Welcome back to the journey of Assaf Rappaport from startup to Microsoft and back to startup. Last time we checked in Assaf had gone from an apartment with a couple of friends to leading Microsoft Israel's R&D center. Now, let's once again dive in to the path leading Rappaport, away from Microsoft and on to Wiz.
“Thanks to Adallom, Microsoft is dog friendly”
From running and gunning in the startup world with his 3 friends, Rappaport suddenly finds himself at the heart of a global tech leader. He admits “that it’s never easy” to make such a significant change in life, but he explains that at the same time Microsoft contained Adallom, rather than Adallom having to acclimate itself. This is in addition to experiencing major changes to company culture, new policies, methods, and technologies, which brought on other challenges for the young startup’s early days at the veteran Microsoft: “Here comes a company with 15 dogs, who we considered part of the team, and now this startup is part of Microsoft, and they had to make a decision. Millions of Microsoft employees around the world were impacted by this decision,” tells Rappaport. “Thanks to Adallom, Microsoft is dog friendly.”
The move from a small Tel Aviv office to Microsoft’s Israeli center in Herzliya (a neighboring city to Tel Aviv) exposed further challenges. “Adallom was a company made up of Tel Avivians, who don’t own cars,” he remembers. Despite public transport between Tel Aviv and Herzliya being a bit of a hassle, Rappaport and his team refused to accept the vehicles offered by their new employers, “So Microsoft had to add a shuttle service to transport employees between the two cities.” Rappaport recalls the first bus ride, which transported all 30 Adallom personnel to the new Microsoft digs. His last bus ride though, was a whole other story. This one was accompanied by two other buses transporting 150 non-Adallom employees.
Life in the fast lane
Other than challenging even the most talented stenographers with his fast paced speech, Rappaport seems as if he’s comfortable living in the fast lane. He refers to the 4.5 years at Microsoft as “a long time”. While talking with him, one thing that constantly came up was the subject of “human capital”, a term that has become a standard toast at company cocktail parties. Nevertheless, Rappaport repeated again and again that the people who joined him over the years were the ‘secret sauce’ to his success. This belief eventually led him to make a number of groundbreaking moves in Israeli high-tech.
For example, Microsoft’s Israeli R&D center under Rappaport’s management helped lead the protest against the Surrogacy Act in 2018. Among other achievements, the company would grant 60,000 NIS to people who decide to form a family through surrogacy, regardless of their gender, age, marital status, and other. Just one year later and Microsoft Israel was leading protests against domestic violence and violence against women. In June 2019, while following Rappaport’s initiative, the company decided to hire employees directly, ending uncertain subcontracting and freelance positions. As part of this initiative, over 100 people working at various non-guaranteed positions - from software developers and QA testers to security guards and custodians - became full-on Microsoft employees.
“The goal was to impact Microsoft… The company was already big and important, but it also had a social responsibility. People love to talk about the high-tech bubble, but in the end, we are all part of society, with its good and bad,” says Rappaport, who reiterates his beliefs that both the high-tech industry and executives in the private sector have a social commitment: “In the end, companies find out that they can impact more than they think. And once more companies realize that, then their social involvement will increase.”
It didn’t take long for this new policy to pay off. Microsoft immediately started climbing the rankings for ‘best companies to work for’ in Israeli high-tech, dethroning Google in 2019, cementing itself in 1st place, which Microsoft kept even during 2020’s introduction to the COVID pandemic. During his time at Microsoft, Rappaport managed to increase the Israeli R&D center by 50%, opened new offices in Tel Aviv and Nazareth, and reached over a billion dollars in operations. However, despite the long list of success, something didn’t sit quite right with Rappaport, who, as it seems, runs at his own pace.
Rappaport explains that he waited to see the Israeli center standing strong on its own for the long run, and not dependent on momentary success. “This is when I first thought about leaving.” After meeting with execs from the Microsoft mothership, where he expressed his concerns, both sides agreed on a departure date. “Every time the date came up, it would get pushed back a few months… Eventually, we agreed, and it came to an end.”
But why leave?
Rappaport: “First, it really wasn’t an easy decision. More of a sad one. My longest tenure ever at a job was the 4.5 years I spent at Microsoft… My commitment was only for two years and I stayed twice as long as thought I would when I walked in on day 1. It wasn’t easy. I love the people there, and miss Microsoft a lot. But I got the bug. It’s hard to explain, it just makes you want to get up and start something new.”
Recreating the success?
After selling his startup for $320 million, and working at an executive role at Microsoft Israel, Rappaort could have hung up his gloves for early retirement. However, you can hear it in his voice, the excitement with which he talks about development, people, and everything in between, is enough to know that he is just built from a different mold. Rappaport left Microsoft at the end of 2019 to found the ‘next best thing’. Two months later, and that ‘thing’ is a new startup called Beyond (later changed to Wiz). Rappaport followed the new startup unveiling with a $21 million funding round. Not bad for a two month old startup.
The Wiz platform enables organizations full visibility into their cloud environment, in addition to detecting vulnerabilities, configuration and identification issues. This provides CISOs and other security managers with a dashboard, outlining risks throughout the organizational network.
No offense, but we’ve heard about more than a few startups, including Israeli ones, which do exactly that
Rappaport: “We are solving a long standing problem. It’s nothing new. The problem with cloud security in the worlds of AWS, Azure, and GCP, is a big one, and it’s just getting more and more complex. True, there are a number of companies, some Israeli, who operate in Wiz’s industry. We’ve entered a pretty crowded sector.”
What makes you unique?
Rappaport: “I may sound like a broken record, but what makes us stand out is the team solving the problem. The team has ‘startup’ in their DNA, meaning they know how to build a company and succeed with it. This is a team that developed Security Business (Microsoft) from scratch into $1.5 billion in revenues a year. A team that knows how to achieve a Security Vendor. This team worked together at one of the world’s biggest cloud providers with Office 365 and Azure. It’s about knowing how a cloud provider thinks, how infrastructure looks, and how to solve problems.”
$100M in less than a year: “Some records may have been broken”
Let’s recap for a second. Rappaport joined by partners Luttwak and Reznik are looking for an idea. Find it. Then found a startup that develops cloud security solutions. Sounds a bit familiar, no? But here is where the similarity ends.
This time around Rappaport and his partners are all experienced entrepreneurs with an actual product in hand and paying customers. It comes as no surprise that within a year of founding Wiz, the company had already announced a $100 million funding round. Among the investors - Cyberstarts, a fund dedicated to cyber investment, and founded by Gili Raanan, who previously managed Sequoia’s stake in Adallom; and Sequoia, of course, in addition to other major VCs from around the world, including Insight Partners and Index Ventures - an early investor in Dropbox, Facebook, and Skype.
“I’ve been part of successful startups,” states Rappaport, “but even Silicon Valley doesn’t see traction like this. Some records may have been broken. We saw both customer and revenue growth very quickly.” Rappaport says that the company’s technology is already being utilized by customers in transactions valued at “millions of dollars”. And all of this, he claims, has happened without even one salesperson on the ground: “The engineers and product teams are the ones who close the deals. The product is amazing enough, where even geeks can generate business.”
Customers who choose startups, choose risk
As an entrepreneur with two startups under his belt, it was kind of surprising to hear Rappaport claiming that customers are taking a risk by choosing solutions from startups over corporate. “It’s almost stupidity to go with a startup. Even a startup that raised $100 million.” But, and it’s a big one, he does claim that working with startups promises enterprises immediate profit, especially in response time and ability to impact the product. “They’re betting on your current technology, and that it’s significantly different from the more traditional vendors. They believe that they can have an impact on product development, and help advance it forward.”
Nevertheless, due to his approach, which has led him throughout his journey, it looks like Rappaport’s main challenge has not been getting customers, but the right people around him. “We have increased the meaning of the team. We raised the bar higher than at any other stage in my life. We’re truly looking for the best of the best… Not just people who are awesome at what they do, but awesome as people,” he says, and adds by the way that “we raised the bar really high, and it’s actually limiting our ability to grow.”
So, who are these “awesome people” Wiz is looking for? Rappaport refuses to describe the profile of the ideal candidate, and explains that’s exactly how we miss on quality talent. Rappaport is settled searching for “excellent” people, and claims that excellence is not just professional, but also in working with a team and having a passion for what they do. “When you try to narrow people into bullet points, you miss out. That’s not what’s important. Therefore, we are on one side very open, but still very strict on the filtering , which tends to create friction.”
An acquisition written in stone? “For anybody looking to acquire Wiz, it’s not an option, don’t call”
We previously mentioned the similarity between the journeys of Adallom and Wiz, but Rappaport interrupts the comparison with a significant difference between the two journeys. “We are taking a quick acquisition off the table,” responds Rappaport vigorously regarding the question of a possible acquisition. “When you raise $100 million you end up shedding a lot of potential suitors.” “Write this down,” he tells me: “For anybody looking to acquire Wiz, it’s not an option, don’t call.” Even after I insist on the possibility, he runs it back, saying that with startups “never say never”.
You jump jobs every two years, what will keep you from jumping on from Wiz in a year?
Rappaport: “That’s the trick with a startup. Every year is different from the last. Adallom went through the rollercoaster, even when moving to Microsoft. You may have the same name tag, but the scenery constantly changes. Next year’s Wiz will be totally different then the Wiz of 2020, and in 5 years Wiz will probably be a whole different beast.”