Goon: All right. This is going to be the meet the VC panel. FYI there are two mics
there. If you have any questions when it's Q&A by direction here, please go to one of
the mics. Cool. Let's give them a big hand. (Applause).
JOHN HERING: Cool. So I'm John Hering. I work at a company called Lookout. Lookout
does mobile security. We actually started here at DEF CON. After a number of years of
doing research and spending time here in the community, we were able to build a business
and ended up raising venture capital. So we thought it would be interesting sharing our
stories and getting to know some of the top venture capitalists.
Maybe we can introduce ourselves, starting with you, JJ.
JOHN JACK: Hello. My name is John Jack. I go by JJ. Clever. I was the CEO of a security
company called Fortify Software, which was security at the application level. We were
one of the pioneers in that space at least in terms of commercializing a lot of work
that had been done prior to us starting the company.
We grew that company fairly well. Became the standard in financial institutions, governments,
telcos and actually the standard in commercial software providers, people like Oracle and
SAP and EMC all used this product in order to root out vulnerabilities in the software
that they delivered to their customers. That company was acquired by Hewlett Packard
in 2010. Previous to that I was CEO of a couple other companies. One we sold to VMware. One
we sold to a company called Corporate Data. And now I work part time with a VC firm called
Andreessen Horowitz. We have a number of investments in security.
And I also part time do some consulting and serve as an independent Director on other
venture backed companies. Thank you. MATT OCKO: Hi. I'm Matt Ocko. I very unglamorously
go by Matt. I'm the co-founder and co-managing partner of a firm called Data Collective.
We like doing deep, dark, difficult stuff that most of our venture colleagues ironically,
except for the guys on this panel, disdain or don't understand. It's where we've made
most of our money. It seems to be a reasonable thesis across 220 companies over nearly 25
years we've had fewer than 20 losses and we've made our entrepreneurs about $30 billion net
of boom, bust, IRS, you name it. I think some of the distinguishing characters
of our firm that may be a little unusual is that three out of the four partners still
read and write code. Still understand chip design. If you show me a 10 million gig design
and are lying to me about the clock tree, I will know. And we've really enjoyed doing
really fundamental stuff. We're the seed investors in XenSource and very early on in VeriSign
a number of companies in the security space are important parts of Google and VMware and
Facebook and some other demanding customers around the world. And we love this stuff and
I'm very happy to be here today. PING LI: Good afternoon. I'm Ping Li, a
partner at Accel. Been doing venture investment for about ten years now, brought Accel over
from the see stage to the growth stage. Offices over in the U.S., Silicon Valley, London,
China and India. Our goal is always to find exciting entrepreneurs that are trying to
build category defining companies and been investing in security for quite some time
and this is just one of many companies we work with.
DEEPAK JEEVANKUMAR: Hi I'm Deepak Jeevankumar from General Catalyst Partners. Okay. We are
an early stage and late stage venture capital firm with $2.5 billion under management and
we have bagged companies under multiple industries including cyber-security some investments
are Kayak, Caribbean Bay, Stripe, Snapchat. And we also have not shied away from hard
technology investment. So actually I used to share an investment
called BBN technologies where the early Internet research was done and one of our companies
called reveal imaging are hardware for bomb scanners and only one customer called TSA
so personally I started writing code when I was about 7 or 8 years old I don't remember
now and first one was logo I don't know if you ever used logo before.
And I have hacked quite a bit and I think I was lucky to be involved in two of the largest
super computing projects I was an architect on those projects in human history. So happy
to share. And happy to --> I hope we can convince more of you to become entrepreneurs in cyber-security.
So it's interesting this is my 11th year at DEF CON I can tell you when I first started
coming it's not something I would expect to see venture capitalists at DEF CON it's definitely
changed a lot as time has gone on just the interest from a mainstream capacity and cyber-security
in general has changed a lot as this technology has touched the fabric of society and peoples
everyday life I'm curious what are you guys looking for I'm sure people in the audience
are curious as they are building projects and whatnot what will it take to be funded
by a venture capitalists what are the types of things when you're looking for a security
investment and looking for --> looking for people at a conference like this?
Okay. We're still going in reverse order. Because it says No. 4 here.
So I would not --> I won't address the technical side of it because my background I think you
can tell from the introduction is not --> I'm not a super --> I'm not a hacker despite the
shirt that I proudly wear. I can tell you that I would say two things
in terms of what do we look for in a security investment. I mean, the first is obviously
we look for something that has a wide applicability so that the market opportunity is big.
And if you take --> if you think about how you can leverage a large market opportunity,
one of the key things is: Are you leveraging something beyond just a security solution?
So a lot of security solutions are frankly point solutions to address a tough problem
in security. And you can make some nice companies out of
that. But if you're also leveraging another major
trend, so for example, enterprises moving to the cloud and cloud-based applications,
so one of the investments we made at Andreessen Horowitz in which I'm on the Board is called
CipherCloud and what CipherCloud does is essentially allow people who use sales force and Office
365 and Gmail and box and other cloud-based applications, it allows them to secure the
data that's in the cloud such that if a Government organization sites the Patriot Act and says
to sales force give us all of the data for XYZ company the data is encrypted it won't
be meaningful so it's therefore protected when you're in a heavy regulated industry
that's something you need to address so there's a company that's not only solved a security
issue but is also leveraging a broader trend in technology which is people moving workloads
from on premise into the cloud in one form or another.
So that's an example of looking at an opportunity that might be bigger than just a purpose-built
specific solution to a security problem. The other thing I would say is we look for really
smart entrepreneurs that are super motivated. That really have a lot of drive, a lot of
ambition and really want to be successful. And so when you put those two together, you
have kind of a winning formula. So I think John makes an excellent point.
Big markets are important. But in a number of the investments that we've done, some of
which actually ended up being co-investments with Ping's team at Accel or John's team at
Andreessen is as they went through the end of their seed stage or into later stages,
are distinguished by not addressing a big market today.
So you know half the Fortune 500 runs or more than half --> 90% of the Fortune 500, 95% runs
these village anti-virus systems. That's a big market you can say hey, 10 bucks on every
aging desktop PC for the U.S. and other G7 countries. It's a big market.
We have no interest in that. We are interested in the stuff that's going to cause a CIO or
a CSO to in a late stage adopter company three years from now to panic and say: I must have
this at all cost. Because one of the dark but unspoken truisms in venture capital is
anything worth doing actually takes a long time.
And all of these sort of -- (Applause).
MATT OCKO: Huge fantasy outcomes that are celebrated as overnight successes or inevitable
successes like a Google, actually took 7 or 8 years of really hard work. Things like Nacera
to Andreessen for having the foresight to invest in that are kind of random events.
So when you're building a product, it's doing something meaningful. By the time you've got
it polished and by the time somebody is going to pay you actually gives a crap it's been
a couple of years, maybe more. So you're looking at stuff that will motivate
a customer today you've already put yourself out of the running.
So to do that, to John's point, takes incredible intestinal fortitude. It takes people who
can solve difficult multidimensional problems about how to run their company and keep their
team happy and keep their customers happy all at the same time on limited amounts of
money. And because you're doing for the gusto for some of you in the future, it takes incredible
tech jobs. So everybody on this panel is motivated not to invest in me too tech even if it's
looking three years out or something undifferentiated. We want to see stuff that has sustainable
competitive advantage. So two interesting examples.
We're in a company called Sentinel. We did with Ping's crew at Accel. Those guys are
stemming a lot of existing security assumptions on its head. They are doing something very,
very interesting that actually produces deterministic results for important stuff and runs only
in user space they don't hook through kernel at all.
I was astonished. I didn't believe it. It took me a long time to understand it. But
it's light years ahead of anything else out there. That was worth doing. We're in a company
with John and his team at A16Z called the Lumio that's doing things that people said
was impossible to enforce security for fungible workloads in the cloud.
And by the way, John, I think it's fair to say that when those guys started doing that,
most people were disdainful that real corporate compute workloads would move to the cloud.
So anyway, I hope that's useful. Yeah the one he point I would echo that
matches that is --> I would --> some of the security markets that become really large
aren't obvious at first and China the great entrepreneurs are the ones that kind of see
around the corner I remember when we first invested in John's company, John Hering's
company years ago around mobile security the Android phone didn't really exist. The iPhone
was just shifting. It wasn't obvious there was going to be any security problems with
the mobile phone at the time. And having that foresight to be that ahead of the market and
understanding where the hackers are going to be I think is a real set of instincts we
look for. Security is particularly hard to invest in because it's an arm's race every
time somebody comes to our office with a great idea there's ten hackers out there with a
better idea that's going to get around his great idea so you really have to find entrepreneurs
that we found that really have been coming to DEF CON for it the last X number of years
they have to be on the cutting edge of whatever the hacker community is thinking about and
pushing the envelope on and that's really hard to find. Folks that actually understand
the problem but also understand the opportunity to build a company around that intersection
is really rare and that's kind of what we look for in security.
I totally agree with most of those points. The one thing I would like to add is we are
at the intersection of three major trends at the same time in the history of Computer
Science and technology, mobile, Cloud Computing and big data. A lot of people have written
about this. But what that means is that they are going to see multidimensional security
problems they have never seen before. So it is an amazingly good time to be starting to
think about innovations in cyber-security. Actually yesterday I saw an article on cyber-security
for the app economy but the point I make is that we have to make tools that are faster
and more better than things that they have seen before. Because of its multidimensional
things that existed in terms of entrepreneurs that we look for specifically, No. 1 you need
to be great evangelists of your product without overselling it.
Then No. 2 is you should have the ability to look around market changes because markets
do change human behavior changes very rapidly than what we think it does.
Then and to Ping's point you need to be best of breed in what you do and you need to stand
the test of your peer groups who are almost as good as you or even better than you.
John, if I might, I guess broadly speaking, everybody in this audience is kind of in the
cat-bird seat for building a company because as much as Fluffy consumer companies get love
and attention and big valuations, that's actually not where the real money is.
And everybody in this room is probably aware of somewhere between a mini to a full-scale
security Holocaust that's in process. I mean, I'm pretty convinced that RSA up to
512 bits is irretrievably broken. Which means every bank and web server in DNS out there
is effectively vulnerable right now. I would say that's a pretty large problem. And the
only alternative --> you know I mean there aren't alternatives. The only practical one
is stuck rotting away inside of RIM. So there's a giant $10 billion company right there that
I don't see anybody doing right now. You know, people are fantasizing about the
so-called Internet of Things. I can't even leave my Bluetooth on here because I really
prefer not to pay for you guys' next vacation. And so everything from my future pacemaker
to the electric meter on my house to the thing that orders food for my kids and my refrigerator
circuit 2020 is going to be produced by the same ass clowns that can't even have effective
security on my phone? (Applause).
So I mean, John asked a really good question: What are we looking for? Well the answer is
we're looking for you guys to step up much as John did when everybody was pretty smug
about the state of mobile security, shocked the hell out of us and produced a giant solution
to a giant problem that nobody was thinking about. And also I would really to --> like
to not pay for your next vacation in the process. I turned off my Bluetooth.
Well I remembered to turn off mine about an hour ago.
Let me ask the audience a question. You meet lots of people working on super interesting
projects many of which can be intellectually interesting but many times won't end up being
a business of the scale we talked about of billions of dollars doesn't mean it's not
interesting when does it make sense not to raise venture capital from someone like yourselves
how do you think about the difference between the types of things you would actually want
to fund and the types of things someone might want to turn into a business or doesn't make
sense to talk to you guys. Are we pushing or popping the stack.
We're pushing. I'll try to be as brief as I can. There's
a concept in finance called net present value. How many of you guys are familiar with that?
Awesome. That's a disturbingly well educated hacker crowd.
So the dirty secret or the other dirty secret of venture capital is that your MPV utility
curve and the VC's MPV utility curve is diverge pretty rapidly. So thanks to a feature of
preferred stock investment, most VCs get the right to keep investing in your company every
time you take money. Which means as long as we have deep enough pockets, our stake doesn't
go down and it may in fact go up a little bit.
Your slice of the pie as more new dollars pour in is in effect reduced over time as
you continue to build a company. So if you build a really giant company and
you and your founding team own 10%, and you sell it for a billion dollars after ten years,
that's $100 million that seems like a pretty good outcome but if you own 80% of your company
and you sell it for $100 million two years into it, that's $80 million.
So you would have had a better MPV selling earlier than later for a supposedly more impressive
number. And when you factor in risk, building billion
dollar outcomes is really freaking hard. You're definitely better off selling for 80 million
bucks in two years now that's also --> that magic outcome is hard to do and I'm picking
deliberately simplistic examples. But when you are pretty sure that you have a point
solution I think as John referred to that solves a really difficult problem that's quote-unqoute
awesome family business makes 10 or $15 million a year with great cash flow for you and your
friends. That's probably not a business that you want to take venture capital for. There's
no reason for you guys to dilute yourselves. If you need money take angel money keep 80%
of your equity and when one of the big bruisers panics and real ice they need this solution
pays you a million bucks laugh all the way to the bank if you are doing one of these
global platforms that John and Ping alluded to, the kind of thing I alluded to like replacing
all of RSA then you probably need venture capital, you probably need people who have
been through it before whether they are CEOs like John or other former operating guys like
Ping to help you build that gigantic business so that's kind of how I see the world.
I'll give two examples to kind of put a point to what Matt is saying. The answer isn't
always venture capital. You know, we are currently an investor for a company called Tenebel (phonetic).
A guy that created Nexus and that company was bootstrapped by the founders for I think
five, six years before we even put any money into the company it was profitable growing
very rapidly Nexus is a very popular scanning tool they didn't need the money because the
business could fund itself and they didn't need someone like myself because they knew
they didn't need those resources in the network to grow their business. It was growing very
fine. And then in the last year or so they decided
they saw a larger opportunity around going global but extending the product line whether
they need additional capital more importantly they needed a partner that knew and had experience
in expanding the business in ways they hadn't expanded before so the decision to make and
take venture capital was less about the money since the business is profitable but more
about the expertise and value add a partner can bring. In the case of John Hering's lookout
it was very different obviously from the very beginning they were going after exploiting
market in the mobile security space where speed to market, time to market and getting
out ahead of the mobile platform which is getting innovated by Google and Apple was
a precondition they had to deal with on Day 1 where venture capital was needed to accelerate
the business and also helping to scale the team and doing a lot of other things around
company building was needed Day 1 so I think it all really depends I don't believe for
the majority of the businesses out there that you require venture capital.
I think it's something that you should look at deeply before you take money. Because as
Matt says, once you take money from another partner, it's a partnership and it's not a
sole proprietorship anymore and I think that's a big transition so I think it really depends
on the opportunity and what you want to do. If I could jump in, I think Ping makes
a great point that sometimes there's a perception of what venture capital is you get money and
then the VC comes to your Board meeting hoping you're doing well.
We do that, too. (Chuckles).
That -- You really do --> in the early stages, if
you are --> if you do decide to accept venture funding, you really do need to look for a
partner. You really do need to look for a firm that has people and services that will
add value to what you're trying to do these firms you see up here have done a lot of work
in security obviously we all have resources that helps you be successful. At Andreessen
Horowitz we have the executive briefing center that John knows about that we bring in chief
security officers and Government officials and all sorts of people on a weekly basis
and bring in our portfolio companies and they get to present to people even before they
have released the product to test the market for their idea and as they mature like John's
company has, they get to talk to real buyers of the solution and that's a real big service
that for example Andreessen Horowitz we bring for our entrepreneurs.
So to Ping's point you really do want to pick a partner that's often both the firm and the
individual partner at the firm that's going to be your chief liaison and help you grow
the company. And actually, I want to chime in and amplify
John's point. It's not just the firm. It's not brand.
There's a company that John and I actually have in common that is desired right now by
a lot of people in the venture capital community. And they met with one of the very senior guys
at one of the top ten firms in the world. Every Fortune, Forbes article, you know, New
York Times Wall Street you know TechCrunch, however you want to view external validation
the firms had it and to some extent this guy had it as well and he was such an arrogant
dickhead in the meeting that the entrepreneur said not only will this guy be helpful whatever
giant a check he wants to write but he'll be actively harmful. And by contract and in
credit to JJ the entrepreneur said look what I want is somebody like JJ who is an operating
guy, he has done real good stuff who has been through good times and bad guys and can help
me move a little further down the road basically said I want another partner because I'm stuck
in the boat with this person for ten years. And you know Ping and his team are successful
in this because they act like partners. And the entrepreneurs we fund early on like both
of these firms because they are happy with them we are still waiting for Deepak to start
writing checks. So it's the a gentle nudge. We have a few for you, buddy.
Let me frame this problem as an entrepreneur the odds of failure are higher than success.
Every step you take every meeting you go to, everyone you talk to should be able to increase
the odds of success. There's a fundamental underpinning here so
all of the venture firms I can say largely speaking are --> they help you to increase
the odds of success through introductions to the top CIOs and CSOs helping to find the
right mentors for you finding a mentor is really, really important never underrate that
so I think some of the top VC funds can help you do that.
The other thing is when do you not take a venture capital money to your question. If
the business has low risk for example one small check we do is can I bank --> can a bank
lend to this company for expanding their business? Definitely not. Then it's not a VC investment.
We look for really high risk investments that need to grow really fast banks look for low
risk investments that don't grow that fast typically venture capital will help you go
from 0 to 100 million in three to four years in that situation venture capital money is
a good fit. So maybe I can share a quick story for
those who might be interested and are thinking about starting companies. On the flip side
of all of this, too, is you can hear an infinite amount of nos but you only need to hear yes
once and it's really important to keep that in mind I remember vividly when we were first
getting off the ground we were doing obscure wireless research and a lot of mobile stuff
and there was not a lot of interest in what we were doing at first Ping wrote us a check
and a few of our early angels did but most of our investors we pitched didn't understand
what we were doing at all. And it's really easy to get depressed when you're running
around trying to raise money and everyone is telling you you are basically an idiot
but having the fortitude to continue on I think is one of the greatest lessons I've
ever learned in raising venture capital and it never gets easier.
You just get better. And hopefully the market is on your side. But I vividly remember I
don't know if --> sometimes it takes the irrational -- like reasonable people will work on reasonable
problems but consensus accurate predictions never yield outside results really important
to understand the outliers come from things that aren't obvious and unreasonable people
will work on unreasonable problems thus you probably need to be pretty unreasonable to
do something amazing this guy Vinod can be an unreasonable dude and he's very brilliant
founded Sun Microsystems I'll never forget we were pitching him everyone had been telling
us no and halfway through the meeting he's like I've heard enough and I'm like shit he's
going to throw us out this is horrible he's like I'm in what is --> he wrote us a $5 million
check I never experienced anything like that after hearing 50 nos and something like that
happens not long after that Accel got involved and the company started to take off and there's
definitely a world where this company would never have existed if we didn't keep going
not because we were there to make money or build a business but because we love what
we do there's 140 people at DEF CON from Lookout we're a much bigger company it's who we are
nothing has changed even though we're a lot bigger that's really exciting to me and so
I think it's something really important to think about as everyone here starts businesses
the foundation is passion and it's a lot about having the fortitude to keep going.
So my question for this group is: How do you think about spotting the non-obvious investments?
Like when you see deals that you're willing to make a non-obvious investment in. I'm curious
Ping I know you've done a bunch of these what are the things you look for in an entrepreneur
when you're willing to make a bet that seems really out there.
PING LI: I think the non--- at least the way we think about Accel the venture guys
don't come up with the ideas. We never confuse ourselves with the entrepreneurs. What we
look for is for the entrepreneurs to provide that inspiration it really is from going out
and talking to as many entrepreneurs as you can. The reason I'm at DEF CON isn't because
I'm going to win any hack competition or anything like that. It's because I can spend time with
what I think are really smart people that are thinking about things 10, 15 steps ahead
of what I'm thinking about. And our job as venture guys is just identify
there's people that have those insights so it's the really in some ways I always say
the best entrepreneurs are the ones that convince me that doing the impossible is actually possible
because we sit there every day and see hundreds of ideas and there's thousands of things wrong
with the ideas but there's always one entrepreneur that comes through the door for some reason
every question you have him or her the answer comes back in such a way like this guy might
actually pull this off that's actually really possible what he just said and no matter how
you poke and prodded them they thought through every single angle of the problem. I can't
tell you how thoughtful the entrepreneurs are that we back in whatever space they are
in it could be big data clout security mobile they have literally thought through every
single possible permutation from the problem from the customer angle to the business model
every single angle that's what gives us conviction not to say they have all the answers but thought
through the problems and the questions that's how we find ourselves backing entrepreneurs
oftentimes in spaces we didn't have any idea we knew anything about before we wrote for
that entrepreneur. I would actually echo that. I joked earlier
in the kids presentation where we're trying to drive our investment level down to 9 year
olds we're working hard on this. There's no law against that actually.
There isn't it's not child labor as long as the LLC is in the mom or dad's name.
(Applause). So kidding aside what I said there is I
want entrepreneurs who will make me feel like a moron. And by --> my wife would say that's
actually not very hard. But -- (Chuckles).
What I would say is to Ping's point, you can be in a meeting with an entrepreneur.
And I've watched this process both at Accel and in Andreessen Horowitz and in my own career
in deals we have in common. The --> you think you're being very clever, you know. The entrepreneurs
I'll pick a fairly obtuse --> they do something that involves zero knowledge proof maybe it's
a hobby of yours maybe you read a couple of articles about it IEE spectrum or --> you think
you have actually caught this person out and they are 9 steps ahead of you and by the way
everything else that you ask, you have the sense as the big baller --> as the big baller
VC that you're a child that this person is patiently explaining how the world really
works and that's when as empirical as we try to make VC that's when you get the gut feeling
especially if the person is passionate and engaged and driven about what they are doing
that this is a human being that you can back. That they have this combination of as Ping
said all the answers. But the fire in the belly to go through with it. And you know
John, you come across as a fairly quiet guy. But clearly you had the fire in the belly
as well as all of the answers when Vinod stopped you halfway through.
I have one more thing is we're wrong all the freaking time so to John's earlier point or
his earlier story, you can't look at a VC saying no. As a valid condemnation of your
dream or objective or goals. You have to look at it as a fallible human being or group of
human beings with incomplete data making the best literal guess that they can.
And by the way, nos are good. I mean one of the things that we pride ourselves on is no
matter how crazy the idea, we will write a couple of paragraphs that explain in detail
our decision making for the no. We never send an e-mail saying yeah it's just
not a fit. All right. Check you later. We say hey look you had this product flaw
and we talked with the four customers you asked us to they were lukewarm and you know
you have 17 competitors. You only listed 4. The market may be more crowded than you think.
And a lot of the time we get a thank you instead of an F you. Even when we say no. Because
it's actually useful for the entrepreneur. This is the one conference you can actually
say fuck on stage. Okay.
I've always wanted to do that I've done it in a lot of --> I've been in a lot of panels
the first time I can say fuck on a panel. I just want to get that out.
(Applause). I guess Ping is luckier because I've had
entrepreneurs on occasion invent entirely new mathematical symbologies to tell me how
bad they wanted me to fuck myself. (Chuckles).
But John is absolutely right. You can't take a no as definitive. And I think when
you do get a no the one piece of feedback that I have for everybody in this room is
demand --> demand the reasoning behind it. And use it to go strengthen your pitch. And
go see Vinod apparently he writes $5 million checks in less than 30 minutes.
I think we have ten minutes left I want to make sure we have time for Q&A there's
two microphones there for those who want to ask questions. We'll start over there.
So let's talk about the logistical process of how you get started you've talked about
it from a hypothetical but at what point are people interacting with you is it when they
have a full fledged product like a prototype it will be different from hardware and software
but let's talk about some of the logistics of how they would interact with you to contact
you guys. Well so from my personal experience not
as a VC but as someone who started a company, I don't think you need to wait at all. I think
you can start building relationships with VCs by you get introduced or you introduce
yourself and you simply say I have a concept I would like to talk to you about. Most VCs
I think Ping said it earlier want to talk to as many entrepreneurs as possible. And
you can come in and say: I'm not ready to raise money yet but I just want to test the
waters with you with this kind of concept. And good VCs will not only you know test the
waters with you. But they will give you advice about you know you're thinking about this
right but have you thought about what your co-founders would look like or you know one
thing that I tend to tell a lot of people is you can't just invent a product without
thinking about how you're going to get that product into customers hands early on. Like
you don't want to build this huge monolithic thing I'll give you an example that requires
an appliance and an agent on every endpoint. You know it's just not going to get sold.
It may solve a problem. But it's --> no one buys technology now that requires something
implemented on every endpoint. So yeah you don't need to wait. You can start
the process he right away. And don't be afraid that oh shit I didn't have a --
This is the place you can swear, right? (Chuckles).
I didn't have a great meeting so now I screwed my relationship with that particular
VC. Not at all. If you did, then that VC is not the right VC anyway.
On the left. Yeah. Hello. Okay. So here it is. You talk
about the impossibility. So I'm from New Jersey you've ever heard the expression Waste Management
the guys from New Jersey what business are you in Waste Management so I'm in the business
of eliminating and killing and crushing foreign adversaries for child pornography now that's
an impossible attempt to go against foreign adversaries organized crime figures people
who actually don't want to actually step up to the plate so I'm in the waste removal business.
Something that nobody can say no to. Because if you say no you're saying no to helping
kids. Well I challenge the panel right here right now I got the technology I got streaming
data I got security I got everything you can possibly imagine to get these people off the
streets the Russians are making $8 billion a year just in child pornography alone and
selling it through cyber-security and other areas under the radar so what do you guys
think about addressing an issue that actually collectively helps saves the youth of the
nation that people say it's impossible to do?
Who says it's impossible? Everybody says it's impossible to address
this because nobody wants to address the issue because of the ugliness of the intellectual
property and the issue that goes along with it nobody wants to stare at 80 million kids
being raped and video alone nobody wants to go through the process filter it decipher
it and put it in the right position and remove it and try to figure how to get it out of
the hands of the people who didn't want to have it or have it creep up on them either
in social media or areas -- Two comments, one it is sunnier in California.
I think we got a better attitude about the impossible than maybe the Secaucus so come
visit the other ones I can't speak to my fellow panelists I know some of them have tight schedules
but I'll come and find you and I'll listen for ten minutes to the impossible idea and
give you the best advice I can. Any other opinion.
I'll be outside right afterwards. Is it just you or nobody else.
I have no idea what my colleagues can do but I will step up.
Over here on the right. Yes. Hello. I'm an Internet Veteran he
from decades back and my question is when are ideas too big for you guys to be interested
in I heard earlier on you talked about CipherCloud or something like that well I come from maybe
a slightly alternate universe from this crowd, from the standards fields and there's this
-- gone through this multiple times in the past but currently there's something called
DNS Seq could be applied for lots of security maybe eating some securities lunch as well
when I'm looking for interest in investors not to make money myself but to make this
stuff happen I get well Rick that's a big play that's too big that's too rich and so
you were talking about looking for the --> I understand maybe it's one out of ten then
you're doing good if you're successful risk is not something you're afraid of but I would
like to get one sentence short little response about when is something not appealing at all
to you guys thanks. I couldn't hear everything but just in
your question about when is something too big. There really isn't anything too big when
you have --> when you're in the venture capital business we're about finding big opportunities
the thing I would think about with your particular opportunity is to actually break the problem
down into smaller pieces don't try to solve the end state right from the beginning. I
think a lot of entrepreneurs see the end state but the market or the industry may not be
as far along as where you want it to be so one of the failure modes we've seen in a lot
of companies is being too early to a market and just making sure that you align yourselves
up with market realities. And it will play out over time sometimes things take longer
or they take a path that's slightly different so the end state is usually bigger than what
anyone images but how you get there sometimes is very different I think a lot of people
try to do the big thing first. So be patient I guess.
Great, thanks. Over here. So I'm one of these people that has an
idea. I'm not ready to come to venture capital yet and because what I'm working on is too
factor authentication behavior and bio in one fell swoop I'll need to put an endpoint
on every --> and appliance on every endpoint unfortunately that's just the nature of the
beast. It's required software and hardware. The hardware has been invented but not in
the right size. And the software somebody good could program it that's not me.
How do I get it to a point where I can bring it to somebody to get some money so I can
hire to build the hardware the size I need it and do the programming because I don't
have the money how do I get it to a point where I can get some help.
You can come today and we can talk about it. And I'm sure the --> to an earlier point
here, it's okay to go to VCs before you are ready, before the product is in the market
so we can give you advice on what we have seen on how to bring these products to market.
I'm assuming I need to have you sign an NDA.
We don't do that. We normally don't sign NDAs.
Maybe I can chime in here. Okay.
A couple of things, one, the only purpose of an NDA that you can argue for actually
in the first to file patent regime which would be to protect --> protect you from future claims
by somebody that you had ex pod your information in public and therefore you couldn't patent
it. As it turns out, if you're talking to somebody about financing your company, there's
an exemption in the law for that that applies internationally. So you're not jeopardizing
your patents by talking to a VC under first to file.
And VCs can't sign NDAs because all it takes is a small handful of people filing nuisance
lawsuits and not our money but our time is then so consumed in that kind of litigious
regime VCs would stop investing in promising young companies so to achieve herd immunity
not signing NDAs is a form of vaccination as far as what you want to do even if it's
not the right thing for the VC there's kick starter and a whole bunch of other crowd funding
stuff there's AngelList we know the guys well there we are actually investors in that platform.
That's an awesome way of getting like minded people to back you and I don't know exactly
what you're doing but if you showed up and said you know and said I have something that
plugs into a USB port or works over low powered Bluetooth next generation laptops and I can
provide bullet proof authenticatable security locked to an individual human being.
Maybe that's my sign-in for you know my true crypt. I can unlock true crypt with your gizmo.
You're right with me, keep going. There's half a million dollars of human
beings interested in that on AngelList or kick starter without a huge amount of effort
so I say go for it. Matt is going to write you a $5 million
check right now congratulations. You need another 30 minutes before I write
you the $5 million check. I'll make the time.
Unfortunately, we're out of time but I know the panelists will probably be up here
for questions anyone who does have questions just come up and grab the panelists after.
So let's thank everyone. I appreciate it. (Applause)