Stuart McClure, CEO of Cylance, thinks his 'AI' tech is far superior to that of old buddy turned... [+]
Stuart McClure, goateed and soft-spoken, is confident and calm as he recites a well-rehearsed pitch on how his company, Cylance, is using artificial intelligence to shake up the antivirus industry. "We block 99.9% of the attacks out there," he says, sounding like he's selling a bottle of Purell. "Response to our product has been so overwhelming that we're almost compelled to accelerate expansion so everyone can get their hands on it."
McClure has a lot to be confident about: In June his nearly four-year-old, 420-employee company was valued at $1 billion after raising a $100 million Series D round from Blackstone Tactical Opportunities and Insight Venture Partners. But mention the name George Kurtz, his former partner and the current CEO of rival unicorn CrowdStrike, and the even-keeled 47-year-old security entrepreneur loses his cool. "George is a major competitor, and he'll say anything to stop you from writing a story like this," McClure says in a burst. "We're beating him constantly in the market because he doesn't do anything around prevention--they only do detection, and they don't do it all that well."
The distaste is mutual. George Kurtz, also goateed, isn't shy about taking shots at his former friend's tech claims. "All the credit should go to Cylance's marketing department," says Kurtz. "Their machine learning has been around for a long time. Most security companies have it - we did it at McAfee years ago."
McClure and Kurtz - once pals, partners and bestselling coauthors - are now fierce competitors. Each leads an approximately billion-dollar security startup battling for a chunk of the surging security market. With the avalanche of recent hacks - from the record-breaking heist of $81 million from Bangladesh Bank to the theft of 32 million Twitterpasswords - companies are scrambling to secure their networks. Research firm Gartner says the security software market hit $22 billion in 2015. Sales have grown by $1 billion for three straight years.
According to George Kurtz, CEO of CrowdStrike, Cylance doesn't do real artificial intelligence, it... [+]
The race is on for Cylance and CrowdStrike - as well as other richly-valued security startups like FireEye and Palo Alto Networks - to convince corporate clients that their software will keep out the criminals in the cheapest and most efficient way possible.
Cylance acts like a border guard, blocking shady actors before they enter the network. Its Amazon-hosted brain performs a cyber strip search, breaking down a file into a large number (potentially millions) of "characteristics" in the search for red flags. McClure says Cylance's AI gets smarter with every piece of data it scans by learning which features are malicious (like code that can move data to a criminal's server) and which are benign. It can uncover and remove infections already on the network, too, as it did for the U.S. government's Office of Personnel Management after malware stole the data on 21.5 million workers.
CrowdStrike, meanwhile, is a digital cop, patrolling networks for suspicious behavior. On top of an antivirus tool, it keeps a constant record of everything happening across the system and offers a post-breach recovery service that hunts hackers and closes off the doors they exploited. In June CrowdStrike helped the Democratic National Committee after Russian hackers stole opposition research on the presumptive Republican nominee, Donald Trump. And using a vast global intelligence network, it's built up a reputation for naming and shaming foreign hackers compromising American organizations, in particular Chinese and Russian spies.
Despite their warring companies and competing security approaches, the lives of McClure and Kurtz remain strikingly intertwined. The pair started working together in 1999, when they cofounded Foundstone, a firm that built software and hardware to identify and repair network security holes. That same year they co-authored the Web security bible, Hacking Exposed , which has sold more than 600,000 copies. In 2004 the pair joined McAfee after the antivirus giant bought Foundstone for $86 million. There they thrived, both rising to the role of global chief technology officer - Kurtz first and then McClure.
Kurtz, frustrated with McAfee's plodding speed and legacy technology, resigned as CTO in 2011, launching CrowdStrike in 2012. McClure soon followed, starting Cylance the same year. Both companies use machine learning to target ever evolving malware threats. Both are based in Irvine, Calif., a ten-minute drive apart. Both companies, according to sources, will have sales in the neighborhood of $100 million in 2016. And both men now sit atop paper fortunes, having attracted massive amounts of capital in a short period of time. CrowdStrike raised $156 million from Google Capital, Accel, Rackspace and Warburg Pincus; Cylance raised $177 million from Blackstone, Insight Venture Partners, DFJ Growth and Khosla Ventures.
The bad blood between McClure and Kurtz built slowly, a result of festering jealousies and disagreements over the future of security. The friendship fractured in 2012. McClure says it got ugly after he declined Kurtz's invitation to join him at CrowdStrike. "I've known George since 1998. We were best friends for 14 years," says McClure. "But I decided I needed to live my life with high integrity and with high-integrity people, so I decided to do this gig on my own. He's still bitter about it."
Kurtz tells it differently. He says McClure approached him to join CrowdStrike but asked for too much equity.
The squabbling extends to their old startup, Foundstone. McClure says he was the real founder: "I built the company from scratch. George begged me to be the CEO.... I said, 'I'll take the president title, and you can take CEO,' because I'm a nice guy." Kurtz and other cofounders (who asked not to be named) contest that story, claiming six equal partners voted in Kurtz as boss.
As for their bestselling book, Hacking Exposed, McClure says Kurtz's name should never have been on it: "He wrote one chapter, but he makes it sound like it's his book. I gave him the book cover because I'm a nice guy." Kurtz responded: "The claim that I wrote one chapter is not true. I spent six months writing almost a third of the book."
But McClure and Kurtz can agree on one thing: Their futures hinge on signing up big clients in the private sector. And so the former friends continue along the same, tight trajectory. Cylance and CrowdStrike are both going global; in 2016 each firm opened new offices in Europe and Asia. Cylance already claims more than 1,000 clients, including Gap, Panasonic and Toyota. Kurtz says CrowdStrike is working with three of the top ten largest global companies and five of the biggest banks. Kurtz will reveal only a few customer names: Rackspace, the cloud provider that's also an investor; Australian mobile giant Telstra; and publisher Tribune Media.
As the battle rages on, McClure can claim a recent, albeit superficial, victory over Kurtz: In June he beat out his old buddy and fellow nominee in EY's Entrepreneur of the Year prize for Orange County. Says McClure: "I think he's extra-bitter about that."