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July 23rd, 2024

Wiz walks away from $23B deal with Google

Wiz opts out of $23 billion Google acquisition for IPO due to antitrust and investor concerns. CEO Rappaport leads the cloud security startup towards $1 billion annual revenue goal amid industry trends.

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Wiz walks away from $23B deal with Google

Wiz has decided to walk away from a $23 billion acquisition deal with Google, opting instead to pursue an initial public offering (IPO) as originally planned. The company's CEO, Assaf Rappaport, cited antitrust and investor concerns as reasons for this decision. Wiz, a cloud security startup founded in 2020, has experienced rapid growth under Rappaport's leadership. The deal with Google would have significantly increased Wiz's valuation from its previous funding round. The company's focus now shifts to achieving $1 billion in annual recurring revenue and preparing for an IPO. Google's cloud segment, facing competition from Microsoft and Amazon, would have benefited from the acquisition of Wiz. This move reflects a trend in the tech industry where startups are cautious about going public and companies are wary of regulatory hurdles for acquisitions. Despite the failed deal, Wiz has achieved significant revenue milestones and garnered support from prominent venture capital firms.

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Link Icon 45 comments
By @Centigonal - 9 months
Founded in 2020, with a $23B valuation, aiming for $1B ARR?

CloudFlare is worth $26B and had ~$1.3B revenue last year. Something's fishy here.

By @ds - 9 months
Far more likely is Google was not willing to complete the deal and was pulling the plug after looking at internal data. Wiz, fearing the bad press of Google backing out rushes to tell journalists that THEY are walking away because they are worth more.

Wiz's valuation is insane. Most people havent even heard of them. I think it was a > 60x ARR multiple on this deal. Id actually be kinda pissed if I was a google shareholder and they went through with it.

Something very strange is going on with Wiz. My gut tells me if they ever IPO to go big on puts.

By @walterbell - 9 months
https://www.calcalistech.com/ctechnews/article/b1a1jn00hc

> [Cyberstarts] has a portfolio of only 22 companies whose combined value is $35 billion. Five of these companies are unicorns, first and foremost Wiz, which seems to be breaking all the rules of growth and success and setting new standards in the industry.. In all three of his funds, Ra'anan shows an internal rate of return of more than 100%, an unusual figure even for the best funds in the world.. The first sales come from the loyal CISOs who work with the fund.. The whole CISO advisory committee issue has gotten out of hand for corporate America.

https://www.calcalistech.com/ctechnews/article/hjpwti2dr

> Wiz announced two months ago that it had raised $1 billion at a $12 billion valuation, bringing the company’s total funding to $1.9 billion.

By @glandium - 9 months
I was like "how the f* is a website builder possibly worth $23B" and then I realized Wiz is not Wix. And then I realized Wix has a market capitalization of $9B, and I'm still WTF.
By @temporalparts - 9 months
I think there's some behind the scenes drama. It takes a LOT of time and investment from both sides to build up to a $23B offer. I wonder if there was something some Alphabet exec did to piss off the founders. Or Wiz was stringing Alphabet along to hype up the IPO.
By @thegrizzlyking - 9 months
Most likely reason is FTC. Wiz integrates with big 4 cloud providers. No way FTC is allowing Google to take control. JD Vance's nomination and support for current FTC chair(Lina Khan) doesn't help.

Current FTC is good(personal opinion) from anti trust point of view but maybe bad for startup exits[0].

[0] https://x.com/ID_AA_Carmack/status/1812978264484552987

By @jwally - 9 months
> saying no to such humbling offers is tough

Minor pet peeve: misuse of the word "humbling".

A $23B offer is not humbling (on my planet at least). Humbling would be turning this offer down and then failing to get enough interest to generate an ipo.

By @prng2021 - 9 months
Lina Khan is our modern day superhero. She may be losing most of her lawsuits against big tech, but she has clearly struck fear in stakeholders on both sides of every tech acquisition.
By @daghamm - 9 months
For those of you who - like me 30 minutes ago - have no idea what Wiz does and what CNAPP is:

https://pulse.latio.tech/p/wtf-is-cnapp

By @nothrowaways - 9 months
23B is a staggering number for a 4 year old cyber security startup with 900 employees
By @immortal3 - 9 months
After the acquisition, I think Wiz would have to only focus on Google Cloud which might be a major limiting factor in the company's future. But other than that, It surprises me that, a $23B offer is rejected from the perspective of Employees. IPO won't provide the same level of liquidity opportunities.

I have used Octa and it's a decent platform, not a magical one. Creating a similar platform for Google Cloud should be feasible with the level of Google resources.

By @KoftaBob - 9 months
Fun fact:

> Wiz was founded in January 2020 by Assaf Rappaport, Yinon Costica, Roy Reznik, and Ami Luttwak, all of whom previously founded Adallom

> Adallom was founded in 2012 by Assaf Rappaport, Ami Luttwak and Roy Reznik, who are former members of the Israeli Intelligence Corps’ Unit 8200

https://en.wikipedia.org/wiki/Wiz_(company)

By @blindriver - 9 months
Lots of companies have regretted passing up on an acquisition, especially one this large and of a company this young. My bet would be that this company is making the same mistake as Yahoo, Groupon, etc.
By @ssl-3 - 9 months
I feel like I am uninformed.

Can someone provide some background?

Who in the fuck is Wiz, and why in the fuck might anyone think that they're worth 11 figures?

By @mihaic - 9 months
Over a certain threshold, all software companies seem to degenerate into sales companies.

Honestly, I'm just mildly shocked of the $23B valuation for a product that I'd expect to have taken waaay less than 1% of that in dev costs. What I'm more shocked is that Google decided they can't build the same thing themselves. Maybe I don't understand the complexity of the product?

By @daghamm - 9 months
Can someone explain to me how a young security company with few employees can be worth millions?

It's not like Google is after they client list, they would probably limit them to Google services after acquisition anyway.

By @Kostchei - 9 months
As a user of Wiz (and I like what I get from them) ,I am relieved . 1. huge valuations are bad for customers- that investor cash has to come back from somewhere 2. Google has a habit of subsuming products into their stack and either sunsetting them or holding them so close that nobody uses them (beyondcorp etc) *spelling
By @resist_futility - 9 months
>Wiz’s founders previously built security startup Adallom, raised money from Sequoia and Index and sold the startup to Microsoft for $320 million in 2015.

Copy, Paste and ask for 70 times more?

By @llmblockchain - 9 months
How much value do companies get out of these "enterprise security" companies? I've always thought they were the modern equivalent to commercial virus scanners that come with Windows.
By @olalonde - 9 months
> The company hit $100 million in annual recurring revenue after 18 months

That's fast... Is that 18 months after launch or literally 18 months after starting development?

By @mupuff1234 - 9 months
From the start this seemed more like a PR move from Wiz than a real offer.
By @RcouF1uZ4gsC - 9 months
I am not quite sure I understand what was in it for Google.

Google already has a world class security team, maybe one of the best in software.

What would they gain by this acquisition?

23 Billion is enough to pay 2000 engineers 1 million USD TC for more than 10 years.

By @DrScientist - 9 months
I feel like there is an opportunity for a startup that protects you from the risks associated with your security vendors :-)
By @drumhead - 9 months
This is positive for Google. Spending $23bn on a company of that size was insane. Shareholders are probably relieved.
By @tzury - 9 months
A screenshot of the internal mail

https://x.com/mikeeisenberg/status/1815644472945819788?s=46

By @trhway - 9 months
Israel's GDP is $500B+ . So Google's offer would bring 4%+ of one year's GDP into Israel. And these guys refused it. One can wonder what the government would think here :)
By @flynapse - 9 months
Major respect. I can only wonder what it feels like to possess that intense confidence. The appeal of 'a bird in hand' would almost certainly overwhelm most of us.
By @shrubble - 9 months
Could it be cold feet or fallout from the Crowdstrike debacle?
By @justahuman74 - 9 months
Can they just buy all the shares on the open market then?
By @physicsguy - 9 months
Wonder if it got downvalued during due-dilligence...
By @kats - 9 months
Good for Google.
By @mrinfinitiesx - 9 months
Sometimes it's not about the money, it's actually about systems security and the level of which you actually want to build, deploy, and protect great products and infrastructure. 23 billion is a LOT of money. Looking forward to see how the IPO plays out.
By @shmatt - 9 months
I have to take the other side than most comments here. Most of the coverage about the Wiz offer called out that this was an odd way for them to end up in - as the founders openly talked about waiting for that $1b ARR since almost day one

To me it feels like Google was trying to put pressure on employees and any other non board option holders. There were dozens of articles and analysis of exactly bow many new millionaires / billionaires will be minted after the sale in Israel

By @newusertoday - 9 months
sometimes it works snapchat rejecting facebook offere which is worth more now, sometimes it doesn't groupon rejecting googles offer.
By @jmsflknr - 9 months
Originally covered here: https://news.ycombinator.com/item?id=41042004
By @warbaker - 9 months
and nobody beats them!
By @arjvik - 9 months
Just leaving this here: https://paulgraham.com/corpdev.html
By @anon5278525283 - 9 months
Today's (relevant) SMBC: https://www.smbc-comics.com/comic/investment-2
By @globular-toast - 9 months
Why would Google even consider this? They're an advertising company and haven't really made any money from anything but advertising. What would they do with this?
By @jimt1234 - 9 months
Why settle for a measly $23B, when a successful IPO will get them 10x that?
By @worthless-trash - 9 months
This is great news !

I use wiz for my home lighting and automation, I'm so glad that google did not buy it due to its habit of killing things that I find useful.

I want my hardware to last longer than the current decision makers employment.

Edit: hah, the site becomes available AFTER i submit so now I can read it.