The CEOs of the Israeli cybersecurity companies that merged in a huge deal last November go back a long way. Wiz CEO Assaf Rappaport and Dazz CEO Merav Bahat built Microsoft's cloud security system together and remained close friends after going their separate ways.
Wiz, which completed the biggest financing round of any Israeli startup in 2024 and turned down a $23 billion acquisition offer from Google, acquired Dazz at the end of last year.
The deal was supported by, among other people, Greylock's Asheem Chandna, who invested in both companies. Now Bahat and Chandna, tell "Globes" about how the deal developed behind the scenes and their vision to make Wiz one of the world's leading cybersecurity companies.
"Intensive negotiations"
So how do you even identify a promising entrepreneur who will lead to huge deals in the future?
"Assessing people is a question worth billions of dollars," Chandna tells "Globes." "Anyone in the world of venture capital, whether on the investor side or the entrepreneur side, can attest that evaluating people is one of the most difficult and most important things."
Chandna knows what he's talking about. In the past 21 years at Greylock, he has visited Israel more than 40 times and invested in a number of Israeli cybersecurity companies, including Imperva and Cato Networks. But his experience in the field begins even before that, when between 1996 and 2002 he served as VP product management at Check Point. "If you look back ten years," he says, "Israeli companies were mainly development centers. Today we see companies that lead the global market. There are really only two sources for the largest cybersecurity companies in the world – Israel and the US."
Greylock became an active partner in the founding of Dazz, and they are also supporting investors in Wiz. So, the merger of two companies that are in the portfolio of the same fund raises interesting questions. "Dazz was a company with strong business momentum," explains Chandna. "Even in its last quarter, it had clients signing deals worth millions of dollars. The company could have continued to grow independently, but this was an opportunity to merge with a fast-growing company and do a share swap – meaning that instead of a cash payment, Dazz shareholders received shares in Wiz and became partners in the future success of the merged company."
Bahat stresses that even though Greylock had invested in the two companies, the board of directors was separate and the money came from two different funds. She says, "In this specific deal, we asked 100% of the company's investors and shareholders to sign on. There are ways to protect the companies so that they make the right decisions for all stakeholders." She adds that her personal friendship with Rappaport did not prevent in-depth talks on the details of the deal. "We don't always agree," she explains. "In this deal, too, there were intense negotiations and situations of dispute. Each party tried to obtain the best terms for its company."
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She says of the day after the deal closed, "A week and a half later, Assaf and I had already met with about 20% of Dazz's customer base. The feedback was amazing. People see it as a match made in heaven. It was a strategic move by Wiz to expand the portfolio and market share, but you could say it also stemmed from the customers. They always saw the complementary nature of the solutions."
The interview also touches on, the hottest tech industry buzzword of the past year – artificial intelligence. "AI can create a lot of good and make the world a better place," says Chandna. "But it will also allow hackers and hostile entities to be more effective. We are going to see sophistication as well as an increasing number of cyberattacks that the world has not yet seen. What is going to happen is essentially a battle between good and bad AI, and humans will not be able to defend themselves against bad AI."
Check Point veteran Chandna continues, "Twenty years ago, there was no role at all for a Chief Information Security Officer (CISO). Today, it is a role that exists in every large or medium-sized company, and in some cases, it is also a person who reports directly to the CEO. And this market is going to continue to grow."
Following the discussion on developments in the cybersecurity market, Chandna addresses another "hot" topic that is preoccupying the industry – the IPO market that is set to open. As a board member at Rubrik, a leading data security company that held an IPO on Wall Street last year at a valuation of $5.5 billion, he has a number of insights. "2024 was a very slow year for IPOs, but there is broad agreement that 2025 will see a significant number of IPOs in the software and technology sector."
Chandna remarks, "There is a strong list of companies that want to go public, and I know that even during the holidays, many companies are working on their S1 documents – the initial registration documents that companies submit to the US Securities and Exchange Commission (SEC) on the way to an IPO."
But Bahat clarifies that for her, an IPO is not the main goal. She says, "I advised Assaf (Rappaport) not to sell to Google, because it (Wiz) has the potential to reach $100 billion. There is always the dream of being the Israeli entrepreneur who builds something big. With Wiz, there is an opportunity to become one of the two biggest (cybersecurity) companies in the world. Any good company can hold an IPO, but the question is whether it is really possible to become one of the two largest companies in the world."
"Not only talent"
The issue of diversity also occupies an important place in Bahat's eyes, "Diversity and the fact that there are women, men, different backgrounds – it helped us think about the future and build a strong company. When you want to run long distances, you need talented people who come with different angles." Bahat talks about combining career and family, despite the many challenges. "It's amazing that we see this all over the world – computer science and technological roles still don't attract enough women. I'm a mother of three children, and it's possible when there's a real partnership with my partner. It may not be the same motherhood as being a stay-at-home mom, but my children are proud of me."
Talking about the difficult year the industry has gone through due to the war, Bahat says, "It is precisely in challenging times that true resilience is shown. Our customers see that we continue to provide what is needed and continue to develop. This builds trust."
Chandna, who has closely followed the development of Israel's tech industry, recognizes something unique in Israel: "It's not just the technology or the talent. There is an incredible ability here to take an idea and turn it into a product that solves a real problem. I saw it at Check Point, I saw it at Palo Alto, and I see it today at Wiz."
He concludes the interview on an optimistic note: "If we sit down together for a joint interview in ten years from now and look at all the great things that have happened, that have made the world a better and safer place, many of the things we see will come from new ventures, and many of these entrepreneurs would have come from Israel."
Published by Globes, Israel business news – en.globes.co.il – on January 16, 2025.
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