DNC Hacks, Growth VC and the World’s Highest Concentration of PhDs: Highlights from CapitalG’s Gene Frantz on NBC Bay Area’s Sand Hill Road Podcast
There’s a lot to discuss in cybersecurity — from protecting the integrity of elections to managing increasingly complex corporate infrastructures. That’s why we were so excited when CapitalG general partner Gene Frantz recently sat down (virtually, of course) with noted NBC tech journalist Scott McGrew to discuss CapitalG’s focus on growth-stage companies, the firm’s relationship with Alphabet, his investments in cybersecurity leaders like CrowdStrike, Zscaler, and Expel, and white space opportunities for aspiring cybersecurity entrepreneurs. While we recommend listening to the whole podcast here for an informative and fun discussion, below are a few highlights distilled from the broader conversation:
McGrew: We’ve talked in the past about corporate venture capital. This week, let’s zero in on CapitalG.
Frantz: CapitalG was established with the mandate to focus on growth investing. We make a handful of new investments each year and have a relatively concentrated portfolio so that we can bring Google and Alphabet resources to bear in a way that’s compelling and well-suited for each individual company. Unlike a lot of earlier stage venture firms which are more prolific in their investments, we prefer a more focused portfolio that enables us to be deeper and more systematic in our engagement.
McGrew: When you say you bring Google resources to bear, you don’t just mean Google money. I mean, there are so many Google resources that can help high-growth companies…That’s probably the world’s biggest concentration of PhD’s ever.
Frantz: Exactly. While Alphabet is obviously our capital source, it’s also the source of our strategic advantage. We have in Alphabet a population of more than 100,000 professionals who are individually skilled experts in their specific areas. So when we find that a company has a challenge, we’re able to look within that population to find the right person or group to advise the company. Beyond that, Alphabet is constantly running programs and training for engineering and sales and marketing, and we’re able to bring our portfolio companies in to participate. Alphabet is a tremendous resource with deep expertise in scaling and growing a successful technology company, so we’re able to bring that to the advantage of the companies in which we invest.
McGrew: You’ve invested in a number of security companies…so what attracts you to security?
Frantz: It’s a very interesting and complicated landscape, and the problem is perpetually evolving; hence the solution needs to evolve constantly. Google’s security domain expertise is highly relevant. As an employer of some of the most profound security talent in the world, Google is a wonderful fellow traveler for most security companies trying to address important problems. That expertise gives us a real advantage in being able to evaluate the security technologies that are really important and have the most promise to create very successful companies.
McGrew: One of your investments is Zscaler, and [founder, chairman and CEO] Jay Chaudry just seems like a natural fit. Another is CrowdStrike, which is constantly in the news because it was hired by the Democratic National Committee to look into the hack attacks of 2016, a hack we now know conclusively was conducted by the Russian government.
Frantz: CrowdStrike addresses the critically important endpoint security market (servers, desktops, laptops, etc.) An important part of its business has also been remediation, meaning a service that investigates, assesses and remediates digital attacks (hacks) that customers experience. CrowdStrike played this instrumental role for the DNC in the 2016 attacks, and it was quite gratifying to see CrowdStrike acknowledged for its great work.
McGrew: It protected the American democratic system — not just the Democratic party, but the system as well…Another one of your investments is Expel that’s out in the DC area.
Frantz: Expel is in the Washington, D.C. area and has deep security lineage. It offers a solution to an overwhelming problem: Most companies struggle to manage the increasing complexity of their security infrastructures while also struggling to recruit, hire, train and retain enough qualified security personnel. Expel offers a managed security service that allows customers to be vastly more efficient with their internal security talent and infrastructures. This eases the burden on customer security personnel and helps manage infrastructure complexity.
McGrew: Looking ahead to the election, what worries you as far as our infrastructure?
Frantz: Number one is the integrity of each political party’s IT infrastructure. That’s something that a number of our companies have a hand in, and it’s really important work. Number two of course is security at the voting machines. There again, I think there’s a lot of important work that has been done. Number three is security for the mail-in ballots that will be a much bigger part of this election. Fourth and maybe most important is combating the misinformation campaigns that wreak havoc among the electorate and cause so much damage.
Want to hear more? You can listen to the full Sand Hill Road podcast here.