Wiz – the Guardians of the Cybersecurity Galaxy

Welcome to our new series! AI Infrastructure Unicorns. They provide the hardware, software, and services necessary for Generative AI companies but even if GenAI will someday become extinct, these infrastructure builders won’t stay without the job as they serve a much bigger industry of AI/ML models in general.

We bet that you might not know much about Wiz, yet it's a cybersecurity company currently valued at $10 billion, largely due to its focus on generative AI infrastructure support. Remarkably, Wiz escalated its Annual Recurring Revenue (ARR) from $1 million to $100 million in just over 18 months and then tripled that figure shortly thereafter. Just two days ago, on April 10, they acquired a second company, gearing up for an IPO. Who are the minds behind this meteoric rise? What has propelled their phenomenal growth? And how are they leveraging the momentum of GenAI infrastructure demands?

These questions peel back layers of a complex story. Let’s delve into the founders' journey, the debate between the power of an idea versus the strength of the team, Wiz's explosive growth, their strategic approaches, and the essential steps for preparing an IPO when growth outpaces expectations.

Wiz has recently secured an impressive $1 billion Series E funding round! The investment was co-led by a16z, Lightspeed Venture Partners, and Thrive Capital at the $12 billion valuation. Wiz has also announced that a portion of this capital will be used to acquire smaller startups.

Wiz is only four years old. It tops all the charts and makes the investors happy with its growth. But its success is a result of almost two decades of friendship and business relationships between Assaf Rappoport, Roy Reznik, Ami Luttwak, and Yinon Costica.

All four of them joined the Israeli army in 2001, serving in Unit 8200, an elite intelligence division. Israel, often called the "Start-Up Nation," has fostered a thriving start-up ecosystem significantly influenced by its unique security situation. Historically, Israel invested heavily in science and technology to gain a qualitative edge for national security, which has catalyzed its commercial technology sector. More than 1,000 start-ups have been founded by 8200 alumni alone. Though the intellectual property developed during service legally belongs to the military, requiring soldiers to sign nondisclosure agreements, there are challenges in ensuring that these technologies do not find their way into the commercial sector, particularly in fields like cybersecurity, where former soldiers are highly sought after.

At some point, Rappaport was transferred to an even more secretive elite cyber group called Unit 81. And that's where and when their cyber journey actually began.

In 2011, their knowledge, skills, and passion for security led them to launch of their first startup Adallom. In 2015, they would sell Adallom to Microsoft and join the tech giant together to experience what it's like to work on that scale.

"When we started, Microsoft didn't have any security sales," says Ami Luttwak, co-founder and CTO. "When we finished, it was around $1 billion a year."

Cushy for the next 5 years, only in 2020 they decided to quit the comfortable world of corporation and start all over again in the same cyber space. It was just the beginning of the pandemic times – and the best time for the cloud security startup.

"One of the things that spurred our departure was the prospect of providing a solution for cloud security teams that extended beyond Azure and truly supported multi-cloud environments," says Assaf Rappaport, co-founder and CEO. "You might say what we envisioned was the 'Switzerland' of cloud security."

So, this are the steps that led to Wiz's success:

Of course, it's so oversimplified and tongue-in-cheek, because the main step here is: build your close-knit, family-like team and move with it from stage to stage, gaining more and more expertise with the people who you fully trust.

For Rappoport the team is always what matters most, since ideas can change, which was the case with Wiz. In 2020, the company was called Beyond Networks and planned to focus on security for cloud databases.

But then their VP of Product Strategy, Raaz Herzberg, who was in conversation with the customers, informed the founders that she didn't see what significant problems the product solved for customers and why it was important.

The funny thing is that it happened after Beyond Network got their first investment. A few investors raised their eyebrows, but as is sometimes natural to VCs, they blindly trusted the team's expertise.

In this case, it proved them right.

The company changed its name to Wiz and started to focus on security for the actual cloud.

The cybersecurity field is a populated one. The key competitors of Wiz in cloud security are such companies as Palo Alto Networks, Check Point Software Technologies, Tenable, McAfee, CrowdStrike, Microsoft, Trend Micro, Orca Security, Lacework, Sophos, Fortinet, and many others.

What to do? Talk to a few Fortune 100 companies you know from your previous experience and learn what their pain points are. Address precisely them (and don't invent a market).

It turned out that despite a plethora of cybersecurity solutions on the market, a lot of companies struggled with the fact that there are actually too many solutions and agents connecting these solutions. In contrast to traditional on-premise cybersecurity solutions, there was no unified platform that allowed security teams to monitor and manage all their cloud servers through a single, centralized interface. The founders learned that companies transitioning their operations to the cloud were continually frustrated by the lengthy deployment times and the complexity of managing existing tools. More to that, this increasing array of tools was challenging for those without security expertise to utilize and comprehend.

"The market existed for 15 years," says Luttwak. "Although you had multiple products, none of them actually solved the problem. That happens sometimes: you have products, you have a market, security teams buy the product. But they don't actually solve the problem. And that's where opportunity arises."

They recognized that the fundamental issue was not lacking specific features or functionalities but rather the entire operational model of how security was managed across different cloud vendors. The traditional approach to cloud security needed a complete overhaul to better understand and secure cloud infrastructures effectively.

Wiz came up with the idea of an agentless cybersecurity platform and to democratize cybersecurity, making it approachable for regular developers as well.

"Our product is simpler to use and allows organizations to receive immediate value from the moment of connection. What customers like about Wiz is the accuracy of the results, the ability to democratize information security and help the development teams to assume ownership, rather than leaving it to the information security people only,” says Yinon Costica, co-founder and VP Product.

Igor Tsyganskiy, until recently the CTO of Bridgewater, and who signed what was then Wiz's largest multiyear contract in the fall of 2021 said: "A bunch of people had the tools, but to deliver ROI almost instantaneously, no one else was there." He says the investment paid for itself in just one week when it helped Bridgewater identify multiple exposures to a zero-day vulnerability called Log4j, a "potential digital Covid" that threatened to expose its $100 billion–plus in assets to cybercriminals.

They also went for a completely different look: no hackers, locks or other gloomy stuff. Wiz is for wizards, blue wallpapers, and fairy dust. It doubles down on a magical look and optimism.

Their investor shares that at "AWS re:Invent in 2023, Wiz's booth featured an "American diner" theme complete with donuts and an Elvis impersonator. For the RSA conference, it staged a "Wizard of Wiz"-themed booth with actors dressed as Dorothy, Tin Man, and Scarecrow. The company's research team even developed a card game called "Exploited in the Wild," which helps explain concepts in cloud security."

It really seems too simple to be true: instead of creating and educating the market, they saw a hole that is worth billions of dollars and made it their mission to patch it with a solution that is based on simplification and self-service, making the experience seamless and agentless.

With the official mission "to help organizations create secure cloud environments that accelerate their businesses," Wiz's bold goal is to win the cloud security race and become a $100 billion company.

Wiz's agentless platform which streamlined the integration process and offered immediate value resonated well with the market during a period when companies were rapidly transitioning to cloud-based solutions due to global crises and lockdowns.

The shift towards cloud services has only been accelerated later by the Generative AI boom that started in the end of 2022. As enterprises increasingly adopt AI technologies like OpenAI's ChatGPT, the need to secure vast data sets in the cloud has become more critical. Wiz has responded by developing AI Security Posture Management (AI-SPM) tools that protect the use of AI in software development. This strategic move not only addresses current security needs but also positions Wiz as a key player in supporting companies to become AI-ready.

By integrating AI into its security solutions, Wiz is not just keeping pace with market trends but is also helping to shape the future of cloud security. This ensures that organizations can leverage the latest AI technologies safely, keeping their cloud environments secure in an increasingly complex digital world. And all of it makes Wiz closer to their $100 billion company goal.

Customers are seeking to reach a state of "AI readiness," with security as an essential component, and Wiz is positioning itself as a go-to enabler for AI adoption, according to Chris Nicholas, senior vice president in Trace3, a cloud solutions group and Wiz's partner.

That's how in only four years, Wiz works with 40% of the Fortune 100, counting among its clients such companies as Avery Dennison, BMW, Colgate-Palmolive, Costco, Chipotle, EA, LVMH, Mars, Salesforce, Slack, Morgan Stanley, and others.

Wiz keeps listening to their customers’ needs but taking into considerations only solutions that can be scaled. That’s the lesson from Microsoft.

They work in three verticals: Government, Financial Services, Healthcare&Life Sciences, offering the following solutions:

Wiz got their $20 million seed round before it had any customers and even before they decided on a product. According to Forbes, "they played with several ideas, from online payments (briefly) to next-gen network security. Talking to dozens of prospective buyers, mostly chief information security officers (CISOs), to find out what they needed, they gravitated back to cloud security."

On May 7, 2024, Wiz announced that it had secured $1 billion in Series E funding. The funding round was co-led by a16z, Lightspeed Venture Partners, and Thrive Capital, and valued the company at $12 billion. Wiz has stated that a portion of this funding will be used to acquire smaller startups.

In December 2023, Rafft which enhances developer collaboration and DevOps infrastructure joined Wiz. In April 2024, they acquired Gem Security to strengthen Wiz’s SecOps and CNAPP offerings, supporting its strategy to lead in cloud security innovation.

In 2023 acquisitions were a bonus. In 2024 they became a necessity – partly due to the fight for talents.

Wiz is intensifying its channel strategy in 2024, leveraging significant executive hires to drive growth in cloud and AI security. Recently joined by former Zscaler COO Dali Rajic and other key Zscaler executives, Wiz is deepening its channel commitments to meet the booming demand for cloud and AI security solutions. The company, which has rapidly grown to $350 million in annual recurring revenue since its 2020 inception, is now positioning itself for an IPO.

Focused on expanding its partner network, Wiz's strategy includes enhancing partner engagement through improved resources, training, and certification processes. This effort aligns with its evolution into a comprehensive cloud and AI security platform, which includes capabilities like real-time threat monitoring and AI security posture management. By aligning closely with channel partners, Wiz aims to leverage these relationships to scale its impact and reach, anticipating that every dollar of revenue could significantly amplify through partner services.

As Wiz continues to grow and possibly approaches an IPO, the company sees these partnerships as crucial to sustaining its expansion and enhancing its market position, especially as it transitions from a security tool provider to a holistic security platform.

Wiz is experiencing unprecedented growth. It is diving into acquisitions and also trying to fill the vacant C-suite positions needed before the IPO. While these moves could potentially position Wiz at the forefront of innovation, they also carry inherent risks, such as integration challenges and the potential dilution of company culture. Even a look at the picture of Assaf Rappaport and Dali Rajic, the new President & Chief Operating Officer of Wiz, demonstrates that their styles don’t match, which could become a problem in the future.

Financially, the push towards a public offering and achieving a $1 billion ARR milestone suggests strong growth prospects. However, it also sets high expectations for performance. The company must manage these expectations against real-world operational challenges, including competition from established players and startups alike, which are also scaling up capabilities and could pressure Wiz to maintain a competitive edge.

Wiz's ambitious goals and aggressive expansion strategies also led to industry scrutiny. Accusations range from patent infringement to unethical sales tactics and potential conflicts of interest with investors. Wiz declines all such claims are baseless and attributes them to the competitive nature of the cybersecurity market.

Wiz's team is incredibly dynamic and daring. The more I learned about Wiz and its founders during this investigation, the more they reminded me of the Guardians of the Galaxy – operating through a blend of friendship, humor, bravery, and improvisation, unafraid to borrow (or even steal) effective strategies from those around them. Assaf Rappaport, Wiz's CEO, truly embodies their Star-Lord, leading with a disregard for conventional playbooks and powering forward with unstoppable force. The team prioritizes speed and innovation, caring little about external opinions and focusing intensely on customer feedback. In their quest to do the right thing – much like the Guardians – they navigate the complex terrain of cybersecurity, a field that seems so natural to them. Data-hungry AI companies that mostly operate in AI environments will increasingly need these cybersecurity services.

Wiz’s journey to an IPO is one of the most interesting to observe.

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