What Makes a Cybersecurity Startup Valuable in the AI Era? A VC's Perspective

Recorded 2026-07-09, PrOTect IT All Podcast. Speaker-turn timestamps from Riverside.

Aaron Crow (0:1.122) Hey, everyone, thank you again for joining me on another episode of the Protect It All Podcast. this is a fun one. It's gonna be a little bit different. I spent a lot of time spending really deep in technology, spending time talking about people, processing, and technology, and a lot of times about the business of just just business in general, but also just the technology space from cyber and everything else. So, with that, I'm I'm excited about our conversation today. So, Ken, why don't you introduce yourself, tell the audience who you are, what you do, and a little bit about your background.

Ken Elefant (0:31.986) Excellent. great to be here, Aaron. And I didn't tell you this before, but today is my birthday. So super excited to be doing this. This is what a great what a great present to be here. so I'm Ken Elephant. I'm the the founding managing director of the venture group here at Sorensen Capital. And as you know at Sorenson Capital, we have two funds. We have an early stage venture fund and a growth fund.

Aaron Crow (0:36.962) Well, happy birthday, bud. I th thank you for spending time with me today.

Ken Elefant (0:57.554) And on the Venture Fund, we focus on everything in AI enterprise software and security. And we do a lot around data and dev tools as well.

Aaron Crow (1:7.968) And and it's it's funny because you know, it's almost every one of my conversations I have, no matter what, whether it's a founder that I'm talking with, an asset owner that I'm talking with, or or just an operator, the conversation is coming to AI. Like every AI is everywhere. You go to RSA, you go to Black Hat, everywhere around it. AI is just part of the conversation, whether it's a vendor bolting on AI or it's

Aaron Crow (1:34.082) you know, AI native things, which is really coming into the the OT space. How are you seeing this growth and expansion, explosion? I guess is maybe even a better word, in all technology and how is it impacting businesses and and how they're changing how they do business with their tools, their process and their people?

Ken Elefant (1:54.706) It's huge. AI is going to affect every part of our society, and I think it's going to affect every business. But it needs to be implemented in the right way. And the way that that I think about it is that there are vertical implementations of AI. One example of that in our third fund of the venture portfolio is a company called jump.ai, which is targeted at wealth managers.

Ken Elefant (2:21.669) And think about this. I mean, if you're a wealth manager, you used to have to prepare so much, and there's so much manual work to prepare for your client meetings. With AI, the wealth manager can come and be completely prepared. All of the follow-up and workflows afterwards are followed up with AI. And all of that work that is going on around compliance, auditing, and all of that work is free is freed up with AI. So that's an example of

Aaron Crow (2:30.094) Mm-hmm.

Ken Elefant (2:51.313) A vertical area and wealth management is just one initial part of what jump can can go after. The the other way that that I look at it is the infrastructure is super important. So for for jump to do their work, the the wealth manager needs to have really high-quality data on the back end and in their ERP systems. And so data needs to be clean, it needs to be performant, it needs to be reliable.

Ken Elefant (3:20.033) so an example of a company that focuses on that area is a company like Excel Data, which is a data pipeline observability company that has a completely autonomous data management process now. So think about all of that data quality, data architecture that enterprises had to spend their time on. that that can get solved with with AI.

Aaron Crow (3:43.030) It it's amazing how many things that you can do with AI. And and I know there's a lot of fears of hey, it's going to replace jobs, it's gonna put people out of work. and I'm sure that there are gonna be jobs that are gonna go away because of that. but I think there's also gonna be new jobs that are gonna come up that are that just kind of like with the industrial revolution and everything else, there's going to be new capabilities and needs as these things come out.

Aaron Crow (4:7.138) And I just think about my process, whether I'm doing, you know, cybersecurity consulting or even just in my podcast. When I think about just my podcast process, the onboarding, finding clients, you know, researching who these clients are, or would they be a good guest to be on the podcast? Like the workflow of there, there's a lot of moving parts that go into having something like a podcast. And since I've been able to start using AI in that process, it's so much faster and more efficient.

Aaron Crow (4:33.688) Cause I actually have a full-time job that I do. This isn't my full-time job, right? I do this as a as a passion project on the side, like because I enjoy it, it brings value to me and the community, I believe. But the point is that I have a f nine to five that I have to do, and I still want to do this at a very, very high level. And AI has helped me to do that with a very small team and do it at a very high level that, you know, five years ago, I would have had to hire.

Aaron Crow (4:59.788) spend a lot of money and hire a really, really high end production team to be able to get the quality of the output that I get now by using and using AI to to better my process alone.

Ken Elefant (5:11.785) Yeah, and I think that's what every leader inside of every enterprise is focused on is looking at where are all their people spending time, where would they like to hire an army of consultants to go solve a problem? Because those problems can be solved with AI. And where they should be applied are in areas where you need a result that

Ken Elefant (5:36.713) can get followed up on. And security is a very good area where AI can be applied because we're doing security so poorly today. People cannot follow up on vulnerabilities where there's so many false positives. So let's apply AI there. I think where AI is going to be very difficult to apply is if I am getting brain surgery. I really do not want my doctor using AI to to actually do the operation. They may use AI to

Ken Elefant (6:6.055) learn and see what other people have done in the past before, but I don't want it during.

Aaron Crow (6:11.670) Yeah, you definitely want that that human in the loop and and some of those really critical processes like that. the same thing would be in in your business operations. There's certain things in your business that you're going to want to have a human in the loop for those things. Even even in my processes in AI, I I I have steps along the way where it's stopping and and I'm I'm air gapping and and and containerizing things so that it can only do things I'm allowing it to do.

Aaron Crow (6:38.432) Anything outside of that, I take control. I'm saying yes. I have to give it permissions or I have to hand that to another agent because I I don't have the confidence today that it's going it's going to be able to do it. I would never just hand every like my entire prod podcast, going back to that simple example, I would never just hand everything to AI and say, Go. I still want to have checks and balances along the way because it still assumes things, it makes mistakes. And like you said, in brain surgery, or if you're

Aaron Crow (7:8.214) If the airplane is flying in the air, you don't want the the AI to say, let's just go ahead and land right now in the middle the ocean with people on board.

Ken Elefant (7:15.495) Exactly.

Ken Elefant (7:18.654) Yeah, and you're you're one of the smart ones, Aaron, because there are a lot of people that put way too much trust in AI.

Aaron Crow (7:29.046) What just happened? You there?

Aaron Crow (7:35.019) All right.

Aaron Crow (7:45.302) Yeah, it just stopped. I don't know what happened. It just said it stopped recording.

Aaron Crow (7:50.912) It's going now, so go ahead. Yep.

Aaron Crow (8:29.954) You know, it it to I always like bring boiling this down to analogies and and and use cases I've seen in other spaces because, you know, if we can't learn from our mistakes in our in our history, then then we're just doomed to repeat them. and in in OT in in in operations, so many times we put all this trust in a in a vendor. you know, whether it's your your plumber, your electrician or whatever it is, and you're not paying attention.

Aaron Crow (8:56.162) So you just assume you put all of the trust in this, this, this other person, this other company, this other entity to come in and do the work that you asked them to do. But you still have to make sure A, that they're doing it to the quality and the standard that you want them to do. They're not doing more or less. They're not adding other things. Like a a prime example of those is some of the, you know, the the target attack is a good example, right? The the the target attack, you know, cyber attacks, it didn't come in through.

Aaron Crow (9:25.486) Target's front door, it came in through a control vendor because they had VPN access. So they got in the back door. I I see this at at power plants because the the c the crane operator had installed a wireless card so they could remotely access it to provide support, but they didn't communicate that to the actual company and they weren't aware. It's not that it was a bad thing, it's that it wasn't done well, it wasn't protected. They weren't aware those things were there. So they were gonna they had this.

Aaron Crow (9:53.197) this unknown risk in their environment that they just thought they were okay with and everything was working until it didn't. And to your point, I think that's that's one of the things I'm fearful of with AI and all of this that's coming out is I'm gonna turn it on and just not know that doom is waiting to happen in the back.

Aaron Crow (10:52.655) So how how are you guys, as you're looking at products that are coming up, things to look at, things to focus on, whether it be, you know, a a current company that you're you're looking to invest in or you're doing due diligence on, how are you guys scaling that up as far as how do you consider those and and and look at the ones that are gonna be potentially i important or impactful in in the direction that you guys are interested in focusing?

Aaron Crow (13:30.627) Yeah. Yeah. And and there's so much there's so much gap and so much void in the market right now with with so much need. we've been and you you said it earlier and and I haven't said it that way, even though I've beat around the bush probably. We we do cyber so poorly. Like, yes, we have a lot of products. There's a lot of great products, but you know, if you really look at the overall the the point in my perspective, the point of of of cybersecurity and products and and and and

Aaron Crow (13:59.075) Doing it is to reduce the risk to the business. It's all about the business. Like I don't I don't install a firewall because they're fun. I I don't have a, you know, an IEM or an Active Directory or any of those things because they're great. I do it because it the whole point of it is to reduce the risk to the business. So I can produce whatever it is that I produce, whether I'm selling things or generating electricity or building cars or whatever those things are.

Aaron Crow (14:22.585) Just like a safety thing in a in an operational space, I want to do it and lower the risk so that I can do those things. But if if cyber gets so complicated or so expensive that I can't sell the thing or or create the thing, then then it doesn't make sense. There's it has to it ha it has to line out.

Aaron Crow (14:49.881) Right. Yep.

Aaron Crow (15:8.067) Yeah. I mean it it doesn't matter how great the technology is if somebody if you can't get it implemented and you can't get the people to adopt it and it can't get installed and imp and it doesn't work well in their process. A lot of times when I'm Yeah.

Aaron Crow (15:23.353) Right. Yeah.

Aaron Crow (15:27.555) So so how many founders are you seeing that understand that? Cause I I go to a lot of these conferences and I see a lot of startups and I see a lot of products that have great ideas and great capabilities, but they don't get that part. And they they are just wanting to cram their product into your process or make you cram your process and use their product and change your process to fit their small product, which is one small piece of their process. And they don't seem to understand why it doesn't take off.

Ken Elefant (15:37.830) Okay. Aaron, yeah. Okay. I'll just I'll just keep going. And and Aaron, you're you're one of the smart ones. I mean you understand what an agent can do for you and you can understand what the outputs are. And you also understand the different steps that you need to go through. That is really what I'm worried about inside of enterprises, is that there's not a lot of really smart people that know how to use AI most effectively.

Ken Elefant (16:6.088) And they're using it too much in some areas, and they're not implementing the guardrails that that you have done. and it's going to cause some major, major hassle.

Ken Elefant (17:59.820) Yeah, the the way that I used to describe it, Aaron, was that AI is like an overzealous intern. They really want to get things done for you. They want to do it fast and they want to come back and tell you that it's done. It's now, you know, a very overzealous master student because AI is very, very, very smart. And that means that this person has and in this case an AI agent has access to an immense amount of

Aaron Crow (18:0.139) Absolutely.

Aaron Crow (18:15.885) Well, and and that that's where I see, you know, I live in Austin, Texas. So there's a lot of you know, incubators here that that that really bring folks in. Cause a lot of folks have a good, good idea. And now with AI, there's a lot of people that think they can be a founder because, and they're not necessarily wrong, but because they can AI can help them create a product. They can help them create something. They can get to that MVP really quickly. but as you know, obviously, the going from that MVP to a

Ken Elefant (18:29.974) data, tools and access inside of your enterprise. And that's why you need to break it down into different different steps, just like you say.

Aaron Crow (18:45.775) product and and and a product that A, somebody's interested in, B, somebody is willing to pay for, and C is is implementable, is supportable, it's growable, like all like there's so many things that go from that. That's not to say that you shouldn't go after those ideas, but you know, having that knowledge, if you've never been in those spaces and you've never understood what it's like to implement a product in a manufacturing facility or at a bank and and understand all the the difficulties of getting a buyer to accept it. And

Ken Elefant (19:6.140) it's a it's a great question, Aaron. So we evaluate about 5,000 investments per year in the early stage fund. And we invest in about eight to twelve companies per year. So there's a very, very high look to buy ratio. Now, not all of those five thousand get looked at. They're they're sent to us from some source. But we love working with print practitioners out there. The a deal that I'm very interested in right now got sent to me by an exec.

Aaron Crow (19:15.597) And the compliance requirements that go in, like all of those things are things to consider. And if you've never seen that or done that, then you have to lean on folks like you guys. Obviously, you guys bring bring money to the table, but you also bring, I assume, a lot of that knowledge to these these folks that don't necessarily have that experience to help them along to say, This is a great idea. We see these other things you're gonna have to fight. Let me help you fight those things.

Ken Elefant (19:35.362) From Citigroup. And it is a very interesting security frontier model type of company. It could change the way that many, many enterprises interact with AI. It's really, really interesting. So that security practitioner knows that the types of investments that we like to do. And then they ask for our opinion because they want to get involved with the company.

Aaron Crow (19:46.753) It stopped again.

Aaron Crow (19:51.124) It seemed to be a clear day.

Ken Elefant (20:3.948) potentially get involved with the company as well. And this is a pre-seed really early stage deal and they know that the the company is going to need some of the value that we bring to the equation, like bringing in business relationships or bringing in executives in into the company. But it's all about those connections. So a lot of our founders or friends of our founders sends us very high quality opportunities

Aaron Crow (20:6.601) I don't know, it just keeps dropping. Like I saw you for a second and then I could still hear you.

Aaron Crow (20:18.774) Yeah. So so I again so I guess my point and and my question here is as more and more because the other side of the AI conversation that I really see is and I'm excited about because I I'm doing it myself is I see a lot more founders that are going to be growing. And because everybody can be a founder, everybody can use AI. You don't have to be a coder, but you can have an idea and you can take that thing to MVP.

Ken Elefant (20:31.626) And then obviously other folks that are in the ecosystem, whether they're they're lawyers or so on. And what I like to do is I like to spend as much time as I can thinking about new thesis areas and then breaking down those thesis areas into sub thesis areas and then making sure that that we talk to as many companies as we can and figuring out which which one is the best company in those areas. And sometimes

Aaron Crow (20:47.578) I I can see it being even more difficult going forward for folks like you and and even, you know, just those traditional founders to find those because there's going to be more needles in that stack of needles of really good ideas, but probably less mature founders that maybe have a good idea, but not really any real understanding of what it'll take to take that thing from an MVP to an actual product. I is that a space that you see growing because of this AI thing and booming? I I

Ken Elefant (20:59.838) It's these theses, there's no no companies in these areas. And so then we'll either go find somebody that wants to build something in these areas, or we'll just keep asking our friends, you know, at large enterprises, have you seen anything? And then we'll hear about it that way.

Aaron Crow (21:54.700) Yeah. Yeah.

Ken Elefant (22:26.754) Com completely. And you you said it yeah. You said it perfectly well at the b very beginning of the show. It comes down to people, process and technology. And obviously we're investing in technology companies, but we love the technology companies where there are founders that really understand that enterprises work based on people and process, not just the the technology component. Those are the companies that that win.

Aaron Crow (22:47.031) Yeah. Well, yeah. I mean, obviously if you're putting anything into an LLM, then anybody else that puts in the same search has that same knowledge and can build the same thing that that you're building, w which takes it takes that away, which is why it's really great to do an MVP with. It's not it's not necessarily going to take it, you know, what got you here won't get you there. it's not going to take you to that next level dependent upon but to to your point, like the the the the H VAC company that needs that needs a website.

Ken Elefant (23:6.368) Yeah, and you don't know y y you you don't know what their current process is and not one size fits all. That is that is really the key thing. Totally agree, Aaron.

Aaron Crow (23:17.379) They can get that a lot easier. You can build websites. My my 17-year-old can build a website and go sell it to these local businesses that don't know how to do these things and they can make money. Now, maybe they're not going to sell it for $10,000 like they did 10 years ago. but maybe they're selling it for five, six hundred dollars. And that that's a that's a growth or automating processes, helping people with expenses, or the helping them with their books or whatever those small problems that they have.

Aaron Crow (23:42.969) that you know, used to be, I'm gonna go mow your yard, I've got a lawnmower, you need your yard mode, that's a problem, I've got a solution, here you go. Now it can be a digital pro solution that I can solve your your digital problems and people will pay for those services.

Ken Elefant (23:44.204) So you asked before, you know, how do we go through all of these companies that come in and prioritize what we look at? And it really does come down to what you said. There's really three main things. It's the people. So in about half of our portfolio companies, they're serial founders, and half they're just phenomenal first-time founders that have great domain experience. And both types of entrepreneurs.

Ken Elefant (24:13.984) You you you'd be surprised. Many of them don't really want to dig in and understand other companies' businesses. They just look at at their own problem that they've that they've seen in the past. But you know, there's it's the 80-20 rule. There's there's 20% of the companies that you really want to dig in on, and then you figure out during your due diligence process should we go for it or not. we in the early stage fund, we really like small but rapidly growing markets.

Ken Elefant (24:43.766) So back in the day before cloud was really in production, we knew that cloud was going to change security in a big way. And so we we invested in several cloud security companies before cloud security was was even known as a problem. So we love these small but rapidly growing markets as well. And then we think about differentiation, and differentiation can be

Ken Elefant (25:13.622) based on the technology differentiation, but it also could be channel differentiation or ecosystem differentiation. So the third area, you know, I didn't didn't go through all of the areas that we invest in, but the third area that that we invest in is around development and so on. So like we're an investor in a company called Harness, the growth fund is, and they handle all of the the CI C D process for enterprises. And what they've done is they've

Aaron Crow (25:14.787) It did again. You're still here.

Ken Elefant (25:42.102) they've got it completely end to end for enterprises. That's critically important. So it's a really it's a it's a really, really good good questionnaire. And it is the the great entrepreneurs are the ones that really understand how to address their customers' problems and can put themselves in their shoes.

Aaron Crow (25:48.271) Mm-hmm.

Aaron Crow (26:9.218) Yeah. Yeah, a hundred percent. And and those AI things, I mean, I'm old enough to remember when they were, you know, the Nigerian prince, you know, that the the language is bad, everything about it was the wrong domain, spelling was awful, like everything about it was like this is obviously fake. Now they look real. The logos look good, the the the domain name is is is looks perfect, it looks believable, everything about it. and it's not a matter of if, it's a matter of when. And

Aaron Crow (26:38.241) If you have an organization with ten thousand people, the likelihood that at least one of them won't click on it is pretty low.

Aaron Crow (27:0.515) Yep. Yep. All I need is that entrance point.

Aaron Crow (27:10.915) Yes, yes.

Aaron Crow (27:15.473) gosh. well, Interstellar is really good. It just got a a a a Michelin star. KG barbecue is probably my favorite, though. It's probably one that most people haven't heard of. You may or may not have heard of it. It's a small food truck, and it is an Egyptian barbecue. So the guy came from Egypt and he kind of fused Egypt Egyptian and Texas barbecue together. so it has brisket, but he also has like lamb.

Ken Elefant (27:30.550) Completely. Wow.

Aaron Crow (27:44.919) it's amazing. It it's over off of the old airport road. If you're ever in Austin, you definitely gotta check it out.

Aaron Crow (28:3.649) I do. I know Tom very well, yes.

Aaron Crow (28:10.777) Yes. Yep.

Aaron Crow (28:18.862) Yep.

Aaron Crow (28:24.367) Hundred percent.

Aaron Crow (28:28.171) Mm-hmm. Mm-hmm.

Aaron Crow (28:44.973) Yeah. Yeah, it's it's one of the reasons I'm here. I'm from Texas anyways, but I moved to Austin three years ago. for that exact reason, right? It it's about, you know, who you surround yourself with. Like it's that old adage of you know, who the five you will be the the people that you hang around with, the five closest friends, you're gonna be that those people. If you hang around with, no offense, losers, you're gonna be the fifth loser. If you hang around with millionaires, you'll be the fifth millionaire. Whatever that thing is, if you wanna be successful, you hang around with.

Aaron Crow (29:12.695) a around with successful people. They just drive you to do better things. So, you know, it's like I've got three kids. I'm always telling them like who you hang out with matters. you know, so so be mindful of those things. it's not about money. It's about just making sure that you're showing up and in in in integrity and in how you want to be and making sure you're in the right, in the right room.

Aaron Crow (29:38.211) Yeah. Yeah.

Aaron Crow (29:59.769) Sure. Yeah.

Aaron Crow (30:15.215) Mm-hmm.

Aaron Crow (30:24.653) Uh-huh.

Aaron Crow (31:0.291) Yeah. Well, you know, I I was a CTO of a company called Industrial Defender, where we're very much in that compliance space. and went one of the original OT products. And and it wasn't sexy, right? It wasn't, you know, it wasn't AI, it wasn't a lot of those things, but it was something that was what was needed in in specifically, it was built for Nurk SIP. but as we started building it out and and and expanding it beyond just the Nurksip initial use case.

Aaron Crow (31:30.489) There's GRC capabilities. There's all these other, you know, other compliance programs, other things that it can be used for. And that value is there. and and it's about finding the capability, finding the users, finding the market for it, you know, and obviously growing the product to to meet the the customer needs. But to your point, there's not a lot of folks that are building compliance program or compliance type products. And and we even saw it in the in the spaces, like we, we, everybody that has a compliance program.

Aaron Crow (32:0.577) has already got a product, right? It's not liking as anybody that's, you know, building a new power plant that needs an a a new product. They've already got right? So you you're dealing with the same X number of customers. So yeah, maybe you can steal from another customer, but once it's it goes back to what we said before, that people process a technology. If I've already got a process and I've already trained my people on that process, I it it's going to take more than a cheaper product or a a little bit better feature.

Aaron Crow (32:28.463) For me to rip out something that's working and replace it with something else. Either my the thing that I'm using now has gotta stop working or they've gotta go under, or there's gotta be a e you know, exponential reason for me to upgrade, right?

Aaron Crow (33:4.205) Yeah. People hate change. That who moved my cheese? We've all read that book, right? You know, people don't like change. It doesn't matter if your firewall is the best firewall in the world. I have a firewall. For me to change out all the firewalls in my environment. Let's say I've got Cisco and Paolo comes to me and says, Hey, my firewalls are better and we'll give you a better deal on them. But like, yeah, but then I've got to change them. And then I've got to train all my people. And then I've got to upgrade all my documentation. And then I've got to

Aaron Crow (33:29.507) You know, there's just this laundry list of things, and I've got to update my sock and I've got to update my run books and I've got to do like changing out a product is hard. That's why when we're going in these emergent spaces that there is no product, it's it's a lot that wedge is a lot simpler because I didn't have a process. It was a manual process, it was ad hoc. That's easier entrance into these spaces where there's already a product, I'm having to kick someone out or or convince the customer to either add a new capability and parallel and or

Aaron Crow (33:58.433) replace and that that obviously is a lot lot lot longer lead time for for getting that wedge in there long term.

Aaron Crow (35:22.575) So how how do you advise folks that are looking for new products if they're looking to beta test a new thing that's coming out, or or you're looking at founders to to how do I get this product in the right space? How are you advising folks that are coming to you for advice on, hey, I'm looking for a product in this type of thing, or I'm looking to grow my my product into in into the space as well? Like what are some of the the big ticket items in in some of the things that we've already talked about, but maybe

Aaron Crow (35:48.451) maybe some other advice that you're looking at or giving with all that's coming on with AI and and machine learning and and cybersecurity and and the the nation state threats that we have and and all of the the things that are just flooding all all of the the radio waves that are going on. and there's just a lot of noise.

Aaron Crow (36:23.428) Yep.

Aaron Crow (36:35.279) Sure. Yeah.

Aaron Crow (37:14.851) Yeah. Yeah.

Aaron Crow (37:22.711) Yeah.

Aaron Crow (37:32.931) The yeah, I've I've I've known a lot of founders like that and and I've worked with a lot of them like that as well and a lot of product companies like that. And and the cool thing with those is they've usually been in the dirt and they've they've seen how badly it is and they know the pains and struggles and they know what it takes to do it without it. so they they kind of sometimes have that that it that head start on if they can make the product do the thing that they need it to do, they already know the wedge to get it into the place.

Aaron Crow (38:0.867) They've just got to get the the MVP. They've got to do that. And then they can sell it. now with AI, hopefully more and more of those will and that's where I was kind of leading for in the beginning. Hopefully more and more of those will start coming out because there's so many folks that have great ideas, but they're not developers. Or they maybe they are. They just don't have the time, the resources, whatever to build those things. AI and some of these technologies are going to make more and more folks like myself, like others that have.

Aaron Crow (38:27.147) All of these 30 years of experience doing all these different types of things, hey, I can spin something up and start something, build a thing, build a widget, build a whatever it is, and find a marketplace, get get, you know, cash positive on that, and then maybe build that into something bigger that really has something that, you know, wasn't in that theory that you thought about before, but but is a real need in the marketplace that just hasn't been hit yet.

Aaron Crow (39:11.119) Sure. Yep.

Aaron Crow (39:16.483) Yeah. Yeah.

Aaron Crow (39:46.817) I I'm a with that, I'm gonna throw you a curveball. interpersonal, right? Not technical or whatever. How many of this is is is letting go? And and I know as a founder, as a technologist, early in my career I had a hard time admitting that I didn't I wasn't the best at something, right? I always wanted to be the expert. I wanted to be the smartest person in the room. As I grew, as as I've grown in my career, I've I've realized hey, I I'm not going to be the best in everything. And I it's okay to lean on others and find and raise my hand and say I don't know.

Aaron Crow (40:17.199) saying I don't know is actually better than pretending I know or or or any of the others. Are do you see and and how do you advise fine founders as they're doing those things to say, hey, I want you to focus on this. Let me help you with these other things. I'll introduce you to something. It's like I don't do my accounting. I have an accountant. I don't want to do accounting. Could I do accounting? I'm really good at math. Yes, I could. I don't want to do that. So I hire an accountant. I have a bookkeeper.

Ken Elefant (40:18.568) Yeah. Okay. why don't why don't you go ahead and and and ask the the question. I didn't know you were

Aaron Crow (40:42.873) Like I don't want to do those things. I I f I outsource those things because that's not my my area of expertise. it's not my area of focus that I want to focus on. And I know as a founder, because I'm trying to save money, it's very easy to just try to do it all. and that's gonna slow your growth and potentially even make you make massive mistakes because you're trying to do it all without getting advice and guidance from folks that actually have that experience.

Aaron Crow (41:12.260) Yeah.

Ken Elefant (41:26.086) One one of the cool things about AI is just like you said, Aaron, is that it is very easy to start up a solution, a product, a a mini company. what I think is really interesting is that many of these companies could very quickly become cash flow positive companies. I don't think that they're gonna have venture like exits, but you can very quickly get to cash flow positive. So one of the mistakes that

Aaron Crow (41:29.134) Yeah.

Aaron Crow (41:48.739) Yeah. Yeah.

Ken Elefant (41:54.876) entrepreneurs make is sometimes they they raise money from venture capital when really they should just be raising from friends and family or their neighbors. So but what I love is that each one of these solutions is solving a problem. And I think there's going to be millions of new small businesses that are built on solving these problems. And the way that they're going to differ differentiate is based on service.

Aaron Crow (42:4.527) Sure. Yeah.

Ken Elefant (42:21.972) So basically I as the owner am the four deployed engineer for the solution. And you can think of it, you know, going after any of the small businesses that are in my area. They even could go after enterprises in the area, but it's just going to be based on that custom implementation at each company on this vernier. But if you are building just a workflow on top of an LLM, you're at great risk of being commoditized.

Aaron Crow (42:37.219) Mm-hmm.

Ken Elefant (42:52.006) And so those are businesses that we shy away from.

Aaron Crow (42:58.500) Mm-hmm.

Aaron Crow (43:13.955) Yeah. Yeah. And everything changes overnight. And and there's new tactics and new capabilities and skill sets and needs and and and the algorithm changes and and there's just so many moving parts. To your point, like if you're not if you're not creating content like this and you're not posting on all the different places and you're not writing white papers, you're not speaking at S4 or RSA or Black Hat or DEF CON or any of these places, it's really hard to get your get your thing to take off.

Aaron Crow (43:41.351) and and and having the right people on your board and like there's just so many factors that go into growing this thing, especially at this level. And and AI can help you in a lot of those ways, but it can also make you, just like we talked about before, it can make you un unbeknownst to some of the risks that you have or feeling overconfident in your capabilities that are not really as good as maybe you think they are.

Ken Elefant (44:5.972) Completely. Yeah, the way that I think about it is that there's two different types to our investment thesis. One is is invest in where the puck is going. And we talked about that with cloud security as an example. You know, another example of that is that we we thought that there is a lot more security that can be solved in a browser. And so

Aaron Crow (44:28.654) Yeah.

Ken Elefant (44:30.098) We looked at all of the companies that were that were in that area and invested in talent security, which is now part of Palapto networks. But that can be the basis of offering security in a whole new way. It can even offer, you can think of the browser as the as the next endpoint. So that is creating a whole new area. The other way that we like to invest is we look at large businesses that are being underserved.

Ken Elefant (44:59.152) And so in a lot of cases, there's legacy software companies that are out there that I think are just not innovating fast enough. In a lot of cases, they've been bought by PE firms as an example. So, you know, one of the spaces that we think is you know ripe for disruption is email security.

Aaron Crow (45:0.525) Well, you you you said a minute ago, and and I've heard you say it in a couple of different use cases now, but but having events and getting people together, and and and I say this all the time, we do business at the speed of trust. Like the sooner that you trust me, the sooner that you're willing to listen to what I have to say, the sooner that you're willing to consider to open the door, open your kimono, whatever that may look like, whether you're a customer.

Aaron Crow (45:22.807) Or you're a vendor, or I'm trying to get you to invest, or whatever the use case is, the faster that I build personal trust between you and I, the more likely it is that we're going to do better business. and and that's the case whether it's your employee, whether it's you and your boss, whether it's a peer or you're a customer and a vendor. That that that trust is there. And I've got countless examples of that through my career. And when that like that light bulb clicked for me, it's like,

Aaron Crow (45:51.787) Everybody's a salesperson. It doesn't matter if you're a salesperson, you're a salesperson. And and if you're just the tech guy and you're just focused on the tech and you don't realize that you're also a salesperson. And if you're not good at it, you better get good at it. Cause you gotta be good at it. Cause you gotta even if you're just selling your boss, you're still selling it. Like you've got to understand that and because you got to work with and through people all the time.

Aaron Crow (46:25.945) Sure.

Aaron Crow (46:37.369) Correct.

Aaron Crow (46:42.871) Right. We don't have to agree. We just have to decide what are we going to do. You say this, I think that. We're going to decide on this and we're going to okay, let's go. Let's let's take that action. I love that.

Aaron Crow (47:4.813) Yeah. Yeah. The the people process the people side of business is again being in the C suite, talking at boards, talking with CISOs and and and it's the same no matter what level of the organization that you're dealing with, you're you're having those interpersonal issues. and when you realize that you you don't have to agree, you don't even have to like each other. You just have to have that trust and understand that you're really good at what you do. I'm really good at what I do. We both are needed.

Aaron Crow (47:33.337) for the things that we do well. And let's come together for a common goal. And then let's decide what those things are. Or someone decide, hey, this is my thing. This is your thing. This is what we're gonna do. Okay, well, let's go. And and there's been t countless times where I didn't like someone, but I can work with them. I don't have to personally like you. I'm working with you. That doesn't have any the two don't have to be related.

Aaron Crow (47:58.275) Hundred percent.

Aaron Crow (48:1.889) Correct.

Aaron Crow (48:11.631) Correct. Exactly.

Aaron Crow (48:17.899) Exactly. Well, what do you want people to know? How do people find out? How do they brink what's the call to action that you want folks listening to this to to know?

Aaron Crow (48:44.719) Okay.

Aaron Crow (49:29.547) Excellent. Well, definitely everybody reach out, check out all the things. Everything will be in the show notes, folks, or click all the links. Definitely go check out at at if you're a CISO, reach out for any of those events. I always tell folks to get out of your comfort zone, go meet the people. Those are the things, you know, those people are going to be the the the di can be the difference in your career. It can be the difference in, you know, being successful in your position and your role and finding the right products and heck you never know. You may need a job or they may need a job or whatever those things are.

Aaron Crow (49:59.385) you never know how how all those things happen. And and the more that you get out there and and put your name out there and and and that add value to the community, it it it comes around. I think everything is cyclical. And the more you give, the more you get.

Aaron Crow (50:14.201) Yeah. Yeah, man, I appreciate it. Thanks for your time today.

Aaron Crow (50:23.531) Absolutely, for sure. And happy birthday. Thanks for joining me on your birthday, sir. All right, bud. Thank you.

Ken Elefant (51:12.228) because the incumbents are not innovating fast enough, is is email security. It's such an important area. And right now, unfortunately, the attackers are using AI to create very efficient, very custom phishing attacks on key important people inside of every enterprise. So imagine you're a CFO and you get wire transfer information what from what looks like the appropriate person.

Ken Elefant (51:41.412) That is unfortunately happening way, way, way too much inside the enterprise.

Ken Elefant (52:20.538) That that's completely true. And the sad thing about especially in security, as you know, is that, you know, we need to be right every time on the defense side. The attackers only need to be right once and then they get in and then they can keep traversing across their network and and take data or money.

Ken Elefant (52:38.960) So yeah. Yeah, so so I've just learned you're you live in Austin. Okay, so what's your your favorite barbecue place there?

Ken Elefant (53:28.641) so I I I love Austin, not only because of the barbecue, but because of the entrepreneurs there. I'm not sure if you saw, but over the last two weeks, do you know Tom Pace at NetRise? Okay. Yeah, so that that was I I do think that software supply chain security is super, super important. And I think that this combined with Dragos and with Run Zero, Accenture has packaged them up together in a in a really, really smart way. I think it's gonna be

Ken Elefant (53:57.551) Really interesting for the OT industry. and then you might know Michael Roth as well from Evo Security. and so that was just announced, I think, a couple of days ago, that Barracuda acquired them. So I love the Austin ecosystem. The the entrepreneurs really help each other, they work hard, and they're very customer oriented.

Ken Elefant (55:8.986) Yeah, we we're we're cut from the same cloth, Aaron. I think that that's that's our philosophy as well, completely. you know, one one other thing that you you know that you brought up are the you know the types of deals that we like. I would say that in general I love going after overlooked, boring spaces because there's typically less competitors in those spaces and

Ken Elefant (55:37.241) they're they're solving important problems. So I'll I'll give you an example of of one of those. The governance risk and compliance space is is just not a a fun space, but these these people are working so hard inside of enterprises doing a super important job, which is making sure that they reduce risk inside the enterprise. so I love that space

Ken Elefant (56:4.175) We're invested in in several companies that that are addressing it. You know, one is a company called Smart Suite, which is the the founders of Archer technology have now focused on governance, risk and compliance, and other workflows ins inside the enterprise. So those are those are the types of things that that I like to to look at are things that are just being overlooked inside the enterprise, areas that you know may on the surface look

Ken Elefant (56:33.807) Just tough to solve.

Ken Elefant (58:14.137) Yeah. Yeah that

Ken Elefant (58:19.221) That that is I think spot on and something that we look at. These startups, we definitely need a startup to have a grand vision of what it can ultimately become. The hardest thing is to figure out what is that initial wedge to get into the customer and then grow inside the customer.

Ken Elefant (58:41.612) And you know.

Ken Elefant (59:42.435) Yeah, and I think finding the customer bases that are willing to take that step with the startup I think is is critical for founders. So, you know, for example, I'm now spending a lot more time in defense tech. And I do think that the the federal government has gotten a lot better at figuring out how they can start working with startups initially.

Ken Elefant (60:9.653) And I do love the fact that there's so many parts of technology that you can start in the government and then move commercially. so that that actually is a pretty new phenomenon, I think, over the last five years or so. So defense tech I think is is really interesting. And we don't invest in hardware here at Sorensen Capital, but I do think the whole wave around robotics is a new and up and up and coming space.

Ken Elefant (60:38.967) as well. And I think it's really around the software behind robotics. It's the vi it's the vision software systems as well. Those are those are really interesting areas that I think are are untapped and the best entrepreneurs are figuring out where that initial initial wedge is.

Ken Elefant (61:44.121) Yeah, well what we do, Aaron, is we try and talk to the practitioners as much as we can. So at RSA every year we try and put together a CISO get together. So CISOs can chat with other CISOs, and we have about 80 CISOs show up and about 20 startups. at Black Hat, which is going to happen in less than a month now, we're doing little CISO lunches each day. and

Ken Elefant (62:13.443) We spark the conversation on problems that we think that's that are out there. And then in a lot of cases the the the group there will be like, no, you're completely off base. This is this is the real problem. So that is, you know, one one way that I think that the best ideas happen. But like we were saying before, I mean the the other way that that we get ideas is that people that are in certain businesses see where

Ken Elefant (62:43.002) there are pain points in their businesses and they get frustrated and they want to fix it, but they can't in these large companies. So they will go out and they will go start a company in that area to fix that pain point because they had that pain point. We we love that as well. And those may be areas that that we hadn't thought about or subsectors in our thesis prospecting that that we haven't really dug into yet. Love that.

Ken Elefant (64:28.857) Yeah, and what I found is that these entrepreneurs with domain experience, everybody wants help in certain areas. Some of them know exactly the the product that that they want to build, but they may not be thinking about the the bigger vision of what of what this could become. Some of them, you know, may want intros to potential customers to test test out their their thesis. Some of them may want an intro to a channel partner.

Ken Elefant (64:58.190) in the early days to help them figure out how to how to scale it out. So love working with entrepreneurs that we're not expecting entrepreneurs to be a plus in every aspect. That's that's really our job is to help bring in bring in people or bring in the some of our historical you know issues that that have happened and also wins that have happened in the past so that we can all learn together.

Ken Elefant (66:44.472) It's a long term process. And I and you know, I mean I'll say I've got weaknesses, so I start off with everybody talking about my weaknesses and where I have other partners that are a plus in other areas and I'm a plus in these areas, and together, boy, do we make a a great partnership. and so if I can personalize it to myself, then over time the entrepreneur will hopefully internalize it.

Ken Elefant (67:12.697) But it's not a a day one type of thing. The other the other thing, you know, that I love doing is having entrepreneurs speak with other entrepreneurs and see where they got help in the past. and we try and connect them. So you know, we we just made a a connection for one of our companies to I think a top tier marketing positioning person because I know that they're not not good at that, but they don't know that they're not good at that. So

Ken Elefant (67:42.957) it will, you know, by a osmosis and a little bit of time, it will sink in that that they can be best abreat in that. And we also put together events for our entrepreneurs to meet with the other entrepreneurs that are in our portfolio so they can compare best practices and and all the mistakes that that each of them have made. But things are moving super quickly today. I mean, that is

Ken Elefant (68:9.209) You know, I've been doing this for twenty-seven years, as you know, and I I must say, like things are moving faster than they ever have. And you know, a thesis or an approach or a process that you were just doing six months ago could be very different. I mean, look at look at AEO, right? I mean, a AEO is the way to get new customers, along with doing really good customized.

Ken Elefant (68:38.929) and scalable approaches on LinkedIn and Google and so on. But if you're not really good at at AEO, you're you're at a disadvantage versus everybody else.

Ken Elefant (69:38.233) Yep, completely. And you know, the the hardest part of of my job is to work with entrepreneurs and have them focus. Because there there is a hundred things that an entrepreneur can do. I mean, there's a hundred things like you were saying as as part of their their job. that over time, you know, that we can help an entrepreneur offload that to someone that is even better than they are in each in each of these areas.

Ken Elefant (70:6.073) But the other hard thing is that they're getting pulled in so many directions by customers. How do you actually focus the the product roadmap? How do you focus the the go to market strategy? I love I mean I love that from an intellectual perspective, but boy, it is it it takes a lot of of energy and a lot of risk to work with this with the with the entrepreneur to make these these tough decisions. But that is one of the my favorite parts of of this job.

Ken Elefant (71:49.433) Yes, yes. And and Aaron, just to just to add on to that, I mean the the trust and transparency is is critical, but that doesn't mean that we need to agree. In fact, I think best companies are the ones where we have trust, but there is a lot of back and forth so that we together can make the best decisions and that we can disagree, but then we decide and then we commit to move forward.

Ken Elefant (72:29.295) Yes. And then and then there's other cases where there's companies where they just like disagreeing a lot and then can't make a decision. That's that's totally solvable as well.

Ken Elefant (73:31.161) Yeah, it's important though to respect each other. That that is different than necessarily liking, but they need to respect and people need to understand what what I do versus what what you do so that there's no finger pointing at the end. Sometimes there's a lot of of wasted time around that as well, as you know.

Ken Elefant (74:4.751) Well, just shoot me a connection on on LinkedIn. I'm a total LinkedIn junkie. and you know I post blogs on of my own on on KenCrypted with some ideas. And I just would love to get more ideas in those two areas that I talked about, either going where the puck is going, or if you're frustrated with a very large company,

Ken Elefant (74:34.021) How you could invent a new company that will just take them out over time. Those would be the the areas that I would go after. I think the the call to action is it's basically that. We'd love hearing new about new ideas. and we'd like talking with more and more experts. So if you're a CISO, would love to have you at our RSA and and Black Hat events. if you're in the ecosystem.

Ken Elefant (75:2.386) there's many, many different ways we can work together.

Ken Elefant (75:48.389) Completely agree with that, Aaron. Thanks so much. And I'll look at you look for you at our our next barbecue event in in Austin. We invite a whole bunch of entrepreneurs to that. So we'll make that happen.

Ken Elefant (76:3.301) Thank you. All right, take care.

Transcript lightly edited for readability.