What seemed like a lifetime ago (in fact it was only mid-February), we reported on Netskope’s latest funding round as they secured $340m and in the process tripling their market cap from $1bn to as near as makes no difference $3bn.
They reported 80% year-on-year growth, they opened 26 high-performance data centres in the last year or so, they have state-of-the-art offices all over the world and along with a 50% rise in headcount to around 1,000 staff, they’ve loaded up with some of the industry’s most high profile C-Suite talent.
It’s fair to say that the security unicorn founded in 2012 by CEO Sanjay Beri, Lebin Cheng, Ravi Ithal (Chief Architect) and Krishna Narayanswamy (CTO) with $21m (which now boasts one in four of the businesses on the Fortune 100 list as customers) sits on a gold throne at the top table of the world’s biggest online security companies.
You’d think that Beri and his buddies would be beyond themselves with glee at such staggering growth. However, it seems that eight short years after Beri drew his vision for cloud-delivered security on a napkin, the rest of the industry is finally catching up with the Gartner-coined term for secure access service edge, or SASE, and Beri ain’t beri happy.
Imitation Is The Sincerest Form Of Flattery, Isn’t It?
In most cases that rings true but in the case of SD-WAN and security vendors jumping on the SASE bandwagon, Beri suggests that they’re not quite on board. ‘I call it SASE washing.’
Gartner has very specific SASE requirements – a new type of network security architecture that consolidates networking and security capabilities into an edge cloud-delivered service. What they mean, Beri continued, is that ‘when they say the future of data and network security is SASE, or secure access service edge, what they mean is a cloud edge — so it’s not built in the public cloud.’
Amongst many other benefits it includes a cloud-native Secure Web Gateway, which unifies Netskope’s original cloud access security broker (CASB) technology, web gateway, and data loss prevention technology.
The third piece of the jigsaw puzzle is Netskope for Private Access which is a cloud-based service for secure access to private enterprise applications in both the public cloud and the data centre.
So, Netskope have got it right but when Beri was scribbling on his napkin in 2012, that’s what they are saying is now SASE but there have been some mistakes by others.
‘Palo Alto, a lot of others made fatal flaws, attempting to do this in the public cloud, or trying to forklift their boxes into the cloud. But they don’t understand the language of the cloud, which is APIs, they still speak the old language. They are trying to latch onto the term, but they are not what is meant by SASE.’
We think there’s one letter too many in the last sentence. Reading between the lines, we think he actually means ‘they are not what I meant by SASE.’
A thinly veiled attack on his competitors or a blatant dig? Hard to know.
What is clear is that he’s not prepared to sit still. He’s going for it big time and he’s charging around the industry like the heavyweight he is.
IPO? Just Say No
According to a February 2020 article by Jessica Lyons Hardcastle in SDX Central, Netskope invested ‘a significant amount’ in R&D for their artificial intelligence and machine learning tech and, says Beri, ‘we’re also investing a lot in our partners and our sales team. Fifteen to 20 of our best reps came from Symantec, and a bunch of Zscaler folk. In the field, people are definitely flocking to our company.’
He’s cherry-picking the best out there and offering them more.
With talk of an IPO refusing to go away, he says that Netskope remains ‘fiercely independent.’ While they may consider an IPO further down the road, he says that right now ‘we are not going that other route. Every investor knows that, our employees know that and our customers and partners know that. It is not why we built the company.’
Again, a clue to his single-minded focus is his response to why Netskope aren’t going down the IPO route. ‘Our goal is to dominate the biggest market in security.’ Note he refers to the company as a whole – ‘our goal.’
But he went on to say ‘if it’s easier for me to do that privately, if I can grow faster and I can put the investment in R&D that I believe needs to be put in R&D, then I will do that privately.’
Me, not us. I, not we.
Maybe we’re reading a little too much into it?
‘Innovate Or Die’
There’s no capital reason to go for an IPO because, Beri says, the traditional model for companies going public is that R&D investment is as low as 17% or 18% and ‘that’s not the model we want to pursue. Look what happened with Symantec, McAfee, what used to be two big security companies and we’re replacing them every week.’
As we reported last September, Symantec who went public in 1989 eventually sold their enterprise security business to Broadcom for $10.7bn in cash last summer after spending, says Jessica Lyons Hardcastle, the last few years struggling to shift its business — or at least its reputation — to an enterprise cloud security specialist and McAfee has experienced similar struggles.
Since they spun out of Intel in 2016, they’ve since replaced CEO Chris Young with Peter Leav, a clear indication that the business wants to sell rather than go public. Very much a ‘watch this space.’
Beri sees these as cautionary tales. ‘There hasn’t been any innovation there. In security, you innovate or you die.’
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