9.4M Dollars In Concept Financing To 100M In Bookings: Palo Alto Networks Founder Nir Zuk (Part 3)

Sramana: When you did your validation, did you find any other pain points?

Nir Zuk: The major pain point was that companies were spending a lot of time and money on network security and monitoring security events on their network. They did not have the capability to stop security events. Companies would learn about a security breach well after it had happened. They then had to work to remedy the incident. That would often require a significant amount of work because they had to go to every single machine that had been hacked and fix it. If companies are able to prevent attacks, they eliminate a lot of the need to monitor things.

Sramana: Nobody had an intrusion prevention system before that?

Nir Zuk: There were intrusion detection systems but not intrusion prevention systems. The detection systems only had to worry about monitoring, whereas when you build a device that prevents attacks it must be built to sit inline with the stream of traffic. It is a much more robust device.

We started selling our system in the beginning of 2001. We sold it for two quarters. The first quarter we did $400,000 in revenue and the second quarter we did $750,000 in revenue. By the end of the third quarter we had been acquired by NetScreen.

Sramana: How much money did you end up raising for OneSecure?

Nir Zuk: We ended up raising $50 million, and we sold the company for about $50 million. We sold the company in such a way that the investors received some of the proceeds. The employees received a much larger portion of the proceeds. We had earn outs, and back then the stock of NetScreen was depressed. We sold the company for about 5% of NetScreen. The people that stayed with the company received another big chunk of stock, so in total it came to about 8% of NetScreen. Three years later NetScreen sold to Juniper for $4 billion.

Sramana: How long did you stay at NetScreen?

Nir Zuk: I stayed through until it was acquired by Juniper. I was able to stay at Juniper for only eleven months, which was actually longer than the other executives lasted. I was the chief technology officer at NetScreen.

Sramana: While you were the CTO of NetScreen, did your IPS vision become a big part of the revenue stream?

Nir Zuk: It did become a big part of NetScreen’s revenues as well as its message. However at some point NetScreen stopped paying attention to that solution because we had several more urgent issues, particularly with network management. My company had a lot of people with experience in management systems, so we took those people and built a network management system.

As a result, the intrusion prevention product did not get as much attention as it should have, and that continued into Juniper. Right now Juniper’s IPS is considered one of the worst in the industry because it has not changed in five years. It went down from being one of the top three solutions to being the bottom solution on the market.

This segment is part 3 in the series : 9.4M Dollars In Concept Financing To 100M In Bookings: Palo Alto Networks Founder Nir Zuk
1 2 3 4 5 6 7