"We looked at all the companies that are out there that have capabilities, and we liked Guardicore the best, by far," is how Tom Leighton, CEO of Akamai, described the process that took many months and led the American company to pay $600 million in a cash deal for the Tel Aviv cyber company
Akamai is a global provider of network, security, and cloud services that works primarily with major media companies. In recent years, security products have taken up a larger share of its operations. "Security is now almost 40% of our revenue and growing at 25% a year, so soon it will become the majority of our revenue. We are putting a lot of investment in the field," Leighton said in an exclusive interview with Calcalist.
"We are really excited about our merger with Guardicore, whose product prevents the malware from spreading within the enterprise once it has gotten in and also detects that it happened and provides strong visibility into what is going on inside. And that is what you need to stop ransomware. And I think having this combination is really exciting for customers, and we can make a big difference there.”
Why did you prefer them?
"I think they have the best solution, they have a great team, a really good cultural match with us and their abilities are synergistic with ours."
Cultural fit is a term that people like to use in the context of mergers and acquisitions, what does it mean to you and why is it important for you?
“I think it is a gate you have to get across to make a successful acquisition. Obviously, it is more than just that, the product has to make sense, the technology has to be a good fit, but culture is important, and by that I mean what is important to the company, how do you operate. In our cases, we both believe in transparency with each other and our customers. Acquisitions are hard enough to start with, most do not work out, and cultural fit makes a big difference for their ultimate success.”
And how do you determine cultural fit via Zoom? What is your personal process?
“Covid does not help, because meeting in person is important. In this case, I was able to visit Israel before, our president Rick McConnell could visit, but most of the meetings were over Zoom,” Leighton explained, also stating the process spread “over a period of months, and there were a lot of meetings between the teams.”
Guardicore employs about 350 people in R&D, sales and customer support centers in Israel and around the world. As part of the deal, Guardicore will receive a generous shares retention package, however, the company refuses to specify its worth. The company was founded in 2013 by CEO Pavel Gurvich, VP of Technology Ariel Zeitlin, and VP APAC Dror Sal'ee, and since its inception, the company has raised $110 million. The company developed a technology that allows large companies to create segmentation on their servers and thus prevent security issues and information leakage, as well as detection of attacks. Akamai, for its part, offers web and network security solutions along with internal organizational security solutions.
"On the internal enterprise side, we have services that stop malware from moving from an infected employee's device into the enterprise. Traditionally, the way it is handled is to have network layer access. The employees authenticate themselves to the network and then when they are inside the malware can move anywhere. And we prevent that by granting application layer access and then even once it is granted, malware is prevented from moving into the application,” Leighton said. "Most of the DNS (Domain Name System) lookups around the world are handled by Akamai services today, that means we get great visibility into what is dangerous out there, where are the bot nets, what is the bad content. Every day there are millions of new domains added, most of them malicious, and we have great visibility into that so we can protect enterprises and employees, and actually tens of millions of people at home use our services under their local provider to protect their home devices.”
Will Guardicore's product be integrated into your own or will the company continue to operate as an independent brand?
“Both, I think. We will work on how to brand it, but we will continue to sell it on its own, they are off to a really good start in the market. And, in time, we will package it together and make tightly integrated offers that have more capabilities."
You have another activity in Israel, will Guardicore merge with it, will there be some kind of cooperation, or will you keep them separated?
“Initially, we will stay in separate offices, they are not far apart maybe a mile or two away. We have a little over 200 employees in Tel Aviv, almost all of them focus on security R&D. I think there will be great synergy between the teams, I expect them to be increasingly working together and getting together. In the more distant future, I do not know what will happen, but there is a strong synergy in what we have today.”
Guardicore was not your only recent acquisition in this field. Is this your strategy, to expand your security abilities through acquisitions?
“It's both organic development and by acquisitions. You could roughly say it's about half and half. We do invest a lot in R&D, and develop a lot of products internally. And when we see exceptional opportunities we make acquisitions.”
We are witnessing increasing efforts on the part of companies to improve their security, but at the same time we keep seeing these attacks, on some big-name brands, how do you explain that?
"Big companies have a lot of processes, a lot of applications, gigantic internal networks, a lot of employees, and that means they have a lot of things to secure, a lot of ways in. And all it takes for the hackers is one way in. Today it is just too easy to get inside an enterprise. That means what you have to do is stop the malware from spreading once it is in. If it just gets into one machine, that is bad but the real damage comes after it spreads. That is where Guardicore comes in terms of stopping the spread, and why their solution is so important. It is still the early days, a lot of enterprises do not have protection there and they need to. And you are beginning to see regulations change, and ultimately I think you will see all enterprises move in the direction of micro-segmentation which Guardicore brings to the market.”