Nir Zuk has never shied away from challenges. Twenty years ago, when he was told he didn’t stand a chance of competing with the existing cybersecurity giants, he founded Palo Alto Networks, which became the world’s largest cybersecurity company with a market cap of more than $125 billion, five times more than the major rival Check Point where he started his career. Since then, he has founded the airline Air Haifa, which connects the north to the world, co-founded a new digital bank, launched the AI-based financial startup Finq and is now considering a re-entry into the field of television.
“I like being told that it’s very difficult to do something,” he insists. “It mainly means that if I succeed, then no one else will be able to do it.”
This method of operation has indeed brought with it many successes but also failures, such as the TV and streaming channel Relevant, which he founded and closed. Now, in an interview with “Globes”, he talks about all this, as well as the future of Israeli cybersecurity and the tech sector, the revolution in banking, and the challenges he sees for the country.
The company’s shares climb
Zuk (54) was born and raised in Rehovot. In the army he served as head of the software development department in the 8200 intelligence unit, while at the same time studying for a B.Sc. in Math at Tel Aviv University. After leaving the army, he began working at a small startup called Check Point. “There were less than ten employees at the time,” recalls Zuk. “In 1997, I moved to the US for the company and stayed there for a few years. Then I left, founded OneSecure, sold it for $45 million in shares, and left. That’s when I founded Palo Alto Networks.”
Since then Palo Alto Networks has become the world’s biggest cybersecurity company, and in the past year, the company’s share price has risen more than 42%. It recently even broke its all-time record. In its most recent financial results, published on February 13, Palo Alto reported a 14% quarterly increase in revenue and a 21% rise in order backlog. However, the profit forecast for the next quarter was slightly lower than the analysts’ consensus.
What is the main value that the company offers?
“From day one, the idea was that the cybersecurity market is made up of many small parts. Over time, whenever there is a new cybersecurity challenge, the existing players ignore it and a new set of players emerge. Palo Alto Networks was founded to change that and to build a platform, that is, one product that over time adds more and more cybersecurity functions, all based on Best of Breed (the best in their field).”
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“All the functions we add to the product can compete on their own against stand-alone products and win. When you buy all these functions as part of the platform, you get all the benefits: it’s cheap, easy to implement and easy to operate. If you want a new function, you simply flip a switch and it works, and if you’re not satisfied, you uninstall and stop paying.”
Rivals like Shlomo Kramer’s Cato Networks and Assaf Rapaport’s Wiz claim that they are taking customers away from you because your products are of lower quality.
“In reality, the numbers show a different picture. You mentioned Cato Networks – no one knows their true size, because they are not public, but in their field alone, Palo Alto Networks is probably five to ten times larger. In Wiz’s field, cloud security, Palo Alto is also the largest company in the world. The numbers that Wiz reports are impressive, but when they go public, we will be able to see if it is genuine and compare better.”
Recently, Wiz and Check Point announced a collaboration that could seemingly threaten Zuk’s company. It’s a strategic agreement with marketing, product and technological aspects, with an emphasis on cloud security, in which Palo Alto is particularly prominent. But for now, Zuk remains unruffled.
“I think the market woke up to Palo Alto Networks’ idea 20 years too late, but it has understood that the right approach in cybersecurity, as in all other IT markets that are sold to companies, is to not need 20 different companies for 20 different challenges, but one company that will solve all of these challenges. We’ve seen this in many areas. For example, in the past in the CRM field there were companies that needed five to ten vendors (software vendors), until Salesforce.com arrived and today there is only one vendor.
“In cybersecurity, this hasn’t happened yet. For other companies, it’s more complicated, to transform from a niche company that solves only one area, like Check Point in corporate network security or Wiz in cloud security, into a company that is a platform that solves everything needed in cybersecurity. To achieve a solution that is equivalent to what Palo Alto Networks is doing, they will have to create a group of about 10 different companies, and even then it will be 10 separate companies trying to compete on one platform.”
You’ve said before that Check Point isn’t even your rival.
“Their model is a little different. They try to maintain their existing customer base. Check Point only appears in deals where there’s a customer who already uses Check Point, and the question is whether to stay with them or switch to us. We’re competing mainly with other companies like Zscaler, Cato, and Fortinet.”
What do you think of their new CEO, Nadav Zafrir?
“Nadav is amazing. He’ll be a great CEO just as he was a great commander of 8200 and a great venture capitalist. I think he’ll do what they should have been doing for more than ten years – invest in development and also in acquisitions and partnerships, as he has done with Wiz.”
“It’s easier to raise money abroad”
Recently, not-so-flattering data was published on Israeli tech. Among other things, the Rise Israel Institute (RISE) noted that only 10 companies raised about a third of all investments last year, and the cybersecurity field alone attracted 42% of all investments. Thus, the companies’ multiples are also climbing and are reminiscent of the days before the big fall in 2021-2022.
How do you see the multiples of companies in the field and activity compared with previous periods?
“It’s a matter of supply and demand. There are two more indicators. The first is the indicator of acquisitions, and there haven’t been many there recently. Palo Alto Networks made two acquisitions in Israel at the end of 2023, right in the early stages of the war. The multiples there were high but not super-high. I haven’t seen a lot of acquisitions since then, so it’s hard to know whether the multiples there are reasonable or not. And of course there are the multiples of public companies, which I think are lower and closer to the reasonable range.”
Are you looking to acquire more companies?
“We look at the market. We have a roadmap for what we want to build, where we want our product to be and when. We are always looking for ways to accelerate that through acquisition, but of course it has to be with the right team, the right technology and in the right place.”
Although he remains calm most of the interview, there is one topic that agitates him. “In most of the world it is easier to raise money than in Israel. Israeli tech shot itself in the foot when all kinds of people, especially the less successful ones, went around the world and said how problematic and terrible everything is here. We definitely see great difficulty in raising money for companies that are not cybersecurity. However, I don’t think the industry here is biased towards cybersecurity. It’s just easier to raise money there right now.”
Could the waves of layoffs that were implemented here at the beginning of the year turn into a tsunami?
“It is true that companies that are unable to raise money will have to lay off, but the impact that worries me more is the people, including senior executives, who are leaving Israel. There is a fear that instead of returning and founding companies here, they will stay in the US or Europe. Right now it is not massive, but we are seeing more requests than usual to move abroad, including from senior executives.
“Traditionally, even ten years ago, people have always relocated. But I can say that with us the number of requests has increased significantly compared to before the war and before the start of the judicial overhaul. It is not a tsunami, but there are many people on the fence who are sitting and waiting to see what will happen here.”
“Humans are better than AI”
AI is changing everything we knew and were familiar with, and is bringing with it a lot of apocalyptic prophecies, including in the tech industry. But Zuk puts matters into perspective. “I personally think that in the AI model there is no money and there will be no money. It will become a commodity, something that everyone has, like an operating system or a computer. We will see AI entering the field of applications, like cybersecurity, fintech, health-tech, and so on. That’s where the money will be.
“Israeli companies have advantages. The use of AI is not foreign to them, the army uses it a lot. There are no AI infrastructure companies here and I don’t think there should be. Local companies should continue to use AI more in order to be more competitive and for their products to be better.”
One of the possible consequences of the increasing use of AI is also related to juniors – the number of junior jobs opened in 2024 was cut in half from 2023. Zuk, on the other hand, is more bullish. “I don’t agree with that. Humans are still better and will continue to be better in the creative sector. Companies that stop hiring juniors will not have seniors in the future. AI helps people work more efficiently, but it will not replace them.”
So there is or there isn’t a crisis for juniors?
“In my opinion there is an artificial juniors crisis because of all sorts of companies that convince themselves that they don’t need to hire juniors, without any research. It’s just their gut feeling. Companies that have a hard time raising money or companies that are in crisis can convince themselves that the first thing they need to give up is juniors. I think that’s a mistake. Development is the last thing I would skimp on.”
The juniors crisis may not exist, according to Zuk, but there is one thing that has certainly been happening in recent months – a massive increase in cyberattacks against Israeli companies. Only recently, part of the communications activities of credit card clearing house Shva were temporarily disrupted. Zuk says we will never achieve 100% protection, and that AI makes the challenge much more complex.
“Attackers are determined to try again and again and in the end they will succeed. You can stop 999 out of 1,000. Until not long ago, it was very difficult to create 1,000 different attacks and try to attack a particular organization. Today, thanks to automation and AI on the attackers’ side, it’s very easy to penetrate organizations. It completely changes the way you think about defense.”
When you look at Israeli companies, are they more or less protected by Western standards?
“Much less. There’s a relatively simple way to measure it – the percentage of spending on cybersecurity out of the company’s IT spending or revenue. In the US, for example, we see that a typical company spends 4%-10% of its IT budget on cybersecurity. In Israel, the number is generally much lower. Israel is a country that tends to save money. This is something I’ve been trying to change for many years, not just in cybersecurity.”
A completely different bank
Aside from high-tech, Zuk is now looking at one of the most complicated areas for competition in Israel – banking. At the end of 2022, Zuk received the long-awaited license for Esh, the new digital bank in which he is a shareholder. The bank has hired several senior banking figures and has promised to revolutionize banking in Israel and abroad. The principles underlying the plan are to maintain a very technologically advanced institution and a very lean workforce.
It’s a very tough market with veteran and strong players. Where are you going to innovate?
“The question is how is a digital bank defined? If you define it as a traditional bank without branches, then there is only one. If you define it as a bank that also has digital, then there are seven more of them in Israel. If you define it as a bank that is completely different from anything that has ever been, then there is one in the works called Esh.”
What value will you offer customers?
“I can’t go into too much detail about the value being offered, because we haven’t unveiled the bank yet, but Esh is made up of two companies – a company that is a bank and a fintech company that is building a full banking platform from scratch.
“Esh will do for the banking sector what Palo Alto did. Today, a typical bank needs dozens of different technology providers to survive. We do everything at Esh. In fact, it’s an Israeli high-tech company that built the first full banking platform in the world in 40 years.
“With this technology, you can build a very efficient bank. Anyone who has returned from the US knows that the banking system in Israel is very primitive, both in terms of the technology that is presented to customers, but mainly in terms of financial services, especially in the credit sector. A lot of people turn to non-bank financing because banks don’t know how to give credit.”
In addition to the digital bank, Zuk is a partner in a new AI-based investment venture called Finq. “It’s a financial startup that has AI-based technology at its heart that is capable of analyzing financial instruments – stocks, mutual funds, pension funds, provident funds. For example, Finq has the ability to recommend to people which pension instrument to put their money into based on all the parameters, and it does this using AI.
“You can go in and see the various pension funds and their analysis, and there are amazing things there. For example, we discovered that there is a pension fund in Israel – no names – that is exposed to the orange juice commodity. Why? Because the investment managers felt like taking 10% of the savers’ money and putting it in orange juice futures.”
And what about the insurance agents? Do you aim to compete with them too?
“Today, the interests of pension agents are aligned with the pension companies, not with the savers. I’m not saying that all pension agents in Israel do this, but it’s much easier for them and their compensation is higher when they work with certain companies and don’t necessarily do the right things.”
Is Channel 13 a potential investment?
In 2007, legendary investor Warren Buffett wrote to his investors that “the worst kind of business is one that grows rapidly, requires significant capital to generate growth, and then makes little or no profit. Think of airlines.” He has since changed his mind, but the message still resonates.
But even the words of the US super investor has not deterred Zuk, who last year entered this complicated market with Air Haifa – a new airline operating from Haifa, and whose CEO is Gonen Ussishkin, formerly El Al CEO.
“All the ventures I am involved in have social aspects. Air Haifa is a company that only has a social aspect, it has no high-tech aspect.”
How did you even get to this point?
“The idea wasn’t mine, but rather that of the three entrepreneurs, who came from El Al. The first is Gonen, the second is Micky Strasberg, and the third is Lior Yavor. Shai Babad was also part of the team, but at some point he decided to pull out and become Strauss CEO. We recognized that Haifa has an international airport that is hardly used. 2-3 million people live in the north, and it takes them longer and costs them more money to get to Ben Gurion than the flight itself to nearby destinations like Cyprus, Greece, and Eilat. We put one and one together and it is working fine.”
How much have you invested?
“A few hundred million shekels, including the purchase of the planes. We have three planes today, and we have already announced a fourth plane that will get here in 2025. We are looking for more planes, but it is not easy today. This business could also be quite profitable in the future. Air Haifa is built as a low-cost company, we are not greedy. It would have been possible to charge higher fares, but we decided that we would not do that.”
Today, the company operates more than 30 weekly flights to four destinations – Eilat, Larnaca, Athens and Paphos. Last December alone, it reported sales of more than 10,000 airline tickets since the launch of sales on the company’s website.
Yet there is one area where Zuk has not succeeded so far – the media. In November 2023, Relevant went on the air – a channel that was first broadcast on an Internet platform and later also on Yes. Less than a year has passed, and Zuk has decided to close it down after an investment of an estimated NIS 100 million.
When you founded Relevant, did you hope that it wouldn’t lose money?
“I call it profitable philanthropy. I don’t believe in businesses that just need donations all the time. I hoped that the business would sustain itself, but it didn’t stand a chance. I think there’s a pretty big failure in the Israeli media market, economically it’s very difficult to survive. It’s a very small market with relatively many players. The advertising market is also very competitive and a lot of it has gone to Google and Facebook. Those who are hurt by this failure, in the end, are the readers and viewers. I hoped that this could be changed.”
Was it difficult to close down?
“Yes, it was a very difficult decision. There were a lot of employees there and the content was good. I really liked watching it. But it was impossible to continue from a business perspective.”
What is certain is that Zuk did not despair of the media and is considering entering as an investor in Channel 13. “I think there is potential there, but it is still under review. When it is over, we will talk and see.”
“Corruption like in Mexico”
Finally, we ask Tzuk what he thinks of Israel today. “There is a lot of potential here. Israel, despite the difficult situation, is still one of the largest economies in the world with a positive balance of payments, a lot of foreign exchange reserves. I think that once morale is better here, we will return to renewed and greater prosperity than we have seen.”
What is your main concern?
“That people will leave. Once that happens, there will be no turning back. And there is no need for a lot of people to leave. Ultimately, this country is held by 10,000 critical people. If a lot of them leave, it will be difficult.”
Is this true for you too, thoughts of leaving?
“Yes. I think it’s true for everyone. If there is a mass departure, I don’t think many will stay, it will be like a snowball. No one wants to be the last to turn off the light.”
In this context, there is one thing that particularly bothers Zuk. “The corruption in the State of Israel is terrible. I lived in Mexico for two and a half years – it’s starting to be similar. I’m also worried about the very rapid growth in the non-productive population.”
Are you optimistic?
“I believe that eventually the country will come to its senses, and there will be a change here that will solve the challenge of leaving and creating a renewed social contract. I think these are two things that are interdependent. Regarding corruption, I’m a little less optimistic – it doesn’t tend to solve itself.”
Published by Globes, Israel business news – en.globes.co.il – on March 2, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
