Posted on Friday, Oct 9th 2015
According to a market report published by Transparency Market Research, the global cloud security market is projected to grow from $4.5 billion in 2014 to $12 billion by the year 2022. That translates to an impressive 12.8% annual growth rate. Billion Dollar Unicorn club member ZScaler is playing a key role in this rapidly growing industry.
San Jose-based Zscaler was founded by serial entrepreneur Jay Chaudhury, who had set up several successful technology service ventures after working with big names like NCR and IBM. In 2008, after Jay had successfully flipped one of his many startups, he realized that his next challenge would be to create something that would have a lasting impact in the market. It was then that he came up with the idea of ZScaler.
Jay had already seen a lot of cloud-based companies and realized that security could also be offered through the cloud. He wanted to offer web security in the cloud that would be able to cater to the rapidly growing mobile world by integrating point products. He did not want to rely on the old-school security model of having physical proxy devices installed at corporate locations. Instead, he wanted to build a network of checkposts within data centers so that traffic could get directed to the nearest data center for inspection and security. With this idea in his mind, he hired his development team to build a scalable proxy.
Soon, Zscaler had launched their Security-as-a-Service platform that could deploy security into the Internet backbone. It has a network of checkposts in more than 100 data centers with thousands of points of presence around the world, thus allowing organizations to leverage the flexibility of cloud and mobile computing. Its security services deliver unified, carrier-grade Internet security, advanced persistent threat (APT) protection, next generation firewalls, data loss prevention, SSL decryption, traffic shaping, policy management, and threat intelligence–all without the need for on-premise hardware, appliances, or software.
One of its early customers was Sears with 50,000 users. Today, it protects over 15 million users across more than 5,000 organizations globally. Its customer list includes names like GE, Nestlé, ExxonMobil, Schneider Electric, the United States Marines, NATO, and the National Health Services of the UK.
Zscaler earns revenues through a subscription-based model. Customers are charged an annual fee based on the level of features used and the number of users protected. The company does not disclose detailed financials, but have seen strong revenue growth.
For four years, Jay bootstrapped ZScaler and it was only in 2012 that he went to VCs for funding. Till date, ZScaler has raised $148 million in funding from investors including EMC, Google Capital, Lightspeed Ventures Partners, and TPG Growth. Its last round of funding was held last month when it raised $110 million at a valuation of over $1 billion. Unlike his other ventures, analysts believe that ZScaler may well be preparing for an IPO next.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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