* Zuk founded company in 2005, went public in July
* Shares of Palo Alto Networks are down 10 pct since debut
* Zuk is viewed as an innovator in network cyber security
By Nicola Leske
PALO ALTO, Dec 14 In fifth grade, Nir Zuk gave
himself a virus.
A computer virus, that is.
It was the beginning of the programming whiz's career as a
cyber security specialist, where he has gone from a ten-year-old
challenging himself to create computer viruses to the co-founder
and Chief Technology Officer of security software maker Palo
Alto Networks (PANW.N).
"I never let it out in the wild," Zuk says of his youthful
Indeed, Zuk, 41, is now one of the major players in the
business of keeping businesses safe from cyber attacks.
An Israeli native who worked for that country's military
intelligence office as a programmer, Zuk helped create the first
commercial firewall at Check Point Software Technologies
(CHKP.O). He went on to found Palo Alto Networks in 2005 and
took the company public in July.
Palo Alto Networks' shares debuted at $55.15 - compared with
an issue price if $42 - but have since fallen by 10.8 percent to
The company currently holds a roughly 3 percent to 4 percent
share of the cyber security market. That's small compared with
Cisco's (CSCO.O) 30 percent market share, but Zuk is undaunted
by the larger rival's lead.
Cyber security is an $11 billion to $12 billion market, and
Zuk said his company can gain market share in the short- and
mid-term, though he declined to say how much. But he pointed out
that NetScreen Technologies, a firewall manufacturer which was
founded in 1998, grew to a market share of around 10 percent by
the time it was bought by Juniper Networks in 2003.
"We have a unique technology because from a tech perspective
we are several years ahead," Zuk said.
Most analysts don't dispute that claim, saying that Palo
Alto Networks changed the firewall market.
With the growth of web services and applications network
security, Palo Alto Networks' realized it needed a different
firewall approach, employing what is now known as next
Traditionally firewalls were created when data traffic
amounted to emails and web-browsing but they cannot protect from
viruses or malware entering via video streaming, file sharing or
Previously corporations would add products such as intrusion
detection to plug the holes in their firewalls. Palo Alto
Networks managed to build one device that handled all of the
An intrusion detection system monitors computers and
networks for signs of invasion and raises an alarm if it detects
anything while a firewall aims to prevent intrusions from
happening in the first place.
"A lot of companies invested a lot of money in detection and
realized it's not enough," Zuk said
"The firewall market was fairly stagnant for a number of
years," said Jonathan Ho, a tech analyst at William Blair. "Palo
Alto Networks really pushed forward the paradigm shift," he
From Zuk's perspective, large vendors like Cisco that offer
network security with other products lack the focus needed to
lead the way in network security, where the "bad guys are always
changing the attacks."
"Hacking is kind of like dating, what you want to achieve is
still the same, now you just use different techniques," Zuk
That's why he is keen to keep the culture of Palo Alto
Networks focused on its innovative edge.
"Many companies do not pay attention to culture and I am not
talking about a Friday night beer bash," he said, adding that as
companies grow "they forget what made them."
"Customers prefer a standalone network security company
because of their focus," he said.
Given that, it should come as no surprise that Zuk dismissed
the idea of selling Palo Alto Networks and believes the company
- and its customers - is better served by staying independent.
(Reporting By Nicola Leske; Editing by Peter Lauria and Tim
((Nicola.Leske@thomsonreuters.com)(+1 646 223 6134)(Reuters
Keywords: PALOALTO ZUK/INTERVIEW
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