INKY’s Advice for Security Startups: Think Platform

Or so it appears now that Kaseya says it’s an API-first vendor. Plus: what security startups can learn from INKY’s sale to Kaseya and the view from Bain on agentic pricing and AI in managed services.

There are no hard and fast rules about these things, but Kaseya normally tells the media what it will be announcing at a major show like DattoCon one to two days in advance. Word that it had acquired email security vendor INKY, however, reached me less than two hours before the opening-day general session commenced. I now know why.

“We signed the deal at 1:30 a.m. yesterday,” says Dave Baggett, INKY’s CEO.

To be clear, he shared that fact on Wednesday. Which means that when he took the stage at about 9:50 a.m. Tuesday morning to discuss the sale, he was speaking on very little sleep and with little to no rehearsal about a transaction that had closed just over eight hours earlier.

I’m pretty sure I would have been incoherent. Baggett wasn’t. Email security demands constant innovation, he said, because attackers are smart.

“Some of them are really smart, they’re creative. I often say if these people were gainfully employed, we’d already have fusion power, so we need to stay up with what they’re doing.”

That’s one, relatively obvious, lesson for Baggett’s fellow security founders from the INKY deal. The thinking behind his decision to sell the company presents another: it’s challenging these days to grow a blockbuster business around a stand-alone, single-function security solution.

“I wouldn’t say I completely question the viability of independent solutions, but certainly it looks like the window’s closing,” Baggett says.

For one thing, as Syncro’s CEO has noted here recently, you’ll be competing with the likes of Microsoft and Google and unlikely to outclass either one of them purely on the basis of product functionality. “They’re not going to let a big opportunity go by them,” Baggett says. “They’re all reading Clayton Christensen. They all know about the Innovator’s Dilemma, and they’re not going to be surprised by the two guys in the garage.”

You’ll have some serious competitive disadvantages against them, moreover, even if your tech is better. “You don’t have anywhere near the marketing budget,” Baggett says. “In many ways, startups don’t have the sophistication of larger entities. We don’t have the many years of relationships to leverage.”

If your target market is managed service providers, furthermore, you’ll be working against the platformization and vendor consolidation trends driving would-be buyers toward sourcing more security software with tighter integrations from fewer suppliers. “You really need to be able to offer an MSP a complete solution,” observes Baggett, who sees only one route for independent vendors to realizing that goal.

“Become a platform,” he says. Assuming you can stomach the cost, that is. “It’s really, really hard and it’s a lot of capital investment. It’s a lot of time,” he warns.

All of which leaves single-function security startups with one big question to answer, he continues: what’s your objective? Looking to build yourself a nice little stand-alone lifestyle business? “Sure, there’s plenty of room for that,” Baggett says. Looking to build something that sells or IPOs for big money?

“That’s getting harder. That’s looking a lot less likely to me, personally,” Baggett says.

Which is why his company is now part of Kaseya.