How to Win Deals & Grow a $250B Business | Nikesh Arora, Palo Alto Networks

Did you read Ari Emanuel's new book? >> No. >> You've heard that you're in it though? >> No, I didn't know that. >> Okay. He says the way he met Egon Durban was that he got introduced to Mark Andre and Mark and Dre told Ari that him, Nikesh and Egon had this like affiliated like group of essentially angel investors that were working together. >> Yes. >> Tell me a little bit about that. So I met Egon when Egon had just come to Europe and uh he was a Silver Lake partner there and he reached out to a common friend saying listen I want to hang out with some people get to understand the tech scene over here and see if you get an adviser or two a silver lake and I just I was early 30s I used to run Google Europe so he and I had lunch and I said listen I said why are you so reluctant on this conversation I said look I I ded to do this they really don't want advice they make you comfort for two day off site.

They present a whole bunch of stuff to you. The last thing I need is more PowerPoint in my life and free coffee. He says, "You know what? This resonates with me. I'm going to call you and if you tell me that's a good idea, I'll obviously independently consider if it's a good idea or not because I have to make the decision. Tell me it's a bad idea, I'll think about it." Similarly, but don't worry, you'd add as much value in telling me what to invest in, what not to invest in, so can we have fun.

So, I said, "Sure." And I did that for about 15 years. So that's when I met Egon uh when he was in Europe. >> You're just investing your personal money. >> Yeah, of course. But I'll tell you there's a funny incident. What happened was one time I flew back from CES with Mark Andre cuz Mark rarely travels but when he does he goes to CES and he goes to dinner and he had me come. We spoke. I spoke a little bit over there and I flew back and I sent him another saying, "Hey, Mark, is there any cool company that you're working on right now that I could put some money in?" He said, "The guy who spoke at dinner." I said, "Yes." I go, "Okul, >> Palmer Lucky."

>> Yes. Well, Brendan to be fair. Okay. Brendon Rebe and Palmer Lucky, of course. >> I said, "Great." So, I give me a number. So, I text Brendon and say, "Hey, we met at the dinner. I'd love to make an investment." And he's like, "Great, but you have to come see this. This stuff's real cool." I said, "Okay." So, I'm in LA. And I said, "The Brandon, I'm coming to LA. Can we take a look at your technology?" Me and my wife. We go there. She says, "Yeah, but you have to drive an hour outside of LA because we have this industrial park. We're going to go there." So, I take a car. I go to the industrial park. The lights are out cuz nothing's going to work. So, we're kind of hanging out waiting for the lights to come back on. We go in. He puts this contraption in our face and it's got this little virtual reality type situation going on. I say it's really cool. This is very cool. What's going to happen? Well, it's going to be

cool because you know all the promise of visualization, all the promise of gaming, etc., etc. I said, "Great. Can I write a check?" She's like, "Sure." He's like, "It's you and Blakean and Viv Neo and I have room for one more." Said, "Well, Egon and I do this together." And Mark was already in the company. Mhm. So I say, "Okay, so me and Econ." So we agreed to do the deal. He sends me some docs. Oh, he sends me an email. He's working in the docs.

Doesn't respond. Egon says, "What's going on? Why haven't we heard from him?" So I sent him an email. He say, "Yes, the docs has just come. They're going to be here with you anytime soon." No dogs. And boom, you wake up one morning and he's just been sold to Facebook >> before you were able to invest. [laughter] >> All right. So this group that Ari writes about, >> we ended up being the technology advisory board to Willie Morris when it was acquired by Silverlake.

>> Okay. So >> Mark and I >> Okay. Well, I don't even know about this. So what were you guys advising on >> whenever you had a question on technology? The advisories around Egon and Ari are very straightforward. Ari does the 15-minute phone call. You can keep Ari >> 15. It's like now I did the episode with him. Now his book is called Rolling the Calls. Now he does it to me. So I get a call and it's like a hold for Ari Emanuel. I'm like, "You're calling me."

>> Exactly. >> And then that uh sometimes they're like 25 seconds and there's no goodbye. >> Yeah. But you know what I'll tell you? It was fascinating. So we would do that when we had something to talk about and know I understand his shortand. He's trying to get something done. He's a man on a mission. >> But there was a time when I had uh left Soft Bank and he reached out and said, "What are you doing now?" I said, "Um nothing. I'm just trying to figure out what I'm going to do." He said, "Why don't you come by and come see me and then we can talk about it." I said, "Okay, I happen to be in LA. I'll come see you." And my assistant like Ari's office says you're having lunch. What time should I schedule your departure?

I'm like, listen. Uh, it's probably going to be 15 minutes. Why don't you schedule half an hour and then we'll get me in get me to the airport and get me in a flight back. And that was the only time I spent an hour and a half with Ari. So, you can tell like like he actually wanted to get into what I was going to go do next and he actually spent time and invested time in that conversation. So, he does have a soul. when it's really important to you, he's going to spend a lot of time, but most times he's actually transactional when he wants to get something done.

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that is deal.comra. >> We were talking a little bit about some of the the people that that we we either know jointly or know of and you were saying like some of the people like jump around a lot like they have an idea and then they're working out for a little bit and then they almost like they have like ADHD. What's like how do you think about you because you seem to have had these jobs for a long time. You're at Google for 10 years. You've been at Paloto Networks for how long now?

>> Eight. >> Eight. Like I like to focus on one thing for a long period of time. Like how do you how do you work? Well, the good news is like even at Pala Networks or when I was a soft bank or when I was at Google, you know, Google went from 2,000 employees to 60,000 employees when I was there. It went from, you know, $2 billion in revenue to $63 billion in revenue. So, you realize even though you're one place, you're actually doing so many different things at that point in time. You went from search and YouTube and double click and like, you know, buying tons of businesses, thinking of all kinds of stuff. So I think it's not what you do at one point in time. It's how much your brain can get challenged. How many different problems can you get involved in? So you can swap from problem to problem solve many things in the same space and as long as you get the right environmental structure right right if if the

opportunity is big enough to when I joined that was 8 years ago we were a firewall company today and know we do we have 70 plus products we're in every aspect of cyber security we're all over AI trying to make sure we pivot hard on the AI stuff so you can always keep yourself challenged as long as you get the right platform in front of you >> I just talked to Nick from Revolute and that was his thing he's like there's no way I was going to run a company with one product. He's like, "That's boring."

>> He's running like 20 different experiments at all given times. I think he's in like 30 or 40 countries. He wants to get to 100 different countries.

>> When you got recruited to become the CEO of Pala Networks, they essentially one product, right? The firewall >> for the most part. Yes. >> Okay. Did was your this expansion that has since occurred in the last 8 years, is that did you come in with that plan or you're just like what was the conversation? >> I didn't have a plan when I came in. >> You had a hilarious line where it's like I thought cyber security was two words or something. You know, honestly, in my interview, I ended up talking a lot more about executive security because I thought that was an important topic and then I realized it was a very small market, but you sitting talking about how each of us need to be secure. I was like, no, that's a consumer business.

You don't want to get involved in that. That's a lot of marketing, lot of AR. So, I came in with more of an enterprise framework study than I did a cyber security framework study. I sat there and looked and said, which are the largest companies that exist in enterprise? And you look at them and it's like I don't know Cisco or Salesforce at that point in time. These were hundreds of billions of dollars market cap. We were an $18 billion market cap company. I'm like how do I go from an $18 billion market cap company to north of 100? That was the original expectation. I s say if you look at the P&L of any enterprise company >> most companies spend 15 to 18% in product development. That's kind of where R&D sticks around. Everything else administrative is 6 to 10%. So the entire difference between a operating margin and your gross margin is sales and marketing and customer support.

If you can find a way of taking 60% of your costs, which typically live in sales, marketing, customer support, take them down to 20, you can be a 40% operating margin business. That was my insight. So, how do I get sales and marketing advertised over time? Then you figured out the biggest expense in enterprise is customer acquisition. That's the maxim that's that's what costs the most. So if you have a low revenue product which you can only sell one product to a customer it's really hard to build a big business and if you look at the largest businesses it's Microsoft enterprise business or Salesforce or you know take your largest businesses they sell a lot to the same customer that was the insight I'm like well if you're going to be big at Palato we got to find a way you're selling a lot to a customer you only have one thing to sell so you go knock on the door you knock on 20 doors you spend all the time and 15 people say

sorry don't need it I already have it you're stuck with five if you're knock on the door, you have a truck behind you saying, "What do you want? You want this? You don't want this? You want this? You want this?" It's like, you know, the world's your oyster. What can I get you? I'm with that insight. I'm like, "Well, we need to figure out a way that we can find adjacencies to our business, which the customers will trust to buy from us so that we can keep expanding what we sell to customers. So, we can go serve the top 10,000 customers in the world and increase the amount of money we can get for them." You only get that if you earn their trust. You only get that if your [ __ ] works. You only get that if it's kind of bestin-class because nobody wants to buy the second best product of cyber security. Kind of sucks. So you want to buy the best then our our need was you got to be the best. Now that's

kind of one part of the insight. The other one of the insight is which is

still true. It takes four to seven years to build a good technology product. It doesn't matter who you are, what you are, where you are. You look back and say this thing was not fully ready. It's been seven years. this thing looks closer to being ready. Whether it's an Uber, it's a YouTube, it's Facebook, it's Google search, it took four to seven years, sometimes longer to build a useful product that the customers found exciting and interesting. That's true in enterprise as well. So I s say holy [ __ ] and I just joined this company. You don't have a large product pipeline.

It's going to take me four to seven years to build real products. What am I going to do? >> You're going to acquire them. >> That's right. But you got to be careful about it because generally um history is littered with bad acquisitions and companies destroy acquisitions for the most part whether they're enterprise or consumers. So you got to figure out and say so I spend the next time next sort of part of my life studying that I'm like what makes for a good acquisition and what makes for a bad study like how are you learning about this?

>> You go back to look at patterns right like how many companies did company X buy how many did company Y buy? Why do they work? Why did they not work? Which ones worked? What are the key characteristics? Was it a failure of the market? Was it a bad idea? You shouldn't have done it. Was it bad execution? Was it bad leadership? You go and figure out and say, "Great, these are the seven reasons why they failed. How can I minimize the risk of failure?" And you minimize that by saying, "Okay, let me control five variables in a different way." And then I only have two risks. I have risk of I picked the wrong idea.

So, I bought the right company. The market didn't show up. Right? We had one of those. We bought a company. We thought the market is going in this direction. Market ended up going there. What was that company? How much did you pay for it? >> That company is called Opera. We thought the world was going to go to IP based segmentation, but it never went there. But we bought it. We cut our losses quickly. Once we decided it wasn't going to go there, we moved on. So, it's kind of like almost like portfolio business, right? It's like marginal venture capital. It's like product development because the pharma companies do it, right? They try a whole bunch of drugs.

They take them to a certain phase and say cut bait. It's not going to work. Got to do the same thing. I've been in, you know, companies where somebody says, "Oh, you know what? We should do this. We should build this. We should buy this." I was like, "No, we can't buy it. We can build it." I was at Google when you know, I said, "Let's go buy Netflix." And no, we have YouTube. We can build same capabilities, same thing. It's a video serving platform.

You get professional content instead of consumer content. That's easy to do technically. Great. Give us $10 million, go 20 engineers, we'll solve it. Never works like that, right? So I had the same thing at Palato. If I tell my team of engineers saying we need to buy this no we can build it. Well if you build it have two or three problems. One the guys we're seeing succeed are already a year and a half ahead of us. They have a functioning team of 50 to 75 people who are working on it. You want to go hire 50 engineers. By the time you hire the right people, get your [ __ ] together.

You start building. You'll have version one and they'll be two years ahead.

>> Why do you think so many other CEOs make the mistake they just is is it like a an ego thing where it's like no I can build this. What is it? >> I don't think it's an ego thing. I don't think CEOs set out to make mistakes. No CEO stands up saying, "Let me try and make a mistake this morning." They believe whatever they're doing is right. And they most likely identify the right company. I think often M&A fails because of bad execution. Your tendency is you're too busy, you're doing a lot of stuff. You buy the company say, "Great, I have a guy or gal who manages this topic. Okay, this person does video streaming. He or she's been trying to do video streaming for the last 5 years. I want to buy a video streaming company and give it to him or her." and you instead put the founder of the company.

>> Yeah. I'm like, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, wait a minute. This person just got their ass kicked with all the resources, all the money [laughter] we had to that guy who got funded by venture capitalists and who went out and, you know, lived in a crummy warehouse, hired people, blood, sweat, and tears, built something that has product market fit, and he or she should work for the empire. That's not going to work. He should be part of the empire. So, I switch it. I say, "Okay, this person did really well. This person is now going to be the head of video streaming. Everybody can learn from him.

you can work for him. That sometimes doesn't go down well with some of the people who have to end up working >> the existing organization. >> Of course, >> they wind up leaving or whatever. >> But it doesn't matter, right? They they were the ones who were chartered with winning. They had access to resources. They come and they didn't. You can't reward that behavior by giving them a prized asset and run the risk that they destroy the priced asset.

>> So that's kind of one one failure mode. The other failing more people saying, you know, I always say this like, you know, my innovation is my genius. Theirs is pure dumb luck, right? Which means I'm a founder. I created something cool. These guys are not smart. I'm just going to buy number two or number three. I'm going to spit and shine it, make it look like new, and I'm going to kick their ass. That never works. I want to buy number one.

>> Well, you talk about this a lot. Why is

number one and number two so important to you? >> If you look at most markets, number one and number two end up with disproportionate shares of profits in the category. This is what you were trying to get out of me before you start recording, [laughter] >> which we'll talk about after. Okay, fine. That's exactly what's happening right now, >> right? So, you know, number one and number two end up with disproportion share of the profits. Three gets close sometimes, but never. So, if you're going to go win, you want to be number one and two in the long term. If you're not going to be number one on two, you got a problem. Now, if you go buy number two or number three, remember, number one still exists. more than likely you're going to slow down whatever you buy because you're still a large enterprise and you can't control every variable. There'll be somebody from finance saying I'm here to help.

Somebody from HR saying I'm here to help. So the guy says dude let me go build the product and you have this whole onslaught of people who show up saying I'm from the mother ship. I'm going to help you. So you have to figure out how to maintain momentum for number one. >> You don't have an acquisition team, right? I I read somewhere that she's like it's [ __ ] me. >> Well, no. There's a there's a set of people who are very good at what they do and they work with me. So it's not like I work alone but no eventually every acquisition ends up with me being involved. Let's say you figured, okay, this we want to extend into this product. You look at both one and two, right?

>> Can you get into the difference like from the outside maybe two looks similar to one? Yes. >> I think on when you get deeper and closer like do you notice can you explain like what you typically find? >> Sometimes there are small differences between one and two. Right. And sometimes you know we've had a situation where we bought what we thought was number one and number two went around us and became number one because we screw up the execution. That happens too. You know, we buy 35 companies. Not everything works out as per plan. But typically both one and two have product market fit. And if you think about product development and you say this is what the end product will look like in four years, number one could have started with this as their primary thrust and number two could have started with this part as their primary thrust.

They both look like they're winning in the product category. But it becomes sometimes becomes apparent later that you should have started here because that's the primary need and the customer wants this to work really well before they take the second half. But it's hard to tell in the early days when both of them are about 30 or 40 customers that effectively pro prove product market fit. So you'll find it's a strategy question. It's an execution question.

It's a product market fit question. It's a business model question. All those things are somewhat different. But they're hard to project how they're going to pan out over the next two or three years. So you have to sit back and look at their both their positions say which one is more likely to succeed. Then you have to add to that which one is more likely aligned with our product direction. So you know I made a mistake early the first company or second company I bought you know spending six months trying to debate product direction after we bought them.

I said wait a minute this is a problem. So these guys started a company and rightfully the founder was like I started the company with this vision in mind. I've already sold the company. That's my vision. [laughter] >> But what did you think the money was for? >> Exactly. It's like no no but I sold the company but I still want to build what I wanted to build. I'm like, does it work like that? >> But it took me a while to get to realize it doesn't work like that. I felt like, oh my god, I'm going to like, you know, [ __ ] a founder. But I had to sit down, dude. It doesn't work like that.

So then we change that model. So what I do now is when I sit down with the founder, I agree a deal. And I I insist on agreeing the deal with the founder. I don't involve bankers because I'm like, you're going to work with me for the next four years. You really want somebody else in the middle negotiating on our behalfs. So that there's eventually that's not what was sold to me. We should tell the company. So we had that. The moment we agreed the deal, I tell the founder, listen, let the let the finance guys, let the legal guys, let the lawyers figure out all the paperwork. Go figure it out. Your job is now to sit down with me and my product guys and design what our joint house is going to look like. And we have 30 days to do it. So, we literally go back and forth on product direction, product >> before the closed. But you don't sign the >> I don't think I've ever heard that idea before.

>> I don't sign the definite term sheet until I get the founder to sign on a joint product road map. I'm like, if you don't want to build what I want to build, then we shouldn't do this. >> It's natural for a founder to be to like want autonomy and to think that they have the right answers. >> So, how like how difficult these conversations surprised when there's a large check hanging on the other side of 30 days, how much more aminable founders are to aligning their product vision than after they've got the proceeds.

It's unbelievable. It's night and day. [laughter] And by the way, they have the choice to pull the rip cord. They don't have to do it. >> How many have backed out at that stage? Nobody backed out. We backed out twice. >> Why? >> Because in the process, we figured out it' be hard to get consistent alignment of the product. We figured out it would be hard to manage the founding team. Thereafter, because they were they had very strong opinion on where they wanted to go. We could sense that they were playing ball because they knew that they had to play ball to close the deal to close the deal. and we just didn't feel that that was going to be the the right outcome. In one case, we we you know, as in the 30 days, as we kept digging deeper, we kept pushing harder, we figured out that the substance was not as strong as we had sensed in our diligence early. So, as you dig deeper, you start looking at architecture saying I'm going

to combine architecture. Oh my god. Wait, >> do the founders typically stay on long after? >> Some do. So one of the other things we do is, you know, because when you buy something like this, you're buying a team. You're buying a team. You're buying the vision. You're buying the execution. So it's very hard as a founder says, "I'm out." So we don't buy companies. The founder say I'm out. If you're out, you should go. Which means you could kill the company anyway if you're going to be done. So you got to be want you got to want to be around.

What will happen is typically if there are two or three founders, one will slack off because they're doing bisdev. So maybe we don't be as bisdev. We do better business. One's doing go to market. We don't need that. So you'll finders fall off depending on the function that they bring in. But it's never the product guys or engineering guys who fall off because that's what we're buying. We need them. We still have many founders who work at Palato.

Some have converted to continuing to work at Palato. Some have the founding it and after 3 years they leave. But the other thing which we always do is when we buy a company we revest the founders for 3 years ideally four. >> Why is that so important? >> We want continuity. We want the continuity from the execution of vision perspective. Right? Because they build something as I've said it takes four to seven year to build build a great product. Typically we buy these product companies 3 years in, 2 years in, four years in. We think there's another 2, three years of consistent product development that needs to be done. And we want that consistency and continuity of the founder and the founding team keep driving that. So if they're not there to lead it, then there's disruption. Disruption could cause you us to lose the lead is at number one in the category. We want them to continue to execute in that direction.

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You could spend months building all this yourself or you can use work OS. Workos provides the infrastructure to make your software enterprise ready. Go to works.com and get started today. that is workos.com. I want to go back to this idea of like looking at the number one and number two and then you get really close to them and is there anything else that you're surprised by? Again, they may look similar from the outside, but the more you dig in, you see why number one is in the position they're in?

You know what's interesting is the hardest thing to put your arms around as a larger company is sometimes number ones also win because the sheer will of the founder right some founders are just what do you call them alpha killers or whatever they are >> what we talking about we got we need context here >> oh you don't want >> no no we've run into each other a few times and I've watched a lot of your interviews and I just think there's like a no [ __ ] the reason I asked you to be on the show is cuz like I like these founders who seem to be like minimal [ __ ] Like we're here to [ __ ] win and that's what we're doing.

>> Yes. >> And like this is I think you've already alluded to this a few times and I was shocked when we were talking before we started recording. You were kind of like >> playing that down a little bit. I was like no no no. I'm pretty sure I know what's sitting across from me. And I was naming some other founders that remind me of you in the way that you operate. >> It's one thing to be that as a leader of the entity. is one thing to have people within your team who are that way. If you acquire a company and the founder is like you described, they're going to break glass and it's okay. But they also have to find a way of coexisting with the larger entity because you know what you get with working with a palalta for example and if you're a founder you founder I have 6,000 people in the field you have eight. You got to find a way of leveraging 6,000 people. They're not all bad. They're amazing right? And

sometimes when you when you're a founder you take on this point of view that everybody's stupid. I'm smart. I'm going to get this [ __ ] done. Anybody who comes in my way is basically slowing me down is not competent enough. You got to change. You got to need a mental reset. If you're going to survive and succeed in a larger ecosystem, you got to be able to balance say, "I get it. I get 6,000 sales people. My job is to motivate 6,000 people to go out there and sell my product because they do. My vision of wanting to make this an amazing product is going to be realized because these 6,000 people are going to be my amplifiers." Sometimes found founders who are used to doing small team stuff and going and being the underdog don't realize you went from being the underdog now you're part of the overdog and that's the only risk that one has to watch out >> to tie that what you're saying right now

to the will of the founder. So you're saying like the will of the founder running they're succeeding in a smaller company largely built uh due to the will of the founder. They have to modulate their behavior. >> You have to modulate you have to be you have to make sure that they can modulate their behavior and succeed in your environment. >> Got it. If they can't modulate their behavior and succeed in the environment, then I lose their their their leadership on the product part because they're going to rub people the wrong way and then they're going to get frustrated. So that's what I have to watch out for.

Sometimes the one and two has to be adapted by us for who's going to be a better fit in our environment. >> I'm kind of like personally obsessed with this idea of like there's usually a gap between one and two and >> Yes, I heard that the third time. Yes. [laughter] >> So keep going. You can ask it again. No, no, I'm not. >> Maybe I'm not smart enough to answer. >> No, no, I'm not. Uh, again, this is this whole show is for my personal education.

>> I I can see that. But remember, one and two is also a judgment call. It could be one and two. Your you could have one, you could have this one, A call one, and B call two, and I could have B call one and A call two because I'm looking at a different set of criteria to measure it. There's no obvious criteria who's one and two. They both have 30 customers. They both have same amount of ARR. Which one is one and two?

>> Are you a tennis fan? >> Yeah, >> I'm not really, but >> but [laughter] sure. Why don't you use a tennis analogy? >> But I'm gonna tell No, because I had dinner. It was really interesting. I had dinner I had dinner one time with he's a mental coach to some of the top tennis players. And when he says mental coach, it's like literally like they got other people to help them with their swing. My conversations are all about what's going on in their mind. And he says something was very fascinating. He's like, you know, take the top 200 tennis players.

He's like, the difference between one and three is negligible. He goes the difference between four and 200 is smaller than the difference between four and three. And he was explaining like like what appears from the outside like oh that person's number four that person's number three or two. It's like that seems the gap is like really small. He's like it's actually a lot bigger when you get deeper and you actually understand what is going on in their like in his case he's like what's going on in their mind. It's actually counting. It's not like a physical. It's not like number three and number four are that different physically. This is like a lot in their mind. So I I just I like these like this personal fascination with the sports business or otherwise of like oh kind of from the outside this kind of looks similar and I've run across a ton of founders and you spend time with them like oh this is

why this person is the gap between them and their next competitor is so large >> as you said the criteria depends right like some could have clear company attributes which make them one or two somebody's got twice the AR and the other one yeah we get it they could be deemed as one much easier sometimes they have similar starting grounds or they started from the same place one came at it from a different angle then it becomes on which founder is going to lead this to success or the other and that's where you're getting into the mindset of the founders and the leadership team and that's what you know I we say it differently I say my job is to fun once once we identify one and two remember they also have to be willing to sell >> which the people we were talking about before we started recording are not selling for any price >> that's right yes so there's also that >> you know you got to reanalyze that from

that vantage point saying well these could be alpha founders they could be winners but dude they're also they're also sending a signal by saying I'm willing to sell. >> Have you talked to Hawkan about this? >> Have I talked to Hawkan about selling >> about acquisitions? >> He does it very differently. >> I know. But have you talked to him about this? How his mindset's a little extreme. So we were me and you were together.

>> Educate me. Yes. >> Okay. Well, me and you were together at Dell's house and uh this is where I heard this story where he was advising a younger founder uh that was also there and he was just like just make sure that on day one of your acquisition that the uh that the acquired company knows that you are the conqueror and they are the conqueror. [laughter] >> And then I have a slightly different philosophy I know you do. Then I asked him I was like uh Hawk why don't you do any podcasts? You want to do my podcast?

He's like, "Oh, no." He goes, "My wife forbids me to do podcasts." I go, "Why?" He goes, "She said I'd get cancelled." [laughter] >> See, I say the opposite. I tell my team when you're starting a negotiation with a company, remember, they're going to be a colleague. Don't treat them with disrespect. >> He's obviously an extreme character. I wasn't taking disrespect, but like >> So, which one's right? Which one's one?

>> No, it's not. >> One and two in your mind. >> I obviously know that. Think about it. There's no way you could think about it like he does because you just said, "No, this guy's coming in and now he's your boss." No, but look, my point is that I see it differently. I cannot win if 20 people around me don't feel they're winning. >> And for them to believe that they're winning, they have to believe they're a first class citizen. They have to believe that they're part of the team and their winning matters and their winning is as much for themselves is for me.

>> Has there been any acquisitions you did too early? >> When I walked in, we had just bought a company called evident evident.io. Palato bought it before I got there and then we ended up buying a company called Redlock, which was the same space. The difference was one only worked on Amazon, the other one worked on all three clouds. And I suspect the one that had been bought early was too early, which was bought by my predecessor, but it didn't matter. The company bought it too early. And then we bought the second one, which was in the same space, just further along. So sometimes you can buy stuff too early. It becomes a question of price, stage, and conviction. If you marry the three, right? Am I convinced this is going to be a big space in the future? Okay, if I'm convinced a big space in the future, I need to have a footprint in that space. Sometimes I can go spin up my own team, have them go charge it down and go

make it work or I can go out and acquire something. the question like acquire something and how long have they been have they been around in that space and you know how expensive are they going to get and I think the current times are most sort of representative of the risk today companies get funding it are getting funded valuations I don't understand right now imagine if I wanted to acquire a company today the same company I'm trying to acquire today would be 1/3 1/4 the price 3 years ago in a different funding environment as compared to today they're probably as early but three times or four times are expensive today.

>> So what do you do? >> You buy them if it makes sense on your strategy. Look, M&A is not a strategy. M&A is a mechanism to validate or to ex to amplify your strategy or to execute your strategy. People come always ask me, "What's your M&A strategy? I don't have one. I buy companies when I believe I need to go win in a category and I don't have my team at the place I'd like them to be at this point in time. I got to go look for another team that's got it figured out and they have the right people in place." So you go buy it. If something's worth $200 million, it's worth $800 million because my job is to take the $200 $8 million asset and turn that into a $5 to$10 billion asset.

>> If something's worth 200, it's worth $800. What does that mean? >> As a $300 billion company, I should be buying things which I believe in the next 5 to 10 years will be worth5 to 10 billion for us. >> So, you're not going to remember the other 500 million. This is Egon Durban. So, um in there was one of the most memorable parts of R. Emanuel's book. They're buying W IMG. >> Yes. And they I think they wanted to pay nine or 18 and it went to 22, something like that. And uh I think maybe it might have been like Ari's team that was kind of like [ __ ] up the deal. And Egon comes in who has way more experienced this. He goes, "You're never going to remember the 400 million."

>> Yeah. >> He's like, "This is an asset we want or not. Like you're going to remember [ __ ] up the deal, but you're not going to remember the 400 million." >> Yeah. >> And you know, they obviously closed the deal and it's been way more valuable to

>> Well, Egon and I Egon and I bought a cricket team together in London. >> I thought you did that with Dash. >> No, no. Egon and I are the equal owners. He and I came over this together and he called me. I was about to go play golf at the AT&T and he called me. He says, "How's the auction going?" It's like 6:00 in the morning cuz it's in London. I said, "The last auction went for two rounds. We're in round number 24."

[laughter] He's like, "I know you're going to want it cheap cuz you like value. It's in your upbringing. This is sport. Welcome to sport. Don't stop bidding. I will stay on the phone with you to give you moral courage." [laughter] Wait, how many more rounds? You were at 24. How many did you have to go? We >> ended up at 29 rounds. >> Well, once he said that, you're like, "Fuck it. We're getting this." >> He's like, "Yeah, what's the worst that we're bringing like half of it doesn't matter because this thing's going to be a huge success or it's going to be a failure."

>> So, he did it to you, too. >> But I do the same thing, but I was trying to be cute on the other one. [laughter] And he just reminded me that, you know, you say that in your professional life, think about in your personal life, too. So, that's what we did. You know, I saw him at the range at 7:00 and they said, "Do we own the team?" Like, yeah, we own the team now. [laughter] It happened. So yeah, he's consistent in his in his uh point of view.

>> I've heard this phrase differently uh before. I'm curious if you if you agree with this characterization. You're not buying companies, you're buying founders. >> You're buying teams. You're buying teams. You're buying their point of view. You're buying their strategy, buying their execution, right? A company is just a construct that is around the team that allows to be held in some legal entity, protect IP and eventually turn that into sort of go to market capability. But effectively, what is a company? When you come up with an idea, your first instinct is not that I'm going to start a company. Your first instinct is I'm going to go build something amazing.

>> Yeah. >> When you go build, you call yourself a builder. You go find like-minded people who have shared the vision and then you're the most charismatic person in the room because you're trying to convince people to get on the bandwagon for your story cuz you had the idea and it's typically one or two or three people. So, you're doing everything. You're you're a builder. You're building. You're you know validating your strategy. Every time you hire the next person, you're looking in their eye and telling them, "This is what we're going to build." And the person gets excited. And if you're hiring smart people, they also have to buy into it.

So, you're basically building a team. You're building a team of like-minded people. You're bashing out the edges. You're aligning the strategy and getting to a point say, "Okay, now we all agree we're going to build this. Now, let's go warp speed and build the [ __ ] because you're going to beat everybody else to the punch." That's what you're doing. That the company is just sort of legal entity. If you think about most of these guys, they probably have one administrative person who does HR, finance, facilities, and brings coffee.

So sad, I mean, a company is a is a construct in which you organize, but you're actually buying a well functioning cohesive team. That's what you test for. Can this team execute better than other teams out there? And when you think about it like that and say, I'm going to compete with that team that spend a year and a half getting together and training together and they're on the field every day. They live in the same house. they were 80 hours a week and say I'm going to beat them by hiring a bunch of corporate people by going through my HR team going through four interviews and going through internal process like holy [ __ ] you're never going to beat them they're far ahead.

>> There's a couple things that are popping in my mind while while um I'm listening to you. Have you heard this guy named Henry Singleton? >> No. >> Okay. Henry Singleton essentially like the proto Buffett. He ran this uh very successful conglomerate called Teladine uh in like the 1960s. I found them because I read when I when I'm interested in somebody, I read every single thing they've ever like written about them or written by them and they will all tell you the people they studied. And so Buffett and Munger kept talking about the same guy named Henry Singleton. Munger said that Henry Singleton was the single smartest person they ever met. Buffett said it was a crime that American business school students uh didn't study him. Uh his returns were utterly ridiculous. And a lot of the ideas that I thought that that Buffett used for Birkshshire were actually he learned from Singleton for Teldine. But he grew by acquisition just

like you did. And at one point he I think he does like I should know this. I just did another episode on him. Let's say 135 acquisitions. I think at one point he owned 130 companies. 129 of them were profitable. So he bought really well. But then he changed his strategy and he stopped acquiring. And then from there he never acquired another company for like another 15 years. >> I'm thinking about him while you're talking. Is there a chance where Polo Networks stops acquiring?

>> Possible. As I said, it's not it's not it's not an existential strategy for us. It's a way we can maximize the value for the business. It's a way we can maximize the outcome for our customers. At some point in time, we believe we've reached a point where the marginal value to accrete to the customer is through us making sure all of our stuff works at a customer. We may focus on that. There's no hard and fast rule that we have to keep acquiring.

>> Is anything going on in AI changing how you think about acquisitions? >> Yeah. Can you say more about this? >> This is the most transformative technology we've ever seen in our lifetimes and possibly will be. So if you look at the impact it's already having is fundamentally changing how everybody works. Like and I say this differently when I was at Google, we democratized knowledge or information. This is democratizing intelligence, right? We all have in our back pocket something that gets more and more intelligent over time. So we basically have access to intelligence we never had like in I'm pretty sure two three years from now AI will get to a point of reliability where we will trust it as much as a human being who's an expert in the topic. You know you talk to your nutritionist you talk to AI and say you know what my nutritionist is not smarter than my phone giving me nutritional advice or my physiotherapist or my

physical or my trainer. So you suddenly find that AI is get to a point where it's going to have so much data, so much tribal knowledge that it's going to be able to decide you'll be able to torque it saying listen give me advice which is at the frontier which is got a little bit of risk or give me advice down the mainstream you'll be able to talk saying how much intelligence do you want how much differentiation you want in the intelligence that you're going to get.

So that's going to be true is going to fundamentally change the way we work. It has to right a lot of organizations are structured in work that is being broken down into silos right even the process of product development is go split across eight different teams you have documentation people you have testing people you have coding people you have product people you have UI people so you got eight different sets of people who combine together to build a product which makes no sense the only reason we did it because we we sort of created specialization because nobody could be great amazing at everything but if you believe that you can harness all this intelligence in a way that one person could master all these eight crafts because they have very abled assistance which will do 90% of the work for them.

It fundamentally changes the way we get [ __ ] done, the way we build things, the way we do anything in our lives, the way companies are created. So that's going to be true. The shape of a company, the shape of the organization that we run today is going to be fundamentally different 5 years from now. >> I found one of my all-time favorite quotes when I was reading the book 0 to1. The quote says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places and they do this by thinking about business from first principles instead of formulas." That is exactly what Apploven has done with their advertising platform. Apploven connects you with over a billion potential new customers in mobile games.

Apploven allows you to capture undivided attention. Apploven ads are full screen videos that are watched for an average of 35 seconds. That is retention that blows other ad platforms out of the water. And you can launch on Apploven in minutes. You set the goal and Apploven achieves it. No complex setup, no expertise needed. And Apploven scales quickly. They can put your ads in front of over a billion potential customers.

Other businesses have seen immediate results, scale to hundreds of thousands of dollars of spend per day, and increase their revenue by millions. So, you want to get started quickly before all of your competitors are on Apploven. And you can do that by going to apploven.com. That's apploven.com. >> Doesn't AI make cyber security companies more valuable? >> Yeah, I think even more so more technology, more interconnectedness makes cyber security companies more valuable. Look, cyber security didn't exist 25 years ago because there's no connectivity. You had a mainframe, you logged in, it was secure. There's no problem. The problem is now David can log in from here into his bank account.

Now that becomes an attack vector. So the more people who can log into [ __ ] from everywhere just expands the attack surface. I saw this morning Facebook says 3.65 billion people who are daily users. There's 3.65 billion people getting into their infrastructure every day. Every door into their infrastructure is a potential cyber attack surface. You do that across the world. I don't know between the 8 billion people we have you must interact with hundreds of consumer applications.

There must be trillions of interactions every day which are on a line that allows you to interact with some enterprise infrastructure. The more you do that, the more likely that you need security across all those vectors. The more technology changes, you need more capability around security. For example, the products that will secure AI don't exist fully yet because AI is so new. So yeah, it's good for our business the

more you connect things. >> You're like a I don't like more of like a stoic kind of person. you seem like you don't get stressed or you said like I I read something like you said your business doesn't stress you which is very unusual >> thing to say life shouldn't stress you should wake up every morning do the best you can and then remember if you grew up sort of in India with Hinduism was like there's a strong sense of fatalism all you can do is you do your best >> okay I don't know about this explain is >> explain how you grew up in like this fatalism thing >> remember like you've got 1.8 8 billion people in the country. You've got to make sure that they all understand that they can do their best and eventually there is a hand of God which dictates what eventually happens or it's the notion that it is uncertainty. You can't create full certainty. Things will happen to you which you can't control.

The only thing you can control is what you do. And if you do what you do really well, then you should sleep well cuz you can't get worried about everything that can happen to you from an uncertainty perspective. That is a sense of fatalism. That is what keeps society somewhat orderly. But you do understand it's easy to say that and very hard to apply for for human for a lot of humans. >> Well, look, doesn't stop anyone from trying, right? We try and control every outcome that we can around us. We try and minimize risk around us. We do. We all do that. But at some point in time, we got to say, I've done my best.

>> Did you have this um like ability when you were younger and like early in your career? >> No, this is like >> this is this is recently found in the past 5 years. Yes. >> You're saying this is like the last like five years. So you're working at Google, high stress, more anxious person. No, Google's the best business like you know the the search business >> keep still like that was like the greatest like that that seems to me maybe I'm wrong is like you you had like a lot of success before that but you you know you're working on like you know once in aundred year company at that point you had and you were young you were in your 30s right >> like I >> it can get to your head feel like it >> but it feel like the pressure to like this is a huge opportunity this could be a once in a lifetime this this will change this opportunity will change my life >> it's funny it didn't feel like that when

you were there Okay, say more. >> You just felt normal. You just felt, "Wow, this is this great rocket ship that's working." And remember, you're 34. You've never actually worked in any other company of a similar ilk. You're now at the center of attention of technology. And like great, everybody's searching around you. Every morning you wake up, there are more searches. Every morning you wake up, more people want to advertise. So, it's an execution problem. It's like saying, "How can I get like there when I joined, people were spending money at Google in Austria with an American credit card? That's the only way you could buy advertising in Europe." Can you imagine?

>> Can you imagine? come like, "I'm so sorry. I can't collect your money. You got to go get yourself an American credit card in US dollars and then pay me." And they're doing it. Wait, let me do that. I'm looking $10 million in Austria. We don't accept local currency. How the hell is this happening? [laughter] >> That's that's that's a different business problem, right? You're just basically it's like, "Let me see if we can get out of their way." So, you're trying to eliminate friction, you're trying to create scale, which is great learning >> for me. And I said, "Great, that I can do. I can eliminate friction and create scale. I don't have to worry about demand." Like I used to joke like you know I used to go to a customer saying what are you here for? What do you do?

So I'm the head of sales for Google Europe. Like what does that mean? So well I sell advertising. Great. So how much is it? I'm like I actually don't know. It depends on what the last guy bid if it's got a bit more than that. So you can't tell me what's going to cost me. I'm like not really. It depends on how much you're willing to bid. Great. How much can you take a day? I don't know. Depends on number of people who search because we can only serve ads when somebody searches. So you don't know volume. You don't know price.

>> Yeah. What kind of sales guy are you? [laughter] >> Think about it. >> I'm selling ads. I don't have I don't have control on volume. I don't have control on price. Price is controlled by biders and volume is controlled by people who search. >> Mhm. >> I can tell you when it rained in France, we used to get a lot more revenue because people sat home and search. That's good. [laughter] So, you got go to customers saying, "Listen, the way it works is we work out an ROI. Every search is worth something to do. If I send you a search, look at your conversion rate. If you convert that into an insurance sale or into an e-commerce transaction, you figure out how much you're willing to pay for a lead, my lead becomes conversion. So, we used to sit and do ROI maths with our customers so they can understand what their maximum bid should be and then we say, "Now go give us all your money and just as long as it hits below your bid,

take as much service as you can." That was my job. >> It's pretty straightforward. Um I'm friends with Adam Fugi, the founder of Applov, and he's just like very simple like I sell revenue. Like if they're giving me a dollar, I have to give them back more than that. and it's like very easy to sell as long as I can give them back more than that. We'll come back to Google in one second. So, I want to get to this stuff from the outside looking in. It seems like because of the proliferation of AI, the fact that it there's like I think you were you were just on my friend show uh I'm friends with John and Jordy from TPBN and >> I I caught a clip of that today and there was some kind of >> Yeah, there was a discovery of a vulnerability called PHP which is like used like 22 and a half million places which is being used right now.

>> Yeah. And so my point is like you've got to be waking up every day hearing more crazy [ __ ] It's only going to get crazier in the future. >> Yes. >> And you seem to not >> allow yourself to be stressed by it, which from the outside seems like this would be the most intense, stressful part of your entire career. Why am I wrong about that? >> But I can't do anything about it. And we all have to go figure this out. We got to go fix it. But stressing is not going to change the outcome.

The outcome is going to be changed by us getting around getting something something to do with it, right? We all discovered this morning. I found out about it like yesterday in the morning. Our teams went and looked at everything we have to make sure we don't have the vulnerability. We found it. We blocked it. We found the patches. We patched ourselves. How do we go protect our customers? Team worked overnight, built a patch. We when it came out this morning, we announced they announced their patch. We announced our patch. We put out in the public domain. We're getting on the phone to any customer who has a problem and solve it. That's what we can do.

>> So, how do you describe like this philosophy though? I'm just saying wake up every morning, do the best you can to the best of your ability, leave no stone unturned, and then let fate do the rest. >> Is this real? >> Yeah. >> Okay. When's the when were you the most stressed or anxious in your life? >> Uh, when I was the most anxious in my life and I had to give a speech at my daughter's wedding. >> Is this the daughter that just started the fund?

>> Yeah, this is the daughter who got married in February in India. >> What's her name? >> Aisha. >> Congratulations. >> She used to work in marketing at Brex. And >> wait, she used to work in marketing for Brex. >> Yes. Kids don't take advice from parents for the most part, but I'm blessed [snorts] that once in a while she'd listen to something and she go process it differently. And I said to her, I said, you know what excites you? Said, "Dad, you know, it's exciting when marketing doesn't seem to be the most important function in a company. So, I'm working in marketing. What should I be thinking about?" I said, "Look, if you look around here in Silicon Valley, the most exciting jobs are people who get to talk to founders, people get to understand what they do, get excited about business. We're excited about business. You got to think about venture capital. So, she thought about it. She

did her own research, figured out that she's going to go work and she worked with Bill Maris at section 32. And then she's getting married this year and she's like, "I think I should start my own fund." I said, "That sounds like a great idea. You should." So, she's been through the motions. She's done a lot of research, figured it out. Then, she started uh going around thinking who would be people who'd invest in her. And she said, "Will you be my adviser?" Now, this is the best thing a father can get.

and she calls me once or twice a day. We talk about companies. We talk about what she's thinking about. That's it's a blessing. It's great. >> That's beautiful, man. When you think

about your own childhood, did your this innate drive that you had to achieve? Largely internal, I would imagine. Did you get a lot of pressure from your parents? >> No. My parents didn't tell me what to do. I used to come home from school doing my homework. My mom would be happy that I did it. She'd be chasing my sister around trying to get her to find out where the homework she had. I got my [ __ ] done. My dad didn't know how I got into university. He didn't know how I got into business school in the US. I just went to him and said, "I need $2,000." He's like, "I don't have that."

Said, "Can I give me 200?" It's like, "Yeah, I'll take 200." I took 200 and showed up here. Then he sent me 2,000 afterwards to pay part of my tuition and that was it. >> You don't put any pressure on your kids? >> No. >> Like how different are you as a parent than your parents were to you? >> Like that was a different era at that point in time. Parenting was different. Parenting is different now. Parenting in India is different. Parenting in the US is different. So, you know, you obviously have all those differences that come into play. I have two younger kids who are 11 and 10. So, more involved in their lives than I was with my 29year-old.

>> Why? >> More time. I consciously try and take out time and I'm I'm sure my kids will say it's never enough and my wife will say it's not enough, but I try and take out time as much as I can. Uh, so it's different. No, I don't believe in putting pressure on my kids. The kids have to be able to express themselves and do what they believe is best. Look, I have seen it's some bizarre thing. I don't know how many people have been born since humanity started. Must be in the tens of billions, right?

>> No, I think it was I mean I we read about this a long time ago. It was like over 100 billion. >> Okay. 100 million people been born. >> It's a well-known problem. Every kid has a parent by definition. And even now we struggle with parenting as a problem because there's probably so many variants of parenting that most people get it wrong. So, I just want my kids to be happy in their lives. If they're happy, my mission is accomplished because I've seen so many scenarios where kids are not happy. And it's not clear where where things go wrong. It's not clear from a parenting perspective or it's in the DNA. It's in circumstances. So, I just want to make sure my kids are healthy, happy, and balanced. If I can achieve that, they can do whatever they want.

>> I love the framing you just put on there. It's like everybody's had a parent. Parenting is a known thing. It's been around and we still don't have it figured out. No, you show me where's the ultimate guide to parenting.

>> I'm particularly interested in this because most of the biographies I read, obviously the person usually starts out, there's some people that are born into wealthy families and they wind up achieving a lot. Uh obviously most of humanity is not wealthy, so therefore like most of the people you're going to read about weren't. And there is something that they almost universally struggle with, which is basically I was the son of a poor man. Now my kids are the son of a rich man. What do I do about this?

>> Nothing. You created a distinction by yourself. When you were the son of a poor man, there was somebody way poorer than you. >> Mhm. >> And from their vantage point, you were the son of a rich man, right? So I think we all get born into a circumstance. And I think it's very dangerous to take that circumstance and keep reminding your children, remember I was poor, you should be more grateful. That's what happens, right? Especially for people who were very not very who were poor relative to where they are today. They feel this notion where they have to keep reminding the kids, well, it wasn't like this when we were born. You know, we used to do this and we used to do that.

I'm like, dude, get over it. They're born in this. Figure out a way that they can enjoy this and make sure that they learn how to yearn for more, how to go have drive, how to go get achievement, right? You got to be careful. So, I think you have to be blessed if you can find a way that kids want to achieve. They want to build. They want to make things happen on their own. and they just don't take their circumstances for granted. That's the hardest part in parenting is to make sure that you kids have drive, your kids have ambition, your kids want to achieve. My son is obsessed with basketball. Great. Go for it. Let him follow his passion. My daughter wants to be a gymnast. He's got tremendous work ethic. She's great. He's extremely sort of, you know, friendly.

He likes people. He likes hang around people. He knows a lot about what he wants to know about. That's great. If my kids can have passion, they can go chase their passion. They can show ambition and drive. I don't care if he becomes a basketball player, a basketball commentator, as long as he wakes up every morning and is happy and felt that he gave it his best. >> I completely agree with this perspective. Out of all the examples I've read about, I love what Sam Walton said in his autobiography, which he wrote when he knew he was dying. He had cancer all over his body. And he says, "I I know I'm a fairly overactive fellow," which is the most the understatement of a century. He's like, "I don't put pressure on my kids. This is like, let them do why would I want them to be like me?" But it's kind of interesting like if you do it the right way, you know, your kids will watch your behavior. They watch more behavior than

you think. They know they know more about how we are, who we are, than we possibly can ever understand. And sometimes they will want to do certain things like you. But if you try and force them to do certain things like you, you're never going to get there. I can see my kids would like to do certain things like me. And that's great. I'm very happy that they want to. And I'm sure sometimes they're looking, I never want to do that thing that my dad does.

So that's fine, too. As long as they can find out what parts of what I do they like to do and what parts of what I do they don't like to, they're fine. I'm

okay with that. I >> I'm thinking back to like all the other people I've had on the podcast and I'm like I just feel yes, AI is changing every single business. Toby Luke was on this this this show early this year. I'm going to see him again in like two weeks to record again. And his whole point was like we're going to look back on the year 2026 where because of AI like every business is up for wraps. So every business is being transformed somewhat, right? But I feel like yours might be the most out of anybody else I've had on the show.

>> No, no, no. So, let's let's break it down, right? Cyber security is because I don't come from that. I told you there was two different words in my mind 8 years ago. So, I'm still going to treat it like that. It's somewhat straightforward, right? Cyber security is the idea that bad actors trying to get into your infrastructure and exfiltrate something important. Let's take that for a purpose. If I know it's bad, I can stop it at the perimeter, right? Bad guy shows up at the door. We know he looks bad. He's got a he's got a hood. He's got a gun. This is bad. We know how to stop them. So half of cyber security is stopping bad guys at the perimeter. Bad things at the perimeter. Okay, that's half of cyber security. 10 20% is analytics. How to get hygiene right once you're inside your house to make sure shit's sorted.

The remaining 20 30% is if somebody gets in, what do I do? Things will get through your perimeter inside your infrastructure. How quickly can I find the bad guy and how quickly can I eject them out of my infrastructure before he or she can do harm? That's cyber security in a nutshell. Okay. How does AI impact this? Okay. Well, let's start with your comment about vulnerabilities. AI says, I can find holes in your perimeter faster than anybody else in the world. Okay. It used to take days to find days take forever. I can find holes to enter your pyramid. Okay, great. My perimeter just became more porous. Right now, AI is not going to patch the perimeter. I have to still go look through the infrastructure, find where the poorest parts are and patch them, right? I could be a software company. I could be a infrastructure provider because everybody's IT stack is made up of tens and thousands of vendors. So

vulnerabilities exist in our software and software that's written by our customers themselves. So that's comes at step one. That's what we're seeing right now. the likes of mythos, the likes of the new models that OpenAI has, the likes of GLM 5.3, they have immense capability of finding vulnerability and bad actors can rent them cheap and throw them at you and find everything that you have vulnerability around. So what is the call of the hour? The call of the hour is to find a way to batch these things swiftly so these bad guys can't get in. Okay, guess who's building the service? We're building a service which called virtual patching. We write signatures. We put band-aid around the entire perimeter. We know where the holes are. These people can't get in.

Over time, our customers will patch the underlying systems and they'll be fine. So, that's kind of one problem. Good news is our business has gone up since Mythos came in. That's what I mean. That's what I'm trying to get. >> Holy [ __ ] Can you help me patch it? Now, guess what? Yes, I can help you patch it. I inspect everyone's parameters. So, you've got a laptop somewhere. I live on a laptop. I charge you 25 bucks a year, and I watch 150 megabytes a day, give or take, on your laptop to make sure nothing bad's coming in. You told me you're hacking my phone calls.

>> I was just kidding. [laughter] I wouldn't know how to do it. Anyway, remember cyber security is two words. So the marginal cost of inspection of traffic and laptop by me is zero, right? I don't charge you more the more traffic that goes through. AI is set up to charge you every time you run traffic through AI in terms of tokens. So if AI tried to do my job at your endpoint, it'll cost you $5,000 a day or pick a number, right? $500 a day. You have become $50 a day. They can't do what I do at $25 an endpoint. If you go back inside and if the bad actor gets in, what happens? Yes, AI can help you analyze all the anomalous behavior quickly, but you still need harnesses.

You still need security expertise, you need data ingestion, you need infrastructure. So, in a nutshell, our business is not at risk. >> Yeah. From outside, that's what I was assuming was the case. That's what that was. always assume that CEOs are trying to maximize their businesses from the outside. [laughter] Generally, that's a good rule. >> Yeah. But we talked about no one wakes up wanting to lose, but a lot of people lose every day. So, this is what I was trying to get to. Who do you go to when you want to learn about like the frontier of AI?

>> Who do I go to when I want to learn more about AI? Um, there are different people. I spend I'm going to say at least four or five hours a week with AI founders of some sort cuz these kids are young. They possibly worked at OpenAI. They probably worked at Google somewhere. They call these companies. They're very kind. They spend time with me. They try and tell me what they do, how it works. So, you know, I learned about open weight models. I learned about training. I about training data. I learned about, you know, guardian agents. I go around.

I talk to tons of people. I try and I talk to probably five or 10 cyber startups a month, maybe 15, cuz I'm trying to absorb how they're thinking about it because in a bizarre way, this is a new and developing science, for lack of a better word. There are no real experts. People know how to do their [ __ ] Everybody else is trying to imagine the implications to everything else around them and they're trying to build a mental model so they can build product and go win in this category, right? There's no concept of, you know, data labeling before you, you started having self-driving cars be able to label data. Now that's turned into reinforcement learning, simulation models, neural networks that are trying to simulate data so we can train AI. So you literally have to stay in the conversation with tons of people to understand and absorb what people are talking about. So you just have to spend

a lot of time on Twitter, spend a lot of time talking to people, spend a lot of time reading stuff. You kind of like half I understand, half just gets through the other side. Can I absorb everything? That's how I learned. >> Oh, you brought up another thing I wanted to ask you about. What's behind your new presence on X? [laughter] >> Well, I think I said that uh I was giving [ __ ] to one of your fellow podcasters, >> Harry.

>> Yeah, I was giving Harry [ __ ] saying, "This is great for you. You keep bringing all of us in. You build your own brand. All of us like are effectively props for your brand." [laughter] He's like, "Well, that's your fault, not mine." I'm like, "What do you mean?" It's like, "Well, you get the right to build your own brand if you want to." He just don't. And how would I do that? It's like, well, go tell people on X, what do you think? You have a lot to say in a podcast. Why do you wait for me to ask the question? That's a good point.

So then he told me to tweet every day. I'm like, okay. And then >> I'm enjoying your tweets. You are tweeting almost every day. >> No, no, it's it's it's a lower frequency now. I I listen. >> Oh, you can't listen. You're really good at it. >> I But you know, you can only put your foot in your mouth if you say something too often because you feel you almost have to not feel the pressure to do it. So I like that advice. Don't feel the pressure to say something all the time.

You end up making it a job. I don't want to make it a job. I want to do it when I have something I want to say. So, I think I say stuff and I want to say stuff. People ask me how much time I spend, who writes it. Actually, I do. I write in back. >> It's obvious that you write it. Come on. People, >> you know, once I had it checked by cloud or something and it made some grammatical edits and people just gave me so much [ __ ] >> Oh, I saw that one.

>> You're like, you're right. So, it's my idea. I check it and I'm never going to do that again. >> No, you're you're really good at this. In fact, uh there's a guy that's always on this camera that gives me a heads up when we hit a certain time and he just gave me the heads up and I was [ __ ] shocked at how fast this time went. So, that's usually a good uh >> It's a good sign. >> It's a good sign, man. I really appreciate you doing this. This was awesome. We've got to do this every few months.

>> Sounds like >> I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast, Founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.