Google-Wiz deal fizzles out, company will pursue IPO
cnbc.com
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CloudFlare is worth $26B and had ~$1.3B revenue last year. Something's fishy here.
I wasn't interested in what ChatGPT can hallucinate or even output. I was after Voloskaya's context, Voloskaya would be the one to provide this insight, which is who I chose to ask for that.
Might want to update your priors, I put your exact comment into ChatGPT and it handled it flawlessly.
Hacker news: "you don't have to deliver. That's the next team's problem".
Apparently 350m isn't enough to prove potential.
You can't grow into something there isn't room to grow into.
https://techcrunch.com/2024/04/18/wiz-is-in-talks-to-buy-lac...
It is a common phrase.
https://dictionary.cambridge.org/dictionary/english/meteoric
so i guess as an adverb it relates to how quickly the rise is happening and how hot/bright it burns
I was actually interested to know what they meant because it sounds like saying: "let's take a walk down to the top of the highest mountain".
https://techcrunch.com/2024/05/07/wiz-raises-1b-at-12b-valua...
The Activision-Blizzard sale was at a premium of around 60% from stock price ($56 per share trading the day before the announcement, compared to $95 per share offer). Wiz was offered a premium of almost 100% on latest valuation.
Both Wiz and Google know that the FTC will hold up the deal, and in that time, Wiz has to convince customers not to jump ship (Google will likely not support AWS forever), and risk that the deal falls through - in which case they've gone a year without momentum.
If they really believe they can make a strong IPO, and keep growing past IPO, their decision makes a lot of sense.
Good job, "Walmart"!
And to your point they are popular with the HN crowd which is usually a strong indicator.
Wiz also has amazing product market fit (almost everyone who's used it has raved about it).
And in the hierarchy of needs, it's easier to place infra security over "yet another CDN"
They've already started developing an M&A strategy and are closely linked with Gil Ranan of Cyberstarts
Wiz's valuation is insane. Most people havent even heard of them. I think it was a > 60x ARR multiple on this deal. Id actually be kinda pissed if I was a google shareholder and they went through with it.
Something very strange is going on with Wiz. My gut tells me if they ever IPO to go big on puts.
Do you know of Active Directory? Most have no idea, even though it is a Windows Server feature from 2000.
Some will live a life and even work not knowing.
Samba can act as an AD DC.
And to be honest, it's fairly understandable. AD manages to be somewhat turnkey while doing the same thing on Linux systems is a major pain.
I am fairly convinced that Redhat, Novel and Oracle probably have a nice interface on top of it all to make it manageable and therefore have a vested interested in keeping it as awful as possible for the rest of the world.
When I played with it I stayed away from self-managing something like it for linux-only systems and for mixed/cloud/online systems I use Entra Id
If you work on internal company systems in a Microsoft environment it often can be.
What sector is the app in, what are some other interesting (non-identifying) aspects of the app that stand in contrast to revenue? Is that in ads, or does the app have in-app purchases et al?
yup, overvalued
I bet those people rarely get promoted for preventing an acquisition, though. Probably that is why we see so many crazy acquisitions, in general.
Granted, it was nowhere near this scale, but I've gone through this process as the head of Engineering for the company being acquired. At that point, the business had already decided to acquire, so the process felt more about finding any red flags and/or identifying reasons to adjust the price.
For the process itself, the company looked at nearly everything over the course of a few months. Every detail of finances, sales, tech, operations, etc. was scrutinized, culminating with 16 hours (4 for business and 12 for tech/ops) over two days of standing in front of a room with 30 people.
This is a misunderstanding I think many non-googlers have, thinking people only get promoted for launches (or in this case acquisitions). It's more nuanced than that: people get promoted for impact and while launches are one obvious form, you can sell pretty much anything useful as impact if you can show how it's useful. In the case of M&A, avoiding a bad acquisition, if you can justify it, would be impact.
The only way I'd tank a deal was by identifying that it was in fact smoke and mirrors.
If anyone is going after CRWD it'll be one of their other competitors.
And their valuation is on par with the whole annually Western support of Ukraine. A country at war and with 30M people in it. That for some completely invisible product.
It is also 17 millions of these most expensive brand new 155m artillery shells.
- stocks are called stocks for a reason, they're not flows. $60bn is effectively an estimate of all future profits of the company over its lifetime
- Crowdstrike generates a return by charging enterprises huge amounts of money to feel secure and tick security boxes (Actual security is questionable). Big enterprises have a lot of money to waste, but they feel they're getting a return on it
- hardly anyone outside Ukraine gets a specific return from backing Ukraine. The same goes for all sorts of other worthy projects of the "end world hunger" kind - there's huge benefits, but not to the people actually spending the money.
Indeed, and of course we have Kalecki's famous quip that economics is "the science of confusing stocks with flows"
> If USD lost the status of world's reserve currency it would have pretty catastrophic consequences for US economy
.. but for everyone at once. Collective action problem. You've argued why it's in the interest of the US government to tax people and send shells to Ukraine, but this is not an argument for Blackrock to divert VC funding to individual armored brigades.
Wiz does cloud security. The same thing as Crowdstrike, but runs in your cloud environment (AWS/GCP/Azure) to detect issues there.
Different customers, different profiles, different costs and prices.
At the very least I would expect to see a 5 billion market cap, and if their growth rate is good (4 year old company, seems to be) it should be higher than that
https://www.wsj.com/tech/how-startup-wiz-went-from-zero-to-a...
https://www.crowdstrike.com/platform/cloud-security/cwpp/
That BSOD also impacting instances of Windows in AWS, Azure, and GCP.
But it would make no sense for Wiz to do that, as they don’t have any “secret sauce” as it comes to endpoint security. They haven’t solved the problems that took Crowdstrike down.
It is not in their wheelhouse. It would be a waste of money and time.
Could they? Sure. Should they? Definitely not. It’s a commoditized space at this point, unless they have some new ideas which, if they did, they’d have already begun discussing.
Carbon Black did well because it turned endpoint security on its head. Not because it was a “better AV”
My $.02
I agree - them being at the top of the market implies exactly nothing about whether their product is any good or has any special moat or differentiator.
All I am saying is to beat them, you’d need something new. “The same as Crowdstrike but we use 2-stage recoverable updates” is fine, but not enough of a compelling pitch to swap vendors en masse. Not even now.
And given that it’s a pretty commoditized space (to which I think you’d agree, at least for “classic” tools), it may not be worth beating if you don’t have anything new.
Adding a runtime security and EDR offering is not going to get them to a $23B valuation.
I agree Crowdstrike sucks. I’ve been beating that drum for the better part of a decade.
Building a “new crowdstrike” by a different name won’t win.
I just mean that if you want to own the market, you will not be able to do that unless you provide something fresh, and it will be a race to the bottom otherwise, in the long run. The same as dynamic web app scanning is today.
At Wiz's valuation, if they were to enter that space, they couldn't be 'just another player.' They'd have to own the space. And I don't think they can do that purely through marketing, as others are already much more entrenched.
Maybe there are obvious answers to these questions, but if a company is worth $23bn I’d expect that as somebody in the industry, I could answer them without doing in depth research.
This is exactly the kind of gut feeling of “something’s off” that I’ve learned to pay attention to.
> Wiz combines a graph search for asset management with agentless vuln and malware scanning that clones EBS volumes and scans them on their infrastructure. That's a great combo for vuln management, but has some downsides like delays between scans and cloud costs. They have a sensor with solid detection rules, and are okay at a bunch of other stuff like cloud log threat detection and sensitive data detection. They've basically pushed what you can do without an agent to the limit.
Crowdstrike: “you just install a kernel module with ring zero access and we’ll make sure you’re protected”
Wiz: “hold my Red Bull…”
> For Wiz, a $23 billion sale price was irresistible. Google would value the startup at 46 times the $500 million in annual recurring revenue it currently generates, a person familiar with the matter said.
https://www.wsj.com/tech/how-startup-wiz-went-from-zero-to-a...
I'm very curious about what due diligence found, but we aren't likely to get more info until we see their s-1
Wouldn't it be more likely that they would have lowered their offer after seeing the internal data - perhaps so much that Wiz would certainly walk away.
> [Cyberstarts] has a portfolio of only 22 companies whose combined value is $35 billion. Five of these companies are unicorns, first and foremost Wiz, which seems to be breaking all the rules of growth and success and setting new standards in the industry.. In all three of his funds, Ra'anan shows an internal rate of return of more than 100%, an unusual figure even for the best funds in the world.. The first sales come from the loyal CISOs who work with the fund.. The whole CISO advisory committee issue has gotten out of hand for corporate America.
https://www.calcalistech.com/ctechnews/article/hjpwti2dr
> Wiz announced two months ago that it had raised $1 billion at a $12 billion valuation, bringing the company’s total funding to $1.9 billion.
The implication, you could argue, is that that also includes purchases from the startups, but that isn't at all a requirement of the program, at least as far as anything legal is concerned, to my knowledge.
That said, it makes sense that if you're advising companies that are building products with your advice in mind, they're going to be solving problems you need solved, so you're more likely to buy from them. The fact that you have a good working relationship with them already is a bonus, of course.
That's the optimistic view.
The cynical view is that it's no different from drug companies paying doctors to shill their pills.
OTOH, maybe The Honest Services Statute where CISOs violate their fiduciary duty by prioritizing security/risk budget & focus to a VC paying them. I don't see most impacted companies making this public vs a warning or voluntary resignation.
It clearly happens a lot, but the only successful prosecution I remember was at Netflix: https://www.justice.gov/usao-ndca/pr/former-netflix-executiv... . A funny thing is the VC is doing all this semi-officially: many but not all of the illegal bits go away - the gov has less to prosecute on when everyone files their taxes accurately !
But wiz? There are reading like Mossad/Unit 8200. And who wants to have them in their backend? Worse than Cloudstrike, which sounds like CIA to me.
You gotta know what you're up against to defend properly.
Current FTC is good(personal opinion) from anti trust point of view but maybe bad for startup exits[0].
Minor pet peeve: misuse of the word "humbling".
A $23B offer is not humbling (on my planet at least). Humbling would be turning this offer down and then failing to get enough interest to generate an ipo.
The reason why tech sucks these days is because everyone over hires and empire builds.
Each one of these is a 50-person company on its own.
I have used Octa and it's a decent platform, not a magical one. Creating a similar platform for Google Cloud should be feasible with the level of Google resources.
HA! Who asked them? I've never seen a startup ask the employees whether to take an acquisition offer.
Can you imagine Billionaires reporting to the average corporate robot at large corp?
> Wiz was founded in January 2020 by Assaf Rappaport, Yinon Costica, Roy Reznik, and Ami Luttwak, all of whom previously founded Adallom
> Adallom was founded in 2012 by Assaf Rappaport, Ami Luttwak and Roy Reznik, who are former members of the Israeli Intelligence Corps’ Unit 8200
I wonder if this rejection is related to the CrowdStrike incident. Are they expecting or already experiencing a significant influx of new clients? I'm unsure if their services overlap, just curious.
In absolutely no world would have taking that offer been the right decision.
Can someone provide some background?
Who in the fuck is Wiz, and why in the fuck might anyone think that they're worth 11 figures?
Depends on just how many CISOs they can sell anything to (iow, whether Gili Raanan has invested or not): https://www.theinformation.com/articles/how-a-former-sequoia...
wouldn't that constitute forensics instead of EDR?
meaning that they can't catch attack immediately?
Or that the author has been waiting for VC investment to stop? I don’t understand what he’s trying to suggest.
Their point is that we've been stuck in 1999 for 15 years, and not the decade before that.
Disagree all you want, but “it's been 25 years since 1999, you fail at math” makes no sense as a rebuttal.
80 failed projects is still a +ev outcome for a VC if they hit their 100x proposition on the 81st.
Honestly, I'm just mildly shocked of the $23B valuation for a product that I'd expect to have taken waaay less than 1% of that in dev costs. What I'm more shocked is that Google decided they can't build the same thing themselves. Maybe I don't understand the complexity of the product?
Faang is where amazing engineers go to produce nothing of value.
One of the political teams was fired recently, so perhaps Google is in the process of reversing course, but that is just a guess.
I swear Google is transforming itself into the next IBM.
At a generous 20xARR valuation this is still 1b ARR.
1 billion / 40 = annual revenue of $25M from each contract.
Hwat. Help it make sense.
It's not like Google is after they client list, they would probably limit them to Google services after acquisition anyway.
I assume you meant to say billions, since this is a $23B offer they turned down.
If I had to positive spin on the valuation: it's chump change if Wiz (who seem to be a very capable cybersecurity firm) are able to integrate themselves deeply into Google's infrastructure and secure it up the wazoo, since a 5% cost to Google's share price for reputational damage caused by GCP getting r00ted would be ... 5% of Google's 2.25T market cap ... $112.5B.
cf. Crowdstrike's share price after some bad news: they are down 30% over the last five days.
The stock is recovering. Traders have short memory. By the end of the year, it'll probably be $400 unless there's a huge class action against them that starts looking really bad for them.
Copy, Paste and ask for 70 times more?
That's fast... Is that 18 months after launch or literally 18 months after starting development?
> The cybersecurity software vendor said in August that it reached $100 million in annual recurring revenue after selling its product for just a year and a half.
So that's 18 months after formal launch. Since we don't have their financial statements, you can only guess wether this is the value of signed deals or a review of actual recognized revenue for those 18 months. I suspect the first.
Google already has a world class security team, maybe one of the best in software.
What would they gain by this acquisition?
23 Billion is enough to pay 2000 engineers 1 million USD TC for more than 10 years.
Don't think so. Google has a relatively good track record for acquisitions. So I don't think they were really worried.
Not so sure about the force per se, but NSO group has been pretty much a bargaining chip in securing the support for the State from autocratic nations around the globe.
What sometimes does work is to make a formal offer to buy all the shares that are presented, at some price quite a bit higher than the current market price. Sometimes that works. Occasionally that works for very little above the current market price.
Wiz might not mind at that point.
But if they did mind, it would be a hostile takeover. The way Wiz can prevent it is by approaching their largest shareholders and asking them to help prevent it.
it's always about the money.
It's (entirely) about the money.
you dont know that. when you start getting high networth, you end up comparing yourself to the _even higher_ networth people.
The love of money isn't driven by need. It's driven by want.
To me it feels like Google was trying to put pressure on employees and any other non board option holders. There were dozens of articles and analysis of exactly bow many new millionaires / billionaires will be minted after the sale in Israel
That doesn't mean much. I've worked at a company that kept taking about "our goal is to reach magic number X" and etc. until one they announce a sale.
Situations change, business plans evolve, and money talks.
Buying a strategic complement where you can multiply the company's ARR overnight by integrating with your own suite makes sense.
Or commoditizing this complement by offering it for free as a differentiator to competitors (Azure, AWS) would also make sense.
Plenty of options to choose from.
https://www.statista.com/statistics/1093781/distribution-of-...
At the end of the day there were a lot of employees up and down the organizational chart that would have been very happy with this deal. So I wish that we could see the inner workings of what went wrong.
The constant rumor mill around Wiz keeps turning, and one starts to ask if there are nefarious actions at play.
I use wiz for my home lighting and automation, I'm so glad that google did not buy it due to its habit of killing things that I find useful.
I want my hardware to last longer than the current decision makers employment.
Edit: hah, the site becomes available AFTER i submit so now I can read it.
Per their About Us page, they are an "IoT platform for smart lighting solutions and smart services" and "offer people connected lighting".