CrowdStrike CEO George Kurtz On AWS, Falcon Flex And ‘Incredibly Important’ Partner Moves

The cybersecurity giant is accelerating platform consolidation and growth for the channel with its Falcon Flex subscription model, even as the cybersecurity giant sees massive gains through its close collaboration with AWS, Kurtz tells CRN.

CrowdStrike sees massive partner opportunities ahead for driving consolidation on the cybersecurity giant’s Falcon platform, including through the expansion of Falcon Flex subscription model deals to SMBs and midmarket customers, CrowdStrike co-founder and CEO George Kurtz told CRN.

In an exclusive interview, Kurtz said the company is helping to accelerate growth for the channel with its first-mover advantage on Falcon Flex, which enables upsized deals through gaining customer pre-commitments at a discount for deploying multiple products from the broad Falcon platform.

While at least one-third of CrowdStrike partners have already done a Flex deal in the two years since the debut of the model, the aim is to take Flex much broader now that the company has aligned its internal sales team and external partners on the approach, according to Kurtz.

“Next year is when we’re all in on [Flex] internally and externally with partners,” Kurtz said.

“If you can take a deal that’s $5 million and turn it into $50 million, that’s pretty good for partners,” he said. “A $5 million deal turns into $50 million because you’ve got a Flex license and you’ve done the work. It’s not just the license, but you have to do the work to go through a consolidation journey.”

Ultimately, the expectation is that Flex will lead to a higher portion of CrowdStrike revenue going through the channel over time, Kurtz said.

“Partners are incredibly important for us,” he said. “Just about everything we do goes through a partner anyway. But the net-new business from partners, particularly because of Flex, I think will expand in the future.”

Notably, the July 2024 IT outage caused by a faulty configuration update from CrowdStrike also had the silver lining of leading to wider implementation for Flex. Because CrowdStrike provided free product compensation to customers through the Flex licensing model, “we accelerated the adoption of Falcon Flex because of the incident,” Kurtz said.

During the interview with CRN, Kurtz also discussed why CrowdStrike is comparable to a public cloud hyperscaler—the first in the cybersecurity industry to be worthy of the descriptor, he said—and how the vendor’s longtime partnership with Amazon Web Services has helped to provide part of the foundation both for Falcon Flex and for the vendor reaching a hyperscaler level.

By building its cloud-native Falcon platform on AWS starting from its founding in 2011, CrowdStrike was “a bit of a pioneer with [AWS] in growing our business as they grew,” Kurtz said. “So I think there’s always a deeper level of partnership when you have that [dynamic]—we were a fledgling company building on their platform, their platform was just getting going.”

At the same time, AWS is also a customer of CrowdStrike, and the two companies have recognized each other multiple times with respective “partner of the year” awards.

“I think it's bi-directional,” Kurtz said. “We probably helped them in some areas, with the things that we needed for our own workloads. And they helped us.”

What follows is more of CRN’s interview with Kurtz.

Do you feel like you are the closest thing to a hyperscaler in cybersecurity? And is that significant for partners and customers?

I think so. Because when you look at a hyperscaler, you’ve got to look at a couple attributes. One, there needs to be a platform. When you look at AWS, you have all these services. They started with one; they built them out. They’re almost akin to modules like we have. Then you’ve got customers that are consolidating on a hyperscaler. They’re placing their bets and they’re looking to consolidate a lot of the other technology they have internally. I think there’s a lot of similarities in what customers are trying to do with us. A hyperscaler needs to be open, [and] I think this is the approach we’ve taken. [You need] an open platform—where you can certainly leverage everything that we have, but if you have other technologies you’re able to still leverage those within the platform we have. Our goal has always been [to] be open. We think it works better with our technologies. But we’re open, as opposed to closed, and I think that’s important for customers.

Then the other piece is we’ve got an amazing ecosystem of partners. With our CrowdStrike Marketplace, we've got lots of smaller vendors that can take advantage of the data model that we have—and can take advantage of things like Falcon Foundry, where they can build their own applications. And they know, once they’re in our marketplace, it’s an accelerant to their business. So I think there are definitely a lot of similarities to what’s happening with the hyperscalers. And we’re in a unique position in the industry because we do have the single platform to make all this work—as opposed to many things out there that are kind of stitched together.

With your decision to build cloud-native from the start, that’s continued to pay off?

Correct. In the early days, we were going to many of the large banks, and [they were] asking me for ‘the on-prem version.’ It was like, ‘Well, there’s no on-prem version of Salesforce, and you guys are using that. So we’ll just wait around and we’ll be back when you’re ready to go to the cloud.’ Obviously, we’ve seen the success of those areas. That has really enabled us to be able to innovate very quickly and to be able to take advantage of this data fabric that we built—'collect once, reuse many.’ Obviously, now that we can take in other people’s data, we’ve got the full suite of data—whether we created it as first-party data, which is what we create, or third-party, which is what we ingest. But we wouldn’t be able to do all the things that we do on the technology side without that platform. And candidly, from a business model perspective, we wouldn’t be as successful. This ‘collect once, use many’ [approach] is a high-gross-margin business. It enables friction-free cross-sell. It just makes everything a lot easier. So the decision to not have separate threads—of on-prem versus something in the cloud—it paid dividends for us, even though we probably lost some early sales because of it.

How did working with AWS from such an early point lead to a such a strong partnership over time?

We started building on them in 2011, [which was not] all that long after they really got going. We were a bit of a pioneer with them in growing our business as they grew. So I think there’s always a deeper level of partnership when you have that [dynamic]—we were a fledgling company building on their platform, their platform was just getting going. And people [were thinking], ‘The cloud is a scary thing.’ So we were able to do that together in some small way through the partnership, and I think that’s remained a great element for us because we started so early with them.

[AWS is also] a customer of ours. So I think it’s bi-directional. We probably helped them in some areas with the things that we needed for our own workloads. And they helped us. When you’re talking about millions of endpoints and cloud workloads, the scale at which they operate and [their management] has been incredibly important. So if it can work for Amazon, not just AWS, it can work for just about any other company that’s out there. And I think that’s a crucial aspect of them partnering with us to make our own technologies better.

Did the AWS subscription model approach play a part in helping you to develop the model for Falcon Flex?

One hundred percent—we came up with Flex because customers came to us and said, ‘We want to do more with CrowdStrike. You need to make it easier. If we buy more, we want greater discounts. If we consolidate, we don’t want to go through all these procurement cycles.’ So we worked with customers in a few iterations of Falcon Flex. And they said [to us], ‘Why don’t you just take a page out of the hyperscalers like AWS, and make it easy for us?’ The EDP [Enterprise Discount Program] is obviously their contract. We’re in a different business, but there [are similar] elements that make it easy. It’s not a consumption model, it's commitment model. The more you commit, the bigger the discounts, and then the more flexibility you have to use the entire product suite. We just make it really easy to buy and use our product. Certainly, there was a hat tip to AWS and their EDP as we put it together.

Since you already had the cloud-native platform, do you feel like Flex was really a missing piece for getting to a hyperscaler-like level in terms of what you can offer?

Correct. That was the last building block to get to the point of CrowdStrike being the hyperscaler of security. You’ve got to have the platform, you’ve got to have the ecosystem, you’ve got to have the technology that people want to consolidate on. But then you have to have the contract vehicle to make it easy. There’s a reason why Amazon is one-click easy in many areas. That was our approach. And that contract vehicle, I think, has really accelerated the business—but also [enabled] this concept of being the hyperscaler of security.

Has Flex exceeded your expectations for what you were aiming for with the model in terms of driving growth?

It has. There’s a massive amount of dollars that have gone into Flex already, but still I think the last public number we put out was [roughly] 1,000 customers. So we’ve got a lot more than that. And there’s a great opportunity now to go through the entire customer base. We’ve got the big customers on it, and now we’re moving it to middle size. In our corporate business, which is medium-size and smaller businesses, we have a lot of customers on Flex. I think people have this concept of, ‘It's just an enterprise deal.’ But it ‘flexes’ all the way down to small and medium-sized businesses, and they seem to really like it.

Is the availability of Flex to SMBs also coinciding with a recognition by those businesses that they need more than just endpoint security?

We have a great business downmarket into medium-size and small businesses. And one of the things that’s been very effective for us is Falcon Flex. People and organizations want to pay for outcomes. If you don’t have all the staff and expertise, with Falcon Flex you can say, ‘This is the outcome I need’—and you can become a very mature company in a small amount of time because we’re handling the install, the configuration, the runbooks, the triage. It just makes it one-click easy for customers. I think that’s one of the areas that's really helped us to actually go downmarket. And Falcon Flex ties nicely into the Falcon Complete business. Then we’ve extended out the Falcon Complete business, where we’ve got Falcon Complete, then we’ve got Falcon Complete Identity, Falcon Complete Next-Gen SIEM. So we can keep adding products into the managed portfolio, which has done really well for us.

When it comes to bringing Flex to customers, why has it been pivotal to have a strong partner ecosystem?

Just before this, I was on a call with one of our partners, and we were talking about next year’s planning and net-new business. This is a smaller partner for us, but they want to become a bigger partner. Their whole concept is investing in CrowdStrike as their No. 1 security technology. And they’re leading with Falcon Flex. They didn’t have the legacy of selling module by module. So the reason they’ve rapidly accelerated the adoption of CrowdStrike is because they’ve embraced Falcon Flex and they’re leading with it. They look at that and say, ‘We can lead with [Flex] and get up a much bigger deal.’ Then it makes it easy within their own customer base to be able to cross-sell. So they’re massively expanding the opportunity within the accounts, rather than just selling module by module.

Is Flex something you are planning to take a lot broader from here?

It is, and in the not-too-distant future it’ll be the only licensing model that we have. I keep telling everyone, so there’s no surprises. I think it’s fairly imminent. We haven’t decided exactly when. But [partners] need to be leading with it so that they’ve got the right selling motion.

Obviously it would still be up to the customers how much they want to pre-commit—it wouldn’t necessarily guarantee that customers would be committing to more than they would have during the current model?

Correct. This is the thing that’s important—you have a license model, and then you have a commitment. If there’s a customer who has a complete road map and they have the commitment and they want the best discounts, great. If there’s a customer that is starting with a BOM [bill of materials], you can still have that license model, and you can have a kind of a commitment that lines up with the BOM. So it’s a little different than saying, ‘You have to have this big commitment.’ We have a license model, and then we can work around what the commitment is, and we can fit the commitment within your budget.

Do you see of the percentage through partners increasing because of Flex and other factors?

Partners are incredibly important for us. I think [the channel] will continue to expand in terms of partners bringing us net-new business, as well as with Flex. Just about everything we do goes through a partner anyway. But the net-new business from partners, particularly because of Flex, I think will expand in the future. It took a while to move our own sales team into Falcon Flex. We did that last year. This year was all about moving the partners to it. Then next year is when we’re all in on [Flex] internally, and externally with partners.

If you can take a deal that’s $5 million and turn it into $50 million, that’s pretty good for partners. It’s good for them and it’s good for us. What I mean by that is a $5 million deal turns into $50 million because you’ve got a Flex license and you’ve done the work. It’s not just the license, but you have to do the work to go through a consolidation journey, or go through a SOC transformation. [The partner has] to line up all the products across the categories—Next-Gen SIEM, identity, exposure management. You’ve got a timeline of when these other licenses burn off that you already have with other vendors. Then if you do that work, you can take $5 million deals and can turn them into $50 million deals.

Even with the headwinds of the past two years, in the economy and for CrowdStrike specifically, you have managed to keep up your growth pace—do you think Flex has been a major contributor there?

What we did is we accelerated the adoption of Falcon Flex because of the incident. With our CCP [Customer Care Program], the only way to get CCP relief was to be on a Falcon Flex license—where we would put dollars into your account, if you will, and you can use that for technology. And then as we talked about the rollover, a lot of this is going to be at the back half of this year, from a financial perspective. So while we had to go through that incident and deal with it, which I think we did a good job, we’ve massively accelerated Falcon Flex adoption. Because the normal course of business would be you just wait for the renewal—and then as the renewal comes up, you move people to Falcon Flex. Well, in one fell swoop, we got to a lot of customers [onto Flex] very quickly. It became a net benefit.

It seems like Flex only really makes sense if you have a lot of products to sell—do you feel like some competitors might not be on a hyperscaler level simply because they don’t have as much to offer as CrowdStrike?

I think that’s a really good point because when you think of the term ‘hyperscaler,’ it’s [about] scaling quickly. With the platform and the technology, we spend a lot of time on how to make it easy, how to scale it, how to add new modules. And as much time as we spend on the technology piece, we spend as much time on the business model piece. How do you scale the business? How do you remove friction from the selling process? How do you create efficiencies within your CAC [customer acquisition cost]? How do you make it easy for them to try something and buy it? How do you take away yet another procurement cycle that takes three to six months? And how do you make it margin-accretive? If you spend as much time in the business model—and the technology model actually supports the business model—that’s when you have lightning in a bottle.

What are your thoughts on the adoption of the Flex moniker by some competitors for their subscription models?

We created it, we named it, and now people are basically trying to create their own version of Flex. So it’s always good to be in that position. As they say, imitation is the sincerest form of flattery. But we spent a lot of time on it. We know how to use it. There are always nuances. You have to know how to sell it. It’s not just a license on paper—there’s a whole selling motion that goes around it. That takes time to get right. And in our space, we’ve been at that, really, before anyone else.

With the launch of Flex and these other moves, is this all setting the stage for CrowdStrike around AI and agentic?

It is. When you look at [the acquisition of] Onum as an example, the ability to direct traffic in the data fabric is very important, and it’s a great area to monetize. But here’s the interesting thing—with Onum, as soon as the deal closed, we’re selling it because we have a Flex contract. Customers were able to immediately draw that down, which is really exciting. So the Flex contract accelerates the adoption of our acquisitions—and I’ve never seen anything like that. Because normally when you acquire something, you’ve got to get it on the price book, and you’ve got to get on the channel, and it takes months to get the selling momentum. As soon as the deal closes, it’s available to our customers. So when we think about that, and we think about the AI opportunity, what are customers looking for? They’re looking for technologies like Pangea, in terms of being able to understand shadow AI, being able to protect it with guardrails, being able to protect from malicious attacks—prompt injection, visibility, AI DR [detection and response]—really pioneering that.

So that’s very important for us, and a massive opportunity. Our goal is, every AI agent should be protected by CrowdStrike. And we think that’s a massive market opportunity and a huge [total addressable market] for us.

And you feel like competitors may not be able to move as quickly on the technology or procurement side?

Exactly, and it’s that speed of integration—because we've got the right platform—and it’s the speed of procurement because we’ve got the right contract vehicle that gets us to that hyperscaler [level].

You’ve moved a lot of services to partners around Next-Gen SIEM. Do you see that as an ongoing theme now for other areas of your portfolio?

One hundred percent. Part of our success is offering immediate time to market. Even to this day, we’re probably still the only [product deployable] without a reboot. Very simple, didn’t take a lot of effort [to deploy], and you saw the explosion of our customer base in terms of how many customers we have. That said, as we’ve gotten into other areas—Next-Gen SIEM and identity and exposure management and risk and these sort of things—it becomes a bit more complex. So partners are pivotal in being able to roll out the technologies and get an outcome. Customers just don’t want to buy technology. We really do try to make it easy—it’s all on the platform, etc. But if you’re getting off legacy technology, like a legacy SIEM, and you’ve got lots of data, you’ve got lots of workflow, there is a process re-engineering that needs to take place. Because you’re doing [things] a little bit differently, and we think more efficiently. And then we have the AI overlay on top. You’re moving people from this one-to-one relationship of, ‘I’ve got a threat, I’ve got to investigate a threat,’ to, ‘I’ve got AI agents that are investigating all these threats, and then I’m managing a fleet of AI agents.’ That takes a bit of change, and you need the right partners—particularly the strategic partners like the GSIs—to be able to help in those areas.

Bottom line, it sounds like you feel as good as ever about CrowdStrike and your prospects?

I do. I think we’ve got the right platform, which has served us well. We’ve got the right focus on serving the customer. We’ve gone into adjacencies that make sense for us. And we’ve got customers that continue to come back and want to do more, and I think Falcon Flex is the great mechanism for that. I would say, I think when we come out with new technology, or we buy something, we’re pretty thoughtful about it. I think we’ve done really well on the acquisition side of buying really great teams, really great technology, quickly integrating it. That’s key to us—that single platform, that integration. And then we’re scaling it. Once it hits the platform, once it’s integrated, generally, it just takes off. That’s why I feel really good about the back half of the year and the future.