Cyber Investing Summit 2018
May 15, 2018, New York, USA
Cyber Investing Summit 2018
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International Cybersecurity Investing Panel
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About speakers

Gary Miliefsky
Executive Producer at Cyber Defense Magazine
Sean Cunningham
Managing Director at ForgePoint Capital
John Rafuse
Senior Agent, Business Development Executive & Producer at Consulting
Nadav Zafrir
Co-Founder & CEO at Team8

About the talk

Cyber Investing Summit panelists discuss international investment opportunities and trends in the cybersecurity sector

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I think. 00:04 We're good when we do the intro. 00:04 Alright. 00:07 Hey folks, I'm going to stand just because I want to honor you. 00:07 It's not that the chairs falling off the edge. 00:13 It's all good. 00:16 We have an incredible panel and I don't think this is the last panel between drinks and anything. 00:16 Is it no good, but I want to read to you. 00:24 I have 4 pages on each person's bio, 00:27 so we have John who is an incredible man. 00:30

I'll tell you 4 pages on his by on a second and a dove and Sean guys. 00:33 Do you want to do the shorter by or should I do the four pages. 00:38 Alright, well no will start with Sean. 00:43 Tell us about yourself. 00:46 Thanks Gary Sean Cunningham. 00:46 I'm with Forge Point Capital Partners. 00:51 An were a venture capital firm based in Silicon Valley and we invest only cyber security we are a 300 million dollar fund. 00:55 We were founded about 3 years ago and. 01:06

We know that's that's kind of all we know my background is I was with Intel Capital Prior to joining forge point for 15 years start doing security investments back 01:10 in 2000 and join 4.3 years ago. 01:24 An we have. 01:27 Three other partners. 01:27 Don Dixon, upper you Pez. 01:30 And most recently we just added Minnesota as a partner from Comcast to give us some smarts in the group. 01:33 And we have. 01:42 We're focusing pretty much an earlier stage Series A Series B companies. 01:42

We also have a few growth. 01:47 Equity companies are portfolio an just. 01:48 So you wonder? 01:51 I like to get attention. 01:51 Is really what I'm wearing this. 01:53 I did basically accident, so it's really not that serious. 01:55 All the self induced, but we were wrestling earlier today he won. 01:59 That's why I have to stand my back is killing. 02:03 So you were at Intel capital? 02:07 I was for how long 15 years hug you like it. 02:09 It's a great platform I had done. 02:13

I guess I've done about 20 deals at Intel capital invested globally. 02:16 The group did deals. 02:22 Mostly in Europe and quite a number in Israel. 02:22 We had 3 full-time invested people in Israel and a couple of more focus on cybersecurity. 02:28 So it's a great platform. 02:34 Very cool. 02:36 Now the dove is going to tell some different which is very interesting. 02:36 It's not really a venture group that you're in. 02:42

Tell us what it is where you're located in what you do all right. 02:45 Well thanks man meat from teammate. 02:50 We started about 4 years ago. 02:52 We are different in the sense that we don't have a deal flow, 02:56 so we start our own companies. 03:00 We go around the world. 03:01 We talked to smart people try to identify big problems if we think the problem is interesting enough, 03:03 we have our own research group and think then that puts their minds around that. 03:09

And if we think we have an intelligent idea of how to really crack through that problem, 03:14 we put together a team and with the support of our strategic investors build a company around it. 03:20 It's a process that we do once a year, 03:26 so every 12 to 18 months we start a new company. 03:28 The companies revolve around big problems in cyber and data driven challenges. 03:31 Their non competitive. 03:36

So once we start them there's also collaboration that happens between the company. 03:36 So that's sort of the differentiated model. 03:42 OK, I get a sense because we're going to international. 03:46 You might be from another country original. 03:50 You can tell by my accent. 03:53 I know that I'm just guessing now. 03:54 I heard we're on our way to John. 03:57 John and I are going to do the big money thing together right? 03:59 Does everyone see his picture up there? 04:04 Yeah, we mix. 04:07

There is so the most patents in the world. 04:07 Can anyone in the room guess what country has most patents in the world. 04:11 There's a Prize? 04:16 Nope. 04:16 Nope. 04:16 You're close. 04:19 Anyone try another stole 'em all. 04:21 We're getting closer China. 04:26 OK, 04:26 it's not China. 04:28 It's not Israel. 04:28 Who is the most pants in the world? 04:31 But you will say be proud people. 04:34 OK, we're going international though. 04:36 #2 is number 2 is Israel and #3 is Japan is this interesting? 04:39

So on that note, Let's talk about Canada. 04:44 Hello everyone, I'm John refuse. 04:48 I'm the agent for the world's most famous hacker and Top certain cybersecurity keynote speaker Kevin Mitnick. 04:50 You don't know? 04:57 Kevin Mitnick is cyber security basically started with Kevin and his case changed a lot of things. 04:57 A lot of laws he never stole from money, 05:03 but his electronic joyride. 05:06 He broke into dozens and dozens of companies. 05:06

Took over or was able to access most of the telecommunications systems of the US and elsewhere. 05:10 His case was followed worldwide. 05:19 There was a free Kevin Movement. 05:21 I is the subject of countless books and TV. 05:22 If you were here last year. 05:25 Of course you saw them speaking hakli. 05:27 There's the opening keynote speaker and I work with him to why they asked me to be on this panel. 05:29 Is I work with almost. 05:35

All the major cyber security companies, 05:37 startups and otherwise of the big players. 05:40 That leverage Kevin to put in a lead funnels that he does endorsements before people invest in companies. 05:43 They ask Kevin to do security claims validation which is very important which people are missing. 05:49 He does security penetration testing banks and things of that nature. 05:56 So instead of going to prison now he gets paid to hack. 06:00

He still loves hacking this first love and love showing off and now he gets to go on stage and do that and that's what it does. 06:03 So what I do is I help. 06:11 You may help you. 06:12 Create money in revenue because. 06:14 Every hasn't great technology in the room. 06:17 Can I speak to people all the time? 06:20 Countries, security companies, entrepreneurs that great Technology, 06:22 but a lot of them don't have good sales. 06:27

So who work doing global marketing for these companies using Kevin is a brand because the Antihero and in this age of mistrust. 06:29 Ironically, he trust Kevin and very pleased to see the. 06:39 The list come out state 'cause know before who has Kevin's endorsement and their flagship product? 06:44 Is the Kevin Mitnick security awareness training product? 06:49 Is number 2? 06:52 Yeah for being number 2 and that's great. 06:52

So in 17,000 organizations in 170 countries worldwide. 06:58 And I'm here to help you. 07:02 I'm also part of the board of advisors for the event itself. 07:03 I'm pleased to see this is in the 3rd year. 07:07 It keeps morphing and there's something for everybody and you have to make it your own. 07:10 This kind of conference and hope you see you next year as well. 07:15

I see a lot of familiar faces and I see a lot of new ones, 07:19 so hope to work with so John, 07:22 you know I want to say sorry to Canada. 07:24 Sorry for not saying Canada has a lot of patents, 07:26 but you have a gift for someone in this audience. 07:29 Which is one of the things I'm excited about. 07:32 He's telling about Kevin Mitnick. 07:34 Does everyone here know who Kelemen Link is? 07:36 Have you ever met Kevin Mitnick? 07:39 Has he ever handed you his business card? 07:41

OK, so who doesn't have one and can't get into their hotel tonight. 07:44 OK, somebody is going to get one and the business card happens to be lock picking gear. 07:49 I kid you not. 07:53 People lined up for hours for these things, 07:53 but I don't wanna go too far into Kevin. 07:56 I just want to understand that he's like he's a valuable commodity that you can leverage for cyber security companies. 07:58 Your existing underperforming assets and things that we could help with. 08:04

And the reason I'm staying over here for another reason is this something that was talking about Bluetooth eavesdropping on my cell Phone to get my contact list. 08:08 So I put my cell Phone in the right pocket. 08:17 In lead. 08:20 Kevin's not here. 08:20 I don't know. 08:22 We already got that. 08:22 That's good. 08:24 OK, so I'm running cyber defense magazine. 08:24 It's in his 6th year. 08:27 I really appreciate this opportunity to be here and to be with a great panel, 08:28 I won't talk too much. 08:33

I'll go quick, but we have one point 2 million readers. 08:34 We have tons of content, 08:37 it's free. 08:38 It's one of the few things in this world that's free an in GDP are compliance. 08:38 In other words, we didn't collect enough data on everybody. 08:43 These guys would be like we're not funding, 08:46 you're not monetizing all your readers by tracking every button they click. 08:49 But we will one day don't worry but will do it legally. 08:54

So internationally GDPR is going to be a big issue. 08:57 We heard earlier this morning that maybe maybe not the president's administration will do something about it. 09:00 How do you guys feel? 09:06 Let's just go through the panel from Sean will work our way across. 09:07 I want each panelist to give a different view on an answer question. 09:11 Keep them short and entertaining if we can. 09:15

Would you invest in a company that just showed up today and says I solve the GDPR problem? 09:18 I've got it, of course. 09:25 Anyway, says they solve it of course. 09:27 So my take on GDP are there is going to be really too. 09:29 Segments of folks that. 09:34 Benefit attorneys. 09:34 And consultants. 09:40 And the reason why is right now companies are trying to figure out May 20 ships coming up. 09:40 How do I solve it? 09:47

IE How do I stay away from getting fine and so they're really trying to understand the gaps. 09:48 And you know where I can put the checks in the box an for a start up to come in and be a platform is pretty unlikely. 09:55 They're gonna be able to platform and solve the GDPR issue. 10:03 Appoint solution? 10:07 Maybe. 10:07 But everyone is so busy right now. 10:07 PT solutions around GDP are are going to be very difficult to get attention. 10:12 So my take is right now. 10:16

There's so much going to be so much fun by the big guys like we solve your problem. 10:18 Don't worry that I would not fund. 10:22 Personally, I would not find a GPR company at this point. 10:25 I can't say that forge point capital won't fund one. 10:28 We're doing some arm wrestling, 10:31 but right now I think we all agree that the attorneys and the pro services folks are going to really make the money for the next period of time. 10:33 That's good answer. 10:42

And what do you think about this whole GDP? 10:42 Our privacy and this nightmare which I think V CS love to fund problems right? 10:46 We want to solve a big problem. 10:51 Is this a big problem that you would invest in a solution for? 10:53 Privacy generally, yes. 10:58 I I think that in many ways we look for the bureaucrats of the world to solve some of the problems that we're dealing with. 10:58

And I don't think it will come into the great surprise that in most cases they aggravate the problem. 11:09 And so. 11:15 As as technologists, we really shouldn't blame them because we're not solving it either. 11:18 And the dilemmas that Sisoes and CIOs and boards and bureaucratic group bureaucrats and legislators are getting right now apart of them have to do with a very simple phenomena. 11:24 We blew up the chart on interconnectivity. 11:36

Everything became interconnectivity. 11:39 Data became the number one monetized resource on the planet. 11:39 Everything is in there. 11:46 Connected and in one generation we changed the whole concept of privacy. 11:46 When I was growing up everything was private and you would choose what you wanted to publicize that is flipped around. 11:52 Everybody's trying to get their minds around it. 12:00

The attackers are using the fact that everything the hyperconnectivity curve is out of the charts to become more and more effective in their attacks's defense were still reactive. 12:03 We're still finding our ways trying to get better and there's a gap that's opening. 12:13 The GDPR is getting is coming after that gap. 12:18 So is the so is Zuckerberg is being questioned right? 12:22 So do you think that lowered his valuation significantly? 12:25

The fact that Facebook is leaking out millions of records accidental E. 12:29 Actually, I don't, I don't. 12:35 I don't think this is accidental. 12:37 EI think this is another story, 12:39 but I think that our biggest problem is that we are really trying still reactive. 12:41 We're waiting for the lawyers interview request to solve it for us. 12:46

We need to come up with the next generation of solutions that will enable the potential of interconnectivity in data mining to surge and solve a lot of the world's 12:51 biggest problems without giving up privacy altogether. 13:01 and I think there. 13:05 In the academia in other places, 13:05 there are pockets of capabilities that we're looking at right now that can bring fundamental changes. 13:08 Your dog don't think. 13:13 Just fundamentally. 13:13

Everyone needs to agree on what privacy is if if it's going to be solved in that matter. 13:16 I mean that's solving world hunger. 13:21 Well, not really. 13:23 I'll give you an example, 13:23 right? 13:25 So I agree that we need to understand what privacy is, 13:25 and that's the SOC decision and cultural decision and psychological decision. 13:29 But fundamentally I think if you take the concept of encryption, 13:33 for example, write a lot of companies do encryption, 13:37 but encryption. 13:40

It only captures data in 2 states, 13:40 right? 13:43 Either it's moving or you're not using it. 13:43 We need to find ways to change that reality. 13:47 Take it to the next step. 13:50 And what if we could use information while it's encrypted and solve some of the biggest problems in privacy? 13:52 So I think I would like to see coming out of this room. 13:59 Would I push my research groups to do is come up with solutions that will make GDP are irrelevant? 14:03 Notes. 14:09

You guys taking notes. 14:09 I'm going to write a story about this. 14:12 Speaking of which. 14:14 John remember visa PCI? 14:14 Everyone said I'm PCI compliant. 14:17 You can trust me. 14:19 I promise you know your credit card data won't be stolen. 14:19 People like Kevin Mitnick are like boom the databases unencrypted, 14:24 you know it happened at the gap. 14:29 the SEC got mad at them. 14:31 Do you? 14:32 Do you think it's all hype right now or is it compliance test? 14:32

Because very limited is a very low bar. 14:37 First off, I really privacy as a human right. 14:39 I I think that's if we start from that standpoint we can be a better society, 14:43 but that might be Canadian company Open. 14:47 For people that have already invested in service companies, 14:50 I think you're going to be tremendous growth in that area, 14:53 specifically showing such a great light on incident response, 14:56 which hasn't got that big focus by most of the companies. 15:00

You know security companies. 15:03 We live in a kind of a bubble, 15:03 but most companies don't know that they should be doing security penetration testing. 15:07 They know they should be doing compliance testing to get their visa MasterCard and do the billing, 15:11 but they don't know they should be actually doing wargaming. 15:17 And how easy it is to bypass it? 15:20 And this is an education idea where we need to get that messaging out there. 15:23

And as an industry we're not doing that or even the government sector. 15:29 So Qualis found stone McAfee right which I think, 15:34 yeah, that wasn't a wall company. 15:38 All these auditing engines came out to find there was a whole area called vulnerability. 15:40 Management was big and hot for period and now today I don't hear as much about it but. 15:47 I'm hearing things like we need to audit the cloud. 15:53 We need Dave do all talked about sass apps right. 15:56

How many apps do you have? 16:00 So my next question is really is this. 16:01 Is this the hottest area to invest in right now is to go back to the drawing board of saying we don't even know how we're connected in the cloud. 16:04 We have so many apps are running. 16:13 Let's say the CIO of big public company or even a medium size company and we offload the risk to these 3rd party assass providers. 16:15 Is this a hot area that you guys would want to invest in today? 16:24

You know, dig in. 16:27 Figure out what apps are running. 16:27 How are they connected? 16:30 It's really I'm getting back to privacy is where is all this data being stored and if we don't know, 16:30 then that's why we keep losing it. 16:37 Sean, what do you think? 16:39 Clearly talk to the sea shells and don't tell you the problem is not solved. 16:41 Any moving to the cloud. 16:47 There were still not there. 16:49 There were moving the Crown jewels to. 16:51

To the cloud is all about authentication, 16:54 identity management and being able to automate that process and not make it so painful. 16:57 And we actually looking couple of matter fact. 17:03 We're going to find a company in Canada of all places. 17:06 There's doing sass, identity management, 17:09 more for the SMB type market to be able to help them migrate to the cloud. 17:12 But I think at the end of the day, 17:17 Gary, right? 17:19

It's about the data and it's about how you protect that. 17:19 The applications we invested company called Prevot. 17:24 Which does rasp which is runtime application, 17:27 self protection. 17:30 And again it's all about automating heard that theme and you continue to hear that theme which the VC lemmings love that term. 17:30 But it's really about being able to automate that and make it easy for the dev OPS in this setup guys to be able to have that application protected. 17:40

So when your outward facing on a cloud application that you don't have to worry about whether that's hacked or not. 17:50 Whether there's any vulnerabilities. 17:58 That's taken care of because this runtime application. 17:58 Self protection is actually solving that problem, 18:04 so there's a lot of different ways to approach it. 18:07 But at the end of the day we need to solve that, 18:11 but it's like any of these opportunities. 18:14

It's not going to be solved with just one solution before you answer the dub. 18:17 Israel has something I think they called the Iron Dome right? 18:22 I'm finding all these new Israeli startups like Dome 9. 18:27 In Como in others or no coronet coral that are saying we can help you secure the cloud. 18:30 And usually Israel. 18:36 Like I said, 18:36 #2 on pads is pretty hot on these investments. 18:38 You said you do one company a year that you guys will build and spin out. 18:40

Will you do a company this year on the cloud? 18:45 Can you tell us what company you chose to do and why? 18:48 We don't know yet, but you know. 18:52 Other cloud. 18:55 We don't know where we're going to research phase. 18:55 I'm trying to see if as Sean said, 18:59 we can really revolution identity identity management so that the software takes care of itself rather than the infrastructure. 19:01

Keep taking care of the software, 19:09 so think about the infrastructure as a given and the software has an identity of its own. 19:11 That is that allows it to work within guardrails and only talk to other software that knows that they are authenticated and it could talk. 19:17 Each other. 19:26 So that's something that we're looking at, 19:26 but still in the nascent stage. 19:29

I think one of the one of the things that Sean said about GDP are going back to is that there's a fundamental in a previous life. 19:31 I headed an organization that's called 8200, 19:40 which is the Israeli version of the NSA and what we learned very very fast is that you win big when you understand something which is fundamentally different, 19:43 and then it becomes a contest. 19:53 It's becomes a learning contest. 19:55 And. 19:57

You know we have the attackers in the hacker is in a cyber crime and nation states. 19:57 They're not going to give up. 20:04 This is not a problem that's going to go away and digital life is not going to go away either. 20:06 And so the question is in that constant battle between attack and defence. 20:13 Every once in a while. 20:18 Can you send offense now that I'm on the defense side every once in a while? 20:19 Can you send offense to reinvent itself? 20:24

And that's why I think and. 20:27 That's one problem. 20:29 The other problem is we're creating as investors and Company Builders Is there were building so many companies that the season the CIOs you know just to 20:29 try to go through all these companies understand what the hell they're saying. 20:38 The 1st place is becoming a problem itself and the regulators are lagging behind. 20:43 So what? 20:47

We must look for our fundamental changes that solve big problems and send the attackers to reinvent himself. 20:47 By the way they will, 20:54 but it's going to take them a long time. 20:55 So I think the winners are going to be the ones that really understand fundamentals of cyber attack. 20:57 Fundamentals of water. 21:03 How do attackers think? 21:03 How do they operate and how can I send them to reinvent themselves? 21:05 And that's why I brought the idea of homomorphic encryption. 21:09

If we could take homomorphic encryption, 21:12 which basically means that we could have our data encrypted and still use it, 21:15 then privacy becomes a totally different question. 21:19 That's a game changer. 21:22 That's a game changer. 21:22 Is it going to cost a lot? 21:25 Can we make it very practical? 21:26 It's going to take a lot of effort, 21:28 but if we can do that and have data encrypted, 21:30 not only when it's moving. 21:32 Or when it's at rest, 21:34 but when we're actually using it. 21:35

Then we can start doing the balancing act between privacy and other rights. 21:37 Because I I agree that privacy is a natural sort of right that we have is human, 21:41 but we also have other rights and we want to balance it. 21:45 So before John answers and I want to, 21:49 I've got something I want to share in a minute. 21:51 That's really interesting about what these gentlemen are talking about is. 21:54 I spoke to an amazing Canadian Fellow. 21:59

Who's been on Dancing with the stars? 22:02 Do you know who I'm talking about? 22:04 Does anyone in the audience don't talk about? 22:06 He runs one of the largest MSS peas in the world. 22:09 Anybody? 22:12 Robert Robert Hersha vac an I sent to Robert and I want to get your opinion on this. 22:12 Robert. 22:17 This is because we're talking about an international investing, 22:17 he said, Hey Robert. 22:22 If there was a start up the hottest startup in the world I mean, 22:22 you saw the technology. 22:27

It looks amazing, 22:27 it's the next scene, pass Splunk or arc cider alien vault or whatever or it's the next ID SIPSDB Networks who renamed to DB cybertech. 22:29 This is the next big thing. 22:37 Would you deploy it for your clients? 22:39 John, what do you think, 22:43 he said. 22:44 It begins with SHOW. 22:44 Show me the money. 22:49 That's what he said, 22:49 he said. 22:52 Show me the money, 22:52 he said if there not already big, 22:54 I'm not going to risk my MSSP reputation. 22:56 On a startup. 22:59

So how do we get that next big startup funded? 22:59 If you know if Roberts a little gun shy or is that the right thing to be? 23:04 Gun shy is a big MSSP. 23:09 How do you get the next big startup funded well? 23:13 You need to show that it works. 23:18 And most people don't have their stuff tested, 23:21 you know. 23:24 One of The Dirty secrets that I'm not going to. 23:24 Names we could approach by a lot of people do endorsements. 23:28 And they just want to give the money to Kevin's account. 23:32

Just say this is the greatest thing since sliced bread and all he's got is this credit that's all hackers half credit, 23:36 and he says no, you need to get penetrated tested big companies, 23:43 big companies that you see on the stock market. 23:47 And they don't want to pay for the test and they're using the Microsoft Model. 23:51 Let's release it. 23:54 Out into the wild and let the users tell us what's wrong with it. 23:54 And there's nothing wrong with Microsoft. 23:59

It works for that operating system. 24:01 People go with it in the solvent fairly quickly. 24:03 So to get the next thing to find it, 24:06 you need to have actual people that you can trust. 24:09 Test again and that is the problem that Roger has is the trust of these products to fund them I think. 24:13 So talk to them and I've never talking man. 24:21 He lives in a different part of the country. 24:23 There's a big country. 24:25 It's la. 24:25 It's allows you to say sorry, 24:28 right? 24:32

Well, utoronto la Vancouver Operation so. 24:32 So. 24:41 But you know, I'll challenge you and what Robert told you. 24:41 Because I think if he sees a technology that is young, 24:45 immature has been tested and is truly revolutionary. 24:49 He'll use inhaled, sell it and he does. 24:53 He said he uses one of our technologies. 24:56 One of the companies that we built. 24:59 It's a young company. 25:02 It's 2 1/2 years old. 25:02 Wait, this is like no offense to my president. 25:05

I only started with a million dollars. 25:09 Is this a young company that started with 50,000,000 two hundred million in funding? 25:12 Started with $5,000,000 just five million five million. 25:17 OK keep that hand up to tell the truth. 25:21 The whole truth, alright, keep going. 25:24 I like it 5 million dollars. 25:26 Our model is very simple. 25:28 We put $5,000,000 after we've done the 12 months of research ideations validation. 25:30

We put $5,000,000 at a pre money valuation that's set deal 5,000,000. 25:36 So the founders and management. 25:40 Get 50%. 25:42 We own 50% 25:42 and together we go and build the company. 25:44 So 5 million dollars. 25:46 Do you find the founders or do you guys? 25:46 So we come up with our idea where in our think tank and we go find the right research people. 25:50 Or in this case we were out the problem that we articulated is the SNR the signal to noise. 25:56

Raise your problem in socks and we said we understand attackers were going to find a better way to undefine attackers and detect them with the relatively very low false 26:01 positive we went out. 26:11 We research it. 26:11 For 6 months we brought in attackers. 26:14 We got ers to work with us on that and then at the after 12 months we put the final knowledge. 26:16 We started rolling out to your point. 26:22 We also had designed partners that were very large companies. 26:24

In this case Citigroup. 26:28 That was our design partner. 26:28 So positive for sex. 26:31 Did you guys hear that? 26:31 'cause you know my goal is to squeeze the info out of them for you. 26:34 You have a startup you funded in a round 5,000,000 and you found a big, 26:38 big, trusted name to help design the solution in science smart design it should we all be doing this? 26:43 Test the hell out of it. 26:50 And then we went to Robert and we said you know this is the best thing. 26:53

The 2nd best thing since sliced bread. 26:57 But he started Yeah, but that I'm calling. 27:00 Ram is not derivative. 27:02 Test again. 27:02 So you have a good testing bed, 27:04 then a good testbed. 27:06 You know? 27:06 It's not. 27:08 It's not like the average start up that you would see out in the hallway where they're looking for funding, 27:08 but you have no idea if you can invest 20,000,000 two or 10,000,000 or whatever rounder looking at you. 27:15

Don't know what you're investigating like we had a device, 27:21 something test 100 million into it. 27:24 This is the device that they wanted to do it. 27:26 The investor came to Kevin. 27:29 It's a coming please. 27:31 Security clans secure he. 27:31 He found that they've had the credentials on a hidden directory on the drive. 27:34 I can't go into too much details, 27:39 but it was complete fraud and these people were very close to cutting a check there. 27:42

Going to cut the check and then people were going to figure out the solution. 27:47 So due diligence 101 sounds like we're adding to do diligence a little bit deeper technical analysis and one of the questions I have. 27:53 Maybe will use this for the price. 28:02 Is Jamie sure I gotta get back into my hotel room? 28:05 It's the Ritz Carlton. 28:08 Kidding. 28:08 That's good someone's going to win this prize. 28:10

Does anyone know how many records have been breached in America and Canada? 28:14 TK Maxx winners. 28:19 Whatever. 28:19 How many records have been breached since 2005? 28:19 I'm going to go fast like the HQ game on your phones. 28:26 Somebody raise your hand throw number of it. 28:30 Go ahead. 2,000,000 going once going twice. 28:32 How many? 28:38 Little bit higher keep going. 28:40 Who said 5, you're not there yet. 28:43 10 billion and you win. 28:47 You get the price. 28:49

It's 10,000,000 go to privacy rights come up later and get this OK. 28:49 Alright, what's your name Sir? 28:55 And can I have your credit card just for? 28:58 So. 29:01 Privatis a joke, right? 29:01 I'm not kidding. 29:05 I gotta get home tonight. 29:05 Privacyrights.org privacy, RIGHT? 29:07 S.org. 29:07 We're looking at 10 billion records breached and I'm not picking on names of companies like Yahoo and poor Verizon. 29:07 I think who acquired them but 10 built billion. 29:18 did I do billion or million? 29:21

Show me the money? 29:23 I'm sorry billion million. 29:23 Remember the really interesting thing about the 10 billion number is came up in earlier panelists. 29:26 So how many. 29:33 Of those were actually reported. 29:33 I mean to me as privacy and as a consumer as well as an investor that's really important. 29:36 An again, nothing against attorneys. 29:42 But there are laws, SEC. 29:45 And there are a lot of laws out there. 29:46 Talk about reporting. 29:49

There was just a law that was put in place for health care. 29:49 Ransomware is considered a breach. 29:55 You had to report it well that lasted about 6 months before there were some some hand waving and now unless it does certain things, 29:57 it doesn't have to be reported so that to me is the biggest problem with these breaches. 30:05 Is there not being reported and the problem is that it's all about? 30:10 Show me the money because. 30:15

There are companies out there ID experts and and so on who will give you bridge remediation would take care of the credit monitoring and reporting in this self protection. 30:17 So that's really important that we as investors, 30:27 that make sure that those are we raise our hands and make sure those are reported. 30:30 That's a huge issue. 30:36 Huge issue. 30:36 So. 30:38 Every state in America has some breach disclosure act. 30:38 The problem is right. 30:42

Within 30 days you must disclose you been breached and DFS in New York, 30:42 DFS 500 or whatever NCY whatever it's called here in the Big Apple, 30:47 you must disclose if you're in the finance industry and Dobbs said something called socks, 30:51 which is not sarbanes Oxley, 30:57 but secure operations center. 30:59 But you know, 30:59 we have our Analogies Sarbanes Oxley Section 404 financials got mangled or stolen HIPAA HITECH. 31:01 We have all these regulations. 31:07

And yet, is their teeth in them or not? 31:09 And so that's my question is, 31:11 do we look internationally? 31:13 This is an international conversation. 31:13 So do you guys want to invest outside of the US where there's going to be more teeth like GDP? 31:17 Or do you want to invest in startups or mid market companies in the EU? 31:22 Let me give you an example. 31:27 G data. 31:28 Has anyone heard of G data. 31:28 German company, one of the oldest antivirus companies in the world. 31:31

Nobody has ever heard of them. 31:35 They get like a 90% 31:37 score on virus bulletin, but nobody hears her to them right? 31:38 Would you? 31:42 Guys maybe G data is doing around to go public on the maybe the London exchange. 31:42 Would you want to make an investment if they do a great job? 31:47 Where would you invest outside of the US and why? 31:51 Let's just go to each panelist on that. 31:54 Yeah, I won't talk about Israel. 31:57

We are model is we invest around the world and then we actually do exactly the Israeli companies do. 31:59 Is we bring the management team and or the sales marking back in the US were really the spending is but we leave the development teams. 32:07 We have a company reversing labs, 32:18 got 60 or 80 engineers in Zagreb. 32:21 Croatia Alien vault was founded in Spain. 32:24 Students pain. 32:28 So we have them around the world, 32:28 but we moved the headquarters back. 32:31 We're huge fans. 32:33

We actually are huge fans of Canada. 32:33 We've had 6, I think investments in Canada over the years and 4 really nice accent. 32:37 So we're strong believers is about the innovation, 32:42 the technology and the cost of doing business is exit around the world. 32:46 Although we're located in Silicon Valley, 32:50 just our portfolio, the Forge Point Capital Portfolios a dozen companies. 32:53 Less than half of those are actually located in Silicon Valley on the East Coast. 32:58

We gotta couple of say in Europe and so on. 33:03 So we believe that we go where the technology is just one last note, 33:06 my personal largest exit was for a company in of all places. 33:11 Chicago, IL company called certify just bought by American Express. 33:15 You know how many investments you know? 33:20 People look at Chicago as a Boston Austin so on, 33:23 so we're not wrapped around the axle on companies that are from the four different major geos. 33:27

Madame other than Tel Aviv. 33:36 But we know great number patents, 33:40 and we're going to have a conversation on patents before we end this panel. 33:41 If we have time. 33:45 Where else would you look to invest? 33:45 What other countries do you think are interesting? 33:48 We we go after the talent, 33:51 whoever whatever place we believe we can have some kind of advantage of getting the Top talents to work with us that were will go. 33:53 That's why we started out in Tel Aviv. 34:01

We just have an unfair advantage. 34:04 Would you invest in Russia or China today after what we've heard from the White House on? 34:06 Maybe we want these phones? 34:12 Maybe we don't can spur ski's out 'cause Persky's in Worcester easy. 34:13 I think that's a very easy answer. 34:18 The answer is no, no. 34:20 No China, no. 34:21 Russia in cyber perk Reno. 34:21 Now we wouldn't wouldn't invest, 34:25 and we wouldn't take money problems because of obvious reasons. 34:27

And still you know the market for the buyers or 50% 34:32 in the US and the rest. 34:36 Probably Europe in Japan anyways. 34:38 And so the answer is no. 34:40 OK John, before you tell us about Canada, 34:43 which I love and job kidding. 34:45 So I was recently in China and I was the only American speaker to Chinese threat Intel Conference and they have a lot of innovation going on in China right 34:47 now. 34:56 One of them called threat book. 34:56 You guys heard a threat book anyone. 34:58

They have a US office to actually have a research lab in the US. 35:01 In Seattle, the CEO goes. 35:04 I don't want to do business in America because of how things are. 35:06 I have more business in mainland China than I'll ever have, 35:09 and he's happy to stay in his location. 35:12 We can't even convince him to come this way, 35:14 but he's willing to sell or licenses threat Intel. 35:17 The cool part? 35:20

I know we've heard too much about threat Intel, 35:20 but the cool part about threat Intel is it's not malware. 35:23 I mean if the thread Intel is bad, 35:26 right? 35:28 If someone sent you bad until you have a D Dos. 35:28 And they'd be out of business, 35:31 but I'm wondering, would you invest in threat Intel out of countries that aren't China in Russia or not interested in thread until definitely not at our stage. 35:33 As a startup, you need to choose your battles. 35:44

The last battle that I want to fight right now is to get into the crossfire between on superpowers. 35:47 We've seen other startups getting there. 35:54 It becomes ugly very fast. 35:57 Yeah we as our credibility is going to be by selling to the blue chip. 35:59 Fortune 500 companies in the US and I think. 36:04 In today's cyber security environment, 36:08 regardless of other countries, you can build a great company that doesn't sell only in the US. 36:11

But I think it's going to be almost impossible to build a grade fiber company that really has an impact that hasn't done it in the US. 36:17 It is just the way things are. 36:26 Thank you and John what are your feelings? 36:29 So for. 36:36 An investor make sure that you when you investment company outside of the US that they are ready and prepared and willing to move their corporate vehicle to 36:36 the US because you'll be able to track more money. 36:46

You better exit strategies and there's a better acceptance of months of corporate culture and networking as well. 36:48 Specifically like I get to see a lot of something you might want to take a look at is we do a lot of events for. 36:55 Cut the countries where they have growth, 37:01 innovation funds and things of this nature. 37:04

Weather pouring money into cyber security companies and you could take a look at some of these things to do P3 partnerships in your investing. 37:06 So maybe you can minimize some of your risk when you're going after some of these investments because the countries are behind their called subsidies of course. 37:13 And you might take a look at that kind of thing. 37:22 I would also suggest that. 37:25

If you were really played more of a say factor globally that you would look at the Commonwealth countries. 37:27 I know that sounds kind of lost me, 37:33 but it's really is a way that you should look towards that kind of safeties. 37:35 But globalization kind of feel. 37:40 Now. 37:42 That being said, they pick the Pacific. 37:42 Rim countries are great. 37:45

Philippines has a very good population through infrastructures the greatest as far as Internet stability but very cheap and easy to produce products there and content. 37:45 Factories support your products. 37:57 So would you believe that I vowed source my receptionist. 37:57 To Canada. 38:05 That's that's correct. 38:05 My mother appreciates yes. 38:08 They speak English in Canada. 38:08 I found that out by the way, 38:11 it's pretty cool. 38:13

It's more of the Queens English, 38:13 the racer 3rd of Ruby, 38:16 Ruby, Ruby, Red, whatever. 38:17 I think they call themselves Newfies nicest people in the world. 38:17 People say I have the best receptions in the world in Canadian, 38:23 there you go, so we've talked about Israel. 38:27 We've talked about Canada. 38:29 We talked about China and Russia off limits, 38:29 right? 38:33 We talked about Spain, 38:33 where else have you invested Did you say the Ukraine or somewhere? 38:35 I show Asia very cool. 38:39

We're down to maybe 3 minutes. 38:41 So if I can do a rapid fire Round 2 more questions and then if we have maybe 1 or 2 in the audience and we do have a winner, 38:43 don't forget lock picking here. 38:51 I'm not responsible if it works. 38:53 It works. 38:55 Ritz Carlton Top floor. 38:57 Let me know. 38:57 OK, so Sean, you and I had a chat earlier about patents and I heard this morning. 38:59 Don't waste your time on patents by I think Dave did Walt just move on, 39:05 just real quick. 39:10

Let's just go around the panel patents. 39:10 Yes no, maybe? 39:14 Why? 39:14 Why not I could never disagree with the wall. 39:14 I actually concur 100% with Dave that patents are interesting, 39:18 but it's not have companies that have patent attorneys lined up in their writing patterns and so on. 39:22 But it. 39:29 It's good to have them, 39:29 but it's not a high priority. 39:32 You know I agree with much rather spend the money on go to market. 39:33

That's good to hear you know how much it costs once you have your patent is issued, 39:37 but don't you want the PCT? 39:42 You want the PCT with Israeli? 39:43 Want the PCT with England? 39:45 You want the peace into it by the time you're done on patent fees, 39:47 the company's bankrupt? 39:51 Well at the end of the day, 39:51 it's all about OK. 39:54 Then you have to defend them. 39:54 That's the biggest cost way back in 2002, 39:56 when I've S and zone labs. 39:59 We had some really interesting patents. 40:00

Another company we ended up suing that company an we won. 40:03 We got some musically license fees back. 40:08 I don't think when checkpoint bought us. 40:12 They really cared about you. 40:13 Didn't really care. 40:15 Take that up. 40:15

Depends with the outcome, what the technology is an outcome you want and I'm not going to say anything about day because he's on my board and the chairman of 40:17 the board is also my boss. 40:27 'cause he's the chairman of clarity and on the vice chairman. 40:29 You know why it's called the apex predator? 40:33 Can you tell us all I can tell you can tell us bug Peyton. 40:36 I think it's really about where you want to go. 40:40 If you want to build a company that will go IPO. 40:44

And become a sustainable growth company and you have a real differentiated RND team that is doing something which is defendable in the 1st place. 40:47 I would say by all means, 40:56 as soon as possible, go and do it. 40:57 Because when you become a big company and you have deep pockets, 40:59 somebody will go after you and use them for defense, 41:03 not for office. 41:06 Use them for defense in those scenarios. 41:06

Now if you're doing a meet to something that's already been done, 41:10 you just turn it trying to do a better mousetrap and you want to get sold as soon as possible to. 41:14 Checkpoint or semantic, then by all means go to market and show that you read that you can actually do it. 41:19 So I think it really depends and a lot of these patents are really in software are so easy to circumvent that they don't make sense. 41:27

But if you're doing something which is fundamental, 41:36 then yes. 41:39 John. 41:42 Over 100 million people use the software and systems that produce before it was an agent designed systems. 41:42 And. 41:50 Patents are a check mark, 41:50 but there not a driving force in the way he wanted us. 41:53 You need to work from the cash register on back earlier panels here. 41:56 People. 42:00 How many people get revenant? 42:00 How many goods that stage. 42:03 It's just like an ordinary business. 42:05

If you are not able to show a path to create revenue right away. 42:07 Do not invest in that unless it's a dream or a passion. 42:11 Or you want to just throw money on the race track and that's fair enough. 42:15 But a problem. 42:19 But focus on the cash register on back of their sales and there's delivery. 42:19 There's lots of delivery. 42:25 Just not very good sales and that the growth part of our industry. 42:25 So invest in that side of things. 42:31 3 brilliant men with common sense. 42:33

Are there any questions for them before we wrap up this awesome panel? 42:36 Anybody all questions are good. 42:40 This is your one shot. 42:42 Anybody come on? 42:44 There's gotta be 1 or 2 questions. 42:44 We're going to wait it out until someone raises their hand. 42:48 Go ahead. 42:52 Out there. 42:54 Breaking of the. 42:58 Let me try to repeat what he said. 43:05 No. 43:07 I can repeat it a little a TLS 1.3. 43:07 So TLS is the transport layer security protocol, 43:10 which is kind of the future of SSL. 43:13

Is anyone working on breaking it doing man in the middle like the old whale SSL VPN from Israel? 43:15 Decryption. 43:23 Be able to break it. 43:23 You won't be able to inspect. 43:26 Payload will hold on. 43:28 The Israelis know how to inspect everything. 43:28 The dogs. 43:33 You can answer this. 43:33 What are you doing? 43:36 What are you doing man? 43:36 TLS 1.4 are you been tested in the lab now? 43:40 We're not so. 43:43 The answer is not at this stage. 43:43 He blinks 3 times. 43:46 Did you notice that next question? 43:46

That is a great question by the way, 43:52 and very technical. 43:54 I liked it. 43:54 Any question? 43:55 We're going international. 43:55 Anybody here from another country? 43:58 I'm not going to name countries. 43:59 Is there anyone here from Saudi Arabia was a question I see you in the back? 44:01 Come on. 44:05 Who's what's that magazine? 44:05 What's that? 44:08 Give us one question before the panel lens. 44:08 He's saying we've covered everything. 44:13 Well, I really appreciate the opportunity of moderate this. 44:15

My first time moderating folks by the way, 44:18 honestly, thank you all so much. 44:20 Great panel. 44:22 All right. 44:29

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