How Lacework Went From Cybersecurity Stardom to Fire Sale Talks

Lacework was once touted as the most promising startup in cybersecurity. But behind its aborted deal talks with a rival is a cautionary tale of reckless spending, stagnant sales and management dysfunction.

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Last summer, more than a hundred people crowded into the brightly lit basement of a Lululemon store in Manhattan at the invitation of Lacework, a cybersecurity unicorn. By all appearances, the startup seemed to enjoy an enviable position, with an $8.3 billion valuation and an assortment of blue-chip investors, including Sutter Hill Ventures, Coatue Management and Tiger Global Management. But behind the scenes, Lacework CEO Jay Parikh was, in fact, desperate to rekindle the company’s growth, which had slowed dramatically. To lure event attendees into mingling with Lacework salespeople at the store, the company handed out $300 Lululemon gift cards to each of them, at a total cost of more than $30,000, said a former Lacework employee involved in organizing the event.

Like many ploys attempted by Parikh and Lacework over the last several years, the event was for naught. According to someone present at the event, the majority of the people who showed up for it didn’t end up becoming customers of the company, whose main product is software that sits in customers’ cloud servers, flagging potential abnormalities that could be signs of a hack. Similarly lavish giveaways of goodies have also failed to yield results for Lacework.