Selling Cyber: Deal Flow and Market Signals with Momentum Cyber

Cybersecurity is really tightly coupled to economic prosperity and national security. The Fifth Domain of Warfare. I got the front row seat to a lot of those early mega deals. We started seeing billion dollar deals for the first time about eight years ago, very consistently. But you guys had to produce this 2025 Cybersecurity Albinac. Eight transactions alone accounted for 87 billion dollars of the value. You're taking every single category within the cyberspace is being eaten by the AI category. So if you could think about it as like a Pac-Man, we're going to clear the board. It's just going to be AI. The machines about smart of the humans, we need to go back into hard and un-prem firewall. No, we could be in this like, or well, you're like, well, ever-treat. If you can't trust the data, you can't trust the models. Then they're useless. You can't get away from the security. It's dominated every discussion the report talks about. It's the most active financing sector. I think we will see a bit of a paradigm flip. AI is revolutionary. It's not revolutionary. [MUSIC] >> Thank you for joining us, William Cyber Show. My name is Chris Hughes, and today I'm joined by Eric McAlpine. Eric, thanks for being here. >> Thanks for having me, Chris. >> Yeah. >> Get into this discussion with you. >> Yeah, I'm excited about this one. I'm kind of a cyber practitioner, return quasi market analyst, advisor, all the things. Just kind of watching the bigger macroeconomic trends in our space. And your firm momentum cyber and some of the reports you all have produced, quickly got on my radar as an excellent resource to kind of do that. But for folks that don't know you, don't know momentum cyber. Can you tell us a bit about yourself and the team as well? >> Yes, so I am a recovering engineer myself about 30 years ago. I studied engineering at Purdue University and joined the Air Force after college. Got another master's degree in engineering and worked on the, at the time was the X32 and X35 program, the Joint Strike Fighter Program. And it was a pretty geeky role helping it evade radar, observable coating steam. But from there I transitioned into the business world through an MBA. And did that 2001-2003 and then joined a story firm, Solomon Brothers had one of the best training programs on the street. And Solomon Brothers had been purchased by City Group. So we became essentially City Group's global corporate investment bank. And it was that experience through New York and then ultimately transitioned my career to Palo Alto. Our office was right across the street from Hula Packer. And so it was right there on, on Page Mill Road, right in the heart of Silicon Valley. And I got the front row C to a lot of those early mega deals that we were starting to see in technology. And from 2003 to 2008, kind of, you know, started my career in the enterprise software group. Security really wasn't a thing. We called it InfoSec back then, if you recall. And somebody had asked me to read some garden reports and put together a presentation on the security space and kind of go out there and do a little hustling as a senior associate junior VP. So I did that and we ended up landing a semantic John Thompson, who ran semantic at the time as a house account. And then we ended up selling a few companies to to Dave DeWalt and McAfee. And back in those days, there was kind of a Coke and Pepsi, right? There was two companies and that was it. It was kind of the wildest. Palo Alto Networks didn't exist yet. You know, Fire I didn't exist yet or any of those other companies as well. In 2008, I had a wonderful opportunity in my career to transition to more of a advisory role, but still in a biceye firm. And that's when I joined Blackstone. And Blackstone had no presence in technology at all outside of New York. There was no office in California. We opened up Blackstone's first office on San Hill Road. We were right there in the thick of all of the venture capital, Andrews and Horowitz, and the early days of their firm and got a front row seat to that. And then took a lot of what I was doing at City on the enterprise software side predominantly and in security and really created a practice around it for Blackstone. And Blackstone became a very security minded and focused firm. I mean, Mr. Schwartzman, we used to call him Steve as many know him, had two rules in the firm. Two things that he was that would keep him up at night. One, insider trading. There will never be an insider trading scandal on his watching his firm. I was really proud of that and there never has been. And two, breaches, right? I mean, these breaches started to happen and they became very toxic to companies brands. Right? And so it was kind of fun to be at Blackstone at a time where we were a little bit more forward thinking around cyber and security. Higher J. League as a CISO. Now J. is running for some ventures in this kind of meteoric ascension to his career going from operator, you know, like and him and Patrick as well. And the whole team over there are coveleo. True operators in the industry to now GPs at one of the most successful venture funds. And again, I had a front row seat to that. Guess what was missing? There was no sell side component to this. I kept seeing all my friends at Bob Akerman and Illegis and what Dave was doing at night drag in. And you saw what Alex Dal and Mark Hatfield were doing at 1011 and of course, Yolav at YL ventures pretty much at every point in time where you would invest in a cybersecurity company. There was now a focused firm. I shouldn't forget ForgePoint, Alberto and the team over at ForgePoint Capital. And I, you know, there wasn't a sell side analog to that, right? There wasn't an M&A firm that just stood for cybersecurity. And so I figured we needed to change that. And in 2017, we rebranded our firm from momentum partners to momentum cyber. We went all in on the space. And it was the right, the perfect time to do that. I thought we got a lot of reception in the industry. There was kind of time. I think the industry had grown up enough. It wasn't a cottage industry anymore full of these small 50 to 75 million dollar deals. And then after that, we got the pleasure to work with guys like Robert Hergerback, of Shark Tank fame. And a lot of folks don't necessarily know how these sharks made their money if you Google them, you could see. But it's not necessarily, you know, wasn't why they know that he basically created Canada's largest pure-place cybersecurity company. And when he had an opportunity to kind of choose the advisor that he wanted to work with, he really embraced momentum's really white glove, boutique, really high touch business model. I think he appreciated that. He's a fan of Ferraris. And sometimes I use that analogy about our firm. You know, we're not for everyone. We're very boutique-ish. We do small, you know, we work on a small number of deals in a year, but they're very important deals, especially to the founders who've created those companies. And we go all in for our clients. They're almost all on the sell side, which is unique if you work with the big bank. They're going to choose both sides. They're going to work for the private equity firms. They're going to work for the big companies, the kind of consolidators. And then they're going to tell the founders, and we're on their side too. We've picked a side and it's yours, and we tell our clients that. And we have worked very selectively in the past for big companies to help them grow their cybersecurity practice. But it's because we're very in tune to it and touch with the founder community. And so a good example of that would be PWC. One of the largest companies on the planet, they have a cybersecurity business that is, you know, it's private, but you know, consider it to be two, three, four billion dollar business captive in cybersecurity. But they're not in touch with the founder ecosystem. And so we sort of did bend the rules a little bit about only being sell side with that experience. Because we could help founders navigate a complex system like a PWC and get deals done. And over a couple of years, a couple of years, we helped them get three or four deals done. That was kind of a unique experience for a firm like ours to be able to work with a firm like PWC and help them expand that effort. But most of what we do is on the sell side, typical transaction size for us is around $350 million. We worked with Gary Fish, sold his last company. He's had three exits of over $300 million. I call him the Jay-Z of Casey. He really is a business. And that was a wonderful experience too. Guys like Robert and Gary, they could choose any investment bank they wanted to on the planet. And we're very blessed and grateful that they chose our firm. Yeah, I think it speaks to the caliber of the company, the team that you've built, the foundation, and the background that you all have. And it kind of took them to my first question for you. You kind of joked it was back then. It was Coke and Pepsi and maybe there was a few, a couple, a small handful of billion dollar deals, right? But you guys had produced this 2025 Cybersecurity Albinac. And it talks about a record year, but also a record concentration. I think the report showed. 96 billion dollars across 400 M&A deals, but eight transactions alone accounted for 87 billion dollars of the value. Mega deals like Google and Wiz or Palo Alto and CyberArc. What does the underlying M&A market actually look like? Is that concentration of an indicator of softness or what does it really say about the middle market? Yeah, I just thought of this actually. I'm going to use a fly fishing analogy. And I think that's very apropos because I'm not taking this podcast in my own home office because I'm actually in Bozeman, Montana for us. So I'm at the ranch of my original business partner and co-founder in M&A, Michael Tedesco. Michael Tedesco was a big deal guy. He ran Tech M&A at City Group. He ran in all North American M&A and Tech M&A at Jeffries and kind of talked him out of retiring early about 12 years ago to join me on this mission that we were on. We've been on here at momentum for the last 12 years and now Michael is almost fully retired. We still pull him into the big or the complex deal, but he spends more time fly fishing than advising clients now, but occasionally we'll pull him into a transaction. The analogy I'm going to use is like fly fishing. You take a picture of the big brown trap that's 22-inch, right? Do you take a picture of the six-inch that you have to throw back or the little trout? You don't. Or the white fish that you might hook when you're actually out there trying to hook a trophy trout. That's what we see in the market. You see these big headlines around the Google Whiz for 32 billion, Cyber Arc for 35 billion, Splunk, two years ago, $20 billion. But the real health in the market is the mid-market. That's that transaction exit that's between $100 to $500 million. That's where we play. Occasionally, we'll look up below that, especially if it's a founder that we really respect and that we really want to back with our time and effort. But most of what we do is kind of in that mode of $100 to $500 million deals. When you look at cybersecurity, most of the transactions are below $250, right? So an outcome, depending on how the company was funded, the outcome could be quite successful below $100 million. There was a category of companies and you see these windows open up, soar, right? You'll see like three soar deals happen, like right in a row. Remember the old web isolation companies coming to like fire glass and web life? So we sold a company called WebLife to Proofpoint and the transaction size was more than 50 but less than 75. They'd raised $2 million. They'd had less than 20 employees and it was a call at a 25x return on invested capital. That was an amazing outcome that changed David Melanick's life. And it became a great business for Gary Steele at the time when he ran Proofpoint. So small things come in small packages sometimes when it comes to M&A, it just depends. When we worked on the Redlock transaction, that ultimately became Palo Alto's Prisma platform. And we're going to create a very different HAP platform but it was early, it was less than $10 million in ARR and they paid over $200 million for it when you consider the restricted stock unit packages for the team. So it's one of those things where the big deals get a lot of the attention and that's where they're going to skew the data. But it's really that kind of mid market that is the lifeblood of cybersecurity M&A. Yeah, makes sense. I think at your point the headlines, the buzz is what gets a headlines as a transaction volume shows. There's a lot more activity underway than just those headlines. Another thing that report talks about is kind of this two tier market where you have, from the financing side, the median series C round has grown from 50 to 80 million plus. And the overall deal count actually dropped below 20%. For founders listening who are between Series A and Series C right now, what separates the companies who are kind of pulling away versus those who are getting left behind and how do those early signals show up? You know how much? Well, first there's a valley between Series A and B and you climb that mountain and then there's another valley between Series B and Series C. So the distance between Series A and Series C can be quite a long journey for an entrepreneur founder and his or her team. When you look at the company's nowadays, you're seeing some pretty remarkable massive raises in the early stage. Look at 7 AI, $130 million Series A. I think what we're seeing is capital is being used and deployed almost as a strategic asset from the onset. And it's almost like a key differentiator. You can build products so fast with the Gen. AI and you can have product, you know, GA to customers and under a year. Let me give you an example of a company that I admire. I'm actually an advisor to the CEO, it's a good friend of mine. Eric Foster has a company called 10X AI, 10X, 10X. So if you look at what they're doing, it's pretty remarkable, which is a company that has gotten into with just a Series A raise and under a year coming out of stealth, has gotten a company to over 5 million in AR, close to 10 million in AR, actually with a trajectory that's going to 3 or 4X that this year. So that's going to be, you know, that's an eventual, very exciting Series B story. When you say 2 tier market, you know, that's sort of the halves, right? To be able to build product, get it out there and be able to sign large multi-year deals with global 2000 companies kind of differentiates you. Whereas before, I think there was an adage that you would raise your seed round, right? Come up with proof of concept, raise an A round, build the team and the technology, and then use the B round to put, go to market muscle behind the platform. Right now you're seeing, you got to do that right away. So the A and the B have kind of merged for some companies and that's why that, you see in these large A rounds. And then you'll see a large B round, that's really their C round, right? And then you see these well-contrated C rounds, which you just pointed out, right? And then you see the data, some of those are, you know, true C round, and some of those are really D rounds. And it just means that there's going to be fewer rounds overall as companies or as investors are more selected than ever in terms of whether they're deploying their capital. Once they believe in an idea, it's better to just put all their chips into a founder that they fully, that they firmly believe in. And another thing that we're seeing to the press is, you're starting to see people second and third acts. So when you, you know, 10 years ago, we didn't have second and third. We're having first acts for these founders, right? You know, my first deal in cybersecurity, Found Stone. Found Stone sale to Mac, it was my very first deal. I was an associate on the deal. And, you know, who the founders of Found Stone were? George Curz. I mean, he's like, you had Kevin Mandier, you just, you looked at the Found Stone, Mabye. This was a small $87 million sale to Macafe ended up spawning crowd strike, silence, Mandier. It's just, it's just, it's mind blowing. You know, it couldn't have predicted something like that, right? Yeah, I think, and that's excellent point in terms of the second and third act piece and putting all their chips in is like, you know, you have these proven repeat founders. You know, they've gained a trust right of the investment community. They've proven that they can do this. They can go and execute. They can scale. They can exit. They can actually create an established category and dominate those categories and so on. So it's just a matter of the industry has been a long, a round longer, right? It's matured. There's been that time to kind of build that track record that didn't exist before. Precisely. You know, and what we're seeing is, you know, people often point out there's not a lot of IPOs in cybersecurity. And they're right. You know, there's a real innovator's dilemma in cybersecurity. And it's really tough. And I think people that are going to be on the forefront of, you know, really defending, you know, our way of life or not, you know, I got my, my cup here says, piece through superior firepower. So I got my earphones sat on today. But, but it really is true. I mean, people who come into that defender mindset, right? And want to build product and defend our corporate networks are national security interests. I mean, those are going to be people that are really truly entrepreneurial and are going to be pushing the envelope in technology. It's not going to be the large platform companies anymore. And everybody wants to see everybody has a friend, right? If you work for checkpoint or you work for Palo Alto or you work for CrowdStrike, you probably have a friend or two or maybe even more that has had a successful exit. And that sort of that camaraderie, if you will, in that sense of community and cybersecurity is much stronger than it is. And any other vertical within enterprise software, you'll see AI guys, you know, kind of band together. You know, there's this new AI conference that I'm getting involved with, called Human Exits run by Larry Chu, one of our senior advisors, Larry, the co-chair of M&A. Good one. guys done more in M&A than not. anybody out of the known. And we're starting to see that ecosystem evolve. And we're starting to see both of our ecosystems, AI and cyber kind of really come together. If you can't trust the data, you can't trust the models, you know, then they're useless, right? Or they're counterproductive. - Yeah, I like to what you said there about the, the Mug and the superiority, superiority through firepower, you haven't been the military myself. And I got strongly believe, you know, cyber security is really tightly coupled to economic prosperity and national security. And like it's a point made in, I forget the name of the author of the book, but the Fifth Domain of Warfare, right? And that's becoming more and more prominent through geopolitics and things like that now more than ever. And I think it's going to continue in that direction. You did talk about the strategics and kind of the innovators, the lemma and things like that, they kind of go versed by. In the report, it kind of has this theme of strategic kind of reclaiming the throne. And I think it was 92% of disclosed MNA value in 2025 was via strategics, you know, a massive swing back from the PE dominance in prior years. Now, what do you think is driving that? Is it simply the mega-dils, you know, screwing the numbers? Are we seeing more change in how companies like, you know, Palo Alto or Google, SilverSnow, some of which, you know, you wouldn't even necessarily call them quote unquote cyber company, but they're moving more and more into that space. Do you think it's a can, you know, a can of how they're thinking about and build versus buy or what's driving that? It's bull actually. So, you know how many independent companies have purchased, independent buyers have purchased a cyber security company, acquired a cyber security company since 2010? - I'm curious, go ahead. - Over 1500, 1568, de-duped buyers of cyber security. Now you take the Cisco's and the Palo Alto networks, I think Cisco's acquired 28, I think Palo Alto's acquired 24 since then, you know, CrowdStrike is now 10 with the latest two they did in one month, less, it was eight at the end of the last year, now it's already 10. We'll see them move up the leaderboard here too. But in terms of the space, you know, we do not have 1500 and 68 publicly traded cyber security companies. So people from other industries, right? But private equity is a large component to that. But, you know, we're probably, there's so many cyber adjacencies, take service now for example, right? I mean, that was a ITSM company, cloud-based, right? So they did kind of disrupt the old EMC and HP OpenView and CA model and they did a quite successfully service now as a large organization that we work with. But it was only a matter of time. I mean, under the old leadership, and I think what we're seeing is, new leadership in some of these companies is making a huge difference in how they're leaning into M&A. I say two things and follow the money and follow the people. And then you'll see M&A activity, right? A good example of that is when Thomas Curie was hired to run Google Cloud because Google was falling behind in the cloud wars, he came from Oracle. Oracle's super successful, you know, very, very inquisitive company. I knew right away they were gonna be a force in cyber security. And guess what, now they use security and they lean in. They developed Chronicle, you know, they bought, they bought Mandy and so they're in services. They bought Wiz, so they're in platform, right? Simplified, so it's just a, you know, when you think about the people aspect of it, look at the change in leadership over at service now, you know, when McDermott came in, you know, it was obvious that they were going to become a dominant force in cyber security when that transitioned from Donahydud to McDermott. He came from SAP, SAP, built by acquisition, right? And now you're starting to see the same thing happen with these, you know, we'll get into this. I'm sure later with these hyper-stilation, you've got to follow the people and I follow the people and I realize if they have Google lineage, right? If they have Microsoft lineage and their heritage into them, they came from a very inquisitive company. Chances are they were hired to accelerate and amplify a company's M&A efforts. And if you look at, well, look at Donahdov, right? So Gil was great. I mean, it's amazing, you know, Hall of Fame, Pantheon of Cybersecurity Operators Gil. They were more focused on, you know, cash flow and dividends than to their shareholders than acquisition by M&A. And Palo Alto, when the cash came on board, right? I mean, just a completely different strategy. And it's not hard to show in the stock price, which one has been more successful. But now you're seeing checkpoint, just announced three acquisitions. And Medov came over and came out of the investor seat from teammate, very highly, you know, regarded early stage investor in cybersecurity to go run, you know, what is arguably the most important cybersecurity company in Israel, checkpoint. So follow the people, follow the money. - Yeah, I really like that you, the people part because we focus so much on the technology, right? The buzz, the technology, the technological paradigms and the way it lays wave, the categories and so on. But underneath all that is people and behaviors and incentives and performance and so on. And I like that you're following that because as you said, it shows up in their, in how they behave, like in terms of how the company operates, you know, tied to the people that are there. And I wanted to also call out, you know, the report talks about AI security. Like you can't get away from AI security. It's dominated every discussion around cyber. And in there, it talks about, you know, we had over 330 different AI security vendors that the report talks about 144 financing rounds making it the most active financing sector. Yet only 10 M&A deals. And Richard Steonen, you know, who's awesome, a good analyst out there. He caught the fastest forming subsector in cyber history. You know, we saw some acquisitions, you know, a prompt and some of the earlier kind of Gen1, you know, AI model-centric companies, you know, be captured in M&A activity. But what do you think will happen in terms of further consolidation in that? Especially tied to a strategic and so on. And they kind of build these like mega platforms, right, rather than the age or kind of point solution kind of paradigm. It really are. It's AI is revolutionary. It's not evolutionary, right? We have evolutionarily trapped the cyber security industry for the last 15 years. It's been my labor of love. We created the original cyberspace, right? And the 2015 and '16 era. And we've kind of slowly modified it over time to add categories as categories kind of come and go. And you know, Gartner will come up with continuous threat exposure management. Like, oh, okay, I'm a C-10 company, right? I'm a solar company. You know, we just used to have security operations as a category and then that kind of fractured often to five categories over time. What we're seeing with AI though is in two years from now, I think Cyberscape 5.0 is just going to be an AI landscape who's going to develop a new company, you know, from the ground up that is an AI native. Like, 10 years ago, you wouldn't have created a company from the ground up that wasn't cloud native, right? That wasn't sass out of the box. And now we're starting to see that. We are probably in the first half inning of the AI revolution in cybersecurity. I think we've just had one team come to bat and they got on base 10 times. If you want to use that analogy, right? And scored a few runs. But we're just getting started. Do you know the category kind of quizzed you? But because it's just so ingrained into me and to what I do in the advice that our firm delivers to clients. But ironically, the category that delivered the most number of M&A deals last year was the antithesis of AI. It was human led security, aka services. So services had 136 or so, maybe some of 40 M&A transactions last year to 10 in AI. But if you flipped it around and said, how many funding were there? AI had 145 things at how many funding of security services or managed services companies were there. It was the exact opposite. So you're going to see the M&A landscape is still going to be dominated for the next few years by kind of human led transactions and services companies. But we're going to probably see that flip in two or three years to very much an AI center world. Yeah, that could have been an entire conversation to be honest with you. I noticed that service dominance too. And I feel like services, like as a practitioner of cyber, I feel like it's kind of overlooked or kind of look down on in some way, right? Because Proc gets all the focus. But at the end of the day, security is something you do. It's not necessarily something you buy. And organizations are buying outcomes. And often services are the firms that help deliver those outcomes. Tools can help, right? Proc can help absolutely. But now to your point, I think we will see a bit of a paradigm flip in the sense that we saw a surge of investment. And now there's the rise of a Gen. T. A. I, which has the potential, you know, the tam, right? Of eating some labor, right? As you automate activities and you're leaning to agents to do some of the activities that human traditionally would do mainly, including in cybersecurity. So it'll be interesting to see how that plays out. You threw out this, the phrase of "cyberscape," I believe it was. And that, you know, in some of the reports, you guys rebuilt the cyberscape, you know, landscape from scratch in 4.0. I think it goes from 18 sectors to 12. But expanded from 803 unique companies to 1,000. AI security alone, housing, I think, 400 plus of those across 10 sub-sectors. Look, what motivated the overhaul? And how do you think about drawing boundaries in the market with so many categories kind of clapsing into the platform players? Yeah. It's not what motivated the overhaul, honestly, it's two. And I have to give a lot of credit. And almost all the credit to my chief of staff, billion yen a key and really a brilliant way. Young banker mind insecurity and he has only you know, he has no tech debt No didn't work for a big bank and didn't work for you know Any other company other than moments and cyber kind of coming out of college and he's been with me now for the last you know six years and He's seen some of the limitations firsthand of how useful the original cyber escape taxonomy could be two boards Right, we've seen this use in the boardrooms of power out of networks. I've actually seen it blown up and in a sock before which is just like you talk about like almost the Tearshading moment for me to see our to see our work being used by security practitioners is probably the best compliment I could ever get for what we're trying to accomplish here at momentum for founders But William really understood and understood that map better than anybody else and was Responsible for maintaining it and and had to take the flack from founders and why on I on this sector or that sector or Subsector, did you know we released this product or what have you and so we would try to do our best to To kind of keep up with you know the product development across the landscape But when this category of kind of when when everything just became kind of AI native two years ago There was a big hole in the cyberscape right and so we started tracking and we started collaborating with Richard who tracks the sector Just as closely as we do and sometimes there's a little rivalry of who tracks more companies More us the truth is, you know, well, there's a lot of sharing, you know and and and and Collaborating in the background of tremendous respect for what he's doing at IT harvest and he wrote a forward for our all-man act But we all agreed that it was time for for us to really look at that category and create enough space on the vision on the diagram itself and I was just blown away by the fact that there were over 300 companies and formed around Some notion of AI security or unless the models the data or taking categories complete categories and just starting from scratch Right, so it's AI identity right it's AI observability right and so you're taking every single category within the cyberscape is being eaten By the AI category so if you could think about it as like a Pac-Man over time, right? We're gonna clear the board and it's just gonna be AI Yeah, I think it's I think that's true But I also think it's a bit of over time AI will be a bit more like a utility or it's gonna be ubiquitous and pervasive Like more of a horizontal than a vertical It's yeah, it's gonna be it's gonna be embedded into everything and it'll just become security and AI is just part of Technology and software, you know, it's you know, we had a cloud security category on there, but I don't know anybody who's coming out, you know who developed an on-prem solution Over the last 10 or 12 years so you could really say that everything is cloud security now when we use cloud security on that Cyberscape we really mean like CSPM companies companies that are protecting the cloud and cloud cloud workloads Versus you know am I a cloud company or not? Yeah, yeah speaking of AI and an on-prem You know, there are some folks, you know bringing workloads back quote unquote on-prem It's often still in a cloud provider, but you know one more privacy or you know control their data So maybe maybe we'll see the renaissance if on-prem. I don't know, but I want to ask you to This point in time where we're like okay the machines about smarter the humans. We need to go back into hard and on-prem firewall We could be in this like or well in like world-world Retrieve yeah, we'll retreat back on-prem But so you guys also had a great resource, you know kind of what a world-class cyber team is worth and it looked at some of the team dynamics and team sizes And it looked at I think a hundred and M&A transactions by enterprise, you know value per employee And it also shows that companies with 50 plus employees, you know growing head-pronged head count pre acquisition average 99% growth Who are shrinking companies average 58% decline Here's what does that sell buyers, you know founders and others about you know team quality and skill and trajectory Beyond just kind of revenue multiples That's exactly it. You got to get beyond revenue multiples or you got to get beyond the headlines and It's another Another young professional that works for our firm that I need to give a lot of credit for the Almanac And particularly the Almanac, but also that report And is named Jake Pollock and Jake joined me about six months ago And I really had a vision for what our firm could be you know if we could take our research efforts and have them be As eponymous and successful and a really hallmark of the firm just as our M&A efforts had been and really marry Content development business development and real client development in this harmonious ecosystem and I pitch this young man My vision and he bought in right away and then we just went into the lab and we created the Almanac from scratch and When you take an undertaking like that, but I wanted to just make sure that Jake got you know the recognition that he deserved From from creating that yeah No, no, no need to cut it out actually came across his profile and I've been following him and I think This has come up throughout the conversation multiple times like pulling folks in right from Different backgrounds and different domains, but you know kind of Building this firm with these different perspectives these different insights and this excellent data for the community. So I think it's awesome Answer your question, though, because I got a little that checked out thinking about what you know Where Jake is going without research platform and you're gonna see some cool stuff And I can't wait to come on and follow up podcast with you maybe Mid-year and we'll just see how you know how we how's the first half of this year Ben versus kind of where we're coming into the year at But yes, the the theme that I tried to stick to with the team is you know There's by the numbers, but then there's behind the numbers right and any of us can just parrot this data Right any of us can put together data any of us can put together charts and it's becoming easier and easier if you have access to the data But really it's understanding what is the data telling us right and what is behind the numbers and that world class cybersecurity report Was our first example of saying look Not all exits are equal right? I mean and and of course everybody you want you know You want to pat everybody on the back for getting that exit and you know and achieving that milestone I think every all 400 founders and their teams are deserving of a trophy For getting to that point and they're journeying But when you really look behind the numbers what we started doing was marrying up Data from headcount data to the exit data and if you look at a company 18 months prior to its acquisition and then at the time of acquisition and looking at headcount trends It was really revealing and that's why we wrote that report So that you could certainly see that I Think it's a lot of this is married up with the fewer concentrated bets and this two two it was just another proof point of this two-tier cycle Right Yeah, yeah, so that actually speaks to you know I believe in the report it doesn't necessarily I don't know if it calls it this but it talks about kind of a What I took away was like a headcount inflection point and it talks about some of the data points in there being that Companies under 30 employees actually shrank 15% 18 months before acquisition Maybe signaling signaling that they're getting lean inefficient and so on where companies in the 100 to 200 range grew 14% before acquisition is there a headcount thresholds where you know buyers shift from viewing a deal as an aqua hire To like an actual platform acquisition and how's that planted the economics of the deals? Yeah, no, that's a student observation and there is and it's a little bit of a gray area Depending upon what you've built and how you've been able to scale go to market early on and but there's that 30 to 50 employee range Where there's sort of some spectrum is you know, are we acquiring? team talent intellectual property or are we buying a tam and a big category here? Right and somebody else's you know already proven go to market muscle and that's that in that 30 to 50 ranges where we see Company starts a transition from what we call tuck-in You know our aqua hire, you know tuck-in to you know, this really is a consolidation Like this is a land grab if you will yeah, that makes sense And we've seen a bit of both play out even this year like you said there was the Checkpoint with you know three acquisitions. It seemed like simultaneously and then just this today actually saw a headline of Co-security and Palo Alto acquiring them and that was you know kind of rumor had been flowing around but I mean They were a super young early team quickly built out of reputation. You know kind of a unique brand in the ecosystem some great research and There they go off to Palo Alto just in the last Probably two two weeks. I've had three founders reach out to me and they have inbound interest They're only seed funded Less than 20 employees right want to get our perspective would would they be a good client, you know for the firm and you know Got to think hard about you know that because there could be a negative signal to the market of working on it Even a firm like ours that is only known for cyber security When if you have 12 13 15 employees, right? Depending upon who's knocking on your door a lot of that selling of that deal needs to be founder led Yeah, it reminds me of small companies early on that are you know founder led sales It includes not just the customers, but technically to an acquisition entity as well So well said there so we've you know we kind of alluded this you know what to end the conversation here But I want to see you know you make some upcoming research changes you guys are making at momentum cyber anything you want to tease for the audience here to keep an eye out as we wrap it up. Yeah, two things that we're working on that we're cooking out that I'll give a little mini preview. One of them is a analysis is going behind the numbers in terms of time series, right? Looking at time to exit, time to funding path and really peeling that back and I have to give all credit that was Jake's idea. And then another one is as we all know, it's 250th birthday of the United States, right? And being a veteran owned business, I thought that we should put a report out this year around the July 4 timeframe, really hang homage to and respecting the veteran owned businesses in cybersecurity and really putting a spotlight on profile on veteran owned businesses. And I think you'll speak to your background, speak to my background as well. But I think without the veteran community and really the beltway working with Silicon Valley, we wouldn't be as protected as we are, right? I mean, you think of what's coming out at unit 8200 over in Israel, you think about what's coming out of the NSA and Air Force and Cyber Command and J9, it really does require veterans to kind of jump off onto the other side of the fence. And so we're going to do a report that that spotlights that later in the mid part of this year. Yeah, I love that because it's spot on in the sunset, oh, lost my camera, it's spot on in the sunset. The veteran community, both like as you point out in Israel with 8200 but also in the United States as well, the emphasis of the veteran community and their involvement. And you talked about this a little bit earlier, the kind of the purpose of mission, right? I think it draws folks from the military but also to cybersecurity, right? Because it has a powerful mission aspect to it, we look at national security, economic prosperity. All the things we talked about along the way. So Eric, I appreciate you jumping on, I really appreciate the insights from the team. I learned a lot and I'm sure folks on along will learn a lot as well. I look forward to having you back on. I think you said mid year this year would be a good time to have you back on again. Anytime Chris, thanks for having me. Really enjoyed the discussion. Thanks for the questions. Absolutely. Take care.