Shlomo Kramer: A playbook for building three multi billion-dollar cybersecurity companies - Cato Networks, Check Point, and Imperva
Download MP3Welcome to Inside the Network. I'm Sid Trivedi.
Ross Haleliuk:I am Ross Haleliuk.
Mahendra Ramsinghani:And I am Mahendra Ramsinghani. We have spent decades building, investing, and researching cybersecurity companies.
Sid Trivedi:On this podcast, we invite you to join us inside the network, where we bring the best founders, operators, and investors building the future of cyber.
Ross Haleliuk:We will talk about the hard part of the founder journey, launching companies, getting to product market fit, raising capital, and scaling to an exit. And, yes, we will also be talking about epic failures.
Sid Trivedi:But, Mahendra, we're here to make the founder journey easier.
Mahendra Ramsinghani:That is correct, Sid. But we cannot make it too much easier because startups are hard.
Ross Haleliuk:And, of course, you already knew that. Alright. You two. And now let's get started with this week's episode.
Mahendra Ramsinghani:Our guest today is Shlomo Kramer, co founder and CEO of Cato Networks. For many in the cybersecurity industry, Shlomo needs no introduction. One of the early pioneers in Israel's cybersecurity startup ecosystem, what makes Shlomo truly remarkable is its ability to repeatedly build category defining companies. He first co founded Check Point, which pioneered the firewall category and today commands a $20,000,000,000 market cap. Then, seeing the shift to the cloud, he launched Imperva, which focused on the web application security, or the WAF, marketplace.
Mahendra Ramsinghani:That was his second IPO. Now, with Cato Networks, he's created an entirely new category called SASE, or Secure Access Service Edge. And Cato has already crossed 200,000,000 in ARR. But Shlomo isn't just a builder. He's also a remarkably successful angel investor with an eye for transformative companies.
Mahendra Ramsinghani:His portfolio includes Trusteer, which IBM acquired for $1,000,000,000 and he wrote the first angel check-in Palo Alto Networks, a company that is now valued over a $100,000,000,000 Today, we'll get inside the mind of the only entrepreneur we know who's on track to potentially take his 3rd cybersecurity company public. Many founders are satisfied with just one IPO. Some rarely go to 2, and Shlomo is on track for his 3rd one. A hat trick if he pulls it off. In the cybersecurity hall of fame, very few could equal what Shlomo has accomplished in his career.
Mahendra Ramsinghani:So what drives him? What has he learned along the way in 3 decades of building cybersecurity startups? And while others talk about platformization, if that's a word, can KETL be the one ring that rules them all? Without further ado, let's get started.
Sid Trivedi:Welcome, Shlomo, to Inside the Network.
Shlomo Kramer:Hello, and thank you for having me.
Sid Trivedi:We wanna cover a couple of different topics, and let's just start with the big picture. And let's start with the big why. Why Shlomo? You co founded Check Point, then Imperva, and now you're leading Cato Networks. What could likely be your 3rd cyber IPO?
Sid Trivedi:A hat trick as as many would like to call it. For most founders, one IPO would have been enough. What drives you both in internally and externally to keep going, keep building these companies?
Shlomo Kramer:The simple fact that I enjoy it. And, that's, I really like, taking technological market innovation and turning that into a reality and looking 10 years ahead and assessing where the markets are going to be. You know, I've been doing this since, you know, even before my, first commercial startup. I've been doing it in the, as a high school student and in the army. And, that's, that's what I like doing.
Shlomo Kramer:So I would say it's a passion. I've never viewed it as work.
Sid Trivedi:And did you always think that cyber was a field you wanted to focus on?
Shlomo Kramer:You know, it's been, I think that Checkpoint was obviously the company that kind of focused my, my career on cyber. Before that, I didn't think that cyber was going to be the focus of my career simply because there was no cyber, no real cyber category. I would say that, JetPoint was definitely one of the first network security company, you know, the 1st network security company, and one of the first 10 cybersecurity companies in the world. So, the answer is, you know, no. But after Checkpoint, it became inevitable that, I'm going to focus on it.
Ross Haleliuk:I'm curious, before you decided to build Checkpoint, what were some of the other ideas that you were looking at? What was some of the stuff you were exploring that could have become an alternative story of Shlomo?
Shlomo Kramer:I'll tell you, when we started, you know, we we we had all sorts of, ideas and stuff that we did. But I'll tell you, as as founders of Checkpoint, both Gil and myself really admired a company called Pure Software. It was a company that, it was the lightweight it was one of the companies in the Sun, Microsystem, a universe, and, which was our world, back in the day versus the PC world, which was more desktop, and Sun was the network is the computer. So, in, in that world, we really admired Pure Software, and it was a kind of a development tool. It found memory leaks and issues very, quickly, and it was revolutionary, and we really liked the fact that it was a bootstrapped startup starting from 0 and with very little resources, became a significant company.
Shlomo Kramer:And years later, just recently, I found out the fact that I hope I believe it's accurate, that this was the company of the Netflix founder.
Sid Trivedi:That's right. Reed
Shlomo Kramer:Hastings. Reed Hastings. So, I didn't know that, but that's so we had a lot of interest in software systems in general and, not necessarily as security folks.
Ross Haleliuk:Shlomo, over the past 30 years, the world has changed dramatically. Like, in both economical sense, political sense, like business sense, Some aspects are probably easier today than they were before. Some are harder. Like when it comes to the entrepreneurial journey, now that entrepreneurship has been largely democratized and literally anybody can start a company at any time. How has the world changed for startup founders?
Ross Haleliuk:Like, what aspects are harder today and which one's easier?
Shlomo Kramer:So for sure, I'll talk about startup in general and talk about cyber in particular. The, the business of startup has stopped being a startup. So when we started Checkpoint, you know, we had no funding, our first office was my late grandmother's apartment. We scrambled for a few $100,000 to enable us to launch the product, and we kind of stumbled on Sun Microsystem and Sun Software, actually, at the time, and were able to do an OEM and, and launch the company. So it was very much, I would say, a startup kind of foundry.
Shlomo Kramer:And other, other folks as well. And for many years, it continued to be that way, I would say, into the 2000, 2010. I would say that in the last 15 years, we see that startups become really templated and professional. And our programmes, and it's, it's almost like a profession. So it's not a, it's not a, kind of a hit or miss or, you know, a garage type of operation anymore.
Shlomo Kramer:And, I would say in cyber in particular, that also meant that there is a lot of money, that there's a lot of funding, very professional. And because of the cyber is the, perhaps, the most dynamic field in IT, there's the bad actor that keeps things moving and changing and innovation happens to startups. A lot of money in particular focuses on startups. So if you have a good idea, you should expect that there are 10 other startups, you know, perhaps some of them in Israel, some of them in Silicon Valley, and some in in other places, that are going to do the same thing. And it's not only about the idea, it's really about the, how you execute around that idea, which is, makes life more difficult in cyber these days, both as an entrepreneur and as an investor.
Mahendra Ramsinghani:So in these 3 decades, Shlomo, what has surprised you in trends, either technological, business wise, political, financial? Are there things that jump out at you that, are different from what
Shlomo Kramer:you might have anticipated? There from what you might have anticipated? There always is surprises. There are things you think, hey, these are going to be bonanzas. And like, I'll give you a concrete example.
Shlomo Kramer:I was one of the early investor in security for mobile phones. It was, very early when the iPhone became mainstream where, you know, it kind of was clear that it will beat Nokia and, Blackberry. And we said, okay, it's a handheld device. It has to have security. It's the most private device that you have.
Shlomo Kramer:For sure, for Android and and and iOS, you need security. We invested in a great team that came out with a good product, and the market didn't happen. You know, it's, it's, you know, that's, and, on the other hand, you get positive surprises where you get huge success in unexpected areas. So, yeah, there's, experience can take you so much. There are still surprises.
Sid Trivedi:Let's talk a little bit about building companies, Shlomo. And, you know, back in 2015, as you and your Cato co founder, Gershotz, brainstormed ideas for your next venture, we've heard that frustration almost led you to give up. And the story we've heard in particular was that inspiration struck while you were sitting on your patio. Can you take us back to that moment and what ideas were you exploring? Why were they dismissed?
Shlomo Kramer:In general, the, the ideas, I would say, were around the fact that, network have become software defined. So there were, the, the data plane was more and more implemented by software versus hardware. And we came out of the, DDoS and the cloud delivery world at the time, and and we thought, okay, that's where we experienced for the first time that the capability to embed sophisticated capability in the network fabric because it's software based. And we looked for other use cases for that. And we, actually, Cato version 1.0 was, an idea that we, that was more in the data center, east west traffic, and, and we worked for, for a few months, 2, 3 months on that building, formalizing the idea and building a presentation around that, etcetera, and it didn't stick.
Shlomo Kramer:And I remember the day that we decided, hey, that doesn't work. We are back to square 1. Went back, home and, sat on the patio and, was frustrated or or disappointed. And then the idea of Cato, came to mind, which is essentially instead of within the data center, it's between the data center and the other parts of the organization and, and other data center remote users, locations, and the SaaS application. So, that's Cato version 2.0.
Shlomo Kramer:I immediately talked with GUR and we kind of started taking this, raw idea and developing it, and the rest is history. What we came up with was, essentially what Gartner, Sassy in 2019.
Sid Trivedi:And any advice for founders who are having that kind of block in terms of ideas and which one to go after? I mean, clearly you took a step back and that helped you. Any, any advice that you have for folks who are brainstorming?
Shlomo Kramer:Well, I would give a general advice about making a big decision, is that I try to learn as much as possible. A lot of these 3 months was consuming a lot of information. Innovation, recent innovation in networking, and, software defined networking, and, and learning about that, thinking about it, and doing a lot of, I would say, conscious processing. But the end, the decision needs to be a gut level decision. And by gut level decision, I don't mean something spiritual, etcetera.
Shlomo Kramer:I really believe that we have processing capabilities that goes beyond the kind of where the fleshlight of the conscious points, which is actually very powerful. And once you internalise all this data, you need to let other parts of your work. So gut, gut feeling is important, and you need to listen to it, I guess. That's the headline, thing to say.
Ross Haleliuk:So when you tried the v one version, as you say, it didn't stick. How did you know that it didn't stick?
Shlomo Kramer:It was a gut feeling. We are not feeling it. We are not feeling it.
Ross Haleliuk:I see. Very, very interesting. Yeah. The reason I ask is because, like, you know, sometimes it's just like, maybe maybe you didn't look at
Shlomo Kramer:the consensus. It was a consensus. Both Goh and myself did I felt the same. So there was no question about it. If both of us didn't feel it, then it's a no go.
Ross Haleliuk:Interesting. So let's talk about Cato's foundation. Like starting the company, you had to essentially start with the networking layer. You have to roll out global points of presence. You have to layer on security.
Ross Haleliuk:Like you have to do so much in order for this vision of SASE to get realized. How did it look like? What were the major challenges at the time?
Shlomo Kramer:Actually, the, the major challenge of Cato, and I think the major innovation of Cato, and, is not layering security on top of networking, but actually embedding, network security in the network. So we have a single stack that delivers in a single pass both all the networking and all the network, security capabilities. And it's delivered as a global cloud service, today over 90 POPs around the world, to thousands of enterprise customers, millions of, users with 5 nines at the one hand, because that's what is the num- you ask any CIO, what's your most important thing? Is that you don't feel it. You know, it's going to be up and working, no hiccups, and nobody's going to call me with an issue.
Shlomo Kramer:And then they want it also to provide the best security. But the best security requires huge amounts of updates and upgrades and dynamics. We do thousands of updates a year to the network. So how do you provide 59s and the same time provide the most dynamic network security stack. That has been since the early days of Checkpoint, since the Ciscos, Juniper's of the world, all in a, in a graveyard of startups, all tried to do this and failed.
Shlomo Kramer:Essentially, Cato is a major breakthrough, was it the first, and I believe still the only company that was able to deliver this based on the fact that, the network is software based and based on many, many innovations along the way.
Ross Haleliuk:And given that you had to go out and you had to build a lot of infrastructure from day 1, what has that experience been talking to VCs? Like at the time, obviously you have already been a successful founder. You have had a great track record, but still you had to go to investors and you have to tell them, hey, instead of, using some underlying foundation, we are going to build our own points of presence. How did it look like? What were the objections from VCs?
Ross Haleliuk:Were there any objections?
Shlomo Kramer:Yeah. So, both Guo and myself had a very good reputation in delivering on, on our promises. And, but there were, and we were talking with a number of VCs. And some of them said it's a very ambitious project, which I guess means go away. And they had a very good reason for it.
Shlomo Kramer:And at the end, it was not difficult to find the believers, and and we got funded quickly, but there were very prominent VCs. Actually, VCs that come from the old days of Cisco, you know, were familiar with the early June JuneOS and, what was the name of the appliance company networks? One of the first appliance companies that Juniper bought for $4,000,000,000 and tried to embed into the JunoOS and failed. And we're familiar with ACE of Cisco, was another attempt. And we're familiar with, any number of startups that tried to do that and failed.
Shlomo Kramer:Unfortunately, here, here is another team that is going to fail at that. And, I guess that was the major hurdle, convincing the VCs that we can be successful. And, it's not an easy task. Again, I am not familiar with any other company that has fully embedded the full network security stack in the network stack, in the cloud, in a way that we all implemented SASE, a true SASE platform in the way that, we did.
Mahendra Ramsinghani:You know, that's fascinating, Shlomo, that, you know, a lot of the VCs would look at this idea as bold, CapEx crazy, and, sort of say, you know, no. This is not for us. Of course, then there were the believers, you know, Steve Krause from US Venture Partners, Theresa from Aspect, and and Jerry from Greylock who've stepped in. I'm sure that the ride has been fascinating for them. Now one interesting nuance on your cap table is that you also have Singapore Telecom.
Mahendra Ramsinghani:Singtel innovated as an investor. Now one would argue that you're actually competing with the carriers back then when you're building the software layer. You're actually competing with the carriers. Right? Yeah.
Mahendra Ramsinghani:So how how did that conversation play out in some of those early years?
Shlomo Kramer:So actually, the our first competitors were the carriers because the carriers are the ones that, you know, there are organization that do do it yourself. In North America, it's about 70%. And 30% go to the carriers or, depending on the size of the organization, perhaps large MSPs, and, have them kind of, assemble the solution, integrate the telco bundle it's called. In Europe, it's actually the opposite. 70% of enterprises use the telcos for, use back then in 2015, the telcos.
Shlomo Kramer:So, we were competing with the telcos. And, actually the telcos had their own architecture that was kind of the mainstream promise for the Cloud, which called NSV, Network Function Virtualization, which is orchestrating single, single, 10 basically blades on the traditional players in their cloud. And obviously, it was clear to us that it's not going to happen, and it never happened. Although AT and Ts of the world invested, I don't know how much in. And so, yeah.
Shlomo Kramer:They were the competitors. Singtel was had the vision, at least their VC arm, that this can also be a partnership. And in actual 10 years later, they were right because we have now quite a number of, telco partners. And in general, the telcos have more or less profited the NSV idea, and, are now providing the underlay, reselling SASE solutions from vendors, and providing the managed service on top. And, that's how the market played out.
Mahendra Ramsinghani:I think that's very interesting, Shlomo, that, when you think about AT and T, I mean, a lot of these carriers hired a lot of software teams. They had the vision. And I think that's somewhat obvious that the reason they could not innovate fast enough is because these are legacy companies with a certain mindset, etcetera. From your perspective, what did you see that gave you the advantage to run so fast ahead of, of the telcos?
Shlomo Kramer:Because the the telcos are an integrator, and we own the IP and build the IP and are able to provide a converged platform. And a converged platform, it has a huge difference versus kind of a a bundle of point solution. It is, first of all, it's more secure because security is a data problem, and you look to get the best converged data in real time with context so you can make the best decision what, what to do here. And then save it into a data lake so you can use it, the kind of that bulky, dataset in detection and hunting and behavioral, in general AI algorithms. And you can't do it when you start with multiple point products.
Shlomo Kramer:So security is better. Operation is completely different. If if you have a platform, you have a single it's the same like CrowdStrike in in the endpoint and Wiz on the, on the cloud. Platforms provide the future of operational efficiencies to, an ever complex problem of the system. And finally, platforms also provide the best business agility.
Shlomo Kramer:Because it's not only about how much it costs you to do it, but how fast can you move. Like, I want to acquire a company that's your, you know, you need now to normalize the security and infrastructure. We are moving to the cloud. We are doing the So digital business moves at a completely different pace that requires digital transformation of IT security. And essentially, the platforms are, the vehicle for that digital transformation.
Shlomo Kramer:So, yeah, the platforms are, are the future, basically.
Sid Trivedi:Let's move the conversation to competition. Yeah. Amazon founder, Jeff Bezos, famously says that he focuses entirely on customers, not competitors. What's your philosophy? How do you view competition in the broader network security space?
Shlomo Kramer:So SASE is an interesting market. So in general, in cybersecurity, there are 2 types of products, right? Either you replace something or you are addressing some sort of a new asset class that was not existing. IoT, mobile phones, Gen AI, something, cloud in general. So, SaaS is very much a replacement model.
Shlomo Kramer:It's, we are replacing the previous generation, which by the way is not the 1st generation, it's the 2nd generation. That's the appliances and the appliance helpers, which are the cloud proxies that were, because the appliance overstayed the welcome, they, they, had to be complimented. So we take that and replace it with, with SASE. And, I would say that we are one of the only companies that that was built, defined SASE. And the, the majority of our competition, or the vast majority of our competition, really transitioned from being the integrators, the, the service providers, to be the, 2nd generation, players.
Shlomo Kramer:You know, the Palo Alto's, the Fortinet of the world. So that's some major competitors.
Sid Trivedi:And how do you view that customer proposition? How do you talk to the customer and factor their feedback in as you're looking at these different competitors?
Shlomo Kramer:So we we are very different than than everybody else in the sense that we built a real cloud platform versus bought a bunch of point solution. And, so we built the the platform. We didn't buy it. And, we are not platformized. We're doing platformization.
Shlomo Kramer:We actually have a platform. And and that is an interesting value proposition because it's a day 2 value proposition. So the, the main thrust is to explain it, but also to give customers the opportunity to experience the, the solution. And we have a great win ratio from POCs. So once a customer's experience the solution in, 70% of the time, we win the, the account.
Ross Haleliuk:And to that point, it's not surprising that Cato is now positioned as the leader in the SASE Magic Quadrant. I've read several stories about the fact that Cato customers are replacing, like, you know, 9, 10, 11 different components with Skater. And that is fantastic. That is a major win for you and the testament to the great work that the company has done. That said, the customers tend to also fear putting all of their eggs into 1 basket.
Ross Haleliuk:Right? Yeah. This whole idea of having one single platform, while it creates reliance on a single vendor, it leads to vendor lock ins and so on and so forth. How do you balance being this one ring to rule them all with the understanding and addressing customer concerns about the vendor lock in, and about potentially having the negative, like, leading over time to negative consequences of that vendor lock in.
Shlomo Kramer:So I think that the concept and the value of platforms, as I explained there previously on the security operation and in the business side, is increasingly becoming mainstream to the point where people invent new words in order to bridge the gap towards being a platform. So, you know, we are part of a movement that is going to shape, I believe, the future of cyber security, which is, And, it's not all eggs in one basket. You're going to have a CrowdStrike, and you're going to have a Wiz, and you're going to have a cater, but you're going to have 3, 4, 5 platforms in your entire, large enterprise universe and not going to have 50, point products like you have today, which is unmanaged.
Mahendra Ramsinghani:You talked about Cato being a movement, and that leads us to sort of this two questions. 1 is great leaders inspire movements. And so what is your leadership style? And the second underlying question to that is, which are the leaders that you admire or look up to?
Shlomo Kramer:So perhaps my leadership style is the founder CEO, which is what I'm also, is a collection of contradictions. Right? Because as a founder, you really have to believe in your vision and being able to articulate that and convince everybody else that, sometimes through very hard times. And on the other hand, you have to have intellectual honesty and look at the reality and adjust and sometimes pivot according to, to that. You need to be a good listener and yet, you know, eventually treat all advices and all external resources, not as somebody you admire, which I don't have world figures like that, but as inputs to essentially get to your own gut level based decision.
Shlomo Kramer:And you have to be, on the one hand a rebel that in order to start something new and, and be very scrappy and version 1.0 type of person. On the other hand, you have to be very organized and operationally oriented in order to scale that. So that's, the key is not to have one or the other. It's the key is to maintain the balance of in all these dimensions.
Sid Trivedi:Let's talk a little bit about lessons for founders. Over the years, you've been a very, very active investor in several category defining startups, from Palo Alto Networks to Gong to Sumo Logic. We've had Sumo Logic cofounder, Kumar Sorab, on the podcast, and he fondly remembered meeting you in a hotel lobby to pitch the company right at the beginning of of the creation of the company with Christian, his cofounder. What patterns are you looking for when you meet these founders, and what are
Ross Haleliuk:the red flags that you look for?
Mahendra Ramsinghani:By the way, if I may integrate Sloemel, you know, the way Kumar described was so funny. He said, Sloemel walks down. We are sitting in the lobby, and Sloemel is not the kind of guy who loves to chitchat. He gets straight to the point.
Shlomo Kramer:It's too hard. It's too hard. I I I seem more comfortable when a conversation has a subject than, it's free form. I admit that. Although I have to, counter Kumar, and my memory tells me it was on the 2nd floor of the old Italian coffee shop on University Avenue versus, but that's, I'll take that with you.
Shlomo Kramer:We'll we'll take it offline. So that's, that's the what I discovered is what I'm trying to, achieve for myself, is what I'm looking at, at others. That balance of of, contradictions in multiple dimensions in terms of being able to be scrapey, but being able to scale it. Being able to, be visionary, but be, able to accept reality and adjust. So, and all of these dimensions is what I'm looking at, at, entrepreneurs.
Shlomo Kramer:And the entrepreneur anger is by far the most important anger when you look at an investment, especially in cyber, where you have 10 different startups. The idea.
Ross Haleliuk:Shlobot, you've invested in tens or maybe even hundreds of startups at this point. And I know you've served as a board director in over 15 of them. Are you moonlighting as a VC? And what's the role of an ideal board member?
Shlomo Kramer:So So I'm I'm first of all, I'm a I'm a 100% doing CATO now. I'm not a board. I'm a in next quarter, I'm not going to be on any boards as a board member. And I'm not a professional VC. I'm just an angel investor focused primarily on areas that that I'm familiar with, which are, you know, essentially cyber.
Shlomo Kramer:And a little bit of, you know, what I learned from being a CEO. So when the founders of Gong came and pitched their idea, it wasn't, by the way, it was far from obvious that it's, it's going to be a category and it's going to be very successful at the time. But for me, it was something that I said, hey, I want that as the VP of sale of my startup. I want it. I immediately saw the value for me, so I invested with MVP, and we doubled down, and and, the rest is history there.
Shlomo Kramer:But I'm, I'm definitely not a professional VC, and I'm not a professional board member by any you know, my only profession is entrepreneur.
Mahendra Ramsinghani:So Slovo, even though you're not a professional board member, this dynamic of board can be very interesting. On one side, you see a younger founder, somebody, who's just getting started. You wanna mentor them. On the other side, your own board, you know, Jerry Chen from Greylock, you know, smart, funny, absolutely lovable guy that I know described you as somebody who is fast and steady. You know, you have slow and steady, but he described you as fast and steady.
Mahendra Ramsinghani:And so you have this dynamic of you you have your board. You have to engage them, help them. On the other side, you have founders that you have to engage and help them. So what are some guidelines, both northbound, southbound APIs that you have to that you play with, you know, in that dynamic?
Shlomo Kramer:It I I would say, first of all, recognizing that the two sides of the table are extremely different in what it requires from you. And I hoped that on one side of the table, I said as an entrepreneur and and I'm, more experienced. On the other side, it's definitely requires more of a consultative. I would say the, the solutions need to come, or the capabilities need to come from, from, the CEO, founder, and you need to be nurturing this process of, giving birth to these new capabilities within that side of the table. So it it is more of a nurturing, guiding, putting limits, sometimes versus a descriptive operative work that people that are used to the other side of the table sometime falling.
Sid Trivedi:We're now getting into the the closing questions. And many who have heard about you or your background, they may just assume that success just must have come easily for Shlomo or even even been inevitable. But we know that's never the case with founders. Could you share a story when things really didn't work and you thought you might fail across one of these companies just to humanize that, hey, the founder journey is hard for everyone?
Shlomo Kramer:I'll do more. I'll do one from each server. Right? So, which is completely different. So Checkpoint was we were 3 people in the room, and Sun Microsystem, signed with us an OEM agreement.
Shlomo Kramer:I don't know if if Sun is now long gone, but it used to be the largest network in the world and a major, major player with global reach. And now you have an a demand funnel that is, you know, the Internet was just created. The first browser was just created. We had absolutely the right product in the right time in the biggest technology transition, I think, since perhaps one of the 2 biggest with the personal computers. And, and we are 3 people.
Shlomo Kramer:And how do you now are able to cope with it and deliver? So running after the demand, and and it was very much a pull experience and and, you had to believe in yourself that you are able to do it, although we had zero experience in doing it. So that that was a very unique, challenge. But it was a challenge of trusting yourself and believing yourself. At Imperva, the second startup that started the data security category, which is a huge category right now and one of the center pieces of cybersecurity.
Shlomo Kramer:It was a company that was started before, PCI was born and before the 1st disclosure role was born. And it was, premature. It was 2 years ahead of its time. So we had, kind of the product out, and there were crickets. And, now I had to believe, and the the other founders, Miki and Mihai, had to believe that the market is going to happen and demand is going to come.
Shlomo Kramer:And we had to articulate that to the employees that and, it wasn't, that was a different type of challenge. Then PCI came in 1 quarter, data security was happening in a big way. And at Cato, you know, those VCs, they were, it's a big challenge. And on, you know, every there's a reason why we are the only company. There's a reason why, I don't know, if you take Palo or Fortinet, they still have essentially appliances on somebody else's network.
Shlomo Kramer:And it's not a new converged form factor of a Cloud service. Just a single hosted, it's more, single hosted than AWS. And the road from version 1.0 to version 3.0 in the early years was very challenging. Because when you have an issue in an application or in a then, you know, people are not happy, but they recognize it. We are waiting for version 3.0.
Shlomo Kramer:We are now in version 10. Right? And, those were difficult years. And that journey is very difficult, especially, now that the market is mature. So that was believing that we are able to, reach that, technology milestone milestone was not, an easy task at all.
Shlomo Kramer:And, we did it. So very different challenges in each one of these startups.
Ross Haleliuk:Shlomo, you have actively shaped 3 generations of network security. You have built, Checkpoint, a company that would go on to define the 1st generation of network security. You have then invested in Palo Alto Networks, which essentially made, like, took the traditional firewall and make it application aware. And you're now building, Cato Networks, essentially moving the industry away from traditional network security to SASE. I know you're fully focused on Cato, but I can't help, but wonder what comes after SASE.
Ross Haleliuk:You see, I know that every new technologies will solve some problems, but it will leave gaps and it will introduce other problems in some way. For somebody who is looking at network security today, like for, some prospective or young entrepreneurs trying to find an angle and trying to see, like, what is it about the network that is still unsolved or that still presents an opportunity? Where should they be looking at? Like, what should they be looking for? And also, how does AI come in to the picture?
Shlomo Kramer:So AI is part of SASE from day 1. It's it's very much, a part of of the solution. I would I would tell you that SASE is in the very early stages. Only 11 or 14% of enterprises have started using SASE, and not to the fullest to I'm sure not to the fullest extent. And I believe that SASE is the 3rd generation, and it's going to replace the majority, 80, 90 percent of the 2nd generation appliances and cloud proxies.
Shlomo Kramer:And, there's a long journey ahead. So I'm really focusing on that. And I think it's going to take another decade for this to play out. So I still have time until, the next idea. Catch me in a decade.
Shlomo Kramer:We'll talk.
Mahendra Ramsinghani:If we catch you in a decade, Shlobo, do you think the telcos will be around? What's the future for telcos? I mean, they've been struggling to figure out what their strategy should be. And, let's say if you were in the CEO of, AT and T's shoes.
Shlomo Kramer:I'm not in the telco expert. So I'm, my I qualify my answers, you know, non expert answer. It's a they seem to be, doing good business in selling the underlay, whether it's wired or wireless, reselling kind of the middleware, and providing managed services on top of that. And it's it's a very big business. Not all parts are of equal, gross margin.
Shlomo Kramer:But if well managed, it seems to be a very viable business. And, you know what? So I I don't see a problem with that.
Sid Trivedi:So, but your your close friend, your childhood friend, Shahar Bar Khohan, says you'd make a great writer if you weren't a founder. What's your take on that? We spoke to him and he told us this. Okay.
Shlomo Kramer:Perhaps in, when I retire. I don't know. I'll I'll check. I have no, no idea why he told you that, and I'll I'll I'll check it in a decade or 2 when I retire.
Mahendra Ramsinghani:Actually, the way Shar described Hlobo was that he's one of the most curious persons I know, and he's curious about everything in a very intellectually precise manner. So I think he's looking at the curiosity and say, maybe storytelling is an attribute that you might have that he looks at. So Thank
Shlomo Kramer:you very much. Shacham.
Sid Trivedi:I think we need we need a book on the history of cyber, certainly the history of cyber in the Israeli ecosystem.
Shlomo Kramer:There you go. That's that's an idea.
Ross Haleliuk:Shlomo, you were the first investor in Palo Alto Networks and served on its board, the company now, worth over $130,000,000,000. And today, you compete with them. Some might look at this and say, well, that's a healthy competition in a big evolving market, but others may feel like it's a bit off or maybe it's it's it's not right. How do you respond?
Shlomo Kramer:Like, Jeff Bezos said, we we really focus on the customers and delivering the, the value to the customers. We don't, focus on the competition. So, and seriously, Palo is a great company. And, you know, I think that competition at the end delivers value to the competing company. Not that, you know, Paolo is such a Goliath, and we are such a David, so I'm I'm not comparing.
Shlomo Kramer:But it it delivers value to the customer, and it delivers value to the competing companies. Otherwise, they would stagnant and, and not innovate. So it's it's good for everyone.
Mahendra Ramsinghani:I think one thing that, Palo has done really well, Shlomo, that all of us know is that, you know, they have done a very good job of acquiring and integrating companies really well. You know, I was an early investor in Demisto. And if you talk to some of the founders, you know, Slavik and, Rishi and others have, been on our podcast, They give a lot of credit to the culture that Nikesh and Nir have created where these companies get integrated well. They tried inside those environments. And, of course, now they're also going down the platformization strategy.
Mahendra Ramsinghani:Absolutely. Yeah. Palo,
Shlomo Kramer:I would assess that they are the best portfolio company, that cyber has ever seen. Unfortunately, portfolios are a very bad idea in the digital, transformed the world, and they need to be replaced by platforms. Taking a plat a portfolio of point solution and turning that into a platform, it's impossible no matter how nice of a UI you would put in, on top of it. So it's it's a great portfolio company, but we are trying to be something else.
Mahendra Ramsinghani:Yes. I I think, each one has to adapt and evolve. Our last question for you, Shlomo, is that, you know, Israel has been a cyber hub. In fact, one of the best regions in the world that has built the cybersecurity infrastructure, that has nurtured so many entrepreneurs. I would say the industry's early origins were also tied to that region.
Mahendra Ramsinghani:And if we look at the past, decade, even past few years, there have been so many changes, whether it's political, whether it's social, whether it's unrest. If you were to look in the crystal ball and say, here is the next 5 to 10 years of Israel and cybersecurity, what comes to mind? What are the things that frustrate you? What are the things that excite you?
Shlomo Kramer:I'm super optimistic about the Israel, cyber security ecosystem. I think it showed tremendous resilience in the, in the last, year plus of difficult conditions. And this is, you know, the outcome, talk for themselves, I believe. And going forward, I see continued momentum. I see Israeli companies, Israeli startups get lots of investment at very high valuations.
Shlomo Kramer:They see acquisitions at a large scale. I see many, many young startups happening. So I would I would even say it's, you know, there's always a pendulum. I would say the pendulum is on the on the very positive side of things.
Mahendra Ramsinghani:In one of your earlier podcast, Shlomo, you talked about the loyalty factor is very strong in Israel, and that's not necessarily what you see in other parts of the world. Can you give us a little more deeper perspective on that? Loyalty of, Loyalty of founding teams to each other, loyalty of employees to the founder.
Shlomo Kramer:I don't remember the, the reference. You know, there's a there's a tighter Israel is a small country, a small community. There's a tighter sense of community in Israel for for good and for bad with all of of the implications. And perhaps that was what I I referred to. That sense of community and everybody knows everybody and everybody feels part of that community, and it creates a different type of bond.
Mahendra Ramsinghani:Yeah. I think it was in context of the Silicon Valley culture where when too much money flows in, people tend to jump from one startup to another, and, that creates a different dynamic. But, but, no, Shlobal, thank you, for taking the time to share your 3 decades of wisdom and insights. You know, audience would absolutely love the fact that, you know, you built one IPO, second IPO, and now potentially the 3rd IPO. So there is repeat entrepreneur and there is 3peat entrepreneurs.
Mahendra Ramsinghani:So, you know, you kind of clearly fall into this very unique category, probably the only individual that had potentially the 3rd IPO in the cybersecurity world. So thank you for sharing your insights, and we do hope that someday you write some books, use your curiosity, and share continue to share your wisdom with the world.
Sid Trivedi:Thank you, Shlomo.
Shlomo Kramer:Thank you very much. It's been a very interesting conversation. Bye bye.
Sid Trivedi:Thank you. Thank you so much. Thank you for joining us Inside the Network.
Ross Haleliuk:If you like this episode, please leave us a review and share it with others.
Mahendra Ramsinghani:If you really, really liked it and you have some feedback for us, wrap it on a bottle of Yamazaki and send it to me first.
Sid Trivedi:No. Don't do that. Mahendra gets too many gifts already. Please reach out by email or LinkedIn.
