and our community. From day one, I spent a lot of time talking to our customers and still try to spend time doing so online. A lot of our team has taken this over today — they listen to customer feedback and suggestions very heavily. Other than any awesome ideas nobody has thought of before, this is what drives the majority of our roadmap.
It’s great for us, because listening to them enables us to build a high quality product we know they’re going to use and love. Simultaneously, I think many of our customers feel invested in a sense, because they see over the course of a few months, their suggestions go from a simple feature request to production. Oftentimes, the customer who suggested the feature even gets involved in the wireframing and beta testing.
What is your monetization model? How do you monetize your community of users? Have you considered other monetization options? Why did you not use those?
Well, initially we actually charged based on usage. What that meant was we would literally charge you based on the amount of DNS requests you sent us each month. After a while, we found two things: 1.) Most customers, especially those switching from a traditional hardware based solution, really had no idea how much they’d consume each month, and 2.) Most of our larger customers were asking to pay annually based on the amount of users they had.
Ultimately, we used the data we gathered from the first year or two of being in business to pivot to a per-user pricing model. We did this very carefully, ensuring that most customers wouldn’t see an actual increase in cost or feel alienated in any way. We tested it bit by bit, and ultimately made the switch about two years ago. My only suggestion would be to remain open to how the majority of customers want to pay you and do that. Billing shouldn’t be a pain point for anyone. There are so many more impactful/difficult things for you to spend your time on.
Based on your experience and success, what are the five most important things one should know in order to create a very successful app or a SaaS? Please share a story or an example for each.
Well, #1 — Just put in the hours. It’s kind of simple, but especially when you get started, if you put in twice the effort you’ll generally get there twice as fast. Elon Musk once shared that he believed this is what got him where he is…Just working harder than others. I agree. It’s just not a good long term strategy.
#2 — Make sure you get the right people on board, especially the technical ones. It’s incredible how far you can get with a few good technical co-founders or early employees.
#3 — Just sell it. Stop waiting for it to be perfect, stop being scared to talk to potential customers. If you’re the founder, you need to be the lead salesperson(s). If you can’t figure out how to sell YOUR idea, do you really think someone else should be able to?
#4 — Talk to your customers. It’s really quite incredible, but if you listen to them, they’ll tell you how to build something so they can pay you! If you impress them and show them you care, you can also consider them as your early brand ambassadors.
#5 — Get funding when you need it. Obviously, as a founder, you want to retain as much equity as possible. However, no matter how great your idea is, even if it’s uncontested, it won’t be that way forever. When the time is right, focus on getting the funding to build the team you need to be successful. It’s really quite simple. For example, don’t be scared to lose 10 or 15% of your equity in a round of funding if that funding is going to make your company 200% more valuable. If you can’t say that yet, don’t raise. In my opinion, where possible, I would try to hold off, though until you can at least bring in a few thousand per month in revenue. That’ll go a long way when it comes to attracting interest. Don’t go to investors with just an idea.. You probably won’t get anywhere if you can’t show you can get started by bootstrapping a bit.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Well, that’s probably the first time anyone’s said that! Honestly, I haven’t had too much time lately to think about movements or what I would want to be involved in outside of DNSFilter to change the world or bring the most amount of good to the most amount of people. That being said, something I constantly think about is how much further ahead in life I could be if perhaps the education system provided a better way for you to focus on what you find interesting earlier in life. It wasn’t until well into (or maybe even after) my time at college that I really started digging into what I was most passionate about. I feel like the education system, at least for me, played a big part in me not pursuing my passions earlier.
How can our readers follow you on social media?
You can find me on LinkedIn easily. Just search for Ken Carnesi. I’m not very active on Twitter, so you’d be better off following our DNSFilter account (@DNSFilter). I post on our blog every once in a while, and any thoughts I have worth sharing will definitely appear there.
This was very inspiring. Thank you so much for joining us!