Dmitri Alperovitch: Building CrowdStrike and defending against nation states
Download MP3Welcome to Inside the Network. I'm Sid Trivedi.
Ross Haleliuk:I I am Ross Haleliuk
Mahendra Ramsinghani:and I am Mahendra Ramsinghani. We have spent decades building, investing, and researching cybersecurity companies.
Sid Trivedi:On this podcast, we invite you to join us inside the network, where we bring the best founders, operators, and investors building the future of cyber.
Ross Haleliuk:We will talk about the hard parts of the founder journey. Launching companies, getting to product market fit, raising capital, and scaling to an exit.
Mahendra Ramsinghani:And, yes, we will also be talking about epic failures.
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Mahendra Ramsinghani:That is correct, Sid. But we cannot make it too much easier because startups are hard. And, of course, you already knew that. Alright, YouTube. Enough.
Ross Haleliuk:Let's get started with this week's episode.
Sid Trivedi:Hey, Dmitri. Welcome to Inside the Network.
Dmitri Alperovitch:Great to be with you, Sid.
Sid Trivedi:We're gonna talk about a couple of different things today. First, we're gonna talk a little bit about Dimitri the person, then we'll talk about Dimitri the founder, we'll talk a little bit about Dimitri the investor, And lastly, we'll talk about Dimitri the policymaker. So let's start with Dimitri the person and maybe start by sharing with us, Dimitri, a little bit about your childhood, your background, where you grew up, and when did you migrate to the United States.
Dmitri Alperovitch:Yeah. Thanks for having me on, Sid. I really appreciate it. I'm an immigrant to this country like many folks and, grew up in the former Soviet Union in the 19 eighties in Moscow, in fact. And I had the opportunity to come to this country with my parents when I was a teenager and grew up, in the South in Tennessee and then later on went to Georgia Tech and, studied cybersecurity, in Atlanta.
Dmitri Alperovitch:And what got me into cybersecurity is really a hobby of my dad. So my dad was a nuclear physicist in Russia initially designing nuclear power plants, and then later after Chernobyl, helping to build simulators for the reactors to help train the workforce to avoid accidents like Chernobyl. And when he we came over to the United States, he couldn't get a job in the nuclear industry. The nuclear industry was in a deep freeze many ways like it is now, although we might see a revitalization of it, with some of the new cutting edge module reactors that are being developed by some interesting startups. But, at the time he just got a job as a programmer and it wasn't very intellectually stimulating.
Dmitri Alperovitch:So he ended up getting really deep into cryptography and particularly the study of elliptic curve cryptography. He had an applied mathematics background. He was really interested in in the math behind how the ECC elliptic curve cryptography worked. And that was a hobby for him. And I, even though I was in high school at the time, saw the opportunity, commercial opportunity, and I sort of said, hey.
Dmitri Alperovitch:This, encryption thing is becoming hot. Maybe we should start a company together. And, we did. It wasn't anywhere near as successful as CrowdStrike as you can imagine because no one's, heard of it. But, it was my first taste of entrepreneurship, and more importantly, it was my first exposure really to cyber.
Dmitri Alperovitch:And, an early realization gave me an early realization that encryption was the not the end all be all and that cyber was really much more of a cat and mouse game that, you know, if someone could steal your keys, didn't really matter how secure your algorithms were. And, it, got me really passionate about this. And I I think, in part, I got so interested in it because I love playing chess, And I found cyber to be as intellectually stimulating and interesting as chess because the unique thing about this domain, it's it's one of the few applied sciences out there where you face a sentient opponent. You face a human being that is gonna react to anything that you do. Right?
Dmitri Alperovitch:Whatever defenses you put up, guess what? The adversary has a move to play. They can find a way around it. And you gotta think multiple steps ahead to make sure that, you're still able to protect your customers, protect your data, and what have you.
Sid Trivedi:Were there any role models that you looked up to in those early years? Was it your dad? You spoke a lot about him.
Dmitri Alperovitch:It was my dad. Now he ended up staying kind of in in the crypto space, and I I started focusing on other things. But, you know, at the time, this was still a very new industry. In fact, when I got my master's degree from Georgia Tech in cybersecurity, I was the 1st graduate out of that program. It had just been set up.
Dmitri Alperovitch:I kinda had to work on my own curricular for it because they sort of didn't have their act together in terms of all the courses and everything else that they, obviously do now. So it was still very, very early on in the industry.
Ross Haleliuk:Interesting. I have been an immigrant twice. Once moving from Ukraine to Canada and then moving from Canada to the US. I'm curious, in your experience, what were some of the early challenges when moving to the US? What was the hardest or maybe the most surprising for you?
Dmitri Alperovitch:By the way, you know, I I kind of skipped a little bit, but I had the same path as you where I moved to Canada actually originally first, very briefly, and then we immigrated to the United States from from Canada. So I can, totally relate, to your story. Well, to be honest with you, I mean, there's always challenges you face as an immigrant sort of building your life together and new friends, new schools, etcetera. But, you know, I I think I was pretty lucky that I I did it when I was still fairly young and I didn't have perhaps as many issues as others who are older that have problems learning the language and adapting to to the culture and so forth. So I I don't know.
Dmitri Alperovitch:It's a good question, but, I can't think of the things that were really, really tough beyond just life and and making it out in a new country.
Sid Trivedi:You know, I'm curious, how did you think about your your journey pre CrowdStrike? Most folks know about your your experience during your time building out CrowdStrike, and that was really the last, whatever, 15 years of your life. But very few people really think about Dimitri pre CrowdStrike. And just give us a sense for the types of decisions you made.
Dmitri Alperovitch:Yeah. So right out of college, I joined the startup called CipherTrust, which was started by Jay Chaudhry, who now runs Zscaler. And it was an incredible experience. It's still fairly small and and grew to decent size. It wasn't, you know, unicorn but, it was, still a pretty good success.
Dmitri Alperovitch:And I was able to join it when it was still relatively small and gave me the 1st startup bug in terms of a real significant sized company. Our family company and that I was starting with my dad in high school never really went, big in part because both of us kinda were distracted me with school and him with a full time job. So, we couldn't really dedicate as much time to it as it needed. But, with CipherTrust, you know, you you join a a startup early on and you get to do everything. Right?
Dmitri Alperovitch:You get to do development, product, sales, marketing, and, it's it's just I highly recommend it to anyone out of coming out of college. Don't go to a big company where you can be pigeonholed and do one thing for, like, the next 10 years. In fact, that that was the experience that a lot of my friends from college had where they a lot of them went to work for Microsoft and stayed in those same jobs for 10 years. And I moved around and had lots of different experiences and a career trajectory that, was, really fantastic. But the other thing that was great about CipherTrust is that it was an email security.
Dmitri Alperovitch:And they hired me actually because of my crypto background. Because at the time when I was joining them in the early 2000, email security meant encryption of email and they had all kinds of policies to secure communications between different companies. And, you know, they had good fortune 500 companies that were buying that stuff. And I remember I was interviewing with Jay.
Sid Trivedi:And this is Jay being Jay Chaudhry, just to be clear.
Dmitri Alperovitch:Yeah. Of course. And Jay, I don't know if he still does it, but at the time, he would literally interview everyone that's coming in the company. He would always do it on on Sundays because the rest of the week he was doing other work. Right?
Dmitri Alperovitch:So he's a workaholic. And I was interviewing with him and I was asking about sort of the future of the product where the roadmap was going. And he said, you know, we're gonna take a pause right now on the policy development around encryption because we have this thing that is popping up spam that we gotta take care of. So we're gonna, like, take a couple of quarters on the road map to solve spam, and then we'll get back to the core issue and and, you know, talk to me about how the product is gonna evolve. And he's like, and and we need you to solve it for us because you were starting on the research team that, is gonna be tasked with that effort.
Dmitri Alperovitch:So as you can imagine, I absolutely failed in that in that task because spam is still with us here today, 25 years, almost 25 years later. And CipherTrust also never went back to encryption because spam went from, like, almost 0% of the world's emails to, like, 98% in the course of literally, like, a year and evolved very rapidly. And I tell you, it was such a great experience to enter the cyber security industry in that field because virtually everything I learned about the field and how to think strategically came out of that experience because nowhere else did you see that rapid evolution on the part of the adversary reacting quickly to what we were doing on the spam filter side. Right? So the spam filter in business started with just keyword searching.
Dmitri Alperovitch:You got a dictionary of keywords, like looking for things like viagra and so forth and and blocking that. And very quickly, the attackers evolved where they would start putting spaces in and, you know, obfuscating those words. And, I remember Paul Graham wrote a blog post, that Paul Graham of the YC fame.
Sid Trivedi:Founder of YC.
Dmitri Alperovitch:Yeah. Founder founder of YC. And he wrote this blog post about using base theorem to block spam, where you would basically, tokenize the emails and, look at each token and look at the probability of that token appearing in spam versus the probability of appearing in email. And it was this brilliant, you know, some very simple mathematical model for how you could block spam that when you try it out was incredibly effective for, like, 3 weeks. Because immediately what the attackers did is they said, oh, we're gonna just dump a lot of keywords into our emails that are present in a lot of legitimate email, like, at the bottom and and break the base filter.
Dmitri Alperovitch:And then you would react to that, and then they would introduce image spam so you couldn't tokenize the words, and on and on and on. And literally, they were reacting so quickly that as soon as you put something out within weeks, there would be a countermeasure to it. And that was not happening in any part of security. Right? In the vulnerability research, things take much longer to evolve.
Dmitri Alperovitch:New attacks, you know, do not appear overnight in terms of, like, new ways to exploit vulnerabilities or the like. In in the malware space at the time, today, things are very different. It was also very slow progress where it took, like, 12 to 24 hours to put out a signature for a piece of malware. And often on the weekends, they wouldn't put out anything. So the spam industry is really what taught me that you gotta be much faster than the adversary.
Dmitri Alperovitch:It taught me also that attribution and intelligence collection on attackers matters a great deal because I quickly found out that a lot of the spam was originating from actors in Russia. And obviously, I had Russian skills, so I was able to get into the forums where they were discussing the various ways to bypass different products. And I was at the time, they weren't very much focused on operational security. They were thinking that, you know, if you use Russian, no one is gonna be able to figure it out. So you could easily gain access to these forums much, much harder today because you gotta be vetted and and so forth.
Dmitri Alperovitch:But at the time, it was relatively easy and you could just sit there and read what they were doing and try to react in advance right before they would even put anything out. So, it gave me that appreciation for the value of threat intelligence, for the value of understanding who's attacking you, for the value of building systems that are able to rapidly collect and analyze intelligence. In fact, we build what you would now call the cloud. So initially, you know, CypherTrust sold appliances. So it would be sitting in a customer's environment and you would push out updates to it like antivirus where you would get like a regular anti spam update.
Dmitri Alperovitch:And we said, you know, that's a, too slow when you you have an adversary that's changing things on an almost minute by minute basis. And 2, you don't actually know how successful you are and where the failures are. So we said, let's build, we called a reputation system that would basically query the cloud with the data about the email, and we have to be careful that, you know, you don't expose, for privacy reasons, the content. So it would be various hashes that you would take out of body of email and headers and the like. And you would start aggregating this data and seeing what attacks are being launched against all of your customers now.
Dmitri Alperovitch:So the kind of the network effect of the collected threat intelligence. And then we started saying, oh my god. We're starting to collect all this massive amounts of data. Again, this was like early 2000. Right?
Dmitri Alperovitch:And why don't we apply machine learning, or as you would now call it, AI, to all this data to see if we can block it automatically? And, you know, a lot of the stuff that's coming up now, we were actually able to build back in those early days.
Mahendra Ramsinghani:Dimitry, Dimitry, your background is indeed very fascinating about how you start with, you know, ECC. You're a chess player. You adapt and move fast, ideally faster than the enemy. Talk to us about, as you move into the CrowdStrike story of your journey, how you and George decided to work together, and how do cofounders bond so well where they create an iconic company?
Dmitri Alperovitch:Yeah. So it it was really opportunistic. So just, to wrap up the CipherTrust story, CipherTrust ended up getting sold to another company called Secure Computing, which is a public company. I ended up taking a bigger role in that company because that company was also doing network security. They had a firewall business.
Dmitri Alperovitch:They were also doing web security. They had one of the pretty significant market shares in in web filtering at the time. And I ended up taking, basically, the research teams across those platforms under me, including email security. And I also, at that time, saw that what we did with the cloud with, email security could be extended to other areas. And I proposed to our board to invest in a product that would do web based cloud security.
Dmitri Alperovitch:And the funny thing is that as I was doing that, Jay had sold the company at that point and and was out. He was having the exact same revelation, and he started Zscaler with the exact same idea to do cloud security. So we ended up competing very briefly. It was very brief because Secure Computing ended up getting sold to McAfee a very short time later. So just as I launched that product and started selling it, we ended up getting absorbed by McAfee, and McAfee decided to promptly kill that product.
Dmitri Alperovitch:So Jay went on to an incredible success with Zscaler and my product, which I thought was very competitive and very good, ended up getting killed inside a big company, which was another valuable lesson, by the way, about big companies and and, the lack of innovations and and sort of systemic challenges and and friction that you face in trying to innovate inside a big company. But at McAfee, I ended up taking the role of running ultimately all the threat threat research and, investigations. And in 2010, I get a call from this company called Google that you may have heard of. And, they had just experienced the issue of China hacking into their networks. And a number of other companies were impacted in that same attack.
Dmitri Alperovitch:And many of them were McAfee customers. So they called us to work on this together and to notify our customers and and figure it out. And I ended up, writing that investigation for us and named it Operation Aurora, which I felt at the time was gonna be a very groundbreaking thing because when I realized early on that this was a nation state intrusion into all of these different companies, the first time that you had seen in the public domain China or any nation state breaking into companies and stealing intellectual property, I realized instantly it was gonna be a watershed moment, which, by the way, is why I named it Aurora because Aurora was the name of the Russian battleship that fired the the shot that was a signal to Lenin in 1917 to launch his Bolshevik revolution. It's been called the shot heard around the world. It changed the course of the 20th century, obviously, with the creation of the Soviet Union and the Cold War.
Dmitri Alperovitch:And I knew that, you know, this wasn't quite as significant as the Bolshevik Revolution, but it would be very significant certainly for the cybersecurity industry. Ended up being very significant for my own career. And the first thing I I did is I asked, myself, well, is this the only thing that's happening? Is this, like, a fluke where China just decided to hack into these 2 dozen companies and that was it? Or is there a trend to this where a lot more is going on than we realized?
Dmitri Alperovitch:And I started looking at our data we're collecting at McAfee, obviously huge customer base, and realized that this was happening very frequently. I started putting out all these threat reports, night dragon, 10 days of rain, which was North Korean hacks into South Korean victims, and then shady rat, which was another major unveiling of a group that actually later became the APT one report. It was the same group that I put a had put out an early report on back in 2011. And as I was doing all these reports, part of that investigation was notifying companies that had been victimized. And in almost every case, when we would pick up the phone and call them and say, hey, we just discovered that, you know, the Chinese are your networks.
Dmitri Alperovitch:In almost every case, they had no idea. And, usually, the the the actors would be in their networks for years, and it would be a complicated process to get them out. But I realized that this was a huge problem and that no one was really solving it. And I was trying to kind of solve it within McAfee because, you know, it wasn't necessarily my intention to go start a company right away. But, you know, I saw a problem and a lot of our customers are getting breached.
Dmitri Alperovitch:Let's figure out how to solve it. It was really, really hard to do at McAfee because it was a public company very much focused on the next quarter. We would continuously have hiring freezes. Like, you would get a budget for the year. You start planning how you're gonna allocate that budget, and then we miss a quarter and suddenly all your ex go away.
Dmitri Alperovitch:Right? Very hard to plan, very hard to innovate. And a lot of legacy thinking as well, a lot of sort of the antivirus mindset from the 19 eighties that this is not really about intrusions. It's just about malware. And, why do we need to think broader about this?
Dmitri Alperovitch:So it was very frustrating. And then, you know, clearly, there was a problem. I realized that we had ideas how to solve it, but no one was actually willing to do anything about it. And, that was sort of the light bulb went off that this is this is an opportunity here to start a company. And also, McAfee at that that point had also gotten sold to to Intel.
Dmitri Alperovitch:And, Intel was an interesting company because it was a hardware company for the most part, and we were a software company. I remember sitting in a meeting with with the Intel folks before the acquisition closed, and we're talking about all these great ideas of how we're going to put security in the silicon and, what capabilities they could do. And I was amazed because they were so receptive. They they said, like, literally, all these ideas we're putting forward, they're like, yeah. We're gonna do it all.
Dmitri Alperovitch:I was like, wow, this is phenomenal. A 2011 time frame. And then I said, well, when do you think you can ship it? And the answer was like 2020. I was like, what?
Dmitri Alperovitch:Excuse me? Alright. They're like, well, yeah, that that's the first opportunity for us to really get a lot of this stuff out. And I'm like, Yeah. I have no idea what the threat landscape is even gonna look like in that time frame.
Dmitri Alperovitch:I'm pretty sure I'm not even gonna be at Intel at that point. That's just not gonna work. The thread landscape, remember, back to the spam days, moved so quickly that you gotta iterate so quickly, like, getting stuff in hardware over that long period of time. That's ridiculous. And that's when I knew, a, I had to leave.
Dmitri Alperovitch:2, there was this big problem. 3, that, you know, we we, are never gonna solve this problem at McAfee. And, yeah, that's when we got together and started pitching to various investors. We actually didn't pitch to that many investors.
Sid Trivedi:And how did you pick George? Maybe just talk a little bit about how did you pick George?
Dmitri Alperovitch:Well, we were we're working together in Mac yeah. We're working together in McAfee. We're we're, working on some of these investigations together, and he he appreciated that, this problem as well. And, yeah, we got start started working together. And, the on the investment side, we literally pitched to 2 firms.
Dmitri Alperovitch:We got term sheets from both, and we ended up picking the better one.
Sid Trivedi:And and then how did how did you decide that that, you know, you were only going to work with George? There were a whole bunch of amazing people at at McAfee, whether that's, you know, you had folks like Mike Fay, Mike De Caesar, Chris was there. How did you pick George specifically?
Dmitri Alperovitch:We were just working together. So we worked together on Aurora, some other, reports and investigations. So we're spending a lot of time. I saw the problem, and and it was just natural.
Ross Haleliuk:Yeah. When looking back at successful companies, it often feels that their success was almost inevitable. And at the same time, we know that that is not really the case. So what were some of the tough decisions that CrowdStrike had to make for it to get, where it is today?
Dmitri Alperovitch:Oh, there were tough decisions every day. You know, success is never a straight line. And there were existential threats to the company, like, almost every day. It's amazing, you know. You look on it now and it seems like, oh my god.
Dmitri Alperovitch:You guys were just it was inevitable you would succeed. That was certainly not the case, and it was a tough slog for a long time. And there are many decisions we made that were very forward thinking. I'm a passionate believer in sort of the Steve Jobs philosophy of focus, that you gotta really concentrate on what you're good at and get rid of all the distractions and say no. Right?
Dmitri Alperovitch:The focus is all about saying no. And, you know, we said no to a bunch of things. So when we were starting, obviously, we're building an endpoint security product, and there were still a lot of Windows XP systems out there. And we realized early on that if we decided to support Windows XP as virtually all of our I think all of our actually competitors decided to do, that that would really limit dramatically our architecture, that we couldn't do all the advanced things that we wanted to do and support XP. There are just too many limitations on that platform.
Dmitri Alperovitch:So we said, you know what? We're not gonna support XP. We're just going to start with Windows 7 and above and probably the Mac and Linux platform later on. But that was a tough decision because many customers are like, I'm moving to Windows 7, but I still have XP and I may not move to XP for a couple of years. And we're like, well, I guess we're not right for you.
Dmitri Alperovitch:Very tough decision, and we lost deals because of it. But, it was the right decision because it'll enable us to build the right architecture that I think ultimately helped us win the market. 2nd, we we knew from the get go that we wanted to do the cloud. So the same idea that I had, you know, back 10 years earlier at CipherTrust to aggregate all the threat intel for email and, apply machine learning to it and so forth, we could replicate and we should replicate this in endpoint security. But right away, we hit customers and financial sector and elsewhere.
Dmitri Alperovitch:They were like, we'll never do cloud. And it would have been very easy to say, well, you know, we'll build you kind of private on prem solution, and many of our competitors went down that path. We said no. That'll break our model. A, that will create a divergent sort of engineering track where you're spending resources on this and that.
Dmitri Alperovitch:That will slow you down. And 2, the whole model is sort of this network effect that everyone contributes their threat data to the to the cloud and and you're able to protect everyone as a result. So we're not gonna do that. And, again, we lost customers or prospects because because we just chose to do that. In the end, we were believers that everyone would one day move to the cloud, which is what happened, but it required, you know, strength and and patience.
Dmitri Alperovitch:And, those were tough decisions. So there were there were just a slew of decisions like that that, I think we made early on. You know, I'll tell you the best decision we made is raise as much money as we did. You know, it doesn't sound like much today, but, you know, in 2011, we raised $25,000,000 of a PowerPoint deck. That was a lot.
Dmitri Alperovitch:I mean, today, it's like an average seed round, I guess. But, then it was, it was quite a bit. And that really, I think, more than almost anything else, helped us win because we raised more than anyone else. What what I see oftentimes in companies is they don't raise enough money. They build a prototype.
Dmitri Alperovitch:They kind of demonstrate that it's somewhat successful. And then they raise another rounds, an 8 rounds off that prototype. And then they're like, well, that was a prototype, so we have to throw it out and we have to start from scratch and rearchitect it. Right? We never did that.
Dmitri Alperovitch:We built it right from the get go, And that gave us an opportunity to keep moving faster. Right. And didn't slow us down with the architectures and the like.
Sid Trivedi:Maybe talk a little bit about scaling and scaling CrowdStrike.
Dmitri Alperovitch:Yeah. So, you know, initially, things were pretty tough because a, cloud. 2, we don't support XP. 3, we're solving the problem that not many people even know they have, which is the quote unquote APT problem. Right?
Dmitri Alperovitch:Because we weren't initially an antivirus. That was later in the plans, but we thought first thought, let's solve the hardest of the hardest problems, which is how do you defend yourself against the nation state threat? And and we were detection only at the time, without any response options. So we're going to companies who were like, what's an APT? Nation states, do we even have that problem?
Dmitri Alperovitch:2, your cloud. 3, you don't support all our devices. It was rough, and it was sort of a slow going initially. But, we figured out that there was a litmus test that was very easy to determine whether a prospect early on in the process, was gonna be the right one, was gonna get it. And that was when we would qualify them with 2 questions.
Dmitri Alperovitch:The first question is, have you had an APT incident? And if they give you blank stares, you know that it's time to wrap up the meeting. And 2, we would ask the CISO about their background. And if the answer was that they had just come out, as a number of them have, out of the government, out of the intelligence community, out of law enforcement. Even if they hadn't had an incident, they were aware of incidents from the classified realm and would understand what we were trying to to do.
Dmitri Alperovitch:And we would have much better traction than with people that had no idea, right, about what the threat landscape looked like. So that kept going for a couple years, and then you you ultimately kinda hit the inflection point where, you know, frankly, you know, I gotta give credit to Kevin, the Mandiant report, the APT one report that was for the same group that I covered in my shady rant report years earlier came out. It became gave much more prominence to to the threat landscape, and, that helped. And then we got into a pretty tough competition with Cylance, a competitor at the time that was focused on building an antivirus that was machine learning based antivirus, and they started to see a lot of traction. And we've always had on our road map the idea that we had to do prevention and that we had to do not just detection for APT threats, but detection, and prevention of malware.
Dmitri Alperovitch:But to be honest with you, we felt like having come out of McAfee, we knew what it would take to replace McAfee or Symantec. Then it's sort of like IBM. No one ever gets fired for buying it. Right? So to have a start up come in and say, hey.
Dmitri Alperovitch:We're gonna replace your McAfee footprint seemed like it was gonna take an enormous amount of effort. And we were kind of pushing it and pushing it until we got the the APT thing really solved. And silence to their credit spent enormous amounts of money on marketing, sort of convincing people that AV was broken, which is what you had to do to get people to start thinking about replacing their McAfee and Symantec. So when we saw that when we saw them create that opportunity, we immediately said, okay. We gotta accelerate our efforts, get the AV product out the door, which we did in record time.
Dmitri Alperovitch:And then we had kind of the full scope solution. We had the AV. We had the what is now called EDR, end endpoint detection response. At the time, there was no real name for that category. And, that really just allowed us to to take off.
Sid Trivedi:So we go through this journey. You know, you go public on the Nasdaq. You go and build out one of the most valuable companies that's out there. And then the beginning of 2020, right before COVID, you announced that you're you're effectively retiring. You're you're in in some ways retiring.
Sid Trivedi:And then, you know, that's when I wanna talk a little bit about Dimitri the investor and Dimitri the adviser, which is our 3rd section today. Today, you're now, you know, this active angel investor. You're in a whole bunch of companies including a few that that I've invested in.
Dmitri Alperovitch:Not not just angel, really. Every every stage.
Sid Trivedi:What do you yeah. Angel in that, like, you're investing for yourself. You're not in you're absolutely right. You're investing at all stages, but you're investing for yourself. You don't have a you're not trying to run a Got it.
Sid Trivedi:Institutional venture firm. And I know you don't wanna do that. What traits do you think define successful founders? You have been and and we can absolutely say this, you've become a successful founder. What do you look for?
Dmitri Alperovitch:You know, that's such a great question. And, you know, one of the big lessons for me in the last, you know, 4 years where I've really been focused on this, including with you where we invested in some great companies together, is the the importance of the person over the idea. You know, it's so easy to fall in love with an idea where you you you get a pitch and you're like, this is perfect. I know exactly that this is what the market needs. The solution is fantastic.
Dmitri Alperovitch:You know, how quickly can I write this check? And you have to stop yourself and say, is the founder right here? Do they have the perseverance? Are they a learning founder? Or are they, you know, so focused on, you know, their own ego and reputation or whatever that they're not willing to take advice, they're not willing to absorb data, autocorrect, and what have you.
Dmitri Alperovitch:How do they deal with adversity? Because you're gonna face it. You you're gonna face existential problems in your company, guaranteed. And are you gonna have the backbone to be sort of a wartime CEO and do what's necessary, whether it's to to cut, whether it's to pivot, whether it's to, you know, when things get desperate, you know, get on the phone yourself with customers and get those deals closed. Make sure you get paid.
Dmitri Alperovitch:Make sure you make payroll. Right. And we've seen that in the last couple of years with a lot of companies sort of experiencing that existential threat because it was kind of easy to start a company in the zero interest rate environment when there was an unlimited amount of money and virtually any idea was getting funded. And then suddenly all that dried up and companies couldn't raise anymore, and you had to figure out how to get to profitability. And, many for many, it took too long to recognize that the world has changed and some of them went out of business.
Dmitri Alperovitch:Right? Or some of those CEOs got replaced. And and for others, they adapted and and were able to do the right thing. So looking for the person, it's really hard to figure out whether they've got what it takes to do this is really, really important, more important even than the market, the idea, and that's been, I think, something that that is not paid attention to as much. Experience matters as well, but but actually less than the perseverance of the person, the learning capability that they have to just the hunger to to understand what what what needs to happen.
Ross Haleliuk:What is the one piece of advice you find yourself constantly sharing with the founders you end up investing in?
Dmitri Alperovitch:I don't know that there is one piece of advice. One one thing that I do tell them to do is focus. So many want to do so many different things, and they need to, particularly in the early days, make sure that they become excellent at the niche that they're in and then expand from there before they try 50 different things because if you're doing too much, then you're likely not doing any of it well. The other thing is the importance of great hiring. Don't outsource hiring to recruiters.
Dmitri Alperovitch:Don't outsource hiring to to HR. In fact, you know, you should be the best recruiter in the company. I hired, almost the entire launch team myself at CrowdStrike and went after people that I thought I had 1% chance of getting. Right? They were just the the elites of the elite.
Dmitri Alperovitch:You know, one person I always cite is my friend, Alex Zanescu, that, was our chief architect for many years. Literally, the guy who wrote the book, literally, the book on Windows internals and knew the inside out of operating system better than anyone else on the planet, like, categorically. Like, Microsoft would hire him to teach their developers about what's in the Windows kernel. And he worked at Apple where he was, you know, doing very well. And when I reached out to him, it was like, no.
Dmitri Alperovitch:Like, how many times can I tell you no? And I didn't take no for an answer. I kept pushing. I kept pushing. I kept pushing.
Dmitri Alperovitch:And ultimately, he joined, and he was, an incredible part of the reason for why we're successful and why we had an incredibly elegant product and and and highly capable product. So, you know, going after people like that is just so crucial and, people settle. You know, I see founders that are like, oh, I've got to hire some engineers and, you know, this guy is not as great as as I want, but I just gotta get him into a seat. And, I'll uplevel them or do something with it later. And that's always, always a mistake.
Dmitri Alperovitch:You know, my my my favorite phrase about hiring is and frankly, firing, is if you're not sure, you're sure.
Mahendra Ramsinghani:And That's a great piece of advice, Dimitry, on people. As we look at investors, one of the questions that comes up is what attributes do you look at in other cybersecurity investors, and what advice would you have for them? You know, one, text message that I just got a few minutes ago as we look at the investment landscape is that there is companies that are becoming successful, also companies that are failing. So Lacework, which is valued at over 8,000,000,000 is now in talks to be acquired by Wizz for 200,000,000, 300,000,000. It's a company that had raised $1,300,000,000 And so the markets have changed.
Mahendra Ramsinghani:The amount of capital that is flowing in has increased. The number of cybersecurity investors have also increased. So if you were to team up with some investors, what are the attributes that you look for, and what advice do you have for the investment community?
Dmitri Alperovitch:Well, stop funding so many features as opposed to products or companies. I I'm actually pretty negative on investing in cybersecurity. I invested in a few companies, but largely actually invest outside of cybersecurity because I just see so many companies not really building visionary products. They're building a tiny improvement on a particular feature. And the problem we've had is that over the last 5, 7 years, there's been so much money that virtually any of these ideas can get funded.
Dmitri Alperovitch:But now a lot of these companies are going out of business because they're not products. They're not platforms. They're certainly not companies. And look for those big ideas that can really change the game as opposed to just improve things slightly. Look for ideas that people haven't done before or or doing something that people have done before but radically different in a way that's gonna change the game.
Dmitri Alperovitch:Right? I mean, we we did antivirus at the end of the day, but we reinvented what it meant to to have an antivirus. Right? And, ultimately get you to be very successful. I I think it's been relatively easy to be an investor in the zero interest rate environment because virtually any company would get funding, you know, after year round.
Dmitri Alperovitch:And there was a lot of m and a going on because it was free money. And now you see so many of these funds struggling and realizing that, oh my god. Actually, like, just even returning capital in a fund is really, really difficult. Right? Much less, you know, having a 2 x or 3 x fund that that you're returning.
Dmitri Alperovitch:And you gotta be much more discerning about the opportunities and the checks that you write.
Sid Trivedi:Dimitri, let's switch into the last section of our podcast which is Dimitri the policy maker. And, you know, I'm curious to get your thoughts on on even that concept. But while you've been this investor and advisor post CrowdStrike, you've all also spent a lot of time thinking about geopolitics and what's happening in in, you know, the the world as a whole. And you did 2 things. 1, right after leaving CrowdStrike, you co founded this new policy think tank called Silverado Policy Accelerator.
Sid Trivedi:And the second piece was you wrote you you've been working on this book which you which you've just launched and by the time the listeners are listening to this this podcast episode, it it will be out on the shelves and on Amazon to buy, which is called World on the Brink. What motivated you to do both these things? Because they're very different from the cyber security community that you've been part of for way over 2 decades.
Dmitri Alperovitch:Well, I guess I always straddle this area and in in college as I was taking all these cyber courses, I was also taking a lot of international affairs courses. I've always been passionate about this. I've always been passionate about giving back and was actually an adviser to the Department of Defense, while I was at CrowdStrike and and, did a number of other things to advance the national security interests of this country that has been so good to me, and I felt it was important to contribute back. And I really have always been passionate about trying to do more to figure out how do we make sure that this century remains an American century, the way that the, 20th century was. And I've been, particularly since Aurora days and even before then, Aurora really put this front and center in my mind.
Dmitri Alperovitch:Been very concerned about China and what China was doing to rip off our intellectual property, to engage in all kinds of anti competitive practices, to engage in their military buildups in the region. And the concern that I had is that we weren't paying a attention to that and b, not leveraging the strengths that we had here in America with our innovation engine, with our incredible military assets, the defense industrial base, the economy, to actually make sure that we defeat China in this new Cold War that we're unquestionably in. And I make the case in the book that we are in this Cold War, which is actually remarkably similar to the first one. I actually compare go back through the cold war one history as I call it and look at what was going on then, what is happening now, and how similar the two conflicts are. And, you know, I wrote this book and and really the work we do at Silverado is making sure that we can, a, define what winning means in this new cold war, and how do we actually achieve that victory.
Dmitri Alperovitch:And what we means is actually not a trivial thing to understand because, you know, during Cold War 1, it was kind of relatively easy because we have the benefit of this gentleman named George Cannon, one of the great, international affairs thought leaders back in the in the first Cold War, who was actually stationed in Moscow on on behalf of the US government, the state department. He wrote the telegram that was called the lawn telegram. There was a later publishes an article in foreign affairs that basically outlined the entire strategy for winning the Cold War. And his big revelation was that Soviet Union was this unnatural entity that would one day fall apart because of all of the challenges that they would face with the ethnic minorities and ethnic nations like Ukraine and, Belarus and the Baltics and others that would one day wanna be their own countries. And his revelation was that we just need to wait them out and and avoid getting into a disastrous war and we would win.
Dmitri Alperovitch:Well, with China, China is not going anywhere. Right? It's been around 5000 years. It'll be around for another 5, 10000 years. Who knows?
Dmitri Alperovitch:And even the leadership of China, there's a lot of people in DC that have these dreams of one day, the CCP will fall. Well, maybe one day it will fall, but we can't count on that. And frankly, when you look at the case of Russia, the Communist Party did fall in Russia. Well, we're not facing Vladimir Putin. Is that really any better?
Dmitri Alperovitch:So just counting on the regime change that you can't even affect in any way seems like a pipe dream. So, you know, I wrote the book looking at all aspects of this competition with China, the military dimension, the diplomatic, the economic, the technology one, the cyber one. And how do we systematically define what it means to win and how do we actually achieve that? And I think this is an incredibly important issue right now because most people most Americans, I think, do not appreciate the precarious state that we're in today, that we're truly a world on the brink, that we're heading towards a conflict that is almost unimaginable. Right?
Dmitri Alperovitch:I believe that China could invade Taiwan as soon as 4 years from now, as soon as 2028. In fact, the book starts out with a detailed scenario of invasion that I've spent a lot of time researching, spending time in Taiwan, spending time with military experts in Taiwan and and in the US military, thinking through how you would actually accomplish it. And if that happens, that will change the world in much greater ways that even the Ukraine conflict has changed the world and it has. Obviously, it made us all less secure. It helped create more inflation.
Dmitri Alperovitch:It, created all kinds of instability in Europe and so forth. This is gonna be a 1000 times more impactful. And particularly, of course, if if the United States actually chooses to fight for Taiwan as president Biden has now said on 4 occasions that he would send American troops to fight for Taiwan. You're talking about a conflict between 2 nuclear powers, and who knows if it stays conventional.
Ross Haleliuk:So why should US citizens care about what happens in Taiwan?
Dmitri Alperovitch:Great question, and my book answers that question. So a number of reasons, and I'll talk about it from a purely sort of selfish American perspective. Right? There's obviously humanitarian reasons, protecting freedom, this dip, democratic outpost in in Asia. Taiwan is a very vibrant democracy, but, you know, frankly, that's also true of Ukraine.
Dmitri Alperovitch:And, we're not fighting for Ukraine. Right. So why is Taiwan different? A lot of people would say, and some have said political establishment in this country, that it's chips. And look, chips are important.
Dmitri Alperovitch:And Taiwan is manufacturing about 60% over 60% of the world's semiconductors, which are critical to everything. Right? AI, manufacturing of iPhones and laptops and cars and microwaves, you name it. The entire economy runs on chips. So if China invades, that will end because those fabs will get destroyed very likely in the course of invasion, and it will be a disastrous outcome for the world immediately.
Dmitri Alperovitch:But that's not really why we should care. I mean, it's it's a little bit of a reason why, but it's not the main reason. The main reason is why why we should care about Taiwan is because we've actually cared about them from a national security perspective in this country for a very long time, long before the age of computing, long before chips were even a thing. In 1950, Douglas MacArthur, general MacArthur called Taiwan, foremost, as it was it was called at the time, the unsinkable aircraft carrier because of its strategic geopolitical position in that region, where Taiwan is sort of like the quark that keeps China bottled up. If you look at the map of China and the region, and one of the things I do in the in the book is I actually rotate the map, where I put China on top, looking out down, and and you immediately see the dilemma that they face because they're essentially contained by the US military bases and our allies in that region.
Dmitri Alperovitch:So if they look out west, they see the Korean peninsula with South Korea and significant numbers of American troops there. They look further down and they see Japan, Japanese islands that have American marines on Okinawa and, all kinds of military assets that we have on on the Japanese islands. Further is Taiwan, which is really at the center of that first island chain. And, which is, you know, they view as an outpost of America. And further down, you have the Philippines, where we now once again have American bases.
Dmitri Alperovitch:Right? So they're basically fully contained today. And if they take Taiwan, they'll be able to project their power across an entire region. They'll push us out. Today, that region is basically a lake for the United States Navy that will end immediately.
Dmitri Alperovitch:As soon as China takes Taiwan, they'll be able to put their submarines on the other side of the, of the island, puts all sorts of sensors, will make it very, very dangerous for us to operate there. They'll kick us back, basically, all the way to Honolulu. And they'll dominate that region. Now when I say dominate, I don't mean that they're gonna invade Japan or Philippines. That's really, really tough to pull off for anyone.
Dmitri Alperovitch:But they're gonna bully people around in the way that you see Russia bullying people around in their neighborhood. Right? So, you know, you look for example at states like Armenia or Central Asian states, they're basically in Russian sphere of of influence, not because they want to be, but because they have no choice. Right? They're small power compared to the big bully that they're next to.
Dmitri Alperovitch:And we're far away. We we can't do anything for them. So they have to accommodate, Russia. And in the same way, countries like Japan, South Korea, Philippines, and and others in the region will have to accommodate China if China becomes a hegemon in the region. And, they will become that hegemon if they take Taiwan.
Dmitri Alperovitch:And the entire American strategy, of course, for centuries has been to prevent hegemony from developing in all parts of the globe, but particularly in Asia. That is the most important region in the world. Right? It's 50% of the world's GDP. Most of the economic growth, a lot of our supply chains are reliant on on these countries in Asia.
Dmitri Alperovitch:To allow China to dominate Asia gives them enormous amount of power. So, you know, I basically believe that if China takes Taiwan, that will give them enormous influence in Asia. Giving them enormous influence in Asia gives them enormous influence in the world. And that means that America sort of pulls back into its own borders. Now we are surrounded by 2 oceans, but that will mean the end of our our our superpower, effectively around the world that is not just helping the world in protecting trade routes as we're doing right now, for example, in the Red Sea, trying to keep them open against the threat of Houthi missiles, but it's also about and and supporting Ukraine against, the the invasion from Russia.
Dmitri Alperovitch:But but it's also about making the world safe for American goods, for Americans to participate in. Right? The rise of the American superpower is directly correlated to the rise of the US Navy. And the in in the 1900, Teddy Roosevelt in the early 1900 sent the the famous fleet, the US Navy fleet around the world on a circumvention tour to basically announce that America has arrived, that we were now a global naval power. And you see the rise of America being traced directly to to that to those events and and the developments in our naval capabilities that allowed us to project power all over the world.
Dmitri Alperovitch:Right? And, that will be absolutely in danger if China takes Taiwan and dominates Asia. And, that will be the end of the American century.
Mahendra Ramsinghani:You know, it's fascinating, Dimitry. Like many of us, we're looking forward to reading the book. And and as you gather these data points of how US Navy played a key role in establishing American power, you know, there are a couple of questions that come up as you look at the next, let's say, 12 months. Number 1 is we're looking at presidential elections in the US. The 2 candidates are pretty obvious, Donald Trump and Joe Biden.
Mahendra Ramsinghani:And, how will that change not just global policy but cybersecurity, which is an integral part of, you know, the landscape today? Navy was important once. Today's cybersecurity is equally important, if not more important. So, you know, there are some of our friends who talk about US should get into the offensive side of cyber. There are some who talk about how we should continue to play defensive, but
Dmitri Alperovitch:Well, we are. We've always been.
Mahendra Ramsinghani:Thank you. And there are some who say how technology can be exported but to select group of countries. All of these are going to get rolled up into this big political conundrum starting next 12 months. How do you see this playing out?
Dmitri Alperovitch:Yeah. So I've I've always believed, you know, in that phrase that a lot of people talk about that, you know, you may not be interested in geopolitics, but geopolitics is definitely interested in you. And that was also, by the way, an early decision in CrowdStrike when we met with our investors, potential investors. We we, right off the bat, said, we believe that you have to choose a side in this fight, that you can't be sort of an arms dealer to everyone, and even if you're providing defensive technologies. And that we told our investors, do not count on us ever selling in China, Russia, well, Iran, North Korea, where you can't sell anyway because of sanctions.
Dmitri Alperovitch:Right? At the time, there were no sanctions on Russia in 2011. And we we said, make sure you're comfortable with that because we are gonna be detecting intrusions from the nation states. We're gonna be attributing them. We're gonna be calling them out.
Dmitri Alperovitch:We're not gonna be doing any business there. And a lot of companies did not wanna take that path. Right? Symantec and McAfee had business in China, had business in Russia, that I saw firsthand what what was happening to it as I was putting out these reports and was basically being told, hey, Dimitry, like, this is really bad for the stop when I was at McAfee. So that everyone needs to appreciate that we do have balkanization taking place, and you gotta pick a side.
Dmitri Alperovitch:And, you know, for me, was always easy. It was always gonna be the side of this country, the side of America. But you're right. Any type of conflict these days has a cyber dimension. We're seeing it play out in Ukraine where you've got cyber being an enabler, with, with kinetic capabilities.
Dmitri Alperovitch:They're being launched, really by both sides against each other. And, of course, the most impactful cyber attack that had occurred so far in this war was the compromise of Viasat in the first hours of that conflict, satellite communications provided to Ukraine. That was an American company, right, that was not a party to the conflict. Didn't think that they had anything to do with them. You know, Ukraine was just one of their many customers, but because it was one of their many customers, their, networks were compromised.
Dmitri Alperovitch:A malicious firmware update was released to the terminals of many of their customers, mostly in Ukraine, but but also outside of Ukraine. And, they had to deal with that issue. So no one is unimpacted by this. And and certainly, you know, when it comes to conflict with China, we're already seeing threat actors like Volt Typhoon, for example, that are breaking into critical infrastructure around this nation, not doing anything damaging yet, but doing reconnaissance, maybe pre positioning so that if if, conflict does arrive, they can do something damaging, trying to deter us from intervening potentially, maybe delaying us from being able to send resources to the region. So cyber plays a really fundamental role in all of that.
Mahendra Ramsinghani:And, you know, Dimitri, like you correctly said, we may not be interested in geopolitics, but geopolitics is interested in you. One example that I can quote is that as a seed state investor, I'd invested in a company headquartered in Ukraine. Majority of the team is in Ukraine. And, of course, as all of this started to unravel, we had to deal with the situation in real time, relocating the team to parts of Spain, parts of US.
Dmitri Alperovitch:Well, you you were lucky by the way because yeah. You were lucky because they closed the borders. Right? And a lot of people couldn't leave. And, I was dealing with a case where, a friend of mine asked me to help, but, you know, he was invested in a cyber company that had also developers in Ukraine.
Dmitri Alperovitch:And and one of their developers did something stupid, violated the curfew, stayed up too late, was arrested, and and was gonna be sent to the front because immediately, basically, if you're arrested, you get mobilized and, you know, they're asking me to help, to at least move him into a cyber unit so that he could leverage the skills. There's no way to get him out. Once once once you're in, you're in. But, probably taking computer nerd and sending him to the front, to be, you know, fodder for artillery was not the the the best thing for him or Ukraine. And, you know, those are the types of things that you have to deal with, right, when when you're hiring people there or in a war zone like that.
Sid Trivedi:You know, last last question for me, Dimitri, to to end things. You know, we we talked about 4 different chapters today. We talked about Dimitri the the the person, Dimitri the founder, Dimitri the investor, and Dimitri the policymaker. If we were to do this all over again in a couple years, what would be the 5th chapter? What's next?
Dmitri Alperovitch:I don't know. Look, if I succeed in my task here of sounding the alarm bells about China and actually getting us to do what is necessary to do to that war, I can I can die peacefully? Right? I mean, that would be an incredible accomplishment, to help, usher in. And, you know, I'll tell you a quick story, Sid.
Dmitri Alperovitch:And you've seen that email. I think I've I've shared it with you. But as you know, I was one of the first geopolitical forecasters to predict that Russia was gonna invade Ukraine. I did so in December of 2021, almost 3 months before the start of that conflict, and I said that they were gonna do it before the end of that winter. Unfortunately, it was proven right, but I didn't just say they were gonna do it.
Dmitri Alperovitch:I outlined in a in a long thread on Twitter all the reasons why. And that thread got a lot of attention, got a lot of retweets, got some criticism from people saying no way. This is not gonna happen. But, the war begins. And sometime later, I get an email out of the blue from an individual I've never met who is a immigrant from Ukraine to the UK.
Dmitri Alperovitch:And he said that he had encountered my my threat and did not know me, was not in the cyber or technology industry, but got convinced by my arguments and tried to get his family to leave the country based on those arguments. The family refused, his parents there and siblings. They said this is all propaganda. This is nonsense. There's not gonna be any war.
Dmitri Alperovitch:And he kept pushing and pushing and pushing. And finally, on February 15th, right, the war begins February 24th, he manages to convince them to go to Turkey. He buys them tickets for a brief vacation. He said go for a couple of weeks and then you'll return. They leave.
Dmitri Alperovitch:They don't return because the war starts. And they lived in Kharkiv, a city in eastern Ukraine. They lived on the outskirts of the city. Their neighborhood was pretty heavily shelled by the Russians. A number of their neighbors perished.
Dmitri Alperovitch:And, you know, he wrote me this fairly emotional email saying that, you know, their lives may have been saved because he encountered my threat and pushed pushed on them to leave. So, you know, I've done a lot of things in cybersecurity. I don't think I'll ever have that type of impact, in cybersecurity. And that was, you know, one one family, one one individual that maybe I had a little bit of a role in helping save their lives. And if if I can play a very small role in helping to deter a much more disastrous war for for the entire world and and for this country With this book and with the efforts that we're doing at Silverado, that would be an incredible accomplishment.
Sid Trivedi:So maybe the the 5th chapter is Dimitri, the the travel explorer, something like a chef. There will
Dmitri Alperovitch:always be new challenges. There's something You know, one thing I don't do is I don't I don't do any sort of forward career planning or the like. I never found that useful. I know a lot of people do that. I found it more useful to just look at the opportunities that come your way and try to recognize when they appear and grab them.
Dmitri Alperovitch:So that's always been the case for me. You know, I didn't set out to be in cybersecurity. I just kinda stumbled upon it because of the hobby that my dad had, and I saw an opportunity there. I saw an opportunity to join CipherTrust out of college. I saw an opportunity to start CrowdStrike.
Dmitri Alperovitch:So, you know, those were not planned things, but they just popped up. And, you know, I guess I was lucky enough to grab them, recognize that they existed, grab them.
Sid Trivedi:Well, thank you, Dimitri, for joining us on Inside the Network. For all the listeners out there, if you wanna hear more from Dimitri, you can listen to his own podcast, Geopolitics Decanted. Or, of course, you can buy his new book, which is now out, World on the Brink. You can get it on Amazon. Any other ways, Dimitri, that folks should follow you?
Dmitri Alperovitch:You know, on Twitter or x, you know, I'm dalperovich, my first initial and my last name and yeah listen on the podcast buy the book also if you like the book please review it if you don't like it don't review it and, I hope you enjoy it. Thanks so much.
Ross Haleliuk:Thank you.
Sid Trivedi:Thank you, Dmitri. Thank you for joining us Inside the network.
Ross Haleliuk:If you like this episode, please leave us a review and share it with others.
Mahendra Ramsinghani:If you really, really liked it and you have some feedback for us, wrap it on a bottle of Yamazaki and send it to me first.
Sid Trivedi:No. Don't do that. Mahendra gets too many gifts already. Please reach out by email or LinkedIn.
