Summarize this content to 2000 words in 6 paragraphs in Arabic Stay informed with free updatesSimply sign up to the Technology sector myFT Digest — delivered directly to your inbox.The turquoise killifish, which splashes around in ephemeral rain pools in southern Africa, is the world record holder among vertebrates for living fast and dying young, being mature enough to mate just two weeks after hatching. The Israeli-founded cyber security company Wiz could perhaps be considered its corporate equivalent. Wiz, founded in 2020, claimed to be the fastest company in the world to reach a $10bn valuation when it raised $300mn of funding in 2023. And it seemed ready to mate with Google this month by selling out for $23bn in what would have been the US tech giant’s biggest ever acquisition. That deal would have netted Wiz’s four founders, who each own 9.5 per cent of the equity, a cool $2.2bn apiece. Not bad for four years’ work.However, this week Wiz revealed that it was walking away from the deal. “While we are flattered by offers we have received, we have chosen to continue on our path to building Wiz,” the company emailed its staff, known as Wizards, on Monday. Wiz suggested it was now aiming to double annual recurring revenue to $1bn next year and would eventually look to float on the stock market. The sudden about-turn left many industry watchers scratching their heads and some of Wiz’s venture capital backers pulling out their hair. Google’s offer appeared more than generous and VCs have been starved of juicy exits in recent years. Some of the world’s most prominent VC funds, including Index Ventures, Sequoia Capital and Insight Partners, stood to benefit handsomely from the sale.Both Wiz and Google are remaining tight-lipped about the separation. But three broader lessons can be drawn from their brief dalliance and conscious uncoupling. First, Wiz’s dizzying ascent highlights the centrality of cyber security in our digital economy. Outside generative artificial intelligence, it is hard to think of a tech sector that is as hot today. Google certainly needs to boost its cyber security credentials to slug it out with its bigger rivals, Amazon and Microsoft, in the highly lucrative cloud computing market. Wiz’s particular expertise lies in scanning cloud computing data for security risks. Further confirmation of the critical importance of effective cyber security was accidentally provided this month by CrowdStrike, one of the world’s leading specialists, which crashed 8.5mn computers globally following a botched Microsoft Windows software update. Rival cyber security companies have been quick to sniff opportunity in CrowdStrike’s discomfort. This may also have played into Wiz’s decision to keep going it alone. Palo Alto Networks, an older, bigger cyber security company listed on the Nasdaq, currently has a market value of more than $100bn.The second notable feature about Wiz is how it grew up in Israel’s start-up nation. Like many of the world’s leading cyber security experts, the company’s four founders, Assaf Rappaport, Ami Luttwak, Yinon Costica and Roy Reznik, hail from Unit 8200, the Israel Defense Forces’ cyber intelligence division. In 2012 they went on to found their first cloud security company Adallom, which they sold to Microsoft for $320mn three years later. Israel has long been a happy hunting ground for US tech companies wanting to acquire expertise while Israeli founders have historically been all too ready to sell.Although Wiz was founded in Israel, it is now registered and headquartered in the US and has more global ambitions. Three-quarters of its 1,200 employees are in the US and Europe. But Wiz cannot easily escape its roots and Google may have faced some internal resistance to buying an Israeli company at a time of heightened controversy over the war in Gaza. Earlier this year, Google fired 50 workers who had protested at the company’s cloud computing contract with the Israeli government. Third, Google might itself have hesitated because the deal may well have run into antitrust concerns in the US given the resistance of the Federal Trade Commission to allowing more tech mergers. Last year, Adobe abandoned its planned $20bn acquisition of the software group Figma because of international regulatory scrutiny.This means that companies such as Wiz, will have to stay private for longer and focus on building sustainably profitable businesses over the longer term that can one day go public. That is no bad thing. But it does imply that Wiz’s founders, employees and VC backers will have to show more patience and persistence. They must learn to live longer than a rainpool killifish. [email protected]
