Shlomo Kramer: A playbook for building three multi billion-dollar cybersecurity companies - Cato Networks, Check Point, and Imperva

Welcome to Inside the Network. I'm Sid Trivedi.

I am Ross Haleduk.

And I am Mahendra Ramasinghani. We have spent decades building, investing, and researching cybersecurity companies.

On this podcast, we invite you to join us inside the network where we bring the best founders, operators, and investors Building the future of cyber.

We will talk about the hard parts of the founder journey, launching companies, getting to product market fit, raising capital, and scaling to an exit.

And yes, we will also be talking about epic failures.

But Mahendra, we're here to make the founder journey easier.

That is correct, Sid, but we cannot make it too much easier because startups are hard. And of course, you already knew that.

All right, you two, enough. Let's get started with this video. Episode.

Our guest today is Shlomo Kramer, co-founder and CEO of Cato Networks. For many in the cybersecurity industry, Shlomo needs no introduction. One of the early pioneers in Israel's cybersecurity startup ecosystem. What makes Shlomo truly remarkable is his ability to repeatedly build category-defining companies. He first co-founded Check Point, which pioneered the firewall category and today commands a $20 billion market cap. Then, seeing the shift to the cloud, he launched Imperva, which focused on the web application security or the WAF marketplace. That was his second IPO. Now, with Cato Networks, he's created an entirely new category called SASE, or Secure Access Service Edge, and Cato has already crossed $200 million in ARR. But Shlomo isn't just a builder. He's also a remarkable entrepreneur. Actively successful angel investor with an eye for transformative companies. His portfolio includes Trusteer, which IBM acquired for $1 billion, and he wrote the first angel check in Palo Alto Networks, a company that is now valued over $100 billion. Today we'll get inside the mind of the only entrepreneur we know who's on track to potentially take his third cybersecurity company public. Many founders are satisfied with just one IPO. Some rarely go to two, and Shlomo is on track for his third one, a hat trick if he pulls it off. In the cybersecurity hall of fame, very few could equal what Shlomo has accomplished in his career. So what drives him? What has he learned along the way in three decades of building cybersecurity startups? And while others talk about platformization, if that's a word, can Cadel be the one ring that rules them all? Without further ado, let's get started.

Welcome, Shlomo, to Inside the Network.

Hello, and thank you for having me.

We want to cover a couple of different topics, and let's just start with the big picture. And let's start with the big why. Why, Shlomo, you co-founded Checkpoint. Then Imperva, and now you're leading Cato Networks. What could likely be your third cyber IPO? A hat trick, as, as many would like to call it. For most founders, one IPO would've been enough. What drives you both internally and externally to keep going, keep building these companies?

The simple fact that I enjoy it. And, uh, that's, uh, I really like, uh, taking technological market innovation. And turning that into a reality and looking 10 years ahead and assessing where the markets are going to be. You know, I've been doing this since, you know, even before my first commercial startup. I've been doing it in the, as a high school student and in the army. And that's, that's what I like doing. So I would say it's a passion. I've never viewed it as work.

And did you always think that cyber was a field you wanted to focus on?

You know, it's been, uh, I think that Check Point was obviously the company that kind of focused my, uh, my career on, uh, cyber. Before that, I didn't think that cyber is going to be the focus of my career simply because there was no, uh, cyber, no real cyber, uh, category. I would say that Check Point was definitely one of the first network security companies, if not the first network security company, and one of the first 10 cybersecurity companies in the world. So the answer is, you know, no. But after Check Point, it became inevitable that I'm going to focus on it.

I'm curious, before you decided to build Check Point, what were some of the other ideas that you were looking at. What was some of the stuff you were exploring that could have become an alternative story of Shlomo?

I'll tell you, when we started, we had all sorts of ideas and stuff that we did. But I'll tell you, as founders of Checkpoint, both Gil and myself really admired a company called Pure Software. It was a company that— it was a lightweight— it was one of the companies in the Sun ecosystem. A universe and, uh, which was our world, uh, back in the day versus the PC world, which was more desktop and Sun was the network is the computer, right? And so in, in that world, we really admired Pure Software and, uh, uh, it was, uh, a kind of a development tool. It found memory leaks and issues very, uh, quickly and it was revolutionary and we really liked the fact that it was a bootstrapped startup starting from zero and with very little resources became a significant company. And years later, just recently, I found out the fact that I hope, I believe it's accurate, that this was the company of the Netflix founder.

That's right. Reed Hastings.

Reed Hastings. So, uh, I didn't know that, but that's it. So we had a lot of interest in software systems in general and not necessarily security folks.

Shlomo, over the past 30 years, the world has changed dramatically, like in both economical sense, political sense, like business sense. Some aspects are probably easier today than they were before. Some are harder. Like when it comes to the entrepreneurial journey, now that entrepreneurship has been largely democratized and literally anybody can start a company at any time, How has the world changed for startup founders? Like what aspects are harder today and which ones easier?

So for sure, um, I'll talk about startup in general, then talk about cyber in particular. The, the business of startup has stopped being a startup. So when we started Check Point, you know, we had no funding. Our first office was my late grandmother's apartment. We scrambled for a few hundred thousand dollars to enable us to, uh, launch the product. And we kind of stumbled on, uh, Sun Microsystems and, uh, Sun Software actually at the time, and were able to do an OEM and, and launch the company. So it was very much, I would say, a startup kind of found a way. And other, other folks as well. And for many years, it continued to be that way. I would say into the 2000s, 2010s. I would say that in the last 15 years, we see that startups become really templated and professional and there are programs and it's almost like a profession. So it's not a kind of a hit or miss or, you know, a garage type of operation anymore. And I would say in cyber in particular, that also meant that there is a lot of money, that there's a lot of funding, very professional. And because of the cyber is the perhaps the most dynamic field in IT, there's the bad actor that keeps things moving and changing and innovation happens through startups. A lot of money in particular focuses on startups. So if you have a good idea, you should expect that there are 10 other Startups, perhaps some of them in Israel, some of them in Silicon Valley, and some in other places that are going to do the same thing. And it's not only about the idea, it's really about the how you execute around that idea, which is makes life more difficult in cyber these days, both as an entrepreneur and as an investor.

So in these 3 decades, Shlomo, what has surprised you in trends, either technological, business-wise, political, financial? Are there things that jump out at you that, uh, are different from what you might have anticipated?

There are always surprises. There are things you think, hey, these are going to be bonanzas. And like, I'll give you a concrete example. I was one of the early investors in security for mobile phones. It was very early when the iPhone became mainstream, where, you know, it kind of was clear that it will beat Nokia and BlackBerry. And we said, okay, it's a handheld device. It has to have security. It's the most private device that you have for sure. For Android and iOS, you need security. We invested in a great team that came up with a good product and the market didn't happen. You know, it's, you know, that's, uh, And, um, on the other hand, you, you get positive surprises where you get huge success in, uh, unexpected, uh, areas. So yeah, there's, uh, experience can, uh, take you, uh, so much. There are still surprises.

Let's talk a little bit about building companies, Shlomo. And, you know, back in 2015, as you and your Cato co-founder, Gershatz, brainstormed ideas for your next venture. We've heard that frustration almost led you to give up. And the story we've heard in particular was that inspiration struck while you were sitting on your patio. Can you take us back to that moment? And what ideas were you exploring? Why were they dismissed?

In general, the ideas I would say were around the fact that network have become software defined. So there were the data plane. Was more and more implemented by software versus hardware. And we came out of the DDoS and the cloud delivery world at the time. And we thought, okay, that's where we experienced for the first time that the capability to embed sophisticated capability in the network fabric because it's software-based. And we looked for other use cases for that. And we actually, Kato version 1.0 was an idea that we, that was more in the data center, east-west traffic. And we worked for a few months, 2 or 3 months on that, building, formalizing the idea and building a presentation around that, et cetera. And it didn't stick. And I remember the day that We decided, hey, that doesn't work. We are back to square one. Went back home and sat on the patio and was frustrated or disappointed. And then the idea of Cato came to mind, which is essentially instead of within the data center, it's between the data center and the other parts of the organization and other data center remote users. Locations and the SaaS applications. So that's Kato version 2.0. I immediately talked with Guo and we kind of started taking this, uh, raw idea and developing it, and the rest is history. What we came up with was, uh, essentially what Gartner coined as, uh, SASE in 2019.

And any advice for founders who are having that kind of block in terms of ideas and which one to go after? I mean, clearly you took a step back and that helped you. Any advice that you have for folks who are brainstorming?

Well, I would give a general advice about making a big decision is that I try to learn as much as possible. A lot of these 3 months was consuming a lot of information, recent innovation in networking and software-defined networking and and learning about that, thinking about it, and doing a lot of, I would say, conscious processing. But the end, the decision needs to be a gut-level decision. And by gut-level decision, I don't mean something spiritual, etc. I really believe that we have processing capabilities that goes beyond the kind of, well, the flashlight of the conscious. Checkpoints, which is actually very powerful. And once you internalize all this data, you need to let other parts of you work. So gut feeling is important and you need to listen to it. I guess that's the headline thing to say.

So when you tried the V1 version, as you say, it didn't stick. How did you know that it didn't stick?

It was a gut feeling. We are not feeling it. We're not feeling it.

I see. Very, very interesting.

Yeah.

The reason I ask is because like, you know, sometimes it's just like, maybe, maybe you didn't look at the statistics properly. It was a consensus.

Both Gu and myself felt the same. So there was no question about it. If both of us didn't feel it, then it's a no-go.

Interesting. So let's talk about Cato's foundation, like starting the company, you had to essentially start with the networking layer. You have to roll out global points of presence. You have to layer on security, like you have to do so much in order for this vision of SASE to get realized. How did it look like? What were the major challenges at the time?

Actually, the major challenge of Cato, and I think the major innovation of Cato, and is not layering security on top of networking, but actually embedding network security in the network. So we have a single stack that delivers in a single pass both all the networking and all the network security capabilities. And it's delivered as a global cloud service today, over 90 PoPs around the world to thousands of enterprise customers, millions of users with 5 nines at the one hand, because that's what Is the number— you ask any CIO, what's your most important thing? Is that you don't feel it. You know, it's going to be up and working, no hiccups, and nobody's going to call me with an issue. And then they wanted also to provide the best security. But the best security requires huge amounts of updates and upgrades and dynamics. We do thousands of updates a year. To the network. So how do you provide 5 nines and at the same time provide the most dynamic network security stack? That has been since the early days of Check Point, since the Cisco's, Juniper's of the world, all, and a graveyard of startups, all tried to do this and failed. Essentially, Cato is a major breakthrough, was it's the first, and I believe still the only company that was able to deliver this based on the fact that the network is software-based and based on many, many innovations along the way.

And given that you had to go out and you had to build a lot of infrastructure from day one, what has that experience been talking to VCs? Like at the time, obviously you have already been a successful founder. You have had a great track record, but still you had to go to investors and you have to tell them, hey, instead of, you know, using some underlying foundation, we are going to build our own points of presence. How did it look like? What were the objections from VCs? Were there any objections?

Yeah. So both Gu and myself had a, a very good reputation in delivering on, on our promises. And, um, but there were, uh, and we were talking with a number of VCs and some of them said it's a very ambitious project. Which I guess means go away. And they had a very good reason for it. And at the end, it was not difficult to find the believers and we got funded quickly. But there were very prominent VCs, actually VCs that come from the old days of Cisco, you know, were familiar with the early Juno OS and what was the name of the appliance company, Networks One of the first appliance companies that Juniper bought for $4 billion and tried to embed into the JunOS and failed. And we're familiar with ACE of Cisco, which was another attempt. And we're familiar with any number of startups that tried to do that and failed. And thought, here is another team that is going to fail at that. And I guess that was the major hurdle, convincing the VCs that we can be successful. And it's not an easy task. Again, I am not familiar with any other company that have fully embedded the full network security stack in the network stack, in the cloud, in a way that we all implemented SASE, a true SASE platform in the way that we did.

You know, that's fascinating, Shlomo, that a lot of the VCs would look at this idea as bold, CapEx crazy, and sort of say, you know, no, this is not for us. Of course, then there were the believers, you know, Steve Krause from US Venture Partners, Teresa from Aspect, and Jerry from Greylock, who've stepped in. I'm sure that the ride has been fascinating for them. Now, one interesting nuance on your cap table is that you also have Singapore Telecom, Singtel Innovate, as an investor. Now, one could argue that you're actually competing with the carriers back then when you're building the software layer, you're actually competing with the carriers, right?

Yeah.

So how did that conversation play out in some of those early years?

So actually our first competitors were the carriers because the carriers are the ones that, you know, there are organizations that do it yourself. In North America, it's about 70% and 30% go to the carriers or depending on the size of the organization, perhaps large MSPs. And have them kind of assemble the solution, integrate the telco bundle, it's called. In Europe, it's actually the opposite. 70% of enterprises use the telcos for, used back then, 2015, the telcos. So we were competing with the telcos and actually the telcos had their own architecture that was kind of the mainstream. Promise for the cloud, which is called NSV, Network Function Virtualization, which is orchestrating single, uh, vendor, single, uh, tenant, basically blades from the traditional players in their cloud. And obviously it was clear to us that it's not going to happen and it never happened. Although AT&Ts of the world invested, I don't know how much in it. And so yeah, they were the competitors. Singtel had the vision, at least their VC arm, that this can also be a partnership. And in actual, 10 years later, they were right because we have now quite a number of telco partners. And in general, the telcos have more or less profited the NSV idea and are now providing the underlay, reselling SASE. Solutions from vendors and providing the managed service on top. And that's how the market played out.

I think that's very interesting, Shlomo, that when you think about AT&T, I mean, a lot of these carriers hired a lot of software teams. They had the vision. And I think it's somewhat obvious that the reason they could not innovate fast enough is because these are legacy companies with a certain mindset, etc. From your perspective, what did you see that gave you the advantage to run so fast ahead of the telcos?

Because the telcos are integrator and we own the IP and build the IP and are able to provide a converged platform. And a converged platform, it has a huge difference versus kind of a bundle of point solution. It is First of all, it's more secure because security is a data problem and you look to get the best converged data in real time with context so you can make the best decision what, what to do here and then save it into a data lake so you can use it, the kind of that bulky, uh, dataset in detection and, and hunting and behavioral, in general, AI algorithms. And you can't do it when you start with multiple point products. So security is better, operation is completely different. If you have a platform, you have a single— it's the same like CrowdStrike in the endpoint and Wiz on the cloud. Platforms provide the future of operational efficiency to an ever complex problem of the CISO. And finally, platforms also provide the best business agility because it's not only about how much it costs you to do it, but how fast can you move? Like I want to acquire a company, that's your, you know, you need now to normalize the security and infrastructure. We are moving to the cloud. We are doing this. So digital business moves at a completely different pace that requires digital transformation of IT security. And essentially the platforms are the vehicle for that digital transformation. So, uh, yeah, the platforms are the future, basically.

Let's move the conversation to competition. Yeah. Amazon founder Jeff Bezos famously says that he focuses entirely on customers, not competitors. What's your philosophy? How do you view competition in the broader network security space?

So SASE is an interesting market. So in general, in cybersecurity, there are two types of markets, right? Either you replace something or you are addressing some sort of a new asset class that was not existing. IoT, mobile phones, Gen AI, something, cloud in general. So SASE is very much a replacement model. It's, we are replacing the previous generation, which by the way is not the first generation, it's the second generation. That's the appliances and the appliance helpers, which are the cloud proxies that were, because the appliance overstayed their welcome, they had to be complemented. So we take that and replace it with SASE. And, uh, I would say that we are one of the only companies that was built, defined SASE, and the majority of our competition, or the vast majority of our competition, really transitioned from being the integrators, the managed service providers, to be the second-generation players, you know, the Palo Altos, the Fortinet of the world. So that's some major competitors.

And how do you view that customer proposition? How do you talk to the customer and factor their feedback in as you're looking at these different competitors?

So we are very different than everybody else in the sense that we built a real cloud platform versus bought a bunch of point solutions. And so we built the platform, we didn't buy it. And we are not platformized. We're doing platformization. We actually have a platform and, and that is an interesting value proposition because it's a day-two value proposition. So the, uh, the main thrust is to explain it, but also to give customers the opportunity to experience the, uh, the solution. And we have a great win ratio from, uh, POCs. So once a customer's experienced the, the solution, in 70% of the time, we win the, the account.

And to that point, it's not surprising that Cato is now positioned as the leader in the SASE Magic Quadrant. I've read several stories about the fact that Cato customers are replacing like, you know, 9, 10, 11 different components with Cato. And that is fantastic. That is a major win for you and a testament to the great work that the company has done. That said, the customers tend to also fear putting all of their eggs into one basket, right? Like this whole idea of like having one single platform, well, it creates reliance on a single vendor. It leads to vendor lock-ins and so on and so forth. How do you balance being this one ring to rule them all with the understanding and addressing customer concerns about the vendor lock-in and about potentially having the negative, like leading over time to negative consequences of that vendor lock-in?

So I think that the concept and the value of platforms, as I explained previously on the security operation and in the business side, is increasingly becoming mainstream to the point where people invent new words in order to bridge the gap towards being a platform. So, you know, we are part of a movement that is going to shape, I believe, the future of cybersecurity, which is platforms. And it's not all eggs in one basket. You're going to have a CrowdStrike and you're going to have a Wiz and you're going to have a Cato, but you're going to have 3, 4, 5 platforms in your entire, uh, large enterprise universe and not going to have 50, uh, point products like you have today, which is unmanageable.

You talked about Cato being a movement and that leads us to sort of this two questions. One is great leaders inspire movements. And so what is your leadership style? And the second underlying question to that is which are the leaders that you admire or look up to?

So perhaps my leadership style is the founder CEO, which is what I'm also, uh, is a collection of contradictions, right? Because as a founder, you really have to believe in your vision and being able to articulate that and convince everybody else that sometimes through very hard times. And on the other hand, you have to have intellectual honesty and look at the reality and adjust and sometimes pivot according to that. You need to be a good listener and yet, you know, eventually treat all advices and all external resources not as somebody you admire, which I don't have whole figures like that, but as inputs to essentially get to your own gut-level-based decision. And you have to be, on the one hand, a rebel that in order to start something new and be very scrappy and version 1.0 type of person. On the other hand, you have to be very organized and operationally oriented in order to scale that. So that's, uh, the key is not to have one or, or the other. Is the key is to maintain the balance of in all these dimensions.

Let's talk a little bit about lessons for founders. Over the years, you've been a very, very active investor in several category-defining startups from Palo Alto Networks to Gong, to Sumo Logic. We've had Sumo Logic co-founder Kumar Saurabh on the podcast, and he fondly remembered meeting you in a hotel lobby to pitch the company right at the beginning of the creation of the company with Christian, his co-founder. What patterns are you looking for when you meet these founders, and what are the red flags that you look for?

By the way, if I may interject, Shlomo, you know, the way Kumar described was so funny. He said, Shlomo walks down, we are sitting in the lobby, And Shlomo is not the kind of a guy who loves to chitchat. He gets straight to the point.

That was, that was a great remark. It's true. I, I, I feel more comfortable when a conversation has a subject than, uh, it's a freeform. I admit that, although I have to, uh, counter Kumar. And my memory tells me it was on the second floor of the old Italian coffee shop on, uh, University Avenue versus, uh, But that's, uh, I will check that with him. We'll take it offline. So that's, uh, that's the, what I described is what I'm trying to, uh, achieve for myself, uh, is what I'm looking at, uh, at others. That balance of, of, uh, contradictions in multiple dimensions in terms of being able to be scrappy, but being able to scale it, being able to, uh, be visionary., but be, uh, able to accept reality and adjust. So, uh, and all of these dimensions is what I'm looking at, uh, at, uh, entrepreneurs and the entrepreneur angle is by far the most important angle when you look at an investment, especially in cyber where you have 10 different startups to have the idea.

Shlomo, you've invested in tens or maybe even hundreds of startups at this point, and I know you've served as a board director in over 15 of them. Are you moonlighting as a VC and what's the role of an ideal board member?

So I'm, first of all, I'm 100% doing Cato now. I'm not a board. I'm a, in next quarter, I'm not going to be on any boards as a board member. And I'm not a professional VC. I'm just an angel investor focused primarily on areas that that I'm familiar with, which are, you know, essentially cyber and a little bit of, you know, what I learned from being a CEO. So when the founders of Gong came and pitched their idea, it wasn't, by the way, it was powerful obvious that it's going to be a category and it's going to be very successful at the time. But for me, it was something that I said, hey, I want that as the VP of sales of my startup. I want it. I immediately saw the value for me, so I invested with MVP and we doubled down and, and, uh, uh, the rest is history there. But I'm, I'm definitely not a professional VC and I'm not a professional board member by any, you know, my only profession is entrepreneur.

So, Slomo, uh, even though you're not a professional board member, the dynamic of board can be very interesting. On one side, you see a younger founder, somebody who's just getting started, you want to mentor them. On the other side, your own board, you know, Jerry Chin from Greylock, you know, smart, funny, absolutely lovable guy that I know described you as somebody who's fast and steady. You know, you have slow and steady, but he described you as fast and steady. And so you have this dynamic of you have your board, you have to engage them, help them. On the other side, you have founders that you have to engage and help them. So what are some guidelines, both northbound, southbound APIs that you have to, that you play with, you know, in that dynamic?

It, I would say, first of all, recognizing that the two sides of the table are extremely different in what it requires from you. And I hope that on one side of the table, as I said, as an entrepreneur, and I'm more experienced on the other side, it definitely requires more of a consultative. I would say the, the solutions need to come, or the capabilities need to come from, uh, from the CEO founder. And you, you need to be nurturing this process of giving birth to these new capabilities within that side of the table. So it, it is more of a nurturing, guiding putting limits sometimes versus a descriptive operative work that people that are used to the other side of the table sometimes fall in.

We're now getting into the closing questions, and many who have heard about you or your background, they may just assume that success just must have come easily for Shlomo or even, even been inevitable. But we know that's never the case with founders. Could you share a story when things really didn't work and you thought you might fail across one of these companies, just to humanize that, hey, the founder journey is hard for everyone?

I'll do more. I'll do one from each startup, right? So, uh, which is completely different. So Checkpoint was, we were 3 people in the room and Sun Microsystems signed with us an OEM agreement. I don't know if Sun is now long gone, but it used to be the largest network in the world and a major, major player with global reach. And now you have a demand funnel that is, you know, the internet was just created, the first browser was just created. We had absolutely the right product in the right time in the biggest technology transition, I think, since perhaps one of the two biggest with the personal computers. And, um, And we are 3 people. And how do you now are able to cope with it and deliver? So running after the demand and it was very much a pull experience and you had to believe in yourself that you are able to do it, although we had zero experience in doing it. So that was a very unique challenge, but it was a challenge of trusting yourself and believing At Imperva, the second startup that started the data security category, which is a huge category right now and one of the centerpieces of cybersecurity. It was a company that was started before PCI was born and before the first disclosure law was born. And it was premature. It was 2 years ahead of its time. So we had a kind of the product out. And there were crickets. And, uh, now I had to believe, and the other founders, uh, Mickey and Michai, had to believe that the market is going to happen and demand is going to come. And we had to articulate that to the employees that, and, uh, and it wasn't, uh, that was a different type of challenge. Then PCI came in one quarter, data security was happening in a big way. And at Cato, you know, those VCs, they were, uh, it's a big challenge. And on, you know, every, there's a reason why we are the only company. There's a reason why, I don't know, if you take Palo or Fortinet, they still have essentially appliances on somebody else's network. And it's not a new converged form factor of a cloud service. It's just a single host. It's more single-hosted than AWS. And the road from version 1.0 to version 3.0 in the early years was very challenging because when you have an issue in an application or in a— then, you know, people are not happy, but they recognize it. We are waiting for version 3.0. We are now in version 10, right? And those were difficult years., and that journey is very difficult, especially, uh, now that the market is mature. So that was believing that we are able to, um, reach that, uh, uh, technology milestone was not, uh, an easy task at all. And, uh, we did it. So very different challenges in each one of these startups.

Shlomo, you have actively shaped 3 generations of network security. You have built Checkpoint, a company that would go on to define the first generation of network security. You have then invested in Palo Alto Networks, which essentially made, like, took the traditional firewall and make it application aware. And you're now building, uh, Cato Networks, essentially moving the industry away from traditional network security to SASE. I know you're fully focused on Cato, but I can't help but wonder, What comes after SASE? You see, I know that every new technology will solve some problems, but it will leave gaps and it will introduce other problems in some way. For somebody who is looking at network security today, like for some prospective or young entrepreneurs trying to find an angle and trying to see like what is it about the network that is still unsolved or that still presents an opportunity, where should they be looking at? Like what should they be looking for? And also how does AI come in? To the picture?

So AI is part of SASE from day one. It's very much a part of the solution. I would tell you SASE is in the very early stages. Only 11 or 14% of enterprises have started using SASE and not to the fullest, I'm sure not to the fullest extent. And I believe that SASE is the third generation and that's going to replace the majority, 80, 90% of the second generation appliances and cloud proxies. And, um, there's a long journey ahead. So I'm really focusing on that. And I think it's going to take another decade for this to play out. So I still have time until, uh, the next idea. Catch me in a decade. We'll talk.

If we catch you in a decade, Shlomo, Do you think the telcos will be around and what's the future for telcos? I mean, they've been struggling to figure out what their strategy should be. And let's say if you were in the CEO of AT&T's shoes.

I'm not a telco expert. So I qualify my answer as a non-expert answer. They seem to be doing good business in selling the underlay, whether it's wired or wireless, reselling kind of the middleware. And providing managed services on top of that. And it's a, it's a very big business. Not all parts are of equal gross margin, but if well managed, it seems to be a very viable business. And they, you know, so I, I don't see a problem with that.

Shlomo, your, your close friend, your childhood friend, Shahar Bar-Kohan, says you'd make a great writer if you weren't a founder. What's your take on that? We spoke to him and he told us this. Okay.

Perhaps when I retire, I don't know. I'll check. I have no idea why he told you that. And I'll check it in a decade or two when I retire.

Actually, the way Shahar described Vishlobod was that he's one of the most curious persons I know. And he's curious about everything in a very intellectually precise manner. So I think he's looking at the curiosity as a, maybe storytelling is an attribute that you might have that he looks at.

So thank you very much.

Shachar, I think we need, we need a book on the history of cyber, certainly the history of cyber in the Israeli ecosystem.

There you go. That's, that's an idea.

Shlomo, you were the first investor in Palo Alto Networks and served on its board, a company now worth over $130 billion. And today you compete with them. Some might look at this and say, well, that's healthy competition in a big evolving market, but others may feel like it's a bit off or maybe it's not right. How do you respond?

Like Jeff Bezos said, we really focus on the customers and delivering the value to the customers. We don't focus on the competition. So, and seriously, Palo is a great company and You know, I think that competition at the end delivers value to the competing company. Not that, you know, Palo Alto is such a Goliath and we are such a David, so I'm not comparing, but it delivers value to the customer and it delivers value to the competing companies. Otherwise they would stagnate and not innovate. So it's good for everyone.

I think one thing that Palo has done really well, Shlomo, that all of us know is that they have done a very good job of acquiring and integrating companies really well. I was an early investor in Demisto, and if you talk to some of the founders, you know, Slavik and Rishi and others have been on our podcast. They give a lot of credit to the culture that Nikesh and Nir have created where these companies get integrated well. They tried inside those environments and of course now they're also going down the platformization strategy.

Absolutely.

Yeah.

Palo, I would assess that they are the best portfolio company, uh, that cyber has ever seen. Unfortunately, portfolios are a very bad idea in the digital, uh, transformed world and they need to be replaced by platforms. Taking a portfolio of point solutions and turning that into a platform, it's impossible no matter how nice of a UI you would put on top of it. So it's a great portfolio company, but we are trying to be something else.

Yes, I think each one has to adapt and evolve. Our last question for you, Shlomo, is that Israel has been a cyber hub in fact, one of the best regions in the world that has built the cybersecurity infrastructure, that has nurtured so many entrepreneurs. I would say the industry's early origins were also tied to that region. And if we look at the past decade, even past few years, there have been so many changes, whether it's political, whether it's social, whether it's unrest. If you were to look in the crystal ball and say, here is the next 5 to 10 years of Israel and cybersecurity, what comes to mind? What are the things that frustrate you? What are the things that excite you?

I'm super optimistic about the Israel cybersecurity ecosystem. I think it showed tremendous resilience in the last year plus of difficult conditions. And this is a, you know, The outcome, uh, talk for themselves, I believe. And going forward, I see continued momentum. I see Israeli companies, Israeli startups get lots of investment at very high valuations. I see acquisitions at a large scale. I see many, many young startups happening. So I would, I would even say it's You know, there's always a pendulum. I would say the pendulum is on the, on the very positive side of things.

In one of your earlier podcasts, Shlomo, you talked about the loyalty factor is very strong in Israel, and that's not necessarily what you see in other parts of the world.

Can you give us a little more deeper perspective on that?

Loyalty of, loyalty of founding teams to each other, loyalty of employees to the founder.

I don't remember the, uh, the reference. You know, there's a, there's a, a tighter sense— Israel is a small country, a small community. There's a tighter sense of community in Israel, for, for good and for bad, with all of, of the implications. And perhaps that was what I, I referred to, that sense of community. And everybody knows everybody, and everybody feels part of that community, and it creates a different type of bond.

Yeah, I think it was in context of the Silicon Valley culture where when too much money flows in, people tend to jump from one startup to another and that creates a different dynamic. But, but no, Shlomo, thank you for taking the time to share your 3 decades of wisdom and insights. You know, our audience would absolutely love the fact that, you know, you built one IPO, second IPO, and now potentially the third IPO. So There is repeat entrepreneur and there's threepeat entrepreneur. So, you know, you kind of clearly fall into this very unique category, probably the only individual that had potentially the third IPO in the cybersecurity world. So thank you for sharing your insights. And we do hope that someday you write some books, use your curiosity, and share, continue to share your wisdom with the world.

Thank you, Shlomo.

Thank you very much. It's been a very interesting conversation. Bye-bye.

Thank you.

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