StartUps

You Don't Scale

The more that information security incidents are in the news, the more often we hear that there aren't enough people to do all of the work necessary to batten down the hatches against everyone who'd like to compromise our systems and networks. The U.S. Government has been particularly vocal in discussing a shortage of security talent, but it's not uncommon to hear this refrain in business circles as well.If these folks are as difficult to find, hire, and retain as we're told, then we only have a few choices:

  • Train them internally;
  • Automate as many security processes as possible;
  • Do things to make the people you have more effective

Most people choose door #2 as a way to get what's behind door #3.There is a common criticism of information security practitioners: that we depend too much on technology, even when the core problems may not be technical ones. Those critics have a point: effective security isn't something one can buy in a box and then proclaim victory afterward. However, in the face of limited talent, deploying a new technology may be the most straightforward way to attempt to address some risks.The reason is simple: many of the best security products tend to embody some very specific, reproducible, automation-friendly aspect of security expertise and perform it tirelessly, over and over.  You may have the best internal security people in the world, or the best  world-renowned consultants, but the bottom line is that humans don't scale particularly well.This is true whether you're the security manager with the responsibility to keep your network safe 24 hours a day, or the consultant who parachutes in to save the day when things look bleak. The former can only hire so many staff members, and the latter can only be billed for a finite number of hours in a day/week/year.If experts are in short supply, then one of the most scalable options is to encapsulate the expertise of rare, highly paid people and build it into a mechanism that can attempt to apply that expertise to real environments, be they network traffic flows, host configurations, or software updates.There has yet to exist a security product that solved all of the world's (or even one enterprise's) problems, but if we look at some things that made a difference in the state of the art when they arrived, they tend to fall into a few categories:

  • They allow less-senior people to do some work that used to be the province of a few
  • They help people to make better sense of information they (usually) already had somewhere
  • They help less-technical users to avoid inadvertently hurting themselves
  • They fundamentally changed some aspect of how we work or build systems to make them inherently more secure*

*This is where the most value is created, but it's also the most difficult.If you've gone to the trouble of building something to solve a problem for yourself, and believe that other people have the same problem, that's called a market opportunity.

Creating a Market-Focused and Product-Oriented Company is Not a Part-Time Job

While there are many factors impeding the successful insertion of disruptive cybersecurity concepts into the current market, I want to explore the underestimation of the focus required to build an enterprise that is market-driven and product-oriented.The business ecosystem inside the DMV’s Cyber Beltway is heavily prejudiced toward the development of bespoke solutions targeted toward single customers.  This ecosystem is dominated by large systems integrators and government contractors who employ low-risk business models based on time and materials billing and very limited internally-funded research and development investment. There is nothing wrong with this business model, as evidenced by the hundreds of wealthy government contracting business owners that our region has created throughout the past decade.  However, this model thrives on labor-intensive integration and operational support and, by its very nature, is antithetical to disruptive innovation.When budding cybersecurity entrepreneurs who have grown up in this ecosystem decide to start their own businesses, the siren’s song of SBIR grants, federally-funded research projects and government consulting contracts becomes extremely alluring.  In contrast to the twenty-something social networking and iPhone app entrepreneurs populating other techno-regions, entrepreneurs in the Cyber Beltway typically have families, mortgages and car payments.   The majority of them are lured toward services models out of financial necessity.Yet they continue to dream about making a disruptive impact.Last week alone, I met with five different entrepreneurs, all aspiring to take to market innovative cybersecurity product ideas.  Several of them outlined plans to invest cash flow generated from their consulting operations to build a product and deliver it to market.  In most cases, the product team consists of one or two developers working on a product concept part-time.  Consistently, these entrepreneurs believe they can bootstrap their way to a generally available product release within 12 months, avoid the dilution of a sizeable venture round and retire on the sale of their product business at a 10x multiple of projected revenues.Here’s my advice:  Pick one or the other.  You can’t do both effectively.Building a product business will take 100% of your focus.  Validating the concept, building the team, and raising the capital necessary to build an organization to support your market entry will take more than all of your time.  Getting your concept to market will require significant outside investment made over a number of years. Even if bootstrapping initial development enables you to reach the market first, without the capital to seize market share and create competitive barriers to entry, better capitalized competitors are going to own the market you have created.Yes, it takes guts to make the leap, especially if your services business is already showing promise.  But if you want to make a disruptive impact, 100% commitment to the endeavor is simply table stakes.  You won’t be able to find the necessary financial backing otherwise.At MACH37™, we are working hard to make taking this leap easier for our entrepreneurs. We have built a 90-day program to enable our entrepreneurs to fully validate and hone their concepts by working with our network of cybersecurity customers, serial entrepreneurs and industry experts.  We provide them with capital, allowing them to focus over a tailored 90-day program and build the effective business case that will support additional seed investment from us and third-party investors. We teach them how to be market-focused and how to build products that address what their customers need, instead of what the entrepreneur wants them to have.