It's difficult to believe that the current generation of venture capital funds would have invested in Check Point Software Technologies (CHKP) when it was founded in 1993. Just out of army service, three youngsters, headed by Gil Shwed, decided to write security software for network computers of the Firewall type. The technology was not new at the time, but the uniqueness of Check Point was that it transferred the technology used in UNIX to the PC environment. Perhaps it was visionary or simply lucky timing, but at the time, the whole world was moving toward PCs.
About forty different Firewall companies sprung up in that period, competing on the Internet communications network security market. Almost half a dozen of them issued publicly, including Check Point. Only about five are active today, but Check Point is the Firewall. The company undisputedly controls the global market, and serves as the synonym for the entire sector.
In many ways, Gil Shwed personifies 'a dream come true'. He set up a company that controls the global market, and that is listed at more than $5 billion company value. He's a millionaire. He feels, however, more of an industrialist than a maker of start-ups. It explains his occasional rage against the excessive sprouting of starting-ups which eats away at quality personnel in the industry, and at the insatiable lust to sell young, unripe companies and take the money and run. "How can anyone plan setting up a company in order to sell it?" he recently asked in a media interview. "A company is like a child."
This may be the reason he is so well-liked in the veteran industrialists' community. The affection he received from general managers of large technology companies in Israel when he met with them under the framework of the Enterprise Managers Forum was unmistakable. They love industrialists, even software industrialists, not start-ups, about which they know so little other than that they steal workers from them.
In the past two years, Shwed has had to face analysts' estimates that the Firewall market is on the verge of disappearing, and that in any event, a single Israeli company like Check Point cannot survive in a forest full of monsters like Cisco and Microsoft. The company's sales and shares, however, have paid no heed to these analyses. The share climbed determinedly and with boring pomp in a vertical line throughout the year, and is currently touching the $150 mark. A handsome figure, particularly this year, in view of the Internet business breakthrough, starting off with optimistic forecasts and giving way to an uncontrollable hurricane, Check Point is well positioned.
With a little flexibility, Shwed succeeded in making Check Point the leader in the VPN market. It wasn't easy, but this time, at least, he had experience. The partnership with Sun Microsystems turned Check Point from an insignificant company into a market leader. Now the company is doing the same with Nokia. That is the difference between 1993 and 1999. Nowadays, its' not difficult to visualize Shwed explaining to managers that telecom is not a dirty word.
Published by Israel's Business Arena on December 14, 1999