Assaf Rapaport, co-founder and CEO of cloud security startup Wiz, said turning down Google's $23 billion offer was “the hardest decision I've ever made.” But he justified his decision by saying that the cloud could make the company even bigger, potentially reaching $100 billion. Security is the future.
“I think we made the right choice,” Rappaport said Monday at the annual TechCrunch Disrupt conference.
“We believe it's bigger than the endpoint, bigger than the network, definitely bigger. So there's an opportunity there to be a $100 billion-plus company. We believe the company that owns it will be a $100 billion-plus company,” he added. “I don't know if it's going to be the Wiz, but I think if we do the right thing and execute, it's…in our hands.”
Still, this was not an easy decision because we had to think about Wiz's investors and employees.
“I was very nervous,” he admitted. But it was he and his co-founders who made the call. “In healthy companies with healthy relationships with investors, the founders’ decisions are always made.”
At the time Mr. Wiz turned down a $23 billion offer from Google's parent company Alphabet, the four-year-old startup founded by former Israeli military officers had a private valuation of $12 billion.
The startup has raised $1 billion from investors led by Andreessen Horowitz, Lightspeed Venture Partners, and Thrive Capital. After the capital injection, the company billed itself as “the world's largest cybersecurity unicorn.”
“It's hard to say no to such a humble offer, but with the talented team we have, I feel confident in making that choice,” Rapaport said in an email to Wiz employees at the time, according to TechCrunch. “I can do that,” he said.
The CEO acknowledged that there are other offers, although none as big as Google. When asked if Amazon was included in that list, Rapaport said only that it was “not an unusual position” for a startup in Wiz's position to make a different argument.
Wiz is one of the fastest growing cybersecurity startups in recent years. Wiz co-founder and vice president of research and development Roy Resnick said the company reached $500 million in annual recurring revenue this month and hopes to double that to $1 billion by 2025. That's what it means. Reznik argued that achieving this goal was a prerequisite for the IPO, a promise the company made to its employees after rejecting Google's offer.
Asked about Wiz's M&A strategy, Rapaport said the company made two acquisitions last year, startups Gem and Rafft, but that the company is generally risk-averse.
“Just because you have money doesn't mean you need to be active,” Rappaport said. “We are a 1,500-person organization, so almost every acquisition has the potential to be a great culture and impact going forward. [Wiz’s culture,]” he added.