Hatz AI CEO: Cyber consequences of AI are progressing faster than we can respond to

Speaking to CRN Australia at XChange August, Jimmy Hatzell believes more cyber incidents are on the way.

The cyber consequences of AI are progressing faster than people can respond and put controls on, according to Jimmy Hatzell, CEO at Hatz AI.

“We're just starting to see it. You look at OpenAI and Anthropic, both had an AI escape their guardrails,” he said.

“A lot of the early vibe coding and AI agent building involves making databases and working with API keys or environment variables, and a lot of these things weren't secured as well as people probably should have.”

Hatzell was an MSP for more than a decade before deciding to launch Hatz AI in January 2024. He has a cybersecurity background working for Barracuda MSP and Skout Cybersecurity in the US.

Speaking to CRN Australia at XChange August, he said because of this exponential growth of cyber consequences, he believes there will be some major security incidents related to AI agent building in the coming months.

"All the major cloud providers have had an AI adjacent issue at least once, but also unintended consequences like outages for services that are normally up because now it's agents interacting with them,” he explained.

“There's a lot of problems that MSPs will get brought into. At the very least, planting a flag early and saying, 'You need to work on AI governance, AI security, but let's define scope of where AI starts and ends ahead of time’.

“At least when these problems come up, they can come back and say, ‘Well, we did have a program for this’.”

Hatzell noted that MSPs are wearier of the cyber risk than the reward of being cyber resilient.

“[MSPs] understand that there's a risk. I would almost say that many partners understand there's a risk more than they understand the reward portion of cyber.

“Which is good, that's what you want from your security team.”

Cost of intelligence

While the cost of AI intelligence continues to drop, there is still a big price to pay for higher intelligence, Hatzell noted.

“The cost of intelligence is trending towards zero, but the cost of the highest intelligence is the highest it's ever been,” he said.

“The cost to for AI to go and help you check and draft an email is getting cheaper. But there's AI models there where no matter what provider you get them from, you could rack up $10,000 in 24 hours very easily.”

Hatzell said the opportunity for an MSP is finding that arbitrage and helping customers map capabilities with the best model at the lowest price that can do the job well.

“AI spend should not work the same way as SaaS because it's just not the same,” he added.

Views on Australia

Hatz AI has 1200 MSP partners globally, with 13 in the ANZ region. The technology is distributed by OpenText in Australia.

While Hatz AI doesn’t have a team in the Aussie region, Hatzell noted he plans to change that very soon.

Hatz AI launched in January 2024 and according to Hatzell within their first year, they had Aussie partners experimenting with the platform.

"I remember in the early days, I would be emailing back and forth with partners one in the morning my time,” he said.

“I love the Australian market for MSPs because of the curiosity, willingness to tinker, willingness to play with new things, and try to productise things.”

Hatzell noted that there is a “certain confidence” that comes from the Australian market.

"That [confidence] works well with AI, in that confidence to be the trusted advisor, but also to try things new and upskill and learn new things. In many cases, having a self-starting nature to it as well.”

Hatz AI aims to help MSPs start their AI business with a three prong focus on security, spend and scope.

“How AI gets governed and managed in an organisation, how MSPs can put controls on spend and have visibility in it, and then where AI starts and ends, and making sure the whole process is secure,” he said.

“But it's about putting the MSPs in control of AI for their end customers.”

As Hatz AI continues on its growth path, for the next 12 months, Hatzell said they will be releasing a few new product and focusing on their partner growth. But more importantly, they will be expanding their international footprint.

“We've basically 4x our team size in the past like six or seven months. We have some hiring to do and some scaling to do, but it's all focused on how can we better serve partners, how we can how can we grow our partnerships and how we can make our MSP successful.”

XChange August was held at the Gaylord National Resort in Maryland. XChange Australia will be held on September 16 at the Intercontinental Sydney.