Re: "Market Failures"

[Thomas Dullien via Dailydave <dailydave () lists aitelfoundation org>]

Hey all,

2022 is a year in which I post to Dailydave *at least twice*. This hasn't
happened in a while.

Dave's last paragraph hits on something that I have repeated to startup
founders and other folks in security for the last few years. When I started
optimyze, a lot of my acquaintances asked me: "Why not a security
company?". And my reply was always a variant of the following:

In B2B, there are three categories of product, and the importance of your
sales org goes up exponentially as you travel down that list:
1. The best category to be in is "top line growth" products. These are
products that the customer buys, and they grow their top line -- e.g. they
make more money. It is the best category of B2B product to build, and
things like AdWords fit right into this category. You won't need a huge
sales force for this, as the economics for buying the product are great,
and it will be easy to find an internal champion that wants to shine by
pushing through the purchase of your product. If you have an idea in this
category, and the TAM is large, go for it.
2. The second best category is "bottom line growth" products. They
essentially say "we will measurably save you money, without you having to
drastically change the way you do business". They are not quite as
compelling as the first category, and will work best in down markets or
recessions, but they will still allow a good product to shine, and your
sales org to not dictate all aspects of your business.
3. Everything else. This is the category where your success will largely be
driven by your sales org, as the economics of your product are not
clear-cut. The quality of your engineering, or whether your product
measurably works, is secondary here - it is only relevant to the extent
that it damages or enhances your marketing message, and deficiencies can be
compensated by louder voices. (Engineering also matters "all else being
equal", but in this category you cannot compensate a weaker sales/marketing
org with better engineering).

Security usually falls into category 3. So as a technical startup founder
that is not good at building sales orgs, you're probably well-advised to
stay away from security products, unless you somehow managed to find a way
to be in (1) or (2). This is also a good explanation why RSA looks the way
it does.

Cheers,
Halvar/Thomas

On Wed, 24 Aug 2022, 15:48 Dave Aitel via Dailydave, <
dailydave () lists aitelfoundation org> wrote:

> If you were at a talk at Defcon this year in the Policy track, you
> probably heard someone talk about how they, as a government official, are
> there to address "market failures". And immediately you thought: This is a
> load of nonsense.
>
> Because that government official is not allowed to, and has no intentions
> of, addressing any market failures whatsoever. If the Government was going
> to address market failures, they'd have to find some way to convince every
> cloud provider from making their security features the upsell on the
> Platinum package. They'd have to talk about how trying to get into
> different markets means every social media company faces huge pressures to
> put Indian spies on their network.
>
> Obviously you know, as someone who did not emerge from under a rock into
> the security community yesterday, that the answer to having a malicious
> insider on your network is probably some smart segmentation, which we call
> "Zero Trust" now.
>
> But Zero Trust is expensive! And most social media companies are not
> exactly profitable as the great monster known as TikTok has eaten every
> eyeball in every market because the very concept of having people
> explicitly choose who their friends are is outdated now.
>
> In fact, as everyone is pointing out, almost all companies you know are in
> this position! They're cutting costs by sending jobs overseas while
> spending huge amounts of money propping up their stock prices and paying
> their executives to sell them to a dwindling market of buyers. Private
> Equity companies spend every effort on squeezing the last dollar out of old
> enterprise software by exploiting the lock-in they have on small
> businesses.
>
> And as critical as Twitter is, we have the exact same dynamic with our
> privatized water and power companies - who have no plans to make strategic
> investments in security or anything really - which is why on public calls
> you can hear them humiliating themselves asking Jen Easterly to absorb the
> entire costs of their security programs.
>
> The ideal practice for all of these companies is to offload their costs
> onto the taxpayer, which is why instead of investing in security, they cry
> for the FBI to go collect their bitcoin from whatever ransomware crews are
> on their network this week using offensive cyber operations that themselves
> cost the government an order of magnitude more than the bitcoin is worth.
>
> As you're sitting in that Defcon talk, listening to someone from
> government talk about how they only want to regulate with the "input of
> industry" or something, you have to wonder: if this is every company we
> know, maybe the market failure isn't just how hard it is to buy a good
> security product because they all abuse the copyright system to avoid any
> kind of performance transparency. Maybe it's also how hard it is to SELL a
> good security product because every single company is trying to cut their
> budget to the exact minimum amount that will allow them to tell the FBI
> they did their best, and the FBI needs to go out there and pick up their
> slack.
>
> -dave
>
> _______________________________________________
> Dailydave mailing list -- dailydave () lists aitelfoundation org
> To unsubscribe send an email to dailydave-leave () lists aitelfoundation org
_______________________________________________
Dailydave mailing list -- dailydave () lists aitelfoundation org
To unsubscribe send an email to dailydave-leave () lists aitelfoundation org