Analysis: Google Is Getting A Good Deal For Wiz, Actually

At least in the case of a highly unique and disruptive player like Wiz, a $32 billion price tag for a five-year-old company may not be so outrageous.

Since the news broke Tuesday morning that Google had reached a deal to acquire cloud and AI security wunderkind Wiz, much of the commentary has fixated on the price tag.

And understandably so: Even a company with the scale and prominence of Google has never before paid anywhere near the $32 billion it’s prepared to spend on Wiz.

That Wiz could fetch this kind of price after just five years in business is, no question about it, an astounding feat.

But for those observers who assume this is just another case of a tech giant over-paying for a buzzy new startup, it really isn’t.

Practically from the get-go, Wiz has stood out as a highly unique and disruptive player in the red-hot category of cloud security.

Wiz specializes in capabilities that rapidly improve visibility into cloud environments, enabling much faster fixes for misconfigurations and other security gaps in the cloud. And notably, the company is now extending its capabilities to the increasingly crucial AI security space.

Using this massively disruptive approach, Wiz has built a real business that has been seeing unheard-of growth all along the way. The company went from zero to $100 million in annual recurring revenue during its first 18 months in the market, before surging to $500 million in ARR over the next two-and-a-half years. (Reportedly, expectations are for the company to double to $1 billion in ARR this year.)

For (very rough) comparison purposes, consider that data security vendor Rubrik reached the $500 million ARR milestone in nine years while SASE unicorn Netskope did so after more than a decade in business. And those are the two of the relatively rare security vendors that have even reached that scale at all.

In other words, Wiz has been hitting revenue milestones just about twice as quickly as other, top-tier cybersecurity vendors.

The bottom line is that, at least based on the available information about private companies, it’s obvious that no other cloud security startup has had anywhere near the level of growth or market awareness enjoyed by Wiz.

For Google Cloud, meanwhile, it’s clear that the company needed to make an impossible-to-ignore statement to the market that it’s serious about enterprise security.

That was my takeaway, at least, from speaking with Gartner’s Neil MacDonald yesterday. MacDonald, vice president and distinguished analyst at Gartner, pointed out that Wiz has exactly what Google feels it needs at this stage: A solid leadership position in the rapidly growing cloud and AI security segment.

Prior security moves for Google, most notably the $5.4 billion acquisition of Mandiant in 2022, have certainly laid the groundwork for a broader enterprise security push at Google Cloud.

Still, MacDonald told me, “I don’t think organizations would say [Google is] a top 10 strategic security vendor” as of today. Quite simply, Google’s aim is to change that ASAP, and Wiz is the catalyst.

As Google CEO Sundar Pichai reportedly wrote in an email to staff on Tuesday, “we don't make deals like this every day.” The unprecedented acquisition price is only the most obvious of the signs that this is a very unique deal, and probably not the most meaningful indicator.

What I mean is, Google could conceivably do another M&A deal of this size in the future. But will we ever see another cybersecurity startup like Wiz?

That seems much less likely.

If nothing else, turning down Google’s reported initial offer of $23 billion last summer, only to have the tech giant return a few quarters later with $9 billion more, should earn Wiz a spot in the annals of startup legend.