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It Was the Worst of Times—and the Best Time to Make $32 Billion

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There are good times to start a company, bad times to start a company—and March 2020. That’s when four Israeli tech entrepreneurs decided to start their latest company. Within days, the founders of a cybersecurity startup called Wiz began to worry that they had made a terrible mistake. They had left stable jobs right before a pandemic sparked the most extraordinarily unstable moments of their lifetimes. Markets freaked. Fear spiked. It seemed like they had managed to pick the worst possible time to start a company.

“In retrospect,” said Assaf Rappaport, Wiz’s chief executive, “that was the best timing to start a company.” In fact, if you asked him to choose the single greatest time in history to start a company that specializes in cloud security, he says he would pick March 2020. And it would be hard to argue with him after this past week, when Google parent Alphabet agreed to buy Wiz for $32 billion. It’s by far the biggest deal in Google’s history and one of the biggest ever in Silicon Valley. It’s also bigger than the $23 billion deal Google tried to make for Wiz just last summer, before talks fell apart. And it’s much bigger than anyone would have imagined five years ago, when the only thing that felt like it was falling apart was the entire world.

But it turns out there is a long history of crises and chaos producing wildly successful companies at the exact moment when you might least expect it. “Dark times, not boom times, are great times to start companies,” says Doug Leone, a Sequoia Capital partner who led the firm’s early Wiz investment.

It’s a counterintuitive theory, so I asked him to elaborate. In dark times, he explained, there is usually less hiring competition and fewer “lookalike companies” pursuing the same ideas. These moments of uncertainty also tend to attract the sorts of entrepreneurs with the right amount of chutzpah, the ones who “just can’t help themselves and can’t go to sleep at night because they’re so excited about starting a company,” Leone said. Sift through the wreckage of dark times and it won’t take long to find a company that rose from the ashes. Hewlett-Packard emerged from the Great Depression. Uber and Airbnb came out of the 2008 financial crisis. Google itself benefited from the abundance of cheap real estate and engineering talent after the dot-com bust.

But perhaps never has a company become so valuable in so little time and under such peculiar circumstances as Wiz.

Long before they signed the deal that would make them all billionaires, Rappaport met co-founders Ami Luttwak, Roy Reznik and Yinon Costica as soldiers in 2001. They were recruited to Unit 8200, the elite intelligence division of the Israeli army that has also become a world-class tech incubator. These days, Unit 8200 pumps out cybersecurity entrepreneurs like the University of Alabama produces NFL players. After leaving the military, their first startup was another cloud-security company they founded in 2012 and sold in 2015 for $320 million to Microsoft, where Rappaport led the tech giant’s research and development in Israel until he left in early 2020.

It was time to build his next startup. Wiz’s software was developed to help companies fortify their cloud systems, recognizing and fending off hacks, threats and other security risks. Over time, the startup raised $1.9 billion from some of the world’s richest people and prominent venture capitalists who stand to make a killing from the all-cash Google deal. In the beginning, Rappaport and his co-founders knew they would be able to get funding. What they didn’t know was what they wanted to do with it. They spent a few weeks toying with cybersecurity ideas around a table in Tel Aviv before deciding that Wiz would focus on the cloud—just in time to be engulfed by dark clouds. That was the moment when even Rappaport questioned his own wisdom. “To run a startup, that’s risky,” he said a year later. “To run a startup during a pandemic, that’s never done before.”

Of all the people who found themselves running startups during the pandemic, Wiz’s founders had several advantages working in their favor. By then, they had known each other for decades and didn’t have to be in the same room to collaborate. They also knew how their skills and personalities complemented each other’s. They even had the same investors from their last startup.

And it turned out they had impeccable timing, too. They couldn’t have predicted it, but Covid would dramatically accelerate a race to