Recently, it has been reported that Google's parent company Alphabet is in talks with startup tech company Wiz to acquire it for approximately $23 billion.
If completed, this transaction will be the largest acquisition in Alphabet's history.
Wiz was established in January 2020, focusing on cloud security business. It helps client companies discover vulnerabilities in their cloud environments by checking for vulnerable software in containers and virtual machines to ensure the security of their data networks.
Prior to Wiz, Alphabet spent $5.4 billion in March 2022 to acquire cybersecurity company Mandiant. After two years, Alphabet has made another big bet in the field of cybersecurity, at a sky high price of $23 billion.
Of course, what the outside world is more curious about is what magic Wiz has that can attract Alphabet so much?
Continuously successful entrepreneurs
Although Wiz has only been established for four years, its founding team has long been renowned in the security industry.
Wiz CEO Assaf Rappaport and his three co founders (Yinon Costica, Roy Reznik, and Ami Luttwak) all come from Israel's elite intelligence agency, Unit 8200. This department has trained numerous technology entrepreneurs for Israel, and in the investment circle, Unit 8200 is also regarded as a talent pool in the technology field.
In 2012, Rappaport, Reznik, and Luttwak jointly founded a company called Adallom (Costica joined in early 2014), which was acquired by Microsoft for $320 million in just three years.
In the following years, Rappaport and others led the development of Microsoft's Azure cloud security business, achieving $1.5 billion in revenue and serving over 40000 developers.
In 2020, Rappaport, Costica, Reznik, and Luttwak chose to leave Microsoft. At first, they also tried other entrepreneurial directions, but in the end, they decided to return to the field of cloud security.
Wiz was officially established in January 2020. At the end of the year, Wiz raised $100 million from globally renowned venture capital firms such as Index Ventures, Sequoia Capital, and Insight Partners, making a name for itself in the field of cloud security.
In February of this year, Wiz completed a $300 million Series D financing, and the company's valuation reached $10 billion. From December 2020 to May 2024, Wiz has raised approximately $1.9 billion from venture capital funds and private investors.
Meanwhile, Wiz has also been acquiring other cybersecurity companies such as Gem Security and Rafft. Wiz further expands its market by integrating the advanced technologies of these companies into its own platform.
Capture market pain points
In the field of cloud security, Wiz has no shortage of competitors. How did it quickly break through the encirclement and become a leader in this field?
Insight Partners, Wiz's investment firm, has stated that Wiz's founding team has a strong vision to restructure the field of cybersecurity, leveraging their experience and successful history in Adallom to build an amazing product in a short period of time.
Advanced technological level is also an important advantage of Wiz. To tackle cloud security challenges, Wiz has introduced a new technology - using an agentless, API centric approach to scan workloads and provide visibility into cloud environments. This method enables organizations to quickly identify and mitigate risks without increasing the burden of deploying and managing agents.
In addition, in terms of market operation strategy, Wiz has focused on high-value customers and giant enterprises since its establishment, which has enabled it to generate a steady stream of considerable revenue. Wiz's disclosed information shows that 40% of the Fortune 100 companies are its clients.
It can also be seen from its revenue situation. In August 2022, Wiz announced that it was the fastest startup in history to expand its annual recurring revenue (ARR) from $1 million to $100 million. In 2023, Wiz's ARR reached $350 million.
The success of Wiz is closely related to Rappaport's management decisions and strategic choices, as he led the company to stand out in the fiercely competitive cloud security market.
Rappaport has stated that Wiz's rapid development has captured the two hotspots of cloud computing and artificial intelligence. In the field of artificial intelligence, as more and more data is migrated to the cloud for training large models, the importance of data security is becoming increasingly prominent, which also brings greater market space for Wiz.
Enhance the competitiveness of 'cloud security'
At present, network security has become a new investment trend. According to data, private financing increased by 31% to $5.1 billion in the first half of 2024, with the cybersecurity industry playing a crucial role, accounting for 52% of private financing.
For Google, network security is also a very important business landscape.
Although Mandiant has been acquired before, it did not meet Google's needs. The massive acquisition of Wiz further highlights Google's determination to deeply cultivate the field of network data security. At the same time, it is also conducive to enhancing Google's ability to respond to network threats and growing its strength in cloud computing.
In fact, resisting security threats in cloud environments has always been a key focus for technology companies, especially giants like Google who need to ensure the security of large amounts of user data. Therefore, they also need to continuously improve the security of cloud services and their ability to respond to threat intelligence.
In addition, if Google completes this massive transaction, the entire market is also expected to benefit. On the one hand, this may accelerate other investors' investment decisions in cybersecurity, and on the other hand, this transaction will benefit the cash cycle of the venture capital ecosystem, as a large number of investors will gain valuable liquidity from it.