Thoughts from the dark side

rsa conference 2016I’m lucky. After doing this for 17 years and having brilliant people that actually know what they speak of, I've been able to opt out of the big conference world. This year I opted in to RSA. Why? Because this industry is fascinating to me. We are at a rare point in time: most revolutionary/evolutionary tech industry explosions happen when one primary catalyst (an event, a technology, a company) creates net new value and the VCs then fund a ton of wannabes to try to eat the scraps left behind. During that period, we have a ton of companies who all sound the same. They all look the same. They are all positioning themselves as having a better mousetrap.

This is true at RSA — in spades.

That’s not what makes it interesting, however. The rarity I’m seeing here is that not only is the confused over-funded hype happening on the vendor side (there are more than 1,000 of them), but it's happening at a time where the buy-side (the customers who actually need this stuff) cannot adequately articulate the problems they are facing. It’s nebulous. “Security is good”. Great, but what problems, specifically, are people attempting to solve? The market is unaware at this point.

When you combine fuzzy problems with cloudy solutions, it’s inevitable that mayhem will ensue. Until the problems are defined and funded, then there are 1,000 solutions that all sound the same seeking to land on a problem that may not exist. Not exactly nirvana.

Combine all that with the fact that for the last 2 years a monkey with a basketball could justify a valuation of $1b or more for being able to put together a slideshow and you have way too many startups fighting for way too little actual customers. Worse still, is that as of 3 weeks ago, funding has all but vanished. (VC cycles are silly — boom or bust — no logical median). So 1,500 funded security companies are going to become 500 really soon, and those will end up being 50, then 5.

One of the 5 will become the next VMware. The other 4 will be the guys you already know. The 4 will be buying up some of the startups for a pile of money — those with the most promising tech — and the others will get auctioned off for pennies.

So, here’s my advice to the 1500:

  1. Be very clear about the problem you are solving, stop telling me about your brilliant solution. At least initially.
  2. Stockpile cash.
  3. Prove you can actually solve the problem.
  4. Eliminate the noise (coming from your own team) that is confusing everyone. I’d rather be in a niche that is understood than a blue ocean that isn’t.
  5. “Machine learning” is a how, not a why. People don’t care about how until you get them to buy into why. Enough of the buzzwords.

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Topics: RSA Conference