Wiz President: "I truly believe that Wiz is on its way to becoming the largest cyber company in the world"
Wiz President: "I truly believe that Wiz is on its way to becoming the largest cyber company in the world"
"I want to turn Wiz from an unimaginable wonder into a well-oiled machine in order to set the standard in everything related to cloud security," added Dali Rajic after Wiz raised $1 billion at a $12 billion valuation
"Wiz's growth to date has been unprecedented, and we have reached a point where a strong infrastructure needs to be built to continue breaking records and leading the market. Our goal now is to reach one billion dollars in sales and go public in New York," Wiz President and COO Dali Rajic told Calcalist in an interview.
On Tuesday, the cyber company announced an extraordinary funding round of $1 billion, the largest ever for an Israeli company, according to a value of $12 billion. This is an increase compared to the previous valuation of $10.3 billion according to which the company raised funding in its previous round in 2023. As part of the capital raising, some of the company's early investors have now sold their holdings for a significant amount. The new round positions the company as the largest private cyber company in the world and is probably the company's last fundraising before the expected IPO in the next 18 months.
The fundraising was led by VC fund Andreessen Horowitz, which is considered one of the most prominent funds in Silicon Valley. Andreessen Horowitz has almost never invested in Israeli companies and international companies in general, mainly due to a preference to invest in companies that sit close to the fund. The round was also led by Lightspeed Ventures Partners and Thrive Capital, two other significant American funds that, like Andreessen, also expect a significant IPO in the near future. Other new prominent investors are the Greylock and Wellington Management funds, with existing investors in the company Cyberstarts, Greenoaks, Howard Schultz, Index Ventures, Salesforce Ventures, and Sequoia Capital, also participating.
Wiz took its total funding since it was founded in 2020 to $1.9 billion. The company was founded by CEO Assaf Rappaport, CTO Ami Luttwak, VP Product Yinon Costica, and VP R&D Roy Reznik, who according to Forbes now all have a personal fortune of around $1 billion. Rappaport was previously General Manager of R&D at Microsoft Israel after having sold his previous company Adallom to the tech giant for $320 million in 2015. Wiz’s other co-founders have been with Rappaport since his days in the military and filled various roles at Adallom, too. The current round had a small secondary component of tens of millions of dollars that was used to purchase shares from employees.
The company estimates that most of the money from the fundraising will be directed to the purchase of additional companies that will complete Wiz's technology portfolio. In April it announced the acquisition of Israeli startup Gem Security, as part of the expansion of the company's cloud application security platform (CNAPP), and in December it acquired the startup Raftt. The company even tried in the last year to acquire SentinelOne and Lacework, but in both cases it did not come to fruition.
At the end of 2023, the company reached an annual sales rate of $350 million, after becoming the fastest-growing software company in the world - when it reached an annual revenue rate of $100 million within 18 months from the day it started selling its products.
The main competition of the Israeli unicorn today comes from two main directions - one is startup companies operating in the field, mainly Orca Security, which even filed a lawsuit against Wiz, and also from giant companies such as Palo Alto Networks and others.
“We will never stop innovating on behalf of our customers,” said CEO and co-founder Assaf Rappaport. “Wiz has worked to earn the love of security and development teams; as we bolster our CDR capabilities, SOC teams are also part of that equation. This funding round will help us continue to solve customers’ complex cloud security challenges in an elegant, simple manner while supporting their broader vendor consolidation efforts.”
Sarah Wang, Andreessen Horowitz, added: “Wiz is a cloud security pioneer and has demonstrated remarkable agility, adaptability, and a keen understanding of market dynamics. This has enabled smart growth and positioned them as a power player in the cybersecurity space.”
Until this year, the company had been led by its four founders, but at the start of 2024 Dali Rajic, formerly COO and President of Zscaler, joined as COO and President. Rajic is Rappaport's number 2 and the man who will manage the company's day-to-day operations, while Rapaport will focus on strategic activities. Rajic, a Croatian by origin, is considered one of the top leaders in the cyber industry today and was in a similar position at the cyber company Zscaler, which currently has a market cap of about $27 billion on the Nasdaq.
What is your vision for Wiz?
Rajic: "I want to turn Wiz from an unimaginable wonder into a well-oiled machine in order to set the standard in everything related to cloud security. Wiz's growth to date has been unprecedented, and we have reached a point where we need to build an established infrastructure to continue breaking records and leading the market. To meet our goal - a billion dollars in sales and going public in New York - we must maintain the entrepreneurial spirit and mentality of a startup that characterizes us, and at the same time consolidate the practices that will take us to these ambitious goals and allow us to beat the traditional companies that stand out in the industry."
Although Rajic only joined the company in the last few months, he was involved in the purchase of the Israeli company Gem Security for about $350 million.
What brought you to purchase a company for such a significant amount?
"The cyber market is in the midst of a process of transition from features to platforms. If the security manager of an American corporation has gotten used to working with an average of 75 cyber technologies in the organization, he understands that this reality must change and that it is impossible to continue like this. In the long term, companies that developed niche products will have to be acquired because the industry simply won't have an appetite for solutions that don't meet broad security needs.
"From this point of view, Wiz is in a very unique position - as a company that from its very first day was built as a platform. Our entire growth strategy, whether by acquiring companies or developing ourselves, was built from thinking about a broad solution that can lead the market. This thinking allows us to constantly examine what's happening in the market, find great talent and execute deals that are considered unusual for a startup that is just four years old."
What did the effect of the war in Gaza have on the decisions you make?
"The war did not harm the perception of Israel as an attractive destination for acquisitions. Israel was always on the radar of every organization I worked for and was considered a focus of innovation and exceptional technological talent - and this is still the case today. We are constantly examining what is happening in the Israeli ecosystem and do not rule out the possibility that we will make more purchases in Israel, as part of the investment in the best human resources."
Is an IPO a must?
"I think that at a certain point, an IPO is very important. You go through the various stages, grow in scale and reach a certain maturity. To be the leading company in the industry, it is important that your data is public and available to everyone. Until there is an IPO, everything is a kind of well-kept secret. If you look at some of the brands we have, like BMW, Morgan Stanley, Slack, and Snowflake – we have a lot of big companies that get services from us.
These are huge businesses - Fortune 100, Fortune 500. 40% of Fortune 100 companies are our clients. That's great, but there are huge companies that will say they need to know more about us to make a decision. They need to understand the viability of our business. The way to do it, in my opinion, is to provide good services and be transparent. This is what we do and it lowers the sense of risk for companies."
According to Rajic, "In terms of the public sector, they do a far more thorough due diligence. They will examine the details and ask whether the company has a sustainable model. I don't think that the importance of money in our coffers can be discounted. The amounts we have raised are large enough so that companies do not think that we are a gamble and that they are taking a risk. So we will reach the giant companies that still do not receive services from us, with the understanding that we continue to grow. We are today at the point where even the most conservative business in the world is at peace with working with us."
Recently Palo Alto CEO Nikesh Arora said that the company will start offering some of its technology for free, does this pose a threat to you? How can you survive in a situation where Palo Alto says ‘don't buy from Wiz - we'll give it to you for free?’
"When I worked at AppDynamics, we had competitors that gave away products for free or almost free. Also at Zscaler, Palo Alto gave away free products to keep us out of the game. But here's the challenge - 'good enough' is never good enough in cyber. This is because the threats continue to grow. Two years ago, not many boards dealt with cyber issues. Today they are no longer content with settling for ‘good enough’. They are asking ‘Do we have sufficient capabilities?' ‘Have we selected the right partners?’
"So even if it's free - if you as a company create more value, if you have the ability to quantify the value you create - you will always win. If you fail to win based on value and talent, you will not win based on price. And there are also cases where clients make decisions that are 'good enough'. Do you know how many times I've seen clients make decisions like that, and then come back to us a year or two later?”
What markets are you aiming for next?
"We started with revenues from the United States and now we have a presence everywhere in the world. To date, we have reached a $350 million annual sales rate through only 100 sales representatives. This is an unprecedented ratio, which illustrates how far we have still got to go. The opportunity in Europe and the Middle East, alongside the opportunity in Asia, it's huge. And we're not close to tapping into it yet because we're still building the infrastructure for our work. So the ability to grow there is a huge opportunity for us.
"In addition, we need to expand our work with existing customers through the platform we offer. The federal government is constantly increasing its budgets - and this is a market with tremendous potential for us. The Biden administration has allocated $6.9 trillion to the cyber budgets of the United States. It can be assumed that the upcoming elections will result in an additional increase in the budgets, with the understanding that cyber threats are becoming more and more sophisticated and complex."
Rajic points out that "only 10% of the organizations have transferred their data to the cloud - so here too there is a tremendous opportunity for growth. Global expansion, building cooperation with the public sector and expanding the sales teams in the United States, all of these are significant goals for the coming period that hold a great opportunity. And that's without even talking about innovation and the expansion of our platform, both organically and inorganically.
"And we didn't talk about our partner community either - the ability of partners and marketers to help us grow on a massive scale. Just in the last two weeks we met with six or seven senior executives in this industry, which is worth billions of dollars. And of course we maintain very close relationships with the cloud providers. Everyone asks ‘how can we be even bigger?’ Partners are a fundamental vector on the way there. At AppDynamics, partnerships are what allowed us to jump from $400 million to over $800 million. At Zscaler, when we redefined who our partners are, we could have made a significant leap."
He added that "we are now building the work plans, reorganizing some of the teams, and formulating significant action plans that include expansion into new territories and massive investment in the public sector. All these elements are part of our future growth - when you combine that with the fast pace that Wiz already has, and even before we dealt with the expansion of the platform - this is exactly why I believe that our growth beyond a billion dollars in sales is within sight. I truly believe that Wiz is on its way to becoming the largest cyber company in the world."
