 So my name is Paul Proctor, and I am with Gartner, and I'm going to be the moderator for the panel today. And while we're waiting for everybody to come down here, there was actually a couple things that I wanted to ask you guys. We did this panel yesterday at Black Hat. It was quite a success, but was anybody at the one yesterday? Anybody? A couple people. Okay. So there's pretty much two halves that we're going to do this in when we finally get people that can actually talk. It's pretty much going to be VC 101, which is what are they, how do they work, how do you work with them effectively. And then the other half of it is going to be what are good ideas in security, what's selling right now, the trends that make sense for funding, and stuff like that. So what I want to see by a show of hands, we're going to do one, two, or both. What people are primarily interested in. So first one by a show of hands, who wants to know what it is VCs do for a living and how to work with them? The basics. Okay, good. That's about half. And then number two is who actually knows all about VCs and wants to hear about the trends in security funding right now. Okay, a few more. And then both. Show of hands, both. Okay, good. All right, well then we'll just divide up the talk relatively evenly and get into it when we actually have panelists. And now I'm going to do a little dance. We have a VC. Yeah, so everybody thought it was a 12. We're supposed to be going in five minutes. Okay, go ahead and sit. I'm going to introduce you and let you start doing some talking about. We have our first VC, Maria Serino. Oh, could you bring up the mics? Good stuff. Yeah, call me when we get back to Boston. All right, nice to meet you. Absolutely. Both hands. Okay, thank you. I'm just missing Dove. Excellent. Dove? Dove, yeah. Dove called me in. Last I saw Dove, our fourth panelist was at the Microsoft party last night at about 2 a.m. and he just called me and said, it's right on his way down. How are you? Good, how are you? Good, thanks. All right, so I'm going to tell you guys. I can't get out of here in a while. May I have your attention please? I'm going to tell you guys what I just told them. We're going to divide this up roughly into two pieces. One is going to be VC 101 to kind of explain how to work with VCs. And then the second half will be trends in security funding and what makes sense. So why don't we start with everybody doing a round robin, give a couple of minutes of introduction about you, your firm, your interests, and so forth. And of course, tell me about your favorite colors so that we can stick with what we did yesterday. Maria, please. So Maria Serino, partner at 406 Ventures, we're a new fund. I'm one of three partners that actually helped start the fund about a year and a half ago. $150 million early stage, that's our technology focus fund. Because of my background, I focus heavily on information security and adjacent areas. Back in 2000, I started a company called Gardens, which then was acquired by Verisign about four and a half or five years later. And it's an area that I like a great deal. I think it's an area that's ripe for innovation. Obviously, the problem is the most dynamic of all IT problems that companies have to deal with. And I get to work with incredibly bright people. And the thing that's principally different about 406 and some larger, more traditional firms is that we're operators and entrepreneurs who have turned VCs. So we've actually run companies, started companies, sold companies, taken companies, public. And we can establish a dialogue with our entrepreneurs because we've kind of been there. We've been through a lot of the same things that they're going to experience as they build and grow their companies. We've done nine investments. In the last two years, companies that you may have heard of like Bit9, Veracode, Memento, upteros, chosen security, health dialogue, business intelligence advisors, help me out, Kara. And think magic. And that's 406 Ventures. Hi, I'm Patrick Chung, a partner at New Enterprise Associates, NEA. We are the nation's largest and most active early-stage venture firm. We were founded about 30 years ago as a bi-coastal firm in Menlo Park, California, and in the Washington, D.C. area. And we do everything. We have $8.5 billion under management. Our last fund was $2.5 billion and roughly divided into two camps. One is healthcare and the other is IT. Under IT, we invest in everything from semiconductors to telecommunications equipment to enterprise software. I feel very honored to be here, but a little bit misplaced in that I don't invest in security infrastructure or security software, but instead in our consumer, internet, and mobile practices. So I've been involved with a few companies in that space, online cash remittances company, a mobile location-based services company, a video game company, which might interest a lot of people here, called Real Time Worlds, a video game studio by the team that built Grand Theft Auto. No showing for your company. Okay, sorry, sorry. Retract all of that. Yeah, so that's about it then, after I've been slapped down. He has nothing else to say now. Not without your permission, sir. I'm Mark McGovern. I'm with Incutel. Incutel is the strategic investment arm of the CIA, actually, of the intelligence community. So we're a nonprofit corporation. We were established to assist the intelligence community in identifying technologies and accelerating their use inside of the national security environments. So what we look for is capabilities that are being developed for other markets. So things that are being developed and funded, either by maybe financial, healthcare, gaming, consumer-oriented devices or capabilities. I look for those capabilities and we look to foster their use or availability to large enterprises. So if you look at a lot of the Intel community, what you really have are worldwide organizations, very focused on information, very interested in making the most out of their information as quickly as possible. And that's very similar to insurance companies, financial companies, in a lot of major areas. So, I'm sorry. And the Anonymizer is an example of a commercial product that's sold into the consumer world. It's an interesting problem. Excellent. Great. Thanks. So now what I'd like to start with is, and I think this was missing yesterday, is I want to do a little VC-101. And I'm going to pick on Patrick because he's not going to be able to say as much about the security trends. So let's say somebody walks up to you at a cocktail party and says, so what do you do for a living? And cover the, you know, briefly cover the people coming to you, the funding, the help that you give all the way through what exit means and where you go after the exit. Well, I think that's an excellent question. And it's a question that if you ask three different VCs, you get three different answers. Because venture capital firms are very, usually very small partnerships, even though we have a great deal of money in our case to invest. We actually have about 30 investment professionals who take care of it. So you're going to get a whole bunch of answers, but here's what it means for us. We view ourselves as real capital and business partners to entrepreneurs. And so if someone comes up and says, what do you do for a living? I'll come back and tell them, you know, we go out and try to meet and identify promising young and later stage teams, companies and concepts and learn about them, help them out. And if we really, you know, share their belief and share their enthusiasm for the project, fund them, give them money, start up, you know, help them hire the initial team, help them, you know, pull in a whole bunch of resources from people to partnerships, to technology, to the vast, you know, resources that we built up over the last 30 years. And we get the company really up and running from the very start, or, you know, if you have a more mature company that already has, you know, a few millions of dollars of revenue or, you know, 30 employees, help get that, take that to the next level to hundreds of millions of dollars and hundreds of employees if that's the way you want to go. You know, we have a very long, a firm like NEA definitely has a very long-term perspective. So we're, when we talk about exit, we don't really have an exit timeline. It's not that you kind of, we're hoping to sell your company in the next two or three or four years. Our funds are 12 years long and in some cases we've been involved with companies. There was just one we refunded last year that we've been involved with for 18 years. And so we really will stick by you until you realize the type of liquidity event, be it, you know, an IPO or acquisition or some other type of exit that you want to. And that we jointly decide as partners to go for. Thanks. And if you guys, as you use various VC terminology that they might not be familiar with, help out and explain what terms are the first time you use them. Maria, could you expand on this idea of assistance that you give companies and please define the difference between assistance and interference? So I can speak to that because I had NEA as one of my investors. The assistance part of that we can explain, not the interference. I mean really good investors understand natively that their job is not to run your company, but to help you run your company the most effective way that they possibly can. And so that means bringing to bear experience, you know, either as an operator or as a seasoned VC where you've actually been involved with so many companies that you can recognize patterns that either lead to failure or success and share those with your entrepreneurs. It means leveraging extensive networks. So, you know, because of operating the security world, you know, I have great people who might want to move to some of the new portfolio companies. We help our companies identify, you know, needs and then help them recruit for those needs. We help introduce them to their first important customers and key strategic relationships. I mean, it's basically leveraging everything you know and everything you have to help your companies be successful. Here's what it's not. It's not telling you what to do. It's basically saying, you know, here's the benefit of my experience. You have to own the decision. It's making appropriate management changes when the company, you know, isn't doing well and the board and the management team, you know, can't agree on future strategy. You know, it's making, you know, helping make tough calls that need to be made in every startup. You know, but by and large, it's not having your hands on the wheel. You know, as a VC versus an operator, you're in the back seat. You're not in the front seat. And I think, you know, having gone from one world to the other, I made that choice very, very intentionally. I was ready for that change in my career and a lot of people who know me and think that I might have a bit of a problem being a control freak said, gee, that's going to be really tough for you. It's not tough at all because you'll fail as a VC if you try to over-manage these companies. And what it basically tells you, if you keep feeling the need to manage that company, you might have the wrong management team. So, you know, I think it's pretty clear where the dividing line is. Yep. 406 Ventures. Tell them about the name. Does anybody know what 406 stands for? Huh? Say it again. Carrier code. Oh, area code, no. That's a good guess, though. Any socks fans out here? Dove is on his way, and I'm going to want everybody to give him a big round of applause when he comes out. Ted Williams, exactly. Ted Williams batting average hasn't been beaten since 1941. And one of the reasons that Ted has still holds that record, even though he's no longer with us, is that he was a very scientific hitter. So he really had great vision, and he examined the strike zone, and he would only hit in the areas of the strike zone that he felt he could hit well. We only invest in areas that we know inside and out, because we can make better decisions there, and that's where we can be most helpful to our companies. And we aspire to have a very high batting average. Yep. Yeah, it is. Raise your hand, and I'll call on people as we go. The question, please. So I'll take this one, and I think Mark will have an interesting perspective on this as well. So that happens a lot, and it probably happens more than it should. And again, sort of being a founding CEO and a first-time CEO in my company a while back, I was very cognizant that VCs have a couple of tools in their bag, and there tends to be an impulse to when things are going wrong, let's replace the CEO, let's replace the CEO. So I think that as an industry, the industry could do a little bit better and expand their bag of tricks, so to speak, so that that's not the first one that they always go to. By the same token, the CEO is a really important person in that company, and the team that that CEO has attracted around them will basically be a key factor in the success of that company. And that's why, and you'll hear this thematically, I think, from all of us, one of the key investment criteria is the team. And by the way, that doesn't mean that every deal that shows up on our doorstep has to have a fully formed team, but you have to start with that core person that you sort of say, gee, this individual is worth building around, worth investing in, worth investing both time and money in because there's a business partnership, as Patrick said, so we spend time together, and then we can really put quality people around this person, because they're a great leader, people will want to work with them, they will want to work for them, and great people attract great people. So I think, again, I don't mean to be schizophrenic on the answer, there's an industry, probably a little too much of that. I think the more operator-centric firms, and you're seeing those pop up, so 406 is one, there's other firms like Formative, Ignition. Hey, Doug. Probably a little less so. That's not going to be the first thing that you think of because you've been there, and you've been in that seat, and you know that that problem wasn't going to get solved by your VCs throwing you out at that time. That used to go through my head. By the same token, I wouldn't say that that's not a tool that we would ever not use because sometimes you've got to do it. And sometimes it doesn't mean that the CEO is doing a bad job. What it means is that they were the perfect person to take the company from this stage to this stage, and they might not be the right person to take the company from this stage to this stage. As a person who's been funded, my experience is that you know when your CEO is not doing the job and you know that they need to be replaced, and you only really run into a problem if you're fooling yourself, or if you can't accept the fact that you're ready to move to the next stage, and a good CEO knows when to step down or find different opportunities. And I think that's a very typical structure. So I want to give Dove a chance to introduce himself. Dove, could you give us a couple minutes on yourself and your firm, and then we'll go back to question and answer. And please tell us what you were doing and why you were late. Yeah. I was just getting back in from last night, so just had a quick change of clothes. So my name is Dove Uran. I'm with Security Growth Partners, and we focus on early stage companies. Exclusively in the security space, most of it's information technology, but we look at other things like physical and detectors and those kinds of things. Essentially we work towards finding companies that are probably too small or too early in its growth for traditional venture capital, and probably around the time they're looking for seed money or angel, or probably sort of straddle that fence. We all come from an operator perspective, so we all have industry experience, and not necessarily the traditional VC with the financial background, although members on our team do have that. And our whole philosophy is taking a very close approach. I'm working with our companies, you know, providing a lot of advisory services, really being an extension of the management team. So having a very close-knit relationship with the entrepreneurs, with the executive teams on the company, and just sort of fostering a collaborative environment where it's give and take, and we're all kind of sharing the idea and the vision and trying to help push that forward. So, again, from sort of a different, from the traditional norms of VC, we only work with a very small number of companies, and really focus on spending a lot of time with that and investing our time, which is a great deal of bandwidth. Great, thanks a lot, Dov. I'd like to direct this next question at Mark and say how should an individual with an idea prep for and present an idea, how do you approach a VC and work with them in the earliest stages? Okay, so all of us, and pretty much anybody you're going to for funding, whether they're in the venture capital world or anybody who's got a lot of money, you're basically asking for it, it probably gets that request a lot. And we see, you know, hundreds, thousands, I know Inkutel will see somewhere around 1,100 business plants this year. Let me ask a quick question. Is sound good for everybody? There's a hum, you, in the back, can you hear at the, can you hear at the back? You what, can we turn the sound up a bit, please? Thanks, go ahead. More energy, Mark. More energy. Pump it up. All right, so... So we see a lot of business plants. 1,100 business plants roughly have come across my desk. And the question is, which ones do we spend time on? What are we looking for in those business plants? What are we looking for when we meet with you? We're looking for people we want to work with. We're looking for people who are, as Patrick said in a previous conversation, who have, they're humble. Humility is actually a big thing. We think we have it to some level, to some level. And we expect others to have it. We're looking for somebody we can work with over time. Because we don't necessarily anticipate that the thing we're being pitched on today is the thing that's going to be the ultimate success. There's a lot of learning to go on. We don't know which way it's going to go exactly. The entrepreneur doesn't know which way it's going to go. The customers don't know which way it's going to go. So we're looking for somebody who has that openness to look at new opportunities, new ways of looking at how their stuff might be used, sold, developed, et cetera. Other things we're looking for, Incutel looks for deep technical capabilities. So expertise in the core technical focus, or particularly in the team. I think we have an excellent panel in that we represent a whole spectrum of different types of investors from the early stage, from a small firm who's willing to work very closely, very hands on with Marie and Dove, to the large NEA who can span, you know, somebody who's already a name brand effectively and bringing them to the next stage. Incutel's part in the venture world, in the investment world, is a strategic investment area. I'm saying that because I think it's important for you to realize when the person sitting across from you, what they're thinking about. So if you're pitching a company that's got, you know, $10 million in revenue, the person you're probably talking to is trying to figure out, well, how are you going to take that to 100? Or where's the future in that? A strategic investor is often looking for what's the product roadmap that's of interest to me strategically. So if you look at an Intel Capital, or Motorola, or Incutel, what we're looking at is what's the value to us? What's the synergy in the technology development to what we care about? So it's management. It's the team. It's the openness to ideas. It's the soundness of the technology. Great. Yoren, sorry. Dove, could you expand on this idea of what makes a successful company from your perspective? Sure, sure. I kind of alluded to, you know, that's, and probably for everyone else here on the panel, the management team can't be stressed enough, you know, willingness to learn, be open, and industry experience, so. That's the major emphasis. But other things that certainly, certainly things that we look for and we think is a successful key ingredient and successful company is the IP of the company, if it's panable, if it's, if it's dependable, if it's sort of an infrastructure, a barrier. Defensible? Defensible, thank you. That's the word I was fumbling for. Certainly the addressable market, you know, what size clients are you going after? Is there a real need for this problem? Is it the enterprise? Is it government? We like to look for things that are more diverse in nature, so that's not just exclusively government. You know, certainly can be industry vertical as an approach, but the idea should be sort of expansive. Looking at the competitive landscape, sometimes being the very first one to market is not necessarily the easiest, but you know, if there's already 25 other competitors, it might not necessarily be an easy market to enter either, so it's sort of a give and take, a balance. And the exit strategy or just a thought on kind of where and what your potential areas and which companies would make sense for you to align yourself with. Again, it doesn't have to be a very deep discussion and philosophical statement, but just a good guideline and sort of a principle of these are the areas that we would fit in and you know, as Mark just mentioned, your company will change, it'll evolve, and those targets will change, but just to have something on the roadmap and sort of a vision to kind of go after. Certainly, referenceable clients, you know, pilots, whether they're paid or not paid, you know, if they're generating revenue or not generating revenue, so they can talk to you, they're large names, you know, they're in the industry you're looking for, they're the client base you're targeting, they're giving positive reference to other clients, to investors. And also maturity of the product, you know, a lot of times, you know, depending on where you are in the life cycle of maturity of the company, kind of depends on who you're going to approach. You know, if it's just proof of concept and idea, probably more towards the angel, if it's probably a little bit, the proxen sort of alpha stage or beta stage or even pilot or even GA, you know, certainly, probably some of the earlier stage VCs, and if it's already mature, moving on, and then you sort of have, you know, rounds of funding already under your belt, certainly some of the bigger VCs might make sense, so that's kind of a smattering of the things that we look for. Can I add one heuristic that maybe may help to condense everything, is that, you know, I think you want to pitch to a VC and try to get him or her to feel that he or she wants to write a personal check to you. It just is a way of focusing everything, because you're addressing, usually in these first meetings, you're only talking to a single person, and so it really encapsulates all of the kind of personal chemistry dynamics. You want to make sure that, you know, that you're putting your best foot forward. You want to draw a plan where this person who may write you a personal check can get his or her money out in a few years and make a profit. You want to appeal to the person's intellectual career. All of those things, I think, become very focused. If you walk in and think, yeah, you know, I want your firm to invest, but I want to be so convincing that you will feel like, not only is it good for my firm, but I want personally to figure out how to get a piece of this, too. And I think if you think like that, it's less confusing, because it's very difficult to think about what an abstract entity like a venture capital general partnership would want, because very few of us have a concept of what that is. Patrick, on that note, could you expand a little bit on the differences between VCs and when you might want to go with one versus another? And I mean like the personality of the firm and how to look for the right things. Good fit. Well, I think it is, many people have made this comparison in the past, and it really is like engaging in a marriage. You're out there dating, and when you commit to your VCs... Actually, I think it's worse. It's worse, yeah. Better on your perspective. You can get divorced eventually. I mean, this is your board, you're going to go down or up with these guys, so it's a very close relationship. No one should tell Dove's wife, he just said. But, you know, just like in marriage, and as Dove says, even more seriously, you know, your fates are inextricably tied together in a set of legal documents that are very, very, very difficult to get out of. And so you ought to take great care in interviewing your VC. I mean, a lot of times, you kind of come in with a mental impression that you're pitching them, you're trying to sell them. And there is definitely that aspect. I mean, this is a bilateral agreement. Both parties have to want to do it. But once you've got that done, you should be very careful about asking, having your VC sell you, here's my business, here's what I need, here's what I think I can do alone, but here's what I can't do alone, when have you done this before? What resources can you bring to bear to help me get where I want to go? And do I want to work with you? In good times, everyone loves each other, everyone's a good friend. But in bad times, I think that's when you really get the test of the integrity and the strength of your partnership. The one kind of, again, driving into the practical, I think the single best way to do due diligence on a VC is the following. Go to that VC's website, the firm's website, and there you'll find a list, generally, of every company that that firm is invested in. I would pick up the phone and call the CEOs of those companies, ones that did well, sure, but more importantly, and almost more importantly, the ones that did poorly, the ones that went bankrupt, the ones that just didn't have a very good time at all, and ask them how it was to work with that VC, what difference that VC made in the trajectory and the life of their company, and would they work with that person again? And obviously, the more similar the company you choose, the more applicable that lesson will be to you. You know, early stage, it was an early stage company, it was a late stage company, it was in the security space, it was in the consumer space, and if possible, get talking to the CEOs that the particular partner in the firm that you're considering has worked with before. There's no better way to do it than that. Thank you. And we got another question down here. That's a great question. So anybody on the panel who wants to address what a good business plan should look like and look, form and function? So I think less is more. You know, in terms of what you're presenting, you know, I think you want to have, you know, 10 to 15, high quality, well thought out, well organized slides that you are not reading, right? Because you don't have to read them because you know the story inside and out. Whatever amount of time and whatever research and however many pages that equated to for you to, you know, really ingest, you know, sort of every aspect of the market that your business is going to aim at, that's different, right? And you should have done that. And that should be, that's for you, right? And then, you know, the way this gets sort of materialized for a potential investor should be short, it should be, you know, kind of to the point, and it should just be sort of a guideline that you say what you're going to tell them, you tell them, and then you remind them what you said. And, you know, it should be, and it should, what should come out during that process is that you have spent a ton of time thinking about this and that you have done appropriate research, especially in the primary sense of going and talking to people who would potentially be interested in this thing, right? And sort of say, this is what this person said and this is what this person said. And so I think those are two different things. I'm not saying you shouldn't do that work, and then when it comes to a VC that actually is excited enough about what you're doing to engage with you, they'll help you put that actual business plan together, right? They'll give you business plans, you know, or templates or things like that, so that, you know, as they go through their diligence, they're going to need that document, but from the time of, you know, sort of dating, just to extend the analogy to the time of cash in the bank, you know, that's several months, so together you'll have time to really put the meat on that business plan. But that to me is far less important in terms of how you present initially your story, who you are, why you're so excited about this, why you think that it's commercially viable, and how you're going to take it there. Don't confuse volume with meat, and it's easy to tell a complex story in 100 pages, but it's brilliant and tough, and you really show your metal if you can do it in 10 to 12 pages. So, we had a question over here first, and I'm sorry, did somebody go ahead? I was going to just comment that I'm more interested in understanding that you have a plan, and you have the perspective, versus you have a business plan document. So, we're in agreement, the smaller the better. So, if you're going to do it in two words, you'll get funded. The question over here, you and the white shirt. I mean, I think it depends on the business, but I think, you know, your points are really valid one. A couple of data points do not a trend make. They might, but that certainly wouldn't be enough to say, oh look, I had two positive conversations, this is going to be great. So, I mean, I think depending on, you know, what, you know, sort of either, you know, what the technology is, or what the service is, or what the idea is, you know, you got to go deep enough so that you can use those points to say this isn't just, you know, sort of, you know, a couple of idle data points, right? You know, I mean, go, and I think, you know, the other point that you made, and I hope everybody heard it, is that you can go talk to these people in such a non-charged way than when you're trying to actually sell them something that's complete. Right? Then the defenses are up, you know, they've been hit on all day long by people, you know, if I'm a CIO or a CISO or whatever, you know, people are trying to sell me stuff, and I don't want to have to say no to you too. So, but this is a very different story when you go and say, you know, I have an idea, can I run it by you? I'd really value your opinions, and I'm sure that, you know, you have some really valuable feedback from me. And to be able to do that, you know, across a broad enough, and I can't give you the exact answer to what broad enough is, what I can tell you is, you know, we had a guy come to us the other day, really interesting idea. He had a couple of data points. I said, you need to go talk to, you know, 20 to 30 more people like this. And he said, I don't know 20 to 30 more people like this. He said, great, you know, I'm going to, by the end of the week, I will have made you 15 introductions. And then go leverage those to go get your next five or 10, because I want to make sure you actually is willing to do some work too. And, you know, so there's, you know, there's, you know, some help that hopefully you can get from your prospective investors as well. But you got to do the work. Okay, so we're going to do one more question, and then I do want to tell everybody that at the end of this, we're going to go down to the Q&A room, and you're going to have a full hour to approach these guys one on one with 20 people standing behind you. And share your ideas. But anyway, so there will be definitely more time for questions, but I want to get this guy right over here. The question is how important are the financial projections? So they're irrelevant to me. That's really relevant, because I'll do my own. What's really relevant is the size of the market. Yeah, I totally agree with that. I mean, there, if you've taken a look at as many business pens that we have, they all look the same. They all go kaboom. Hockey stick. And so it's almost, you know, the only thing is just if you try to, it's a perversity in the market, but if you almost try to be realistic or even conservative, then people think, people add the inflation to it, and they think, oh, God, he thinks this thing is going to crash. So it has become a very strange bit of great inflation where you just, even if you don't believe you've got to do it, otherwise it's suspicious somehow. Just as a suggestion, don't start your business plan. If you're doing a startup and you have no customers, don't start out with, we are the leading provider of. So what I want to switch to now is let's talk about trends and security right now. And let me throw it open to you guys. No, let me not throw it open. Mark, tell us about trends and security funding right now. What's hot and what types of things are getting funded? Um, so... No, wait. I haven't had any coffee this morning, so I'm really behind. So services are a very interesting area these days in enterprise support, enterprise security, security capabilities, things that have that tail on it. That tail is in regards to subscription or licensing or service fees that's a recurring capability to derive revenue is really an interesting aspect of security that I think a lot of the business models you're seeing funded are appropriately targeting or trying to get up and do it in the right way that they can actually get cash out of customers. They can get cash out of folks. So enterprise software in general is a really tough space for startups and for early companies. And although security traditionally has a very nice place in enterprise because it's one of the places where larger companies are willing to take a chance on a non-IBM, a non-Semantec, a non-name brand recognized color or box or whatever. So they still have that play, but I think it is gearing and Maria can talk to this a lot better. It's focusing a lot more on services versus here's a box that does something. Okay, let me get Doug's impression first and then we'll go to Maria. Then we'll go to Patrick just for fun. Certainly I think there's going to be a trend towards sort of jumping and piggybacking on the Web 2.0 and SOA initiatives of the Wikis of the world and the collaborations and allowing everyone to kind of communicate and access data all the time. So I think there's going to be a good trend of securities that are going to enable, authenticate and secure those kinds of communications that aren't from the traditional firewall sense but more permeable and sort of an interactive peer-to-peer as opposed to that hub and spoke kind of model. And as that natural line of thinking progresses, it certainly moves to more remote systems and more remote users and the evolution of smartphones and just different ways in which people are accessing and using their data. So coming at it from a different approach and having sort of a security mindset of doing that in a simple way and doing that in sort of that new method of thinking is certainly I think a trend in the next couple of years and how security can support those initiatives. Great, Maria. I actually loved Mark's answer at this panel yesterday which was this notion that, you know, at different levels for better or for worse, enterprises, corporations have done a lot of security over the last 10 years and they recognize that they have to continue to do this but at the consumer level, that hasn't happened. You all have fairly sophisticated networks in your basements or your apartments or homes or whatever but the rest of the world doesn't and the homes are now digital, right? This notion of a connected home is very, very real and so there's going to be a fantastic opportunity to help consumers, to draw consumers into the world of securing their networks, their applications and their data at the home level and home is now what is home by the way because I only have one laptop. It's the same one I use at work. It's the same one I use at home. It's the same one that I use for a whole variety of things and so to the degree that many of the things that companies have adopted, whether it's managed services, managed security services, monitoring, all kinds of other stuff, there are opportunities to bring that down to a consumer level which is a massive, massive, I think, untapped and really interesting opportunity. Other areas that I like and am focused on currently, application security in the sense of where the big untapped holes are. I helped put together a company called Veracode a couple of years ago because to the point that Mark made earlier, I love services companies. I love technologies that can sit in the middle of a company that you can then wrap a service model around whether it's an on-demand service or a managed service and here's how you can't help companies, right? You can't say to a company, give me, you know, ship out your source code to me, Fidelity and I'm gonna run this, you know, incredibly sophisticated technology against it and I'm gonna tell you where all the vulnerabilities are and then you can go fix it because they're not gonna give you the source code but if you have figured out a way that you don't have to look at the source code and this happens to be at the core of the technology is we look at the binaries and we find where those vulnerabilities are. Bingo! Now you can actually build an on-demand service where the company doesn't have to buy the technology, they don't have to train their developers, they don't have to help tell the developers they're actually using the stuff so they can't check a compliance box and so, you know, that's an example of big untapped problem against an enormous market sophisticated patented technology with the right business model wrapped around it and that's an area that I personally like a lot. My point security is wide open too. It sucks to be an anti-virus vendor these days and there's a whole world that's going to go with that revolution of interesting companies and technologies that are just starting to percolate on the horizon and that deserve to be built to address a market that's not gonna exist three, four, five years from now. And just to pick up on the sop that Maria threw me about the consumer, I totally agree with you. I think that in the consumer space nowadays with mobile apps, with web apps, with the social networks we're in kind of a naive heyday where 13-year-old girls are posting photos themselves and detailing every bit of their lives without very much regard to their own privacy and there's a lot of trust inherent in the system. Obviously there's a lot of news about child stalkers, et cetera but there hasn't been a concentration on how secure your data is and it's more and more of your kind of adolescent self-worth transfers online. There will be a need for that type of protection. The one thing that I would caution is that consumers don't understand one-one-thousandth of what you guys understand and so whatever consumer offerings you put out there have to be incredibly simple and because it's viewed as almost a feature not an individual purchase and it's almost viewed as an entitlement, something that should be embedded in whatever social network mobile app these users or consumers are using. So let me ask a quick question and then I want to wrap up with two more questions. I'll just kind of throw it out there. Are we looking for security companies these days? Are we looking at M&A or going to the public markets and for exits and what type of multiples are we looking at for exits? Anybody? Well, a wise person once told me that you build your company as if you're going to own it forever or you probably will. So I think while to everybody's point up here you have to go in and have at least a sort of landscape of potential exits or you have to be able to convince your investors that because the market is so big because what you're doing is unique, different and compelling enough and because you have found points to protect it so that you're not going to have an overcrowded competitive space where you can actually get to a revenue amount where you can take your company public that's okay too, that's a very acceptable exit, right? IPOs. But revenue has to be about 50 million in order to sort of get into that range. So you have to have some semblance of who the potential acquirers would be who this technology or this service might be interesting to but I think you also very intentionally have to go into this with this is not a quick flip. I'm not going to do this for a couple of years and then guaranteed sell it to this guy you have to have a real business. You have to have a business that is going to get, grow, get profitable, spin off cash, stand on its own and once you do that you'd be amazed at how pleasant your board means to become. So you asked a question though that it's interesting when you work with a company particularly from an early stage on it's one of those things that can cause some really interesting board interactions and it tests sort of those issues that were being asked about in the beginning and so I mean you run across some really hard think about a product that you start up that arguably maybe in hindsight you would say that's actually a feature on the overall product that I ultimately build at some point in the progression of your company you're going to look around and you're going to sit down with people like us and you're going to say okay so do we compete with the people who are going to acquire us or do we become very complimentary to them and try to do partners with them or channel through them and what's the sort of business progression in product development but it's very hard at an abstract level to just sort of say IPO or M&A M&A is an easy answer to say M&A is the more likely because few things make it to IPO so you either fail or you are successful independently or you're M&A. IPO is a very hard road I would argue. So again I see there's lots of questions but we've only got two minutes to go and then we're going to go down to the Track 5 Q&A room and again you can pile on as much as you want down there. I want to wrap up with a just some quick anecdotes from you guys what is the lamest idea that has ever been pitched to you and I want to do a round robin and we'll start with Dove what's the stupidest thing you've ever heard? Well I'm going to cheat and you say what I said oh no that's not cheating there's only one guy who was here yesterday they haven't heard it it was a company that actually raised a lot of money in the late 90's and people might have heard of JustBalls.com and they had balls you could buy on the internet and they would ship them to you this is the whole dot com craze of iClicks and revenues based on balls you want to get shipped out so Mark I believe you're going to have some death ray stories for us what's ink you tell what's ink you tell yeah mobile tv is an interesting business but we didn't invest in it and it's a good idea you know the ideas that I have the most trouble with that arguably are the toughest are ones where people come to me and say I have a patent and it's for this thing and I'm going to build a business around it and it's patents for things that I just don't understand how they got them so I've seen patents literally on how to swing a golf club these are issued patents patents on how to paint pictures with babies bottoms so you talk about it I think we have a winner this is just we funded that by the way so we have to we're running out of time here so Patrick how about you alright well I'll say what I said yesterday also two words caffeinated soap and I'm going to qualify this that I didn't do yesterday it was a part of a larger business and they had a whole bunch of very interesting it's a good business they had a whole bunch of ecommerce a whole bunch of products but the most ridiculous one that I found was caffeinated soap and that became Starbucks this is the wrong audience to say I find that ridiculous you know I don't really know they were a very clean company and Maria what I'd like you to do is tell us your lame idea and then please tell us about the contest that Black Hat is running well my lame ideas do not compare to these I must say I think I've been doing this long enough plus I have great people in our firm that actually protect me from stuff like that the one thing that particularly offended me was some guy that actually tried to pitch me on a managed security like a network managed security business like in 2007 I did one of those in 2000 and it was good at that time but that ship has sailed it got like semantic and verisign IBM sort of are the gorillas in the space now like we wouldn't fund a business like that again in a million years and the guy is trying to tell me why it's such a great business I'm like hello I've built one I get it I know that at the time it was a great business so that's my lame idea just one thing to add I know Mark said yesterday he said two words time travel he's actually seen a business plan for time travel that was interesting it wasn't the stupidest so let's just take a minute and talk about that then we'll all move down to the down to the okay so you're going to hear and see more about this because it's actually I think the press release is going to hit the wire today but we are absolutely pleased to announce the first ever black hat and def con def con black hat and def con business plan open so 406 ventures along with Incutel and NEA are sponsoring and dove I think you're in here are you in here too do we take some money from you and so security growth partners is in this too and so essentially you're going to have a year to and there's a website on here and you can check it out and all the rules are there but you can have a year to submit a plan the winners will be announced next year at black hat and essentially the winner will get the benefit not only of some cash but of a tremendous set of services that have been put together it's almost like a start up in a box concept right so there's PR services there's legal services there's all types of these services to help you get your company off the ground and one of the reasons we're so excited about this is that obviously it's very very specialized and focused on information security in this group and we think that there's been far too little like this focused stuff for this audience so we're excited about it you can check it out at www.blackhat.com and I think we have a link off of the 406 ventures website and you can talk more with these guys so I want to thank our panel