Overnight success twenty years in the making

Yinon Costica  credit: Omer Hacohen
Yinon Costica credit: Omer Hacohen

Wiz co-founder Yinon Costica talks about his team’s journey to $350 million annual revenue that started on a bus to the IDF Recruitment Office.

"There's something annoying about you Wiz people," I told Yinon Costica, co-founder of the company recently termed "world’s fastest growing" (explained below). Wiz deals in information security for cloud computing. Established only four years ago, the company is already worth more $10 billion. From the outside, it feels like an easy overnight success, and not just in terms of value: although just hatched, the company already has am annual revenue run rate (ARR) of $350 million annually. Meaning, this Tel Aviv team knows how to bring in a billion shekels a year, real money from real customers, all huge Fortune 500 companies. Just this month Wiz acquired Israeli cyber company GEM for $350 million. But one conversation was enough for me to understand that this "overnight success" took 20 years to build.

In just one year you reached a $1.7 billion valuation. I recall that the whole market was critical about this. Now I hear that your ARR is $350 million. That looks like a world record for growth to me.

"Yes, it really is a world record. In addition, Wiz holds the record for teh time taken to reach $100 million revenue after its first million.

"It's doubly nice: first of all because it's the first Israeli company to break this record, and secondly because it's the first cyber company to break it, so it's really an interesting combination. This is really fast growth and I think that it’s indicative of the market we're in. It's a result of the market, of the times we’re in, and of a deep need for what Wiz produces."

It’s undoubtedly about being in the right market with the right need, but there’s competition, even in this market. I work with companies and my task is to generate growth for them, but you have something special, something hard to pin down. Can you explain it?

"I’ll tell you a little bit about our journey, to give context. We are a team that met on a bus on the way to the IDF Recruitment Office on July 16, 2001. Since then we’ve worked together. It started in IDF Unit 8200, after which we founded our first startup Adallom Technologies) a cloud security company - E.G.(, then Microsoft purchased us in 2015 )for $320 million cash - E.G.(.

"It was exactly at the time when Microsoft moved to the cloud, which was a revolution. Satya Nadella became CEO of Microsoft in 2014, and Adallom was chosen to be the basis of its cloud security group. It was really an opportunity to take this nice product we had built and raise it to the highest level. We were supposed to stay at Microsoft for two years, but we actually stayed for almost five. We learned a lot in this process. I personally moved to Seattle and saw up close how the company works.

"In March 2020, we left to found Wiz. We started with a quite different idea and a different name: Beyond. We wanted to do cloud networking - connecting between cloud networks. We went through more than 100 potential customers and asked them about this amazing idea, and we had complete confidence in it. We knew the market and when we spoke with customers, they all liked the idea."

Who are the customers?

"Security teams at Fortune 500 companies "

So, you tell them about the product, and what do you ask them?

"First of all, I asked the customers what they thought of the idea. I didn’t hear anyone say it was a bad idea. Then we asked - suppose we had a product like this today, where would we install it? What team would we work with? We suddenly realized that everyone who said it was an amazing product, didn’t understand anything about it. That's where we started to become suspicious, and realized that customers don't really know their cloud environment. No matter how many security tools they have installed there, they don't understand the environment. They don't know what they have, very basic things were foreign to them. So, we decided to enable them to understand the problem."

You would show them the problem.

"We would show them their problem -- the cloud. At that point, we realized the problem was more serious than we thought. There are enterprise security teams, but they don't know how to secure their environments. There are crazy developers who build things for the cloud but don't know what to do with it.

"We built a fast solution, which is fundamentally different from all other solutions on the market till then. Our solution does not emphasize the problems in the environment, but instead emphasizes in-depth understanding of the environment. We use a very innovative database graph technology: instead of tables, it connects an image to a single graph that has two amazing factors (the ability to connect information easily from different content containers, and to present the information in a easy to understand way - E.G.) And so it's very easy to connect between containers - instead of having ten products, I can put all the information in one place and query it."

That really sounds like a feature.

"It completely changes the world."

But if I'm a competitor, can't I do that too? Go from tables to a graph?

"It’s very difficult. This is really one of the things that I think are at the heart the company. You have to understand what the product is built on, its foundation, and then we’re able to provide insights that no other company can, a sort of automatic experience.

"I think the experience is similar to when you give glasses to a child who can’t see well. That's how I was. I had a very high number, and I didn't have glasses as a child. Suddenly, when I put them on, I began to see. So, we provide a similar experience when we connect Wiz to the customer’s cloud environments. Their staff comes in and they’re shocked. Suddenly they can see and really understand what’s happening in their environment. They go from a situation of constant noise to a company action plan."

Fast decision making

It’s surprising that even in a super-heavy technological sector, in the end, the customer experience makes all the difference. But I want to talk for a minute about your team, and your ability to work together. There’s no doubt that this is one of the most important things when establishing a startup. Tell me about the relationships between you.

"The team - the founders and developers - was born naturally. As I said, we were together in the Unit, and at Adallom, and that's how we really fused. We went through a period where we were together all the time, and we grew. The day we founded Wiz, we were already a very organic, cohesive team of dozens of people, all ready for action and set to look for problems to solve.

"In the team dynamics, I think there are two things. One is the willingness to strive for the goal, in the most authentic, genuine way, with a very professional discourse based on trust and immense esteem. I think this is the basis of everything.

"The second thing is professionalism. This team didn’t come to cloud security by chance. We’ve been living in this world for 20 years, both as attackers and as defenders. We’ve actually lived in this world for a very long time, and we learn from this experience, and bring it to our customers. When I propose something, I first want to hear they have to say about the idea. And of course, the team also has to be diverse."

But you’re not diverse, you’re the annoying 8200 clones on the way to the Recruitment Office.

"It sounds like that, but in fact, each of us has a completely different approach. In the end, I’m very oriented towards the product and processes in the organization, the CEO, Assaf Rappaport ,is very oriented towards the business side, VP R&D Roy Reznik is very oriented towards operations and development, and the VP of Technology, Ami Luttwak, is very targeted at solving difficult technological problems. There’s a variety of approaches here. By the way, that may be why we became a team, because each person really comes from a very different direction."

When did things click?

"From the very start. When did we really become a work team? At Adallom, when we came to one place, to do one task, working together and going through all these experiences together. I think that, in the end, a good team is the sole factor in how quickly and well decisions can be made."

When you saw other teams, you said to yourself: We do something quite different from the way other teams work.

"I think that the ability to accept everyone's decision and implement it is very unique to us. For example, it helped us in choosing the idea of Wiz and pivoting it quickly. We were able to say to ourselves that, true, we thought the original idea was amazing, but together we understand that we’re moving on to the next idea. Ultimately, it’s clear to everyone that we’re happy to align ourselves with it.

"In the beginning, other people from the team joined us, for example Raaz Herzberg, who today is CMO & VP Product Strategy. We began bringing her into our conversations and she said, ‘Listen, it sounds like I don't really understand where this is going and how big a market this really is. I don't understand the problem we’re trying to solve, and if I don't understand, maybe some customers don't really understand either. That shook us up.

"We use things like this to learn. And why do I say that? Because it's not just the four of us. In the end there’s a broad team that’s constantly listening and open to more ideas. When someone puts a mirror in front of us, we take it and learn, and that can also happen with a comment like, 'I don’t understand'".

You know, sometimes when I’m working with a company, I’ll tell them, ‘There’s no shame in saying I don’t understand.’ Because people sometimes associate that with being insecure.

"I say 'I don't understand' a hundred times a day. I'll say, ‘I don't understand’ another twenty times until they explain it to me in a simple sentence. If we start getting confused, how will other people be able to understand? Going back to the explanation, there is a process of refining. I mean, we try to refine the reason, and go over it, again and again, until it's really easy to understand."

Sometimes that can be a bit fussy.

"It's not fussiness, it's the precision of the idea. For example, one of the things that Gili Raanan does at Cyberstarts (a venture capital fund that invests in cyber, and one of Wiz’s first investors - E.G.) is to say, 'I don't understand, explain it to me again, and be precise.' This precision hones in on what primary and what is secondary. I think this process is critical."

"We share a lot of scars"

How do you generate $350 million revenue?

"Look, it's funny, because if you were to ask any security team what's the thing that bothers them the most, they'd all say there's too much noise. Noise is a symptom, and I think being able to distinguish between a symptom and the root problem is what separates solving the real problem from solving a very superficial one. I solve problems from the root, actually. I don’t give pain relievers. A pain reliever won’t bring you a $350 million market."

Strategically, you did something fairly risky in pivoting. You went into an existing market and competed head-to-head for some of the toughest customers.

"That's true. Maybe that's the difference. We didn't come to do another Adallom. We wanted to start big and said: Let's start with the Fortune 500. Why not?

"Another thing that allowed us to do this was a very good intuition for the timing of the move. We didn't have this sort of intuition during the Adallom period. But at Wiz, suddenly, we feel it. When there was a match between the product and the market, we felt it. We knew that now was the time to get going on development, build the product, and start selling."

What trauma does your team have in common?

"Wow, we share a lot of scars. First of all, founding Wiz during the Covid period was a crisis for us. There was a sense that we’d made the worst decision we could ever have made."

What did you actually do?

"It took a while before we said, ‘Okay, how do we continue from here?’ Little by little, we began to understand there actually were opportunities, and looking back, this was probably the best point in time for establishing a startup. At the same time, it was really a deep crisis of, 'Oh my God, what have we done?'. But the whole team went with us, despite it all.

"Another example is that the market we started with at Adallom was a different kind of cloud security, a parallel market in which there was a very dumb, unsophisticated product. We kept saying that there was nothing there and that it brought no value. This product was a foot in the door for a great many of our competitors. At one point, I remember getting feedback from a salesperson who said, ‘But why don't you make it simple?’ So, we literally did a 180-degree turnaround and implemented it. In that way, we managed to get in the door a lot more."

It sounds like you’re too successful - I’m not hearing about any significant crisis.

"We've been together for 20 years, after all."

I read recently that your competitor Palo Alto is lowering prices. I’m sure that with success comes even more aggressive competition.

"I remember very clearly that there was a point at which all at once we came to many companies against Palo, and suddenly you feel that you’re a front-runner in a race and everyone is behind. I very much respect the competition, and Palo Alto is an amazing company that has passed the $100 billion mark (market cap, E.G.). It's really amazing, and it's amazing to see how they’re building it."

What is your biggest struggle as a manager?

"My challenge is how to continue building the team in a way that I can let go."

And do you manage to have a life?

"Yes. First of all, I got married a year ago. On a personal level, it was the happiest event of my life. I think you need to know how to take breaks and go out for Friday night dinner with the family. I know how to stop for a moment."

Eran Gefen is the founder of strategic consultancy G^Team, which helps companies develop new growth engines. He has experience working with CEOs and management of leading companies in Israel and globally, including Coca Cola, Wolt, Microsoft, Strauss, and Kimberly Clark. A company he founded was acquired by Wix.

Published by Globes, Israel business news - en.globes.co.il - on April 2, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Yinon Costica  credit: Omer Hacohen
Yinon Costica credit: Omer Hacohen
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