SentinelOne at Goldman Sachs Communicopia + Technology Conference

Technical innovation, go-to-market strategy, leadership changes, and more

SentinelOne S 0.00%↑ is the largest holding in the Sycamore portfolio, with a >30% weighting as of mid-September. Tomer Weingarten, Co-Founder and CEO, spoke at the Goldman Sachs Communicopia + Technology conference last week in San Francisco.

Below, I’ve summarized the key insights from the entire conversation. But first, here are my top three takeaways from the interview:

1. Technical innovation: SentinelOne’s strength is in its technology, not its marketing. "One of the biggest mysteries in this market was for four years, there’s been one company that consistently led MITRE evaluations with 100% detection and protection, yet the market didn’t fully grasp the value."

2. Go-to-market strategy: Over the past two years, SentinelOne has increased its endpoint market share by 5x, successfully competing against major players like CrowdStrike and Microsoft.

3. Leadership positioning: In preparation for surpassing $1B in ARR, SentinelOne has bolstered its leadership team, bringing in new executives to support its rapid growth trajectory.

See below for my full notes from the conversation.

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Key Points on SentinelOne’s Technology and Innovation:

• AI-Driven Detection: SentinelOne focuses on embedding AI detection models directly into its agent, reducing the need for frequent updates. This contrasts with competitors who rely heavily on constant updates.

  • "Having a generic approach to detecting threats that doesn't require these frequent updates... that's a huge architectural change."

• Minimal Kernel Interaction: SentinelOne reduces risk by minimizing interactions with the sensitive parts of the machine's kernel, unlike competitors who use more kernel space for their security functions.

  • "Our mantra is to minimize what you do at these sensitive parts of any machine...”

• Linux & eBPF: The company utilizes the eBPF framework in Linux, which allows them to get kernel-level telemetry without needing direct kernel access, providing a safer alternative.

  • "eBPF gives you all the telemetry that you need from the kernel without needing to be at the kernel."

• Cloud & Hybrid Approach: SentinelOne aims for parity between its on-premise and cloud offerings, particularly in securing workloads across various environments.

  • "Our technology stack has innate advantages with securing any type of workload—on-prem, private cloud, public cloud—it doesn’t really matter."

Go-to-Market Strategy:

• Channel Ecosystem: SentinelOne leverages a strong channel ecosystem to multiply its reach and augment its direct sales force, allowing it to scale efficiently without having the vast resources of larger competitors.

  • "The channel ecosystem has been really a force multiplier and that is something that we continue to do today."

• Nimble Marketing Approach: The company prioritizes efficiency in marketing while avoiding the overhyping that competitors engage in, focusing instead on education and clarifying their technical advantages.

  • "Marketing can be done in a more responsible way... it’s mostly about education and making sure people understand technically what these products are."

  • "We pledged at IPO that we wouldn’t be an overzealous marketer like others in the industry. We’ve stayed true to that."

• Growing Market Share: Over the past few years, SentinelOne has increased its market share significantly in endpoint security, from 1% to 5%.

  • "We had 1% market share two years ago, 3% last year, now about 5%."

Competitive Landscape:

• Competitor Differences: SentinelOne acknowledges that while competitors like CrowdStrike and Microsoft have strong market positions, there is no "winner-takes-all" in cybersecurity. Each provider has strengths in different areas, and SentinelOne is confident in its best-of-breed solutions.

  • "There are no perfect platforms, not mine, not anyone else’s... nobody can cater to all the needs of everybody in the market."

• Cross-Selling and Upselling: With a growing customer base, SentinelOne sees significant untapped opportunities for cross-selling and upselling, particularly as they expand into areas like cloud security.

  • "We now have a customer base that's pretty significant, which is also an upsell and cross-sell opportunity for us, which is yet to be fully unlocked."

Recent Leadership Changes:

• New CFO: Barbara Larson has joined as the new CFO (previously CFO of Workday), bringing experience in scaling software companies from $1 billion to $6 billion in ARR, aligning with SentinelOne’s growth goals.

  • "We’re coming pretty close to that $1 billion in ARR, and we need to start thinking about our long-term targets... Barbara brings that financial foresight."

• Growth Potential: SentinelOne's leadership emphasized that the company is better positioned today than it was a year ago, with a stronger team and more efficient operations, enabling them to scale further.

  • "We have a better team, better company, and I think the sentiment around SentinelOne has never been better."

Market Opportunity:

• Cloud Security: SentinelOne is pursuing the fragmented cloud security market with a focus on runtime protection, which they view as a massive multibillion-dollar opportunity.

  • "When you talk about a $100 billion market opportunity, you're going to see a full spectrum of needs, and we focus on what we do best."

Customer Engagements:

• Customer Inbound Interest: SentinelOne’s CEO noted that recent customer conversations have been mostly inbound, driven by customer interest in moving away from competitor products.

  • "I've been nonstop on the phone, and I swear I've not called a single customer—every customer that I’ve talked to was an inbound call."

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Sycamore Capital is not investment advice nor a recommendation to buy, sell, or hold securities. Sycamore Capital is not an investment advisor and does not manage client assets. Assets are my own. Opinions are my own.