Zohar Rozenberg is Chief Strategy Officer at Elron. He’s a former head of IDF’s Cyber Department and retired as a colonel after 20 years of service.

As someone who knows the industry inside and out and as an investor keyed into what’s happening and what’s next for cybersecurity, Zohar seemed like the perfect person to talk to about the impact of coronavirus.

I talked to him about what covid-19 means for cybersecurity companies, what the smartest companies are doing right now to prepare for after the crisis ends, and why everyone should be looking for alternatives to in-person conferences.

MIKE: HOW HAVE YOU BEEN ADVISING COMPANIES THROUGHOUT THE COVID-19 CRISIS?

 

Zohar:

It’s been a case-by-case process. I think one of the most significant things I can contribute to our portfolio companies is to help them absorb or assimilate the crisis and its implications to think more strategically about it. It’s not just a quarter or two delaying your work. It’s more than that, something bigger.

Their assumptions for new revenue in Q2 should probably be zero. They understood they needed to lower expectations, but none of them were shooting for zero in Q2, and I told them no, put zero in Q2. I hope to be happily surprised, but put zero.

Another thing is being there with them for the tough decisions. It’s quite common and not very surprising that some need to cut expenses. In some cases investors are saying, fire everyone you don’t critically need; cut everyone’s payroll by 20 or 30%.

In some companies, layoffs could be more devastating than anything else. You might make it through the crisis, but I’m not sure you’ll have a company at the end of it. So it’s being there with CEOs on the tough decisions.

HOW DID THEY REACT WHEN YOU TOLD THEM TO PUT ZERO FOR THEIR REVENUE?

The first response was no way, I don’t believe that’s what it’s going to be. Two weeks later, most of them were convinced.

OBVIOUSLY, YOU’RE CONSTANTLY LOOKING AT THE INDUSTRY AS A WHOLE. ARE THERE SPECIFIC SPECIALTIES WITHIN CYBERSECURITY THAT YOU THINK COULD SEE GROWTH AS A RESULT OF THE PANDEMIC?

Yeah, definitely. Everything that has to do with working remotely is going to see significant growth: endpoint security, secure connectivity, identity and access management, data security, Wi-Fi security, and other measures around the home environment. Even with those who try to keep work inside their headquarters, we’re going to see a dramatic shift toward using more SaaS and making data and resources accessible from anywhere.

Second, I think we’ll see a lot of activity around strengthening the internet infrastructure. We’ll probably see a significant push for 5G, because as we’ve seen over the past few weeks, in many countries, the infrastructure doesn’t support the load that’s suddenly being used. In many places employees’ homes do not have good enough connectivity to support continuous working from home with all the hours of Zoom meetings. So I think the connectivity and infrastructure is going to get a significant push forward.

I think that we’ll see healthcare budgets significantly increase everywhere. There’ll be a lot more devices, a lot more telemedicine. It’s been the buzz for the past decade, but very little has been done about it. In most of the world, it’s clear that it’s going to have a significant boost. In Israel, it’s already being discussed that the regular neighborhood clinics won’t stay the same. There’s going to be a lot more remote medicine, which of course carries a lot of privacy and security issues.

I WAS READING SOMETHING ABOUT PEOPLE’S MEDIA HABITS, AND HOW TRENDS THAT WERE EXPECTED TO EVOLVE OVER FIVE YEARS WERE COMPRESSED INTO FIVE WEEKS. IS THAT SIMILAR IN THE CYBERSECURITY INDUSTRY?

Definitely. Look at more traditional industries like banks. In many places, banks have pretty much avoided moving to the cloud. There wasn’t such a thing as remote working if you worked in the bank headquarters. But now suddenly they had to open everything in a few days because the banks needed to keep working, but people cannot come to the headquarters. That was an overnight change, which is really dramatic.

Government offices, in most of the world, never planned for remote working, but everyone is home. So the government is almost paralyzed. Even if the government makes decisions, there’s no way to execute them because the people who need to execute them cannot come to the office. So that’s another area where overnight, you see a change that would have taken 20-30 years, but now it’s going to happen much much faster.

WHAT DO YOU THINK CYBERSECURITY COMPANIES SHOULD BE DOING NOW TO PREPARE FOR WHAT’S NEXT AFTER THE CRISIS? 

I’m not sure it’s unique for cybersecurity, but they need to understand how well they’ll be addressing the needs that will be higher priority right after we start to move forward again.

If you’re not addressing an issue that will be one of the top three to five priorities, then you’ll be in a tough position because you won’t be the one getting a deal for the next one or two years. So it’s really understanding how you will be meeting the shift, the change, the fine tuning of the priorities of organizations and of CISOs the day after the coronavirus crisis ends.

WHAT ARE SOME OF THE MOST IMPORTANT THINGS CYBERSECURITY COMPANIES SHOULD BE COMMUNICATING RIGHT NOW, BOTH INTERNALLY AND EXTERNALLY?

So internally, the message should be that we’re all in the boat. It’s a joint task to make it through. It’s a message about keeping innovation running. It’s also about understanding everyone has their own issues around the crisis. Some have kids stuck at home. Some have issues with money because their income has decreased. Some have issues with elderly parents. Some just have fear and uncertainty. So it’s about keeping everyone closer and understanding who’s undergoing what and being there for them.

Externally, you should show strengths through your online presence. Do a lot of thought leadership because now’s the time for that. It’s very difficult to close deals now so you have more time to do thought leadership and be on people’s radar. Once we do get back to doing business, you should have earned greater brand recognition as more people are aware of you and know what you’re doing.

WE BOTH STARTED OUR YEAR OFF TRAVELING TO DIFFERENT EVENTS, WHICH FEELS LIKE DECADES AGO AT THIS POINT. IF A LOT OF THE IN-PERSON EVENTS CONTINUE TO EITHER RESCHEDULE OR CANCEL, HOW WILL YOU FILL UP YOUR CALENDAR AND ADVISE OTHERS AROUND EVENTS FOR THE REST OF THE YEAR?

I don’t see any big conferences happening over the next 18 to 24 months, at least. Going back to what I said before, it’s really about understanding how we are going to do things differently. People are doing online conferences and more webinars and online meetups.

It’s definitely not the same as being there and meeting people in person. I don’t have a good answer yet, but I do understand that you need to find new ways to meet new people on a one-to-one basis, somehow, even remotely.

Events & Conferences

It goes back to your online presence and leveraging on that. If I post something on LinkedIn and people react, I need to see who reacted and contact them because I’m not going to have a chance to meet with them face to face over the next 18 to 24 months.

How do I leverage my online presence to meet new people and take it from the sort of one-to-many or many-to-many online events to a one-to-one event. Because again, I don’t think I’ll be meeting many new people face to face in the foreseeable future.

WE’VE SEEN A LOT OF NEWS STORIES THAT HAVE CROPPED UP AROUND WORK FROM HOME, ONLINE SCHOOLING, RAPID ACCELERATION OF VIDEO CONFERENCING, ZOOM BOMBING. WHAT’S CATCHING YOUR EYE IN THE NEWS?

The velocity and the volume of the phishing around coronavirus rose so fast it was amazing. In a way it’s disappointing to see that no matter how bad things are, cybercriminals will take advantage of it.

I think the Zoom issues are sort of a surprise because it’s a relatively new, cloud-born company, and I would have expected them to be more aware of cybersecurity issues. They had a sort of 1990s approach to cybersecurity. It was strange.

WHEN YOU’RE LOOKING AT COMPANIES THAT YOU’RE CONSIDERING INVESTING IN, WHAT ARE THE MOST IMPORTANT FACTORS YOU CONSIDER?

The most important has been and still is the team quality and unity. The startup journey is a very challenging one with a lot of uphill battles and a lot of downfalls and it takes a strong personality and a very strong team to be able to cross all those challenges.

I’ve seen teams of founders break up, some more nicely, some more ugly. So I think team quality and unity is the first and most important thing.

And again, this coronavirus crisis is a very good example. Even companies that had a very good period just before the crisis now are maybe in a catastrophic situation. To get past that you need strong personalities, leadership, and again, unity within the team of founders because these times require tough decisions.

That’s really the first and foremost factor. And I’ll just say that part of team quality is also obviously flexibility and the ability to change and the ability to raise change. And again, this crisis is a very good example why this is so important.

WHAT BOOKS DO YOU ALWAYS TELL PEOPLE THEY SHOULD READ?

I like to think that every decade has its own book, with a different theme for every decade. In the 90s, my bible was “Built to Last.” But then 2000 came and most of those that were built to last didn’t really last.

Then there were books about leadership and management by Peter Drucker and others. I think I would go back to books about leading change, culture, and others. It’s really important and that’s what I’m pitching to my portfolio companies: that they should stop thinking about when do we get back to normal and understand that we won’t go back to the old normal; there will be a new normal.

It’s going to be different, at least for the next two years. So it’s important to embrace the change and understand how to change everything you do, and not count the time until things go back to the way they used to be. That’s the wrong attitude, at least in my view.

Companies that are dealing mostly with cutting expenses, thinking let’s wait for the crisis to be over and then get back to what we did, expecting that everything goes back to normal, they’re going to get the more severe hits afterwards. Companies that are focused on how to think about things differently will have an advantage.