"The point is that money is addictive and being cash flow negative is also addictive," he said. "It is very difficult to get out of it. You should do it as quickly as possible and that's how you create the best organization. The best companies in IT, they were all like this. Cisco, for example, spent very little amount of money before they started generating money. The same is true about HP and Oracle. And those companies that go out with a big bang and burn a lot of cash, they eventually disappear. That is something I learnt in the military-how to not spend a lot of cash. Checkpoint was like that in the beginning. It took less than a million dollars to become cash flow positive."
"It is always hard to start from the scratch," he admitted. "There was a need for innovation. Cisco, for example, was not innovating anything. They were just buying companies."
Was there need for innovation because cloud technologies were arriving on the scene, I asked him.
"No," he said, "it was not because of cloud technologies. It was because you cannot expect 15 year old technologies to defend you against the hackers. The attackers, they keep changing all the time. So, you have to change all the time. And Juniper and Cisco-they had 10, 15 year old technology. That did not make any sense. So, it was clear that there was an opportunity to innovate, a need to disrupt the network security market. The challenge was how to do it?"
"I left Juniper in February of 2005," he said. "We only started building products of Palo Alto Networks in January 2006. So, we took almost a year to figure out what is the disruption and how we are going to change the market, which obviously we did."
When he started, he was the lone employee of his company. He had two investors-Sequoia and Greylock. Together with them, he tried to figure out how to innovate in security. They gave Zuk $250,000 to come up with the product-the 'first new class of firewall in 11 years'. Around September, they hired a CEO to run the company and raise the money to build the company and the products. The next year, they managed to raise $9 million more from two VC firms. Zuk put in his own $400,000, along with some other friends.
Once the company picked up speed, it moved like a rocket: Palo Alto Networks 'successfully IPOed in July 2012, bringing in $260 million'. The company already has 4-5% share of the $10 billion network security market, and is growing at a pretty fast clip.
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