Google closed its acquisition for 32,000 million dollars from cybersecurity company Wiz this week: the largest acquisition in Google’s history, as well as the largest acquisition ever of a venture-backed startup.
In the last episode of TechCrunch Equity PodcastRebecca Bellan, Sean O’Kane and I were joined by Shardul Shah, partner at Index Ventures, Wiz’s largest shareholder. Shah told us his history with Wiz, which extends before Wiz himself: He previously backed Adallom, the startup previously founded by Wiz’s Assaf Rappaport, Ami Luttwak, and Roy Reznik.
We also asked Shah why he thinks the company was such an attractive acquisition target and how he responded when Wiz abandoned Google’s previous acquisition bid.
“It’s no surprise it’s Wiz,” Shah said. “Wiz is at the center of three tailwinds: AI, cloud and security spending.”
Read an excerpt of our conversation, edited for length and clarity, below. Shah began by noting, half-jokingly, that we may have been underestimating things by calling the acquisition one of our deals of the week.
Shardul Shah: I think this should be considered the deal of the year or the decade, not just the week. Can we change that? Thank you.
But it’s really important for the industry. This is the largest venture capital-backed acquisition in history.
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Rebeca Bellan: Yes, we’ll figure it out in the post.[-production].
Shardul: And more importantly, it’s no surprise that it’s Wiz. Wiz is at the center of three tailwinds: AI, cloud and security spending. And that’s critical today, in light of the AI era, where every workload needs to be protected. That is why we are very proud to be the largest shareholder of the company. And yes, I think at least [the] offer of the month.
cardigan: How long has it been? When did you initially invest in Wiz? Because this is the type of exit I’m sure investors dream of.
Shardul: If it’s six years or 16, it’s a question we ask ourselves internally. About 10 years ago, I joined the board of Assaf, Roy and Ami’s first company, Adallom. So we had a front-row seat to how they make decisions, how they develop trust, and how it evolved over time.
Assaf called me on my birthday when he founded Wiz. And the initial round is when I joined the board.
Antonio Ha: We’ve talked about this deal a couple of times before on the show, but since Wiz is not a consumer-facing company, I’m guessing some of our readers are familiar with it, others aren’t. Can you talk a little bit more about what it was, beyond just sitting at the intersection of these really important sectors, that you think made Wiz such an attractive investment and ultimately such an attractive acquisition target?
Shardul: At Index, the core of our business is focusing on people. And I really think the core of the acquisition was the people. Assaf is an incredible leader who can make high-quality decisions. He has great intuition about people and markets. Two of its co-founders, Ami and Yinon. [Costica]They are almost always in dispute: Ami lives in the future, [Yinon] it is very, very present and Assaf has the ability to really make a decision about which voice, at what moment, could lead the way. Roy is an execution machine.
So together they created this environment and culture of trust that allowed them to build a platform from the ground up and take on an existing category with unmatched speed.
Sean O’Kane: There is a funny, funny story for us, especially because we get to pressing them on Disrupt a couple of years agowhere Google approached the company and [Assaf] he actually walked away from the deal. In that moment, does that almost feel like validation to you, as someone who feels like you’ve identified someone you really believe in and who’s willing to take a step that I think a lot of people would be afraid to take, in the face of such a big exit at that moment? Maybe not as big as now, but pretty close.
Shardul: Not precisely. Part of this is probably because I’m irreverent and external validation doesn’t matter, despite my insecurity about you describing this as the deal of the week.
At one point I told the founders that I believe in them more than themselves. The first blog I wrote for Index was titled “Learn to say no” actually aimed at the founders of Audible. […] When founders choose and make decisions, you trust the input, as well as the way they make decisions. You don’t really focus on the results and the luck involved in whether it is validated or not.
Cardigan: How important was that to the acquisition of Wiz? Basically, you get what you can get from Google: funds, access to [Google’s] cloud and more resources, but are you still able to maintain your own sense of leadership?
Shardul: So to your point, perhaps for the audience, Wiz aims to protect cloud infrastructure and code in production. Most of their clients are part of what is called a zero-criticism club: they have the context to know what to prioritize and what to act on. Google’s resources, infrastructure, and AI talent allow Wiz to extend that recognition while maintaining this culture of trust and camaraderie.
Antonio: When we think about major acquisitions, they can be important in different ways. They can be transformative for the acquiring company. They can also be transformative for the startup ecosystem because there are a lot of people who will make a lot of money from this. And then that potentially starts whole new industries, whole new companies.
So when you think about this as a big acquisition, what do you think the biggest impacts will be over the next few years?
Shardul: I think it starts with inspiration. I think there is a new imagination about what may be possible for entrepreneurs around the world. And that’s amazing, right?
I’m really proud that there are so many people whose lives will be changed based on this investment, that’s really meaningful and fulfilling. But I think the most important thing is the talent, skills and aspirations of the entrepreneurs. So we can’t wait to see what the limits are for the next generation.
