With all the news about data breaches, the cybersecurity market may seem like a smart investment. But if you're a venture capitalist looking to pour money into startups promising solutions to digital threats – choose wisely.
"There's going to be a blood bath in the cybersecurity market in the next 18 months," Niloofar Razi Howe, senior vice president and chief strategy officer at RSA, a leading American computer and network security company, says on the latest edition of The Cybersecurity Podcast.
There are now some 1,600 cybersecurity companies globally, Ms. Howe says, and 90 percent of them have revenues less than $20 million. "They won't all survive," she told the podcast's cohosts, New America's Peter W. Singer and Passcode's Sara Sorcher. "A lot of companies are either going to go out of business, or get acquired at fire sale prices."
The market is saturated, she says, with virtually indistinguishable companies. "A report came out recently that called it a 'Game of Clones' and I think that's right," she says. "After a company gets funded, 15 companies in that same space get funded. They're all saying the same things, they're all doing the same things, and it's really hard to distinguish one from the other."
What's more, she adds, "you have a lot of investors coming into the cybersecurity space in the last few years who aren't sophisticated with respect to security, who don't have a background in it, and have a hard time distinguishing between companies whose products are really working and ones who are not."
All episodes of The Cybersecurity Podcast are available for download on iTunes and on Stitcher. You can find more information about the podcast on Passcode's long-form storytelling platform. Bookmark New America's SoundCloud page for new episodes or sign up for Passcode below.
Also joining the podcast this episode was Jack Harrington, vice president for cybersecurity and special missions at Raytheon. They discussed the role the private sector can play in helping government improve its security, the Defense Department’s cyber strategy, and innovative technical solutions to bridge the vast talent gap in this field.
On previous episodes, producer Walter Parkes – who wrote the cybersecurity cult classic movies "Sneakers" and War Games" – discussed how fiction can cause real-life policy change, the hacker archetypes depicted in pop culture, and why these movies resonate with the security community.
Previously on The Cybersecurity Podcast, retired four-star Gen. Michael Hayden, who formerly led the National Security Agency and CIA, discusses why he thinks unbreakable encryption makes the world safer. Joining him was Julie Brill, who at the time was a Federal Trade Commissioner.
All episodes available for download on iTunes.