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The Cyber Why: What We Read This Week...
... and why you should too! (08/22/23)
Welcome to The Cyber Why! This week we discuss the impending car crash that is “cyber investment,” satellite hacking, Palo Alto Networks’ strategic vision, a brutal attack against LinkedIn, ransomware as a service, the herd mentality of venture capital, and the death of social media. Make sure to check out the direct links to read the detailed stories that make up our summaries. There is more than we can cover in a short email blast. Finally, remember to tell your friends - The Cyber Why needs you to share if we are to keep writing our content. Sharing is CARING!
TCW is the real deal! Find the nuggets of gold in the mountain of rubble we call the Internet!
As The Cyber Market Burns - Where’s The Bottom
Mean Reversion: When Will Startup Investing Return To Normal (Tomasz Tunguz)
Security Alert: Cybersecurity Startup M&A On Pace For Weakest Year Since 2017 (Crunchbase)
The Low-Budget Startup (Bryce Roberts)
Only 34 cyber startups have been acquired thus far in 2023. According to Crunchbase, that is the lowest pace since 2017. I have been in touch with numerous young startups that are getting dangerously close to the end of their runway. The pressure is building to an unsustainable level, and something will have to break soon. According to Tomasz Tunguz (Theory Ventures), Alberto Yépez (Forgepoint Capital), and Umesh Padval (Thomvest Ventures), we should be seeing the bottom of the market soon. The one event showing promise is that we have seen at least one M&A occur where the valuation was at a massive discount - Check Point Software acquired Perimeter81 for $490M, less than half the $1B valuation it received the year before. The closer the car gets to smashing into the wall at 100 MPH, the more likely the board and founding team will look for an escape hatch. I sincerely hope most of them eject before it’s too late.
Hack The Planet? Nah… LET’S HACK THE SAT!
I mentioned this event in last week’s TCW, but this article goes into much more detail regarding exactly how the “hack the satellite” event at Defcon 2023 went down. With five teams making the finals, and a bomb scare that evacuated the building just before the winners were being tallied, the suspense around the event was tangible. There were lots of extraordinary tricks used, including convincing the GPS to report a wrong satellite location and hacking the camera to take a photo from space. While at first glance, this type of threat modeling event may seem pointless, there are real-world applications. At the Black Hat conference, Viasat and NSA revealed that there were Russian attacks on satellite communications at the start of the Ukraine War. Fascinating real-world implications for this one.
PANW Forward Looking Deck Drives Market Surge
Palo Alto Networks announced earnings last Friday, resulting in a stock price surge of +11% during after-hours and another +15% on Monday. That type of value jump is quite surprising given that they announced on a Friday (typically reserved for bad news), but the fascinating thing that came from the announcement was the 134-slide analysis of the global cyber security market. I’ve been a fan of the playbook that Palo Alto has been running from a business perspective for the last decade. They have one of the most significant strategic understandings of cybersecurity markets in existence. I know many of you will argue with me on this point, but I’ll put it out there anyway…
There are only a small number of cyber companies in the world with the potential to unify the market and Palo Alto Networks is one of them. Check out their slide deck and get a grip of where the future of cyber security is really headed. It’s on point.
Ransomware Crews Have IT Problems Too!
Ransomware Diaries: Volume 3 – LockBit’s Secrets - Rick Pick (Analyst1)
Analyst1’s Jon DiMaggio continued his Ransomware Diaries series last week, focusing on the infamous LockBit crew. LockBit offers ransomware as a service to its affiliates and takes a cut of the extortion payments. Jon’s blog is lengthy; however, it is a fascinating expose, and Jon even communicates with LockBit’s leader. The research highlights some of the infrastructure difficulties LockBit is experiencing, limiting its ability to publish victim data. These issues are driving LockBit affiliates to seek out other RaaS offerings. Ransomware is a business; your customers will go elsewhere if you can’t provide a reliable offering. Show me the money! You can read more about LockBit from one of my day job reports or CISA.
LinkedIn Users Locked Out Of Accounts
LinkedIn accounts hacked in widespread hijacking campaign (Bleeping Computer)
A wave of attacks against LinkedIn has been causing many people to find their accounts locked out or stolen permanently. Some users have even been contacted with ransom attempts to return the compromised accounts. Predominantly based on credential stuffing attacks, LinkedIn is under siege as many of these accounts have been unable to get their access back after weeks of outreach to a very overwhelmed LinkedIn support team. This is a critical issue as LinkedIn has become an essential piece of the business networking and communication fabric. With technology employees recently getting hit with significant layoffs, LinkedIn is by far the method of choice for networking into your next position. Don’t underestimate the importance of the most influential business networking tool on the planet.
Top Quote Of The Week
Sometimes you bump up against a piece of prose that really hits home. Not just some boring ass writing that makes you wonder why you took the time to read it, but something that is so well written that the point is driven into your soul in the best way possible. I will leave you this week with a paragraph from an article on herd mentality in the VC community. This is precisely the investor that I strive to be!
The path forward is a VC who embraces their role as more than just financiers. These are the stewards of responsible innovation, the guardians against unfounded hype and the champions of justified valuations. The VC who cultivates an environment where genuine ingenuity is as valuable, if not more so, than being part of the 'in-crowd' will successfully calibrate hype with valuation to ensure sustainable growth.
In the end, the future giants of the business world may well be those ventures that were nurtured in the clear light of rational expectation, not the shadow of hype.
Twitter, I mean “X” May Fail
Nothing really to say about this one other than… NO SHIT ELON!
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