Palo Alto Networks: Challenging the incumbents

Founder, Nir Zuk, on the vendor’s approach to the local market

Palo Alto Networks founder, Nir Zuk, caught up with during a recent visit to Australia and spoke about the vendor’s approach to the local market, as well as what the company has in store for the coming months.

Patrick Budmar (PB): How was 2011 for Palo Alto Networks?

Nir Zuk (NZ): We did extremely well. While we are a private company and don’t announce our results, we did announce in August that our booking run rate has passed $US200 million. A year before that we didn’t announce anything, but there were some articles in the Wall Street Journal that said it was half of that, so you can extrapolate that there was significant growth. We plan to continue growing at a high rate, certainly higher than any other competitor in the market. Back then we had more than 20 seven figure customers, which meant they have already deployed more than one million dollar of equipment. More recently, we have said publicly that that number is closer to or above 40, so you can see that the growth rate is quite good.

PB: So what brings you to Australia?

NZ: The customers. I met more than 200 customers in the last few days, some of them one-on-one and some of them at events, seminars and lectures. We got a good response, and like everywhere else in the world, there is a lot of interest in dedicated security products, which is what Palo Networks is about. We’re challenging the incumbents and doing that pretty well, so we’re continually generating interest.

PB: What opportunities do you see here locally?

NZ: The same ones we see everywhere else. We already have major Australian companies replacing their entire network security infrastructure with our products. And these are security infrastructures that we have been building over the last 15 years with multiple products from multiple vendors. They take them out and replace it with our products.

PB: Are you running into any challenges here?

NZ: I don’t necessarily see a lot of differences between the Australian market and other Western markets in the world. The challenge is always when your value proposition is replacing an incumbent infrastructure, so the challenge is the standard one: the people are already trained on the infrastructure and they know it, and they trust the vendor. So what you need to do is offer enough innovation and enough differentiation from the incumbent to justify this kind of move. Customers are moving to us, so I’d like to believe that we’re offering what they want.

PB: What are your growth plans for next six to 12 months?

NZ: Our plan is to grow faster than the market or any other competitor. In the US we’re pretty much established and we’ve been selling there for four-and-a-half years. In Australia, we’re recruiting more and more partners to sell our products. Our sales strategy is 100 per cent channel, so we have two tiered distribution all over the world and we never sell directly to customers. We are relatively new in Australia, so we’re always on the lookout for new partners. What we’re offering to the channel is a high margin product because we’re not over-distributed or oversold. Our resellers maintain their margins and we, as a company, don’t want to engage in professional services.

PB: What type of partners are you looking for?

NZ: Since we’re selling disruptive network security technologies that go and replace the incumbents, which means our customers replace their firewalls, proxies, and web filters with our products, we’re looking for partners who are selling these types of technologies today. We’re also looking for those that are able to deliver innovative technologies. If you look at what our competitors are doing in a commoditised market, every product does pretty much the same thing. We’re doing it differently and some partners can work with that and explain the new technology to their customers. What we’re seeing in the Australian market is that all of the usual suspects in terms of resellers are looking to sell our products, and for some it is easier than for others depending on how open minded they are to our disruptive technologies.