In every talk with Cyber-Ark cofounder and COO Udi Mokady, he mentions the company’s advantage as an Israeli start-up. Petah Tikva-based Cyber-Ark, which has 60 employees, is very proud of being Israeli, in contrast to many other Israeli companies, which decided at a certain stage of their growth that it would be better for business to conceal their origin by pretending to be from Boston.
It appears that in Cyber-Ark’s field of information security, Israeli patriotism is nothing to be ashamed of; it’s a value to be highlighted. “Israeli information security companies have the same status as Swiss watchmakers,” Mokady says. He boasts that what really helped the company from the very beginning was sales in Israel, and that a large part of its business is in the local market. “Most of our activity now is in the US, but we have good sales in Israel,” Mokady says.
”Despite the conventional wisdom, which says that US customers don’t look at what a start-up sells in small markets, I see that they’re very interested in knowing to whom we have sold in Israel. Eventually, we managed to leverage our sales and activity in Israel for the benefit of other customers. I also think that it’s to our advantage that our development center in Israel, which has 30 employees, is located close to many of our customers, and can give customers what they want,” Mokady explains.
Cyber-Ark’s annual sales are nearing $10 million. They are divided equally between two products. The first is Network Vault, an information security platform that serves as a kind of digital safe on the web. It includes a firewall, a virtual private network (VPN), and access control. Network Vault is installed on a unique computer, which uses only software designed by Cyber-Ark. Mokady says that Network Vault is also used as a tool for managing network identities, and meets the stringent requirements of the Sarbanes-Oxley Act.
Cyber-Ark’s second product is Inter-Business Vault, which makes possible secure links and provision of information between an enterprise and its business partners. The product is an instant wide area network (WAN) that provides connectivity between various parties within an enterprise, and outside it. The product has two principal components: a vault, which provides safe information storage and facilitates access for enterprises, and a vault connector, a communications component that enables enterprises to use the product through standard interfaces. “Inter-Business Vault is like a room of safes on the sidewalk, open to information sharing. The product can eliminate the use of e-mail, and replace communications and other special lines,” Mokady asserts. He says that Inter-Business Vault deals usually amount to $500,000, while the Network Vault costs only $50,000, with the price rising according to the number of users.
Target: Tripling revenue
Mokady and chairman Alon Cohen founded Cyber-Ark in 1999. The company has raised $20 million to date from Jerusalem Venture Partners, the Israel Infinity Fund, Vertex Management Israel, Nomura Holdings (TSE: 8604; NYSE: NMR), IDB Development Corp. (TASE: IDBD), and Cabaret-ArbaOne, a little-known American-Israeli investment group controlled by the Eliashar family, an importer of Altria group (formerly Philip Morris) (NYSE: MO) products. Cyber-Ark raised $12 million at a company value of $30 million, after money, in its most recent financing round in March 2003.
Tom Crawford, who has worked at PeopleSoft (Nasdaq: PSFT) and SAP (NYSE, LSE: SAP; XETRA: SAPG), recently replaced Cohen as president and CEO. He was recruited in order to develop Cyber-Ark’s marketing and sales network in the US.
Mokady claims that Cyber-Ark has already made a profit in several quarters, but that the company is primarily concerned with increasing its revenue. “What interests us now is not profitability, but expanding our sales network. We currently make 30% of our sales through distributors, and we want to increase that to 60%. At the same time, bear in mind that an enterprise product like Inter-Business Vault is sold directly, because customers insist on contact with the company selling the product,” he explains.
Cyber-Ark currently has about 100 customers, including Lehman Brothers, Virgin, Comerica Bank, Gilette, Wells Fargo, Telecom Italia (NYSE: TI), Isracard, and all large Israeli banks and credit card companies. “Our goal is to triple our revenue in 2005, and we have tripled the number of our sales and distribution personnel for that purpose. These products also have the advantage of being publicized by word of mouth,” Mokady declares.
"Globes": Who are your direct competitors?
Mokady: ”We have no direct competitor, although we’d like to have one. Network Vault competes with integration companies, and in communications between enterprises, we compete with companies that lease special communications lines. Our strategy now is to hook up with integration companies, and sell our products through them.
Published by Globes [online] - www.globes.co.il - on February 9, 2005