Security products are naturally sold top-down. CISOs need central governance over a fragmented tool landscape, and the product's value is subjective and hard to measure (like insurance). This environment favors a high-touch, relationship-based sales motion, making pure bottom-up adoption difficult to monetize.

Cisco differentiates its networking business from NVIDIA's by focusing on connecting clusters across a data center ('scale-out') and connecting separate data centers ('scale-across'). NVIDIA primarily dominates 'scale-up' networking within a single rack. This complementary approach allows Cisco to partner with NVIDIA while still carving out its own massive market.

Cloudflare expanded from protecting websites (a reverse proxy) to protecting corporate employees (a forward proxy). They realized the same global network used to inspect incoming traffic could inspect outgoing traffic, allowing them to enter the massive Zero Trust security market with existing hardware.

To grow beyond common revenue plateaus, MSPs must shift focus from their technology stack—which customers don't care about—to professional and managed services. Growth and margin come from selling solutions like managed cybersecurity or AI deployments, not from the specific tools used to deliver them.

Cisco is benefiting from the AI build-out on the networking side. Despite a market overreaction to a small margin dip, the company posted strong earnings and guidance. Its successful integration of Splunk and foundational role in networking make it an attractive, undervalued AI investment.

While overall enterprise software spending is hitting record highs, this growth is not a rising tide for all. Half the increase is consumed by existing vendors' price hikes and 30% is allocated to new AI initiatives, leaving minimal budget for traditional SaaS tools.

For innovation arms inside massive companies like Cisco, early revenue is irrelevant—a $5 million success would be laughed at. The true measure of success is creating strategic options for the parent company to navigate future market shifts, not hitting traditional startup KPIs.

Unlike other software, security product value is hard to prove. If a tool finds nothing, it's unclear if the tool failed or if there were no issues to begin with. This shared uncertainty for both buyer and seller makes it difficult to assess true value.

Incumbent software vendors face a crisis: customers aren't churning, but all new enterprise budget is directed at AI. This traps legacy platforms as stagnant 'systems of record' while AI applications built on top capture all future growth.