A Product Market Fit Show | Startup Podcast for Founders
How Wiz grew to $500M ARR in 4 years—& could exit to Google for $23B (largest VC-backed exit in history)
18 Jul 2024 · 11 min
Key points
- Pablo Srugo says Wiz reached about $500m in ARR in four years, and Google is reportedly in talks to buy it for $23bn, the largest venture-backed startup acquisition ever.
- Srugo argues the reported deal implies roughly a 40x revenue multiple in a market no longer hot, versus about 15x for Microsoft and 5x to 10x for Google and Meta.
- Srugo credits Wiz's rise to insane growth, insane team and insane discipline, including an end-to-end cloud risk offering that rivals' siloed tools never matched.
Why Wiz reached $500M ARR in four years and drew a $23B bid
Wiz's reported $23B sale to Google would be the largest exit ever for a venture-backed startup, at about 40x revenue. Pablo Srugo attributes it to growth, team and discipline. Wiz solved the full cloud security job where hundreds of vendors each handled a fragment, and a repeat founding team built it on proven customer demand.
Takeaways
- The reported $23B price implies an extreme multiple. Google is reportedly in talks to pay $23bn for Wiz, the largest acquisition of a venture-backed startup. On roughly $500M ARR that is about 40x revenue, against about 15x for Microsoft and 5x to 10x for Google or Meta.
- Wiz grew at record speed. Wiz announced $100M ARR within 18 months in 2021, the fastest ever at the time and since beaten by ChatGPT. It reached about $300M by end of 2023 and $350M by May 2024.
- Wiz won by owning the whole job to be done. Using Christensen's jobs to be done lens, earlier vendors each attacked one silo of cloud security. Wiz covered end-to-end cloud risk, onboarded fast without agents, fit any cloud architecture and helped teams prioritize fixes.
- The platform approach resembles Shopify's. Shopify bundled payments, website building and inventory management into one platform. Wiz did likewise for security, replacing hundreds of point vendors, each solving only a piece, with one view of risk.
- The founding team was unusually proven. The four cofounders met in the Israeli army at 17 and served together nine years. They built Adallom, which raised $50M and sold to Microsoft for $320M, then spent five years on Microsoft's cloud team.
- Customer demand came before product. The founders solved problems manually and showed customers a pitch deck first. Customer assessments exposed risks, such as a virtual machine with access to an external ID, that no siloed tool caught.
- Timing and focus amplified the advantage. The CTO brought a Microsoft rule to build nothing that cannot reach over 100m users. Starting in early 2020 gave build time, and Zoom made enterprise selling easier because buyers had time to evaluate.