According to CRN, Huntress CEO Kyle Hanslovan has revealed that his cybersecurity company is planning to disrupt its own successful business model to better protect small and medium businesses from growing threats. The company, which surpassed $100 million in annual recurring revenue a year ago and employs more than 600 people, now believes “the current version of Huntress needs to be put out of business by the future version of Huntress.” Despite expanding from its core managed EDR offering to include managed ITDR, security awareness training, and SIEM solutions, Hanslovan acknowledges that the industry “is not winning right now” against threat actors. The company has already begun embracing new strategies, including a recently announced collaboration with Microsoft’s marketplace and its first distribution partnership with Sherweb last month. This strategic pivot reflects a fundamental rethinking of how to achieve Huntress’s mission of protecting the 99 percent of underserved SMBs.
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The Business Case for Self-Disruption
Hanslovan’s radical approach represents a sophisticated understanding of disruptive innovation theory applied to cybersecurity. Most companies fall into the trap of sustaining innovation—making incremental improvements to existing products—while ignoring the fundamental shifts happening in their markets. By publicly committing to disrupt his own $100M ARR business, Hanslovan is essentially implementing a controlled demolition strategy before competitors or market forces force a more painful transition. This is particularly crucial in cybersecurity, where threat actors constantly evolve their tactics, and yesterday’s cutting-edge solution can become tomorrow’s liability.
The SMB Cybersecurity Gap
The strategic pivot addresses a massive market failure in cybersecurity protection for small and medium businesses. While enterprise organizations have dedicated security teams and multimillion-dollar budgets, SMBs typically lack both the resources and expertise to implement complex security stacks. This creates what security professionals call the “SMB security gap”—a vast underserved market that represents both a business opportunity and a systemic vulnerability. Huntress’s move toward becoming a “turnkey solution” acknowledges that SMBs don’t want multiple point products; they want security outcomes without the complexity. This aligns with broader industry trends toward consolidated security platforms that reduce management overhead.
The Distribution Dilemma
Huntress’s shift toward marketplaces and distributors represents a significant strategic evolution with substantial financial implications. Historically, direct sales models provide higher margins but limit market reach, while channel partnerships expand reach at the cost of margin compression. Hanslovan’s admission that he had to “realize that if I don’t use some of these distributors to help me protect the masses, I’m going to fall short of my mission” indicates a mature understanding of scaling challenges. The Microsoft marketplace partnership specifically provides access to Microsoft’s vast SMB customer base while potentially reducing customer acquisition costs—a critical metric for any subscription business aiming for sustainable growth.
Positioning Against Incumbents
This self-disruption strategy creates a unique competitive positioning against both legacy security vendors and newer entrants. Established players like CrowdStrike and SentinelOne continue to add features to their platforms, following a sustaining innovation path. By contrast, Huntress is signaling a willingness to fundamentally rethink its approach, potentially leapfrogging competitors who remain committed to their existing architectures. The “faster horse versus new car” analogy Hanslovan uses suggests he’s looking beyond incremental improvements toward architectural innovations that could redefine how SMB security is delivered. This positions Huntress as an innovator rather than a follower in a crowded market.
Revenue Model Evolution
The transition from point solutions to a turnkey platform has significant implications for Huntress’s revenue model and valuation multiples. Platform companies typically command higher valuation multiples than point solution providers due to higher switching costs, expanded wallet share, and network effects. However, this transition requires substantial R&D investment and carries execution risk. Huntress’s $100M ARR milestone provides the financial runway to fund this transformation, but the company will need to carefully manage the transition to avoid disrupting its existing revenue streams while building the new platform.
The Road Ahead
Hanslovan’s transparency about the need for self-disruption creates both opportunities and challenges. While it builds trust with partners and customers, it also sets high expectations for delivery. The company’s track record of growth while staying focused on SMBs suggests they understand their market, but the shift from specialized solutions to comprehensive platforms represents a fundamentally different business. Success will depend on Huntress’s ability to execute this vision while maintaining the operational excellence that earned them their current market position. If successful, this strategy could position Huntress as the defining SMB security platform for the next decade.
