Gil Shwed: I'll focus on strategy and new products

Gil Shwed credit: Globes
Gil Shwed credit: Globes

In his first interview since announcing he is to step down as Check Point CEO, Shwed spoke about his future plans and 30 years at the helm of the Israeli cybersecurity giant.

"The main lines of thought are to delve into our future and that of our industry, and to think about the next 30 years. I want to move to the next stage. Maybe I will choose fewer topics and concentrate on them in depth, maybe I will focus less on the operation of the company, and more on strategic thinking," explained Check Point Software Technologies Ltd. (Nasdaq: CHKP) CEO Gil Shwed told "Globes" tech editor Assaf Gilead at the Globes Tech IL Conference today.

He added, "I still don't know what I will do. I have to think up something. I think after 31 years, change is good. I'm constantly changing, this isn't the first change I've made. My role as CEO 30 years ago, 20 years ago, 10 years ago and today does not look the same. Check Point has grown, I have grown, and things are different."

Shwed has served as Check Point's CEO for 31 years. He is the longest serving CEO in Israel's tech sector and has been part of the development of the country's high-tech sector, which has transformed Israel into the Start-Up Nation and a giant in the world's cybersecurity industry. Two months ago, he announced that he is stepping down as Check Point CEO, stirring up a storm in Israel's tech sector. Now for the first time since his unexpected resignation announcement, Shwed has spoken to the media about his future plans.

He said, "I think that in the next stage most or all of the day-to-day operations will be able to be done by another CEO. And it may be that he can bring amazing strategic directions. I want to be here and support, and I fully intend to remain a part of Check Point, and I want to help understand how I help build the next product, and what the world will need in cybersecurity in the coming years."

And what about outside of Check Point?

"I have a wonderful family and I want to spend more time with them. After 30 years, the order of priorities was first of all what was happening in the office. I want to say 'maybe I can afford to take time off whenever I want, and not just in very specific windows in which there are no management meetings, end of quarter or other things.' This too can change. But my focus, and I hope it stays that way - is at Check Point."

When asked about a role on social matters, Shwed insists that that is not where his focus is. "I am active in several not-for-profit organizations, and I intend to continue this. But if I look at the whole, I would very much like my center to be at Check Point, even if with a slightly different intensity, or focusing on a few areas and more in depth. I think focus is a very important thing in order to move forward, and in recent years it's been more difficult for me to focus on things due to the need to manage the large organization here at Check Point."

Who will be the new CEO and how do you ensure that Check Point will stay in Israel?

"We are starting to look for the next CEO, but it is a process that is being conducted slowly, and it will take time to build the right profiles. I would really like to find a CEO who will be in Israel, and preferably an Israeli. I think there are wonderful people here, but there are not many people with experience in managing organizations in our field, so it cannot be taken for granted. I think we need someone who wants to lead the cybersecurity world, someone who will be the best. Someone who will lead our marketing and sales all over the world in an excellent way, and of course he should share Check Point's set of values."

We know companies that have appointed an American CEO and then there center of operations shifted away from Israel. Will you manager things differently?

"I really want and we all understand that the best way for Check Point is to remain a global Israeli company, whose center of gravity is in Israel. The requirement we set for the next CEO is to be in Israel, and I hope he will be Israeli. The company's entire headquarters is in Israel, and I don't think that will change."

The proud achievements and the mistakes on the way

Shwed was asked what he has been most proud of over the years. "I am proud of most things, we have a great company. We provide the best internet security there is, it has no competitors. The security level of our products remains the best. We have built a very good and valuable company, the customers are loyal to us and we are loyal to them. Our employees are wonderful and great, Check Point's set of values is excellent and we try not to compromise on the qualities that are here. I see employees who leave Check Point and return because they realize the goodness and significance of what we have here. I am proud of what we have built."

Check Point is the biggest Israeli tech employer among, with 7,000 employees worldwide, of which 2,900 are in Israel. This is another source of pride for Shwed. "In the 1990s, there were no large Israeli companies. In the 2000s, they said that Israel was the Start-up Nation, but is unable to grow large companies here. Not only did we prove that it was possible to grow a large and world-leading company, other companies followed in our wake.

"I think that in Israel the glass ceiling has been broken. There are many companies with sales of hundreds of millions and not only in the cybersecurity industry. In almost every of my meetings with entrepreneurs or CEOS, they tell me that they have learned from our model."

What about mistakes or things that you regret? "There have been many mistakes," he responds. "But I am proud of what we have achieved. Could we have become bigger and more significant? Probably yes. The rival of very good is always excellence, and of excellence it is excellence plus."

In the index of the 100 high-tech companies, we could probably be placed more than in the top decile, maybe in the top tier. We still want to be better and twice as big and successful, and we will do everything to get there."

What is your answer to those who claim that the company was overly conservative, that it was not aggressive enough in terms of acquisitions and that it did not diversify its products?

"I don't regret anything, I look around us, I see the dramas of other companies and how many companies did not survive. We saw companies with endless ambition for unrestrained growth that built companies or destroyed good companies. This hurts me to see. There were many of them. I am very proud Check Point has always been stable, there has not been a single year that we have not made a profit, we have never had to lay off employees, that's in my heart. I'm please to say that we got through changes in the market, and we had management mistakes, and our employees did not pay the price. Could it have been otherwise? Perhaps."

Ultimately, the market rewards growth and expansion, despite profitability. Palo Alto Networks is less profitable than Check Point but has grown faster in terms of market cap and share price. There is a price for low growth.

"My number one challenge is to grow faster. We are making every effort in order to grow faster. Perhaps we will meet in several years and you will see that we have succeeded in meeting this challenge."

Will we see more acquisitions in the near future?

"I don't think that growth is from acquisitions. We have made many acquisitions but perhaps there was criticism of us 15 years ago because we did not acquire enough. But over this time we have acquired about 20 companies and over the past year we bought three companies. We are buying very well. We have other challenges and need to grow faster. Not all the acquisitions are in Israel - over the past year we bought three companies - two Israeli and one not Israeli."

Is Israeli tech only good at cybersecurity?

Israeli cybersecurity is struggling to produce more companies like Check Point. In recent months we have heard about many startups with potential, but such companies are not produced here. Shwed says: "There are no new Check Points in the world, period. There are 2-3 companies in the cybersecurity world like Check Point, and if one of them is Israeli, then we should be proud to be Israeli. But yes, there are large cybersecurity companies in Israel, and there are also companies that are not cybersecurity. I have a lot of pride in the industry in Israel."

Shwed provides examples of a number of Israeli cybersecurity companies that have reached big numbers: CyberArk, SentinelOne, and Wiz, "Which have grown very quickly". In non-cybersecurity fields, he mentions Mobileye, Wix, and more. "There are amazing companies with big sales, and that's how it should be.

"Ten years ago you asked if there could be another Check Point. So the answer today is that there could be additional large and significant companies. Reaching hundreds of millions of dollars or over a billion dollars in sales has become an ambition for many companies," he says.

After 30 years of high-tech, we haven't succeeded in other sectors the way we have in cybersecurity.

"I think we are truly a leader in cybersecurity, 20% of the global cybersecurity industry is in Israel. But I disagree with the assumption that we are not leaders in other fields. There are dozens of companies in the Internet fields, and gaming companies - there are companies there with sales of over a billion dollars. In the fields of chips, there are amazing Israeli companies. In each of the fields - Israel has a lot of knowledge. For example, Mobileye in autonomous driving, SolarEdge, which interfaces very well with high-tech."

And what about AI?

"It's still too early to say. A billion dollar company is not created overnight, it takes more than 10 years to reach that number. In AI there is AI21Labs which is in a good place, and there are lots of startups that use AI, like Gong, which is built on AI. There's an amazing and unusual industry here. I don't think it's made up of just cybersecurity, and some of the companies are being bought, to our delight and regret, because that's the path of companies, and many of them are becoming public and remaining independent."

Is a new bubble being formed that will burst?

"For the past two years we have been in a bubble, and perhaps it is not one that is going to burst, but rather many small bubbles that burst and make the market rational. This is perhaps a better process, because it is not a major crisis but a return to normality. The laws of economics are not broken like the laws of physics are not broken. Companies naturally develop a product that customers want, the customers pay them, and that's how a profit is made for the companies."

Shwed continues, "In the last decade, there has been a perception that some of the rules in the equation should not work - let's say great companies that lose a lot of money, but it won't work for long. In the last two years, we see a return to the basic law in economics: a high multiplie means that a company can make a lot of money, and if It can, it needs to make a lot of money. Companies need to learn not only how to grow, but also how to make money." He points out that in the recent wave of IPOs many companies crashed, which is "by definition a kind of bubble."

"We see tremendous pressure on large and small companies to reach profitability. I hope that this normalization in the market will reduce the crises, which will be smoother and not in the form of a crash." He adds, "I am proud of Check Point that we are profitable and show that it is possible to succeed, grow and earn. And I think this is also an opportunity for investors, and this means there are many upsides. If a company is traded at a multiple or a value that says it needs to grow 5 times to reach its value, then the profit potential for investors is high, and I think this risk is different in a company that is stable and has the potential to grow. In these cases, risk-reward can be a different formula. I have never had a problem with this and over the years, we have proven it quite a few times."

The war has an impact on Israel but it is reversible.

As an Israeli CEO of an leading Israeli company, Shwed speaks with senior figures around the world. "If you refer to the recent period regarding the war, I receive overall positive responses. Most people are not very interested in the war, and few people express support. I have not come across any other responses," he says.

How resilient is Israeli industry to wars, and what is different this time? "Our industry is very resilient and functioning. All the companies manage to function and do what they need to. We at Check Point in the first week of the war, immediately made a decision as much as possible to meet our deliveries. Not only for the specific period, we have gone through, to create a situation in which we are seen in the world as somebody trustworthy."

Shwed continues, "The immediate damage is not the problem, but the damage that will be caused in the long term. I certainly do see that new companies are much less willing to open a business in Israel, investors are reluctant to come and visit here. There is a very significant impact on the industry, it's not that there is no impact. But companies exist and work, and continue to work, and the customers continue to buy the products in the same way." Shwed insists that this impact is reversible.

How easy is it to set up a company in Israel? After all it is easier to raise money in Silicon Valley and found companies there.

"Israel's ecosystem is huge and excellent, and it is one of the most worthwhile places in the world to found a tech company. The ecosystem has many things: it begins with people and expertise in knowledge in many areas, many areas of support systems - and Israel is perhaps the place I think best in the world in this aspect. You also have to remember that Israeli companies are always split companies, because our market is not in Israel. So the company's focus should always be on the international market, often the US market. So many companies are founded when the CEO or one of the top executives moves to Silicon Valley, and global headquarters are created, which is part of the issue because our market is not in Israel."

What is it like to be the longest-serving CEO of a Nasdaq company today? Is it a role model for others?

"I hope so, I don't know how to say and I hope it's a model for others. I think for me it's a process of learning and growing, the title is the same title. But it's really not like when I started out in the position, and I managed three people and we did everything alone. Since then we've built an organization, and we had to understand how to operate an organization with 500-800 employees, then I jump forward 25 years, and have to work with 7,000 employees. I have changed my role, the company has changed its shape. I hope that the process of growth and learning what I'm doing now is the next step of this process."

What do you advise entrepreneurs to do in terms of coping with the geopolitical situation?

"I wish I knew, I don't know what the future holds in this regard, and how we can prepare. Our best way is to do our best work, to prove to ourselves, to the world, and to our customers that we are here and we can create innovation and meet their demands. And all this we managed to do in Israel."

Full disclosure: The Conference was sponsored by One Zero Bank, Microsoft, HP Indigo, KPMG, AT&T, and Mekorot and with the participation of the Israel Innovation Authority.

Published by Globes, Israel business news - - on April 16, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Gil Shwed credit: Globes
Gil Shwed credit: Globes
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