Stu Sjouwerman’s KnowBe4 seeks to take the human error out of IT security
Stu Sjouwerman is pragmatic in all that he does. He’s a man who looks for evidence and tries to always keep two feet planted firmly on the ground.
“Ethics is what you do when no one is looking,” Sjouwerman says.
Born in Amsterdam, Holland, he was the oldest of four siblings and a self-proclaimed uninterested student, but he was always intelligent and a hard worker. His first job was a paper route. His parents told him if he wanted pocket money, he’d have to earn it himself.
For six years he had a paper route, which he emphasizes is the Dutch way of a paper route. It was newspapers in a canvas bag, hand-delivering the paper to the front door six days a week and riding his bike in rain or shine, snow, wind and sleet, which Holland’s weather is known for.
“It does set you up for persistence and making sure 100 people get their paper every day, it teaches you responsibility,” he says.
Sjouwerman went on to create five startups, thus far, his latest being the wildly successful KnowBe4 in Clearwater, a company that creates integrated security awareness training and simulated phishing platforms. It’s also something of a unicorn, a privately held company valued at more than $1 billion.
“I was one of those students in high school that always passed with Bs and Cs. I had a lot of other interests, I wasn’t focused on school at all,” he says.
Until the last year when it came to exams and certifications, suddenly he was a straight-A student. “They said, ‘Huh, guess he can do it after all,’ ” he says with a laugh.
He went to the University of Amsterdam and he studied educational sciences for almost two years. He realized he wouldn’t make a living in this particular area, and he questioned what he was going to do with his life.
Sjouwerman was a major science fiction fan and had been reading the genre since he was 16 years old. He looked to the future of industries and realized the future was technology. He decided to focus on computers. That was in 1979. “I made that decision when I was five years old, remember that,” he says as he laughs.
Sjouwerman trained himself on computer technology, as there was no such thing as a computer science degree in 1979.
“I hit the books, of course, I knew how to study because I had just had five years of educational science. I taught myself computing and started in sales and marketing in the first company that I started, with a couple of my friends,” Sjouwerman says. “That was my first startup. My first work experience was a business that I started up with four of my friends.”
It was a technology company that provided administration for nonprofits. One of their customers was Greenpeace.
“We built that company and then we sold it, and that was that. That was my first company, then I had four more,” he says.
His second business was creating audio tapes for first-time computer users.
“It was fun, but I started that company on credit cards only. That was painful and it was very stressful,” Sjouwerman says. “I sold it, breaking even, to a large publisher. I was able to pay back the credit cards and was like, ‘phew!’ It was interesting because it foreshadowed what I would do with KnowBe4 20 years later.”
Sjouwerman took a sabbatical from Amsterdam in 1989 and came to the United States. It was here, in Clearwater, that he met his wife Rebecca and married. Their visas ran out and they started to think of where to go next. She was from Sweden.
“The fun part for us was we decided not to give anyone an unfair advantage, so Sweden was out and Holland was out,” he says.
One of their friends had a company in Paris that was importing U.S. software and distributing it in European countries. It seemed to be a good fit. They lived in Paris for four years.
Sjouweran recalls, “Eventually, the company I worked for in Paris decided they wanted a U.S. subsidiary. And when I heard that my hand went up. ‘Can I go?’”
The company invited an attorney from the London U.S. Chamber of Commerce to discuss the expansion.
Due to the limits of time zones, it narrowed the choices of the location to the East Coast.
Florida was attractive for several reasons, the weather and the tech corridor in central Florida were among the notable pluses. Also, Sjouwerman and his wife were familiar with Clearwater and had friends there.
“In January of 1994, I arrived to start our U.S. subsidiary. ‘I was like, ‘OK, here I am!’ ” he says. “We loved the climate here, compared to what it is in Holland. You had me at Tampa.”
Sjouwerman had gone full circle and now had his two feet firmly planted in Clearwater. Little did the town know then that his presence would create a behemoth of a company that would grow to be a unicorn.
Sunbelt Software was sold in 2010, which was startup No. 4 for Sjouwerman. He walked out with $10 million from that sale, which he admits is no secret.
“The funny thing is when I knew it was going to happen … that Sunbelt Software was going to be sold, it was interesting to see because it was a great run. It was 14-15 years; I had a boatload of friends in that company,” he says. “When the sale started to get close, I was getting quite unhappy and getting grumpy. And I didn’t know what I was going to do with myself. When it happened, the day that it sold, Rebecca and I had a little happy dance, but I was not a happy camper.”
Sjouwerman explained yes, it was a victory in that it was a successful company and he walked away with a good chunk of money. “But what did it mean? Nothing,” he adds. “There was no game to play. All my friends were now reporting to someone else. No challenge, nothing. After about four or five days Rebecca said, ‘Can you please get out of the house?’ ”
Out of the house he went. In August 2010, Sjouwerman took $1 million of his own money and established KnowBe4, his fifth startup.
“The idea [with the company] was that the human was the weak link in IT security. But how are you going to manage that problem?”
Even when the software would be created to solve the problem, human error was the main issue at hand in many cases.
Sjouwerman and a small team established version 1.0 and ran it by a few people.
In the venture capital world, you want to have a good product-market-fit. Is there a demand, will people buy it and will they pay the price for it?
“It took two years to dial that in,” he says. “It was something new. No one had done this before. It was carving out a whole new market. It’s fun, it’s interesting and it’s scary.”
After the product entered the market, it was off to the races for the fledgling company.
“I built it up and we were profitable. I talk about this virtual shovel, where I put all of the profits back into expansion,” Sjouwerman says.
It has paid off. KnowBe4 is now valued at more than $1 billion, thus giving it unicorn status. The company is expected to have revenue of more than $200 million in 2020 and has a global customer base of 33,000.
The Sjouwermans go above and beyond with charitable giving in the Tampa Bay community. In 2019, Sjouwerman and his wife Rebecca donated $4 million to the Humane Society of Pinellas County.
“We love animals and they are going to build a new building, for the actual adoption process, where people can come in and find their pets in a nice, air-conditioned, friendly place to find their new pet,” he says. “Of course I have other charitable goals and if I add everything up, I’ve probably donated $60 to $70 million to nonprofits, locally.”
One of his splurges, other than his impressive home in Belleair Bluffs and generous charitable giving, is having inversion tables sent to hotels so he can stretch out his back.
“He’s the most ‘nonextravagant’ person,” says Tiffany Mortimer, chief of staff at KnowBe4. “He and his wife don’t spend a dime they don’t need to.”
Mortimer and her family also enjoy time in Sjouwerman’s beautiful lagoon-style pool on the weekends.
“When we leave, I have to remind my kids, this is a very special treat and not everyone lives in homes like this,” she says with a laugh.
Sjouwerman’s smile implies he loves every minute he gets to share the nicer things in life with those he cares about.
A quick Internet search brings up countless articles about KnowBe4’s investment in its company culture and its people.
While working remotely during the COVID-19 pandemic, employees were given a stipend for coffee, snacks and other items they would normally have access to in the office.
“A company is always the reflection of the person who starts the business, whether you like it or not. From day one, this person makes the company handbook and rules. Which is the first thing I did before I hired anybody. Nine months before I hired anyone, I had the company handbook ready,” Sjouwerman says. “Your organization is a reflection of the team that starts it. If you have to summarize it, there are three rock-bottom corporate values that our culture has. And one is radical transparency. Everyone knows exactly what’s going on, all the numbers are out on the board with real-time updates. Everyone sees when things are going well and everyone also sees when things are not going well.”
These three pillars are something Sjouwerman references often in his interview.
“Everyone has measurable metrics. We run the place like the NFL, to some degree. We live in a glasshouse. Both good and bad,” he says. “Next there’s extreme ownership. Meaning, anything that doesn’t go right, that’s my responsibility. I need to make it work. And then, complete honesty.”
Creating this accountability system is just another way Sjouwerman has been able to grow his company and have the right people on staff.
“I want to go to a place where it’s fun to work. Life is too short. We have a very clear, in writing, no a–holes rule. Do it right the first time, do it fast and have fun while you do it,” he says. “The onboarding [at KnowBe4] is all based on these values. This is what you get when you walk in, day one. And we are very picky [about who we hire] and we are pickier now than we have been before.”
KnowBe4 typically can see up to 9,000 applications per month. There are about 1,000 employees globally and 800 in Clearwater.
During the COVID-19 pandemic, as other companies were forced to furlough or lay off workers, KnowBe4 continues to hire people.
“From day one of KnowBe4, the company was built in the cloud. It was always possible to do practically, 95 percent of the jobs wherever you were on planet Earth. However, I’ve always resisted having people all over the place,” Sjouwerman says. “I always tried hard to get everyone into the office, as much as possible. The reason, mainly, is that it’s more efficient, and more effective, to have everyone come together and get stuff done quickly.”
While doable, it’s not preferable to Sjouwerman obviously feeling what many have encountered: the dreaded “Zoom prison.”
“It’s a pale comparison to the real deal. When you have real people you can see in person,” he says. “We’ve learned that we can do it. We’ve learned we can rise to the challenge. We don’t necessarily like it. But I was forced to admit that working from home was a real reality and we will be a hybrid from now on.”
After all, the pragmatic Sjouwerman looks at the facts in front of him and makes his move. It is his way.
“Ultimately, I want to help people. In my particular case, we help our customers stay safe from bad guys trying to get in. We stop them. So customers need to win. My employees need to win. I tried to build a super-fun place to work and my investors need to win, too,” he says. “What I think I’ve been able to establish is a game where everybody wins. Everyone is being improved in some way or another. And that is why I love to do what I do.” ♦