Hornetsecurity, a significant player in Europe, entered North America a little over a year ago focused specifically on SMBs and looking to attract MSPs. They provide an update on their progress.
LAS VEGAS – A year ago at the CompTIA ChannelCon event in Washington D.C., Hannover Germany-headquartered cloud security vendor Hornetsecurity made their entrée into the North American market, from a U.S headquarters in Pittsburgh. This year, with the event in Las Vegas, HornetSecurity is back. This year, they hosted their first event at ChannelCon, and company co-founder and President Oliver Dehning updated ChannelBuzz on their progress in this market over the past year.
Hornetsecurity is an established player in Europe, where they started in the small business space, in a market which at that time was poorly served by stripped-down enterprise solutions.
“Some vendors who looked mainly at enterprise in the past are now claiming to look at SMB, but I’m not sure they really do,” Dehning told ChannelBuzz. “Going downmarket from the enterprise is really difficult, although some of these companies have tried this through acquisitions. New companies have entered the market but they have largely ignored this space. I think that’s because the big venture capitalists push their companies towards the enterprise.”
Dehning noted that in Europe, Hornetsecurity successfully practiced an insurgent strategy, where they quietly grew a presence in the market among smaller business, and now have around 40,000 business customers. As they became a bigger presence and better known in Germany, they began to pick off some larger customers as well, including Swisscom and Telefónica.
“Our principal competitors in North America are Barracuda, Mimecast and Proofpoint,” he said. “The market here is really huge, and if we can stay under the radar for a little longer, that’s fine. We can build a nice business, and hopefully these larger players will just ignore us. That happened in Germany. We were ignored by the bigger companies at first, and we grew. Now we are fought hard. But we still win.”
In North America, they have not yet acquired any higher-profile customers, but that’s also not their strategy.
“That’s not how we work,” Dehning said. “In Germany we got bigger customers, but only after we grew to a certain size.”
Dehning emphasized that they see the fundamentals of the North American security market as very well suited for their cloud and smaller business-focused value proposition, particularly among MSPs.
“In talking with the smaller MSPs here, I find their issues and concerns are very similar to what we see in Europe,” he said. “The difference is that there are a lot more of them here, twice as many for the size of the population. In Germany, by comparison, managed services are just starting.”
Hornetsecurity also sees their way of doing business as having appeal to smaller MSPs.
“Our competition over here is primarily venture-backed companies, who are making their main effort in the enterprise, and who can serve that market quite well,” Dehning said. “But with that focus, they cannot care about family businesses. In the MSP business, you have many small service providers who own their own company. We believe that they want to do business with people they like, and who like businesses like them. It’s hard to like an anonymous big brand name.”
Hornetsecurity has made some enhancements to their service this year. They recently released Malicious Document Decryption, which targets malware in encrypted email attachments where the encryption prevents traditional filter mechanisms from detecting it. This has been integrated into Hornetsecurity’s Advanced Threat Protection email protection service.
“This ability to detect malicious code in encryption is becoming more important in the market, as the use of encryption increases,” Dehning said. “It’s a nice add-on to the solution, although it’s not vital in itself. You need many features like this to have a great solution. But it does add a percent or two to quality.”
Another move of note was the acquisition early in 2019 of Spanish email security leader Spamina. Anti-spam is not a new capability for Hornetsecurity. They started there themselves. The company was originally called antispameurope, but rebranded as the product portfolio expanded.
“This is mainly about expanding our presence and market,” Dehning said. “It’s not that important in terms of technology or features, although they do have a dictionary for rules which we do not, and we will build that in. What it does do though is make us stronger in Spain, and it also gives us people in Argentina – people in this time zone.
“We started doing business in Spain around 2008, and they were already there, having started in 2005,’ Dehning added. “In Spain, we always ran into a U.S. competitor or Spamina. They were basically giving away their service for free then to gain share. Then the crash came in 2008, and Spain was very hard hit, and we waited for Spamina to crash but they didn’t. They had changed their tactics, and started charging money. So we recently inquired, found out they were looking for money, and bought them.”
In Europe, while Hornetsecurity’s partner base is not huge by North American standards, it is fairly large for Europe.
“A typical European distributor will have between 2000 to 8000 customers, and we have 800 total,” he said.
They still do not, however, have very many in North America, about fifteen in all. A couple are in Canada, with the principal one being SourcetekIT, which is based in Bolton, on the outskirts of the Greater Toronto area.
“We did get some partners from this show last year, but growth is still slow, a bit slower than I would like,” Dehning said. “We are just at the beginning though, and part of the issue is branding. People here don’t know about us.”
This year’s growth from the show are limited, but still significant to HornetSecurity’s growth plans.
“We would like to pick up a handful of MSPs,” Dehning indicated. “To reach our goals here for this year. we don’t need that many. We want to continue building up our presence in this market.”
Hornetsecurity is at Booth 425 at ChannelCon. As an added attraction, on Tuesday August, 6 they will have Las Vegas’ Big Dog’s Brewing Tailwagger Wheat, a Bavarian-style Hefeweizen beer, on tap from 1 p.m. to 5 p.m.