Nir Zuk has by no means shied away from challenges. Twenty years in the past, when he was advised he did not stand an opportunity of competing with the present cybersecurity giants, he based Palo Alto Networks, which grew to become the world’s largest cybersecurity firm with a market cap of greater than $125 billion, 5 instances greater than the main rival Examine Level the place he began his profession. Since then, he has based the airline Air Haifa, which connects the north to the world, co-founded a brand new digital financial institution, launched the AI-based monetary startup Finq and is now contemplating a re-entry into the sphere of tv.
“I like being advised that it is very tough to do one thing,” he insists. “It primarily implies that if I succeed, then nobody else will be capable to do it.”
This technique of operation has certainly introduced with it many successes but additionally failures, such because the TV and streaming channel Related, which he based and closed. Now, in an interview with “Globes”, he talks about all this, in addition to the way forward for Israeli cybersecurity and the tech sector, the revolution in banking, and the challenges he sees for the nation.
The corporate’s shares climb
Zuk (54) was born and raised in Rehovot. Within the military he served as head of the software program improvement division within the 8200 intelligence unit, whereas on the identical time learning for a B.Sc. in Math at Tel Aviv College. After leaving the military, he started working at a small startup referred to as Examine Level. “There have been lower than ten staff on the time,” recollects Zuk. “In 1997, I moved to the US for the corporate and stayed there for a couple of years. Then I left, based OneSecure, bought it for $45 million in shares, and left. That is after I based Palo Alto Networks.”
Since then Palo Alto Networks has develop into the world’s greatest cybersecurity firm, and up to now 12 months, the corporate’s share value has risen greater than 42%. It not too long ago even broke its all-time file. In its most up-to-date monetary outcomes, revealed on February 13, Palo Alto reported a 14% quarterly enhance in income and a 21% rise so as backlog. Nevertheless, the revenue forecast for the subsequent quarter was barely decrease than the analysts’ consensus.
What’s the major worth that the corporate provides?
“From day one, the concept was that the cybersecurity market is made up of many small components. Over time, at any time when there’s a new cybersecurity problem, the present gamers ignore it and a brand new set of gamers emerge. Palo Alto Networks was based to vary that and to construct a platform, that’s, one product that over time provides an increasing number of cybersecurity features, all based mostly on Better of Breed (the most effective of their discipline).”
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“All of the features we add to the product can compete on their very own towards stand-alone merchandise and win. Once you purchase all these features as a part of the platform, you get all the advantages: it is low cost, simple to implement and straightforward to function. If you need a brand new perform, you merely flip a swap and it really works, and should you’re not happy, you uninstall and cease paying.”
Rivals like Shlomo Kramer’s Cato Networks and Assaf Rapaport’s Wiz declare that they’re taking prospects away from you as a result of your merchandise are of decrease high quality.
“In actuality, the numbers present a distinct image. You talked about Cato Networks – nobody is aware of their true dimension, as a result of they aren’t public, however of their discipline alone, Palo Alto Networks might be 5 to 10 instances bigger. In Wiz’s discipline, cloud safety, Palo Alto can be the biggest firm on the earth. The numbers that Wiz studies are spectacular, however after they go public, we will see whether it is real and examine higher.”
Lately, Wiz and Examine Level introduced a collaboration that might seemingly threaten Zuk’s firm. It is a strategic settlement with advertising and marketing, product and technological facets, with an emphasis on cloud safety, wherein Palo Alto is especially distinguished. However for now, Zuk stays unruffled.
“I believe the market woke as much as Palo Alto Networks’ thought 20 years too late, but it surely has understood that the suitable method in cybersecurity, as in all different IT markets which can be bought to firms, is to not want 20 completely different firms for 20 completely different challenges, however one firm that can resolve all of those challenges. We have seen this in lots of areas. For instance, up to now within the CRM discipline there have been firms that wanted 5 to 10 distributors (software program distributors), till Salesforce.com arrived and at this time there is just one vendor.
“In cybersecurity, this hasn’t occurred but. For different firms, it is extra sophisticated, to rework from a distinct segment firm that solves just one space, like Examine Level in company community safety or Wiz in cloud safety, into an organization that could be a platform that solves every thing wanted in cybersecurity. To realize an answer that’s equal to what Palo Alto Networks is doing, they should create a bunch of about 10 completely different firms, and even then it is going to be 10 separate firms making an attempt to compete on one platform.”
You have mentioned earlier than that Examine Level is not even your rival.
“Their mannequin is a little bit completely different. They attempt to preserve their current buyer base. Examine Level solely seems in offers the place there is a buyer who already makes use of Examine Level, and the query is whether or not to stick with them or swap to us. We’re competing primarily with different firms like Zscaler, Cato, and Fortinet.”
What do you consider their new CEO, Nadav Zafrir?
“Nadav is superb. He’ll be an amazing CEO simply as he was an amazing commander of 8200 and an amazing enterprise capitalist. I believe he’ll do what they need to have been doing for greater than ten years – put money into improvement and likewise in acquisitions and partnerships, as he has completed with Wiz.”
“It is simpler to boost cash overseas”
Lately, not-so-flattering information was revealed on Israeli tech. Amongst different issues, the Rise Israel Institute (RISE) famous that solely 10 firms raised a few third of all investments final 12 months, and the cybersecurity discipline alone attracted 42% of all investments. Thus, the businesses’ multiples are additionally climbing and are paying homage to the times earlier than the large fall in 2021-2022.
How do you see the multiples of firms within the discipline and exercise in contrast with earlier intervals?
“It is a matter of provide and demand. There are two extra indicators. The primary is the indicator of acquisitions, and there have not been many there not too long ago. Palo Alto Networks made two acquisitions in Israel on the finish of 2023, proper within the early levels of the conflict. The multiples there have been excessive however not super-high. I have never seen lots of acquisitions since then, so it is laborious to know whether or not the multiples there are affordable or not. And naturally there are the multiples of public firms, which I believe are decrease and nearer to the affordable vary.”
Are you trying to purchase extra firms?
“We have a look at the market. We’ve a roadmap for what we wish to construct, the place we wish our product to be and when. We’re all the time searching for methods to speed up that via acquisition, however after all it must be with the suitable staff, the suitable know-how and in the suitable place.”
Though he stays calm a lot of the interview, there may be one subject that agitates him. “In a lot of the world it’s simpler to boost cash than in Israel. Israeli tech shot itself within the foot when every kind of individuals, particularly the much less profitable ones, went world wide and mentioned how problematic and horrible every thing is right here. We positively see nice problem in elevating cash for firms that aren’t cybersecurity. Nevertheless, I do not assume the trade right here is biased in direction of cybersecurity. It is simply simpler to boost cash there proper now.”
May the waves of layoffs that had been carried out right here at the start of the 12 months flip right into a tsunami?
“It’s true that firms which can be unable to boost cash should lay off, however the affect that worries me extra is the folks, together with senior executives, who’re leaving Israel. There’s a worry that as an alternative of returning and founding firms right here, they’ll keep within the US or Europe. Proper now it’s not huge, however we’re seeing extra requests than regular to maneuver overseas, together with from senior executives.
“Historically, even ten years in the past, folks have all the time relocated. However I can say that with us the variety of requests has elevated considerably in comparison with earlier than the conflict and earlier than the beginning of the judicial overhaul. It isn’t a tsunami, however there are a lot of folks on the fence who’re sitting and ready to see what’s going to occur right here.”
“People are higher than AI”
AI is altering every thing we knew and had been accustomed to, and is bringing with it lots of apocalyptic prophecies, together with within the tech trade. However Zuk places issues into perspective. “I personally assume that within the AI mannequin there is no such thing as a cash and there will probably be no cash. It’s going to develop into a commodity, one thing that everybody has, like an working system or a pc. We’ll see AI getting into the sphere of purposes, like cybersecurity, fintech, health-tech, and so forth. That is the place the cash will probably be.
“Israeli firms have benefits. The usage of AI just isn’t overseas to them, the military makes use of it lots. There aren’t any AI infrastructure firms right here and I do not assume there needs to be. Native firms ought to proceed to make use of AI extra in an effort to be extra aggressive and for his or her merchandise to be higher.”
One of many doable penalties of the growing use of AI can be associated to juniors – the variety of junior jobs opened in 2024 was minimize in half from 2023. Zuk, however, is extra bullish. “I do not agree with that. People are nonetheless higher and can proceed to be higher within the artistic sector. Corporations that cease hiring juniors won’t have seniors sooner or later. AI helps folks work extra effectively, but it surely won’t substitute them.”
So there may be or there is not a disaster for juniors?
“For my part there may be a synthetic juniors disaster due to all types of firms that persuade themselves that they need not rent juniors, with none analysis. It is simply their intestine feeling. Corporations which have a tough time elevating cash or firms which can be in disaster can persuade themselves that the very first thing they want to surrender is juniors. I believe that is a mistake. Improvement is the very last thing I’d skimp on.”
The juniors disaster might not exist, in accordance with Zuk, however there may be one factor that has definitely been occurring in current months – an enormous enhance in cyberattacks towards Israeli firms. Solely not too long ago, a part of the communications actions of bank card clearing home Shva had been briefly disrupted. Zuk says we are going to by no means obtain 100% safety, and that AI makes the problem rather more advanced.
“Attackers are decided to strive many times and ultimately they’ll succeed. You’ll be able to cease 999 out of 1,000. Till not way back, it was very tough to create 1,000 completely different assaults and attempt to assault a specific group. At this time, because of automation and AI on the attackers’ facet, it is very simple to penetrate organizations. It fully adjustments the best way you consider protection.”
Once you have a look at Israeli firms, are they roughly protected by Western requirements?
“A lot much less. There is a comparatively easy approach to measure it – the proportion of spending on cybersecurity out of the corporate’s IT spending or income. Within the US, for instance, we see {that a} typical firm spends 4%-10% of its IT funds on cybersecurity. In Israel, the quantity is usually a lot decrease. Israel is a rustic that tends to save cash. That is one thing I have been making an attempt to vary for a few years, not simply in cybersecurity.”
A very completely different financial institution
Other than high-tech, Zuk is now one of the sophisticated areas for competitors in Israel – banking. On the finish of 2022, Zuk acquired the long-awaited license for Esh, the brand new digital financial institution wherein he’s a shareholder. The financial institution has employed a number of senior banking figures and has promised to revolutionize banking in Israel and overseas. The ideas underlying the plan are to keep up a really technologically superior establishment and a really lean workforce.
It is a very powerful market with veteran and robust gamers. The place are you going to innovate?
“The query is how is a digital financial institution outlined? In case you outline it as a standard financial institution with out branches, then there is just one. In case you outline it as a financial institution that additionally has digital, then there are seven extra of them in Israel. In case you outline it as a financial institution that’s fully completely different from something that has ever been, then there may be one within the works referred to as Esh.”
What worth will you provide prospects?
“I can not go into an excessive amount of element concerning the worth being provided, as a result of we have not unveiled the financial institution but, however Esh is made up of two firms – an organization that could be a financial institution and a fintech firm that’s constructing a full banking platform from scratch.
“Esh will do for the banking sector what Palo Alto did. At this time, a typical financial institution wants dozens of various know-how suppliers to outlive. We do every thing at Esh. In truth, it is an Israeli high-tech firm that constructed the primary full banking platform on the earth in 40 years.
“With this know-how, you possibly can construct a really environment friendly financial institution. Anybody who has returned from the US is aware of that the banking system in Israel may be very primitive, each by way of the know-how that’s introduced to prospects, however primarily by way of monetary companies, particularly within the credit score sector. Lots of people flip to non-bank financing as a result of banks do not know easy methods to give credit score.”
Along with the digital financial institution, Zuk is a companion in a brand new AI-based funding enterprise referred to as Finq. “It is a monetary startup that has AI-based know-how at its coronary heart that’s able to analyzing monetary devices – shares, mutual funds, pension funds, provident funds. For instance, Finq has the power to advocate to folks which pension instrument to place their cash into based mostly on all of the parameters, and it does this utilizing AI.
“You’ll be able to go in and see the varied pension funds and their evaluation, and there are superb issues there. For instance, we found that there’s a pension fund in Israel – no names – that’s uncovered to the orange juice commodity. Why? As a result of the funding managers felt like taking 10% of the savers’ cash and placing it in orange juice futures.”
And what concerning the insurance coverage brokers? Do you intention to compete with them too?
“At this time, the pursuits of pension brokers are aligned with the pension firms, not with the savers. I am not saying that every one pension brokers in Israel do that, but it surely’s a lot simpler for them and their compensation is larger after they work with sure firms and do not essentially do the suitable issues.”
Is Channel 13 a possible funding?
In 2007, legendary investor Warren Buffett wrote to his traders that “the worst form of enterprise is one which grows quickly, requires important capital to generate progress, after which makes little or no revenue. Consider airways.” He has since modified his thoughts, however the message nonetheless resonates.
However even the phrases of the US tremendous investor has not deterred Zuk, who final 12 months entered this sophisticated market with Air Haifa – a brand new airline working from Haifa, and whose CEO is Gonen Ussishkin, previously El Al CEO.
“All of the ventures I’m concerned in have social facets. Air Haifa is an organization that solely has a social facet, it has no high-tech facet.”
How did you even get so far?
“The concept wasn’t mine, however reasonably that of the three entrepreneurs, who got here from El Al. The primary is Gonen, the second is Micky Strasberg, and the third is Lior Yavor. Shai Babad was additionally a part of the staff, however sooner or later he determined to tug out and develop into Strauss CEO. We acknowledged that Haifa has a world airport that’s hardly used. 2-3 million folks stay within the north, and it takes them longer and prices them extra money to get to Ben Gurion than the flight itself to close by locations like Cyprus, Greece, and Eilat. We put one and one collectively and it’s working high quality.”
How a lot have you ever invested?
“A number of hundred million shekels, together with the acquisition of the planes. We’ve three planes at this time, and we now have already introduced a fourth airplane that can get right here in 2025. We’re searching for extra planes, however it’s not simple at this time. This enterprise is also fairly worthwhile sooner or later. Air Haifa is constructed as a low-cost firm, we’re not grasping. It might have been doable to cost larger fares, however we determined that we might not try this.”
At this time, the corporate operates greater than 30 weekly flights to 4 locations – Eilat, Larnaca, Athens and Paphos. Final December alone, it reported gross sales of greater than 10,000 airline tickets for the reason that launch of gross sales on the corporate’s web site.
But there may be one space the place Zuk has not succeeded to date – the media. In November 2023, Related went on the air – a channel that was first broadcast on an Web platform and later additionally on Sure. Lower than a 12 months has handed, and Zuk has determined to shut it down after an funding of an estimated NIS 100 million.
Once you based Related, did you hope that it would not lose cash?
“I name it worthwhile philanthropy. I do not consider in companies that simply want donations on a regular basis. I hoped that the enterprise would maintain itself, but it surely did not stand an opportunity. I believe there’s a reasonably large failure within the Israeli media market, economically it is very tough to outlive. It is a very small market with comparatively many gamers. The promoting market can be very aggressive and lots of it has gone to Google and Fb. Those that are harm by this failure, ultimately, are the readers and viewers. I hoped that this could possibly be modified.”
Was it tough to shut down?
“Sure, it was a really tough choice. There have been lots of staff there and the content material was good. I actually favored watching it. However it was unimaginable to proceed from a enterprise perspective.”
What is definite is that Zuk didn’t despair of the media and is contemplating getting into as an investor in Channel 13. “I believe there may be potential there, however it’s nonetheless below evaluation. When it’s over, we are going to speak and see.”
“Corruption like in Mexico”
Lastly, we ask Tzuk what he thinks of Israel at this time. “There’s lots of potential right here. Israel, regardless of the tough state of affairs, remains to be one of many largest economies on the earth with a constructive stability of funds, lots of overseas change reserves. I believe that when morale is healthier right here, we are going to return to renewed and higher prosperity than we now have seen.”
What’s your major concern?
“That folks will depart. As soon as that occurs, there will probably be no turning again. And there’s no want for lots of people to go away. Finally, this nation is held by 10,000 essential folks. If lots of them depart, it is going to be tough.”
Is that this true for you too, ideas of leaving?
“Sure. I believe it is true for everybody. If there’s a mass departure, I do not assume many will keep, it is going to be like a snowball. Nobody needs to be the final to show off the sunshine.”
On this context, there may be one factor that notably bothers Zuk. “The corruption within the State of Israel is horrible. I lived in Mexico for 2 and a half years – it is beginning to be related. I am additionally fearful concerning the very fast progress within the non-productive inhabitants.”
Are you optimistic?
“I consider that finally the nation will come to its senses, and there will probably be a change right here that can resolve the problem of leaving and making a renewed social contract. I believe these are two issues which can be interdependent. Relating to corruption, I am rather less optimistic – it does not have a tendency to unravel itself.”
Printed by Globes, Israel enterprise information – en.globes.co.il – on March 2, 2025.
© Copyright of Globes Writer Itonut (1983) Ltd., 2025.
