Rebooting the cyber arsenal of democracy

Okay, they are perfect.

Good to go.

Thanks and welcome everybody to rebooting the cyber arsenal of democracy. Who am I and why am I here? So I will tell you right up front. I don't have all the answers, but I've got a lot of hard-fought lessons. I've got a lot of scar tissue. I've got some wins. I've got some losses. and I'm here to share all that with you. Uh my name is Eric Foster. I am currently CEO of 10X AI. We were recently named by Crunchb as the number three M&A target in the entire world, which has made my uh last 30 days kind of crazy. But uh before that, I've been responsible for building more than a billion in shareholder value

across multiple exits. I was part of the team that built Risk IQ that we sold to Microsoft for north of 550 million. I built the company called Sidaris that we sold to private equity. I sold specifically to Robert Hershec and got to uh run with him for a little bit. So got a lot of interesting stories I'll share with you over dinner maybe around that. Um I've had a couple other exits. I built and sold MMA Junkie to USA Today. So not just in the cyber world but now I'm building 10x AI and um maybe one of the reasons I was asked to come here I raised from Andre and Horowitz as part of launching uh 10X you know pretty

widely considered maybe the tier one of tier one VCs. So I'm also an investor. I'm an operator. I'm a defender. You know I was a three-time CISO before I got into the venture capital game. And I'm really here to talk to you about why you should consider, if you're thinking about it, starting a cyber security company. But importantly, this isn't just lessons that I've learned. I'm a big believer in the concept of standing on the shoulders of giants. And what I've done to prepare for this talk, I've pulled together some direct input from literally some of the best venture capitalists on the planet, especially some of the best cyber security folks. So in this presentation, you're not just

hearing from me. You're also hearing from Andre and Horowitz. You're hearing from TCV. You're hearing from Insight Partners. You're hearing from DTCP, which is to give you a little bit of international flavor, that's the venture capital arm of Deutsche Telecom. And then two very specific cyber security focused venture capitalists. If you don't know these names, you absolutely should. Ballistic Ventures and Cross Point Capital. uh pretty widely regarded as the top two cyber security pure play focused venture capitalists and yes there are pure play cyber security focused venture capitalists but let me start with why I'm a big believer in this concept I believe now is quite literally the golden era for cyber security founders I

would argue there has been no better time in human history to build a business and there's a A couple reasons for that now. One, the regulatory climate has changed. And whichever side of the political spectrum you sit on, I think there's very good odds that you're going to see regulatory climate be in the favor of business for at least the next 10 years. And when you're starting a company and you're making a planning horizon, a decade's about as far out as you can plan to be honest. And so if you're making a plan right now that says I'm in the best regulatory climate to build a business, okay, that's a really good starting point. But the other

piece, artificial intelligence is changing absolutely everything about building a business. And I can tell you, we're seeing it firsthand. We're seeing, you know, so-called soloreneurs, individuals come and start a business by themselves with less capital than it would have taken, you know, even two years ago to start and build a company. We're seeing companies move faster with solving more problems and delivering more value. It it is an incredible time to build. It's also not just the artificial intelligence advantage that it gives you as a builder, but it's the platform shift. I'm somebody I've been doing this a long time. This is 33 years in cyber for me. I've been through most of the platform shifts. I've was right

on the front lines of the move to the internet, the dotcom bubble, all of that. And I can tell you every one of these platform shifts creates a whole new wave of companies and creates a whole new [snorts] wave of enterprise value. And so when you combine all of these things, you combine the regulatory climate, you combine the change that artificial intelligence gives you as a builder, you combine the market opportunity that artificial intelligence is creating. And then I would also say in cyber specifically, there's two other big pieces. One, cyber is still very much an unsolved problem, right? We wouldn't be sitting here if it was. I don't believe artificial intelligence is magically going to solve cyber security.

Is it going to make it more efficient? Is it going to let us as defenders move faster, deliver more value? Absolutely. Firm believer in that. Is it going to let the bad guys move faster and deliver more value to their stakeholders? Absolutely. But I also have to tell you again, you know, sadly from the front lines, man, the big guys are missing the boat. When's the last time you saw one of the bigger companies deliver just mind-blowing innovation in the cyber security world? I got to tell you, it's been a while for me. Like most innovation in the history of our company comes from the garage, right? If you look at almost every bit of transformation that has happened,

it's been small founders and small teams who've come up with amazing innovation. And most of the big companies, they end up buying that acquis, you know, they end up acquiring that innovation and then rolling it out. I'm not saying that Google or Microsoft or CrowdStrike or PO aren't still innovating. They absolutely are. But I can tell you from being firsthand inside some of those companies, man, do they move slow and their slowmoving nature is your advantage as a founder. And especially if you're talking about in the age of artificial intelligence where you need less to, you know, less resources, less team, everything else, now is the time to innovate. And you're also going to hear from me a little bit later of why I

actually consider this a moral imperative when I talk about rebooting the cyber arsenal of democracy. I truly believe that we're at war. Our country is actively at war with a number of nation states. And I think a lot of you know this, right? You're on the front line of defending against that. I know I have been for the most part of my 30-year career here. And I can tell you the need for that innovation to keep us safe, to allow our country to innovate and grow is more important than ever. But let's get into, you know, very, very specifics. I'm going to take you through a lot of tactical, practical advice. I'm going to weave in a lot of the specific

advice and feedback from some of these top venture capitalists. And then, by the way, I'm a big fan of sort of setting the story for you here. At the end, you're going to get a link and a QR code if you trust me enough to scan a QR code, but you're going to get details of everything that's in the presentation. You're going to get a whole list of recommended reading. You're going to get a whole list of founder tools, a whole bunch of other stuff. So, and as I'm aware, these are being recorded and will be online as well. So, don't feel like you have to, you know, sit and take notes or anything else. I'll also be

hanging out after the presentation for about an hour if you guys want to catch up, talk, anything else. But so let's start at the beginning. It's the very best place to start. What we're talking about is this concept of zero to one. You're taking nothing and you are creating a thing. You are moving from zero customers to one customer. You're moving from literally an idea to execution. you are moving hopefully from zero revenue to a million in revenue is kind of the general concept of starting your first business starting this focus four big points I want you to take away one ideas are cheap but you still need an idea so execution is absolutely everything in

cyber security in venture capital in operations in life I see this time and time again everybody thinks when they're starting a company you're going to start a startup, whatever else, that the idea is this huge secret thing and oh man, I've got to have an NDA before I talk to anybody. I can't tell anybody about it, anything else. It's absolutely ludicrous. Myself and most real, you know, serious venture capitalists, the moment you ask for an NDA will throw you out of their office. It's absolutely ludicrous. It creates a huge amount of risk on me for signing an NDA. And I can tell you there is absolutely no value in your idea with maybe a little tiny

asterk which is like okay if you've invented a new kind of transformer, if you've invented a new kind of extropic chip, if you've got some true absolute like patentable groundbreaking thing, then yeah, you know, put it out into the world, patent it, and then start talking to people. But generally speaking, I see this mistake all the time where you're like, "Well, man, I've got this idea and I can't really tell anybody about it." You should tell everybody about it. You should go talk to venture capitalists. You should talk to CISOs. You should talk to defenders. You should talk to your friends. You should talk to everybody. This is market research. You want to build that relationship with the

people you're thinking about selling to. You want to build the relationship with the people you're thinking about raising from. If you're not starting with a problem that actually matters to the market, you're making a huge mistake. And I see this all the time. And that's point number three here. I'll get back to that. But point number two, always two. There are a hustler and a hacker. Generally speaking, you have to have these two things to be successful. You've got to have somebody that builds a product, which I call the hacker, and you've got to have somebody that sells the product. That's the hustle. You really truly have to have both of those things. Now there are some rare ex

exceptions. There are people like me that are, you know, this is my superpower is I am very technical and I'm also really good at speaking or really good at sales, really good at storytelling. But if you don't have that, if you don't look inside yourself and go, man, I'm really great at telling story. I'm really great at sales. I'm really great at doing that. You are the technical founder. Go find a sales founder. And vice versa, if you're the man, I've got this really great idea, but I don't know how to code or anything else, go find a technical founder. You have to have this combination. And don't get me wrong, you can split that

combination among four people if you have to. You know, hey, there's we've got a product and an idea guy and an engineer and we've got somebody who can talk to the customers and maybe somebody who can do marketing or whatever that puts together. But you have to start with these two roles. And it's one of the again the biggest mistakes I see people coming and trying to build a company and they're like, "Man, I'm this really great hacker and I'm really great at producing code and I've got this amazing idea, but I don't want to talk to anybody." Like, I'm not going to go talk to customers and I'm not going to go do any of that. And I can tell you

from firstirhand experience, those people fail almost every time. If you don't build this strong team around you that complements you, that makes you a complete human being, as I like to joke, then you know you're gonna struggle a lot. Number three, and again, I see this all too often, solve a real problem. Don't just build something because it's cool. Don't just build something because you had this great idea. Start with a business problem and work your way back from it. There are basically three things that I look for anytime I'm starting a company and these are from such hard-fought lessons. One, you do not want to create a category if you can help it. You want something that the

market already understands. You want something that's already in your buyer's budgets and you want something where there's already a solution to that problem. If you have all three of those things, then what you have to do is basically be better, faster, cheaper. Ideally, all three of those things, but at least one of those three things. Now, you've got a viable company. We when we created Risk IQ, we literally were considered to create the external threats or the attack surface management category. We were about a decade too early. It was one of the hardest slogs we ever had because we had to go and tell people this concept of an attack surface that existed outside of your firewall that

you needed to care about. And we'd go sit down with CISOs and they'd go, "What are you talking about?" Like, "Look, there are all these websites and all these assets that, you know, shadow it and a bunch of other stuff that stood up that has your name on it that you're not aware of. Did you know marketing stood up this site and it's got all of these vulnerabilities in it?" Well, no. It's not our site. well look it is your site it's owned by you it's owned by marketing all so we had to go convince them that this thing existed and then go oh yeah you know not only does this matter to you need to do something about

it and now there is a solution to do something about it and now we got to help you try to find budget for it because nobody had budget for a tax surface management or any of the rest of that in their budgets so it was very hard it's hard to create a category it's hard to go after budget that doesn't exist it's hard to sell a solution that the market doesn't know about. If you can pick something in that, if you can solve a real problem, and I've seen the other side of it, too, man, of just founders will come out and go, "Man, I've got this really cool idea. I'm going to take this thing and I'm going

to make it twice as fast." Okay. Was anybody complaining about how slow it was before? Well, no. I mean, but it's twice as fast now. Great. and is that anywhere on the critical path of like responding to an incident or doing security operations or anything else? It's like, well, no, but mine's twice as fast. Like, great, nobody cares. And nobody will care once you build it that you're just faster if you're not actually solving a real business problem. So, start with a problem, work your way backwards from it. And again, you heard me talk about this already, but target the existing budget, the existing known problem, and the existing known fix. If you do all of

that, you're going to have a much easier time. I'm a big fan in general, and I know I'm speaking to an army of practitioners here. Ferdinand Porsche, I'm a huge car guy. For Ferdinand Porsche had a really great quote, which is when he originally decided to get into the car business, he said, "Looking around and not seeing the car of my dreams, I decided to build it myself." That's my single best advice to you in terms of going from zero to one. If you're a practitioner and you've been fighting the good fight for a while, you've probably got something that you're like, "Man, I always wish I had this tool. Oh man, this is a specific

pain point. Oh man, my organization could really use this." That's looking around and not seeing the product of your dreams and deciding to build it. It's and we'll talk a little bit more about all that but ultimately go to market is everything in cyber security and SAS in general everything else. What do I mean by go to market? It's it's an easy term for sales if you're not familiar but it's it's bigger than just sales. It's how you literally go out interact with buyers and ultimately bring home the deals. So I I already talked about being better, faster, cheaper. Like that is the concept of if you can align your business strategy to the customer's

existing pain, but that's the key. It's not just, oh, I took something that wasn't painful and made it faster. I found a point of pain. Oh man, when I run a query in my sim and I have to literally get up and go take a coffee break and come back because it takes 15 minutes to run. That's a point of pain. Oh man, I can't log everything I want to. you know, these SIM bills are killing me. That's a point of pain. Oh man, I have no idea what's actually going on in my cloud infrastructure. That's a point of pain, right? Find the pain and then find a way to solve it better or faster or cheaper or ideally

all three. The big thing about go to market, the big thing about sales, the big thing about raising capital, it's all the same thing. It's storytelling. And this is back to you need to be a complete human. You need to have somebody who can tell stories. There are some really great resources that I lay out for you in the appendix here on how to become a better storyteller on people who can help you be a better storyteller. But this is the most important thing that you will have to do as part of this. Um and you know especially people miss this part which is the motion to raise venture capital is the exact same motion you should be

following to get to the market. Like people will you know come at this and go like I have no idea where to start. I have no idea what to do. How would you go get customers? Think about that. Like how are you going to go get customers in your startup? And guess what? going out and finding venture capitalists is going to look almost exactly the same. You got to find a way to reach out to them. You've got to find a way to get in front of them with a compelling message. You've got to literally cold call, cold email, arrange meetings, whatever it is you're going to do. And there's no one right way to do

it, but there is a way. You're going to have to lay that path out and you're going to have to go do that to get in front of venture capitalists. And then it's going to be the same motion. And what it all matters the most is coming and telling a compelling story. And I'll get in more detail here in a little bit about exactly how to craft that story and what you want to do. Number three, urgency. A huge believer in this concept of sense of urgency. And in the age of artificial intelligence, it's more important than ever. If you're, you know, active on X, if you see a lot of this, there's a lot of focus right now

on like fastest companies in the world to 10 million in revenue, hundred million in revenue, all this other stuff. It it is absolutely insane. And yes, it has changed a lot of this, but there are still a lot of people building really great businesses that aren't one of the fastest companies in history to hit these revenue numbers. But what every company that is succeeding has in common is an insane focus on sense of urgency. And what do I mean by that? When you wake up every day, you should understand that the enemy is at the gates. Your competitors are at your heels. The opportunities are in front of you. And if everybody in your company

doesn't wake up that way and believe that and follow that, that's an opportunity for you as a leader as starting your company here to drive that. Drive that urgency across your team, but especially drive it in the product world. One of my favorite points of this um you know, perfect is the enemy of good. I really like the the the patent quote instead, which is a uh it's a good plan violently executed is better than a perfect plan effectively. I'm butchering it a little bit, but like that concept, moving fast and breaking things to take the old Facebook analogy, moving fast and shipping things that you're embarrassed by. Like if you wait to perfect your product

until it is perfect. If you're not embarrassed by what you ship, you have waited too long to ship. And then number four, this is one of the other just absolute biggest mistakes I see. People moving away from founder sales. Every one of your customers when you're going from zero to one, a huge part of why they're buying from you is they are buying the founder. And guess what? The venture capitalists who are investing in you, they are buying the founder. Are they buying the idea? What did I tell you earlier? Ideas are essentially worthless. There are a million of them out there. They're buying the team. They're buying your ability to execute. They're buying your vision. Those are

all more important than the idea. And in fact, you can go hear some top venture capitalists talk on podcasts where they're like, "I don't even care about the idea at all." They literally don't. They just want to see who are you? What do you bring to the table? What does your team look like? How are you going to go execute against this idea? And the idea is almost interchangeable. In fact, it's a concept we talk about in startup world of pivots, right? This idea of like, oh man, we launched as this and then we got some traction with the market and then we decided to change to something else and then we got some feedback and we decided

to change to something else, right? It's not, oh man, I had to have the perfect idea and that plan had to survive contact with the enemy and 10 years later, you know, that business plan I sketched out on a napkin was exactly perfect. That is not how business works. So, founder sales, founder sales is the answer. Every single one of your early customers, I'd even argue close to 10 million in revenue, you should be talking to the customers. The customers want to talk to you. Too many companies I've seen will go out and go, "Oh, we're going to hire a VP of sales right away." You know, because, you know, oh man, I'm not techn, you know, I'm super technical

and I don't have the sales DNA and I'm not going to have a co-founder that knows that. I'm going to go hire a VP of sales. They're not going to be part of my co-founding team, but they're like, you know, an employee will bring them in. And every time that's a mistake. It's not to say don't hire a VP of sales. Most VPs of sales are absolutely necessary, but you should not have one before you've got a million in revenue. Now, if you've got a million in revenue in 30 days, like a lot of us AI natives, whole different story, and you can start hiring for that right away. But for most companies, the bar for getting a million

in revenue used to be a year. That was sort of the traditional venture capital backed approach. Like you go raise a seed, you take about a year, you'd hit about a million in revenue in about a year. And so you kind of slow down, let the f and you know still crazy sense of urgency and everything else, but slow down on that plan to outsource your go to market. So I've got a section here of basically four slides that lay out how to pitch, what do the VCs care about, what should you nail, what are the pitfalls, and then I go into red light, green light basically. So, and again, this comes from not just me.

This comes from literally some of the top venture capitalists is where this is sourced. And as you get to the resources in the end, I've got a long form interview that lays out all their questions and answers that you can go read. But these are essentially the top five things that venture capitalists are looking for when they're funding a cyber security company. They're looking for extreme clarity on purpose. I like to call this high conviction. Right? This is what we are here to solve. And I can explain it super easy. You know, you've heard the term elevator pitch, right? Your ability to pitch somebody on what you're doing literally in an elevator. If you can't nail that,

you're making a huge mistake. Practice and figure it out until you have that literal 30 second one minute. This is who we are. This is what we do. This is why we do it. Extreme clarity on purpose. You've got to be able to communicate that. You've got to nail what the product does. Again, you should be able to do this in an elevator ride. This is exactly why we're doing it. This is our purpose and this is exactly what we do. And again, you know, some of the themes run through this the whole way. Work back from business problems. If you're out pitching a hey, you know, we've got this crazy idea and we're going to go build this and

we're going to do that. And they ask, okay, but what's the business problem it solves? you've made a mistake. Align to the business problem and do that first. Sell the vision powerfully. It really truly is all about not only your ability to execute your team, but your vision. This is the end state that I see. This is the change that I am going to bring and how we're going to accomplish it. And then you've got to think about go to market. And you really should think about it in these three phases. 0ero to one, one to 10, and 10 to 100. Guess what? 10 to 100 will take care of itself. 0ero to one is the hardest thing anybody

ever does. Creating something from nothing. Going and getting an initial class of customers to pay you a million dollars in total. That is the hardest part of starting any business. Less than 1% of businesses get to 10 million in revenue. Less than 1%. We crossed 10 million in revenue in six months. And I'm sad to say, Andre and Horowitz told us we are the top 1% of 1% of companies they've ever funded in first year revenue because nobody sells, nobody does that. It it is such a long process. It is the hard part of this. And so many people come in and go, "Well, I'm, you know, focused on building that that unicorn. I'm focused on a 100red million ARR

everything else." Guess what? 0ero to one is impossible. If you can get through impossible, 1 to 10 is hard as hell. 10 to 100 is an inevitability. If you build a business that can get to 10 million in revenue, the rest will take care of itself. And I'm not saying it won't be hard when you get there and everything else, but like this is another huge mistake is you come in and go, "Oh man, we've got this plan and here's the fiveyear plan and here's how we're going to get to 100 million in revenue." man, have a real clear story how you're going to get zero to one and have a pretty good story of how you're

going to get to one to 10. That's really all that matters and that all that everybody's looking for. But at the same time, it's not just what is green, what is red. Focus too much on tech. Distribution is everything. Sales is everything. Go to market is everything. The tech matters. It absolutely does. But your pitch should not be 80 90% tech focused. It has to be focused on the entire story. If it's overly complex, if it's overly technical, of that list of top venture capitalists I provided, I mean most every VC these days has a cyber security practice for sure, but most of the people you're talking to in that cyber security practice, with all

respect and love, are not going to be super technical. Many of them might have been out of the game for five or 10 years. You don't want to come in with this hugely technical pitch. Even to the very cyber focused VCs, the people who are allocating money, they don't want that overly technical pitch. You should be able to encapsulate it into a story and take it that way. Number three, outlandish TAM slides. TAM, total addressable market. This is one of the classic uh mistakes you see. They laugh at this all the time on Shark Tank if you don't watch that show, but like you come in and go, "Oh man, identity is a 30 billion ARR market and

all I have to do is get 1% of 1% of the identity market and look at the company I will have built." Okay, sure the TAM is huge. How are you actually going to do that? Just coming out and saying, "Man, there is a huge market out there." Guess what? There's an 8 billion ARR TAM for managed detection and response. There's a 30 billion TAM for security services. So what? Come with an actual practical plan of where you're going to do and how you're going to build this. Nobody cares, especially at the early stage, what your in TAM is. It's not something to focus on. And this is something that everybody gets totally wrapped up in very early on. The other

overselling without self-awareness. This is something that, you know, especially I see a lot of early founders get into a lot. If you've never done this before, you start to understand, oh man, storytelling is everything. Sales is everything. I've got to go do this. I'm going to go promise the world. I'm going to go oversell. Meaning, like, I'm going to write a check that my team or my product or my delivery can't cash. You do not want to do that. You don't want to do it to your investors. You don't want to do it to your customers. Now this is an art form I will tell you like when you sell to customers you generally actually want to sell a little bit ahead

we call it because if you think about it most enterprise buying cycles they're not buying from you what exists today usually when I'm coming in and if I'm demoing to you and you're at a relatively large company we'll be lucky if you've put us under contract three months from now probably more like six months from now depending on what you're selling it might be a year from So, if I come in and sell to you what the product does today, and I don't at least partially sell what it's going to do by the time you buy, I've done myself a disservice, but I've also done you as a customer a disservice because the product you're getting isn't actually

going to look like what you just saw today. So, you've got to sell ahead to a certain level. You've got to say, look, this is where we're going to be six months from now when you guys get implemented. These are the things on our road map. This is what we do today, and this is where we're going to go. And then ignoring distribution in favor of product. Again, the best product does not always win in cyber. The cyber graveyard is littered with some really great products that didn't have distribution, that didn't have sales, that didn't have marketing, that didn't have that level of success. So, let's turn those things specifically into a list. What are the green lights?

If you're a venture capitalist, what are the things you're specifically looking for? You're looking for domain expertise and crystal clear conviction. You guys by the nature of sitting in this room are probably have this level of domain expertise. Right? If you're coming and solving a problem in cyber security, talk about your practitioner background. Talk about these are the lessons I learned. This is the problem I saw. This is the problem I'm fixing that I saw at my company and we always wanted to buy this thing and here's my level of experience and man, here's my crystal clear conviction about how I'm going to build this and when I build it, who's going to buy it? Oh, and in fact, I've

actually already talked to three of my friends that are in these positions at these other companies, and they're all like, "Yeah, hell yeah. This is exactly what we want." Number two, missiondriven teams focused on the long haul. One of the my favorite mistakes I've ever seen in a VC pitch is somebody coming in and talking entirely in a seedle conversation about their exit plans. Oh man, here's what we're going to get to and who we're going to sell to and exactly what our exit's going to look like. And it's like, man, you are a long ways from that. Build for the long haul. You should be coming in and talking about this is the problem we're

going to solve. This is the great company we're going to build. And in fact, a lot of venture capitalists are saying that the time horizon has extended to essentially double what it used to be. You're seeing this a lot now, especially between seed and series A. It used to be 12 to 18 months was like clockwork. you raised a seed and then 12 to 18 months later you hit series A milestones and raised a series A. The median time to series A is now 24 months and we're seeing a lot go to 36 because there are a lot of companies that started that didn't have the traction to go out and raise their series A. We're seeing this valley of

death that they call it in military procurement where it's like man I got this original initial funding and I couldn't quite use that funding to build what I needed to to get the motion in the market to get to success to my next milestone. So focus on the long haul right from the beginning and man with AI as your co-pilot is easier than ever to go raise a seed and stretch that money to go like we've got this long haul plan. Here's how we're going to get to a million in revenue to be able to raise our A and here's what the cost is going to look like and what the burn is going to look like.

>> Please mentioned AI. So in your experience building your company, what has been the main use of AI to increase your velocity or whatever. >> Yeah, great great question. So the repeating for everybody the or for the recording um the question was in building our company AI native what has been some of the biggest returns we've seen from artificial intelligence where are we actually seeing it work the the answer for us is literally absolutely everywhere and this is one of our biggest advantages we believe why we're growing so fast is it it's this classic thing you hear called the innovator's dilemma which is basically with all respect if any of you guys are here from

any of the legacy MSSPS. I'm sorry, but here's what this looks like. You've built a really great book of business. You might even have a hundred million in ARR. And guess what? The moment artificial intelligence came out, you should have ripped up absolutely everything and started over from the beginning. And most companies refuse to do that. They try to figure out where they can bolt AI on. They try to figure out how they can integrate it into their existing process. but they've got a whole bunch of people and a whole bunch of process and a whole bunch of tech and nobody's willing to just completely rebuild. It's one of the biggest advantages we had is being AI native

clean sheet of paper. Literally every part of our business and I mean every part is is heavily using artificial intelligence. Now that said, as you guys know, there are pitfalls to AI. It is non-deterministic. But here's the the the dirty little secret about this. Humans are non-deterministic too. It it it's the self-driving car problem, right? Everybody throws a fit about, oh man, a Tesla just crashed. You know, the AI that's driving the Tesla just crashed. It is an order of magnitude provably better, faster, safer than a human driver. It's insane that people are looking at AI and going, "Oh man, it's not perfect. We can't use it." That's not the bar. The bar is, is it better than people? Is

it better than what you had before? Is it better than the old code you could write? Because guess what? I literally have worked some of the biggest breaches in history. Every single one of them that I've ever been a part of, you know what the single cause of all of them was? Human failure. Every single one of them. Every single major breach you've ever seen was human failure. And if the AIS are better, they will absolutely help. So the short answer to your question, I mean software development is the single easiest one. Like if you're writing software and you're not using AI, you're very much missing the boat. I don't tend to find that anymore, but I still will find some

people who for whatever reason aren't using, you know, the right coding tools, but I mean quite literally, we're using it heavily in every single part of our business. We had a single mandate that said like if you are going to run a part of this business for me, you have to have a plan for how you're using AI in all of this and I would really truly encourage everybody to do that. I appreciate the question and hopefully I'll have plenty of time here at the end too for that. Um so the last two steady quarter overquarter momentum repeatable sales. This isn't as much when you're raising your first round when you're, you know, if you're

getting seed or preede money, but if you have a product, if you're out in the market, you know, if you haven't seen the show Silicon Valley, you absolutely should. It is sadly so true to life for absolutely everything that happens in Silicon Valley. Um, if if you haven't, there's one part of it where Erlick Bachmann is yelling at them for actually making money. Like, what do you mean you took in money? You're supposed to be pre-revenue because very literally the moment you take in your first dollar, now a different clock starts. Now you're going to start asking questions about, well, what's your quarter overquarter momentum? How repeatable are your sales? What's your churn rate? What's your

growth rate? All this other stuff. If you're pre-revenue, you're just at the idea stage. All of that's off in the future. So, if you haven't done that yet, you can hold that off by by getting there. Red lights. What kills VC deals? Again, bringing it back. I tell you, I'll tell you again. I'll show you what I'm going to tell you and bring it back. Too much product focus, outlandish marketing claims, naive positivity. Oh man, you know, again, this is such a big market. It's going to be so easy. We're going to build this thing. It's going to be the greatest thing ever and everybody's going to buy it. Like, okay. Non-complimentary team. We see this too

often, too. Oh, man. We're both super hackers and we built this out and we're the amazing technical co-founders and we're going to go build a bunch of great product yet. Yeah, you absolutely are. Where's your sales guy? Where's your marketing guy? Where's your complimentary team? Found a team with, you know, found a company with four or five people. Build that team. And guess what? Even if you're just the two co-founders and you're the technical co-founders, you need to go build that team arguably before you go raise money. And we've seen this a lot. like you'll come with a slide, a team slide, and where it's like, hey, this guy still works at Salesforce, but he's going to join the

moment we actually get this check, and you know, this guy's working at CrowdStrike, but he's ready to leave, and the moment he comes over, we're going to come do this, right? So, roll through that. And again, focus on a quick exit. If you come in and are laying out, man, this is how we're going to get out and how how quick we're getting away. So, go to market. I tell you that this is the most important. I can't do that without giving you just a little bit of how to do it and do it better. I already talked about founder sales. Everybody who's buying wants to hear from you as the founder. They really do. And even if

you build a sales team, they you they need to pull you in. You need to be part of that initial authentic interactions. Be yourself. The the company that you are selling to is buying in part because of you. They really truly are and they should be and that should be part of it. Um, you know, man, demand creation. This is really where a huge part of the difficulty in go to market is right now. It's like, how am I actually going to create demand for my startup? I've got this great idea, but how do I actually accomplish that? And there's a bunch of resources. You know, this could be a whole presentation in of itself. I'll

point you to a few different u suggestions here. I use the term AI optimized hiring. I like to even say AI native at this point building a company. It's a screening question for us. Like we want to understand that everybody we're hiring understands how to use AI. They're AI native. Like if they're not come, you know, if you're choosing to work for 10X AI and you aren't singing the value of AI, if you don't know this is exactly how I leverage AI to make myself better, you're probably in the wrong business, at least for us. And I would really kind of encourage you guys the same thing. Some big go to market fails that I've seen avoiding vanity

plays that don't resonate with the customer. How often have you guys seen this where a startup will go out and spend a bunch of money on something because the founder really likes it? You know, I'm a crazy car guy. You know, if I go and take everybody to Black Hat and like go race my favorite cars around, is that like the best use of company funds? I'll love it. But can I actually show that that's going to really drive value with who my buyers are and that this is going to drive returns. And that's just one very small example, but we see this all the time, especially with early stage stuff. It's like, you know, this

isn't about vanity. It's not about you. It needs to be about what actually resonates with the customers. Um, I will also say skipping traditional tactics that don't adapt to the market changes. You know, one of the best things that I've seen people have to change now is cold outbound. Like, how many of you guys love getting, you know, calls or emails trying to get you to look at a product? Nobody, right? I mean, okay, one, I need your info after this. But, I mean, quite literally, right, the market has changed. This is one of those great things that like AISDRs took off and all of a sudden we started getting hundreds of messages a day that all looked the

same. You know, the ones that I get the most are all the podcast invites, if you've seen these, and they're all the exact same format where it's like, "Oh man, my CEO is browsing LinkedIn and he found you and here's his email down below that we want to invite you on our podcast that you've never heard of and has no views, but man, we'd really love to talk to you." I'm like, I get 40 of those in a day from 40 different sources. It's like, okay, but you know, the AISDR has essentially killed the SDR. Like, you have to adapt to the changing times. can't just go, "Oh, man. We're gonna go send a thousand emails and

that's how we're going to go get customers." Okay. Like, oh no. I mean, actually, honestly, I respect it more if you're like, "No, I'm going to staff a couple guys who are going to pick up the phone and call a bunch of people." Most people hate it, but it actually works a little bit. Works a lot better than email these days. But, you know, if I'm doing changing market tactics, stuff like this, you know, being in person at events, still selling to people over stake dinners. It's a cliche, but it absolutely works. Like in person, how your plan what you know what these uh sort of tactics look like. And then one of the other ones to highlight here,

steer clear of over reliance on channels too early. I see this all too often too. Everybody goes, "Oh man, you know, Optin's going to go sell my stuff or Guidepoint's going to go sell my stuff or whatever else." They've got literally 5,000 products that they're selling. It's not figurative. It's literal. You're going to be one of, you know, 5,000 and one and that's all of a sudden going to magically drive all this demand. The channel is important. It is not your focus zero to one. It's arguably not even your focus zero to 10. I can tell you is having built one of the biggest channel partners, the channel is super selfish and they just want you to bring success to them. They

want you to come and go, "Oh man, look, we've got this crazy hot product and everybody wants to buy it here. I want to give you 20% just for going and selling it to your customers." And by selling it to your customers, I mean, I'll go sell it to your customers and then I'll bring you in to do the paperwork. Like that is the sad reality of most of the quote unquote value added resellers. They've all forgotten the V and they're just added resellers these days. So, if your strategy is very channel centric, you're going to have a bad time. I talked about this a little bit before, traction before capital. Now, this is great stuff. I would just

tell you like the more you can do to validate product market fit, and by that, you know, literally before you've raised, even before you've taken in revenue, here's how I understand how this product is actually going to fit in the market. I've done a pilot with my buddy who's the CISO of this bank and they've already put this in and they're already looking at it or you know I built this product to solve my own need at my own company and they actually let me go build this and we're providing it back to them you know or I've done this survey of five other people and here's their contact info that you can call and

validate that they all see this is the the issue. I also say engage with VCs early. This is another big point of s of of success or failure that I see. Everybody's like again, well, my idea is super secret and so I've got to get to that stage and then I've got to build the team and then I got to build a product. Man, just go have coffee with somebody and go, this is what I'm thinking about doing because your idea is not the key. It really isn't. If you go have that coffee and go socialize that idea, you're going to get more validation. You're going to early understand that very clearly. And then I

say generate early ARR from budgets. You go back to the things I was talking about before. You've got to be selling something that's in somebody's budget already or you've got to have a clear path to get there. Like how can I get my early ARR out of your budget? If you don't understand that question as you're going to market, you're going to have a hard time. One of the other things I really want to touch on, vet your VCs. Most people don't realize that venture capitalists are much more serious than a marriage. No kidding. It is way easier to get divorced than it is to get somebody off your cap table. It is way easier to get

divorced than it is to get somebody out of your boardroom. And I don't know about you guys, but like most people don't meet somebody like have coffee with them once, have them go, "Oh man, I really like you." And then, you know, get married to them. Vet your VCs and by that like figure out are they a good culture fit for you. Check references. Everybody should check references on everything. This is one thing that kills me. Like how many of you actually check references on hiring? Like very few people, a couple hands, but like very few people actually do that. And man, is it so valuable? It's the same thing on venture capitalists and don't listen to their references. Go

find, you know, most of this is public. Like go find 10 companies that have taken checks from them and literally call them and go, "How is it working with these guys?" And guess what? Most of the time those founders will be really really fast to help. Um I'm also a huge believer here of relevant experience. When you're finding a venture capitalist, they should be able to really tell you. A lot of them, some of them will do these I call pitchback sessions. And I'm a big fan of making them do that. Like I've come and pitched to you. I've told you here's what we're going to build and how we're going to partner and everything else. Now you

turn and tell me how are you going to help me? And have that be an actual story that you can get to. I've got a little bit in here on hot opportunities. I'm gonna, you know, speed through this, but to me, man, almost every part of security is kind of hot right now. Identity is huge. Cloud is huge. Obviously, um, sadly, if you if you bundle those two things, identity and then cloudnet network, most people don't realize that's 70% of security budgets just in those two areas, right? This is almost everything. Um, I still believe threat detection needs a lot of work. like this is an area that we're all having trouble actually separating the

wheat from the chaff. Obviously throw AI on everything but actually mean it. You know AIdriven anything is very very hot. I believe there's a lot of opportunity to streamline incident response but also you know building future resilience and I lay this out um man like I started at the beginning. I believe that you literally have a moral imperative to try to start a company right now. Like if you're thinking about it, if you're on the fence, there is no better time in human history. We need you. The country needs you. The businesses need you. The internet, the ecosystem needs you. Parting shots. I'm going to give you a couple here. There's a whole bunch of stuff you should read,

but guess what? It's all on the next slide. Um, I've got a link tree and I've got a QR code for you. Other parting shot, more money isn't always the answer. Another get great Silicon Valley reference. What do you mean I could have raised less money? Every time you raise money, you set expectations. If you go raise at a billion valuation right now, guess what? You've got to deliver and grow your company to be worth a billion dollars before you can raise again. >> Yeah. >> I don't really know about when you raise money each time. Are you giving away equity? >> Absolutely. And and that is the exact point. Every time you raise money, and

this is one of the funny things to me, like everybody just immediately celebrates. Oh man, we raised and we raised at this raising should be a little bit somber. I just sold part of my company. I just gave away part of my equity. I just diluted everybody who believed in me before. If I've taken money and I go raise again, everybody who gave me money before is now their value, their portion of the company's actually gone down. Now, the whole idea is the valuation has gone up and so you own a smaller piece of a much bigger pie, right? But it should be a somber moment. It really, really should. Um, >> how does that factor into like

>> That's a really good point and let me finish this off and I I'll jump right back to it. No, I I love the questions. I I want to roll through that. So, be it for the long haul. Culture wins every time. I'm a huge proponent of culture. So, I'll show you this a couple times. It's on here too, but I am perform plus ify like modify. So link treeperformify or that QR code. And yes, I'm not Rick rolling you. I'm not trolling you. This will actually take you to this. If you jump to it, I think this will show. It'll look like this. It's not going to show. Um, well, there's sections. There's a section of

books. There's a section of online resources. There's a section of my stuff. Um, I think I'll know if I get through this later, but long story short, jump to that link tree and you should see a lot of additional resources for you on um, you know, a bunch of technical, tactical, other things. Other things you'll see on this um, this isn't my book, but I am featured heavily in it. raisingmoneybook.com. It's also available from there. Uh, literally a couple of my friends turned and wrote a book on raising capital right now and I think it's worth it. And then, you know, happy to jump into Q&A here. By the way, just selfishly speaking, we're hiring. We're hiring

like crazy. And where I recommend, and I I do this both self-servingly and hopefully interestingly to you guys, I'm a huge believer in culture. Culture wins everything. Check out our culture deck, culture.t10x.ai. And I'm going to jump back to the link tree and then I'll jump into questions. So you'd said, you know, as you're making decisions about taking other people into your company, what what was the second part of that? >> Um, when you for a private company, how does like raising money factor into power? >> Great. Yeah. Yeah. How do how does >> equity given away? >> Yeah. When you raise money, how does how does that, you know, equity given away factor into decision-m power? So this is

actually a really really important point. So um generally speaking the way most companies are organized you have voting shares and if you haven't done something special with it a lot of decisions require majority vote like 51% of the company and you'll end up in circumstances where you give away com parts of the company and you're literally giving away votes in your company and this is where founders will get replaced or will get voted out or other things like that. a certain point. >> Exactly. And you know the other thing, man, I got to tell you, like you see this all the time, too. I sold 20% of my company to these guys and they only own

20% and that doesn't technically give them a board seat or doesn't technically give them the right to vote on what I did. But guess what? If you would like to ever raise money again, ever, if you would like to ever get any more money, you're going to generally have to listen to the people that gave you money. So, it very much factors into it even if the votes might be in your favor. I think I've got a few more questions. Please, >> what is your opinion of what investors think of as an engineering team that is outsourced versus one that >> Great question. Yeah. What do what do investors think about outsourced engineering teams? Um, there are some

that are not a fan, but generally speaking, it's not that big of an issue. Um it really isn't like it's more about your vision and your total ability to execute. And what I'd tell you is just have a story around it. Like yeah look we've got an Indian development team or we've got a nearshore development team or what whatever that story is but what I would almost always recommend it's the same thing with my dev team is all AI. You still need somebody to kind of babysit that. You still need somebody to drive governance and all of that. And so what I usually see and what most people usually respond the best to is like,

yeah, we've got a CTO, but they're not going to hire a bunch of engineers. They're going to partner with this offshore development team or whatever else. >> Please, you mentioned when you're picking that company when you're like very early on, are you saying it should? >> Yeah. Yeah, really good question. So the question was when you're like preede your early um we talk about culture alignment with VC should that be culture alignment with you guys as the founders or where you see the company going so I'm a big fan if you pull up my culture deck I write those before I start companies this is what I believe in. This is this is my conviction and this is the culture

that I want to have. Now Ben Horowitz as you get into my link tree here Ben Horowitz has two really great books. sees the, you know, half the Horowits half of Andre and Horowits. Um, two really great books. The hard thing about hard things, which is mandatory reasoning if you want to start a book, and the other is what you do is who you are, and it's all about culture. And his book takes you through a lot of this. Long story short, define your culture upfront. And it should they those should be the same answer. Like the culture of me and my founders is the culture that the company's going to get except culture is a living thing. And so it's

going to change over time. >> Please question. What's your perspective on like fully remote teams versus like colllocated same room? >> Yeah. >> For for dev teams in particular for small startups. >> Absolutely. My my perspective on remote teams. Um I'm super controversial on this. I hate remote work. >> I believe it's a necessary evil. Um our company 10X, like we're hiring like crazy. You go to our website, you'll see three things. All of our positions are either in Sarasota, Florida, they're in Kansas City, Missouri, or they're in San Jose, California. And then we put an exception on that and we say, if you are a true 10xer of 10xer, if you are the 1%, we will make an exception and hire

you remote, it's more like 10%, to, you know, give away a little secret, but I'm a big believer in the value of in-person work. Now, that said, man, anybody can be successful. I've seen remote teams work. I've seen all that, but man, I am a huge believer in culture. I'm a huge believer in uh the whole concept of return to office. I got one more question and then I'll be here for another hour. Happy to hang out, take questions. Anything else? >> Curious to hear your story of like getting your first, how did that go? What did you do? >> Yeah, the the story on getting your first customer. And again, if you've started with high conviction and working

backwards from a business problem, ideally you have that first customer in mind before you start your company. I know here's a problem space and I know somebody this is going to resonate with. And in fact, one of the most successful things I see early on are companies that come to the table with we've already had this idea. We've gone and had this conversation with five potential buyers and I've got a purchase order here like or I've got a letter of intent like these guys will buy from me once I build this together. So there there's a lot about that in some of the resources here but it is absolutely worth it. Thank you guys so much. I'm a TIME [applause]