“We are not part of the Israeli cyber clique, which is our strength”
SentinelOne founder Tomer Weingarten tells Calcalist about his first computer, why not serving at a top tech military unit helped him, and why his company’s market value does not phase him
Unlike the young cyber companies that have sprung up recently, SentinelOne, which provides organizations with endpoint protection for every device connected to the network, took several years to reach a billion-dollar worth and unicorn status. It happened in early 2020, and since then, the company has kept going. By the end of 2020, it had already reached a value of $3 billion, and on June 30 of this year, it had raised more than $1.2 billion on Wall Street, at a value of $9 billion. However, it did not stop there either as the company concluded its first trading day at a value of nearly $11 billion.
In the crowded and competitive Israeli cyber industry, SentinelOne manages to stand out as an extraordinary success story, and one of the reasons for this is undoubtedly its founders: Weingarten and Cohen, who retired from the company a few years after its founding. They were not the typical Israeli tech founders, not former soldiers in an elite technology military unit, but rather friends who actually met in elementary school, in the second grade in Petah Tikva, and had not parted until a few years ago when Cohen left the company. And yet, when Weingarten speaks of his childhood, he uses "We" - referring to the duo.
"When we were in high school and started trying to figure out what to do in life, it was very clear to us that what was happening in the software world was fascinating to us," he recalls. "It was in the late 1990s when companies like Microsoft built operating systems, and it seemed amazing to us. We asked ourselves why we were not doing it, we also saw mediocre companies and mediocre software - and we realized that things could be done better, a kind of innocent thought of young children.
"We both, and especially Almog, were very interested in what was happening in the world of infrastructure, and specifically, in hacking. The internet still has many breaches to exploit, but back then, it was completely open. We looked at this world from within its gut and asked ourselves how things are connected and how we can use them. We never hacked anywhere to make a profit, it was more about studying the possibilities and the hacker’s state of mind."
Where was your military service?
“In all sorts of places. At one point I wanted to be in the Center of Computing and Information Systems (commonly known as MAMRAM), out of the same attraction to the world of software development, but somehow we rolled into all sorts of roles in the military. We both probably have a problem, we are less suited for structured environments, it is difficult for us to do things without a clear logic behind them, and I think it would have been a lot less interesting for us to be part of the Intelligence corps.
“We didn’t really fit in anywhere, we did what we could but beyond that, our service had very little impact on our futures. We mostly focused on how not to stay longer than we had to. It's not that we had academic plans but we wanted to start going forward, we felt we could build anything we wanted.”'
Following his service, Cohen began working at Check Point and remained there for seven years, until he became the company's director of innovation, while Weingarten set up a start-up with another friend. "I wrote a website that was meant to analyze people's sentiment online and see what they were thinking and feeling," he said of what sounds like Facebook's twin sister that was ahead of its time.
“We had a thought that everyone would communicate with each other and ask questions, and it would be possible to use the wisdom of the masses. Of course, we did not have a clue on how to make it real, but somehow we managed to build something impressive that caught the eye of a public market research company. They called me and another friend and wanted to come to our offices, which of course we did not have. In the end, they bought us, although at first, they did not believe that we wrote everything ourselves, and checked that all the intellectual property was indeed ours."
At just 24, Weingarten found himself with a few million in his account. "I spent the money very quickly on nonsense. I told myself that if I did not spend it, I would probably not do anything else in life and retire - so it is better to spend it and push myself to do more things. But it was very nice they bet on two young kids to open an R&D center in Haifa with 50 people. I was there for five years, as VP of Product. It was a very interesting path. What's more, I had no idea about product management."
So you actually learned everything on your own?
"One time, Almog and I wanted to build something, and we told my dad about it. He asked us 'what will you do next?' We told him we will raise money and hire programmers to write for us. He looked at us and said ‘you are the programmers.’ Then we realized we need to learn to do things ourselves, so we bought books and started studying. At SentinelOne Almog and I wrote big parts of the original code, only recently we got rid of the code I wrote for the platform. We used to love it and we had a natural connection.”
"The investors’ rejection did not make sense"
Weingarten may have been busy with other things, but over the years he kept an eye on the security field. For a long time, he said, "the market was not interesting, and I did not see an eye-catching challenge. But at some point, we realized that the realm of threats was going to change drastically. We looked at the antivirus market where nothing happened in years, and then I thought it was an opportunity, and maybe it was time someone will build a better antivirus software, and that connected to new models that Almog came up with.”
“Back then, all the systems on the market gave an alert but had not stopped the threat. We began formulating a concept for a system that analyzes behavior to detect threats and can respond in real-time and block them automatically - instead of only recommending action. So we also introduced machine learning to produce predictions. We thought it might be the next generation of antivirus, a $15 billion enterprise market.”
"We had a lot of questions about how to build for an enterprise company because we both did not come from this world and it was a huge leap for us, to build a product for the corporate market and not the consumer market. But we decided the opportunity is there and not in the consumer world. We realized we would have to build a marketing and sales machine on a global scale, because the market is not in Israel, and the product should be one that can be used in all the huge companies around the world."
Although SentinelOne's current product has evolved greatly since its early days - its basic concept has not changed. "When we set out, it was important to me that we do as much preparation as possible, and try to avoid pivoting because it's a huge waste of time," Weingarten explained.
To their first investors, the California-based UpWest Fund, Weingarten and Cohen came with a great deal of determination and confidence, but without a real product. "We had a very basic presentation and prototype, it was at the level of showing input and output - bad or not bad," he says.
How did you manage to persuade the first investors?
“The truth is, we didn't convince them at first. They said no, but I did not accept it, their rejection did not make sense to me. We wanted to get to Silicon Valley but we had no connections, so we thought of them as those that would enable us to build a network of connections, and that's what happened. We persuaded them and moved to the Valley for three months in which we raised Seed investments. What we have done is not unprecedented in the Valley, many companies raise funds this way. We raised $2.5 million from VCs we thought would give us value in the future, such as Excel and DCVC, and we also raised funds from Dan Scheinman, who still sits on our board."
SentinelOne was built as an American company from the start, with an R&D center in Israel. Weingarten says this is one of the reasons they raised money solely from American funds, but there is another reason. “It was clear to us that no one in the country would invest in us. We talked to very few people before we moved to the Valley, and we realized we were right. We are not anyone's friends, we did not serve anywhere notable in the military and we don’t know people. I remember speaking with Shlomo Kramer, who is today a friend of mine and we are investing together in companies, and he did not have anything to base his assumption that we would succeed, and of course, he did not invest.
"We always knew we were not part of the Israeli cyber clique, but we thought we could give more than others. We also did not want to be part of this clique, because we are not that kind of people. We can be completely outside of the box - and that's what makes us strong. We do not have the 8200’s frame of mind, we can think the way we want - and that's a tremendous strength that people do not fully understand."
The assumption that you are part of this Israeli clique did not help you abroad?
"Many investors started the conversation with us by asking where we served, and if I was 8200 or 81, and the answer was no. To some extent, we succeeded even though we did not come from there. We are different from all other Israeli cyber companies."
Your conduct is also different. For many years you were flying under the radar.
"We have never had an interest in getting famous, making headlines, being the biggest and strongest, and getting into those comparisons. We are building a company, a business, and a solution that goes to customers, and everything else, the marketing, is to bring in employees - but we do not really care. All the fame that surrounds these companies is not important to us. We are simply another company, which is perhaps a little larger than the average in Israel.”
CEO and full-time salesman
Weingarten moved to Silicon Valley immediately after the company was founded, and in addition to being the CEO, he also did marketing. "I was the only salesman for the first three years," he said. "We had a small sales team to support the operation itself. In the third year we brought in a VP for Sales, and in the fourth year, we did a complete reboot to the team and started over. In the first few years, we mostly listened to our clients, tried to figure what was the killer application they saw, and if they will use what we are planning. We spoke with Intel, Netflix, and many other companies, most of which later became customers, but at that stage, we just wanted to learn what the challenges were."
When did you feel like you leaped forward?
"There were a lot of little jumps. The first client was magical. It was a law firm in San Francisco. They paid a crazy amount for each license, and we felt it didn't make sense this was happening. They bought 500 licenses. Today, by the way, clients buy 500,000 licenses. Another significant point was the first quarter in which we reached the target we set, I think it was $4 million.
"However, the moment we realized we were really building something on a large scale and we were not just another company, was in 2019 - when Deloitte invited us to receive an award at a ceremony in Silicon Valley. We were told that the first three companies in their rankings receive an award, and we were surprised. Until that moment, we did not know how we rank in relation to the other companies of our size, and then it turned out that we were ranked first in the Valley - the stomping ground of very impressive companies, and we realized that there is something very special here, and how big it can get."
Three years after its founding, Cohen decided to leave the company and left Weingarten with a difficult decision. At first, he took on the role of CTO that Cohen had in the early years. "Almog and I are good friends to this day, but for the past five years he has not been part of the company," he said. “On a personal level, there was a point when things had to be done differently. We have always had disagreements and at some point, he found himself less in the day-to-day work of the company. I would have been happy if he had stayed, in any position, but he wanted to take his foot off the gas and I accepted it.”
You had to readjust?
"I realized that quite a few changes had to be made in the company. I talked to the board, I won their full trust, and since then we have not looked back. We rebuilt our sales department, which was good, but it was clear the market became competitive and a new level of sales was needed. The vision for our platform seemed very far away at the time. We had to change our R&D and be much more than an antivirus. We let go of many people, it was not the most pleasant period in the company’s history, but we laid down the infrastructure that supported us.”
"We started from a nice concept for a product that can replace antivirus and today our product gives full telemetry, AI-based detection, cloud security, IoT security, and data processing. It opened up more markets and opportunities for us, and we moved to being a cloud-based platform you can deploy in a moment and enjoy all its benefits."
There are many actors in this field. What is your place in it all?
"It's a very big field, but there's one market that is the biggest today - the endpoint security market, and it's where we have always been. There is another significant actor there, the publicly traded CrowdStrike, which is our main competitor. When we started, there were dozens more, now it is them and us. Our dominance in this market positions us as a key player, we have expanded to other areas, such as cloud security, where there are also many actors - but it is a large market and there is no winner."
Weingarten does not mention names, but it is hard not to understand that he is speaking of young Israeli unicorns like Wiz and Orca, two start-ups that reached a value of $1 billion with revenues of a few million dollars when he said that "today a considerable part of our income is coming from the cloud. We have more revenue from the cloud than all the startups that have just popped up. In the cloud space, there is a lot of sentiment for large fundraising and good teams, but at the end of the day, the platform companies work in the cloud in a much more significant way."
The reason for the advantage of companies like SentinelOne and Palo Alto is that their base product protects all endpoints in an organization, and from there it is easier for them to expand the customer's security circle, unlike companies that provide only cloud security, as a separate product. “Once you have coverage of all the real estate in the organization, more capabilities can be offered on top of your platform,” Weingarten explained.
"Our customers are among the most satisfied customers in the world, and the ability to grow with them is very significant. At the same time, our organic growth is almost unrivaled. We reached our IPO with our ARR (Annual Recurring Revenue) growing by 116%. There is perhaps one company in the public market that has grown faster than us. We are in a group of intriguing companies at the global level."
Check Point executives recently said in an interview with Calcalist that they are the largest cloud security company in the world, do you agree with this statement?
"It's hard to define Check Point as a cloud company, but if you look at the revenue of companies deploying a solution in the cloud - a very broad field, when what Check Point does is different from what we and Palo Alto do - you can not ignore they have close to $100 million in revenue from cloud products. But, it does not seem to me that there is metamorphic growth there. A lot of these things are a point in time that anyone can spin. If we look at a period of five years of a fast-growing startup, or us, we will see completely different results. Will Check Point be dominant in the cloud over time? I do not know.”
"We are very competitive in salaries"
SentinelOne has R&D centers in several places around the world these days, but most of its development team, 300 people, is still in Israel and they make up about 30% of the global workforce. About 20% of them are women, similar to the reality in the entire industry.
When asked if competition for cyber manpower has become tougher, Weingarten said that “competition in the country has always been crazy, we always had to jump through hoops in the sky to bring in talent. However, we have created a core team that brings more people and it is an expanding circle. Many join us because we have some of the best human capital in the country, and they know we work with a different set of values.”
"We do not advertise on the Ayalon highway and we do not want people who flock to billboards. We want talent and values, we are very competitive in salaries and stock compensation is a significant component for us. It is probably something no one can offer. Only a few world-class companies have the growth we have. Maybe Monday.com."
What does a different set of values mean?
"We are very low key, and those who come to work for us appreciate it. We are very committed to transparency and mutual respect for everyone who works for the company. Comparably (a website that compares employment conditions in the U.S.) has chosen us as one of the 50 global companies with the best work culture, emphasizing diversity, and inclusion. It reflects the spirit of the company. No politics, no blame games, we are really working together and trying to produce the best solutions. We have a huge clientele to provide the best protection solutions, and it unites us all together."
Compared to other high-tech companies, and especially other cyber companies, SentinelOne does not often make headlines in Israeli media. Although in 2020 it launched a television campaign in the U.S. and caused a brief mini-storm when it chose to place a billboard to recruit workers at the entrance to the Glilot intelligence base.
You appear much less in the media than your peers, so how do you communicate?
"I think it comes through the people, if you ask around and are interested it is very clear. The people are the best publicity."
What do you think about the idea of bringing foreign workers to high-tech in Israel?
"It sounds a little strange to me. I think we need to focus much more on training. We need to start with education and making technology accessible to people from all walks of life, and there will be a better return on our investment. The question is also what volume we are talking about. For a significant change, a mass of human capital needs to arrive, and in our field, there is a shortage of talent around the world. In the U.S., there is a shortage of one million or more workers in the cyber field. "
Your IPO succeeded beyond expectations. Were you surprised?
"I was not surprised, we planned everything. I am very happy with the result and the fact that things happened as planned. A lot of things had to work out for it, and it was a lot of people's work. It also happened in record time, because we brought the company to the IPO in six months. We were ready, and it helped us."
Weingarten is of course proud of the impressive move, but he refuses to measure the company’s success by the value it has reached. “Our revenue and growth forecasts are unrelated to value,” he said. "Market value is what the market is willing to give to a company with stats like ours. Sometimes that number goes up and sometimes it goes down, depending on the market situation.”
"We are a company that grows very fast and adds plenty of revenue every quarter, so the value is fluid. We analyze the market and understand where we are supposed to be relative to similar companies. One billion, three, or ten - for me what the market dictates is detached from our performance and growth. The market will go up and down and we do not necessarily have any control over it. Therefore, we are focused on producing a value within the company, in the hope that the market will reward us for it."
Why did you suddenly decide to go for an IPO?
"In our market, to establish the trust we ask of our customers, we need to be a transparent company. An IPO removes the cloud of mystery, which was a key barometer. Another reason was the desire to create capital for the company, it was fundraising by different means. We raised $1.4 billion, which gave the company significant resilience. We felt it was ready, with very good revenue forecasts, and everything was connecting. It was a matter of making a decision - whether to enter a six-month effort to bring it to the public market."
For many entrepreneurs, this is the moment they encounter personal wealth. Was it for you too?
"Not really. I did not sell anything in the IPO and there was no secondary component for the employees. They will only be able to sell in the future. Given the stock price, this is probably not a bad decision, and no one is in a rush. The company is a good investment and I have no problem keeping the shares. We are at the beginning of our journey."
So you are not going on a shopping spree now as you have in the past?
"I'm not the same age, I have four children, I am somewhere else in life and most of all, it is important to me to spend time with them. When you make an exit at an early age, you realize that money is not a goal."
Is there a moment in this journey that broke you?
“I'm not a person who breaks. There are a lot of hard moments, but there will always be a better day. Just yesterday I read to the children a book by Dr. Seuss that I really like - Oh The Places You'll Go, and it reminded me that there will be difficult moments. The journeys of entrepreneurs like me and almost everyone you see in the high-tech scene are not very simple. We read about the successes but there is an infinity of hard work, commitment, and difficult moments, but part of it is knowing how to deal with these moments and not run away from them "
Do you see yourself staying in the company, like Gil Shwed at Check Point?
"First of all, I do not see myself as Gil Shwed. I have never met him, by the way. My approach to the company has always been pragmatic - I am with the company for as long as it wants me. They signed me for five years and I will stay as long as they want me."