Cybersecurity: Top 7 Companies & Best Company Rankings – AngelKings.com

Cybersecurity: Top 7 Companies & Best Company Rankings – AngelKings.com

September 8, 2019 0 By Stanley Isaacs


(mechanical music) – [Voiceover] This is the
Billion Dollar Startup Series. Your host, the Angel Kings. – [Voiceover] Okay, Ross,
so today we’re gonna talk about cyber security startups.
– Sure. – [Voiceover] Why do you
think it’s so important to pay attention to
this particular sector? So, the big thing about cyber security is that every single company in America is faced with a cyber attack, right? Whether you’re a hardware startup, which means you build something, like the internet of things, you’ve got a nest thermostat in your home, or many different things
that we use everyday. Your cars, new drones
that are being built, they’re at threat every single day. On the software side, there are many, many threats when one puts their information in the cloud. So, whether you’re a small business or you’re a Fortune 500 company, customer data is now being uploaded into what’s called the cloud. And that data needs to be protected or hackers will find it
and they’ll exploit it. And so it’s incredibly important that you take measures ahead of time and not after the fact
to prevent cyber attacks. – [Voiceover] Do you think the hacking that happened at Target, think that’s the catalyst for the rising popularity of this sector or has it always been at the forefront of what’s going on now? – So, cyber security almost always is an after the fact,
ex post facto solution. That’s just the way the
United State’s economy works where companies that are busy
tailoring to customers’ needs, they don’t think about cyber security. And the case of Target, Anthem insurance, and many, many others, for example, Sony. These were attacks that took place and they didn’t release the fact that they’d been hacked until way after the fact, right? And I think a lot of customers were upset. Many, many customers
fled those operations. Target’s recovered but
took an enormous hit on the market capitalization. Anthem, which is one of the
largest insurance companies in America, and in the
world, for that matter… Many, many millions of
customer data were exposed. So, taking these hacks collectively, that’s billion of dollars
not just in market cap, but also in customer trust and loyalty, which companies need to be aware of. – [Voiceover] Okay. So,
let’s jump into the rankings that you’ve given us today. And lets start with Authy. Tell me the people about Authy… The founding team.
– Sure. So, Authy was founded by a
guy named Daniel Palacio. And Daniel is a young hacker who came up with the idea of Authy because
he saw many, many companies that were starting to have logins, so that companies or social networks, or companies doing bitcoin with Coinbase, could log in and actually
start to interact with their websites. He’s a very bright guy. He’s also what I call a hustler. He’s able to get out there and connect with many, many other
startups who are looking for solutions to what’s called
multifactor authentication. He has all those components. And when he actually
sold the company recently to a larger enterprise called Twilio, they saw Daniel as the perfect fit for a founding… You know, even if you’re
a one person founder, he did a great job. – [Voiceover] Have you
personally used Authy? – Yeah. So, I’ve personally used Authy, and I believe that every
startup needs to use… Or every startup investor, rather, needs to use a product
before they’re gonna invest. I think it’s incredibly important, just like Warren Buffett
said on the public market, that you understand a product, how it works and how it affects consumers to see whether there’s
actually need or want for that product. – [Voiceover] Okay,
Ross. So, for execution, how are they building a brand and creating a community for Authy? – So, when you look at execution, fundamentally comes down to two things. On the one hand, it’s about whether there’s
a need for the product, whether it’s indispensable at its core. Or it could be replaced easily. And number two is whether
there’s a community of people, what I call evangelists, that will advocate for your product just because they love it and they think it adds some sort of… It has a mission and a value to it. With Authy, they hit both points, right? So, on the need front, this was… Authy at its core is a multifactor
authentication product. It is a way in which you
type easily into your login, so if you’re a cloud based company, you put Authy in so that
you get a text message, Or a consumer will get a text message that gives them a code so
that they can then login. So, it verifies who the user really is. Whenever a company, right, a B2B company like Coinbase, which used Authy, implements that, they’re hooked, right? They have every single
one of their consumers logging in all day, everyday, 24/7. Authy’s now a substantial
part of that actual product. So, they fit that. On the other hand, there’s fact of community. With Authy, what I like, what Daniel did, in particular, is Authy developed a
massive developer community. People that… They saw a product that
wasn’t too expensive. He, in fact, gave what’s
called a freemium product to developers to have them test it out, and developed a cult following. And I know that now they’ve
been acquired by Twilio, which is also brilliantly executes in terms of building community. They are perfectly aligned, now. So. – [Voiceover] So, I know you
also touched on this briefly, but are they the first movers in this cyber security space? Who were their previous competitors and how did they build upon whatever their previous competitors did? – So, they were not the
first movers, right? There were many, many other what’s MFA, multifactor authentication… That’s part of cyber security now. Most companies that scale to
millions of users use MFA. They weren’t the first movers, and so, at Angel Kings, when we look to invest in companies, there’s two types of companies with respect to timing in our book. There are the first movers, and then there are the most efficient… It’s been done before, but they’re gonna
reinvent the wheel, okay? With respect to Authy, Authy was one that made
the process of logging in and securing logins incredibly simple. And they built that
dependency from developers, from B2B enterprise companies, very early on. So, this fit the more… Authy fit the more been there, done that before, but more efficient. And that’s critical. And, so, there is a need for that. A lot of the companies we look for… Of course, we wanna find a
first in category type company, but sometimes we’ll invest in
a company that’s so simple, and has created dependability that can still scale to millions of users. – [Voiceover] And, so, as far
as exit strategy is concerned, I know you mentioned that
they’ve been acquired by Twilio. Can you talk a little bit more about that? – So, I mentioned this in a previous video on our Billion Dollar Startup Series. They’ve been acquired before… I’m Sorry. They were acquired by Twilio, which is going to IPO
probably in the next year, and I think that’s a great fit. I do say that they sold too early. There was a lot of discussions about Authy and whether or not Daniel, who was a first time founder, sold too early. And I actually believe they did. I think that as they
were starting to scale… Yes, it’s a very nice integration within Twilio’s larger platform, which will, no doubt, be
a billion dollar company. It’s already in the billions
of dollars evaluation. But they sold too early. And, within our book, Kings
Over Aces, we talk about that. Within the founding team, you need to make sure that a founder isn’t one who will sell too early or not sell at all or IPO or have some sort of liquidity event. And I think they sold too early, but I still believe they have… They will build a larger
community within Twilio. – [Voiceover] Okay. Thank you, Ross for talking to us about Authy.
– Yeah. – [Voiceover] Learn how
you, too, can invest in America’s next top startups. Visit AngelKings.com today.