The Pulse #101: Did AWS forget it’s a cloud infra company?
Also: why GitLab is seeking a buyer, how Alexa got left behind in conversational AI, and Cloudflare offering customers less AI – because those customers want this.
The Pulse is a series covering insights, patterns, and trends within Big Tech and startups. Notice an interesting event or trend? Send me a message.
Today, we cover:
Industry pulse. Google to buy cybersecurity startup Wiz for $23B, Snowflake quiet on messy data breaches, Claude’s new model wows developers, poor web UX creates random Icelandic presidents-in-waiting, and more.
Did AWS forget it’s a cloud infra company? AWS seems to spend most of its developer investment and innovation on GenAI, which is starting to annoy their core customer base of cloud engineers. But is this strategy more rational than it seems?
Why is GitLab seeking a buyer? Two weeks after we highlighted that GitLab’s business has grown faster than most SaaS businesses, the source control company is looking for a buyer. Looking closer, GitLab’s impressive revenue numbers might be due to higher prices, while real business growth may be more ordinary than it appears.
How did Alexa get left behind in conversational AI? In 2019, Alexa had 100M users, and Amazon was investing billions in research and development. A former Amazon ML engineer shares what they think led to Amazon missing the opportunity for Alexa to be the conversational agent ChatGPT has become.
Cloudflare offers customers less AI – because they want it. There is no shortage of businesses rolling out GenAI features to attract new customers. In contrast, Cloudflare has listened to its customers and is doing the opposite: rolling out a feature that allows customers to block GenAI crawlers from their data. This move will likely make it more expensive to source GenAI training data, globally.
1. Industry pulse
Google bids big for Wiz security scaleup
Wiz is an Israeli cybersecurity scaleup, founded 4.5 years ago. Last month, we reported the company was a potential buyer of another cybersecurity scaleup, Lacework, raised $1.9B and was last valued at $8.3B. Lacework explored a sale to Wiz, as per The Information, which offered $100M; a sum equal to the annual revenue of Lacework, which hasn’t grown in the past several years because of continuous customer churn.
This week, the WSJ reported Google is close to acquiring Wiz for $23B, which would make it the search giant’s largest acquisition yet, and be a massive increase on Wiz’s $10B valuation from 2023.
It’s unusual to see a 4-year-old startup be so in demand, especially in an enterprise sales-heavy industry like cybersecurity. For cybersecurity companies to strike deals, they typically need to convince chief information security officers (CISOs) to sign longer-term contracts, which is easier said than done: even after Lacework raised $1.9B in funding, the company is “only” managing to generate $100M/year in revenue. This is a testament to this!
Plenty of people want to know how Wiz attracted such a high offer. Last summer, Forbes published a deep dive on Wiz’s success, “Nobody beats Wiz,” in which Forbes revealed Wiz’s hyper-aggressive sales strategy of closing the market’s highest-value companies first, and cutthroat negotiation tactics. Last month, Israeli publication Calcaist also revealed how one of Wiz’s investor, Cyberstarts, could have played a large role in driving Wiz sales.
It’s an open secret that investors can and do make a big difference for startups in the market for a sale. This is because of industry contacts: investors introduce businesses to others in their portfolio, meaning a scaleup selling a solution for tech companies could access new corporate customers via these introductions.
My take is that the success of Wiz is truly remarkable, and its investors likely have a big role in this. But most credit should go to Wiz employees; they’ve been able to grow in a very competitive market like cybersecurity.