Two years later, Juniper Networks bought Netscreen for $4 billion.
"Netscreen was a major competitor of CheckPoint and it was doing very well," he said. "One day I was in Hong Hong when the Netscreen CEO called me and told me that they had sold the company to Juniper."
Nir then was the CTO of the company.
From there it was all downhill. "Juniper basically killed all the products of Netscreen because they wanted to build it inside their existing product," he said. "They did not even want the people (that worked with Netscreen); they wanted original Juniper people to do all the work. And they wanted to save money by moving all the engineering to China and India. So left because I like to build technology and products. I couldn't do it there anymore so I left and did it here."
Zuk left the company in early 2005. He also gave up 300,000 unvested shares worth about $6 million.
Money is addictive: Lessons on running lean startups
"The most important lesson that I learnt in that company is that you have to be small, nimble and not spend a lot of money," he said.
"Money is addictive," he said. "In the beginning we raised a lot of money-at the company called OneSecure. I think the first round was US$25 million. And we spent a lot of money. And it didn't work very well. And after the crash happened, we said we were going to reduce the spend, we were going to work the way we used to work in the past-small number of resources, very very smart people, and smart processes, and then we became successful."
Is that why you once said that you need smart VCs, I asked him. No, he said. He had said that in a different sense. "Smart VCs mean VCs who can support you, who are not going to be scared of bad times," he explained. "And also they think the same way that you do. So, if you need to have a small company with really really good people, that means you have to pay them well, and more importantly, give them a good part of your company. And you need VCs to support it."
"So the most important lesson learnt there is that you have to be small, not raise a lot of money, and be smart because that creates a good company long-term," he said. "At Palo Alto Networks, we did it from the beginning. We spent less than US$ 50 million to become cash flow positive, which for a system company is very very small. System companies usually have to spend hundreds of millions of dollars to become cash flow positive. Take the example of one of our competitors, FireEye. This year they are going to burn about US$150 million. Just this year. Overall, they have probably burnt half a billion dollars! They are still not cash flow positive and they are not going to be cash flow positive for a few years still. So they will probably burn between half a billion to a billion dollars before they become cash flow positive. We have been cash flow positive from many many years. We spent only $50 million, which is why we are double their sales, and we are growing faster than them and we have much higher valuation."
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