Collapse of National Security Elites' Cyber Firm Leaves Bitter Wake

Cybersecurity firm IronNet, founded by former NSA director Keith Alexander, has collapsed after failing to deliver on its promise to revolutionize cyber defense. The company, which went public in 2021 with a $3 billion valuation, shut down in September 2023 after running out of money.

IronNet's downfall has left investors and former employees bitter, with some accusing the company of misleading them about its financial health. "I'm honestly ashamed that I was ever an executive at that company," said Mark Berly, a former IronNet vice president. He said the company's top leaders cultivated a culture of deceit "just like Theranos." Critics point to questionable business practices, subpar products, and associations that potentially exposed the firm to Russian influence. The company's board included high-profile national security figures, which helped attract investments and contracts. However, IronNet struggled to secure major deals and meet revenue projections.

$3 billion error in judgement

[Rinnon]

What I always wonder about these stories is who, or what, is valuing these companies in the billions, and what criteria are they using? And furthermore, why do people keep falling for it? Where are the consequences for these valuations that appear to be based on a wish and a promise?

Re:

[Pseudonymous Powers]

You raise some excellent points, and, as an investor in tech unicorns, I will consider them in due time. First, though, I've got to WISH SO HARD that this obviously useless thing wasn't so useless. Because in the finance business, and especially venture capital, if you just wish hard enough... it actually works! At least long enough for you to cash out.

Re: $3 billion error in judgement

[Penguinoflight]

For public corps it's just the share price multiplied by the volume, but many times the IPO or starting point is so skewed against real value like revenue or potential. There should maybe be more controls on those values but many corps can go for years with ridiculous above 100:1 pe ratios

Re: $3 billion error in judgement

[Midnight_Falcon]

IronNet wasn't public. Venture valuations for software businesses are usually based upon multiples of recurring revenue. You can be losing money, but if you have 10 million in recurring revenue (contracts renew annually) and enough hype and scale potential, multiples can range from 10x-150x. The trick here is they seemed to pump the numbers with the CEOs political sway and how pretentious board members were. Investors may have glazed over due diligence to avoid offending them or losing the "opportunity"

Re:

[Enigma2175]

IronNet wasn't public.

Then why does the second sentence of the summary say "The company, which went public in 2021 with a $3 billion valuation"? If you are going to directly contradict the story you should at least post a citation.

Re: $3 billion error in judgement

[Midnight_Falcon]

I should use mobile less and read more! My comment is completely inapplicable in that case and is only valid for nonpublic venture backed companies.

Re:

[Anonymous Coward]

> who, or what, is valuing these companies in the billions,

Venture Capital firms and private equity firms

> and what criteria are they using?

They calculate odds on if they can dump the stock on public markets before the crash.

The original post got it right when it said "like Theranos".

Theranos's Board of Directors:
* George Shultz, former US secretary of state
* Gary Roughead, a retired US Navy admiral
* William Perry, former US secretary of defense
* Sam Nunn, a former US senator
* James Mat

Re:

[jon3k]

People who think they can invest in a company, have them make even a mediocre product, use the big names and cache and connections for contracts and then IPO and get out with a big profit before it falls apart. Half smoke and mirrors and half probably a product that ends up at best comparable to whatever else existed already.

Re:

[arglebargle_xiv]

What I always wonder is what IronNet's value proposition was beyond "we're run by a former DIRNSA". Lots of people have a background in SIGINT and decent-enough management skills without it giving them any kind of superpowers when it comes to IT security.

Keith Alexander and the NSA

[Valgrus Thunderaxe]

Are both unethical persons/entities and nobody should be giving them any money, whatsoever.

Product? What product?

[geekmux]

Are both unethical persons/entities and nobody should be giving them any money, whatsoever.

If he’s that unethical then there was no product. Ever. This was simple theft. A scam from the start.

Theranos took fifteen years. This was more of a turn-and-burn scam.

IronNet homepage is corrupted.

[Anonymous Coward]

Go to IronNet's homepage. https://www.ironnet.com/ [ironnet.com] Scroll down to the bottom of the page. There's lots of junk source code there. Either inept or hacked.
Obviously a very skilled high-tech company!

Re:

[omnichad]

The source code is worse. Inline javascript using document.write to add more script tags all over the place. It's Zoominfo embed code, incorrectly inlined by Google Tag Manager, probably due to the spaghetti. But it's also on every page of their site and knowledge base.

run out of money my azz

[FudRucker]

they embezzled it and laundered it, probably most is in some off shore account and a some stashed in hole in the walls and suitcases, nobody burns through 3 bajillion dollars, nobody

How to revolutionize cyber defense

[Mirnotoriety]

Bin the Intel product, bin the Windows product. What's needed is a Manhattan Project to design a secure system from the ground up.