And you were still with Checkpoint for that move?
Still with Checkpoint. I had been flying back and forth between the US and Israel, because an engineer had to do that, and I was the only one who spoke decent English that was willing to do it. I got married and we decided it was too much, and it would be better if we just moved to the US. So I moved for Checkpoint, and stayed for another two years. At that point, Checkpoint had started being a difficult place to work for.
How is that?
First, the engineering department in Israel grew very quickly, from a few engineers to a few hundred. It became very bureaucratic and it was impossible to do anything. They were focusing on fixing bugs instead of developing new technologies, and I like to develop new technologies. So, we started a small engineering group here in the United States and we built a product called Floodgate, a quality of service product which Checkpoint started serving, and then in 1998 we had a complete implementation of a bandwidth optimization product. The product was ready to be released, and then Checkpoint decided not to release it. The reason given to me for not releasing it, was that the engineers in Israel were really angry that someone in the US was having fun building new products. I'm not kidding you, that was the reason! Then I said, okay, this is an organization that I don't want to work for, and I left that day. In March 1999, I took some time off and started my own company called OneSecure. We started as a managed services company, but during the dotcom crash people were not that willing to pay money for managed services, so we decided to stay with the product we were developing, which was the first intrusion prevention system in the world. It was a device that was sitting behind the firewall and actually complementing the firewall. It looked at the traffic the firewall allowed through, and made sure that traffic is free of attacks.
In the middle of 2002 we were acquired by NetScreen, which happened to be Checkpoint's biggest challenger, and that got Checkpoint a little bit scared. Within a year, NetScreen passed Checkpoint to be the second largest firewall vendor, and was kicking Checkpoint's butt.
It's very different then, starting a small entrepreneurial company and watching it grow like that.
Yes, it was similar to what I had at Checkpoint. I joined Checkpoint soon after it was founded, but it was different to see it from a founder's perspective. NetScreen was not a very big company, and it was very quick to move and we could do a lot of amazing things. But then NetScreen was acquired by Juniper Networks, and I had to deal with the same things I had dealt with at Checkpoint, not being able to do anything. After Juniper acquired NetScreen, they had their mind set on taking the NetScreen technology and moving it to the Juniper product and eliminating the NetScreen product line. I tried to convince Juniper that the right way to do it was, if you're going to build a new firewall, you might as well build a different, better firewall. It was difficult to convince Juniper to do it, so I gave my two week notice, and immediately got a call, and they said, ‘you're a great guy, we need you here, please stay, what can we do to keep you?' And so I said: here is what I need to stay: I want to own the project, I'm going to do it while building a completely new kind of firewall, I need a $10 million budget and 25 people that I handpick from the NetScreen organization. And I will do it within two years. After a year of not hearing back from them, I gave another two week notice and left.
I started Palo Alto Networks. I raised $9.4 million, a lot of those 25 people I wanted at Juniper joined me, and we built a new kind of firewall -- which today is kicking Juniper's butt. When you start with a small company, everything is great and you can build a product, but then you get acquired by a bigger company, and it becomes too big, and you can't do anything any more. I left to start something new, which is unfortunately competing against the old thing. I wish I could have done it within Juniper, and I wish I could have done what I wanted within Checkpoint. But the companies were too big to allow that. I left and started competing against them, and when I was part of NetScreen we passed Checkpoint in revenues, and here at Palo Alto Networks, we will pass Juniper in security revenues within a few years.
What's the biggest difference between working for a large company and running your own entrepreneurial company?
It depends on the big company. NetScreen was not a small company. We had about 600 employees, but it was acting like a small company. To me, the point when the company switches from acting small to acting big, is not when it passes a certain size in revenue or number of employees, but when the mindset of the company switches from a can-do attitude to a cannot-do attitude. I've noticed it in the three companies I worked for. I started at Checkpoint small, at OneSecure small, and at Palo Alto networks, hopefully we will never get there. I've noticed that it's trying to happen, and I crush it in time. It's when you start having people in the organization spending most of their day justifying their existence or why they're a part of the organization. At both Checkpoint and Juniper, at some point it got to where in order to pass any kind of decision, you needed to have 20 people buy into it, from 20 different departments.
The bureaucracy got out of hand.
I remember sitting at product planning sessions, and having an operations guy, a finance guy, a marketing guy, and a PR guy, telling the product teams what should and should not be built. The operations guy says we can't do it, the support people say we can't support it, and the finance people say we don't have money for it and should spend money on other things. But that's not their job. So I think the biggest difference between a small company and a big company isn't the size or revenue, it's the behavior. It's about how fast you can move and how many stakeholders you have in every decision that's being made. To me, when that happens, the company is too big, and it's time for me to move onto another company. At Palo Alto Networks, we're not small, we have close to 200 employees and pretty decent revenues. I've seen signs of it trying to happen, and I crush it immediately because I know what it can do to an organization.
Do you ever see yourself moving onto something else again?
Not as long as I can crush this kind of behavior, which I think is for the next many years. We're not letting that happen here. We don't let politics happen. We fire politicians. It doesn't matter how good you are, if you have an ego that's too big for yourself and if you're acting like a politician, you don't have room here.
As CTO, are you still involved in creating the technology, or do you take a more strategic role?
I don't do hands-on coding any more, but I do have a really good engineering team, and I just have to tell them in two sentences what should happen, and it happens. I spend a lot of time flying around the country and getting customers interested in the product.
From an early age, you had an entrepreneurial mind. What is the most surprising thing about taking this path as opposed to the customary corporate path?
I think the biggest thing about the entrepreneurial path is that it's much more fun than working for corporate. But there's also a lot of risk involved in it. Checkpoint was successful, OneSecure was successful, and here at Palo Alto networks we're very successful, but it's not always like that. You always have moments when you just don't know what's going to happen. There are moments when you think that the last four years you spent at a company, and the low salary you took versus the corporate salary you could have had were for nothing. When you work for big companies, you could get fired, but you can always find another job. I could find a job, but I don't like a job. I want to be an entrepreneur. But the most difficult thing when you're facing tough times for your company isn't what's going to happen to you, but what's going to happen to all the people you hired. The people working for us came here also on lower salaries, with the hope of making money from their stock options. It's tough to have to face them and tell them the company is not doing so well. Luckily for me, we always found ways around our difficulties, but a lot of people are not built for that, to be able to live with those risks. In my personal life, I don't take risks. I don't bungee jump, dive out of planes, or drive cars at 300 kilometers per hour on the Autobahn, but some people do that, but then don't take risks in their professional lives. I guess I'm the opposite.
What's the biggest success factor in getting where you are today?
People. The most important thing I found throughout my career, is hiring the right people. If you have the right team, you will always find a way to make whatever you do successful. The CEO of my previous company, said he prefers a “C” business plan with an “A” team, to an “A” business plan and a “C” team. If you have a good team around, you'll find a way to be successful. The second success factor is not to have an ego, and then not to try to run your own company. I think being an entrepreneur and being a CEO are two different things, and sometimes the opposite. It's rare that founders of companies are successful CEOs. And the last success factor, having a good business plan always helps.
It's not an easy thing to start a company, and even harder to get $10 million in venture capital. What advice would you have to someone who comes to you and says, “I want to do what you're doing”?
My advice would be “just do it.” Take the risk. Make sure you are willing to take the risk -- you cannot be half pregnant with this. I've had friends that call me and say they want to do it, and they're working for big companies getting their $150,000 a year and stock options and bonuses, and they say they're exploring it, but you're never going to do it. You feel very comfortable and don't feel the risk. Your time is split and your mind is split. I don't think you can be that comfortable in your life and be an entrepreneur at the same time. You have to dive into it. Leave your big fat salary and your comfortable position and start living as an entrepreneur. Just do it. Work 24 hours a day on doing it. That's the most important advice I have. The other advice I have is don't try to think you can do everything yourself. If you're a good entrepreneur, you probably cannot be a good CEO. Hire a CEO. If you're a technologist, make sure you have a good marketing person. If you're a good marketing person, make sure you have a good technologist. And the last advice is to get money from really good VCs.