Lacework Co-CEO David Hatfield Out 4 Months After LayoffsHatfield's Exit Comes Amid a Go-to-Market Exodus, With CRO Andy Byron Also Leaving
David "Hat" Hatfield has exited the co-CEO role at Lacework just four months after the cloud security vendor laid off 20% of its employees.
The move will bring Lacework's co-CEO experiment to an end after just 14 months, with Facebook engineering head Jay Parikh moving forward as sole CEO of the San Jose, California-based company. Hatfield's departure comes only weeks after President and Chief Revenue Officer Andy Byron - who spearheaded all go-to-market functions since 2019 - left the company, making Hatfield interim CRO (see: Lacework Announces Layoffs 6 Months After Raising $1.3B).
"We have decided that now is the time to unify the company under one leader," Parikh wrote in a note to Lacework employees that was shared with Information Security Media Group. "As such, today, I'm stepping into the role as sole CEO of Lacework. One CEO and one voice setting the tone, the execution rigor, and the priorities for the company, driven by absolute focus on achieving our mission."
Go-to-Market Brain Drain
Hatfield started as Lacework's sole CEO in February 2021 after nearly seven years as president of Pure Storage. He was responsible for leading Lacework's operations, business strategy, business development and market expansion efforts in the co-CEO arrangement. And since Byron's departure in late August, Hatfield had also overseen Lacework's sales and marketing teams as interim CRO.
Lacework didn't immediately respond to an ISMG inquiry about who would assume Hatfield's duties. While there are no plans to directly replace Hatfield at Lacework, the company does plan to hire Byron's replacement in the near future, Parikh told Protocol, which first reported Hatfield's departure. Hatfield will remain on Lacework's board, while Byron serves as an adviser, The Information reported in August.
"Our growing customer base is rightfully relentless in their expectations of us as they seek help and partnership to mitigate their security woes," Parikh wrote in a note Tuesday. "We must continue to evolve our business to serve them."
At Lacework, Hatfield replaced Dan Hubbard, who had served as the company's CEO for nearly two years and became chief product officer before leaving Lacework entirely 10 months later. Five months after becoming CEO, Hatfield brought Parikh on as co-CEO to drive product, engineering and infrastructure efforts.
Success, Then Struggle
Lacework's two CEOs knew each other from an overlapping stint at content delivery vendor Akamai two decades earlier, when Hatfield served as director of U.S. direct sales and Parikh became vice president of engineering. Parikh subsequently spent 11 years as Facebook's vice president of engineering, during which time he helped the social media giant grow from 300 million users to more than 3 billion.
Hatfield and Parikh had great success in their first months together. Lacework closed the largest funding round in security industry history and became the third-most-valuable venture-backed cybersecurity company in the world, with a valuation of $8.3 billion. The company grew from just 200 employees in January 2021 - the month before Hatfield started - to more than 1,000 in March 2022.
But Lacework became the first cybersecurity casualty in this year's economic downturn, disclosing in May that the company had laid off 20% of its employees in a bid to strengthen its balance sheet. The company's headcount reductions are most pronounced in sales and marketing, according to LinkedIn, with smaller cuts in engineering, and the IT workforce actually grew over the past six months.
"We have adjusted our plan to increase our cash runway through to profitability and significantly strengthened our balance sheet so we can be more opportunistic around investment opportunities and weather uncertainty in the macro environment," Hatfield and Parikh wrote in an email to employees at the time.
'The Road to Success Is Not a Straight Line'
Despite the cuts, Parikh told employees Tuesday that he's looking to create a business with more than $1 billion in annual recurring revenue. That's roughly 20 times its current size. The Information reported in June that Lacework had exceeded $50 million in annual recurring revenue at the end of 2021.
Lacework has enjoyed astronomical top-line growth. The company's corporate endpoint security revenue surged by 200% in 2021 to $102.1 million and cloud workload security market share increased by 260 basis points, according to IDC. Still, Lacework had just 4.7% market share in cloud security, putting it behind five other vendors in that area, and 1% market share in endpoint security, putting it behind 20 other vendors.
Lacework's ability to identify elusive threats and zero-day vulnerabilities by finding spikes in anomalous activity sets it apart from other cloud security startups, Kate MacLean, senior director of product marketing, told ISMG in August. MacLean said Lacework normalizes, contextualizes and correlates as much data as it can get its hands on to build a baseline of how an environment typically operates.
"We have the right strategy, and we have the cash to fuel our ambition," Parikh wrote Tuesday. "We need to continue building the best team and continue to execute with precision and teamwork. If our vision was easy, it would already have been done. The road to success is not a straight line, nor is it well-paved."