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Comment by Centigonal | Hacker News Reader

Founded in 2020, with a $23B valuation, aiming for $1B ARR?

CloudFlare is worth $26B and had ~$1.3B revenue last year. Something's fishy here.

Valuations have always been more about potential than about current state in startup world. Wiz is 4 years old and already at $350M ARR, that's a meteoritic rise.

Meteorites crash & burn, honestly, what is a "meteoritic rise"?

Fast enough to cash out at highly favorable and ambitious valuations while the ARR trajectory supports it. You’re selling potential, you don’t have to deliver; that’s the next team’s problem.

Wiz: Got to 350m ARR

Hacker news: "you don't have to deliver. That's the next team's problem".

Apparently 350m isn't enough to prove potential.

It's certainly not enough to justify a $23B valuation target, or even $12B assuming reasonable multiples in the space (average is ~15x in cyber tools and controls). Lacework went from an $8B valuation to $200M–$230M (first with Wiz attempting to acquire, and now Fortinet at the valuation I mentioned, roughly ~2x revenue, ~3x if we want to be generous). A case can be made that Wiz is a more mature platform and Lacework is a fire sale (which it is, but also not a great sign for the rest of the space), but I'll argue a lot of Wiz's revenue is likely premium pricing with current customers that can cram them down on at their next renewal cycle, and the TAM is simply only so big (with competitors being as, if not more, resourced to compete and stay ahead).

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...

https://www.forrester.com/blogs/fortinet-acquires-lacework/

meteorites shine briefly, swiftly, and suddenly

so i guess as an adverb it relates to how quickly the rise is happening and how hot/bright it burns

Not even knowing about Wix until today, I had no idea what to make of it, I wasn't trying to be snarky with that comment.

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".

Wix, on the other hand, is a website builder, not a cyber security firm.

I did mean Wiz. I guess my brain just substituted that. I guess I'm at least familiar with the Wix name in that I saw ads all over the net ~a decade ago?

Not understanding an idiom is something you should just discuss with ChatGPT, it'll set you straight, show you the ropes, right your ship, and whatnot.

I very much doubt that. This as a phase doesn't even seem to exist online till today, even much less as an idiom, telling me the equivalent of "just google" for someone specific's thinking is entirely unhelpful.

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.

I have seen “meteoritic rise” many times.

Well, no, not exactly :)

existed prior to today https://dictionary.cambridge.org/us/dictionary/english/meteo...

The actual spelling is "meteoric rise", so that might be why.

It is indeed. Thank you.

Genuinely asking here; have you really never heard the phrase "meteoric rise" before?

Yes, all the time. It is a common idiom, especially in history books.

It's easy to miss the difference between "meteoric rise" and the OP's typo, "meteoritic rise".

Also easy to recognize that it was a typo and interpret it as intended.

Indeed even gpt-3.5-turbo recognizes the typo and gives a proper explanation. Can't wait until everyone has an LLM baked into their device that makes submitting stupid content a two step verification.

> I very much doubt that.

Might want to update your priors, I put your exact comment into ChatGPT and it handled it flawlessly.

They meant to say "meteoric rise".

It is a common phrase.

https://dictionary.cambridge.org/dictionary/english/meteoric

Is this your first day or are you looking to be snarky?

To be fair, the difference between meteorites and meteors is that meteors burn and die BEFORE they crash, according to NASA. So not much better. The idiom is still a thing though.

https://science.nasa.gov/solar-system/meteors-meteorites/

It's a rise about as far as a quantum leap

Their last raise was two months ago at a valuation of $12bn. Google was offering a premium to take them off the market.

https://techcrunch.com/2024/05/07/wiz-raises-1b-at-12b-valua...

Likely offering a very large premium to offset the risk of antitrust holding up the deal.

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.

Look at their financials, CloudFlare might be popular among the HN crowd but the stock is massively overvalued. At the end of the day they are a commodity CDN that somehow can’t run a profitable business.

And now with their bad hiring practices and shady business deals they might not be popular among HN crowd for long too.

Yeah nah... they have great products and their primary business is allowing them to enter markets where other companies can't compete. The valuation is based on potential not the business as it stands today.

And to your point they are popular with the HN crowd which is usually a strong indicator.

I think GP's point is that wiz's valuation makes even less sense.

I did look at their financials - 77% gross margin with 30% revenue growth. Much higher than “commodity cdn” can command. If they cut marketing and r&d they’d be bagging half a b a year in profit but they are investing in growth as they should because it’s working

Cloud flare will still be the internet in ten years, while Amazon will just be Walmart,

Amazon is the internet too. The us-east-1 outage in 2023 took down a lot of stuff.

AWS is making $100+bn per year and growing at about 20% per year.

Good job, "Walmart"!

And, that's a dis, why?

WalMart has a market cap of almost 600 Billion dollars. Weird dis.

It’s even weirder since Amazon is at $2T, and has long been worth far more than Walmart.

Well, not weird, you got it exactly! Thats the point :) It would be "just Walmart"

Strange take on AWS.

cloudflare is a commodity CDN, amazon is an ecommerce site

They have a lot of products.

Because they have so many using their cdn functionality they can upsell them on other products such as domain registration, video streaming, s3, etc

Cloudflare makes no money on domain registration.

Yet.

So they have similar valuation and ARR as Cloudflare. What is fishy?

Cloud flare has it, they are aiming for it. Definite income vs possible income cannot be priced in the same way, assuming the CF valuation is justified.

Cloudflare has a much smaller ACV than Wiz, as a CDN play is very different from a CNAPP play.

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"

Wiz hit 100M in mid 2021 and 350M ARR last year; now they're going to automagically get that to a Billion in a much tougher climate?

They have amazing product market fit in the security industry and a lot of dry powder.

They've already started developing an M&A strategy and are closely linked with Gil Ranan of Cyberstarts

You raise an important point. To me, pre-IPO "valuation" is mostly VC bullshit. Remember WeWork's pre-IPO valuations??? Jan 2019: 47B USD! What really matters: Post-IPO market cap, as long as there is significant float. (See VinFast IPO with a ridiculously small float.)

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