The Channel and its (brief) History

If you've spent any time in cybersecurity, you've probably heard someone mention "the channel."

If you're asking yourself, "What the heck is the channel?" you're not alone.

"The Channel" is simply the route through which technology gets sold from a manufacturer to an end customer.

A few terms you'll hear frequently:

• OEM (Original Equipment Manufacturer): The company that builds the product.

• VAR (Value Added Reseller): A company that sells and advises on technology solutions.

• MSP / MSSP (Managed Service Provider / Managed Security Service Provider): Organizations that operate technology or security programs on behalf of customers.

• Distributor: Marketplaces that help vendors scale reach, financing, logistics, and procurement.

• Direct Sales: Buying directly from the vendor with no intermediary involved.

Simple enough. The more interesting question is:

Why does the channel exist at all?

Why not simply buy cybersecurity products directly from the companies that make them?

To answer that question, you have to go back and look at the history of the channel. 

When Security Was Simpler

In the early 2000s, cybersecurity was still largely an IT function.

Most organizations made a handful of security decisions every few years. The average security stack was relatively straightforward:

• Firewalls

• Antivirus

• Intrusion Detection Systems (IDS)

• Vulnerability Scanners

• VPNs

• Email Security

There were fewer vendors, fewer categories, and fewer decisions.

Security was certainly technical, but it was still possible for a reasonably sized IT team to understand most of the market without dedicating an entire department to vendor evaluation.

Then the world changed.

Security Becomes a more prominent Business Problem

After September 11th, 2001, cybersecurity began taking on a new level of importance.

Governments increased spending. Regulations expanded. Critical infrastructure became a national concern. Security was no longer viewed as simply keeping computers running it was becoming a risk management function.

Around the same time, organizations became increasingly connected. Applications moved online. Businesses digitized operations. Data became more valuable.

The stakes got higher.

As a result, the number of security tools, frameworks, and technologies started growing rapidly.

By the mid-2000s, organizations needed greater visibility into what was happening across their environments. This gave rise to technologies like SIEMs (Security Information and Event Management platforms), centralized logging, and advanced monitoring tools.

The market became more complicated.

MSPs emerged as translators between increasingly complex technologies and customers who simply needed outcomes.

For many organizations, buying expertise became just as important as buying software.

The 2008 Shift

Then came the financial crisis or 08. Budgets froze. Headcount slowed. Technology leaders were asked to justify every dollar spent.

Security teams could no longer buy tools simply because they were interesting. Every purchase needed to demonstrate value.

Organizations became more disciplined buyers. Outsourcing gained traction not just because of expertise, but because it often reduced operational overhead. MSPs evolved accordingly, bundling services and technology into predictable monthly costs.

• One vendor.

• One bill.

• One relationship.

• Less complexity.

That mindset stuck around and never really went away.

The Rise of Strategic Buying

Throughout the 2010s, cybersecurity continued expanding at an extraordinary pace. Development in one area created a cause and effect tigger through categories of cybersecurity. For instance: 

• Cause: Cloud computing arrived to the scene in an economical way that corporations could now consume. 

• Effect: Mobile devices could become standard use for business.

• Cause: Mobile devices distribute the attack surface, making it unpredictable. 

• Effect: Identity management matured due to the rise of mobile.

• Cause: “Identity Management” 

• Effect: Endpoint Detection 

• Cause: “Endpoint Detection” 

• Effect: With more endpoint tools generating usable data Threat Intelligence exploded. 

The average organization wasn't evaluating five security categories anymore. They were evaluating dozens. At the same time, security leaders found themselves speaking to entirely new audiences.

• The Board

• The CFO

• The CEO

• Investors

• Risk committees.

The conversation shifted from technical features to business outcomes.

The security buyer had evolved and the market had evolved with them. This is where VARs became increasingly important. Not because they were new, they had existed for decades but because organizations needed guides.

The challenge was no longer finding technology. The challenge was navigating it.

Then 2020 Happened

Right as the market settled into its direction and stabilized growth…. overnight, the traditional IT perimeter disappeared. Employees went home, all of them (us) no longer sat behind the protection of the corporate perimeter. 

VPN infrastructure strained under unprecedented demand which led to Cloud adoption acceleration at a speed no one could anticipate or maintain. 

Identity became the new security boundary.

Concepts like Zero Trust, which had largely existed in strategy presentations and conference talks, suddenly needed to be implemented immediately. Organizations didn't have years to prepare or grow into these new challenges. They had weeks, days, nights. 

Meanwhile, the vendor ecosystem exploded.

Every year brought new categories, new acronyms, new platforms, and new promises.

Security teams weren't just evaluating products anymore. They were trying to make sense of entire markets. The number of vendors in cybersecurity now measures in the tens of thousands.

No single CISO can realistically evaluate all of them. No procurement team can keep up with every pricing model, incentive structure, acquisition, merger, or market shift.

This is where the channel became essential. Not mandatory. But increasingly relied upon. The channel became the mechanism through which organizations could simplify complexity. Or at least attempt to.

The Problem Nobody Talks About

The channel exists because customers need help navigating a complicated market and aggressively changing attack surfaces and attack techniques. 

The challenge is that the economics of the channel create competing incentives. As vendors scaled, they increasingly relied on channel partners to drive growth. VARs became extensions of vendor sales organizations.

• Margins increased 

• Partner incentives expanded

• Sales programs became more sophisticated

And over time, a subtle shift occurred. The channel stopped serving only the customers. It began serving both the customer and the vendor.

Most of the time those interests align.

When they don't, the customer often has no visibility into why a recommendation was made. That's not necessarily malicious. It's simply how incentives work. The problem is that cybersecurity has become too important for incentives to remain opaque.

The Question Every Customer Eventually Asks

Today, security leaders face more scrutiny than ever. Expectations continue to grow around program ROI where ROI is difficult to measure. The business of cybersecurity is a corporate challenge with increasing involvement from the CFO. 

Eventually every executive asks the same questions:

• What value are we getting from our tools?

• What value are we getting from our services?

• What value are we getting from our advisors?

• What value are we getting from our VAR?

Those questions ultimately led to the creation of The Paranoid Co.

Not because we believed the channel was broken. But because we believed it could evolve.

What If The Channel Worked Differently?

What if customers didn't have to wonder how their advisor was compensated?

What if incentives were visible?

What if alignment wasn't implied but demonstrated?

What if a customer could walk into a board meeting and clearly articulate the financial value created by their technology partner?

We built The Paranoid Co around a simple idea:

The channel should work for the customer first.

Not because vendors aren't important. They are. But ultimately the customer is the one assuming the risk. The customer is the one signing the contract. The customer is the one explaining outcomes to the board and executive. That's where our focus starts.

The Business of Cyber

Technology matters.

Outcomes matter more.

Modern cybersecurity is no longer just about operating tools. It's about operating a business function. We care about:

• How the business of the SOC operates - not what underlying technology runs it

• How identity strategy evolves and impacts the operations of the business itself

• How risk is communicated with common language to executives

• How technology decisions impact indirect and direct procurement budget

• How security programs mature over time and communicate risk reduction

Understanding the vendor landscape is table stakes.

Helping organizations make business decisions within that landscape is where the real work begins.

Fiduciary Responsibility

One of the questions we asked ourselves was simple: What would happen if transparency became part of our business model?

After more than a year of modeling different approaches, we chose to structure The Paranoid Co as a consumer-facing cooperative.

For every qualifying new transaction, we allocate a portion of our gross margin back to the customer as credits for future purchases.

The credit isn't hidden. It's not buried in terms and conditions.

It's visible and that is intentional.

Customers should know how their partners make money. We believe trust grows when incentives are visible. We take it a step further by matching those credits with charitable contributions through our Impact Match initiative, supporting causes selected by our customers.

Our view is simple: If your advisor is willing to be transparent about economics, they're more likely to be transparent about everything else.

Understanding Markets, Not Just Products

Another advantage of living inside the channel is understanding how vendors actually go to market.

• We understand pricing structures.

• Partner incentives.

• Promotional programs.

• Packaging strategies.

• Competitive pressure.

• Timing.

The reality is that significant value often exists within vendor programs and customers never hear about them. Knowing where those opportunities exist can sometimes save more money than negotiating list price ever will. That's not about exploiting vendors. It's about ensuring customers fully benefit from the programs already available to them.

The Next Evolution of the Channel

The channel exists because modern cybersecurity is too complex to navigate alone.  AI and automation are accelerating vendor landscapes, threat landscapes, defenses and attack techniques. AI will make the next decade even more complicated. There are daily, significant changes happening in the world of cyber security. For the first time in modern history they’re influenced by technology itself and not some type of world economic change. 

The future doesn't need more noise.

It doesn't need more acronyms.

It doesn't need more sales pitches.

It needs more trust.

The next evolution of the channel won't be defined by how many vendors a partner carries. It will be defined by how well that partner aligns with the organizations they serve to solve the business of cybersecurity. 

That's the future we're building toward.

We think cybersecurity is better when the customer sits at the center of it.