CrowdStrike: Cyber SaaS - [Business Breakdowns, EP. 72]

22 snips

Sep 1, 2022

In this engaging talk, Roneal Desai, a senior public market investor with a focus on enterprise software, shares insights on CrowdStrike, a leading cybersecurity firm. The discussion highlights how CrowdStrike revolutionized security by predicting threats, especially in the cloud era driven by remote work. They also dive into CrowdStrike's critical role during the 2016 DNC hacking and its impressive growth metrics, including a $45 billion valuation. Desai emphasizes the need for continuous innovation to fend off competition and future threats in the evolving cybersecurity landscape.

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ANECDOTE

CrowdStrike and the DNC Hack

In 2016, CrowdStrike helped the DNC investigate a suspected hacking incident during the presidential election.
They identified data being sent to Russian servers, ultimately tracing it back to a hacker group known as Cozy Bear.

INSIGHT

Casino Security vs. Airport Security

Traditional firewalls, like McAfee's, primarily block known malware, similar to airport security.
CrowdStrike's approach involves actively monitoring behavior for anomalies, akin to casino security.

INSIGHT

CrowdStrike's Pricing Model

CrowdStrike's pricing model differs significantly from legacy vendors, charging more per endpoint.
They offer next-gen antivirus, endpoint detection and response (EDR), and optional managed services.

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This is Jesse Pujji and today we are breaking down CrowdStrike, the cybersecurity provider. Founded in 2011 by George Kurtz, the former CTO of McAfee, CrowdStrike differentiated from firewalls and anti-malware by building a platform that actively predicts threats rather than blocking attacks that have happened before. Today, CrowdStrike serves over 18,000 customers globally and is valued at $45 billion.

To break down CrowdStrike, I’m joined by Roneal Desai, a senior public market investor focused on enterprise software. In our conversation, we discuss how CrowdStrike reinvented cybersecurity for the cloud era, why the pandemic and remote work drove a paradigm shift in the industry, and how the company helped the DNC identify Russian hackers during the 2016 election. Please enjoy this breakdown of CrowdStrike.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Show Notes

[00:02:29] - [First question] - Overview of what CrowdStrike is

[00:05:28] - The size and scale of CrowdStrike today

[00:07:10] - Customer use-cases before and after CrowdStrike

[00:08:45] - What software would have been used prior to CrowdStrike

[00:12:17] - How many customers could there be and who CrowdStrike is taking share from

[00:16:41] - What their prior estimates lacked in terms of TAM

[00:17:17] - Whether or not Palo Alto Networks is a true competitor

[00:19:33] - The criteria used for deciding which service is better than the other

[00:21:16] - The early days and founding story of CrowdStrike and their structural advantages

[00:27:30] - What about COVID opened up an opportunity for CrowdStrike’s growth

[00:29:44] - The P&L and the special parts of the business that show up there

[00:34:21] - Strategic acquisitions and product expansion

[00:39:21] - What’s behind their distinctive growth

[00:40:54] - Other noteworthy aspects of their gross margin and R&D

[00:44:17] - Distinctive aspects of their sales and marketing strategy

[00:50:00] - What their unit economics looks like today

[00:52:35] - Key factors that would contribute to the bull case for CrowdStrike in ten years

[00:54:14] - Why a security company would become the integrated layer

[00:55:47] - Biggest risks and threats to CrowdStrike over the next decade

[00:57:41] - Lessons for builders and entrepreneurs

[00:59:05] - Lessons for investors

[01:00:09] - Where to go to learn more about CrowdStrike