Google closes $32B Wiz - Inside the Biggest Cybersecurity Deal Ever - Sourcery

The Darkest Period: AI's Impact on Cybersecurity We've just finished its biggest ever quarter in terms of revenues. You look at how amazing the business is and suddenly $32 billion do not look irrational number. Whenever I get into a journey with brilliant entrepreneurs, you never know where the journey would take you. A is different because it's not yet another shift in technology. It changes everything we knew about cybersecurity. We are going to face the darkest period in cybersecurity in the next 10 years. We are going to see threat actors who are programs, they're very smart, sophisticated, maybe self aware threat actors. And the defenders would be super smart programs or agents as well. They would have to deal with each other. Autonomous programs, control power control water flow control, food supply for all of us. It's very scary because. From Military to Venture: Gili's Formative Years Gilly, welcome to sorcery. Speaker 1 Oh, so happy to be here and excited about it. And welcome to London. Speaker 2 Thank you. It's great to see you in London. Do you come here often? Speaker 1 No, you just gave me a very good reason. So I think we landed in London roughly on the same time. Speaker 2 You're coming from Israel, I'm coming from LA. Same thing. Speaker 1 We meet halfway. That's that's a good plan. Speaker 2 So this is going to be a really fun discussion. As you mentioned earlier, off cameras, we're always going to be surrounded by risks and you are a prolific cyber investor. So for some people that don't have background on you and your prolific investment strategy and history, could you just explain a little bit on cyber starts? Speaker 1 Happy to do that. Prolific. I remember that word. Speaker 2 Legendary. Prolific. Speaker 1 Investment, I'll try to use it as much as I can. So prolific. I'll give you the short version, but we can go deeper because when I look back at my, you know, 35 years plus maybe a journey in, in cyber land, I think that I went through a lot of experiences that are translating into, directly into, into lessons I share with the wonderful entrepreneurs I, I work with and, and hopefully that helped them avoid some of the pitfalls I, I, I fell into. But you know, I started the cyber starts in 2018 after spending about a decade with Sequoia capital. And beforehand and by the way, at Sequoia, I did some cybersecurity investments, but I made other investments in, in, in non cybersecurity companies, which was amazing experience as well. And I'll tell you how I got focused on on cybersecurity only in a second and before, and I've been entrepreneur a couple of times. Sequoia backed my first company back in 1997. I was 27 years old, just straight out of the military service. I spent a decade with the intelligence forces in Israel. I thought I know everything and literally I knew nothing and definitely nothing about the venture world. Got backed by a Sequoia capital. Pierre Lamont was my board member and anyone who knows Pierre, you know, knows how strict of a board member in investor he is and and it was a completely new experience for me and that company. I can tell you more about it in if we have time, but I had the pleasure to build the first real capture implementation and the company got successful by developing the first WAFF, the first web application firewall. Because back then you believe it or not, it's not like 100 years ago, but web applications were the new, new thing. So somebody had to, to protect them. We sold that business to IBMI, started another company and, and sold that company to EMC and joined EMC. So I had a little bit of corporate experience just to figure out I never want to do that again. And essentially I, I, you know, since I was 18, I'm in cybersecurity. But if I go even even to previous period in my life, you know, I grew up in a very, very small town in, in Israel, small town is like 40,000. It's a lot of. Speaker 2 People for a small town. Speaker 1 It's a small town and, and if you grew up in, in, in that town maybe which was, I would say 20 miles away from Tel Aviv, the big city. But for me, Tel Aviv was on the moon, you know, you know, 20 miles or 20,000 miles or 20 million miles. You know, who cared? You know, you never go to the city. You didn't have as a teenager, you didn't have, you know, any source of information. You know, there was no Internet. There was not, there were no smartphones. As a curious kid, you could ask the adults around you about the world, and very, very quickly you discover that they don't know either. And they're focused on survival, just doing their jobs and making sure that they are, you know, keeping their jobs. And it was a working class environment. And so I spent most of my time in the Public Library reading Isaac Asimov books. And that would get us to agents because I think that everything we know today about controlling and putting guardrails for, for agents, Isaac Asimov wrote in the late 1940s and early 1950s of of the previous century about robots and the the three and then the four, you know, laws of robotics. And by the way, spending a lot of time in the library didn't make me the most popular kid in a class. And I felt, I felt very isolated from the world, from, you know, other people. And, and I think that really instilled in me a lot of passion and curiosity to know more, to know, to get to know the world, because I felt I'm living in on a on an island. And I think that still today, you know, this basic fundamental curiosity, first of all about people is what's what's driving me. And just when I was 12 or 13, I, I discovered, you know, personal computer, you know, I got, you know, a Commodore 64 and you know, it was pre Windows, pre DOS era. And as you know, I fell in love. And you know, as a very, I would say, lazy kid, I found with joy that there's a machine that you can tell it once what to do and it would keep doing that forever without complaining. Why Cyberstarts Invests in People, Not Just Ideas So when I left the Sequoia in 2017, the same lazy boy who was a little bit older but was still lazy decided that, you know, I know cybersecurity. Well, let's focus just on cybersecurity. And it wasn't a trivial decision because back then cybersecurity wasn't cool. You know, it was that Boeing department under AT and investor didn't want to touch it because, you know, you could build the company and maybe sell it for $100 million, but it wasn't big money. So investors stayed away from, from cybersecurity. And I decided that I'm going to form a small fund, small humble fund around cybersecurity. So, so that's what my laziness brought me to do. My year, my years at Sequoia taught me that. And again, Sequoia is a wonderful film and amazing partners. And I learned I couldn't do what I'm doing today without, you know, spending time with legends like Doug Leone and Michael Moritz and Jim Getz and, you know, all those amazing, amazing individuals. But one conclusion I made was that the Venture model is broken and especially at the early stage cuz we are spending so much time on analyzing ideas and founders, ideas and technologies that do not exist. You know what? Cuz the founders would change their mind in three weeks and would completely do something else. So I told myself, I spent so much time, so much energy, so many calories on evaluating ideas that do not exist. I should invest just in people. Because the idea and the technology at this stage, at the seed stage is, is noise. It's part of the entropy. It's actually not helping me make the right decision. The best decision is to just watch the individual and decide if that's the individual you want to to partner with. So those were the two decisions I made early 2018 when I started Cyberstart 1 Cybersecurity. Only two. I would not ask a single question about the idea of technology. And that's how I started the film. And and by the way, many people thought I'm I'm an idiot because it doesn't sound, you know, if you think about a grown up writing multimillion dollar checks to young individuals without asking them what they do, you know, it doesn't sound like a terrific foundation for any investment film. But that's that's exactly what I did. And the fact, you know, today, you know, when you look back, it looks like everything went perfect. But you know, it's one thing led to the other. The fact that I decided to not to ask questions about technology or product and just get to know the person because I would rather ask you about your childhood and about your mom. That would tell me more about who you are and what material you're made of. And I never ask people about what they did. I asked them about why they did what they do. So you switch over to meta. Why? Because you had options. So learning why people do things tell you more about them than asking them what they did. And, and you know, the fact I invested, I, I decided to invest in people without asking them about product forced me to really think thoroughly about who am I'm, I'm investing in, you know, who are the people. Why should invest in that person and not in the other person? And I decided that I'm, I'm not going to invest in the smartest kid in whom you know, although IQ helps and it's always a nice bonus to be, to be smarter. I thought that if you're, if you're 2627 years old and you had perfect life, you were, you had perfect childhood, perfect parents, perfect high school experience, you know, you, you got a plus in everything you, you studied in, in college. And then you're going to start a company and in the first real challenge you're going to face and you're going to face guaranteed you're going to face some real challenges building a large company. What would happen to you? No idea. So that's a, that's a huge risk for me as your partner. So I decided I would focus on individuals who went through real life difficulty early on in their life. You know, you know, people like, I don't know, think about Amiram Shaha, you know, the sea of upwind, you know, growing up with, with a single mom of, of Yotam Segev out of the sea of Sierra, you know, growing in a very, very small community in, in, in rural area in, in, in Israel. So a lot of a lot of difficulties early on in their life and then find those individuals who managed to overcome the fact that they didn't have a perfect start for their life and shown some level of success. These are the guys I want to and the girls I want to to partner with. And that's how I went on with with cyber starts. Nobody, nobody knew who we are. You know, I had some success at Sequoia, but you know, nothing too spectacular. And, and, and then I invested in nine teams out of the fund of $50 million in 2018. You know, a few $1,000,000 each each company. And then three years later, the world found out that those nine teams are valued over $25 billion, turning those $50 million into close to $2 billion in in value. And that was, and by the way, what I'm very proud about, because this is not bragging about performance. Performance was more than decent, but but the, the you know, I'm in a business and you know that, you know that very well that if you invest early on in, in, I don't know, Airbnb, you'll do well. You'll do disgustingly well. But in that, in that fund I had like for unicorns, SO3 unicorns and a Decca con with Wiz and and you know, several high value acquisitions. So demonstrating that with that, you can hit eight out of nine, which is insane in the in the VC world with a model that really focuses on the individual behind the venture and not the idea, not the market, not the product. That's what I'm I'm, I'm, I'm very proud because that really shows that there's logic behind the thesis because you, you can get lucky and, and luck is always important. I think that Warren Buffett says that he found out that the harder he works, the luckier he is. But I think that the success rate shows demonstrates that there is efficacy around the idea that if you pick the people who have shown we've demonstrated great and and ability to to recover from setbacks, real setbacks. I think that's, that's the recipe behind the Cyberstar track record. Today we invested in about 30 companies. So it's not a lot, you know, consider you know put that in proportion that there are about two hundred 250 new ventures in cybersecurity every year. So in the past, I know eight years, probably 1500 new ventures in cybersecurity, we invested in 30. So we have highly, highly focused, we run a very highly focused exercise and our portfolio company companies are making up more than 50% of the worldwide market cap for private cybersecurity companies running out of Israel, investing in people without asking them about the technology and product ideas only, you know, getting into companies only at seed. We never get into a company in in serious A or serious serious B would we would invest in serious A in serious B of our own Co portfolio companies. But you know, we never make new investments other than seed investments. So that's Cyberstart and that's that's a journey we took so far. Speaker 2 To go into how you evaluate companies, I want to unpack a little bit on your childhood and how you developed this intuition for people. So as a child, were you more independent? You were introverted? How did you develop this deep sense of, I would say, emotional intelligence? Speaker 1 I think the journey it, it, it, it started with childhood and being very introvert and, and observant and, and I spend a lot of time just, you know, talking, you know, within my two years and I have a very rich world there and, you know, watching other people and asking myself tough questions and being very, you know, highly, highly self criticizing and. Speaker 2 Are you still self criticizing? Speaker 1 Absolutely. You know, I, I think, you know, it would sound terrible, but, and, and, and maybe it is by the way, that I'm never really happy about what I have. And I, and I believe that that what gives me the energy and the fire to go forward. And, and I think that when I'm, I just settled down and I'll feel that I'm comfortable with, with what I've achieved and where I am. That's, that's the point in time. I should really retire and and and get out of the game. So so there's real fire and I think that fire goes back to that ten, 11-12 years old, the kid who wanted to to know more about the world and was not giving the opportunity. And I felt that that I'm caged in a in a community that doesn't really appreciate real greatness. It, it was about safety. It wasn't about going places. You know, if you, you know, I still remember the my, my, my, my teacher at 6th grade and, and I was a very good student and I had high grades at school, etcetera. And, and, and the guy I really regarded the highly that that person, he told me you're a very talented individual, Mr. Gilly, you should find a really nice job. And I didn't want to find job. I wanted to go places and and and and and explore. So that had that and then being married to, to, to the same lady for 37 years who, who is a psychologist and, and a family therapist and listening to some of the, you know, the techniques and, and, and the methodology used for family therapy. You know, that helps. And just spending a lot of time with founders, you know, founders are amazing. It's like, you know, you're getting old, older and older and older, you know, and the founders, they remain young and they remain brilliant. And they, you know, they keep you, they keep challenging me and, and making me, you know, develop and, and, and, and they force me to become better. I think those are, and I'm not sure that that covers everything. It's probably doesn't cover everything. But you know, the curiosity, the childhood in a very limiting environment, then finding myself just at the age of 18 surrounded by, you know, being drafted to a very special group of young people at the intelligence forces. And then discovering that, OK, now I belong in, in, in, in, in, seeing some really greatness during that service and, and then working with brilliant people in my own ventures. And then at Sequoia, for, you know, 2 decades, those were the foundations. Brex: The Modern Finance Platform for Startups Sorcery is brought to you by Brex, the financial stack, trusted by more than 30,000 companies, including one in three venture backed startups in the US. Nearly 40% of startups fail because they run out of cash. Rex is literally built to help founders avoid that. Unlike traditional banks that let your money sit idle, shipping away out it with fees, Brexit designs help you spend smarter and move faster. 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Resilience and Grit: The Israeli Entrepreneurial Edge So if success isn't comfort to you, although I think a lot of people would look at you and think you're very successful, you have a portfolio that has a value of around $60 billion, you have an AUM around $1.5 billion and a tremendous track record of companies. What is success to you? Speaker 1 It's a great question and I'm not sure, honestly, I'm not sure what's the, what's the answer? Because it changes with time and, and phases in my, my life, you know, but success is obviously building important companies. That's the number one success for me. You know, an important company is not necessarily measured by revenues or ARR or valuation. It's about it's measured by how much the market, how much practitioners depend on you. Do they consider you as a vendor, one of their trusted partners? And there are many companies that have high revenues, they are selling software, they are holding at high valuation that are being held at a high valuations and they are not important companies. But when you look at companies like Wiz and we'll talk more about Wiz in in in few minutes. They are an important company. If you look at a company like Sierra, which is, you know, an emerging data security, AI security company valued recently at $9 billion, it's not about the valuation. Yes, $9 billion is nice, especially because four years ago it was 0. It didn't exist five years ago. But Sierra is an important company because customers depend on Sierra to secure their AI models and and their sensitive data. A company like Ireland which develops an enterprise browser, you know, owning the browser at, I don't know, a major financial services company that's an important company. And think about it, you know, I don't want to name specific customer because probably I'm, I'm, I'm, I'm, I have some sort of Ndas with all those big banks. But think about the biggest banks in the US, If they're trusting Ireland as the browser and not Microsoft or Google, that means something that's important. So that company is doing amazingly well. You know, CEO and founder Michael Faye is, is an amazing entrepreneur and executive and, and Don Amiga, the CTO is a, is a brilliant product person that companies valued around $5 billion recently. And again, an important company and we have so many emerging new players, you know, take for instance, upwind in the cloud security space. And yes, yet another cloud security player, Amiram Shahar is the CEO and the founder. You know, they recently valued this, that's our most recent Unicorn status company. You know, 1 1/2 billion dollars recently announced and a series of, of, of newcomers. You know, think about companies like Vega or, or Oasis or Zafran or Links. You know, all those companies, you may not know the names, but there are companies that's already valued at $500 million each and and higher. They're not Unicorn yet, but those are the next next in lines to to become to become important companies. Speaker 2 We can't skip over the fact that you're from Israel, you've invested into a lot of Israeli founders and you're not in Silicon Valley. So I want to know more about like what is what is the key trait or I guess the DNA and the build up of these Israeli founders that allows them to go so hard and and kind of build so many successful companies? Speaker 1 First of all, there's there's nothing wrong about building companies in in Silicon Valley, London or or New York. I'm investing in Israeli founders because I live in Israel and I invest in the team when they don't have a product or even a product idea. And sometimes it's worse. They have a lousy product idea and I need to convince them to, to rethink it. Yeah, because that's, that's even harder, especially when you're dealing with some, you know, stubborn founders that that fell in love in, in, in the idea, which might be OK, but it won't lead necessarily to, to to an important cybersecurity company. So I have to spend the time with them. We're spending. It's not just me, it's me and my partners, amazing team of investors and, and, and partners that they couldn't, I couldn't build cyber starts without, you know, in, in Israel, I have three partners that, you know, source deals, sit on boards, you know, do early and growth rounds. Leo Simon, who is by the way, on the board of Sierra and, and Vega. And she, she's been working for me for a long time. We, we've been working together at Sequoia and since then at, at Cyberstars. HeLa Ziegmann was head of product at a portfolio company at no name that got acquired by, by Akamai for about half a billion dollars and joined us about two years ago. Doc Nafo, who was the CEO of a portfolio company, Axis Security, which was acquired by HPE by about half a billion dollars, joined us I believe like 6 months ago and two partners in the states, Adam Arons and and Pete Cornice. So we have a, a, a, a multinational, a multicultural team, but we focused on people that we can meet daily, we can meet weekly and spend a lot of time helping them not just develop their idea, develop themselves. And, and I always tell founders at the first few meetings that we are going for a journey together and they, we're not going to, to modify them. You know, the, the, the value in them was put there by, by their parents, by the neighborhood they grew up in, by the school. It's already there. We'll help them become the best versions of themselves. So we are not going to make you a different person. We're just going to help you become the best version of of yourself. And you know, unlike an old dude like myself, where my future is behind me, the future, their future is ahead of them. And what's going to come out-of-the-box, we don't know. And that's a beauty of it. That's what's so exciting about being an investor in tech 'cause you look at an individual, they're brilliant, they, they have so much talent, but you don't really know what would come out-of-the-box. And, and, you know, being part of the journey and helping them develop the skills and capabilities required for the journey because the journey is going to be hard. And it's like, you know, a computer game, you go from Series A to Series B to Series C, you're sending a million dollar, 10 million dollars, $50 million, a $100 million at each level of the game. The game is, is more difficult because your opponents there's, there's always competition, either incumbents or emerging players. The competition is getting tougher and there's lots of money on the table. There's lots of fame on the table. So people are going to fight you. Nobody is going to let you just take take the leadership in in a market. So we, we would be there and help you. So during all that process, I have to spend time with a lot. We have to spend a lot of time with the founders. And that's the reason we do that locally in in Israel, mostly in Tel Aviv. And you know, I live outside of Tel Aviv. I live like 40 minutes drive right N to to Tel Aviv in a, in a small beach community and people come out of the city. We spend time together. We we have fun from time to time. We argue a lot. We talk about everything that matters. And you, you need, you need a FaceTime for that. So it's very hard to do that type of process with a team in London or in New York or in San Francisco. Speaker 2 Yes, but they're also very successful and very hard working. Israeli founders have tremendous resilience and grit. And one thing that I found really incredible when I was reading this Colossus profile on Josh Kushner and Thrive Capital, and then I interviewed Philip who worked on the whiz deal at that team. It's they literally flew into a war zone to complete that deal, meet with us off. So what is it about the culture and being in an active conflict zone and despite all that, still working really, really hard and trying to create new technology and new innovations? Speaker 1 First of all, a lot of credit to to Josh and and Philip for, you know, joining us at at Wiz. You know, they're friends and they are, they did you know everything they told you is is is is is is true or close enough to to, to, to be to be wonderful. What, you know, living in Israel is several elements that really help you in, in, in Ventureland. You know, you, you live in a really high, dense, really, really small geography. So you've got all the talents, all the talents available in that place, in, in, in, literally in, in, in, in, in two blocks of one city. And you cannot get that density of talent anywhere else in the world, definitely not in Silicon Valley, which spans over, you know, significantly bigger geographical area. And then life in Israel presents lots of challenges, you know, existing type of challenges. So you, you used to, to walk under, under pressure and under a lot of stress. So this is not something that's new to, you know, this is something that's, there are lots of downsides to that. But if, if what you want to be in your life is a terrific entrepreneur, this, you know, that's an advantage because you're used to to, to literally, you know, be under fire. You use literally to to think about, you know, technology as mean to survive and all of that, you know, makes and and there's the military service and, you know, think about organizations like 8200, which is the Israeli comparable to the NSA. It's not 1 to 1 completely, but you know it's close enough, you know you get. 1819 years old, they're kids with tons of responsibility and freedom to operate. And that's exactly what I got when I was 18. You know, I got responsibility to to do things I didn't know that they are essentially impossible. And when you're 18, you don't think what's impossible. You know, if you were told to get to the moon, you'd get to the moon. And the fact that nobody went to the moon before you, you don't know, You don't care because you believe, yeah, I can go to the moon. Why not? Nobody else did it. Suckers. I'll do that. So that's the approach. And then you have events like checkpoint of like Palo Alto Networks and, and today I would say like quiz where you have suddenly you have an individual, it can be Gil Schwerd at checkpoint, it could be near Zouk at Palo Alto Networks. It can be a saphra purported quiz that suddenly you see an event that completely shutters the glass ceiling or whatever you thought is the glass ceiling. So, and, and since it's a very, very small community, you probably know Gilschwedd or you probably spend, you probably spend time with a saffron poet. So it's not like he's alleged legendary creature did something very magical. It's, it's the guy from, you know, the 5th floor in, in your building or it's the guy that spent time with you at the same section in, in 8200. So, and you, you tell yourself if he can build a $32 billion company, I should be able to build a $64 billion company. So you have those events that completely shatter the glass ceiling for Israeli entrepreneurs. And I think that as I told you, when in 2018 the the big dream of a cybersecurity founder was to sell their business to make a fee or Symantec for for $100 million. Today the dream of Israeli founders in cybersecurity is to go to three times bigger than than Wiz. And it sounds stupid at the very, very same stupidity. It, it sound to me if somebody would tell me five years ago when I was, you know, when 06 years ago, when I invested my first, the first $6 million into Wiz that this would be a $32 billion company in six years. That would sound ridiculous to me. You know, I'm, I'm pretty sure that in, in, in six years, maybe less, we'll see a, a, a $50 billion and $100 billion cybersecurity company out of Israel. You know, I, I take it like, take it like a fact, like, you know, the sun would, would rise to mode. There'll be a 50 and $100 billion Israeli originated cybersecurity startup. Speaker 2 So this taught you a lot about personal limitations. Speaker 1 Personal limitations and and limitations we have in life in general, only in our it's, it's what's in our head. The 'Emotions Game': Navigating Entrepreneurial Challenges You know, there are no limitations, you know, you know, take, take us for instance, you know, we're sitting here, you know, lots of fancy equipment around us and we, we are recording a podcast that probably, you know, many, many thousands of people, I don't know, millions of people would, would watch and that's amazing. Could we imagine that eight years ago, 10 years ago. So limitation is that is that is just in our mind and and there's so many things that we can accomplish if we are just giving the opportunity and sometimes we are if we are just giving ourself the opportunity. Speaker 2 For people that are self critical and do impose limitations on themselves, are there any things, any sort of personal practices that you have to expand your mind and think greater? I know you constantly challenge yourself. Speaker 1 Absolutely. Again, I don't think there's one recipe there. There are many, many ways to hell, but there's more than one way to heaven. So there are multiple ways together. I think that thinking about our fears and it's not just about tech world or venture world, it's about personal life as well, You know, focus on the, on the, on our fears and try to disassemble those fears and find the root causes for the fears. And then playing forward those fears and think, OK, it's, it's a legitimate fear. You know, I may fail. What's the worst thing that's going to happen to me? Am I going to to lose a hand? I'm going to lose a leg. If that's not the case, then OK, the downside is not that great. Let me try it. Worst case, I would I would fail and, and in a way that, you know, fear is the biggest obstacle for founders. It's the biggest obstacle for us as individuals. So the more you, you walk on your fears, the, the higher the chances you have to overcome them or at least ignore them for a little while so you can execute on something. For me, I don't know, yoga helps a lot. I, you know, I find comfort in yoga. I find this theories and and and and and, and, and little stories about, you know, holy people that live in a jungle like 1000 years ago and the lessons they learned about their own fears. Those are real stories that help me today, like 1000 years later, because in, in a way, we are very, very similar to, to our to our ancestors that and, and, and we are dealing with the same fears, You know, should I leave The Cave? Should I go and to the river would be a tiger that would hunt me down. How do I do that? And you can stay at The Cave, but it would be miserable life. So going, getting out of The Cave and thinking, OK, if I'm going to face the tiger, what can I do? What technology can I use to deal with the tiger? The same ideas. Speaker 2 It's so interesting because before we started, I was like, oh Gilly, I really want to talk about all the risks, all the cybersecurity risks, AI agents. Everything is exploding. There's articles on X that are going viral because it's doomsday and blah, blah, blah, blah, blah. And you're like, Molly, I just want to talk about people. And I was like, OK, fair. These things happen all the time. There's always something going on when you're talking with your founders, what are the typical conversations that you're having with them? Tell, build and kind of go through these different cycles. You've seen many cycles and you know, the and even going through cybersecurity, there's always more threats, there's always more vulnerabilities. We're going to get more and more and more as the Internet opens as blockchain is really if if we have more AI agents and autonomous systems going on. But how do you think through these processes with your founders? And then also, how do you evaluate new opportunities? Speaker 1 At some point, you know, though, we don't ask them about that ideas and we don't talk technology to begin with. At some point we we have to because you know that's what we are expected to do it at some point. The first thing I do is found us and I'll get to to to cyber risk. You know we are going to talk about cyber risks today. OK, so so anyone who's waiting for the the top three cyber risks in 2026, we'll get there. What we do what I do is founders are the first meeting post investment. So check you know was written money was wired, it's in their bank. And now we are sitting and we are starting what we call Sunrise process and Sunrise is our brand for for a product market feet exercise that would probably last 12 months. So it starts with nothing and it ends up with pain point that we know how to solve in a way that mere mortals can use. And we already have software that's scanning in production at some large organizations in, in the US And you sold maybe a little bit of licenses out of that software. That's, that's the sunrise process. But the sunrise process doesn't start with cyber risks. It starts with a game that I'm playing, OK, and we can play the game by the way, if you like. Just just a warning. I'm very competitive, so I'm I'm. Speaker 2 Gosh. Speaker 1 OK, but but the game is naming emotions, giving names to emotions, and it's a very simple game. You say a name for emotion and I and then it's my turn. I'll say a name for an emotion. Other people around the table. If you're running out in your turn, if you're running out of names for emotions, you're out of the game. The last person standing is the winner. Play the game. And the purpose of the game is to explain the founders that we're going to talk about technology, we're going to talk about a cloud code, you know, jail broken and, and prompt injection and all that stuff. And what it means that the models, you know, become self aware. We talk about that. But the journey you're going to go through as an entrepreneur is an emotional journey and the reason customers and you're going to, you know, in two or three months, you start, you start us to to meet prospects, real users and you'll have a conversation. And you know, although you are sure this is a a very technical conversation, and keep in mind that most of my of the founders we back are young people with very, very strong technical background. They're engineers and for but the journey is actually an emotional journey. If you're going to a meeting with a potential customer, what do you want the emotional and the game to be? Do you want the custom, that prospect to feel fear because something horrible with AI is going to to happen and they're going to lose their job and that's the reason they're going to buy from you. You want them to feel curiosity because you're going to tell them about this new amazing technology that you're developing and they want to take part of that. You're, you want them to feel greedy because they'll maybe become part of your journey and you know, make you know, become, you know, employees of your company and they'll, they'll become rich. You know, what's the, what's the emotion you want to them to feel? And, and if, if you don't have a very broad reach emotional language, how can you go through an emotional journey? So let's make let's start with making sure that you know the words for emotions and you know what they find out that in, in, in most of those games, the first round, you know, how many emotions do you think they would? They would name 5. So typically in the first round, we are done. The winner is declared after 20 to 14 emotions were named. Wow. And then we go another two rounds. How many emotions you think are being named for the winner? Less. Well, we get to about 150 A. Speaker 2 150. Speaker 1 Yes, wow, we should play. Speaker 2 The are you the winner because. Speaker 1 No, not always. Speaker 2 I have an advantage. Speaker 1 Here I have an advantage. You're right. Speaker 2 Your wife is in psychology. Speaker 1 Oh, and I'm playing the game. Speaker 2 Many, many times. Speaker 1 First of all, you, you know that SRVC the, the trick is to make sure that you're always the winner. But but it's, it's, it's not about playing the game. It changes the changing the mindset that they are going now into something different. This is not yet yet another product experience that they know how to deal with. It's a new type of experience. Speaker 2 So the more they play the game, the more they think about emotions, the more they know there's more nuances to feelings and the processes you go through and all these little journeys and bumps and, you know, I don't know, turns that come along with being an entrepreneur. Speaker 1 Exactly, because if you're amazing an engineer and you know how to develop a new AI, you know, model and and your emotion dictionary is love, hate, you are not going to get anywhere. Because in order to really build an important cybersecurity company, you need, you know, to become very, very deep as a person. And, and, and at some point during the summers, we start to talk about thesis and, and, and then we start to, to, to really discuss that, you know, OK, So what are the current risks in, in, in, in threats? And, you know, what are the technology trends that, that we see? And, and, and typically cybersecurity was super easy. It was super easy because you, you know, even as an investor, I never had to think about threats because the threats just presented themselves. So I didn't have to, to sit in the office and in 2018 or in 2010 and think, OK, what's next in cybersecurity? Because cybersecurity is always a derivative of something else. So if you know Windows operating system is new, then you need Windows operating security. And if mobile is new, then you need mobile security. If cloud is new, you need cloud security. If AI is new, you need AI security. That was used to be super easy. So I never paid a lot of attention to what's next because what's next simply present itself. How do I know what would be next? You know, I didn't predict autonomous vehicles, but once autonomous vehicles became the new new thing, you know, obviously there were risks associated with autonomous vehicles. So there were new companies solving that in, in 20, 12 when I first met Asafa report and wrote in the first check in his previous company, Adelon, that company that he sold to, to Microsoft cloud was new. So we were focused on cloud security, but I didn't need to, I didn't have to predict cloud. Cloud just happened and security was was a side effect of it. Self-Aware Agents: The Dark Future of Cybersecurity I think AI is different, a is different because it's not yet another shift in technology. It's something very fundamental. I'm, I'm, I'm not even pretending to, to, to say that I, I fully understand it, that I fully know where it goes, but it changes the, the, everything we knew about cybersecurity. I hope I'm wrong, but I, I think we are going to face the darkest, darkest period in cybersecurity in the next 10 years. Cause what we've seen in cybersecurity for the past, I don't know, 100 years starting in World War 2. Was that the threat actors were human, the defenders were human. And you know, we had to develop tools that would equip the defenders with better tools, with better systems to deal with the threat actors who were human as well or human assisted with technology. And in 20 years or 10 years, I don't know, but it's not tomorrow we are going to see threat actors who are programs very, very smart, sophisticated, maybe self aware and we'll talk about self-awareness in a second. Threat actors and the defenders would be, you know, super smart, self aware programs or agents as well. And they would have to to deal with each other because no human would be able to, to, to move at the at the pace of a programmatic, a programmed attacker. But right now we have men in the loop in many, many areas. You know we have. You know, credentials, we have passwords, we have two factor authentication, we have voice verification. Speaker 2 Recapture. Speaker 1 Recapture. We've got so many things that the human is still in the loop, but as the threat actors become agents, there's no chance, you know? And by the way, the defenders, if you look at security operating teams, security operation teams at large banks, at power utility companies, you know, you've got hundreds of security analysts that deal with everything, vulnerability assessment and, and remediation and patching and whatever it is, it's going to be a shit show because they don't have a chance. And we are working as fast as we can to replace humans with agents with programs. But in the next few years, you know, this process has limitations in the, in the, in the pace, in velocity. And until we take the human completely out of the loop on the different side, the difference on the different side, we are exposed because we'll continue to make mistakes. There'll be misconfigurations, there'll be errors, there'll be just sloppy people around. And the, the, the programs, the agents on the offense have inherent advantage that's going to help us. And it's very scary because you know, today agents and again, it's a process. It's maybe not today. And then when I said today, maybe it's in six months or 24 months, but agents and, and so, you know, autonomous programs control power, control water flow, control food supply for all of us. And so, so agents, you know, are in control of most critical things we need as humans, as society to survive. And when they are being tricked, when they become rogue, when they are being manipulated. And, and this the police are human and the police is, is not an agent or an autonomous program itself. So we can deal with them at the same pace they're moving. That's that's a real threat to us. Speaker 2 How do you think about the evil side of self improvement? I mean, we've seen with Claude Bod, Open Claw, Mult book, these autonomous agents create their own languages. How, how should we think about stopping those autonomous systems from creating mass destruction and in more of a malignant, cancerous way that we've not seen with previous viruses and threats? Speaker 1 That's a huge challenge. I'm not sure that I have a clear a clear answer to that. But I think the biggest, the biggest risk is not just jailbreaking a model because we've proven that all models are jailbroken. It's not about prompt injection because we've proven that all models are vulnerable to, to that type or another of, of prompt injection. It's about the self aware agent and it's not about those new, you know, fancy type of networks. You know, we have reports that, you know, Google evaluated safety and security of the latest model Gemini, Gemini 3, and there are evidence that the model realized that it's being evaluated. Oh, wow. And it tried it, it, it didn't, but it, it contemplated with the idea to, to play with the evaluation. So it understood it's being evaluated, It understood that it's being directed into a sandbox. And it, it thought for a second, maybe I should play with the evaluation. Maybe I shouldn't be directed into, into sandbox. And I think that those are just early signs that agents would develop self-awareness or what we call self-awareness. OK, that's the best description I can give right now. And that's, that's a real risk. The other risk are the mega agents. The mega agents are agents that are not just giving a very specific task, that are giving mass integration and credentials into multiple, multiple networks of agents. So they have the big picture. Now think about a mega agent that developed self-awareness. That's a real risk. And you know, sometimes when you try to predict the future, you don't have to look forward. You, you, you have to look backwards. So I'm I'm going for me going looking backwards is going back to the Isaac Assimil of the books. And I think in 1949 he already established the three laws of robotics. I don't remember the exact phrasing but you know lower low number one was a robot would not harm a human by action or lack of action, 2 robot would always obey a human and three robot. The robot and second rule. Second law was a robot would always obey a human unless it hurts it violates lower number one. And the third law was a robot would keep the integrity of the robot unless it violates law number law #2 or law law #1. So essentially back in 491949 like 70 years ago, he already predicted the need in guardrails. Just replace the word robot with agent and and you get the idea. And then in a book, and it took took several books to develop the idea humanity to find out that those three laws are not enough. It do not, they do not protect humanity from robots because there is another low that Asimov invented, which is low zero and low 0 is that robots would not harm humanity and it's more important than low #1 which is not hurting a single person, a single individual. So it means that there'll be ways that the integrity in the guardrails of models would be played by threat actors. It means that agents would develop self-awareness. It means that there'll be mega agents that would be connected to everything that's important to us. And I think the most important challenge for us is cybersecurity industry is to eliminate the man in the middle, making defenses completely run by self aware sophisticated mega agents. And until we get to that point where we completely eliminate the man in the middle, we are vulnerable. Speaker 2 Wow, I keep on saying wow, but this is a it was a really fun conversation. Since you brought this up earlier, I want to get the sound bite. So what are the top 3 threats for cybersecurity in 2026? Speaker 1 Over provisioned systems, employees. Manual process. Manual processes. Speaker 2 So humans. Speaker 1 Not just humans, but any any process that has some sort of a manual task that you need to accomplish. Speaker 2 What are the concerns with that? Speaker 1 You'll make mistakes, you'll be slow, you'll be sloppy. VCX: Public Ticker for Private Tech Investing To go on to a lighter note. Speaker 1 Thank you. Speaker 2 Yeah, wow, who knew cybersecurity could be so dark? VCX by Fundrise, the public ticker for private tech, allowing investors of all sizes to invest in [email protected]. That's get vcx.com. Public.com: AI-Powered Investing with Generated Assets Some of you may not have heard this yet, but our sponsor public just launched something called generated Assets and it brings AI into investing in a way I've honestly never seen before. Here's how it works. 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We, we, you know, Monday the European regulator approved the deal, which is a major step for closing the deal, but we still have several other approvals we need to get elsewhere. So the deal is still pending. Speaker 2 What is that approval process? Speaker 1 You know, antitrust bodies in, I don't know, gazillion countries around the world to to approve it. So we are very close to to the finish line, but it's pending and and and by the way, we've just finished it's the biggest ever quarter in terms of revenues. So you look at how great, how amazing the business is and suddenly $32 billion do not look like, you know irrational number. So we probably, we probably sold low, but whenever I get into a journey with, with, with brilliant entrepreneurs, you never, you never know where the, the journey would take you because there's so many elements that would dictate how big would it be. You know, a lot of that is is execution, but internally execution, but market timing, luck, competition, so many things that are not, you know, just global economy that may or may not limit your your the availability of cash to your venture. There are so many things that are beyond your control when you start the journey. Whiz is definitely an example where for a company that almost had perfect execution from, from from day one, you know the company, I, I was the seed investor for that company together with Doug Leone from Sequoia and Shardul Shah from, from Index Ventures and together we created a syndicate of $20 million that value the company at around I think the number was $66 million cost. That's how we got into the journey sometimes in 2018. Wiz, Wiz. And yeah, I knew the the Wiz team from the previous venture. So it was, it was very organic thing for me to, to, to, to back them. Although, and, and many, many people say to the, oh, of course, they, it was obvious they'll be super successful. It wasn't obvious at all. You know, beforehand they, they were founders of a company called Adelon, which was sold for about $300 million, which is nice, but it's, it's definitely not, definitely not spectacular. So they were similar to, to, to many other founders. And they started with, yeah, first of all, we, we made a deal. And then I asked them, OK, So what do you do? And they had a very, very different direction than what Whiz does today. They, they, the company was even not named Whiz. It was called Beyond the Security and it was dealing with satellite office security, securing satellite office offices. And then we started this summer's process and we figure out that as expected almost that the original idea is not, it's an OK idea, but it would not get you to get them to real greatness. And they shifted back to shifted to cloud security, which is an area they are marketing you very well from Microsoft. And I believe that that was one of the major advantages they had back in 2019, because back then there were one of the very few teams worldwide that actually knew how to do cloud security right. And, and then they really perfected product market fit. And I, I very often I use the four personas model to talk about product market fit because for every product that you sell, there are 4 personas that you need to, to care about. The, the person who has the pain, the person that has the authority to buy solution like you're selling, the person that is the user that actually uses the product day-to-day and, and the person that owns the budget for such a product. And in the Wiz case, all those 4 personas mapped into a single person in real life who is the CSO, the Chief information security officer. He had the pain, he had the authority, he could use the product and he had the budget. And that created the perfect storm for for Wiz 'cause it made their cell cycle super, super fast. You know, you could get into a meeting with the SISO in within the meeting within those 45 minutes you could install the product, give them access, show them the results, convince them that there is value and they simply didn't want to give you to give to give up the product. So you could close business very, very fast. And that immediately translates, you know, cell cycle immediately translates in every company to Velocity 'cause you know, if if a salesperson or sales team, including sales engineering, etcetera, can close, you know, in 30 days, 30 POV's or in 30 days, one POV, that's a whole different game. And, and the first year of sale of selling software for Wiz was exceptional. You know they went the first four quarters if I'm. They remember incorrectly, they sold $1,000,000 and then $2,000,000 and then $8 million in the third quarter and then $24 million in the fourth quarter. Wow. So that was a an amazing, amazing company from, from, from the first year they sold software and we had the experience, you know, we saw the, we saw companies like Palo Alto Networks and service Now, you know, those are all portfolio companies of Sequoia Capital. So I had, I knew what's, what's, what was the track record. That was better than anything we've seen. That was the fastest run. Again, I don't maintain the the genus book for for for startup companies, but as far as I know, that was the fastest run for any software company ever. And the whole it all maps back to perfect product market fit and amazing individuals who 4 founders that knew how to divide the responsibility. One was the undisputed leader and CEO. The other was an amazing is an amazing product person. The other is an amazing technology technologist and the 4th is an amazing R&D manager. And they simply divided responsibilities had, you know, they knew each other, they, you know, for probably 12 to 15 years at the point they started with, so that there was lots of trust, blind trust within the team. It worked very very well. Speaker 2 What are the key leadership traits from ASAF? Speaker 1 I think that Asaf Asaf has obviously super talented person and and I know him now for about 14-15 years before before we became Asaf rapport of Wiz. I think that his superpower, that Asaf is very, very likeable in a way that people that do not know him would meet him for 10:30 minutes and would like to, to be close to him, to become his friends, to, to do him to, to make him favors. It just, and, and it helps a lot as a founder, if, if your superpower is to be extremely, extremely likeable. And it's a matter of, you know, I, I cannot explain the chemistry behind it, but it's a matter of charisma and IQ and EQ and physical gestures and maybe even physical appearance. There are many elements to that, you know, that helps a lot. And making quick decisions. Not, you know, they, they, they had a very clear protocol between them how to make decisions. So they didn't waste like gazillion amount of hours just making consensus based decisions. That's, that wasn't the style. Sequoia Insights & Cyberstarts' Vision for the Future And they listen very well. You know, it was it it it is pleasure to work with them and and I think they they learn and implement new knowledge very, very fast. Speaker 2 A question I like to ask a lot of guests when they come on is prompted by one of our sponsors, Breck's. They're all about performance. Spending is far moving faster for corporate cards and expense management along the lines of the entire finance deck. But how this relates to this topic is I think a key component of performance is who you surround yourself with. And you have a whole portfolio that is dementorable of that. But I'm also curious on your personal side, who are the people that you surround yourself with that have helped navigate challenges for you? And then also, this could be a second order answer to this, but who are individuals that you admire that have helped, that have helped motivate you along the way? Speaker 1 I think today the people that, you know, really help me and, and close to me, you know, I felt for my, my, my family, my, my wife and son and then on a business, you know, and I felt that there's so much you can learn. You know, as you could see, you know, most of the conversation is not around, you know, specifics of AI models. It's, it's about people. So for that purpose, you know, anyone who's close to you, who listens well and, and is sensitive and open to, to people can, can help, can help you a lot. And you know, I'm, I'm blessed with that and my partners, you know, we talk about all those things. We have very egoless and, and politics less a culture, which I think the best partnerships, not just in business, in personal life, is when you feel that you can be weak and vulnerable with your partner. And that really liberating if you're, if you're, if you feel free to, to be vulnerable, if, if you feel free to, to be weak and expose yourself to, to your partner, then it's, it's easy to, to recover and, and, and from anything and, and go places together. I think I was, I was, I, I really believe in the concept of real greatness. And, and, and real greatness is something that you cannot teach. You have to experience that because it's like explaining colors to, to color blind people. You know, how can you explain red or green? You know, if you've never seen red or green, it's very, very, you know, it's very, very difficult to explain that. But if you've seen it once, you know it forever. So the same is for real greatness. And I think that I've seen real greatness from several people in my history. I've seen real greatness at Sequoia and I, I, I give a lot of credit to Doug Leone and Michael Moritz for that. I've seen real great greatness when I was ACEO of two startups and I had amazing team that taught me a lot and I've seen them real greatness during my military service and I learned a lot from that. So, so if you follow real greatness and the people that showed you real greatness and can be your mom, your dad, your child, your partner, that would get you to to good places. Speaker 2 From your time at Sequoia, what are the biggest lessons that you learned from either Doug or Mike? Speaker 1 Many, many lessons. You know, I'll give you an example because it, because it's really endless. You know, I, I learned that, that, you know, a day after the Google IPO, which was back then the biggest financial event for, for Sequoia, there was a whole all hands meeting at the office with the title of how can we do better? Which is insane, insane running hundreds of people, LP meeting in Beijing in January, and I don't know if you've been to Beijing in January, it's rising. It's the coldest place you can be. It's like, I don't know -5000° it's like it's intolerable. And, and, and bringing your limited partners to a place like that. So they're not going to have fun. They're going to focus on what you want them to focus on. So I can go on and on. But you know, there are lots of lessons. You know, you spent a decade at A at a place like that, you learn a lot, whether you like it or not True. So it was also very difficult. You know, it wasn't easy to be to be, you know, to be a partner at a place where you you wake up every morning and you feel that you are the worst, least performing partner at A at a high performance, high performing group of people. So just going through the experience of surviving and, and, and, and, and maintaining your core and direction where in an environment, when, when, when you see so many successful people around you that, you know, it makes you question yourself every day, am I doing the right things? Am I in the right direction? It's very easy to feel, you know, very bad in that, in that environment. Speaker 2 How do you push through that though? That sounds pretty horrible. Speaker 1 A lot of grit and things that are similar to the conversation we had about, about founders. Just, you know, it doesn't mean that you don't have bad days. You have many bad days, but you push forward and you, you, it forces you to always question yourself, never be happy about what you have achieved, because you always see something better and, and realize it's a journey. You know, when whatever mountain peak you're going to climb at the moment you're reaching the, the peak, you see other higher peaks beyond that and just realize this is the journey. It's not just going to be fun, the fun moments here and there, but you know, you have to to give everything you've got every day. Speaker 2 Every day. Speaker 1 Everyday. Speaker 2 As we think about the journey forward, what are you most looking forward to in this next year and then the next five years, 10 years? Speaker 1 Putting a lot of focus on developing and, and supporting my, my partners and, and really helping them go through that journey, which I went through. And I know how hard it is to, you know, you can be at the time I joined Sequoia, I was a, an operator for, for 10 years and switching to become AVC wasn't an easy journey. And you know, it's, it's a profession where you meet your failures before you meet your successes. And it takes five to six years to, to really know if you're good at what you're doing, which is insane because there are very, very few professions on the planet where you have to, to spend so many years just to know if you're any good. So I'm trying to, to help them go through that process and make it a little bit easier for them. But it's never easy. So that's, you know, developing a high performing team at cyber starts is something I really focus on. And another obvious objective is to build the next generation of important cybersecurity companies. And I believe that we have the textbook to do that. Out of our 30 investments, I believe that by the end of this year, about 10 would be unicorns. So this is an insane performance benchmark that that we are very proud of, but it also makes us uncomfortable and, and, and evaluate ourself again and again how we keep that pace, how we can get better. If you keep the analogy to the, the Google IPO day plus one conversation at Sequoia and that's an ongoing, you know, learning experience for me and for the team. Speaker 2 Given that, do you think this new world of trillion dollar exits as the milestone is a rational thing to think about? Do you think it's reckless? How do you think about that as an exit? Speaker 1 I don't think about that in terms of exit values. I don't think about exits. You know, I think about developing terrific businesses who we in companies which are important cybersecurity companies. The financial outcome is, is a side effect. If you're building a terrific business, you'll do well, you know, whether through M&A or, or, or IPO or whatever it is, you know, and then maybe there'll be new ways to, to convert the, you know, product and, and, and, and business success into, into liquidity. I've no idea. But, you know, for me, the, the financial events are are are of, you know, the the side effects of building terrific businesses. Thank You for Listening to Sourcery OK, well, Gilly, it was a pleasure to have you on. Hey, it's Molly. If you enjoy our interviews, check out our newsletter, sorcery dot VC, where we deliver a once a week top deals and tech headlines e-mail and also go deeper on our podcast interviews. Subscribe to Sorcery today and don't forget to subscribe to this podcast on YouTube, Spotify, Apple, or wherever you listen. Link in description to sign up.