Tanium cofounders Orion and David Hindawi (Credit: Timothy Archibald for Forbes)
Fathers and sons everywhere can learn a lesson from David and Orion Hindawi.
Working together, the duo cofounded Tanium, a cybersecurity startup that helps protect governments and many of the world’s largest companies (including Amazon, Target, Visa, and Verizon). It’s a technological breakthrough for IT departments under constant attack from hackers—and a lucrative business.
Tanium announced on Wednesday morning that it raised $120 million in new funding from TPG, Institutional Venture Partners, T. Rowe Price, along with existing investor Andreessen Horowitz. The round pegs Tanium at $3.5 billion, doubling its previous valuation of just 5 months ago and launching the startup into the upper echelon of private VC-backed tech firms.
The new valuation turns both David and Orion Hindawi into billionaires on paper. The Hindawis are true partners in Tanium, where David, 70, is CEO and Chairman while Orion, 35, is President and CTO. They have maintained equal stakes in the business, with a combined ownership of about 60% of the company—or just over $1 billion for each. (It’s rare to see parent-child billionaire combos, especially outside the realm of inheritance.)
The Hindawis bootstrapped Tanium for the first five years, building a state of the art endpoint management system that lets companies scan and control their thousand of computers and other network-connected devices in real time. In 2012 they started selling the product and since have been on a tear: bookings, or revenue to be recognized over multiple contract years, have increased from $2 million in 2012 to $24 million in 2013 to $74 million last year. Tanium projects over $200 million in 2015 bookings.
Read more about Tanium in this Forbes Magazine feature story >>
According to Orion Hindawi, the company has been cash flow positive every quarter since 2012, and hasn’t needed funding. But they’ve taken it anyway: $262 million total in just over a year, including $142 million exclusively from Andreessen Horowitz over the prior two rounds last August and this March. Orion says the goal of this latest round is to put an end to fundraising for the foreseeable future.
“The reason I need this money is so I can stop raising money and go work on my product,” he told Forbes. “There a pernicious cycle in the Valley where everyone is raising money. We wanted to do it big enough so that we don’t have to think about it anymore.”
The Hindawis also want a safety net for any upcoming slump in the capital markets. “We sized the round to protect us against a really nasty downturn scenario,” Orion says. “I’ve been doing this for 20 years and have been through three of those. I really think change in some way is going to happen. There’s lots of funding going on that’s ludicrous.”
This new round is designed to be a bridge, if necessary, to an eventual public offering or other liquidity event for Tanium a few years down the road. It could serve as a “war chest,” as Orion calls it, to strategically buy tech assets that may not be as financially secure if the bubble bursts.
Until then, Tanium is focused on maintaining its torrid pace. In addition to its headquarters in Emeryville, CA, the startup has new offices in London, Sydney, and Tokyo to chase Global 2000-level companies. It opened an office this year in Washington D.C, as the federal government rapidly became one of Tanium’s biggest customers. “The OPM [Office of Personnel Management] hack really woke people up to the public aggressive attacking that is levied against the federal side,” Orion says. “The hackers are more sophisticated and the tools the government uses are older than that of most business customers.”
Tanium, which had only 35 employees at the beginning of 2014, just passed the 300 mark and plans to have a headcount over 400 by the end of the year. Many of those are in sales and support, but the company is also building out a full suite of IT management and security modules on top of its basic solution. That’s where investors see much of the long-term growth coming from.
Meanwhile, the Hindawis have plans for their newfound wealth. “If the goal of your life is to make tons and tons of money—then lucky me because I did that, but unlucky me because that’s not a worthy goal,” says Orion. “I plan to give it away in the short term so it probably won’t be my money very soon.”
While the Hindawis have multiple causes they care about, strengthening public education is at the top of their list. Given their success so far with Tanium, such philanthropic efforts are certainly worth watching out for.
