From: allin
Wiz, a cloud security startup, declined Google’s acquisition offer of 12 billion in its most recent funding round [04:07:34].
Wiz’s Financials and Growth
Wiz currently boasts approximately 23 billion offer from Google represented a valuation of roughly 50 times current revenue and an estimated 23 times forward-looking revenue, as Wiz projects to hit $1 billion in ARR [04:14:26]. This represents an “absurd premium” compared to high-growth SaaS businesses, which typically trade at about 10x forward revenue multiples [04:36:26].
The company was founded in 2020 [04:26:41] and specializes in helping clients secure their data across various cloud platforms such as AWS, Azure, and Google Cloud [04:30:17]. Its rapid growth from zero to half a billion dollars in ARR in four or five years highlights the significant need for cloud security solutions [06:02:00].
Reasons for Rejection
There are two primary reasons speculated for Wiz’s decision to decline the offer:
- Confidence in Future Growth The most likely explanation is that Wiz believes it can achieve faster revenue growth organically [06:31:00]. Recent events, such as the AT&T Snowflake leak, might have supercharged sales, reinforcing their belief in their natural momentum [05:27:00], [06:36:00]. If Wiz continues its current growth rate, it could potentially reach a market capitalization in the range of Palo Alto Networks, which is 15-20 billion is seen as minimal compared to the upside potential [12:23:00].
- Antitrust Concerns Another potential reason is the concern that the deal might not pass regulatory scrutiny [05:03:00], [08:03:00]. Google has been actively seeking to accelerate its Google Cloud outcomes, particularly in the cloud and AI space, and is looking for sizable transactions that can pass antitrust muster [11:03:00], [11:11:00].
Implications for Google and the Cloud Market
Google Cloud (GCP) has shown stunning revenue growth, with a run rate of 4 billion in 2017 [06:50:00], [07:07:00]. It is tracking almost identically in revenue to Amazon’s AWS in its first seven years [07:09:00]. GCP is now a significant priority for Google, generating 1.2 billion operating profit [09:59:00], [10:12:00].
Cloud security is a high-growth segment that offers Google the opportunity to cross-sell and secure more enterprise customers [11:16:00]. Google aims to surpass AWS and become the leader in cloud services, actively seeking other significant acquisitions that can clear antitrust challenges [12:35:00].
A potential risk for Wiz if Google were to acquire them is the possibility of Google making their product free and bundling it, similar to Microsoft’s strategy with Teams or Internet Explorer [13:13:00].