Palo Alto Networks ft Nir Zuk & Nikesh Arora - The Grudge That Transformed Cybersecurity

Nir Zuk (0:01)

Everybody thought we were crazy. Nobody would use the cloud for cybersecurity. Nobody would send cybersecurity related data to be inspected in the cloud and so on. And when I hear something like that, I say, of course, I'm going to do it, because it's the right thing. And if everybody believes it shouldn't be done or it cannot be done, or nobody would want it, then it's a good reason to do it.

Roelof Botha (0:24)

Welcome to Crucible Moments, a podcast about the decisions and inflection points that defined some of the most consequential companies of our time. I'm your host, Roelof Botha. In the 1990s, as businesses rushed online, a new cybersecurity industry emerged to protect the networks powering the internet boom. Among the industry's early builders was an Israeli engineer who helped shape several of those companies until he grew frustrated with their overly cautious cultures that stifled innovation. So he decided to strike out on his own. Along with a small team of experts, Nir Zuk built something that would change the industry, the Next-Generation Firewall. Unlike traditional firewalls, it didn't just block threats, it unified multiple layers of protection into one intelligent platform. By blending on-premise security with early cloud-based capabilities, Zuk's vision redefined what modern cybersecurity could be and set the standard the industry still follows today. In this episode, we'll explore the Crucible Moments that turned Palo Alto Networks from a bold startup into a global leader in cybersecurity. From bringing their disruptive product to market, to scaling into a public company, and ultimately outpacing the industry again in the cloud era. This is the story of Palo Alto Networks, and the people who refuse to play by the old rules.

Nir Zuk (2:00)

I'm Nir Zuk, founder and shift technology officer at Palo Alto Networks. I was born in Israel in 1971, and as a teenager in the mid-80s, one of my hobbies was to develop viruses, some of the early computer viruses in the world, which landed me a job with Israeli Intelligence as part of my military service. And there at Unit 8200 is where I met two of the three founders of Checkpoint. I joined them at building Checkpoint software in late 94

Roelof Botha (2:34)

At Checkpoint, Nir worked on some of the first firewall technologies, network security systems that could monitor and control traffic between private networks and the outside world.

Nir Zuk (2:45)

The biggest challenge I faced at Checkpoint was that very early on, Checkpoint has decided, number one, that they're just going to be a firewall VPN company, meaning they don't want to do other things that customers require as part of their cyber security strategy. And second, that they want to optimize for very high operating margins. Checkpoint has always run close to 60% net operating margins, which is very high, but it also means that there is no money to invest specifically in research and development. So for me, as someone that likes to build technology, likes to build products, like to take things forward, it was a challenge not being able to invest in R&D and not being able to build things beyond basic firewall VPN.

Roelof Botha (3:36)

Nir transferred to Checkpoint's California team, hoping it would offer an opportunity to work outside of the company's VPN-only strategy. But when the team was shut down in 1999, Nir decided to leave Checkpoint altogether and forge his own path in the cybersecurity space. He wasn't shy about the fact that his former employer was now his biggest competition.

Nir Zuk (4:00)

I had a custom California license plate made. The license plate was CHKP-KLR, which reads Checkpoint Killer. So I was driving around the Bay Area with that car.

Jim Goetz (4:13)

I had met with him and walked him out to his car and it spotted the plates. It was an example of a chip on the shoulder that Nir had developed in his time at Checkpoint. My name is Jim Goetz, partner at Sequoia Capital.

Roelof Botha (4:31)

Sitting out to compete with Checkpoint, Nir founded his first company, One Secure, which was quickly acquired by Netscreen, which was then sold to Juniper in 2004

Nir Zuk (4:43)

The first day, literally the first day after the acquisition closed in April 2004, my new boss, the CTO and founder of Juniper, told me that they were not interested in the products and they wanted to rebuild them into their own products, which I thought was a disaster. So, I left, many other people left and I left to start Palo Alto Networks. I called a really good friend of mine, called Asheem Chandra, who is a VC at Greylock, and told him I was going to start something, and he immediately brought Jim Goetz as well into the picture. I knew from the beginning, they agreed from the beginning, that we're going to build something that's going to change the cyber security industry, and the three of us sat down and tried to figure out what it is.