A Fireside Chat with Richard Yorke, Co-Founder of Deep3 (A CACI Company)
Richard Yorke co-founded Deep3, an expert mission-critical software business, in 2014. Rapidly scaling into a thriving business with over 70 people, Deep3 was successfully acquired in November 2019 by CACI, creating an exciting addition to CACI’s leading defence and national security team.
InfoSec People worked closely with Deep3, delivering talent attraction and retention consultation to support their rapid growth and vision. InfoSec MD, Chris Dunning-Walton, sat down with Richard to discuss his journey and a few of the biggest challenges currently facing start-ups and rapidly scaling businesses in the cyber tech sphere.
CDW: Richard, why did you initially start Deep3?
RY: It was more about seizing an opportunity. I always had in my mind that at some point I'd like to set up and run my own business. I’d been working in the cyber and national security sectors with Atos prior to setting up Deep3, and the National Security and Cyber mission was something very exciting and of national importance. I felt that if I could combine those two things – my passion for the customer's mission with growing my own business – that would be a fantastic thing to do.
CDW: Tell us about your first year with the business; what did you need to get started and how did those first twelve months feel?
RY: The first year was something of a whirlwind. In those first twelve months for any business, you don't know if you're going to succeed or fail. You're focusing on cash flow, new business, all those kinds of things. The overriding focus for us was in getting the right people into the business at pace, because ultimately that's what we needed to be able to grow and deliver for our customers.
Because we had already attracted several very talented people with the right accesses and clearances, we were able to ramp up the business very quickly in terms of getting new contracts on board. With the support of Raytheon, who were the Prime that we went through, we were able to grow very quickly and scale up in that first year. It took away some of those concerns and nervousness around cash flow, for example.
CDW: Tell us about, how you went through that “Valley of Death”; how you navigated the difficult path of delivery whilst hiring at pace and ensuring adequate cashflow?
RY: I would say that was probably the biggest risk and challenge over the first eighteen months. It was something we were tracking on almost a daily basis and there are a number of things that helped us to be successful.
We negotiated very short payment terms for invoicing with Raytheon; we were getting cash coming in within fifteen days of invoicing, which is obviously a major, major help from a cashflow perspective. With recruitment, we had to take risks, as all businesses do, in terms of bringing people in, but we could see where the business was going; we were in conversations with multiple customers about contracts that we had a high degree of confidence in landing, so it was very much a case of needing to take the risk, bring the people into the business ahead of time and then deliver on those commitments.
We built a financial model very early on in the business and with managing our cash flow we knew what 'good' looked like and we monitored that as a management team on a regular basis. You have to be agile in these situations; nothing quite goes the way you planned, so you have to be responsive and adapt.
CDW: For your first few critical hires beyond the Directors, what were the most important qualities of the people you were looking to hire and how did you frame Deep3 as a company that they would absolutely want to join?
RY: The key things that we were looking for - and still to this day we look for over and above technical skills - is the kind of values that they bring, and there are two in particular that we've always focused on; passion and curiosity. Passion for technology and for the customer's mission and the curiosity to learn, to want to understand how things work.
Technology moves at such a pace you're always having to learn new skills, always having to keep ahead of the curve, and you need the combination of these two values that drive you to be able to do that effectively. That's something we recruited for in the early days and we still use as the basis of our recruitment today.
We initially leveraged our network and spoke to people we’d worked with in the past. That was less of a risk because you know how they work and that they embody those values and have the technical skills and domain knowledge. We incentivised them with a couple of things: we had an EMI share scheme in place, offering equity in the business, which is obviously an attractive proposition - getting in at the ground floor, as they say! With the working environment, we learned a lot from some of the frustrations of having worked for large corporates previously and the friction that gets introduced in terms of the day to day. We removed that wherever possible.
CDW: Inspiring your people has clearly been as important to you as the challenge of the technology you've been developing?
RY: Absolutely. One of the things we have as a differentiator, working and focusing in cyber technology and the national security space, is the end customer mission. Keeping the UK safe and secure is incredibly motivating. All our employees - from day one to the 75 we had in the business at the point of acquisition - are driven by that mission. It motivates them and gets them excited knowing that they're making a difference.
CDW: You took the business to a successful sale with CACI – was there an intention from the outset to take the business to a point of sale?
RY: From the outset? It was certainly there, although I remember reading once that you don't go into a marriage with an idea of divorce or exit in mind!
When we first set up the business, it wasn't a hard and fast “We're going to sell after five years”, or even ten for that matter, it was "This is what we love doing. Let's do it our way with people we love to work with. Then, if we get to a point where somebody wants to buy it, great!" But a sale wasn't the overriding aim.
As we started to grow, we saw that there was a clear demand for what we were doing, so then we started to plan for an exit at some point in the future, and started to make sure that the business was structured in the right way and focused on the right things to be attractive for a sale.
CDW: Along that journey, I’m sure you had months and even years of working all the hours that you can. Were you able to keep a semblance of work/life balance, if that’s even possible for rapid tech scale-up?
RY: I think there is work life balance that can be had. I mean, the first year there was very little balance: I was living in the north west, whilst most of the work we were doing was in Cheltenham, and that put a lot of strain on family life with two young kids. We relocated down to Cheltenham which made a big difference; even though I was burning the midnight oil and we were doing long hours, just being present and being able to see my wife and kids more was enough to get us through that first twelve to eighteen months.
Once we'd got through that first year or so, we put the right structures in place for the management team, where we were able to delegate down while still maintaining a heavy involvement. It's important because if you're totally absorbed in the business, you're not picking up outside influences and there's a danger that you become too encapsulated in that world and you underperform and sometimes have a closed view on things.
CDW: With hindsight, would you have done anything differently? Were there any missed opportunities along the way?
The one that stands out is our decision to not take a product to market in the early days. One of the first pieces of work we won was a research project introducing automation in response to cyber-attacks. We came up with a model for doing this using some machine learning techniques and won two further pieces of work and we felt that actually this could be productized and taken to market - there was a demand and an opportunity for automated remediation, which there still is to this day.
We did this in parallel to growing the services side of the business, where we sold teams of software engineers to deliver outcomes for our customers. The reality was that all of the leadership in the business came from a services background and we got to the point where we knew we'd be competing with some very big players and it was going to be a challenge requiring external investment in new expertise. We took the decision to focus purely on the services, because it's what we knew and it was growing and we could see the future of that. I certainly don't regret that decision because of how things have panned out, but I think there was a missed opportunity; the IP that we developed potentially could have gone places with the right expertise and focus on it.
CDW: The cyber tech start-up scene is very buoyant in the UK at the moment. What three key pieces of advice would you give to anyone thinking of starting their own cyber tech business currently?
RY: I think probably the first one is being clear about your mission, your “why”. Obviously, there may be a very cool kind of technology that you're innovating around, but unless you know why that's going to make a difference and why you're motivated to do it, then you may struggle to focus or really make it a success.
The second is less exciting, but it's around the financials; building a robust financial plan. That's not to say it's a rigid plan that you must follow, but it enabled me to sleep at night because I could see the business growing, how we would ride out any peaks and troughs. It helps make informed decisions about the business, particularly around recruitment and other things where you're having to invest and endure costs. It enables you to do that in a way where you can sort of play through scenarios and understand the impact and it hopefully de-stresses or de-risks things further down the line.
The third thing is people, and this is whether it's a people business like ours, where we were selling in teams of people to deliver great things for our customers, or whether you're building a product; you need fantastic people who are motivated by the same things as you and who work to be able to achieve that. Focusing on getting a good partner to work with in terms of helping identify the right people, whether that's a recruitment partner like yourselves [InfoSec], or engaging directly in the local community as well. Things like CyNam [Cyber Cheltenham – www.cynam.org] allow you to network with like-minded businesses and like-minded people and attract the right kind of talent into the business.
CDW: You're not an island.
RY: No indeed! I would add that - I know you asked me for three things - but as a fourth thing: absolutely. If only as a business leader to know that there are other people going through some of the same ups and downs as you. That's been incredibly important to me. Being part of the CyNam community, meeting and becoming close with a number of business leaders in the area, that's really helped because ultimately, we all want to be successful and we're all working towards a very similar goal.
CDW: Fantastic. Last question for me: what does the future hold for you now?
RY: For CACI it's a very exciting time. Earlier in the year, prior to acquiring Deep3, they acquired Mood International, a product-based company with some very interesting modelling / digital twin capability for complex business systems and processes. They’re doing some fantastic work into the M.O.D. and other such customers.
The future for CACI in terms of growth is expanding on our footprint in cyber and national security, while also looking at adjacent markets where the technology and the expertise that we have translates quite nicely and easily, be that into Law Enforcement or potentially into the private sector. We are all excited to see how that plays out.