 Welcome back to Falcon 2023. We're here in Las Vegas. My name is Dave Vellante, watching theCUBE's coverage. This is day one. George Kurtz is here, CEO, co-founder of CrowdStrike George. Good to see you. Thanks for making some time for us. Great to see you again. I said in my breaking analysis, George Kurtz has pumped up and why not? Now, you know, you're not really prone to hype, but more pumped up than I've seen you. Like in the last earnings call and here, I mean, this is great. It's fantastic. If you look at what we talked about today, so many announcements. I think it was the most product announcements we've had over the seven years at Falcon. The most customers we had at one event and just have everyone together and really it's our best selling event of the year. So you got to be pumped up on what we're delivering and talking to customers always gets me excited. So that Charlotte AI demo was amazing. I mean, you could just, you sort of laid out the life of a SecOps person and how this is going to help them save, eight hours down to eight minutes, I think was sort of the metrics that you used, but I want to know. So for those you didn't see it, you got to go online and check it out. It was George basically talking to Charlotte AI and getting instantaneous answers. How much of that was real? That was real. And what we showed in the demo is we did a text to speech conversion just to make it easier for the audience. But every question we asked, every answer we got was actually real. And I pointed everyone to our hub right in this pavilion here to actually see it in action. So what we demonstrated exists today, it's delivering value. And again, it's taking the collective knowledge of CrowdStrike and empowering that SOC analyst not only with our knowledge, but to actually do work. So I mean, it was literally, the demo was instantaneous. Is that really how, I mean, ChatGPT is essentially instantaneous. Does it, A, work that fast and do you have to sort of massage it a little bit, give it a little prompt engineering or change the tone or is it really going to be that simple? Well, I'm going to invite you to go take a look at it because you'll see how fast it actually works. Okay, I will. And from the perspective, it really depends on the query, right? If it was a massive query that was super complicated, you could have a little bit more latency than sub one second. But overall, you're going to get those results that people expect from using a generative AI type technology. If I say, I mean, I know the cube AI and we're still working on it, it could take minutes, but you're talking a lot faster, right? Because you guys, again, it depends on the query, but you should get your results back pretty quick. You guys have more resources than we do with the cube, but it's still pretty cool what we're doing. All right, and I was sitting on the edge of my seat, George, waiting for pricing, right? And I got to call your rep. So you got to show us a little leg here. I mean, how are you going to price this thing? Well, when we think about Charlotte AI, the pricing model is going to be very familiar to our customers and that is being an uplift to an additional endpoint purchase. So the way we sell our technology today is by the number of endpoints or workloads, for the most part, we've got different models without our purchase and we'll have an uplift to that. But I think overall, when you look at Charlotte and you look at the value of providing per endpoint, it's going to be less than a cup of coffee per month. Okay, so really easy to get in and then based upon how much resource you use, because this stuff's got to be expensive. Yeah, exactly. We'll talk a little bit more about pricing during analyst day, but at the end of the day, there'll have to be a list price and then the more you buy, the cheaper it gets. But overall, our goal is to provide a value-based pricing where someone can get into Charlotte and then obviously as you consume more, LLMs are not free, right? And compute resource is not free, so there's a real cost to it, but as you consume more and need more, we can provide additional add-on packs. You guys have legit AI chops. I wrote in my breaking analysis, I stole a slide from your deck. I mean, it's self-serving and timely, but it's true. Your journey on AI, I mean, it goes back to 2011. Yes. You know, AI AI all the way through. When did you start really digging into large language models? Yeah, well it's a good point. We call it AI native and we've been doing it since I started the company, which is really focusing on leveraging AI. And at the time, that was really machine learning and it was a different model. Generative AI is a newer technology. And we started the journey over a year ago. We've got a data science team that is very robust. We spent a lot of time in this area and they were really just looking at emerging technologies and we looked at this and said, hey, this can be really useful. So this has been something that's been in the works for well over a year and we're delighted to be able to show the fruits of our labor today. You made the point, I forget, I don't know if it was on the earnings call or maybe it was one of the conferences you did. You made the point that it's not necessarily about the amount of data, although, you know, the researchers would tell you that having to be able to scan the entire internet helped create the human condition. But you made the point that you don't need all the data in the world. You can actually get a lot done with small amounts of data. It's the fidelity of that data that really matters most. Can you explain that? Sure, well the good news is we have lots of data and we've collected that data over the 12-year journey of CrowdStrike. But what I was saying is, and it's easy for vendors to say, well, we've got more data here or someone else has more data there. Data is great. It starts with a place of data gravity. But what we've been able to do over the last 10 years is we've been able to annotate that data with things like Falcon Complete and our Falcon Overwatches, our Threadhunting Services. So as you know in ChatGPT, there's a farm of humans that are trying to figure out what's real and what isn't, they're trying to train ChatGPT so it doesn't hallucinate. We've actually, I would say, I'd rather be lucky than good. We actually got lucky in that we had that sort of annotation of that data over the last 10 years. So when we put in this sort of this threat data and the pairings of how attacks work, we actually have the human annotation to it which gave us the ability to actually get it trained up very quickly. Okay, so that's because A.I. is generative, right? It doesn't give you the same answer every time. That's great. But you've got the quality of data such that you can get that consistency. It's the fidelity of data. The funny part about generative A.I. which you said is to ask a generative A.I. technology question, you might get three different answers. Hopefully they can triangulate but you get three different answers, right? They should converge on what the real problem is. It might be said in a different way. And what we wanted to do with the LLMs is to create smaller models that were trained on things like intelligence or vulnerabilities or threat actors or pick something in the wild, maybe IT related tasks. And I think those smaller models give us better output rather than one big monolithic LLM. You know, this is like the NFL. People are going to see what you've done and you're going to have a lot of copycats. I mean, no doubt. And that happens every day. Right, I know, but things are moving so fast, right? So I presume you're using a lot of the LLMs that we all know and love. I mean, there's a ton of them out there. There's big ones. There's specialists. There's open source stuff. I got to believe you're playing with them all and gaining a lot of experience. It's amazing to me. I wonder if you could comment on the pace of innovation here. I've never seen anything like it. And we are. We've looked at, played with, and probably used almost everything that's out there. And we really wanted to be LLM agnostic. We wanted to have the data curated in such a way that we can pick the right LLM to get the right output and also the right cost profile for us as we implement those technologies. What do you make of the call to slow down, you know, put the brakes on AI development? I mean, kind of funny, but I wonder if you have thoughts on that. Is it, you can't slow down AI, can you? No, I don't think you can. And I covered that in my keynote. If you look at these tectonic shifts of technology, whether it's plane flight, whether it is the internet, whether it's the iPhone, whether it's generative AI, all of these can be used for good purposes. All of them can be used for bad purposes. And I think what's incumbent on us is to recognize AI and LLMs are here to stay. So why not harness the power? Because our adversaries will. And that's one of the things that I really hammered on in the keynote was adversarial AI. The adversaries are already using it. As defenders, we have to use this technology and put it in our arsenal. So you talked about the three sort of lines of business, if we will, cloud, identity and log scale. As each IPO-able business is on their own. You're not going to start spinning out companies, are you? No, we're not. Okay, so, and then of course you got, Humio was the log scale that was in your home run on that one. So how are you thinking about your business going forward? Is that sort of the framework for the foreseeable future? Well, the framework is really the platform, right? And it all starts with collecting first-party data, now third-party data with our Raptor release. And then once we get the data in the platform, then we can create different security outcomes in different businesses. You talked about three of them, right? Obviously we've got the protection market that everyone knows and loves us for, but because we collect data from the platform, we've been able to solve different use cases, identity, threat, protection, and response. Next-gen SIM, all these cloud workloads and our acquisition of Bionic I'm sure we'll talk about. So it really starts with selling the platform and collecting the data. And this is an area that I really focused on, again, in my keynote, which is 10 years ago, EDR was all about protection and visibility of endpoints. In 2023, the Falcon platform and that agent really is the chassis that gets data into the platform. It certainly allows us to do EDR, but it allows us to unlock all the other areas that we've created to solve different security outcomes. Okay, let's talk about Bionic. What was the rationale behind that? I saw, I don't know if it was announced, but I saw a tech crunch reported 350 million. I don't know if that's the actual number. Is that, where does it fit? What's the rationale? Could it create another IPO-able business? Sure, it was, that's their number, not our numbers. We actually haven't put the numbers out, but we're excited about this acquisition, about the technology and the team, which is really what we look for when we buy a company. So the rationale is, we are one of the largest cloud security providers in the world, by revenue. So we're almost 300 million, which we talked about our last earnings call. We've created a very effective CNAP solution, so CSPM and Cloud Workload Protection, CIEM, Cloud Entitlement Management, Infrastructure Entitlement Management, too many acronyms. And really what Bionic does, is it gives us application security posture management. So not just giving you visibility on your infrastructure, but telling you what's in that infrastructure, what applications are in use, what exposures do you have, and how do you draw a map of what's out there? Not only critical for security, but critical for the DevOps team. This stuff, the way it works without touching code, is magic. And that's what customers like. It's not intrusive to getting these map and these outcomes without actually looking at code. Very cool. You're talking about acronyms, that's another thing that Charlotte AI will help us out, is all these acronyms, you just ask it, and they'll tell you, I want to talk about the cloud. You're right, the cloud, when the first, we've heard about the cloud, it's like, oh, maybe it's not secure, and then, oh wow, the cloud's more secure. The cloud has actually created a lot of complexity. And I wonder if you could talk about that as the opportunity that that created for you. Well, if we think about the cloud, the cloud is just the evolution of technology. And I've said this a few times in my life, which is, as technology complexity increases, security parallels the slope of the technology curve. Meaning, in the early days of Web 1.0, you had a firewall and a web server and maybe a router. In today's environment, you've got microservices and Kubernetes clusters and everything in between and all of the various technologies that help you deploy, manage, and run the cloud. So, with each level of complexity comes risk, and you have to have the right security controls and products in place to address those. The technologies of 10 years ago can't possibly protect the cloud, which is why we've evolved our technologies, why we built and why we bought other technologies to create what we believe is the most comprehensive code to cloud security stack in the industry today. You're not afraid to talk about the competition. You have stuff on your websites, you know, head to head. Yep. You talk about it on, you called out several companies on the earnings call, Microsoft of course, you were making fun of them today up on the stage with Charlotte's help, Sentinel-1, you threw a little fud in the mix, Wiz and Arctic Wolf. So I see that as, oh, okay, these guys are, you know, on the radar. How do you think about competition? What gives you an advantage over some of these and some of the other companies that we see out there? We certainly take all the competitors seriously. And it's a, security's a bit of a contact sport in that there's so much fud in the environment. You and I talked about this before we got on the air. Like we're always being looked at, and as they say, you know, many enemies much on it, right? Always being looked at and trying to be knocked off the hill. But that being said, we try to let our numbers and our technology do the talking. When you look at the growth rates we have as a company at scale, almost $3 billion. When you look at the record cash flow, when you look at record after record that I went through in the earnings call, I'm not going to go through each record that we had. There's a reason why we're achieving that and that's because we're technology and innovative leaders in this space. And you know, competition is good because it drives us harder. It sometimes confuses customers, but our goal is to create the best technology with the best security outcomes for our customers while we can consolidate and reduce cost and complexity. And we're not going to win every time but I think we're going to win more than our fair share and that's going to prove value to our company and to our shareholders. In my breaking analysis this weekend, you gave me an idea on the earnings call. You said, you know, Microsoft, obviously a formidable competitor, but they're the kind of good enough competitor. And you know, as we say in security, good enough, not necessarily good enough. But you had said there's a very high degree of overlap between, you know, Microsoft and your accounts. And so my partner, ETR, a data partner, I ran an analysis across tab 422 crowd strike accounts in the data set with Microsoft security accounts and the overlap was enormous. Like 75%. Is that a reasonable reflection of reality and how do you compete in those accounts? Why are they buying both? Well, from a licensed perspective, they might have an E5 license, which entitles them to- Shelfware? Free security, which really only covers the endpoints. Doesn't cover servers or things like data ingestion and kind of SIM. So what we found is that there are many organizations, Microsoft is arguably the stack everyone uses. There's competitors out there, obviously we've got Google as an alternative, but many customers are going to have Microsoft, which is fine, that's the world we live in. But a couple of things, one is, and I've had conversation after conversation today with customers and said, hey, we have E5, but we're not using it. Why are you using it? Because it doesn't work. It doesn't work for them, right? These are their words, it doesn't work for them. And they basically said, yeah, even though we have it, it doesn't mean we're going to implement it. Now that's one end of the spectrum. The other end is we have customers who have E5 and they might put Defender on an endpoint, but it doesn't mean they won't have CrowdStrike because they're looking at multiple layers of protection. And then when you look at things like Falcon Complete and Falcon Overwatch, our services that we wrap around this are by far the best in the industry and it's because of the platform we built and how we actually collected data and the visibility we get. So we actually have many customers that overlap. They might actually have Defender, but they still have CrowdStrike. And we certainly have many Microsoft customers who buy different pieces of their security stack, but obviously have centered on CrowdStrike as a key pillar of their security stack. You kind of got me, thank you for that, by the way. You kind of got me on your keynote today when you said people always ask you how many modules you're going to offer. And you said, you threw up the infinity sign. I said, where is he going with this? And then you announced the Falcon Foundry, which is kind of very cool. It's low code, I can develop new workflows, my own workflows, so that kind of gets you infinite, right, you know, points in between. Do you ever see a day, and that, by the way, is the hallmark of a platform where you can actually create your own workflows and apps. Do you ever see a day, so you got low code or no code? Do you ever see a day when you'll offer a yes code? Well, yes code is Charlotte and you're going to see that tomorrow. Okay, so that's what you said, more demos tomorrow. More demos tomorrow, yeah, you should see that in action. Part of it is, how can we leverage Charlotte to actually ask Charlotte what you want to build and have Charlotte crank out a workflow and an application for you. Wow, so more than you saw the tip of the iceberg today. George, you're an amazing CEO, big part of a CEO's job, she or he has to create TAM expansion. You've obviously done a very good job with that, not only through M&A and your tuck-ins, but also organic, and it's paying off. So congratulations on that thanks so much for having us here and look forward to a bigger show next year. Fantastic, we look forward to it. Thanks again, it's always good to see you. Do a great job up here and you do a great job keeping all of our customers enlightened and informed. I appreciate that. Thank you, all right. Thanks so much. All right, keep it right there. We're back with our next guest right after this short break. The Cube is live from Falcon 2023 in Las Vegas. Be right back.