Wiz investor unpacks Google’s $32B acquisition

Google this week completed its $32 billion acquisition of cybersecurity company Wiz – the largest acquisition in Google history, as well as the largest ever acquisition of a venture-backed startup.

On the latest episode of TechCrunch’s Equity podcast, Rebecca Bellan, Sean O’Kane and I were joined by Shardul Shah, a partner at Wiz’s largest shareholder Index Ventures. Shah walked us through his history with Wiz, which extends back 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 takeover target, and how he reacted when Wiz walked away from Google’s previous takeover bid.

“It’s no surprise it’s Wiz,” Shah said. “Wiz is at the center of three directions: AI, cloud and security spending.”

Read an excerpt from our conversation below, edited for length and clarity. Shah started things off by noting, half-jokingly, that we may have undersold the business by calling the acquisition one of our deals of the week.

Shardul Shah: I think this should qualify as deal of the year or 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-funded acquisition in history.

Rebecca Bellan: Yes, we will elaborate on that in the post[-production].

Shardul: And most importantly, it’s no surprise that it’s Wiz. Wiz is at the center of three directions: AI, cloud and security spending. And these are central today in light of the AI ​​era, where every single workload needs to be secured. So we are very proud that we were the largest shareholder in the company. And yes, I think that’s true at least [the] offer of the month.

Rebekah: How long has it been? When did you first invest in Wiz? Because this is the kind of exit I’m sure investors dream of.

Shardul: Is it six years old or sixteen is an internal question for us. 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 that has evolved over time.

Assaf called me on my birthday when he started Wiz. And the seed round is when I joined the board.

Anthony Ha: So we’ve talked about this deal a few times on the show, but since Wiz isn’t a consumer-facing company, I’m guessing some of our readers are familiar with it, and some aren’t. Can you talk a little bit more about what it was – beyond just sitting at the intersection of these really important industries – that you think made Wiz both an attractive investment and ultimately such an attractive acquisition target?

Shardul: At Index, the core of our company is a focus on people. And I really think the core of the acquisition was the people. Assaf is this incredible leader who can make high-quality judgments. He has great intuition about people and markets. Two of its co-founders, Ami and Yinon [Costica]are almost always in conflict – Ami lives in the future, [Yinon] is very much present and Assaf has the ability to really decide which voice, at which time, could take the lead. Roy is an execution machine.

So together they created this environment and culture of trust that allowed them to build a platform from scratch and take over an existing category with unparalleled speed.

Sean O’Kane: There’s a nice history there – nice for us, especially because we got to push them at Disrupt a few years ago, where Google approached the company and [Assaf] essentially walked out of the deal. Does that almost feel like an affirmation for you at that moment, as someone who feels like you’ve identified someone you really believe in and who is willing to take a step that I think a lot of people are afraid to take, in the face of an exit that was so big at the time? Maybe not as big as it is now, but pretty close.

Shardul: Not really. Part of it is probably because I’m being disrespectful and external validation doesn’t matter, despite my insecurity about you describing this as deal of the week.

At one point I said to the founders: I think I believe in them more than I believe in themselves. The first blog I ever wrote for Index was titled ‘Learning to say no’ actually aimed at the founders of Audible. […] When founders choose and make decisions, you rely on input, such as how they make decisions. You don’t really focus on the results and the happiness that comes with it, whether it’s validated or not.

Rebecca: How important was that in the Wiz acquisition? In short, that it gets what it can get from Google: money, access to [Google’s] cloud, and more resources, yet able to maintain its own sense of leadership?

Shardul: So to your point, perhaps for the public, Wiz is committed to securing cloud infrastructure and code in production. Most of their customers are part of what is called a zero-critical club, they have the context to know what to prioritize and take action on. Google’s resources, infrastructure, and the AI ​​talent they have allow Wiz to expand that recognition while maintaining this culture of trust and camaraderie.

Anthony: When we think about major acquisitions, they can be important in several 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 stand to make a lot of money doing this. And then that potentially starts whole new industries, whole new startups.

So if you consider this a major acquisition, what do you think will be the biggest impacts in the coming years?

Shardul: I think it starts with inspiration. I think there is a new imagination about what is possible for entrepreneurs around the world. And that’s great, right?

I’m really proud that there are so many people whose lives will change as a result of this investment, which is really meaningful and satisfying. But I think the talent, skills and ambitions of entrepreneurs are more important. So we can’t wait to see what the boundaries are for the next generation.