Most startups fail. Some get traction. Few become unicorns. Fewer get acquired. Almost none get billions. Only one said no to $23 billion from Google.
That one company is one you probably didn't know until Google's recent offer: Wiz. That's because Wiz isn't a shiny object, but an "unsexy" thing that mostly runs in the background.
Cybersecurity rarely comes up, but it's one of the most funded industries by VCs.
Wiz, founded in 2020 by second-time founding team Assaf Rappaport, Yinon Costica, Roy Reznik, and Ami Luttwak, is a cybersecurity suite that allows customers to monitor their cloud environment for threats and people trying to hack their systems.
Wiz took off instantly - in their first 18 months, they hit $100 million ARR. By 2023, they reported $350 million ARR, which propelled their valuation to $12b. Only 2 months after that billion-dollar round, Google offered them almost twice their valuation - $23 billion.
It's hard to find a takeaway because few companies grow this fast this soon after launching. But the fact that few people know Wiz is important: Wiz isn't a cool consumer subscription or shiny AI company, but it solves a real problem, has high switching costs and targets big companies who can pay a lot.
It's easy to be blinded by business ideas you'd brag about on your high school reunion. But the biggest opportunities are often the hidden things other people build on - like Wiz.
In fact, Wiz is so big an opportunity, the founders said no.
Why Wiz said no
Even if Wiz had wanted to be acquired, the pool of suitors would've been small. Few companies have $12 billion (or more) to spend on acquisitions. Google does.
To compete with Microsoft and AWS (which have built-in cloud threat monitoring software), Google lobbed a whopping $23 billion offer to acquire Wiz. This nearly doubles the size of their biggest acquisition to date (Motorola in 2012 for $12.5 billion).
Giving up an offer from a market leader like Google is not an overnight decision. But it does show that
a) companies might actually be better off working on their own product rather than letting someone else steward growth and that,
b) the inherent sexiness of a product doesn’t matter if the product really works.
After rumors of the potential acquisition began swirling, Wiz founder Rappaport announced to the media that they'd decline Google's offer to pursue an IPO. This couldn't have been an easy decision.
Besides becoming a literal billionaire, the allure of a billion-dollar acquisition is a guaranteed that Wiz can continue building their product.
That being said, an offer to build a product is not the same as building their product.
Selling to Google would mean building a product for Google, not for themselves, their market or their customers. Ultimately, Wiz would bolster Google's competitive position against Microsoft and AWS. Instead, Wiz founders made the decision to follow their own ideas and build a product not for Google, but for their customers.
Cybersecurity is difficult to understand for the modern day excel monkey. But the industry contains many fast-growing startups are solving for high-need problems with loyal users who don’t need a flashy Corvette, but a dependable Toyota.
Companies like Wiz build for the background. That's why few know them. Few founder brag on X about the cool cloud security product they bought.
Since their founding four years ago, Wiz has won 25% of the Fortune 100 as customers. This makes their growth even more impressive: Wiz was far from creating the cybersecurity category.
Wiz's competitors are integrated for specific environments like Microsoft Azure and AWS. This doesn’t let customers customize their product to their needs. Instead of forcing customers into a painful integration process, Wiz can be rolled out in minutes via an API which gives clients automatic access and coverage to whatever is going on in their cloud ecosystem.
This is another great takeaway: Whenever a product category is known for being complicated or hard to use, an easier-to-use version can succeed (even if the features and benefits are the same).
This resolves the problem of a painful sales cycle and an even worse integration. Buyers often want to throw their hands up and quit while they’re ahead, which often results in chrun.
Wiz’s claim to fame is that they aren't sexy - they’re not doing AI-powered grocery delivery. They’re no pre-revenue, pre-product, pre-proof "unicorn" that’s playing with VCs’ money.
Instead, they found a niche that needed improving, created a great product that was well sought after by many, and took their development into their own hands instead of building for someone else. Passing up an acquisition was the only way for Wiz to continue to do what Wiz knew how to do best - build.
Further - a lesson to be learned from Wiz is that bigger is not always better. Even though they were offered an acquisition deal at twice their valuation, Wiz’s founders bet that they were going to take their product further than Google ever could.
They are clearly filling a gap in the market with or without the struggles of other cybersec products, which should pave the way for VCs and tech buyers alike to pay attention to products that are the foundational to their businesses rather than flashy nice-to-have tools.
