Editor’s Note: Sponsored by Monday Properties and written by ARLnow.com, Startup Monday is a weekly column that profiles Arlington-based startups and their founders. The Ground Floor, Monday’s office space for young companies in Rosslyn, is now open. The Metro-accessible space features a 5,000-square-foot common area that includes a kitchen, lounge area, collaborative meeting spaces, and a stage for formal presentations.
“If we let our guard down, the bots win.”
That’s the attitude of Distil Networks Founder and CEO Rami Essaid, and it is what has driven his company from something he built while living with his parents and crashing on his co-founders’ couches in 2011 to a thriving business with hundreds of clients and millions of dollars in funding and revenue.
Distil started out as a web scraping prevention company. Essaid was selling cybersecurity for a Northern Virginia company — he declined to say which one — when he realized that almost every company he was dealing with was having its content stolen by web scrapers. Seeing no company out there preventing scraping, in early 2011 he decided to quit his job, sell some of his possessions, rent out his apartment and move in with his parents in order to start his new company.
It’s not the first time Essaid had tried to launch a startup. Soon after Apple launched the App Store, Essaid and some friends began building a mall directory app. As Essaid put it, they “missed the Black Friday deadline.” He said an app with a worse design and smaller database launched on Black Friday, Apple featured it, and, selling for $3.99 each, it made hundreds of thousands of dollars almost overnight.
A few of his other ideas came close to turning into a business, but never quite made it over the finish line.
Essaid and his two co-founders, Engin Akyol and Andrew Stein, are all computer engineers. Once they had an idea of what kind of product to build, the building part was relatively free of speed bumps. The other side of the business — raising money and finding clients — was a different story.
“We didn’t know anything about being a venture-backed company,” Essaid said. He approached his first potential investor with his company not incorporated and without a lawyer; two requirements if a company wants to raise large sums of capital. “I thought if you just built a product, people are going to give you money. It was a rude awakening.”
Essaid said he was batting “about .010” in venture meetings, but raised $400,000 at the end of December 2011, another $300,000 in July 2012 before completing a $2.1 million round of investment in December 2012. Distil will do another round of fundraising in 2014, Essaid said.
Distil Networks has grown beyond just preventing web scraping, expanding to four different products blocking different types of bots. Essaid calls each system a “vertical,” and there’s one to prevent online merchants from having their prices scraped by competitors. Another prevents fraud bots, which can drive up the price of online banner advertisements and clog servers. There is a vertical to prevent bots from stealing data, and another that shifts a company’s website onto Distil’s servers, increasing the website’s speed and performance.
“People kept asking us to help with problems tangential to the services we offered,” Essaid said, so Distil grew into a more diverse company.
Distil was ahead of the curve when it was just starting out. Essaid took meetings with potential clients and had to convince them that bots and web scrapers were hurting their business and jeopardizing their security.
“A lot of people are very ignorant of the problem,” he said. “One of the biggest challenges we have is educating the market.”
In 2013, the script completely flipped. Essaid said he signs a client every other meeting. Distil Networks counts 12 Fortune 500 companies among its hundreds of clients, and several of those companies initiated their meetings; Essaid barely had to sell them.
“I had a CTO of a Fortune 500 company cold call me,” Essaid said. “This has reached an executive level. Management at these companies is aware of the problem.”
Essaid wouldn’t reveal what Distil’s next vertical or venture will be, but said simply he wants “to get deeper into security.” Distil’s “core mission” is to make the web more secure, he said. Personally, he said he simply wants to relax. His prevailing motivation for the last two years has been “don’t screw up.”
“I want to go from ‘don’t screw up,’ to ‘how big?'” he said. “Do we want to be a $50 million company? Do we want to be a $100 million company?”
All the while, Distil must constantly improve its service. It will never block all the bots — there are too many and the bots are too sophisticated — but Essaid said they block 99 percent. The difference, he said, is the equivalent of either leaving your valuables on your front lawn, or locking them inside your house. But online burglars are also getting smarter.
“It’s an arms race,” he said. “Someone’s not going to be able to build this system once and forget about it. The curse is we can’t stop. Research and development is always going to be a big part of the budget.”