Nir Zuk has by no means shied away from challenges. Twenty years in the past, when he was instructed he did not stand an opportunity of competing with the prevailing cybersecurity giants, he based Palo Alto Networks, which turned the world’s largest cybersecurity firm with a market cap of greater than $125 billion, 5 instances greater than the key rival Test 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 instructed that it’s totally tough to do one thing,” he insists. “It primarily implies that if I succeed, then nobody else will be capable of do it.”
This technique of operation has certainly introduced with it many successes but in addition 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 growth 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 known as Test Level. “There have been lower than ten workers on the time,” remembers Zuk. “In 1997, I moved to the US for the corporate and stayed there for a number of years. Then I left, based OneSecure, offered it for $45 million in shares, and left. That is after I based Palo Alto Networks.”
Since then Palo Alto Networks has turn into the world’s largest cybersecurity firm, and previously 12 months, the corporate’s share value has risen greater than 42%. It lately even broke its all-time document. 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 fundamental worth that the corporate presents?
“From day one, the thought was that the cybersecurity market is made up of many small elements. Over time, every time there’s a new cybersecurity problem, the prevailing gamers ignore it and a brand new set of gamers emerge. Palo Alto Networks was based to alter that and to construct a platform, that’s, one product that over time provides increasingly cybersecurity capabilities, all based mostly on Better of Breed (the very best of their discipline).”
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“All of the capabilities we add to the product can compete on their very own towards stand-alone merchandise and win. Whenever you purchase all these capabilities as a part of the platform, you get all the advantages: it is low-cost, simple to implement and straightforward to function. In order for you a brand new perform, you merely flip a change and it really works, and when you’re not glad, 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 unique image. You talked about Cato Networks – nobody is aware of their true dimension, as a result of they don’t seem to be 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 also be the most important firm on this planet. The numbers that Wiz studies are spectacular, however once they go public, we will see whether it is real and examine higher.”
Lately, Wiz and Test Level introduced a collaboration that would seemingly threaten Zuk’s firm. It is a strategic settlement with advertising, product and technological elements, with an emphasis on cloud safety, through which Palo Alto is especially distinguished. However for now, Zuk stays unruffled.
“I feel the market woke as much as Palo Alto Networks’ thought 20 years too late, nevertheless it has understood that the precise method in cybersecurity, as in all different IT markets which are offered to firms, is to not want 20 totally different firms for 20 totally different challenges, however one firm that can remedy all of those challenges. We have seen this in lots of areas. For instance, previously within the CRM discipline there have been firms that wanted 5 to 10 distributors (software program distributors), till Salesforce.com arrived and in the present day 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 Test Level in company community safety or Wiz in cloud safety, into an organization that may be a platform that solves every little thing wanted in cybersecurity. To attain an answer that’s equal to what Palo Alto Networks is doing, they should create a bunch of about 10 totally different firms, and even then will probably be 10 separate firms making an attempt to compete on one platform.”
You have stated earlier than that Test Level is not even your rival.
“Their mannequin is a bit totally different. They attempt to keep their current buyer base. Test Level solely seems in offers the place there is a buyer who already makes use of Test Level, and the query is whether or not to stick with them or change 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 incredible CEO simply as he was an incredible commander of 8200 and an incredible enterprise capitalist. I feel he’ll do what they need to have been doing for greater than ten years – put money into growth and likewise in acquisitions and partnerships, as he has finished with Wiz.”
“It is simpler to lift 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 couple of 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 massive 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 lately. Palo Alto Networks made two acquisitions in Israel on the finish of 2023, proper within the early phases of the struggle. The multiples there have been excessive however not super-high. I have not seen numerous acquisitions since then, so it is arduous to know whether or not the multiples there are cheap or not. And naturally there are the multiples of public firms, which I feel are decrease and nearer to the cheap vary.”
Are you trying to purchase extra firms?
“We take a look at the market. Now we have a roadmap for what we wish to construct, the place we wish our product to be and when. We’re at all times searching for methods to speed up that by means of acquisition, however in fact it must be with the precise crew, the precise expertise and in the precise place.”
Though he stays calm a lot of the interview, there’s one subject that agitates him. “In a lot of the world it’s simpler to lift cash than in Israel. Israeli tech shot itself within the foot when all types of individuals, particularly the much less profitable ones, went world wide and stated how problematic and horrible every little 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 the direction of cybersecurity. It is simply simpler to lift cash there proper now.”
Might the waves of layoffs that had been carried out right here at first of the 12 months flip right into a tsunami?
“It’s true that firms which are unable to lift cash should lay off, however the impression that worries me extra is the folks, together with senior executives, who’re leaving Israel. There’s a concern that as an alternative of returning and founding firms right here, they may keep within the US or Europe. Proper now it’s not huge, however we’re seeing extra requests than normal to maneuver overseas, together with from senior executives.
“Historically, even ten years in the past, folks have at all times relocated. However I can say that with us the variety of requests has elevated considerably in comparison with earlier than the struggle and earlier than the beginning of the judicial overhaul. It’s not a tsunami, however there are a lot of folks on the fence who’re sitting and ready to see what is going to occur right here.”
“People are higher than AI”
AI is altering every little thing we knew and had been conversant in, and is bringing with it numerous apocalyptic prophecies, together with within the tech trade. However Zuk places issues into perspective. “I personally assume that within the AI mannequin there isn’t a cash and there can be no cash. It’s going to turn into a commodity, one thing that everybody has, like an working system or a pc. We’ll see AI coming into the sphere of purposes, like cybersecurity, fintech, health-tech, and so forth. That is the place the cash can be.
“Israeli firms have benefits. The usage of AI shouldn’t be overseas to them, the military makes use of it so much. There are not any AI infrastructure firms right here and I do not assume there must be. Native firms ought to proceed to make use of AI extra with the intention to be extra aggressive and for his or her merchandise to be higher.”
One of many attainable penalties of the growing use of AI can also be associated to juniors – the variety of junior jobs opened in 2024 was lower 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, nevertheless it won’t exchange them.”
So there’s or there is not a disaster for juniors?
“In my view there’s a synthetic juniors disaster due to all types of firms that persuade themselves that they needn’t rent juniors, with none analysis. It is simply their intestine feeling. Corporations which have a tough time elevating cash or firms which are in disaster can persuade themselves that the very first thing they want to surrender is juniors. I feel that is a mistake. Improvement is the very last thing I might skimp on.”
The juniors disaster could not exist, based on Zuk, however there’s one factor that has actually been taking place in latest months – a large enhance in cyberattacks towards Israeli firms. Solely lately, a part of the communications actions of bank card clearing home Shva had been briefly disrupted. Zuk says we’ll by no means obtain 100% safety, and that AI makes the problem rather more complicated.
“Attackers are decided to attempt repeatedly and in the long run they may succeed. You possibly can cease 999 out of 1,000. Till not way back, it was very tough to create 1,000 totally different assaults and attempt to assault a selected group. Immediately, because of automation and AI on the attackers’ facet, it’s totally simple to penetrate organizations. It fully modifications the way in which you consider protection.”
Whenever you take a look at Israeli firms, are they roughly protected by Western requirements?
“A lot much less. There is a comparatively easy technique 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 mostly a lot decrease. Israel is a rustic that tends to economize. That is one thing I have been making an attempt to alter for a few years, not simply in cybersecurity.”
A totally totally different financial institution
Apart from high-tech, Zuk is now taking a look at some 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 through which 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 take care of a really technologically superior establishment and a really lean workforce.
It is a very robust market with veteran and robust gamers. The place are you going to innovate?
“The query is how is a digital financial institution outlined? In the event you outline it as a conventional financial institution with out branches, then there is just one. In the event you outline it as a financial institution that additionally has digital, then there are seven extra of them in Israel. In the event you outline it as a financial institution that’s fully totally different from something that has ever been, then there’s one within the works known as Esh.”
What worth will you supply prospects?
“I am unable to go into an excessive amount of element concerning the worth being supplied, as a result of we’ve not unveiled the financial institution but, however Esh is made up of two firms – an organization that may 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. Immediately, a typical financial institution wants dozens of various expertise suppliers to outlive. We do every little thing at Esh. In actual fact, it is an Israeli high-tech firm that constructed the primary full banking platform on this planet in 40 years.
“With this expertise, 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 could be very primitive, each by way of the expertise that’s offered 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 methods to give credit score.”
Along with the digital financial institution, Zuk is a associate in a brand new AI-based funding enterprise known as Finq. “It is a monetary startup that has AI-based expertise 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 possibly can go in and see the assorted 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 purpose to compete with them too?
“Immediately, the pursuits of pension brokers are aligned with the pension firms, not with the savers. I am not saying that each one pension brokers in Israel do that, nevertheless it’s a lot simpler for them and their compensation is greater once they work with sure firms and do not essentially do the precise issues.”
Is Channel 13 a possible funding?
In 2007, legendary investor Warren Buffett wrote to his buyers 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 elements. Air Haifa is an organization that solely has a social facet, it has no high-tech facet.”
How did you even get up to now?
“The thought wasn’t mine, however slightly 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 crew, however sooner or later he determined to drag out and turn into Strauss CEO. We acknowledged that Haifa has a world airport that’s hardly used. 2-3 million folks reside within the north, and it takes them longer and prices them more cash 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 effective.”
How a lot have you ever invested?
“A number of hundred million shekels, together with the acquisition of the planes. Now we have three planes in the present day, and now we have already introduced a fourth aircraft that can get right here in 2025. We’re searching for extra planes, however it’s not simple in the present day. This enterprise is also fairly worthwhile sooner or later. Air Haifa is constructed as a low-cost firm, we’re not grasping. It could have been attainable to cost greater fares, however we determined that we’d not do this.”
Immediately, 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’s one space the place Zuk has not succeeded thus far – 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.
Whenever you based Related, did you hope that it would not lose cash?
“I name it worthwhile philanthropy. I do not imagine in companies that simply want donations on a regular basis. I hoped that the enterprise would maintain itself, nevertheless it did not stand an opportunity. I feel there’s a fairly large failure within the Israeli media market, economically it’s totally tough to outlive. It is a very small market with comparatively many gamers. The promoting market can also be very aggressive and numerous it has gone to Google and Fb. Those that are damage by this failure, in the long run, are the readers and viewers. I hoped that this may very well be modified.”
Was it tough to shut down?
“Sure, it was a really tough resolution. There have been numerous workers there and the content material was good. I actually appreciated watching it. However it was inconceivable to proceed from a enterprise perspective.”
What is definite is that Zuk didn’t despair of the media and is contemplating coming into as an investor in Channel 13. “I feel there’s potential there, however it’s nonetheless below overview. When it’s over, we’ll discuss and see.”
“Corruption like in Mexico”
Lastly, we ask Tzuk what he thinks of Israel in the present day. “There’s numerous potential right here. Israel, regardless of the tough scenario, continues to be one of many largest economies on this planet with a optimistic steadiness of funds, numerous overseas change reserves. I feel that when morale is best right here, we’ll return to renewed and better prosperity than now we have seen.”
What’s your fundamental concern?
“That individuals will depart. As soon as that occurs, there can be no turning again. And there’s no want for lots of people to go away. In the end, this nation is held by 10,000 vital folks. If numerous them depart, will probably be tough.”
Is that this true for you too, ideas of leaving?
“Sure. I feel it is true for everybody. If there’s a mass departure, I do not assume many will keep, will probably be like a snowball. Nobody desires to be the final to show off the sunshine.”
On this context, there’s 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 comparable. I am additionally nervous concerning the very speedy progress within the non-productive inhabitants.”
Are you optimistic?
“I imagine that ultimately the nation will come to its senses, and there can be a change right here that can remedy the problem of leaving and making a renewed social contract. I feel these are two issues which are interdependent. Concerning corruption, I am rather less optimistic – it would not have a tendency to unravel itself.”
Revealed by Globes, Israel enterprise information – en.globes.co.il – on March 2, 2025.
© Copyright of Globes Writer Itonut (1983) Ltd., 2025.
