Ballistic Ventures’ Jake Seid On Helping Entrepreneurs And Whether Large Security Companies Are Doing Their Jobs

‘Cybersecurity is like war. It’s fought, it’s not won. It’s an ongoing battle. And the big cybersecurity companies are doing a lot of important work. But …’

Since its launch earlier this year, Ballistic Ventures has maintained it’s a different type of venture capital firm, one that’s focused exclusively on cybersecurity and one not offering just money to startup founders.

Some might object to Ballistic Ventures’ claim of true uniqueness.

But there’s no denying the firm, which oversees a $300 million fund, was founded by a “supergroup” of “founders backing founders.”

Among the VC firm’s founders are Kevin Mandia, CEO of Mandiant; Barmak Meftah, former president of AT&T Cybersecurity; Roger Thornton, managing member of Area 51 Ventures; and Ted Schlein, the chairman and general partner of Ballistic Ventures and current general partner at Kleiner Perkins.

Meanwhile, Jake Seid, founder of Stone Bridge Ventures, is also a co-founder and general partner at Ballistic Ventures.

Seid recently talked to CRN about Ballistic’s formation of a new star-studded advisory board, as announced on Monday and reported by CRN. The board includes Phil Venables, vice president and chief information security officer at Google Cloud; Nicole Perlroth, author and former lead cybersecurity reporter at the New York Times; and Derek Smith , senior vice president of security at F5.

The goal: To help cybersecurity startups back by Ballistic Venture reach their full potential with the assistance of advisors offering entrepreneurs a wide variety of ideas on how to improve operations.

In his interview with CRN, Seid also talked about how his firm put together the advisory group, whether it will really work, the challenges facing VC companies and the cybersecurity industry in general, and other issues.

How did you guys get this who's-who/all-star team together as an advisory board? How did you do this?

There‘s five founding partners at Ballistic Venture and we have a combined 40 years of venture investing experience. We’ve invested in 90 companies that have created over $50 billion of value. And so while we‘re a new fund, we’re a very experienced team in investing and operating businesses in this area. So these are people that we‘ve known and worked with throughout our careers.

This advisory board. Will it really make a difference? VC firms do provide advisory services.

What‘s different? The key difference for us is our focus. A lot of advisory boards at other firms have to serve many different areas. They have to serve business apps. They have to serve infrastructure software. They might have to serve the crypto platform, the internet platform, their FinTech platform, and they need a couple people here and there for each of the different areas they focus on.

Our platform is very different in that it‘s focused on the needs of cybersecurity and cybersecurity related companies. So we could go very, very deep in building out this platform and these services for the benefit of the companies that we focus on. The resulting depth of the networks that we have around these areas is a key difference.

So you think this is going to be a competitive advantage for you guys?

We do. At the end of the day, we think about this as what can we do to serve our companies in the best possible way -- to help them create value in the best possible way. We believe if we focus on our customer, the entrepreneurs, that’s the focus versus thinking about competition. We think by being sector focused we‘re able to build a level of depth that’s just harder to do in a generalist platform.

Do you think VCs in general need to be doing more things differently and not just providing the money?

That’s what we’ve always believed. At Ballistic and before Ballistic, at the end of the day, money is a commodity. And ultimately, how do you help companies and entrepreneurs build a business as a strategic partner, in helping them think through the challenges and opportunities of that business, in helping them build an incredible organization from a talent perspective? And in helping them find customers from the early days when customers don‘t want to deal with startups that have no customers. That’s our job -- to try to break through that noise and really help them support our portfolio companies.

Are the large legacy cybersecurity firms -- and we’re talking like Palo Alto and Fortinet -- are they doing enough to provide cybersecurity? It seems like the industry is producing an awful lot of young startup companies to solve these seemingly never-ending cybersecurity problems.

You know, (I’d) argue cybersecurity is like war. It‘s fought, it’s not won. It‘s an ongoing battle. And the big cybersecurity companies are doing a lot of important work. But what you have in cybersecurity that’s very different than other areas of enterprise infrastructure software is a theme we call ‘adversarial innovation.’ This exists only in the cybersecurity market, nowhere else in enterprise software. The bad guys are innovating. The bad guys are technologists. The bad guys are creative. When one area gets shut down, they don‘t stop being bad guys. So as the bad guys innovate, there becomes new opportunities for startups to innovate. It doesn’t mean that we don‘t need a Palo Alto Networks anymore. What they do is very important. But that is the opportunity for entrepreneurs in this area, the fact that this is an ongoing battle. There’s adversarial innovation, where the bad guys are figuring out ways around what the incumbents do. But it doesn‘t eliminate the need for what the incumbents do.

What's the biggest cybersecurity industry shortcoming that you see right now?

There’s a lot of key theme areas that we’re focused on. One has been kind of the rise and importance of data security. You can’ just look at the applications or the data repositories, but you really have to take the next level and secure the data itself. Ultimately, that’s the crown jewels. As data moves to the cloud, and through different clouds, it becomes very important to secure at the data level. We made two investments in data security, in Veza and Concentric.

Some say VCs are starting to pull back a bit from investments, even in cybersecurity, due to the uncertain economic times. Are you seeing this?

I can only speak for ourselves and we’re fully open for business. We believe that the bad guys don’t stop because the stock market is down 100 points. Right? Customers continually need innovation from young companies to solve big problems. So our view is, if you‘re an entrepreneur solving a fundamental problem, it doesn’t matter if the public markets are up or down. We‘re long-term investors. Our fund has a 13-year life. So our view is that if you’re solving a fundamental problem, you’ll create a lot of value, regardless of where the stock market is fluctuating today.