The Exchanges

Q So the world is changing and you're changing. Um, what about New York?

A Uh, so I, I think New York is, uh, New York has always been, like, a up-and-comer. I think we, we have a good friend of the firm, Josh Silverman, who's now the CEO of Etsy, which is a great success story for the ecosystem. I think Datadog will be in another amazing success story for the ecosystem. Uh, I think you have a bunch of, like, growing SaaS players here as well. Um, but I, I think it only takes a, a few companies of massive scale to encourage people to Be more entrepreneurial as well, because I don't, I don't think it was ever a lack of, you know, core engineering or design talent that really, you know, kept New York in, in second or third place, right? It was more like access to capital and people choosing to, ah, work in young tech companies versus the many other options they have in New York.

AI assessment note: “I think New York is, uh, New York has always been, like, a up-and-comer.”

Q there were, um, uh, you know, maybe like two or three famous VC investors who, like, did their entire career in Security and did extraordinarily well at it, but, like, for the most part, like, people were asking, okay, where are the exits? How big can those companies get? And it was, like, on-prem, and so why is that, what are the driving factors why it became so interesting now?

A Yeah, I, I think we, um, at Greylock we try really to, like, make sure that there's a, you know, shared tribal knowledge and macro framework for why things are happening. And for me, security is, like, relatively simple. Like, let's say in 2019, you can call it a 75 or eighty billion dollar industry, half of which is software and half of which is services. Um, this is an industry that is still growing, like, On a multiples basis, and like, I think the reason is just like, it's attached to the growth of the internet, right? Like, why does commerce grow? Why does software grow? Um, uh, most soft, I, I would say most software that is valuable today has to be attached to the internet. The internet's not a safe place. Um, if you think that you have increasingly, um, transactions, systems, customer data, uh, that is richer and richer and more and more important, that's in an unsafe Environment, like, the sort of defensive industry around protection of it has to similarly grow. And I think the, um, the other interesting thing for us to think about is, like, I think the software piece of that is going to grow faster than the services piece. Both will continue to grow, but, you know, the United States, um, at, at the federal level, and I, I think governments worldwide, they talk about how this is a important front for, uh, warfare in the 21st century. Uh, that there's not enough cyber t…

AI assessment note: “I think the reason is just like, it's attached to the growth of the internet”

Q And is it fair to say that the, the, the shift to the cloud and multi-cloud environments changes a lot of things and opens up a lot of opportunities as well? I mean, is that, uh, do you think of the whole, uh, uh, you know, perimeter versus zero trust, uh, type of evolution? Is that one of the, one of the

A Yeah, I, I think one of the most interesting, um, questions in security is the, the broad one you bring up, which is, like, uh, most of the, call it, 35 or forty billion dollars of security spend today, it really is still, like, on-premise tooling in a few known categories, the largest of which happen to be, like, network and endpoint and, and, um, some areas like that. Uh, and I, I think, like, the question Matt's asking is, like, we're gonna need to re-architect it, right? And I don't think that the, um, existing spend goes away, but, like, if you think about, um, the things that people try to do on premise in an environment which requires many fewer access points where you actually can have a better sense of control, like, that will not apply if you do not own your infrastructure and you need

AI assessment note: “we're gonna need to re-architect it”

Q And to the, the point about the explosion of SaaS, I, I think I read or saw on Twitter somewhere that, ah, one of the trends you're excited about is the evolution from SaaS for the enterprise to SaaS for SMB. Is that, is that correct? And if so, what, what drives that trend?

A Yeah, I, I'd say that's, um, that's definitely a part of it. I, I think about the four W's for SaaS companies. One of them is just width, width of the market in terms of, like, the type of customers they serve, um, SMB to, like, large enterprise, uh, and you, I think you can have large, Shopify's an extraordinary example of this, but you can have companies that enable entirely new, um, customer bases to do new things, and they've figured out, like, web distribution, Basically, to make a different price point work for different customers, but I think there's another kind of width, which is, um, like, how much, if we're talking about business software, how many of the users in that business really interact with that software? And so, um, like, I would posit that there was a generation of software company where you had very large company IT build you something on Oracle or a customized SAP and, like, When they did that, um, even after that engineering and IT work had been done, a small set of administrators really interacted with the end product of software. Um, and, and I think, like, now when we think about with, like, you have much more user-adopted software. You have even top-down purchase software where, you know, it really needs broad adoption to be successful to deliver user value and business value. And so, I think one of the things that, um, I personally, and I want Greyl…

AI assessment note: “that's definitely a part of it. I, I think about the four W's”