← Leap Academy with Ilana Golan
Leap Academy with Ilana Golan
Gil Shwed: Building Check Point into a $20B Empire and Defining the Future of Cybersecurity
00:57:23
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- [00:01]
Ilana Golan
Wow, this is going to be such an incredible show today. But before we start the show, I want to ask you for a favor. See, I'm on a mission to help millions leap their careers, land their dream roles, fast track to leadership, jump to entrepreneurship, or create portfolio careers. Now, this podcast is about giving you a blueprint of how some of the biggest leaders of our time reach success. So subscribe, download, so you never miss it. Plus, it really, really, really helps me continue to bring amazing guests. So let's dive in.
- [00:32]
Gil Schwed
Even if you're excellent, you need to push it further. Excellent is seeing always what's wrong and what you need to improve. It's not sitting and saying how great we are.
- [00:43]
Ilana Golan
Gil Schwedt, Founder and Executive Chairman of Check Point. The longest serving CEO of any NASDAQ traded company. It's roughly a $20 billion company, the Pioneer in cybersecurity, and probably the largest company in Israel.
- [01:00]
Gil Schwed
I knew that I want to be an entrepreneur. I dreamt about it since I was 17. When we started, there wasn't even the web. So we are free guys in Israel. We have product, we believe in it. And then a few months later, my partners told me, gil, how do we sell this stuff? They said, you go now to the US and don't come back without a million dollar check. But after 100 days, I returned from that trip with a million dollar check. You don't start a company because you want to have a company. You start a company when.
- [01:42]
Ilana Golan
Gil Schwed, Founder and Executive Chairman of Checkpoint Gilsfeld was the longest serving CEO of any NASDAQ traded company. How cool is that? He founded Checkpoint in Israel. It's roughly a $20 billion company, the Pioneer in cybersecurity and probably the largest company in Israel. Gil, you began programming at a very, very young age. You were curious about computers when we barely knew what it is. So why?
- [02:17]
Gil Schwed
It's a good question why? But I think 70s, mid-70s, I think it might have been something to do with my dad that was like a system analyst in computers and one of the early programmers. Very different technologies, very different environments, but probably triggered me and I don't know, maybe also as a kid, my parents sent me to all these sorts of classes and actually I didn't like most of them. And computing was the first one I registered myself that nobody sent me. So that's maybe one of the reasons.
- [02:49]
Ilana Golan
Wow. So something sparked that interest very, very early on. And in the military, you got into a very elite unit. Those who know it's called 8200. It's in the Israeli Deferred force and it is more around intelligence, et cetera. What did that early experience did for you, Gila? I know I always talk about how we've had more responsibility at age 18, 20 than I had many, many years later. But talk to me a little bit about that for you first.
- [03:25]
Gil Schwed
I've started being a professional sort of quote unquote at the age of like 14, 15. And I worked as an employee at the Hebrew University and then at several other companies, National Semiconductors and few others back in the days. And when I got to the army I actually, even though I was 18 and really young, I was recruited, quote, unless an expert. And when you think about it, by the way, it's hard to realize that in the Israeli army first there are some of the smartest people and they know a lot. But when you think about it, the army only recruits people at the age of 18 with zero experience. So I was brought into open systems, UNIX systems, which everybody's using today, the Linux based systems. And in the army I was surrounded by super, super smart people. Many people did their PhD at the age of 17 or 18 and I had to find my own way and how do I contribute to that system with such smart people? And I think one of the interesting thing in the Israeli army that these 18, 20 and maybe you know, the old guys are, the mature guys, are 24, 25 years old, get a lot of responsibilities. So I got a lot of interesting tasks and nothing was impossible.
- [04:41]
Ilana Golan
So it's incredibly inspiring. But I think also the military lets you dive into areas that maybe on the day to day you usually don't dive in. Where did that hit you in terms of cyber? What did you learn there that you took later on?
- [04:59]
Gil Schwed
So first back when I was there, it was 37, 38 years ago, there was no cyber. I mean when we think about the cyber industry, it's all around the Internet and that all started around 30 years ago, so few years before that and now it's became a power of cyber. But that's way past my time. I mean maybe I was one of the few that started some of the technologies, but not cyber because there wasn't any cyber warfare in the late 80s which were these these years. But I think I've learned a lot. And by the way, in the army you learn a lot. You learn some of the bad stuff. It's a huge system with a lot of bureaucracy, with hierarchy and so on. You learn some of the good stuff, which is how you get 19 years old, kids take any task, break any barrier, break any rule just to get the work done and to achieve the goal. And that's something that it's actually very common to startups, without the part about a big bureaucratic system. So when I'm in Checkpoint today and one of the first thing I said to people, guys, we need rules. And in order to build a scalable company and a big system, you need rules, you need all these sorts of things. But we are small enough, so if the rules are not good, we don't go around them, we don't break them, we change them because we can. And that's some of the differences between, you know, what you learn in a system like the army and the system like a startup company or now even now, Checkpoint now is 7,000 people. It's not a small system, it's a pretty big one.
- [06:32]
Ilana Golan
It is a pretty big one and I want to go into that. So you don't really deal with cyber yet. That's true. Although I think intelligence overall teaches you how to solve problems in a certain way. And I think that's also in the military, like you say, you take 19 year olds, 20 year olds, and they need to solve problems. You know, you don't train for four years to learn it, you just figure it out. Do you feel like there's a story for you that latched on to what happened in Checkpoint later, or do you think there's something there first?
- [07:07]
Gil Schwed
There is a connection because the idea for the technology that later became Checkpoint came to me in the army and it came from something completely different. I was in a very classified unit. Computer networks were in the very early days and we had to connect our network to a separate network, a separate network which was literally over the wall. But for us it was a big issue from the security. And that's where I got the idea and the challenge to connect two networks securely. Moving fast forward three, four years later, that became the original technology behind our stateful inspection and securing the Internet. But again, it's completely different environment and different technology. But that's where the original idea came from. Other than that, I think the fact that you can achieve everything and you can do everything is something that I've learned there. And it's a good thing to take into life.
- [07:58]
Ilana Golan
It's actually critical. I think it's that level of confidence that no matter what you have and what you face, you can figure it out, which I think is a big part of something that sometimes as adults we lose in life at some point. And I think it's important to see how to get that back, which I think a lot of our listeners will resonate. But you leave the military, you don't necessarily start Checkpoint right off the bat. You do have a few more jobs. What did you gain from some of those experiences? And what do you think that helped you in terms of founding Checkpoint later?
- [08:34]
Gil Schwed
So first when I left the army, I had the idea and I knew that I want to be an entrepreneur. I'm entrepreneur from the stand, but I want to build my product. I dreamt about it since I was 17. At that point I was like 21, 22. So I already knew that I want that. And I was looking for ideas and.
- [08:51]
Ilana Golan
I'll just say the word entrepreneur didn't even exist and you already knew that. You want to start something, go for it, okay?
- [08:57]
Gil Schwed
And I looked at that idea, network security and I said, you know, it's actually a good technology. It's quite simple, it solves a real problem. So it has all the characteristics of a good basis for a startup or for a company. But I didn't find an exciting market for it. I said, if I want to send it to, you know, big government organization that needs their network to be classified or compartmentalized, it can be done, but it's not an exciting market. So I actually decided to do other things. I've actually worked initially as a consultant for several projects which was great because I moved from one company to another and I learned how different markets behave and different company behaved. Then I worked at one company in the the company was in called optrotech, was in the PCB industry, but I actually worked on a small startup within that company. It was on printing. A year later I started another company with my previous boss at that company that we were developing software for an American company as an Israeli kind of subsidiary. And through all of his learning I've learned so much in Optra Tech which was back in the days it was a few hundred people. To me it looks like a giant company. I've learned how not how the army works, but our commercial company worked. I've traveled the world and did better sites in Indianapolis and trade show in Chicago and Frankfurt. So I've learned a lot about vet what it's like to meet with salespeople, what it's like to meet with customers at the next startup. I've learned some good things, some less good things. For example, how to build a company, how to recruit people. Within a year I've recruited the team of over a dozen programmers I've built business plan I've presented to our shareholders and customers from New York and so on. All within, by the way, a budget that you can't imagine today. I'm talking about recruiting 13 people with a budget of less than $300,000. You think about how we're today budget for less than 1.
- [11:03]
Ilana Golan
Right, right.
- [11:05]
Gil Schwed
So I've learned a lot about what it's like to start a company. By the way, what I learned that was less ideal is that you don't start a company because you want to have a company. You start a company when you have a huge market opportunity, a great idea, a good team of people, and not because you want to have a company. And a year later, then I saw actually the Internet coming. And as a young person, especially as a remote country, I said, wow, the fact that we can be connected will change the world. And again today, we can't imagine what it's like to be not connected. But I think for the. I'm sure that there are some listeners here who remember and some listeners who can't imagine their life. But think about the life that if you want to know about the latest computer, you wait until a big magazine, Bite magazine that's like this heavy, arrives to the local news store and you bite and you learn about a product that was launched six months ago and you actually can't even get it because it's not shipping in your country. So when you can actually register. And when we start to checkpoint in 93, it was before the web. So I'm saying getting access to information is not surfing the web. It's being subscribed to a mailing list and getting a daily mail that says, this is new, this is exciting. And then you can even respond and ask more questions. That looks like something that can change the world, at least my world. And I think that vision was correct. I think where I was wrong is that I probably undersized the opportunity by a factor of 100 or a thousand. I thought that we'll have a great idea, a nice market for it, and we will be few dozen people and we'll sell for a few million doll, and that will be a great business to be in. And, you know, here we are 32 years later with something that probably a.
- [12:57]
Ilana Golan
Thousand changed the world. And I want to take you there for a second because I was probably in the military and the Air Force at that time, and I think we kind of saw the wave of Internet starting, but you. And it kind of moved from being this academic tool to being Companies starting to see, you know, how they can do something with this. And you somehow latched on and decided to, not only companies will need this, but they'll need a firewall or they'll need literally a door to protect them. Right. And by the way, I love this explanation. You know, I think you, you explain it really, really well. So can you explain what you've seen and what you decided to solve?
- [13:41]
Gil Schwed
Now, I've sold dozens of companies back in the days and they all want to connect to the Internet and get email and log in remotely and do all these things. And then they say, but what's about all these students in 15,000 universities that were already connected to the Internet, they can go now into my computing system and they can look at everything because things are generally wide open. It's like, you know, putting your house, not just opening the door, but putting it in the middle of the central station in the, you know, in Times Square and being open to the entire world and everybody can just walk in. So the first question is, okay, that's great. I want to be on Times Square, I want to see everyone. But how do I make sure that people, I can go out, but they cannot come into my, my store? And that's what the firewall does. It's like this door that looks at who's going out, by the way, which is not always allowed to, and who's coming in and is vet allowed or that's the right service and right person and creates the security for that. And of course, doing it at the wire speed, that thinking about future communication protocols. Because when we started, there wasn't even the web, so we needed to imagine what will be in the future. And that's what we started doing. And by the way, the response was very high because every company that's connected to the Internet asked the same question. Now today we're talking about malicious actors that are huge criminal groups and state actors and hacktivists and all sorts. Back then it was the students from MIT attacking Caltech and defacing their Internet and vice versa and putting files on one another. But again, when you think about it, it's like being on Main street, wide open. And that's every expert that's connected to the Internet thought about it.
- [15:32]
Ilana Golan
You realize there's going to be a real issue, which is pretty incredible because I think both of us were just dazzled by the idea. But you were already looking a few steps ahead, which I want to talk about, because that's a theme in your. But you also decide to raise an Extraordinary amount of money. We'll talk about it. This is a joke. When VCs, I mean, the whole concept of venture capital wasn't really there. And I am joking because you built this company from basically nothing how you started. So can you share a little bit?
- [16:07]
Gil Schwed
So again, we thought, how should we finance ourselves now? Today, the ecosystem for that in Silicon Valley and in Tel Aviv is very clear versus, you know, VCs. And there's the entire ecosystem, what you need to be supported and what you need to do. Back then, it wasn't that simple. Again, we weren't the first tech company in the world and we weren't the first tech company in Israel, but there were like two or three VCs in Israel and we didn't even think that we can call them. Maybe we should have, but we didn't. And we thought maybe we should finance ourselves by, you know, working the day and developing the software at night, which is quite common. And actually we did a lot of thinking that days we didn't have an experience. So when we said, the Internet is moving really fast, we can't afford wasting time. If we will take us too long to build the product, then we might miss the market. And we decided that we need to raise money. We built some plan that says we need like $100,000 to buy computers, fly to the US and these things. And we started looking for different alternatives for raising money from different software companies to people in the finance world and others. And we approached five or six groups and at the end of the day we decided we ended up with a software company from Jerusalem that we knew. Some of the founders of that company that back then looked to us like the role model that we can learn from because they were 30 people selling software. So it looked to us like, like a big company. And we actually ended up raising $250,000 twice as what we actually thought we need. And that's where we got started. And by the way, we never used all that money and we never raised more money because from that amount of money we built a product, we started selling it, and we became profitable.
- [17:53]
Ilana Golan
And if I am correct, they got about 50% of the company. For 250%?
- [17:59]
Gil Schwed
Yeah, for $250,000.
- [18:01]
Ilana Golan
So it's probably one of the best investments on the planet ever. So if somebody wants to calculate if the company right now is worth about 20 billion, you can make your calculation. But first of all, you start with a few beta sites, you start with a few companies. Tell us a story of a company that wanted to adopt this. But also, I'm sure you had companies that didn't want to adopt this or didn't want to adopt the Internet altogether. Share some stories. Because I'm sure at the beginning it sounds glamorous, like, oh my God, you're on this hockey stick. You raise capital. Everything is amazing. Share some stories. Go.
- [18:40]
Gil Schwed
So first, the challenging part was actually not just. I mean, we built the software. Three months later, we had the prototype, we ran it. We didn't have an Internet connection, it was too expensive. So we actually ran it on our parent company, the investors in Jerusalem, and they were, as I said, a rich company. So they got an Internet link and we installed the software. And the first hour I installed the software and suddenly I see that I get alerts on the console. Somebody's trying to break into the network. The immediate reaction is that maybe that's a bug in the software. There's a bug, but I've checked it and all the IP address looks right. They were of companies I knew. And the Internet community in Israel back then was very small, so started calling up the companies that were trying to break in. And one of them, which I also worked with, just told me, come here and check our network. And I found out that somebody was all over their network. And I found traces from other. Again, not many companies, because not many companies were on the Internet, but that were all connected. And a few weeks later, the police was able to arrest two teenagers in Israel that basically broke to all the places in Israel that had Internet connection, including utility and infrastructure companies and multinational companies from Silicon Valley that branches in Israel. So that shows us first that it's real, it's not theoretical, it's not something that you might think if you, even if nobody knows who you are on the Internet, you're a target. Fast forward now, how do you sell that product? We are free guys in Israel. We have product, we believe in it. But how do you find the market? So while we established some connection, I did few trips to the U.S. i mean, we realized, by the way, that if you want to be successful in tech, it's a global market, you need to be successful in the us if you're successful in America, the entire world will follow. So I've traveled to the US mainly to into all parts of it, but to mainly to Boston and New York. And we found few better sites that were ready to test the software. And again, the reaction was very positive. Out of like 19 companies that I met with in the period of few months, out of 20 companies, 19 said, we want it, we want to buy. They didn't know how much it cost, we didn't know how much should it cost. But that's a very high success rate. One company, if you're talking about somebody that didn't want it, says, you know what, the software is really cool, but connecting to the Internet is not safe enough. We would never connect to the Internet. By the way, that company was Lotus from Boston, the ones that invented the spreadsheet. And by the way, I'm not using this against them because they knew that there is a risk and they knew about the Internet. Interestingly enough, a year later, they purchased like 10 or 20 copies of our software. So it took them a year from 94 to 95. But then they became big customers. And then a few months later, my partners told me, gil, we are working for a year now. We have 20 or 19 active beta sites. The Internet is moving in the same direction than we anticipated. But how do we sell this stuff? How do we establish distribution channels? We are in Israel, the market is in the US and again today there is a market. I mean, sometimes you can imitate the market and says, that's the market. I put it on the website. That's a channel there was not selling on the web. I go through these kind of resellers, but they weren't Internet resellers, they were PC resellers. They were networking, but not Internet. And then they sent me off a road trip and my goal was very simple. They said, you go now to the US and don't come back without a million dollar check scheduled. I had like a 10 day itinerary in the east coast, in the west coast, all over. Very interesting trip again, there's a lot of stories. I wouldn't use the full hour to tell the stories, but the end of the story is that I returned from that trip with a million dollar check. It didn't take me 10 days, it took me about 100 days every time I wanted to come back home. And then there was this new opportunity that I should fly into tomorrow. And I didn't return and I changed my ticket. My parents came to pick me from the airport two or three times and they didn't show up again. Remember, there wasn't a cell phone that you can call and say, I'm not coming. It's like you call home once a week and you said, and suddenly I didn't show up. But after 100 days, I came back. We had few customers, we had few resellers, and we signed the giant Contract with Sun Microsystems, that was the main server vendor of the Internet. If you're for those who remember.
- [23:27]
Ilana Golan
Of course I remember.
- [23:29]
Gil Schwed
Sun was like the slogan was we are the.in.com. and they were the giants of the Internet. And they became our OEMs or our distributors, which was a giant thing for us because we moved from three people or four or five people at that stage to securing a million dollar commitment per year. And our run rate was no spending a hundred thousand, two hundred thousand dollars a year. And suddenly we had secured a million dollar in the deals. So we started from that to build a company, hire people, this build sales and marketing. We realized that we cannot rely on a single distributor or a single partner to take care of our destiny. So the nice thing we did, which was smart, is saying, okay, we will support them as much as we can because they are the future, but we will build the bigger future because we cannot rely just on one channel. And that was a great success because we worked with sun for like five or six years and it was a great success. But when the contract ended, instead of going down, we went drastically up because we moved all the sun channels directly to us. And we became actually even bigger with that.
- [24:41]
Ilana Golan
What a story. And I want to talk about those hundred days, first of all, because a lot of people, this is where they would give up. Like, they would basically say, well, you know, a week or two have passed. I didn't make it. Does this even make sense? Is it gonna create anything? And you had no problem continuing. I think that level of conviction, I guess, of what you're building and that this is gonna be a real thing. But what kept you motivated and not just pull the towel?
- [25:13]
Gil Schwed
First, I had a mission, and second, I didn't necessarily reach my goal. And I saw that the road to get to it is slightly longer, but we were on the right track. I mean, every day I found new opportunities. Every day there was this next great meeting that can be the bridge for the future. The relationship with Stan, of course, weren't created in one day. I had some meetings there in an earlier trip. And then I started establishing relationship. And then I built the relationship with the people I were working for. So, like, every week I would come back to Silicon Valley, to Mountain View and meet with them, and actually even spent with them some weekends in all these places. And by the way, a month or two later, and we played all these tricks to get into a business. For example, we presented one of the opportunities. We met with a Internet service provider from Princeton University and they told us, you know, there's a big trade show in Las Vegas next week. We don't know if your product has potential. Come show the product at our booth and we'll see what's the potential. It was a big deal for us. How do you create a stand in a trade show in the week? Create banners, signs, again, many stories about that. We ended up that show when we won the Best of Show award in Network Interop, May 1994. And by the way, we created a lot of connections. So the guys from Sun Microsystem wanted to come and see the product in our booth. So the trick that I did for them, I don't know if they know, is that I called on the same time some people from Cisco and Digital, which was back then a big computer company. Now the guys from Cisco and Digital, it was like the first introduction, they didn't know anything. And the reason I called them on the same time. So the people from Sunset, there's other people interested, right? People in San. For like the second or third meeting. And it worked because they came, you know, I didn't say anything, but they realized that the booth is busy. The other people there had badges and they were their competitors. So they realized that they need to move. And again, it took them a lot of time. The next story is that after like a month or two of dancing back and forth like that, they said, you know, we are ready. We want to sign a contract. There are no business terms. Let's meet. So I consulted with one of my mentors, actually, our lawyers, our lawyer, and he says, tactically, don't schedule the meeting in Mountain View because you're never going to end the negotiation. They will always ask for more. And for them, they are not in a hurry. They can only always meet next week. They are not rushing. They said, we'll come to Tel Aviv. I said, no way, because they'll come to Tel Aviv. And they see, no matter that you know that you are three or four people, they'll come and they see that you have a one room office. There's no way you're going to get a lot from that deal. So we ended up doing the meeting in New York. We were three people at the company. Sun, of course, was this giant company. We ended up bringing 10 people from Checkpoint and three people from Sun. They brought product manager, business development and the lawyer. We brought three lawyers, three board members, two consultants, the three of us. So we kind of added 10 people in the room. They were showing up like Silicon Valley guys with jeans And T shirts. We were with suits and ties. We spent an entire week in that conference room. I was the youngest person by far in the room. 25, 26 years old, running the meeting with his big lawyers from New York and so on. And we ended up the week with understanding of what the deal would look like. And that's where things started rolling.
- [28:53]
Ilana Golan
Hey, I'm pausing here for a second. I hope you're enjoying this amazing conversation. Don't forget to like this video. Subscribe to our channel now. If you're looking yourself to catapult your own career, figure out what's next for you. Get that clarity, fast track your own growth. Check out our free 30 minute training@leapacademy.com training. That's leapacademy.com training. Now let's get back to the show. There's the book Chutzpah, or the word chutzpah. You know, I mean, there's something about knowing how to create our own luck. I think that is playing a really important role here. Um, and I love these examples now, I think, and correct me if I'm wrong, Gil, but only after about three years. You decided to go public with Checkpoint. You're super young. Why did you decide it? How did you know how to do it? Talk to us a little bit, because that's a big deal in every perspective.
- [29:49]
Gil Schwed
So first I didn't want to go public. My shareholder really pushed me. And back then, the hurdle to go public was much lower than today. Today it's like at least $100 million. Back then, growing at $10 million was good enough. And at that point we were more than $10 million in sales. We were super profitable, which by the way, very high there and doesn't exist today. We were like making $10 million of sales or 5 or $6 million in profit. So we were very lean and so on. And even a year earlier, my shareholder told me, you know, Gilbert, it's time to go public. We have bankers here. Let's go. And I said, guys, no way I'm building a company. I'm not trying to do an exit. I don't need the money. I want to be busy in building a real product and a real business and the real distribution channels and so on. And I said no. Which wasn't easy. A year later, in 96, when we went public, it was less than three years after we started formally, they asked me again. And at this point, I didn't have too many excuses. We were like few dozen people. Our sales were growing again. Still Very, very small. But at this point, I freed myself. And by the way, I was very lucky because I had two partners, two equal partners that are amazing, Marius and Shlomo. So I said, I mean, the thinking there was going public or any, by the way, initiative of raising money really distract you from running the business. And by the way, I see so many entrepreneurs today, most of them today, that measure themselves of how much money they raised in the next valuation. And that's actually a distraction from building a business. It's not building a business. So I said to my partners, you're going to build a product, sell the vet. I'm going in the next six months to focus on going public and you're going to run the show. And that's what we did. I'm going to seclude you from most of the financing activity. I'm going to update you, I'm going to, you know, share everything. But I don't want all of us to be distracted. I want somebody to run the business. And that's what I did. And, you know, going public, it's like basic training in the army in some aspect. You do a roadshow and you're repeating the same presentation five, six times a day and you're asking the same questions and you need to appear in every meeting like it's the first meeting that you have and answer all the questions genuinely, which is part of that is putting you under a lot of pressure and seeing that you don't break. We did that. And then In June of 96, at the end of June, we became public company traded on nasdaq, which was a big thing. And by the way, the shocking thing, the next morning I met, I already had the head of sales in the US and the head of market sales and marketing. Very smart woman in the US and we met the next morning in New York and everybody was amazed that we are public where it's worth a lot of money, like half a billion dollars. And our stock popped from 14 to 24 on the first trading day. And they were all excited. And that day I looked at them and I said, guys, we screwed up big time because it's now June 30, it's the end of the quarter, the quarter is going to be good. But you didn't make your number. It's coming from our old channels. You were supposed to bring, I don't know, half a million dollar of new business from new channels. And you didn't make that number. And we can't be happy about the financing. Wall street expects us to deliver the numbers we need to build it. They were shocked. They were feeling that. They were all happy and celebrating. And I was on the same day, 11:00am in the morning, when the stock started trading on the first day, I was actually screaming at them. I hope I'd learned better since then. But still, I think that was the spirit that I had back then, which is we always have to look future. We always have to push harder. Even if you're very good and even if you think that you're excellent, you need to push it further. Excellent is seeing always what's wrong and what you need to improve. It's not sitting and saying how great we are. And I think that's what we did.
- [33:59]
Ilana Golan
First of all, I would love to hear how your leadership morphed, right, because you're starting from such a small company to 7,000, whatever employee company. That's a huge transition. And there's a lot of phases that go through this growth. What is that for you? How did you learn how to morph yourself? Or what are some of the mistakes that you feel like you've made? And you needed to learn how to do better in terms of leadership.
- [34:30]
Gil Schwed
So first, that's the reason why I survived for so many years, because I get bored easily. And I think my task as a CEO was every year to learn something new. On one end, I built on what I knew. I was a programmer. The first product, it's not that we hired a bunch of programmers. The fourth product we wrote ourselves. We were free. Two of us were programmers, and Shlomo and I, and we wrote the pro, the software, then we needed to sell it. And again we realized, yes, we need to hire professional sales and marketing people, but it will take us probably a year to build a team. In this year, we need to sell. So we became the sales people and we became the support people and we became the marketing people. And behind us, we built infrastructure. So there was a constant learning. Again, I've described going public, tons of learning what it's like, how to navigate that. And that was an amazing six months for me of learning about the public markets. And we made, of course, mistakes, but for me, it was growth. And in like 97, we were already a company with probably a few hundred or over 100 employees. We need to learn how to build a company out of it, how to create hierarchies, how to create departments, work processes, what's product management and what's product development, and how do we interact with sales and with marketing. And by the way, it was not coming from weakness, it was coming. I mean, our sales were at the sky, our marketing did very well, but it wasn't connected. So we needed to connect all the dots to build the infrastructure. And at least for me, again, maybe it's my background as a programmer. That's what you think about the programmer. How to build new elements and how to make them work together. And by the way, of course we brought a lot of people that also taught us how to build these things. That was kind of the learning process for me. And every year in my ex career I had to reinvent myself. And by the way, it was a huge task because when you're growing vet fast, you're never doing all the things you want to do. You never have enough people. We all want to grow fast. And today our main challenge is how to grow faster. But it's not an easy place to be in. And by the way, then we finished seven years, we reached half a billion dollars of sales at that time, by the way, we were worth more than Apple computers. In 2000, Apple was in their down and we were in our max. And then came the dot com bubble and suddenly the entire environment changed. Instead of hyper growth, the market is actually declining, not growing. So how do you manage? And that was a huge learning experience for me. And by the way, an amazing one. Because it's not no matter what you do, you're growing, it's now if you invest in that, it creates growth. If you don't invest in that, it doesn't create growth or create losses. So we navigated through that period. I think we were probably one of the only companies in the market that never did any layoffs through that period, even though our sales went down for at least one year, 2002. And each learning experience was an interesting learning experience. So we organized things, we created more organized budgets and the flow of things and we became more even more efficient. By the way, we reached the maximum profitability at the time because we realized that suddenly we have enough resources, we don't need to invest more in growth, at least in certain years.
- [37:59]
Ilana Golan
Like if we stay in with 2002 for a second before we move forward. I mean, you're a public company, you need to report everything. Unlike a private company where you can hit the losses, right? Like now it's all public, there's a lot of stress. How do you handle the stress?
- [38:18]
Gil Schwed
It's a good question. First, I always believed in what I'm doing and we always had good results in Checkpoint. We always knew that our product delivers the best security. We always benchmarked ourselves and that's the defining line. We need to deliver the best security. We always had good customers and the customers believed in us. And by the way, we also always generated profit. So we never had this pressure of we are going to run out of money or that something is going to happen. By the way, even in those days, we could have continued in auto mode and just invest more and more and hire more people. No, we didn't. We stopped and we said the market stopped growing, we need to change our behavior. And we changed our behavior and we adopted different methodologies which worked. So I think it's mainly keeping your focus and always asking yourself, am I on the right path? Is what am I doing is right and what do I need to change? It's not slapping yourself. I did wrong, by the way. It wasn't us, it was the market. So that's part of the analysis. When we are wrong, we're saying we are wrong. We need to fix it. If it's the market, we need to react to it, we can't change it. It's like, you know, a YouTube movie I started seeing, I didn't see. It talks about strategy and it says, you know, strategy is how where's the market grow going, what's the competition is doing, how is the world behaving? All the things you don't control. So actually the most important thing, your strategy, you don't control. That's the external factors. You control how you assume that something has happened and how you build yourself. And I think that we always need to build ourselves to the unknown. By the way, it's in Checkpoint. I think it's both the operation and I think it's also the product we need to be ready for the unknown attacks, the attack that happened last year. We know how to react to them and we should do it. We're doing it and we should always do it. What we need to build is something that would protect ourselves against the threats of tomorrow and the threats we don't know. We can imagine some of them, but we're not going to know about the new attack vector. So we either need to protect it in a preventing mode, preventative mode ahead of time, or we need to be able to react very fast because things might change. And that's true in security. That's also true in the business operation. And I think that's the lifeline of our life. It's not just business. I mean, we look at politics, it shows us all over the world so many Things that you cannot imagine, and they are happening. So you can say, I give up. It's not my strategy. Or you can say, I react and I change. I adapt. I'm not changing my strategy. I still believe in the same values. I still believe in a good company and providing the best security and working with a great group of people. I can change my people overnight. I can improve. I can hire more people to adapt, but I can't change my people because the market is changing. I need to work with good people that are good athletes that are flexible. And I think that's what we have in Checkpoint. We have an amazing group of people that on one end are very professional, on the other hand are flexible. That's maybe, by the way, one of the good characteristics of Israelis. We know how to improvise. We know. And I think I started with that. We need to work by the book. We need to work throughout the rules, but we also know how to change and how to adapt and so on. And my experience, it came because I have no background. We had to learn how to do everything. So that's some of the, I think, values and qualities that we bring to it, to the limits that we have. And we are limited. We are human beings.
- [41:52]
Ilana Golan
One of my favorite quotes is, you can't change the wind, but you can adjust the sail, right? And I think there's a little bit of what you're talking about, of how you're adjusting the sail according to where the wind is blowing. But I do want to talk about this for a second, because you need to get ahead of trends in the cybersecurity world, world, which is changing so fast. How do you anticipate the future? What are some of the ways, Gil, that you can even start predicting the future?
- [42:24]
Gil Schwed
So, first, the one thing I would say, I don't know the future, and I don't think nobody knows the future, and definitely not me. And I even start every earnings call with that by saying, my projection for the next quarter is that. But nobody can predict the future, and things can change because they do. It's not that I have a magic wand and things do change. What we know is we can collect a lot of know how, intelligence, thinking, beliefs, and combine all of them to one coherent picture and understand that the picture is not perfect. Now, some of that comes from evolutionary or organic sources. Like, you have a lot of customers, they tell you what they want, so you know that if you give them what they want, it's likely that, well, stay, stick to you and buy more and. And you'll solve the problems because they know what's painful for them. So that's one vector. The other vector is understanding that you need to think what your customers will want three years from now or two years from now. And they don't know it yet, because if they knew how to build the product and design future products, they weren't the customers. They would become me. Now, again, part of it is ideas that people have, and you compare them to what you see. Part of it is what other companies are doing. Part of what external analysts and sources are saying, and that's part of my job and also many other people in Checkpoint, is to view that now at the high level. It used to be my job as a CEO. At the micro level, each product manager, each product owner, even each group manager in R D needs to understand that they need to ask themselves, how does technology change and what can I do with it? What do customers ask me and challenge themselves, what can I do better? Sometimes it's just evolutionary, actually, most of the time. Sometimes you come up with a revolutionary idea. 80, 90% of what we do at the end is coming from this feedback. And so it pays off. Some ideas you develop and they never make it. Some ideas you come up with great ideas and the market don't need them. We are today in many markets that I still believe in, and they are not happening. The customers are not buying. And again, when you ask yourself, is it because of our execution, some markets we didn't succeed because others built better products or did better sales and marketing or whatever, better execution. In some markets, I look and I see and I see that there were few competitors and none of them were successful. So maybe it's the market and not our execution. Customers never realize that they actually need it.
- [45:01]
Ilana Golan
Wow, okay. But you managed to somehow reinvent yourself even as a CEO. Again, again, again, you delegate more, communicate better. Like, you learn how to steer a ship that is really, really big and very, you know, disruptive in this world that really revolutionized the security industry. And at some point, only I think last year, you decide to step down as CEO. Can you take us through? Gil, your decision was that, Was that a fun decision? And again, you were the longest standing CEO of any public company in nasdaq. So that's incredible. But take us through that decision.
- [45:43]
Gil Schwed
So first, it was a very hard decision. And by the way, I began people asking why. Now, it's a good question because I've been asked since 1996, since we went public, to say, okay, you succeeded in what you do you made some money? Why don't you retire? You can, you know, live the dream and retire. And by the way, the answer was very simple. My dream was running a software company. I'm now living the dream. Why wake up? I'm not going to wake up to a better dream. And I did that for like 26, 27 years until I made the decision to change that. And part of it because I was challenging myself and growing and changing processes and delegating. You know, six years ago, I did certain amount of work every day. Two years ago, I did completely different work and I delegated a lot of the things I did. And first, I became very confident that we have an amazing group of people in Checkpoint and they know how to run this huge ship. And second, I felt that we needed a little bit that I can try something else in my life. Not working 10 hours a day or more or traveling or it's not even the time, because it's not that I miss time. It's the pressure. It's knowing that somebody else has to solve all these problems, not you. And again, my responsibility is when one of my people come to my room and to a weekly meeting and share their experience, I feel that my job is to help them solve the problem. Not to tell nice is to either challenge them because there's bigger problems or help them solve a problem. And it can be a giant problem, like what's the strategy? Or how to solve a technological problem, or it can be somebody upsets them, how to deal with that person. And sometimes the answer is, that was pretty annoying. But this is a long standing, amazing employee, so be patient. And sometimes it's, this is a problematic person. It's hard, but don't accept something. And somehow I said, you know, why don't I try something else? You know, waking up in the morning when you have no pressure and it's somebody else to solve the problem. And I realized that both Checkpoint can use somebody who comes with far more energy to take it to the next phase. And I can try something else. Now I'm involved in Check Point. I'm now the chairman for a month or a month and a half, I'm coming to work every day, but again, not for 10 hours. And it's so refreshing that I meet with Dav, our new CEO, which is an amazing guy, and I meet with him every day. We consult, we brainstorm. He challenges me, I challenges him, and so on, but I don't need to solve the problem, right? And that's it. And so it's suddenly great to see that. And maybe I would do. The best comparison is what you have kids, and on one hand you want them to succeed and you want to take care of every aspect of her life. And on the other hand, you understand that what will make them really successful is that we'll become independent. So my kids are quite young. My older son is just 18 and a half now. The youngest one are seven. First grade in school. So I have the range. And I do the same exercise that says my goal is to build them that will become independent. They will always be part of my life. I will always want them to be successful. I need to find a way. Why should they come to me and speak to me? Because it's not simple. And again, everybody with kids understands that when they become even 10 years old, they don't need you anymore. So how to create that intimacy that they listen to you and how to be proud of them. They're independent. So that's kind of the analogy that I draw. I'm learning it now in my private life with my kids, with my family, and I'm learning it with my older family or my bigger family, which is Checkpoint.
- [49:36]
Ilana Golan
I love the example. It's so true. And, Gil, maybe one last question. If you're looking back in time, I mean, you grew from this engineer that loves to write code to somebody who invented and disrupted this huge market and led huge teams. So what would be an advice to yourself? And I want the listeners to hear, they might be in the stage of stress or trying to figure out what's next for them or how to grow in their career. What would you say to your younger self?
- [50:11]
Gil Schwed
So first, don't be afraid to listen. But you need to know that you own your future, you own your destiny, and you need to make your decisions. You know, people think that CEOs or leaders need to make a lot of decisions. That's not true. You need to make few decisions, but the right decision. So sometimes, if you can't make a good decision, don't make it. Wait, collect more information. I do believe, by the way, that collecting more information, thinking more, and avoiding a mistake is always better. And every hour that we spent on learning and understanding, save us 10 hours or a hundred hours by avoiding a mistake. I mean, we are smart human beings. And when you say, okay, that's the right direction. Okay, great. By the way, when I believe in something, that's where the problem starts. If somebody comes to me with an idea and I don't believe with the idea, I'm not going to argue with that too much. I mean, I challenge it because I'm thinking about every idea that people bring to me. But very quickly I say, let's ignore it and move on, because there is another meeting. If somebody comes to me with really intriguing ideas of what to do and whether it's a new technology or organizational change or anything, I start to think, I said, okay, now we have to take that risk. We have to do something different. Now. My goal is to think about all the possible challenges and problems and think about the possible solutions, because I want it to be as smooth as possible. And when you do that, every second that you spend, every hour that you spend will save you a hundred hours later. And again, it's not just for you. If you're building a product and it's going to be a higher quality, it's thousands of hours of customers and sales people and sales engineer and support people. Now, of course, you have to do it with a limit. You can't spend unlimited amount of time on launching a product. So you have a deadline and you need to make the deadline. But I'm just saying think things through and think about when you take a risk, how to minimize the risk and focus on the right things again. In our day, we're busy. By the way, that's the job of a CEO. I used to do 15 meetings of half an hour every day, and you can't really deep dive into any subject. And now it's a chairman. Suddenly I can think I can spend hours on the same subject. So that would be a refreshing change that after so many years of saying, okay, here is the idea you brought me. That's what you need to think about. Let's meet again tomorrow or next week and think about the next phase. Now I can say let's spend a few hours brainstorming about it.
- [52:42]
Ilana Golan
Wow. That should be a refreshing change for you. Gil, your story is incredibly inspiring. What you created is amazing right now. Cybersecurity is one of the biggest trends and things that people deal with, but you somehow created this incredible organization way ahead of time. So I want to thank you for coming to the show and sharing all your insights. Anything last that you want to share with the listeners, they want to build something incredible or they want to be part of a company that does something incredible.
- [53:19]
Gil Schwed
I think first, thank you very much. You had amazing questions and guided me through the right way. I think it's at the end of the day, you know, it's our life. I think that, by the way, every person can do 3x of what they do. And for me, I see it every time when I get into a time which requires a lot of focus, and then suddenly I see that my productivity goes up 3x or 4x than what I usually do. And it happened to me in the first years of Checkpoint. It happens to me once in a while when there's something important. It happened to me, by the way, four or five years ago when Covid hit our life and suddenly we had to change the complete way we work. And for a few months it was like a new way of learning everything from scratch. So first, I think everybody should know that they can do it. Second, I think it's not many people want to build the company and want to build a startup. I don't think that people should do it lightly. It's an amazing experience. But you should only do it when you have a really, really amazing idea that can change the world, that you have a market that wants that again, there's so many great ideas that don't have a market and that you have the unique group of people that you can do it with. It's not easy to do it alone. And especially in a new environment, you need to change. And I mean the job of an entrepreneur is to change themselves every time and to morph and to create new things. Because you don't have time until the new department is ready, that takes a year. So you need to be that department until you build it. So you need to have a unique set of people that are super flexible that you can work with. And it doesn't happen very often and sometimes you miss because the market is not what you expect it to be or the product is not turns out to be more complicated than you thought. But at least in Checkpoint, I had this amazing luck to be with amazing people all over the years up to now. I mean, it's not started with two unbelievable founders, but now we have a lot of people in Checkpoint that demonstrate many of these values. And we had the unprecedented market opportunity with the Internet that's maybe now repeated with AI, maybe not, we don't know yet. And we have a simple idea, a unique idea that nobody had, but very simple. Because trying to think about overly complicated idea also doesn't work. You need something simple that solves a real problem and the real problem that will defines the market. And you look to do something, think about that. And if not, by the way, at least for me, working in some bigger companies beforehand was a great experience because that taught me all the things, many of them I implemented as business processes and many of them I learned what to avoid. Most of them I learned from my previous companies. So I mean it was a great experience from that standpoint.
- [56:07]
Ilana Golan
Gil, I could probably ask you million more questions but thank you so much for your time and for your knowledge and for what you created and what you're demonstrating and mentoring all of us. Thank you.
- [56:19]
Gil Schwed
Wonderful. Great to meet you and maybe I'll see you in real life too. Thank you very much.
- [56:35]
Ilana Golan
Wow. What an incredible conversation. I am so inspired. I hope you are too. And if you enjoyed it as much as I did, please share it with friends. It really, really helps us bring more amazing guests. And if you at some point want to take yourself and your career to the next level, watch our free training@leapacademy.com training it's leapacademy.com training and I will see you in the next show of Leap Academy with Ilana Golan.