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July 18, 2018
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Cyberwarfare

A simple solution to end the encryption debate

in Atlanta/Column/computer security/computing/crypto wars/cryptography/Cyberwarfare/Delhi/encryption/executive/Federal Bureau of Investigation/India/law enforcement/mobile devices/mobile security/Politics/smartphone/smartphones/Symphony Communications by

Criminals and terrorists, like millions of others, rely on smartphone encryption to protect the information on their mobile devices. But unlike most of us, the data on their phones could endanger lives and pose a great threat to national security.

The challenge for law enforcement, and for us as a society, is how to reconcile the advantages of gaining access to the plans of dangerous individuals with the cost of opening a door to the lives of everyone else. It is the modern manifestation of the age-old conflict between privacy versus security, playing out in our pockets and palms.

One-size-fits all technological solutions, like a manufacturer-built universal backdoor tool for smartphones, likely create more dangers than they prevent. While no solution will be perfect, the best ways to square data access with security concerns require a more nuanced approach that rely on non-technological procedures.

The FBI has increasingly pressed the case that criminals and terrorists use smartphone security measures to avoid detection and investigation, arguing for a technological, cryptographic solution to stop these bad actors from “going dark.” In fact, there are recent reports that the Executive Branch is engaged in discussions to compel manufacturers to build technological tools so law enforcement can read otherwise-encrypted data on smartphones.

But the FBI is also tasked with protecting our nation against cyber threats. Encryption has a critical role in protecting our digital systems against compromises by hackers and thieves. And of course, a centralized data access tool would be a prime target for hackers and criminals. As recent events prove – from the 2016 elections to the recent ransomware attack against government computers in Atlanta – the problem will likely only become worse. Anything that weakens our cyber defenses will only make it more challenging for authorities to balance these “dual mandates” of cybersecurity and law enforcement access.

There is also the problem of internal threats: when they have access to customer data, service providers themselves can misuse or sell it without permission. Once someone’s data is out of their control, they have very limited means to protect it against exploitation. The current, growing scandal around the data harvesting practices on social networking platforms illustrates this risk. Indeed, our company Symphony Communications, a strongly encrypted messaging platform, was formed in the wake of a data misuse scandal by a service provider in the financial services sector.

(Photo by Chip Somodevilla/Getty Images)

So how do we help law enforcement without making data privacy even thornier than it already is? A potential solution is through a non-technological method, sensitive to the needs of all parties involved, that can sometimes solve the tension between government access and data protection while preventing abuse by service providers.

Agreements between some of our clients and the New York State Department of Financial Services (“NYSDFS”), proved popular enough that FBI Director Wray recently pointed to them as a model of “responsible encryption” that solves the problem of “going dark” without compromising robust encryption critical to our nation’s business infrastructure.

The solution requires storage of encryption keys — the codes needed to decrypt data — with third party custodians. Those custodians would not keep these client’s encryption keys. Rather, they give the access tool to clients, and then clients can choose how to use it and to whom they wish to give access. A core component of strong digital security is that a service provider should not have access to client’s unencrypted data nor control over a client’s encryption keys.

The distinction is crucial. This solution is not technological, like backdoor access built by manufacturers or service providers, but a human solution built around customer control.  Such arrangements provide robust protection from criminals hacking the service, but they also prevent customer data harvesting by service providers.

Where clients choose their own custodians, they may subject those custodians to their own, rigorous security requirements. The clients can even split their encryption keys into multiple pieces distributed over different third parties, so that no one custodian can access a client’s data without the cooperation of the others.

This solution protects against hacking and espionage while safeguarding against the misuse of customer content by the service provider. But it is not a model that supports service provider or manufacturer built back doors; our approach keeps the encryption key control in clients’ hands, not ours or the government’s.

A custodial mechanism that utilizes customer-selected third parties is not the answer to every part of the cybersecurity and privacy dilemma. Indeed, it is hard to imagine that this dilemma will submit to a single solution, especially a purely technological one. Our experience shows that reasonable, effective solutions can exist. Technological features are core to such solutions, but just as critical are non-technological considerations. Advancing purely technical answers – no matter how inventive – without working through the checks, balances and risks of implementation would be a mistake.

News Source = techcrunch.com

The United States needs a Department of Cybersecurity

in China/Column/computer security/Congress/cyberattack/cybercrime/Cyberwarfare/Delhi/department of defense/Department of Homeland Security/department of justice/executive/Federal Bureau of Investigation/Government/hacking/India/national security/Politics/Russia/San Francisco/Security/spy/United States/Washington by

This week over 40,000 security professionals will attend RSA in San Francisco to see the latest cyber technologies on display and discuss key issues. No topic will be higher on the agenda than the Russian sponsored hack of the American 2016 election with debate about why the country has done so little to respond and what measures should be taken to deter future attempts at subverting our democracy.

For good reason. There is now clear evidence of Russian interference in the election with Special Counsel Mueller’s 37-page indictment of 13 Russians yet the attack on US sovereignty and stability has gone largely unanswered.  The $120 million set aside by Congress to address the Russian attacks remains unspent. We expelled Russian diplomats but only under international pressure after the poisoning of a former Russian spy and his daughter.

Recent sanctions are unlikely to change the behavior of the Putin administration. To put it bluntly, we have done nothing of substance to address our vulnerability to foreign cyberattacks. Meanwhile, our enemies gain in technological capability, sophistication and impact.

Along with the Russians, the Chinese, North Koreans, Iranians and newly derived nation states use cyber techniques on a daily basis to further their efforts to gain advantage on the geopolitical stage. It is a conscious decision by these governments that a proactive cyber program advances their goals while limiting the United States.

Krisztian Bocsi/Bloomberg via Getty Images

We were once dominant in this realm both technically and with our knowledge and skillsets. That playing field has been leveled and we sit idly by without the will or focus to try and regain the advantage. This is unacceptable, untenable and will ultimately lead to potentially dire consequences.

In March of this year, the US CyberCommand released  a vision paper called “Achieve and Maintain Cyberspace Superiority.” It is a call to action to unleash the country’s cyber warriors to fight  for our national security in concert with all other diplomatic and economic powers available to the United States.

It’s a start but a vision statement is not enough.  Without a proper organizational structure, the United States will never achieve operational excellence in its cyber endeavors.  Today we are organized to fail.  Our capabilities are distributed across so many different parts of the government that they are overwhelmed with bureaucracy, inefficiency and dilution of talent.

The Department of Homeland Security is responsible for national protection including prevention, mitigation and recovery from cyber attacks. The FBI, under the umbrella of the Department of Justice,  has lead responsibility for investigation and enforcement. The Department of Defense, including US CyberCommand, is in charge of national defense.  In addition, each of the various military branches  have their own cyber units. No one who wanted to win would organize a critical  capability in such a distributed and disbursed manner.

How could our law makers know what policy to pass? How do we recruit and train the best of the best in an organization, when it might just be a rotation through a military branch? How can we instantly share knowledge that benefits all when these groups don’t even talk to one another? Our current approach does not and cannot work.

Image courtesy of Colin Anderson

What is needed is a sixteenth branch of the Executive — a Department of Cybersecurity — that  would assemble the country’s best talent and resources to operate under a single umbrella and a single coherent policy.  By uniting our cyber efforts we would make the best use of limited resources and ensure seamless communications across all elements dealing in cyberspace. The department would  act on behalf of the government and the private sector to protect against cyberthreats and, when needed, go on offense.

As with physical defense, sometimes that means diplomacy or sanctions, and sometimes it means executing missions to cripple an enemy’s cyber-operations. We  have the technological capabilities, we have the talent, we know what to do but unless all of this firepower is unified and aimed at the enemy we might as well have nothing.

When a Department of Cybersecurity is discussed in Washington, it is usually rejected because of the number of agencies and departments affected. This is code for loss of budget and personnel. We must rise above turf battles if we are to have a shot at waging an effective cyber war. There are some who have raised concerns about coordination on offensive actions but they can be addressed by a clear chain of command with the Defense Department to avoid the potential of a larger conflict.

We must also not be thrown by comparisons to the Department of Homeland Security and conclude a Cybersecurity department would face the same challenges. DHS was 22 different agencies thrust into one. A Department of Cybersecurity would be built around a common set of skills, people and know-how all working on a common issue and goal. Very different.

Strengthening our cyberdefense is as vital as having a powerful standing army to defend ourselves and our allies. Russia, China and others have invested in their cyberwar capabilities to exploit our systems almost at will.

Counterpunching those efforts requires our own national mandate executed with Cabinet level authority. If we don’t bestow this level of importance to the fight and set ourselves up to win, interference in US elections will not only be repeated …  such acts will seem trivial in comparison to what could and is likely to happen.

News Source = techcrunch.com

Lessons from cybersecurity exits

in Adobe/Bain Capital/Business/ceo/chief information security officer/CIO/Column/computer security/CTO/cyber/cybercrime/Cyberwarfare/Delhi/Director/Economy/Entrepreneurship/head/India/IPOs/LinkedIn/Marc Andreessen/mulesoft/national security/nea/Okta/palo alto networks/partner/Phantom Cyber/PhishMe/Politics/Private equity/sailpoint/Sendgrid/splunk/Symantec/TPG Growth/trident capital/True Ventures/Twilio/unicorn/venrock/Venture Capital/zscaler by

To: ceo@cybersecuritystartup.com

Subject: Lessons from cybersecurity exits

Dear F0und3r:

What a month this has been for cybersecurity! One unicorn IPO and two nice acquisitions – Zscaler’s great debut on wall street,  a $300 million acquisition of Evident.io by Palo Alto Networks and a $350 million acquisition of Phantom Cyber by Splunk has gotten all of us excited.

Word on the street is that in each of those exits, the founders took home ~30% to 40% of the proceeds. Which is not bad for ~ 4 /5 years of work. They can finally afford to buy two bedroom homes in Silicon Valley.

Evident.IO Investment Rounds and Return estimates

Date

Select Investors

Round Size

Pre

Post

Dilution

Estimated Returns / Multiple of Invested Capital

Sep 2013

True Ventures

$1.5m

$5.25m

$6.75 m

22%

44X

Nov 2014

Bain Capital

$9.8 m

$18.1m

$28.0 m

35%

10.7X

Apr 2016

Venrock

$15.7 m

$35.0 m

$50.7 m

30%

6X

Feb 2017

GV

$22.0 m

$73.6 m

$95.5

23%

3.1X

My math is not that good but looks like even some VCs made a decent return. Back of the envelope scribbles indicate that True Ventures scored an estimated ~44X multiple on its seed investment. Others like Bain snagged a ~10X on the A round investment and Venrock which led the Series B round took home ~6X.

We see a similar pattern with Phantom Cyber, which got acquired by Splunk for $350 million. A little bird told me that they had booking in the range of $10 million. But before we all get too self-congratulatory, lets ask – why did these companies sell at $300 million to $350 million when everyone in the valley wants to ride a unicorn? Clearly, funds like GV, Bain and Kleiner could have fueled more rounds to make unicorns out of Evident.io and Phantom Cyber.

Phantom Cyber Investment Rounds and Return estimates

Date

Select Investors

Round Size

Pre

Post

Dilution

Estimated Returns / Multiple of Invested Capital

April 2015

Foundation Capital

$2.7m

$8.3 m

$11.04 m

14.50%

31.7

Sep 2015

Blackstone

$6.5m

$26.7 m

$33.2 m

15.90%

10.5

Jan 2017

KPCB

$13.5m

$83.0 m

$96.5 m

13.90%

3.6

(Data Source: Pitchbook)

Some of the board members might have peeked at the exit data gathered by the hardworking analysts at Momentum Cyber, a cybersecurity advisory firm. Look at security exit trends from 2010-2017. You might notice that ~68% of security exits were below $100 million. And as much as 85% of exits occur below $300 million.

Agreed that there are very few exceptional security CEO’s like Jay Chaudhry who grew up in a Himalayan village, and led ZScaler to an IPO. This was Jay’s fifth startup and he kept over 25.5% of the proceeds, with another 28.3% owned by his trust. TPG Growth owned less than 10%. After all, he himself funded a substantial part of the company (which raised a total of $110 million).  But not everyone is as driven, successful and it’s ok to sell if the exit numbers are meaningful. Remember what that bard of avon once said:

For I must tell you friendly in your ear,

Sell when you can; you are not for all markets.

(Shakespeare, As you Like It, Act 3, Scene V)

(68% of security exits occur below $100 million. M & A Data from 2010-2017. Source: Momentum Cyber)

My friend Dino Boukouris, a director at Momentum Cyber, offers some sage advice to all founders who are smitten by unicorns. “Before a founder raises their next round, I would reflect on the market’s ability to purchase companies. The exit data says it all. As you raise more capital, your exit value goes up, timing gets stretched and the number of buyers who can afford you drops.” Dino has a point, you see. As we inflate valuations, your work, my dear CEO, becomes much harder.

If you don’t believe Dino, let’s look at another recent exit, PhishMe, which was acquired by a private equity consortium for $400 million. That’s a nice number, correct? At the first look, you’ll notice that the dilution and financial return patterns are similar to that of Phantom. Except that PhishMe took 7 years and consumed $58 million of capital, while Phantom took 3 years and consumed $22.7 million. Timing and capital efficiency matter as much as exit value. It’s not just the exit value ~ but how long and how much. Back to my man, Dino who will gently remind you that for the 175 M & A transactions in 2017, the median value was $68 milion. Read that last sentence again — very slowly. $68 million. Ouch!

PhishMe Investment Rounds

Date

Round size

Select Investors

Pre-money Valuation

Post

Dilution

Returns / Multiple of Invested Capital

July 2012

$2.5m

Paladin

$10 m

12.5 m

12.20%

32.0

March 2015

$13 m

Paladin

$61 m

$74 m

13 %

5.4

July 2016

$42.5 m

Bessemer

$155 m

197 m

21%

2.0

(Data Source: Pitchbook)

Two years ago  in Cockroaches versus Unicorns – The Golden Age of Cybersecurity Startups cybersecurity founders were urged to avoid the unicorn hubris. A lot of bystanders, your ego included, will cheer you as you get higher valuations. But aren’t we all rational human beings, always making data based decisions?

Marc Andreessen will remind you that his best friend, Jim Barksdale, once said “If we have data, let’s look at data. If all we have are opinions, let’s go with mine.”   Since 2012, my VC friends have funded 1242 cybersecurity companies, investing a whopping $17.8bn. But chief information security officers say that they don’t need 1242 security products. One exhausted CISO told me they get fifteen to seventeen cold calls a day. They hide away from LinkedIn, being bombarded relentlessly.

Enrique Salem (former CEO of Symantec) and Noah Carr, both with Bain Capital are celebrating the successful sale of Evident.io. They pointed out that the founders — Tim Prendergast and Justin Lundy had lived the public cloud security problem in their previous lives at Adobe. “Such deep domain expertise allowed them to gain credibility in the market. It’s not easy to earn the trust of their customers. But given their strong engineering team, they were able to build an “easy to deploy” solution that could scale to customers with 1000s of AWS / Azure accounts. Customers were more willing to be reference-able, given this aligned relationship.”

(Source: Momentum Cyber)

You, my dear CEO, should take a page from that playbook. Because Jake Flomenberg, Partner at Accel Partners says, “CISOs are suffering from indigestion. They are looking to rationalize toolsets and add very selectively. New layer X for new threat vector Y is an increasingly tough sell.” According to Cack Wilhelm Partner at Accomplice, “Security analysts have alert fatigue, and CISOs have vendor fatigue.”  You are one of those possibly, wouldn’t you agree?

Besides indigestion and fatigue, the CISO roles have become demanding. William Lin, Principal at Trident Capital Cyber, a $300m fund pointed out that “the role of CISO has bifurcated into managing risk akin to an auditor and at the same time, managing complex engineering and technology environments.”  So naturally, they are managing their time more cautiously and not looking forward to meeting one more startup.

Erik Bloch, Director of Security Products at SalesForce says that while he keeps an open mind and is willing to look at innovative startups, it takes him weeks to arrange calls with the right people, and months to scope a POC. And let’s not forget the mountain of paperworks and legal agreements. “It’s great to say you have a Fortune 100 as an early customer, but just be warned that it’ll be a long, hard road to get there, so plan appropriately” he pointed out.

So, my dear founder, as the road gets harder, funding slows down. Look at 2017 —  despite all those big hacks, Series A funding dropped by 25% in 2017. Clearly, many of our seed funded companies are not delivering those Fortune 100 POC milestones. And are unable to raise a Series A.  Weep, if we must, but let us remind ourselves that out point solutions are not that impressive to the CISOs.

All the founders I know are trying to raise a formulaic $8m Series A on $40m pre. But not every startup that wants 8 on 40 deserves it. Revenues and growth rate, those quaint metrics matter more than ever. And some investors look for the quality of your customers.  Aaron Jacobson of NEA, a multi-billion dollar venture fund says, ”A key value driver is a thought-leader CISO as a customer. This is often a good indicator of value creation.“

Stage

Expected Revenue Run Rate

Estd. Round Size

Angel

None

Up to $2m

Series A

$1.5m to $3 m

$5m to $8m

Early VC

$5 m to $8 m

$15m to $25m

Late Stage VC

$6m to $10m

$30m to $50m

When markets get crowded and all startups sound the same, investors seek quality, or move to later stages.  They like to see well proven companies, that have solved a lot of basic problems. And eliminated riskier stumbling blocks. Like product-market fit, pricing and go-to-market issues. Naturally, the later stage valuations are rising faster. Money is chasing quality, growth and returns.

Median Post-Money Valuation by stage for cybersecurity companies (Source: Pitchbook)

The security IPOs offer a sobering view. This is a long journey, not for the faint of heart. Okta moved fast, consumed ~4X more capital as compared to Sailpoint and delivered great returns.

Company

Year Founded

Years to IPO

Total Capital raised prior to IPO

Revenues (2017)

Post Money of last round prior to IPO

Market Cap at IPO

ZScaler

2008

10

$180m

$176 m

$1.05 bn

$3.6 bn

Okta

2009

8

$231 m

$160 m

$1.18 bn

$2.1 bn

Forescout

2000

17

$159 m

$220 m

$1.0 bn

$806 mn

SailPoint

2004

13

$54.7 m

$186 m

N/A

$1.1 bn

Security IPOs (Source: Momentum Cyber, Pitchbook)

Innovating with go-to-market strategies

In the near term,  the big challenge for you, dear security founder, is selling in an over crowded market. If I were you, I’d remember that innovation should not be restricted to merely technology, but can extend into sales and marketing. We lack creativity when it comes to marketing – ask Kelly Shortridge of Security ScoreCard. She should get some kind of BlackHat award for developing this godforsaken Infosec Startup Bingo. If you find any startup vendor that uses all these words, and wins this bingo, please DM me ~ I will promptly shave my head in shame. We got here because we do not possess simple marketing muscles. We copy each other while our customers roll their eyes when we pitch them.

Sid Trivedi of Omidyar Technology Ventures wants to work with the developer focussed startups. He says, “Look at companies like Auth0. The sales efficiency on developer-focused platforms is tremendous. You can go to a CISO, CIO or CTO and point out that X number of developers are paying to use my technology. Here are their names, why don’t you talk to them? And then, let’s discuss an enterprise license for the full company?” That approach works like magic. Overwhelming majority of the software IPOs like Twilio, Mulesoft, SendGrid are developer platforms.”

If you go top-down in a hurry, you can crash and burn. I am aware of an impatient security vendor who used executive level pressure at a Fortune 50 company. They kicked their way into the POC. And got kicked out by the infosec team. The furios infosec team destroyed the vendor in a technical assessment. I was told that the product was functional but the vendor’s impatience and political gymnastics killed the deal. Let us not forget simple truth: many times CISOs turn to their subordinates for advice and decision-making, so don’t just sell to the top. Nor ignore the rest of the people in the room.

With more noise, the buyers freeze. Margins shrink. Revenues and growth slows down. Which means it’s harder to get to your milestones before your next round. Running out of cash is not fun. Nor is a down round, layoffs and such. So while this is easier said than done, please raise less and do more. And maybe, just maybe, you can keep 40% of a $350 million exit.

If you have questions or existential dilemmas, you can always find me, chatting with a friendly VC in South Park.  Or I’m always around in a trusted secure world of Signal.

Stay safe at that annual security stampede called RSA.

Kindly,

Mahendra

PS: Let’s not forget to express our gratitude to those analysts at Momentum Cyber and Pitchbook for painstakingly tracking every investment, analyzing and presenting meaningful data. They help us look at the forest, and make our journey easier. Send them a thank-you tweet, some wine, chocolates, flowers or home-baked cookies.

News Source = techcrunch.com

Researcher Emilio Ferrara talks about the rise of fake news and botnets

in botnet/bots/computing/Cyberwarfare/Delhi/India/Politics/Social/Software/spamming/Startups/Stitcher Radio/TC/technotopia by

Emilio Ferrara has been thinking about botnets for over a decade. As the first social networks climbed out of the mire, he noticed that they were very easy to game. Now, it seems, all of those early tools have finally been weaponized.

I spoke to Ferrara about his research work as well as his fascinating study that found that Twitter bots can be used for good. In this episode of Technopia we discuss the rise of botnets and how they can be turned against those who would use them for harm.

“We found that bots can be used to run interventions on social media that trigger or foster good behaviors,” said Ferrara. “This milestone shatters a long-held belief that ideas spread like an infectious disease, or contagion, with each exposure resulting in the same probability of infection. Now we have seen empirically that when you are exposed to a given piece of information multiple times, your chances of adopting this information increase every time.”

Technotopia is a podcast about a better future by John Biggs. You can subscribe in Stitcher or iTunes and download the MP3 here.

News Source = techcrunch.com

New Bluetooth vulnerability can hack a phone in ten seconds

in Bluetooth/computer security/computing/cryptography/Cyberwarfare/Delhi/Enterprise/hacking/India/Internet of Things/national security/Politics/TC/vulnerability by

Security company Armis has found a collection of eight exploits, collectively called Blueborne, that can allow an attacker access to your phone without touching it. The attack can allow access to both computers and phones as well as IoT devices.

“Armis believes many more vulnerabilities await discovery in the various platforms using Bluetooth. These vulnerabilities are fully operational, and can be successfully exploited, as demonstrated in our research. The BlueBorne attack vector can be used to conduct a large range of offenses, including remote code execution as well as Man-in-The-Middle attacks.

“Blueborne affects pretty much every device we use. Turns that Bluetooth into a rotten black one. Don’t be surprised if you have to go see your security dentist on this one,” said Ralph Echemendia, CEO of Seguru.

As you can see from this video the vector allows the hacker to identify a device, connect to it via Bluetooth, and then begin controlling the screen and apps. It’s not completely secretive, however, because in activating the exploits you “wake up” the device.

The complex vector begins by finding a device to hack. This includes forcing the device to give up information about itself and then, ultimately, release keys and passwords “in an attack that very much resembles heartbleed,” the exploit that forced many web servers to display passwords and other keys remotely.

The next step is a set of code executions that allows for full control of the device. “This vulnerability resides in the Bluetooth Network Encapsulation Protocol (BNEP) service, which enables internet sharing over a Bluetooth connection (tethering). Due to a flaw in the BNEP service, a hacker can trigger a surgical memory corruption, which is easy to exploit and enables him to run code on the device, effectively granting him complete control,” write the researchers.

Finally, when the hacker has access they are able to begin streaming data from the device in a “man-in-the-middle” attack. “The vulnerability resides in the PAN profile of the Bluetooth stack, and enables the attacker to create a malicious network interface on the victim’s device, re-configure IP routing and force the device to transmit all communication through the malicious network interface. This attack does not require any user interaction, authentication or pairing, making it practically invisible.”

Windows and iOS phones are protected and Google users are receiving a patch today. Other devices running older versions of Android and Linux could be vulnerable.

How do you stay safe? Keep all of your devices update regularly and be wary of older IoT devices. In most cases the problems associated with Bloodborne vectors should be patched by major players in the electronics space but less popular devices could still be vulnerable to attack.

“New solutions are needed to address the new airborne attack vector, especially those that make air gapping irrelevant. Additionally, there will need to be more attention and research as new protocols are using for consumers and businesses alike. With the large number of desktop, mobile, and IoT devices only increasing, it is critical we can ensure these types of vulnerabilities are not exploited,” wrote Armis.

News Source = techcrunch.com

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