Sameer Gandhi (00:00:08):

Welcome to Spotlight On, Accel’s podcast series. For everyone, I'm Sameer Gandhi, and I have George Kurtz, founder and CEO of CrowdStrike, who's graciously agreed to join us for the afternoon. So we're really excited about this conversation. You and I have a pretty long history, so we've talked about a lot of these things, but I think it's great for us to be able to share it with everyone out there who's listening and it's great to be here. And I was excited when you asked me to do it with you, George. Why don't you go back and recount some of the fun stories that we have between the two of us. When you started the company, CrowdStrike, you were way under the radar. And what we knew from an Accel perspective was George Kurtz wrote the book on cybersecurity, literally wrote the book, and you were CTO of McAfee and now you left and we'd heard that you'd pulled together this dream team and you're working on something in Southern California.

(00:01:04):

So we're like, we got to go figure out what George is doing. We hadn't met before, so you're getting barraged by people on our team calling you for a meeting and asking what's up. Meanwhile, if you read between the lines, a lot of people were speculating about what you're working on, which was nowhere close to what you were really doing, and it seems sort of out there. And so that was sort of our backdrop. At the same time, we were thinking about going back into the endpoint space. Somebody's going to do something new here and we should go figure out what everybody's doing.

(00:01:40):

So we ended up finally setting up a meeting in Irvine at your office. And I remember thinking this is one of those ones, we have no idea what's going to happen. We just know it's a well-known individual, very credible founder and allegedly a really phenomenal team. And so we're like, let's go see George. You remember our first meeting and you can tell your side, the part that I remember is, okay, we have 30 minutes with George. That's all he agreed to. He's not raising money and you end up getting tied up at the doctor's appointment. So you were late. So I'm like, our 30 minute meeting is going to be really short now, and you had the eye doctor glasses on where they dilate your eyes, the big look like Vision Pro goggles coming in to the meeting late, my first reaction is this is not going to be a good meeting and thinking he's ready to go do the next thing. And here we are all down here after having flown down. And my recollection at the end is the 30 minutes was a couple hours and we started talking about the opportunity and throwing away the old approaches and taking a really fresh new approach to it was going to be hard, but it was the right way to do it. I feel like we looked at the world the same way, but I'm very curious what your side of that meeting was actually.

George Kurtz (00:03:01):

Yeah, I remember it vividly. Well, we had been in contact for probably three months and it was just like we were busy, we didn't need the money, but you guys were persistent. I have to say you and John were persistent. And so I said, okay, it's Accel. You got to meet with Accel. You’ve got yourself, a top person, and obviously the firm. So you came down and for whatever reason, I had an eye doctor's appointment. And like you said, they dilated my eyes. So I came in with the big 3D glasses on. I couldn't even see straight bumping into the walls. Oh, they could see us. Yeah, I barely could see you. I didn't know how that was going to go. And as you said, once you heard what we were doing and the approach and the team that we were putting together, it was kindred spirits.

(00:03:48):

We were on the same page. And I think one of the things that stood out, which got me excited is the longer term view that you guys were taking, which was not like, Hey, we can be thoughtful. We're going to hang in here. And I know a lot of venture teams will say that, but there was a willingness to what's the art of the possible? How do we build something big rather than let's just get something to market quick and hopefully a quick turn and we move on. And this was like, how do we build the Salesforce of security? That was really a lot of what we talked about.

Sameer Gandhi (00:04:19):

We talked about that we were using things like the Salesforce of security. You even said like the Google of security before. And I think it was just that very ambitious big idea, but a very specific way to go after it, meeting the endpoint first and then moving from there where we just agreed with approach. And now just for everybody, the timeframe and the context. You had built an intel business. So it was a subscription content business really. And when we finally put the investment together, Falcon was, my recollection is around a 1 million of a RR. And so it was very, very much at the beginning. Now we're here 10 plus years later at something that's 3 billion. So it's pretty dramatic amazing story. But the same ambition still exists because the stage now is bigger, the opportunity sets bigger. There's no shortage of things to do with cybersecurity and even beyond cybersecurity. And so I think that's, that's kind of an interesting and really, really fun journey. But it also is very provocative in terms of thinking about the future.

George Kurtz (00:05:32):

Well, I have to tell the intel story. As you said, nobody knew what we were doing by design and people, they speculate on all kinds of stuff that was just not right. But from an intel perspective, we were building an Intel team with Adam who still runs it today. And the whole idea was we thought intel and taking the adversary-centric approach was important for stopping breaches. This was not about just stopping malware, it's about stopping breaches. So if you understood what the adversary was doing, you're going to be better equipped to actually stop the breach. So we were building that capacity up and then we'd write a blog post and we'd get a lot of interest of like, that's great, write another blog post. And then we'd have interest on, can I buy some of this information, the security intelligence, what are you doing with it?

(00:06:17):

So when Adam came up with another blog post on something interesting that we were seeing, I basically said, well, why don't you at the end of the blog post put in if you're interested in buying CrowdStrike intelligence email intel@crowdstrike.com. And obviously we didn't have anything. We had a blog post and people were building content, but the content was supposed to go in the platform. So he looked at me and he said, well, we have a problem. I said, what's that? He goes, well, we don't have an intel@crowdstrike.com. I said, we don't have an Intel anything, but we can make an email address. So put the email address out and put the blog out with the email and see what happens. So we literally created an email address in the system, which we didn't have, and he puts the blog out and boom, the email, this was our sort of MVP test. We had no product. And all of a sudden emails came in going, I want info. Tell me more about your intelligence. And that's how the intel business got going.

Sameer Gandhi (00:07:14):

And incidents response were sort of the two things that launched the product business. So in some ways it's one of those things that's challenging to pull off, but you do these other things as you're building your product. And not only does it help fund that development, but you start getting some customer introductions and then the products coming. And it was a great way to, I don't want to say bootstrap because you raised money in the beginning, but it was a great way to sort of be in market and have something to talk to customers about while you're working on this ambitious Falcon project in the background. So I think it was a really interesting start, but the beginning of the business was intel and services.

George Kurtz (00:07:58):

I think people originally thought that was the business model, but you had the original deck. It wasn't a business model. Business model is what we built today. Obviously it's evolved, but it's what we built today. And the whole idea was if you are a trusted advisor from a services perspective, that's great insecurity. Intel is needed to stop adversaries. And by doing the incident response work, that actually allowed us to understand more about the adversary. We did this at Foundstone, like the incident response business that he ultimately grew into a big company. A lot of it started at Foundstone, so kind of went back to that model. But if you're in the middle of a breach and you understand how the adversary works, you can build better products. So it was all integrated to work together. It wasn't just a let me have a services business and install your product. It was actually to gain more knowledge about the adversary, more of their tactics, techniques and procedures, and then also build a trust relationship with a customer.

Sameer Gandhi (00:08:53):

One of the things I think is good just to level set everybody is just what it took to get here. Because today we look at this, you have an amazing cybersecurity company, public, it's really a leader, pioneer in this category. You're performing well. But there were a lot of things along the way that we're going to unpack that a little bit in terms of the decisions made, the things that we did, the things you would do differently. But maybe just for now, tell us how you're feeling about the path to get here and what you see as the opportunity going forward for the company.

George Kurtz (00:09:30):

As you and I spoke many times, it's never a clear path to success, and there's been a lot of ups and downs and trials and tribulations, and I always equate it to a duck on the water. It looks calm, but there's a lot of pedaling that goes behind the scenes. So the path has been long and hard and I think focused, which has been really important for us. We haven't really strayed from the original mission and some of the original slides that you saw, but how we got here and how the dynamic changed and you got a pandemic in the middle of it right after our IPO. So lots of things that I probably couldn't anticipate, which a key part of our success has been just deal with what's in front of you and be able to execute no matter what comes your way. So I know we'll go into more detail, but at the highest level, there's a lot going on and it's not always as smooth as it looks, but we try to make it look smooth.

Sameer Gandhi (00:10:26):

You certainly make it look smooth, but I know all this stuff that goes on behind the scenes. And I also think in a lot of ways when companies are at this point, maybe they've almost tapped their market opportunity. And when we sit and talk about where we're going, it feels like we're in the very beginning chapter still. And I think that's a pretty unique situation to be in. There's so much more to go do. And it feels like every time we talk, there's yet another thing to think about in terms of future opportunities, and we're going to get into that too. So I want to go back to when you started the business, and just so everybody knows, you had sold your prior company Foundstone and worked for a while in industry, let's say in one of the bigger companies, the legacy companies, and then came out with this new idea to go start this new company. And I like to think of it at the time as being sort of pretty unconventional relative to what people were doing in cybersecurity. When you focused on endpoint, you were all in on cloud when it was not the thing to do and nobody believed it was possible. So what was the insight at the time and how did you decide to buck the trend and where did the conviction come from to go do this?

George Kurtz (00:11:34):

Well, I guess I kind of go back in time a bit at Foundstone. So I started Foundstone in 99. We sold it in 2004 to McAfee. I had a great run at McAfee and learned a lot, but this is really where I formed a lot of my thinking about what was next. At the time in the industry, I got to McAfee, it was just all about malware and antivirus. And then they've expanded into different areas. And like I said, I had a good run there, I learned a lot. But my last couple years I was asked to be the worldwide CTO, which I had turned down a few times. I just didn't want to be the tech guy. I was running a business unit. And ultimately I took it, and it was the best job that I originally turned down because it gave me a much better appreciation for how the industry worked and some of the challenges.

(00:12:18): And the biggest thing for me was companies were buying security and spending money on security, but I didn't think we're getting the outcome they deserve, which was not being breached. If the whole industry is trying to stop malware rather than stopping breaches. I just looked at it a little bit differently, said, well, what is the outcome we're trying to solve for not solving malware, but stopping malware, but stopping breaches? So a big part of the thesis was how do we create a system that could handle silent failure? Meaning if one part of the system failed, you'd still be able to identify a breach. Not everything is always detectable. Certainly in the early days, even to today, there's no one hundred percent. So how do you come up with something that stops a breach and then also do it with the right architecture? And for me, I thought it should all be, so you had at the time terms of SaaS platforms, Workday, ServiceNow, Salesforce, who did you have in security? It wasn't McAfee, it wasn't Symantec, it wasn't Palo, it wasn't Checkpoint, it wasn't go down the list. It wasn't anyone. There was no foundational cloud platform security company. So for me it was to create CrowdStrike to be that company and to deliver cloud security and security from the cloud using an architecture that hasn't been done before. And a lot of people thought we were crazy, but I think ultimately the results proved that we had the right model.

Sameer Gandhi (00:13:35):

Well, we thought you were on the right track. We had been thinking about that exact same thing. And when we intersected, we actually had a pretty interesting meeting of the minds. Maybe we're the only few people that were talking about doing a pure-play cloud company for security. And I remember one of the early things you had to go sell this and a lot of the big customers we have today, the Fortune 20 or 50 type customers, were not going to do cloud back then. And you were really pure to the cloud concept. You were like, we're not going to go on-prem, we're not going to do a hybrid model. You just stuck to your guns on it. And I remember one time you said, Hey, they said no, but you'll call me three years or two years or whatever it was. And then they ended up doing that. But tough times in the beginning to stick to the conviction on it. What was it that just drove you to say, Hey, we're going to do this the hard way, really stick to it and not do the deal that's in front of you when you're a startup? That's a really interesting lesson for people to learn.

George Kurtz (00:14:37):

And that's one of the biggest lessons I think and takeaways that I can try to give to new entrepreneurs or younger companies is having some conviction on how you're going to go to market and not necessarily deviating from that unless you really need to. And when I see you really need to, there's a better model, but it's not one-offs. The problem is the one-offs. And for me it was two things. One, the business model had to be subscription. So we didn't want appliances, we didn't want term licenses, we didn't want a whole bunch of things that were just complex. We wanted pure SaaS subscription, which had to meet with the technology delivery model. I think sometimes people get confused. There's a business model and a technology delivery model, sometimes they don't always equate. So we wanted those to be equal and then specific to customers.

(00:15:24): And I remember going into some of these large Swiss banks and I'd explain everything that we're building and they would say, this is fantastic. When can you ship me the box and let me install it? And it's like, well, no, you can't. The agent installs right? There's no box, but the brain is in the cloud and he's like oh, we're Swiss bank, we can't do that. And I would go through and say, well, let me see. You're using Dropbox and Box and Salesforce and go down a list of things. Yeah, we use that, but we're not cloud. We don't do cloud. It's like, okay, you're already doing that. So for me it was basically just saying, look, if you're not ready for the cloud journey, you will be at some point. The cloud is much bigger than CrowdStrike. And when you're ready, we'll be here, but we're not going to change our model.

(00:16:06):

And a selling point for me to them was the fact that if we're developing an on-prem and a cloud model, we're diluting our resources and we're not going to really drive innovation back in the product. And two, when you actually see the benefits, when the crowd and the CrowdStrike is the crowdsourced elements, you're going to want this version of it. So once we explained that, we had people that waited two years, but they became big customers after that, and all we needed to do was draft some of the larger cloud providers and basically provide security around where the market was going.

Sameer Gandhi (00:16:41):

I think back also like to stick to your guns on that, but I also recall the competitive landscape at the time. So it made it extra challenging because you had these deal opportunities, but there were competitors that maybe we would perceive to have been early leaders or maybe a bit ahead of us even at the time. And even through that, you ended up saying, we're going to stick to this very pure model. But I feel like if you go back and say what was the lesson or some of the learnings through that process when you felt like, Hey, we're chasing two or three other fast moving smart startups that are in the same space today. There's tons of separation, but back then it was a bit of a dog fight.

George Kurtz (00:17:26):

Yeah. So here's what we really thought about. How do we build the right architecture from the beginning? This wasn't how fast can we get to it and how many corners could we cut? I talk about gold plated plumbing all the time with one of our original architects and why we spend so much time on that's gold plate of plumbing. He basically said, George, you're going to need this, trust me. And we didn't cut corners on it and I allowed him not to cut the corners. So it took us longer, a little bit more money. We had some next gen antivirus competitors who got to next gen antivirus, which was the machine learning AI piece of it before we did. But what we did in our superpower then and today is build one of the most elegant and efficient agent data cloud architectures. And what I didn't realize at the time is how many other use cases we're going to have for it.

(00:18:17): But we stuck to our guns in thinking that if you had the right data, data is a big element to solving the security problem. So we focused on getting data in and out of our cloud at scale, and then we added the AI and the algorithms and all the workflows. But had we not started with the hard part, we'd have been in a different place. So our competitors started with arguably the easier part, which was next-gen AV. And they had a big spike, they had it no one else did. And then ultimately when we added all the capabilities, we just blew everybody out of the water. So we didn't chase the new shiny thing until we were ready to. And then when we did it, we did it really good and really well. And I mean one of the things certainly that as you being part of it, you weren't pushing us to, well just shortcut to the quickest path to revenue. We were taking the long-term view to build CrowdStrike.

Sameer Gandhi (00:19:12):

Yeah, I can think back on a lot of conversations where the market thought of us as doing endpoint.

George Kurtz (00:19:21):

But they originally thought it was intel.

Sameer Gandhi (00:19:22):

They originally thought it was, well, there's a whole separate story about nobody knew what you were doing because you were so secretive and we thought it was some sort of reverse honeypot kind of thing that the market thought you were doing. And so we're like, let's go see George and see what he's really doing because it's a well-known entrepreneur in the space. But I think back to that point that you're making about, we really laid the foundation and took our time because we're playing a much longer game than just going for the quick wins. And when we went public a few years back, I sort of noted that in the blog post and it said something along the lines of doing the hard things first, which is really a comment about having a long range vision while you're executing short term and realizing that all that gold plated plumbing was going to pay dividends in the future. And one of the things I would love you to talk more about this is you and I spoke about platform and diversifying from endpoint years before the market ever saw that, but you had in your head very early on, and so I think part of this is maybe what is the model you used or the framework you used around the timing of when it was right to go do that versus the simplicity of saying, Hey, we're a next-gen endpoint company.

George Kurtz (00:20:38):

Right. Well, it's really a good topic because when we first came out, we have 27 modules today. We had one when we first launched a company to get data in and out of the cloud and then do some reporting and detection on it. But from the standpoint of where we were and where we wanted to go, we knew data was going to be a big part of it. And we, in the early days, and this is again, good lessons learned when you're trying to sell to the largest banks in the world and largest enterprises. We can talk about why we started there at some point if you want, but we wanted the big enterprise. You got to throw everything in the kitchen sink in because five guys a dog in a garage. You've got some relationships and you want to get in and obviously show well and add value.

(00:21:20): So we threw everything in the kitchen sink in. And from that standpoint, people kind of thought, all right, well this is what you pay and here's the revenue and this is what it all looks like. But we knew we were going to modularize it. Then ultimately when we had next gen ev, we were able to then break all of the modules out and then create these separate categories. I would say we probably really pioneered this whole modular concept, certainly in security, you had other people that were trying to put suites together, but the way we were monetizing it, I spent as much time thinking about the business model as I do the technology architecture. So how do you collect data once? What does that mean? Well, if you collect it once and reuse many, that's an incredible gross margin story, right? Because you collected once and then you're just basically selling each module as almost pure margin, almost pure. I mean, there's few nuances with cloud costs, but that's been a game changer for us. So even when talking to some of our early C investors, they looked at our margins, which were in the toilet, and they couldn't get their head around us getting to 80% gross margin. And I had to explain and walk 'em through. Some of 'em never got it and regret not investing, but that was a big part of what we did. How do we think about the business architecture as well as the technology architecture?

Sameer Gandhi (00:22:37):

And I remember that we had to do a gross margin bridge.

George Kurtz (00:22:41):

Yep.

Sameer Gandhi (00:22:44):

We led the round because we could see the path to going from 30 to 80. And it was all, again, back to the taking a very long view on this and building things from the ground up in a way that we're going to allow you to expand into different product modules, which means different product categories and additional tam. And you think about other companies that sort of took the shortcut, there's no way for them to re-architect everything. Exactly. Basically they have to rebuild it from scratch. Most companies can't do that.

George Kurtz (00:23:13):

Because they've totally focused on just NextGen av, which is a different architecture than what we built. And it was very difficult for any of those to pivot. And a lot of them were selling it on-prem, getting back to that piece where they would just take deals, OnPrem, and yeah, maybe it's a little painful when you lose the deal, but you sort of get excited because every new on-prem deal is another barnacle and it's another barn and it's another, it's going to be a disaster for them to try to re-architect and deal with all their on-prem customers and transition 'em over. And as a reason why a lot of the companies that we were competing with at the time are no longer around is because of those kind of shortcuts.

Sameer Gandhi (00:23:54):

I think that's something else that you've done that's very different. I think it's worth talking about, and some of this was while we were private, some of us as a public company, but it relates to the conversation about the platform and really delivering everything in an integrated fashion off of one dataset, which is how do you think about doing m&a? Companies get to our scale and m&a becomes a part of the natural way of doing business, but your approach is actually very, very different. And can you talk about that a little bit in terms of how you think about bringing in things from the outside that fill in the gaps that might exist in the product portfolio?

George Kurtz (00:24:28):

We spent a lot of time thinking about m&a. A lot of what we've built is organically built a lot of innovation at CrowdStrike, but there's certainly some great companies and we've invested in companies that could be future acquisitions for us, we look first at the team and the chemistry because if we don't have the right people and the team and the chemistry, we won't do the deal. It'll be the best tech in the world. But if we don't like 'em, we don't trust them, we can't get along with them, we don't think they'll execute deal's, never going to get done. So without that, no deal happens. Then we look at the technology and it's a pretty high bar because of what we built here and the engineering culture that we have internally on that side of the house. Then we look at is there a go-to market?

(00:25:11): And great teams and great technology and we can fill in the blank on the go-to market. And that's been I think a really good formula for us. Get 'em at the right stage. And then once we get 'em, like one of our acquisitions around identity preempt a fantastic team, loved the team, loved the technology, really easy to work with. They came in at 7 million in ARR, and at the time we were filming this, they're publicly announced numbers was over 300 million and we didn't sell it for the better part of two years, which is an incredible amount of discipline because our brand promise is single agent architecture. So we wanted to take their agent and actually we rewrote it as part of our own sort of architecture. Was the field enabled? No. And we did that with a lot of discipline because we knew once we got the agent put together, which many companies don't, it was going to take off. And that's exactly what happened.

Sameer Gandhi (00:26:06):

Yeah, I think it's a super important point because a lot of people think about m and a and it's like, are we buying customers? Were we buying revenue or ARR? And here you're investing in a team in maybe a very nascent technology, you're willing to take the time again to do the hard things first and rebuild it onto the platform so you're not sitting there with the situation later on where now you've got code bases that need integrating or two different customer sets that need different kinds of support. It's a very disciplined way of doing it, which is similar to how you started the company, but I think it's a pretty unique way to think about how m and a works at CrowdStrike. I want to come to talk a little bit about in the same timeframe, there was a lot of team building and organizational building, and you and I spent a lot of time interviewing a lot of executives and some didn't work out and some have been unbelievable. And so are there some things there now that you feel like just looking back saying, I learned a few really good lessons about how to think about team and organization, what worked, what didn't work?

George Kurtz (00:27:16):

It's important to realize that there's always different phases of an organization. And in the early phases you have these, a lot of it, this pertains to sales, but you can apply it to the company of the evangelical sales motion, which is you got a PowerPoint. I mean, we had a PowerPoint. We didn't have a lot of products, we had a PowerPoint, so we had to go out and sell that, get people excited, get people want to be part of the journey, changing the world. Those folks are different than the next phase, which is scalers. So now you have a product that works, you've got some product market fit, now you've got to scale and build out the infrastructure, go to market, all the things that you need to do to try to get to be a teenage company. And then you go into the real coin operated phase, which is you're just big enough where you can harvest into your own account. You have high net retention rates, you add new things into your platform, it just keeps going. So each phase is a little bit different, and the people who got you to a hundred million won't necessarily be the ones that gets you to 500 million to a billion, to 5 billion to 10 billion. So you have to look at each area. It doesn't mean they're bad folks, it just means that they may not be a fit for that period of time within the company's lifecycle.

Sameer Gandhi (00:28:33):

One of the things I find is that people get behind on this, right? And then you feel like you're scrambling because you're constantly catching up with where the business is. Are there things that you did to look ahead a bit and sort of go like, okay, I'm here now, but to get to this next step, I really got to think about my org differently. I've got to bring somebody new in. It's a challenging set of conversations that people wait typically until it becomes critical.

George Kurtz (00:28:59):

I'll pose it to the audience. Has anyone ever regretted moving someone on too quickly? Generally, no. They waited too long and they just kind of put it all off. And I think that's one of those areas for me is how do you look at the team that you have and basically say, would I hire that person today for the role they're in today? And maybe two years ago it was the right role in the right person, but it doesn't mean today it's the right role in the right person. And if you can't answer yes to that and sort of do that on a daily basis, then you got to know what you got to do.

(00:29:35):

I have lots of folks that I'm friends with that I know that moved on, and I helped them find other roles and things outside of CrowdStrike just because at the time weren't where we needed to be, but didn't make 'em bad. People didn't make 'em not capable or didn't have talent, but their skillset at the phase we were in wasn't the right fit. And by taking that approach, which is very, you have to have some barometer for what are you going to do here? Or you can just wait and wait and wait. It makes it a little bit easier and it's never easy to move someone on, but you have to have a framework to be able to say, look, this is not working out. We got to get to the next phase.

Sameer Gandhi (00:30:19):

George, one of the things I think a little bit unusual for a company, the way you developed it anyway is how you very thoughtfully in the early days constructed the board, including having a chairman, an outside chairman, and today a lot of those board members are still in place from even the early days of when the company was getting started. I think for other CEOs and founders, there's a lot of lessons to be learned about how you thought about timing of board members and construction of board members and then how you use the board effectively or leverage the board. Can you share some of those?

George Kurtz (00:30:58):

Sure. When you think about constructing a board, it's really critical because you're going to be living with these board members, and some of them you're going to choose because they're part of the cap table and others, you're going to go out and you're going to recruit. And I think a lot of entrepreneurs will fall into a trap of, well, I want that person because of exactly what they did in their background or what have you. And sometimes it doesn't always materialize. So for me it was finding someone who bought into the vision and building a big company and wanted to be here for the long term who had some level of skillset, could be financial, could be sales, what have you. And generally somebody you can get along with because at the end of the day, it's a bit of a family when you're spending so much time with board members.

(00:31:41):

So a pick people that you like and can work with. And getting back to maybe some of the earlier comments, I would take less money to work with somebody I like, then more money and have someone on the board that was problematic. It's just not worth it. So that I think has served us well. And then two, you got to be able to leverage the board and everyone has their own strength or superpower, so figure out what it is and then leverage it. I think one of the things that we did might be a little bit unconventional is we tracked board influence revenue. 

Sameer Gandhi (00:32:19):

I remember that we had a leaderboard.

George Kurtz (00:32:21):

We had a leaderboard for the board members. So this I think is a good one for the audience. What's your board delivering? What are they going to deliver? Have 'em write it down over the next 12 months and then track board influence revenue and put a leaderboard up. Nothing better than a leaderboard. And we did that and we drove pipeline through our board and their contacts because board members are on multiple boards. They've got contacts all over the place. So I think in summary, it's pick people that you can work with, they have a skill or superpower, and then they're going to hold you accountable, make sure that there's some level of accountability back of what they're trying to drive for the entire company.

Sameer Gandhi (00:32:59):

I think that's totally fair, and I've seen you do that really effectively because there's people on the board that really do bring different things. And depending on your situation, you'll text Gerhard or Roxanne or me or others, and you see how that group works together in a very collaborative way with you bringing all those things to bear. So I think it's a great lesson to learn about how to create a very healthy collaborative board relationship that works both ways. Exactly. I think if you're where you are today and you've put some ambitious goals out in the public market, like we've said, we're going to get to 10 billion ARR in five to seven years, putting the company in very rarefied territory. Not many very few have gotten to that stage, certainly not in the timeframe that compressed timeframe that you put out there. So it's very audacious. And when we sit here today, one of the things that I think everybody grapples with as a company gets to scale is how do you keep that startup intensity, creativity sort of like, we have to make this work because we all go home afterwards. If it doesn't work, how do we do that in a company of this size and still be the pioneer and not become the legacy company? So tell us a bit how you're grappling with that.

George Kurtz (00:34:23):

There's this concept of scaled insurgent and what got us to where we are is we disrupted all the legacy players. We disrupted many companies, and I don't remember how many investor meetings and conversation we had with everyone going, well, what about McAfee? What about Symantec? What about this? What about that? It's like they're all gone or changed or something, right? Because we were able to disrupt them, and we obviously don't want to be on the other side of being disrupted. So what we talk about internally is this scaled insurgent. If you have the mindset of always wanting to be on the forward end of the curve and thinking about customer problems and I getting things done and executing in a very short period of time, you have to have that mindset of being insurgent. If you're not doing it, someone's doing it to you. The good news is we have scale.

(00:35:17): So we have to use our strength, our distribution channels, the people we have, the relationships we have the tens of thousands of customers. We have to continue to build out our moats around the business, but we still have to think like a startup. It was the first day and the last day. Every day you come in, you should be thinking about, man, there's a whole new world in front of me. And when you go home, you should be thinking about, man, if I didn't get this thing done, I'm going to be out of business and I don't care whether we're 3 billion or 3 million. That's kind of the way we think now. It becomes harder as you bring new people in and you get through the IPO process and you're not 300 people, you're thousands of people. But having that culture of people just wanting to solve customer problems, keep 'em safe, and this mission, this sense of mission that we've always talked about at CrowdStrike is important.

Sameer Gandhi (00:36:11):

You're the leader and everyone's following you and you're immersed in everything in this company. It's wrapped around you as the founder identity, the company's wrapped around you. So what are you doing to make sure, other than the fact that you're naturally competitive, what are you doing to make sure that you are that insurgent still?

George Kurtz (00:36:27):

I think a big part is building a culture on winning. It should be fun to be at work and it should be fun to win, and it's not so fun when you lose. So it should actually hurt when you lose, and I think you learn a lot even when your kids are going through sports. Not everybody should get a trophy. That may be not how people think today, but when I grew up, not everybody got a trophy, and when you didn't get a trophy, it really sucked. So I think if you could take the wins and celebrate 'em and you can build a winning culture and you build momentum around, yes, we're winning, but the customer's winning and we're stopping the bad guys, that's really important for me. If I can build that with the right team and the right people, then I think a lot of it takes care of itself.

(00:37:15): You're not going to win everything and not everything's going to go right, but if you have the right people with the right philosophy, you can get through a lot of it. If you sit back and go, well, we've been successful and look at our numbers and we got to 1,000,000,003 billion faster than most companies we're one or two in a lot of these categories ever. If you just sit back and think it's just going to happen at five and 10 without doing it, that's where you get yourself into a problem and the complacency kills. So for me, I talk a lot about time and urgency and have a saying that I'm looking at a watch, not a calendar. And that's the kind of sense of urgency that we need, and we should be paranoid that someone's trying to disrupt and replace us like we did to the legacy players that are out there.

Sameer Gandhi (00:38:01):

Yeah, I do love the watch versus calendar. It's a good segue into a hobby that you and I both have. I would say hobby for me, more like a true passion for you, but you're basically a professional race car driver, but you're in the AM class, you have a full-time job, the racing world and building a company, you're doing both at an incredibly high level. There's got to be connections between the two. And I think it'd be fun to share just a little bit about how you got into racing your passion for it, but then how you pull it back into your professional life as well.

George Kurtz (00:38:40):

Sure. Well, I got into it in 2007 ish. I think when Dennis O'Leary, one of our board members, we went out to a racetrack. He was on the McAfee board, so went out to the racetrack and took a few days of just driver instruction in a radical, was pretty good at it and ultimately bought a car and then raced and kind of went up the ladder and continued to go on and on and do bigger and better things with it. But that's how I got into racing. The thing I love about racing is the stopwatch doesn't lie, and you can come up. Drivers are literally the best to come up with any excuse never the driver. It's always the car or the other drivers or the rain or whatever you want to come up with. It's easy to come up with an excuse.

Sameer Gandhi (00:39:23):

I've used all those excuses.

George Kurtz (00:39:26):

Professional drivers use every excuse in the book. But at the end of the day, it's what place are you on a leaderboard and what's the time period? Nothing else really matters. So if you take that and you apply it into business, just take sales, simple thing is to have a leaderboard. You're the top of the leaderboard or at the bottom of the leaderboard. I mean, you can come up with any excuse you want. Life is hard, dog ate your homework, couldn't get out of bed. It doesn't really matter. The scoreboard doesn't lie. And I think if you take that approach, it becomes really helpful and it gets back to the racing. Let's just look at the data and look at the numbers and let's drive behavior that way. I think the other thing racing and business have in common is it's a team sport. I can race the car, but if I don't have the right car, if I don't have the right preparation, if I don't have the team doesn't change the tires the right way, all of this stuff will go awry if you don't have the team.

(00:40:23): And for me, a big part of this success of CrowdStrike is looking for people who want to play for the name on the front of the jersey, not the back of the jersey. We're not going to win. It doesn't matter what I do. I can't be everywhere and do everything for the company. So if you take some of those principles of time and data and the fact that the little details matter and racing when the pros race, they're all couple of tens apart. Literally. They're like robots, right? It's the little details of the car and just the little extras that make the difference between first and 20th place within a second. So those are the kind of things that we try to bring into CrowdStrike and racing has been a big part of the history of the company. What we do with Formula One, what we do with our CXO events, and we're sort known in that area, and in fact, copied a lot of our competitors got into Formula One because we were there and they were like, what do those guys know? What are they doing? But that's a little bit about the passion and how we take some of the lessons learned from racing and apply it in the business.

Sameer Gandhi (00:41:30):

You're one of the few people to actually drive a Formula One car. You want to share what that experience was like?

George Kurtz (00:41:37):

I was having dinner and we were talking, this is really before the pandemic got going about what would be an incredible experience for a customer. So we've just sitting there having some wine and thinking about it. He says, well, what if we got five of the biggest CEOs around to an event and we would train 'em to drive a Formula One car? And I said, okay, sounds crazy, but let's talk more about it. So he said, we can get five of 'em together. We can take 'em through a training program and a simulator, and if they pass these tests, we can put 'em in a car. And I said, okay, done. And of course, I'm involved. He said, yeah, yeah, you're involved. So we start thinking about who we're going to invite and then the engineers get involved because at that point it was two CEOs with a PowerPoint going, this is a great idea.

(00:42:29): Sounds like a startup. Sounds like a great one, yeah. So then the engineers get involved and you have two types of people possibilities total, and myself and parameters, engineers, possibility parameter, people need both. But you know how it works. So the parameter folks are now saying, okay, let me give you all the constraints. You have to be under six foot one, you have to be under 180 pounds and you have to have a 32 inch waist or smaller. So the sphere of people that we could possibly get, forget about driving a car, that was just the physical piece to get in the car was crazy. So all of this happened and we're like, okay, we're running out of time. So Toto basically said, okay, you can drive the car. And I fit just about every criteria, but I had to lose one inch on my waist.

(00:43:17): So I had something called Project 32, which was like I was going to have a 32 inch waist to get in this car. So I go through the whole training program, I go to Braley, I go to simulator six, which 10 people in the whole company have seen. It's super secret. I do all the simulator work, and then they put me out on the track. And that was one of those times where, okay, this is Louis Hamilton's car. It is priceless and they're going to put me in it. So they basically put me out. I went out on rain Tires, you and I talked a little bit about this, and they put me on rain tires because you had to keep heat in the tire. And they were worried, could I keep heat in the tire on a regular slick and could I operate the brake hard enough?

(00:44:00): They had to be like a hundred bar. So I went out for a lap and got enough heat in the tire and I was like 90 bar on the brakes. And yeah, you got to hit it a little bit harder, I mean it pushed your foot through a wall. But I did all that and I got through driving the car and got faster and faster, and it literally was, it's trying to explain someone how to fly an F 16, that's never been an F 16. It's like an out of body experience, but that's the whole story. 

Sameer Gandhi (00:44:29):

There's a great video series of videos.

George Kurtz (00:44:30):

Great series of videos of it, but it started with a crazy idea of let's get a couple of CEOs and put 'em in a car. And that's how it all unfolded.

Sameer Gandhi (00:44:39):

Sometimes those are how the ideas start. The question is how do you take the idea and then turn it into something that's a reality, which translates back to a lot of things that you and others have done in companies. George, we can't sit here and not talk about the two letter word that everybody's talking about or the acronym AI. So one of the things, I know that we both find this a little humorous because when you started the company, nobody was talking about AI, but a lot of putting all this data in the cloud and delivering security from the cloud involved basically the principles of machine learning and ai. So you've been an AI company since the beginning and AI native in a sense, but now things are very different. And CrowdStrike has released a whole suite of products using that foundational technology and incorporating it as part of what was the normal course of the product roadmap. We didn't have to adapt to it in a sense because you were already on that path, but just your thoughts on what the import of that is, the impact of that is today in security and other product categories that we're in, because it's such a big part of the fabric of what we're doing. George Kurtz (00:45:52):

I always say we were doing AI before it was fashionable. So when I started the company, the two big themes were, well, probably three. One was cloud big data. We had to get data, but big data was, we don't hear much about that term anymore, but it is. And then machine learning, which you put marketing wrap around and call it AI, but it was machine learning, which is different than generative AI today. But we thought having the data and using, and it was really early on for what we were doing, machine learning to solve these problems was going to be the way forward. We didn't want signatures. That was the problem with legacy technology. We needed a signature every time there was something bad. So we got really good at that. Built a whole data science team and have done some incredible work over the years.

(00:46:34): And I'd say over the last 18, 20 months now with generative AI, Charlotte AI is now our product, which you've seen is pretty incredible of what it can do and how it works. And I think it's really going to transform the SOC and create the AI native SOC, which is helping people compress the eight hours of mundane work into 10 minutes of work. So for us, it's always been part of our ethos. Now what we're doing is leveraging AI across the company. We have an initiative called AI Everywhere. So whether it's in legal or marketing or anywhere, we can be efficient because we're just how we think we're just bought in on AI is going to be the future. Particularly generative AI. You have a lot of companies that talk about AI, and there's AI and there's AI, and they're not always the same, but they look all the same on a PowerPoint.

Sameer Gandhi (00:47:24):

Yeah, I mean, Charlotte AI is, it's pretty incredible when people talk about, Hey, we have AI products, we have copilot, we have this and that. But when you actually use it and you see a task that took a day, go to minutes, you realize how transformative that technology can be. But I do think this AI native concept, I would love for you to unpack that a little bit because it's not something you just add in. It's a start from the ground floor or the basement or the foundation and build up, right?

George Kurtz (00:47:59):

It is, it starts with data, but then it's how you actually curate the data. And you hear a lot of companies talk about, well, we have the most data. You don't know it's data, but if it's a pile of data that is not really trained or organized, it's not going to make any sense, which is why we created our threat graph early on so we can organize the data in the right way. And then sometimes it's better to be lucky than good. Over the last 10 years, we've annotated a lot of the data we've collected and the threat pairings where it's annotated in a way that when you actually use an LLM, a lot of the training can be very efficient because you don't have to then put it through another human loop because we've already annotated the data, so we just kind of got lucky there.

(00:48:43): But it's important to have all the right steps. It's not all about having the most data. I hear that all the time. Well, you have the most data. That doesn't mean anything to me is the most relevant data that is trained the right way with the right algorithms to get the right outcome. If that's the case, great, but if not, just tell me you have the most data, doesn't mean anything to me. And then the second piece is there's a lot of guardrails that you have to put around this thing in a security space, in chat GPT. If you ask a question, you'll always get an answer in security. If we don't know the answer, we shouldn't just make one up chatGPT will make something up for us. We had to build all kinds of layers around what results we're getting and then what we're actually telling the customer, because we wouldn't want to get a result and have them do something they shouldn't be doing. There's a lot of work in that. I'm sure there's other, a whole bunch of other companies you're looking at that help companies do that. We had to build their own.

Sameer Gandhi (00:49:38):

Any prediction you make about where this capability takes us going forward as an industry, really?

George Kurtz (00:49:49):

As an industry, I do think it'll transform security because security AI has a lot of data. There's a lot of mundane task. It takes a lot of time, and there's not enough people trained people in security. So I think it's a perfect area for generative AI to help. We know the adversaries are using generative ai, they're using LLMs that don't have guardrails on 'em. And for me, that really is going to democratize security. These security attacks, a lot of these security attacks are pretty esoteric in the grand scheme of 8 billion people on the planet Earth. There's relatively a handful that are really smart that can create these attacks, right? Yes, there's a lot of but versus eight billion's, a handful. If you can take that expertise and now democratize it through evil LLMs, dark LLMs, that's a real problem. And what we see is the attack timeline is going to really be compressed. Microsoft comes out with a patch, generative AI and sort of an AI factor will be able to disassemble that patch, figure out where the vulnerabilities are, write the exploits, write the exploit kits, and put it up on the website and have it for sale in hours, which would've taken days in the past. So it's only going to get worse. And I think having the right. AI approach is going to be critical to keeping customers safe.

Sameer Gandhi (00:51:05):

As you financed CrowdStrike, you started the company and the way you financed it, the way up to and including the IPO, it's really, it's like a clinic, a masterclass and how a founder should think about funding their company going forward. And I'd be helpful to just relate some of your principles about how you thought about funding rounds and investors, and then anything you learned along the way that would be great to pass along.

George Kurtz (00:51:34):

Sure. So when I started Foundstone, I was 29 and didn't have track record left and young at the time. So when I first raised money, three and a half million at the time, at a 6 million pre-money or something might've been low. Right now you're doing seed rounds at like 80 million, but it was a much different time. So you had to be super capital efficient. And I think my lesson learned really in the series A was you had to pick the right investors because in 2004 when McAfee came calling, I really didn't want to sell the company, but we were 1999 vintage fund that I was in for many of a couple of the VCs that were part of the deal. So in 2004, guess what company was the only company that was worth anything. It was us. 

Sameer Gandhi (00:52:26):

Non-internet.

George Kurtz (00:52:27):

Yeah, the Foundstone. So everyone was looking to have liquidity and put money give back to their LPs. So they were all ready to sell. I wasn't necessarily ready to sell. Now it all worked out and I wouldn't change anything, but I wasn't necessarily ready to sell. For me, the number one thing was having long-term investors. And the biggest thing was I didn't want the investor to make their name on CrowdStrike. You guys did Facebook.

Sameer Gandhi (00:52:55):

A few people heard of that. You heard of that.

George Kurtz (00:52:57):

The firm. Didn't need CrowdStrike to make Accel. Accel was already made. That gave me a lot of comfort in that the fact that we were going to be able to not have to worry about taking shortcuts or sell the company. Sure if there was something that made sense for the shareholders and we thought it was the best outcome at that period of time, we would talk about it. But we really didn't talk about selling the company. There was one sort of outcome we thought we could build, which was to be a public company. So for me, getting back to the original part of the question, I wanted to curate all of the investors across the entire cap table for people who didn't have to make a fund or their name based upon an outcome of crouch. And I did that. We had great investors up and down the board.

(00:53:45): They didn't need us, so that was number one. Two was to have long-term kind of thinkers. One is people hang in there, they don't need to make the name, but you want people to understand the vision. And you and I got together and talked about what we can build. We want to build a generational security company and we were all on the same page and I think that was important. And then work in economics and all those sort of things. I mean we can go on any of those questions, but just doing it at the right time at the right stages where it was good for the employees and the founders. But it's also good for investors. You have to have a win-win if you want to have the best outcome.

Sameer Gandhi (00:54:25):

Yeah. I'll pull a couple examples. So I think there were times when in some of the later rounds where there was maybe an opportunity to raise money, just maximize the price, but you took a lower within reason, but you took a lower valuation. What was driving that thought process to say like, Hey, I'm not taking the highest price deal, I'm going to take this particular deal. And they tended to be more insider oriented. 

George Kurtz (00:54:51):

Adding a new player both in an equity partner and a board member or a board advisor is just more complexity. I think smaller is better and you can just get more done with less personalities around the table. You want to have different folks with different views, but 12 people versus six people, it's just easier to get stuff done with six people. So I think that was a big part of it, knowing the people and realizing that life is pretty short. So you want to be working with people that you like and just bringing other folks in that have a different dynamic and maybe a new group would've been great. We brought some new ones in and they were all good, but the more you bring in, the more likely you're to make a mistake or have something go wrong. And one of the things that I've seen several times in my career is that the partner that you've got the relationship with leaves or goes somewhere else and then you inherit someone and that may or not may be the person you want to work with. So just managing that is really, really important. And if you don't do it upfront, it just gets away from you as you get down the funding rounds

Sameer Gandhi (00:56:05):

And then you end up spending all that time managing your investor base and board rather than putting it back into the business.

George Kurtz (00:56:11):

Exactly.

Sameer Gandhi (00:56:13):

The IPO was interesting because we had healthy debates on pricing and I think it's sort of a lesser of how you thought about, again, taking a longer view on things. And so the company was really attractive, it was hot, it was a hot issue and you could have priced it in a lot of different places and you end up choosing the lower end of the range after a lot of discussion and input. What drove that?

George Kurtz (00:56:42):

So first Burt and I were out doing a roadshow and the IPO process didn't start in 2019 when we IPOed, it started in 2017 when we did all the pre-work with all of our sell side and buy side analysts. So we had all these great relationships, they knew Burt and myself. Then we get to the IPO process, which was kind of up and down and was it going to go out in 19 or 20? And all of those sort of isn't going to happen is not going to happen. We went through anything else. It's always ups and downs to get it out, but we finally go on the roadshow and I have to say the roadshow for anyone who did a roadshow in Covid, I feel bad for, I literally had the best time on the roadshow. It was a great event and something that I'll never forget because it was just so inspiring meeting with companies and talking about what we were doing, getting 'em excited about CrowdStrike being a public company.

(00:57:40): And I'll come back to that in a minute because a funny story that came out of it. But then we get to the pricing meeting and I think we were oversubscribed so many times, there was only two buy-side folks that didn't invest. I forget who they were, but there was two out of all the meetings that we had. So it was wildly successful. So we go through the pricing committee and everybody's got input and lawyers and bankers, everybody's there and we have this board meeting and we set the range or we're talking about the original range was probably 24 to 28 and it kept itching up based upon the interest. And then we got to, well, we think we can price it between like 34 and 38, something maybe 40 at the time. And it was a lot of debate of don't leave money on the table.

(00:58:25): And everyone had their own thoughts on it, but Burt and I looked at it and the heart of your question is like, well, what do we want to do? Well, it's Burt and I that were out there talking to investors. We were looking for long-term shareholders, which people can say they're going to be long-term, they may not be. And we wanted to be in a position where we never broke the IPO price. And that was important for us because I think if you price it so high and you want these investors to hang in there to a certain extent, they're going to remember that, right? So we wanted to price it a little bit at the lower range and not a guy that leaves a lot of money on the table, but we wanted to create that relationship, which is we are here for the long term and we want our investor base to be there for the long term. So we price it at the lower end. And I remember there was a lot of debate. So the whole board, you guys sent this into another room and said, what did you say? 

Sameer Gandhi (00:59:27):

Come back, figure out what you want to do. 

George Kurtz (00:59:29):

Figure out what the price is. And you said you were going to go along with the price. So Burt and I go out into the other room. I think we spent 45 minutes in the other room, 32nd was actually pricing it. 45 minutes was calling our wives and doing other things. We didn't want to go back after 30 seconds. 

Sameer Gandhi (00:59:46):

Keeping the board on ice. 

George Kurtz (00:59:47):

We dragged it out for like 45 minutes and then we went in and we priced it at 34. And I think in Covid it may have broke 34, but I don't think it ever closed underneath that. So obviously, and the rest is history. But that was a big deal because I think if you have a broken IPO, it becomes really hard to recover after that.

Sameer Gandhi (01:00:11):

And I think to me it was very consistent because all the way along those financing rounds, how you thought about the company, everything was built for the long haul and the IPO pricing conversation was exactly the same thing. You could have been very transactional and maximized it, but again, you were thinking about the long haul. And I think it was in retrospect, it was the right signal and right decision to make. And when you came back after icing us for 45 minutes and you said 34, I was like, from my standpoint, I was like, okay, pencils down 34 is the answer. 

George Kurtz (01:00:47):

That was it. Some funny stories from the IPO, we were in a meeting with an investor and they basically said, okay, so you're going to IPO the company, you're raising 600 million, whatcha going to do with all this money? Are you going to have a party and go to Vegas? What are you doing with all this money? And I said, well, what do you mean go to Vegas and have a party? So the guy says, oh, we had somebody that we backed and he did an IPO and then he went in Vegas for a month and he had a party. And I said, okay, that's not us. I'm going to tell you what I'm going to do. We're going to do the IPO, we're going to have a dinner, and then the very next week I'm going to continue the roadshow. And he said, what do you mean you're going to continue the road show?

(01:01:27): You already IPOed the company? I said, no, I'm going to continue the roadshow with our customers and I'm going to meet a hundred customers and prospects in a hundred days. And I did. I met 132 or something like that over 130. And he was blown away because my whole point was the IPO is the green flack. It's not the checkered flack. So we kept the roadshow going and we kept all the momentum build pipeline. And it was really symbolic for the company as well because you get a lot of people that were really wealthy after the IPO. You don't want to thinking, Hey, we're done here. This is just the beginning. So the a hundred and a hundred I think is pretty popular, legendary now with some of the bankers because we just kept the roadshow going. 

Sameer Gandhi (01:02:14):

That was the point. It was a big statement. And I remember the a hundred and a hundred because people come out for that. They do the roadshow, they have the IPO, there's a party and all these things. We had a small team dinner, like the day you priced or the way the day it went effectively and you were off basically the next day to do the a hundred and a hundred. And I again, it's a great lesson. It's like what's leadership when you're a founder and a CEO and you get to this point and you spoke with your actions, which is like, okay, tomorrow's the next day and we're back at work. And you were the first one out, first one out of the gate to go do that day one. It's pretty incredible around the world tour. Yep. Well, George, I got to thank you for doing this. It's always fun to sit down and just talk about some of the things after 10 years and we're kind of caught up in the day-to-day planning for the future, but to sit on the couch and discuss things is a real treat. And appreciate your time. So thank you for being on Spotlight On. Thank you so much. All right.

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