Why Google may spend $23B buying Wiz, and the Wiz theory of the 2024 election
Welcome to Cautious Optimism.
The Rundown
📈 Trending Up: Shares of Trump’s ‘tech’ company … Swiggy’s IPO prep … smartphone sales … Apple sales in India … Russia hedging its China bets … crypto prices …
📉 Trending Down: GDP growth in China … print … sportswashing … the ability of tech folks to not spread conspiracy theories … small cap earnings …
🤔 What Else?
There have been 28 $100M+ venture rounds invested into AI startups this year in the United States alone. Some of these are easy to recall, the Figures, Cyeras, CoreWeaves. Others had slipped my mind, the Blaizes, Cognitions, and Magics. It’s busy out there.
Web3 funding is ticking higher. Crunchbase data makes that clear. But Galaxy points out that unlike in prior crypto cycles, bitcoin’s recent price appreciation is not generating a similar bump to web3 venture activity that we have seen before. In other words, the hangover from overexuberant 2021-era crypto fundraising is still working its way through the market.
Why Google wants Wiz
The biggest technology story this morning is that search giant Google is in talks to buy Wiz, a cybersecurity startup with roots in Israel and headquarters in New York.
While the deal is potentially expensive and fraught from a regulatory perspective, I don’t think that it is too surprising a transaction. Why? Microsoft, mostly, but also the cyclical nature of advertising and AI data. We’ll touch on each in turn.
What is Wiz?
Wiz is a young startup that has scaled to more than $350 million worth of annual recurring revenue (ARR) since it was founded in 2020. That makes Wiz one of the fastest-growing startups I have ever heard of.
What does it sell? Security software for enterprise cloud usage. In English, it sells software that helps companies that use cloud services keep their walls up, data secure, and code safe. There is a blizzard of acronyms in the mix (CSPM, CIEM, AI-SPM, IaC scanning), but it boils down to companies being able to leverage the cloud without taking on lots of additional risk.
That’s big business because the cloud is big business. And the company capitalized on that fact, making noise earlier this year about going public in time at the same time it raised $1 billion at a $12 billion valuation.
Enter Google with a potentially $23 billion offer. That’s effectively double the price private-market investors paid rather recently, meaning that backers old and new of Wiz could be in for a massive payday.
So, why does Google want to pay 64x Wiz’s last-known ARR number?