security

How 2 Founders Sold Their Startup to Aqua Security in a Year – The New Stack


Speed is a recurring theme in this episode of The Tech Founder Odyssey. Also, timing.

Eilon Elhadad and Eylam Milner, who met while serving in the Israeli military, discovered that source code leak was a hazardous side effect of businesses’ need to move fast and break things in order to stay competitive.

“Every new business challenge leads to a new technological solution,” said Elhadad in this episode of The New Stack’s podcast series. “The business challenge was to deliver product faster to the business; the solution was to build off the supply chain. And then it leads to a new security attack surface.”

Discovering this problem, and finding a solution to it, put Milner and Elhadad in the right place at the right time — just as the tech industry was beginning to rally itself to deal with this issue and give it a name: software supply chain security.

It led them to co-found Argon Security, which was acquired by Aqua Security in late 2021 for what Elhadad told The New Stack was just under $30 million, a bit over a year after Argon started.

Though the pair had intended to “create a huge company,” as Elhadad put it, the timing proved right to sell to Aqua, the co-founders said.

As the industry moves toward creating a “golden path” for cloud native organizations, a wave of acquisitions is likely. “We see a lot of other companies making acquisitions of other kinds of startups,” Milner said. “And we see everybody in the chase of creating the unified experience for the customers.”

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Elhadad and Milner, now Aqua’s general manager and senior director for software supply chain security, respectively, told the story of their startup journey and success to Heather Joslyn and Colleen Coll of The New Stack.

Listening to Customers

Argon began with the aspiring entrepreneurs doing their homework.

“We basically took a deep dive into this topic,” Elhadad said. “We start to look around attack surface trends in the market. We started speaking with different potential customers.”

Their market research revealed a massive potential customer base, he said, with CI/CD security — or lack of it — the biggest vulnerability: “It’s a huge thing … but no one was protected.”

As they set up Argon, Elhadad took the role of CEO, Milner became chief technology officer. They ignored friends’ cautions about starting a company during a global pandemic, reasoning that there’s never a perfect time to take the leap.

“Always there [are] disadvantages and advantages of the time that you’re doing it,” said Elhadad. “An entrepreneur [who] believes in a specific idea and has a strong team, you need to go for it, all in, no matter what. It will find the solution to fix the problem. Because [the problem] will show up every day.”

Elhadad offered some advice to other aspiring entrepreneurs, based on his and Milner’s experience with Argon: “Speak with customers from day one, learn how to do it, learn how to sell, and how to hear the customer, how to create a value proposition.”

Common Startup Mistakes

Both men had started companies previously. Elhadad’s, PaidIt, was purchased by YCD & Verifone; Milner’s, Datsmi, folded after a year. Today they are both investors in other startups, through YL Ventures.

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They’ve learned a bit, Milner said, from working with early-days companies. Though a lot of those fledging organizations are comprised of very smart individuals, they often falter for very specific reasons, he said.

“The majority of them make the same mistake, especially technical founders, of falling in love with the solution,” Milner said. “So they often find kind of an unmet need, and they tackle the making of a solution. They start to code … and they get an amazing product. And the focus is on the solution itself.”

And then, he said, two potential issues arise. One is product market fit — either creating a solution for a problem that either doesn’t exist or creating a solution that can’t easily scale.

The other issue: “They have a hard time letting go. It was one of the mistakes that I feel I did in the previous company that I founded.”

Listen to the full episode to learn more about Elhadad and Milner’s journey, including how their leadership collaboration worked.

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