Wiz-Google deal collapse will only benefit Israel’s cyber industry
Wiz-Google deal collapse will only benefit Israel’s cyber industry
By canceling the deal, Wiz’s founders have paved the way for other Israeli entrepreneurs to feel confident in their path.
Wiz doesn't want to be sold; Wiz wants to be a big company. At least that's what Assaf Rappaport, one of the company's founders and its CEO, says. Rappaport has been saying this from the beginning and continued in his first statement after the leak of the deal to purchase the company by Google parent Alphabet. Bottom line: it seems that canceling the deal can only benefit the Israeli cyber industry, which is currently at its peak.
Local entrepreneurs who see the company's refusal to be sold for such an amount will understand that there is a real horizon for startups and not just a quick sale for hundreds of millions of dollars. Entrepreneurs who are afraid to oppose dominant investors in the company can take an example from Rappaport and his management team and choose the future that suits them. Along with the investors, of course, but not against the will of the developers. By canceling the deal, Wiz has paved the way for other Israeli entrepreneurs to feel confident in their path.
For the investors in the cyber industry, or at least for some of them, the cancellation of the deal is probably less welcome news. This mainly concerns Wiz investors who could have celebrated a very handsome exit. However, some of the investors, led by Gili Raanan, chose to continue with Rappaport, believing that the company's value will continue to climb and that it will remain independent and strong. For other investors in the industry, such a valuation for a local cyber company prompts a reconsideration: Is it worth always selling a company or perhaps it is sometimes better to discover its potential?
Wiz charmed Google because it offered everything one could ask for in a major acquisition. Wiz's technology currently provides the most comprehensive solution in cloud protection, which is lacking in Google Cloud, Google's cloud company. Google Cloud currently holds only a 10% share of the global cloud market, trailing Microsoft and Amazon's AWS. One reason Google is lagging behind is its lack of a high-quality solution for protecting the cloud, unlike the two leaders. Wiz is currently considered a preferred company for cloud security systems. Another reason Google was willing to acquire Wiz over its competitors is Wiz's strong reputation and established customer base. Customers who knew that Google now provided Wiz's protection would feel more secure.
Wiz appeals to large businesses and organizations that currently prefer to use the Microsoft or AWS cloud rather than Google Cloud. The intended connection with Google would have opened doors for Wiz at many organizations that now prefer competitors. If each component were examined separately—technology, acquisition cost, etc.—other companies might have been considered, but Wiz is the only one that offers a suitable solution for large companies that can be quickly integrated with few obstacles.
For Wiz, the situation may not be so simple. This is already the third time that a purchase announcement related to the company has not materialized, making it seem like it is floating test balloons. This includes the acquisition of SentinelOne and Lacework, where Wiz was the buyer, and the attempted purchase of Wiz by Google. One reason for breaking off the negotiations so quickly is that such rumors burden the company's salespeople. During negotiations, competitors court the customers of the companies being sold, creating significant market distractions.
For Wiz, which is currently at a sales rate of hundreds of millions of dollars a year and aims to reach a billion dollars quickly, such a slowdown is unacceptable. As for the Israeli government, the fantasy of receiving billions of shekels in taxes has been dashed, leaving it to find other solutions to bolster state coffers at this difficult time.
