Intro: Born and raised in a tiny village in the foothills of the Himalayas in Northern India. Lacked electricity after I finished my 8th grade. And water, well, after 10th grade. The teacher would send some students to go to the village well and fetch water, so the rest of the students could drink for the rest of the day.
You look at those things there.
Welcome to the Logan Bartlett Show. On this episode, what you're gonna hear is a conversation I have with founder and CEO of Zscaler, Jay. Shari jay and I talk about a number of different things, including building Zscaler into a $30 billion business and the opportunity he took to build a disruptive technology company, capturing the trends of the move to the cloud and going all in on that.
Customers are good to validate when you build in incremental stuff. When you're building to stop this stuff, you shouldn't talk to your customer. Because you are really changing everything. We also talk about Jay's initial founding of his first company, which included him putting his entire life savings and him and his wife quitting their jobs to start the business, which ultimately proved really successful and allowed him to self fund Zscaler for a number of years.
We also talk about the value of family and how Jay has been able to keep his kids grounded despite his immense success with Zscaler as well as his prior endeavors. You'll hear that conversation with Jay now.
Logan: Well, thanks for doing this.
Jay: Thank you.
Logan: Yeah. Uh, San Jose, uh, these are HQ for Zscaler here. We're, uh, as, as we sit, so how many people are local to, uh, California for you?
Jay: In this office, somewhere in the 600 to 700 people,
Logan: And total employees is.
Jay: 500 to 8, 000, somewhere
Logan: Yeah. Okay. Yeah. Depending on the day,
Jay: on that, yeah, makes sense.
Logan: Well, normally I don't like to, uh, I'll jump around a little bit, but I think your, your background and story is so interesting. So, so this is your fourth company,
Jay: Fifth.
Logan: fifth company, excuse me. Uh, and, uh, maybe give for a little bit of background for People maybe give quick [00:02:00] snapshot of, of upbringing and I think it's, it's an impressive story of coming to the United States
Jay: Well, it's a story of America, you know. It's, it's wonderful. Um, only in this country you can do whatever you want to do. And that's true, I wonder sometime about my life. Born and raised in a tiny village in the foothills of the Himalayas in Northern India. I reflect on it. Electricity after I finished my 8th grade.
Logan: and water when
Jay: After 10th grade.
Logan: so, so eighth grade electricity, 10th grade water, and you got your camera. The first time a camera came around was when
Jay: First picture. Oh, high school group picture.
Logan: is, I mean, it's, it's, it's like a crazy, like 30 billion plus technology company and that to be your child. It's kind of a
Jay: crazy. It's unbelievable. I look back. My sister and I will fight over who is going to clean the kerosene lamp because we would study in that lamp. In school. At the start of the day, the teacher will send some students to go to the village well and fetch water. So the rest of the students could drink for the rest of the day.
You look at those things and say, hmm, man,
Logan: I'm sure, I'm sure your kids feel like walking uphill both ways, you know, in the snow, sort of the old adage of, of parents telling their kids how hard they had it, but you had to walk a fair ways to get to school actually.
Jay: yeah, yeah. And my kids have been back. I've taken them. They
Logan: to prove, like, no, this aren't just dad's adages.
Jay: to kind of help them appreciate life and what it takes because America sometimes seems like a bubble.
Logan: And you, your first flight was to the U. S.?
Jay: flight was U. S.?
Logan: And what year was that?
Jay: 1980, when I did my bachelor's in IIT BHU and came here to do my master's.
Logan: And what [00:04:00] was the, uh, what was the draw of coming to the States? Was it just education?
Jay: Yeah, IITs are some of the best schools in India. And somehow, everyone thought that the best place to get a master's degree in engineering was America. So, actually, probably IIT students will come to America to do master's. And that's what I wanted to do as well.
Logan: So, so take me from there to, uh, I guess starting your first business.
Jay: Yeah, you know, a lot of these things that happened to me was not part of the plan. Okay. Um, because I didn't know IITs existed. Okay. I just stumbled across them. I didn't know that I could be a great engineer. Just then I heard that medical and engineering are two great professions. Since I didn't want to deal with blood, engineering was a good thing.
And even picking the discipline of engineering was kind of accidental. They asked me to fill, which choice do you want? And I looked at the list and said, electronics engineering sounds cool, because electronics had to deal with television and radar type of stuff. Uh, but once I got to my IIT, Then I knew a lot because it was the best of best students, so I probably had a bigger shock to come from my village to my IIT in India than coming from IIT to the U.
S. So I came here for a typical thing, let's go and do masters in the U. S. And once I did that at University of Cincinnati, and I selected them because they offered me a tuition scholarship. Without that, there's no way I could do anything. And I started doing software development, just like most of the Indian students would do.
Jay: And it's funny how I moved to the business world. [00:06:00] Once I graduated, this company where I had done summer internship, they offered me a job. It was a very small software startup. And I wrote these software systems. And one day our sales engineer called in sick and my boss said you wrote the software, why can't you do a demo?
I never done a demo to a customer. I never talked to a customer. So, well, opportunity presented and I did a good demo. And as I drove home that night, I said, wow, that was a lot more fun. Then writing code all day long. That was the spark that says, should I change my career and move into sales and marketing?
And I thought about it. I felt better. I read a little bit more about sales, marketing, customers for the first time in my life. The pull was there. And then I called IBM office in Cincinnati itself. And they said, Oh, you come from engineering background. You're competing with HP and digital equipment. So we need people with technical background.
They hired me in sales. So perhaps if I had not gone from engineering to IBM, I may not have started any of these companies. IBM was the best sales training. Having done that, I moved to marketing at NCR. Uh, because I realized that IBM, that I had a flare for creating good message, good presentation, and I would do it for my customers.
Then other sales reps from IBM will say, could you present this to my customers? And I say, ah. I started having fun, creating message, re finding the message, and that's why I went to NCR. There was good learning ground, international marketing and the like went to NCR. There was a bigger jump where I ran.
Sales [00:08:00] and marketing for the software products division.
Logan: So
Jay: it was good exposure to large company.
Logan: that took you to Atlanta? Yeah.
Jay: No headquarters was Philadelphia bluebell right outside, uh, Philadelphia. So that's was there. And that's where I saw bigger companies, but I also saw that at a VP level, some of these large companies are so internally focused.
And I was always focused on customers, customers. And then I came across the CEO of this small company called IQ Software in Atlanta. And who liked my ideas and suggestions and worked on me for six months to have me quit Unisys and join his company as the number two man in Atlanta. So now I had a broader exposure beyond sales and marketing, some of the other areas.
And I worked there for a couple of years. This was 19 four or five time frame. I joined the Brawley in late 93, early 94. And company did quite well, actually. I, even outside Silicon Valley, I joined that company at 10 per share. And when I quit after two years, it was 22 per share. So some of the savings of that company actually helped me start my companies.
But that's where I got into startup literally by accident.
Logan: And I guess as you look back, I mean, it's such a crazy journey from from the electricity and the water to IIT to Cincinnati, um, and as you paint the story, it sounds elements of luck, and I'm sure if you I'm sure you're being modest in that, but as you reflect on it, Are there, are there lessons that you would impart to people that are listening and thinking about their career or how to create the opportunity for luck, things that you feel like you did uniquely well?
Jay: So the [00:10:00] biggest thing I had was I love to learn. So I was good in figuring things out, reading, figuring out, for example, in IBM, funny story. I joined sales. I thought sales will be easy. You talk to customers. I realized that sales isn't easy. Getting those purchase orders, selling takes a lot more. So I want to.
I was comparative. I want to get ahead. I want to be number one. That desire somehow was there all the time. And I also realized that you don't get ahead unless you work hard. That was somehow instilled in me. In IBM, I found that in sales, man, I was struggling for some time. And other salespeople who were born and raised here, they have lots of buddies, drinking beer buddies, and watching football games and baseball.
I wasn't into those things. And I felt, hmm, how do I get ahead? So I thought through and I said, if I am good technically at solutions, I start spending my Saturdays for three, four hours every Saturday to learn everything about IBM solution. In six months, I knew IBM solutions better than most of the people in my office.
So it is a lot of work, but I really loved being out there, learning, figuring out. Then opportunities presented themselves. Thanks. then I essentially jumped on them with both feet to make sure I take care of them.
Logan: And there's an element of, of, I guess, I mean, going all in, in that, right? If you're going to do it. I'm going to learn the solution all the way to its end and state and all of that. I guess, I mean, that brings to your first venture as well. You quite literally went all in on that. Maybe for people that don't know.
Can you tell the story of the original financing? And
Jay: Yeah, so, so far I was on a corporate [00:12:00] path in this company, IQ Software, small public company, but I was number two, man, doing pretty well. But I love to read everything. And I was reading about Internet, the World Wide Web had just evolved. And reading about Netscape, Mark Andreessen, and Mozilla browser. The more I read about it, the more I fell in love with it.
The logic was, wow, for the first time you could access information without having a special software on your PC, just a browser. So again, this is your logical thinking without a lot of IDC or Gartner data behind it. If it is so easy to access information in this model, this technology should take off. If it does, then every company will start setting up their websites.
Then they'll start connecting to the internet, which is like a cyber highway. That means bad guys can also start coming in. That means cyber security should become an important area.
Jay: So that's what took me the line of cyber security. I had no background in cyber security.
Logan: but it's an interesting framework of how to think that through where I think eventually. We'll get to your, uh, existing very successful business, but you, you kind of took something and extended it to its fullest conclusion. And then what are the derivative considerations that hang off of that? Because I guess in technology, as you know, far better than I.
Just doing the incremental thing, uh, Competitors are going to copy or be able to keep up. And so you almost need to go all in to the end state.
Jay: And maybe in a different area,
Logan: It may be in a different area.
Jay: right, where the big guys aren't.
Logan: Yes.
Jay: Uh, lots of companies want to build web servers and all that kind of stuff.
Logan: Because that was, that was one derivative. Okay, the [00:14:00] internet's going to happen. Let's go, let's build the websites. And a lot of people were going and doing that.
Jay: I think technology that's main, mainstream, if every big guy is coming in, you have a hard time, but if you start in a given area that's a little bit different, establish yourself and there's enough runway for you to become big, and there's disruptive technology, you have a far better shot of being successful.
Too many entrepreneurs like to say, I have better technology, but it's incrementally better. If it's incrementally 10, 20, 30 percent better. Oh. They're going to come and catch up with you. So this is where I think I have been looking for disruptive. Trends all along and to me disruptive is disruptive technology.
I'll give you examples, right? Security was probably the first pure play security services company.
Logan: Which is your, your first business.
Jay: My first business. Before that, this used to be services company. I'll do a little network here, this year, this year. I honed on and said, if cyber is a big issue, could be a big issue. Let's do nothing but become the heart surgeons of cyber security.
Services deployment. How do you design, architect, sell, deploy, and support FIWA? Was the starting
Logan: And the VCs weren't exactly clamoring to, to
Jay: No one
Logan: in Atlanta. So you had to put in.
Jay: And to put,
Logan: entire life savings,
Jay: right? So,
Logan: a very, a very, uh, a very, uh, a lot of credit goes to your wife for participating in this endeavor.
Jay: without her, uh, it won't get happened.
Logan: Yes.
Jay: In fact, she also quit her job, too.
Logan: So, so you guys are all like literally all in life savings, both employment,
Jay: And it was logical, because if she hadn't quit her job, I would have hired someone for finance and all this stuff. Hiring [00:16:00] her. We don't have to spend money, so it, it worked, but the goal was there wasn't much expertise out there. I talked to Checkpoint Software at that time. In 96, Checkpoint Software had done, if I recall it right, about 25 million total in sales.
Okay. And so then I went in as a partner with them to deploy firewalls, all that kind of stuff out there. And our business took off because we're so focused in this area. And the other lesson I think people can learn is, there are half a dozen firewall companies out there. And other guys will come and say, Mr.
Customer, which firewall do you like? I carry all of them. And I would go in and say, we have looked at all. This is the best firewall and we are the best in deploying it. We know it better than anybody else and work with us. And since we did that, Checkpoint will send all the leads to us because Checkpoint knew that this company was only focused around it.
So having some level of focus, tight partnerships.
Logan: It's interesting. I've heard, I've heard, uh, the phrasing that like startups, you need to force a choice and not a comparison. Like if you're, if you're comparing things, it's too incremental. You need to have someone make an independent decision on something. And so you got to be the best at doing that thing.
And if people didn't want to do it,
Jay: Yeah. Funny story. One day, this was I think Home Depot in Atlanta, I was offering some of the services, we were doing deployment, pen test and the like, and we were charging at that time, uh, over 2, 000 per day. And this guy said, Hey, even IBM doesn't charge that, they are worth 1, 000 a day.
That's a look. If you want a heart specialist, you come to us. If you want a journalist, you go to IBM. Okay. Okay.
Logan: it's a choice.
Jay: [00:18:00] what we do.
Logan: It's it's forcing the
Jay: All right. So I think those decisions are important. And I always try not to do incremental technologies.
Logan: that so so I want to I want to skip ahead to to Z scaler here in a second, but I guess I'd be remiss. You had exit options along the way for secure it. At one point someone came to you and I read the story and they were maybe a little arrogant in their how they presented the option.
Jay: Yes. Yes. They said, if you don't sell me, we'll wipe you out. Okay.
Logan: And that didn't happen.
Jay: It was a tough decision. Now. Sure. I mean, I like to say I don't have a lot of attachment for money and I really don't. And luckily my wife doesn't either. So we just happened to coming from that mindset. Okay. But then someone said, Hey, here's an offer.
Take it or leave it. I didn't know any bankers, anybody out there, to figure out what to do. And, but I kind of depended on my gut. A lot of decisions got made. And sometimes I think the good decisions, you need only a certain amount of information, too many people. The deeper you go, the more analysis paralysis you go.
The more you slow down, this, this. You need some amount of information, then you make a call, you move forward with it, you may have to course correct.
Logan: And what was that framework at that moment in time that did you just feel, Hey, this, I mean, minus the guy kind of being a jerk, but like, did you just feel that, that there was more to be had and there would be a fair value in the future, or was it simply his attitude to you?
Jay: I was having fun
Logan: You were having fun.
Jay: I was having fun. I wasn't thinking about selling at all. Yeah, interesting. Okay, uh, and then if someone asks, and they are really arrogant like this, so obviously, you have no intentions, and [00:20:00] someone is arrogant, you walk away.
Logan: And then ultimately when you decided to sell, what was like the considerate, did you stop having fun or did, uh,
Jay: No, we are doing actually very well. We literally Had gone from 5 million to 16 million. First year was 5 million dollars. 20 percent pre tax profits. Wow. Okay. So, and then it was moving very well. That sale happened to Verisign. Okay. Uh, the CEO there was a great gentleman. Okay. He actually talked, called me a few times.
And I said no. One day I had a call. He said, Hey, you're saying no, but don't you think we should sit and talk and then you should say no. Pretty logical.
Logan: yeah,
Jay: So then I sat down and talked and his logic was, so you're trying to build a bigger company? Yes. You're trying, you'll go public? Yes. He said, why don't you go public through me?
I just went public. Okay. And they had. And it'll be pooling of interest. You have all the shares in this company and you run it as a service business. He was, this was stratum scleros. He was a great guy, and so we did the deal. It was a good thing, actually, because I turned on all the other companies out there who would call.
And Verizon's deal was done at 26 per share. And I know approximately when I left, it was what, 15, 18 months? It was 2. 56 after two splits. So, I mean, my employees had 20 percent of the equity. I had the remaining. There was no outsiders. And it was like, wow,
Logan: You made a lot of millionaires.
Jay: lots of minutes, 70 or maybe more. If I looked at the spreadsheet, there was a going away party they gave to me when I left.
And they published the t shirts, uh, t shirts. It's just so kind of [00:22:00] emotional for me, too. The t shirt said, uh, Thank you for securing our future.
Logan: That's great. That's super cool.
Jay: Yeah, I went home that night. I looked at the spreadsheet of options they had multiplied by the stock price. With 70 or 80 employees. Had their options over a million dollars kind of stuff.
So it is extremely, extremely
Logan: I'm sure that was extremely gratifying. So, so you, uh, skip ahead. So you had three other businesses you started after that, maybe all at once or within a short period of time. staggered and uh, good success along the way.
Logan: But then I guess I'm curious when, when you get to Zscaler, um, going all in on, uh, technology, I heard that Mark Benioff was an inspiration and you wanted to build something that was, that was super enduring.
And so I guess I'm curious, how did you land on the idea of what Zscalers become. And you also picked up and you moved, uh, the business here. So can you take me through the, how you thought about what your next act was going to be?
Jay: So, just a little summary, the three companies happened because I made so much money, I thought I can only put so much in one company, let's do multiple and stagger and thinking that the young will need more time, the others will need less time like kids, but that's not true in business. Okay. So I realized that there's a lot of work needed and you can't just say this is go hide a CEO.
This will run on its own. So even though all three worked out quite well, it's wonderful. I did realize that it's not a good thing to do multiple projects. So when I came to Zscaler, I said, I won't do anything else. Not even invest nothing, no boards. I want to put 200 percent focus in C scan. So it is the opposite of doing multiple.
Now, starting idea was pretty simple. I thought about it over actually a fair amount of time. [00:24:00] It wasn't that one day suddenly the idea clicked. I was in cyber security. I was in internet all along. I was so familiar with what's internet. I was familiar with the risks of internet and all that kind of stuff.
The idea at this time was, How do you build something that's lasting long? So I want to pick a bigger thing. Previously, I was looking for narrow and deep. Here, I want to go
Logan: We're just narrow and deep and cyber is a decent way of selling companies. You, a lot of businesses sell for 200 million bucks these days and
Jay: good to be narrow and deep. The chance of success. But narrow and deep go higher. You have fewer competitors.
Logan: raise a lot of money. There's a lot of good buyers out there and.
Jay: That's essentially what I did in my previous company. This I want to change. Because there's no fun in doing it one more time the same way.
Logan: Yeah. So what was the, I mean, I'm curious, the motivation itself was, was it building something that lasted and went public
Jay: Yeah. Climbing a next big, big mountain. Uh, to something like Salesforce. So my first slide was, Can we build the Salesforce for cloud security? Okay. So, it was security focused.
Logan: and the salesforce of cloud security in your mind? Was it something that endured and encompassed a bunch of different considerations?
Jay: was successful. It had done quite well. It had gone to a new space. It wasn't trying to do Siebel better. It was disrupted cloud native multi tenant. So when I looked at it, I said, so the notion was. If application moved to cloud, because even in 2007 8 when I was working on it, Internet was the biggest source of applications.
I have been using Salesforce and NetSuite since year 2001, when each of them was under 10 million annual sales. So I loved SaaS. I believe that more and more applications will become SaaS. And in [00:26:00] 2007, AWS had just launched. is compute and storage as a service and Apple had announced their iPhone. So I could see mobility and applications all over.
The simple notion was any new technology starts, it starts as a cottage industry and eventually it has to become as a professionally managed service. In my simple mind, compute as a service, just like water as a service, electricity as a service. It should be done that way. I looked at it, so this trend will take some time, but it has to go that way.
And getting inspiration from Salesforce, what they had done, why shouldn't security be sold as a service? Applications are everywhere. We are everywhere. So two notions we re imagined. One was, why should we build private networks when Internet is evolved? It's almost like, why would you build private roads as a.
Big, large company, when nation has only built highways. So in my world, I want to make sure internet is your co operative. Two was, if applications are everywhere, users are everywhere, where are you going to put your firewalls? Where is the mullet? None. So we're going to think outside. We won't build a firewall.
Everyone's untrusted. We are an exchange, a switchboard, a policy engine connecting things together. That
Logan: And so for people, people that don't traditionally, you sort of had the concept of a. Of a moat and what's inside the castle is secure and what's outside the castle is bad. Now we're moving to a world of, you know, everything could be good, could be bad. Your employees are down the street, they're in India, they're in Atlanta, whatever it is, and you don't, what do you do in the world where you're not sure what to
Jay: And applications are out there. Salesforce is not in your data center. They're out there. So, everything is untrusted.
Jay: We became the policy engine that says, I [00:28:00] will connect User A to application B after I check identity and a few other policy constraints. That was really literally outside the box thinking.
And, and for that, since, since the notion was, I want to do something big and I'll put whatever amount of money it takes, and we'll focus on innovating new technologies. And I found this great team, uh, that had built, uh, Netscaler, load balancer. They could. This team knew how to handle packets at high speed, sitting in line, figuring out what needs to be done.
And that's what actually brought me
Logan: Oh, interesting.
Jay: the core team is here, I need to be here as well.
Logan: I mean, even going back to the secure ID, secure IT days, it's a similar thing of taking something to its conclusion and assuming, uh, what it could be if this is the path that it's on. I find this in the venture world a fair amount of, like, some of the Best investments we make are tiny markets. They just happen to be tiny markets that are on the path of being huge markets.
What's not on Facebook was Harvard's, you know, little social network. And then it just happened to be something that extended a lot.
Jay: And I think you, you need to really build conviction around those things. I mean, one of the thing I do is. I do fair amount of color research, but not library research reading article.
Jay: At Zscaler, before I started the company, I actually met with scores and scores of customers sharing the ideas. And most of them said, not really. Okay.
Logan: just cause it was so fundamentally different.
Jay: Fundamentally different. They all agreed they need to do this. They won't agree that it needs to be done in the cloud. Would I let my security go to the cloud? So most of the validation [00:30:00] was negative. But the notion that things should become a utility service felt so powerful. And I said, if we really build a serious technology, it should happen.
I was Ready to really make this big bet.
Logan: And presumably you found some people that validated the, the idea, was it that they were so effusive in their validation, uh, that you, you knew other people would come along or you knew you could build a big enough business around the people that really believed it and inevitably some other people would join you?
Jay: So, one or two out of ten would say it's a good or reasonable idea. Uh, but I, I felt like customers are good to validate when you're building incremental stuff. When you're building disruptive stuff, you shouldn't talk to your customer because you are really changing everything. So that's really the notion I went in with.
If I had been going the notion that customer validation is happening, then I wouldn't have done this business because then the numbers just not supporting it.
Logan: That's a, it's a profound perspective. Uh, I, I, I think that almost all the super disruptive technologies probably have some, some element of that. I also imagine the businesses we've never heard of that, uh, burned out, have some element of that, too. And so which, which, which one you're on, only time will tell.
Jay: Everything is not a success.
Jay: As you know, the start of the other thing I thought about is first move advantage is very helpful. But if you're too early, you start so many first mover. Potential first mover fail.
Logan: You never start on the exact right day is so
Jay: Exactly. And, but if you are [00:32:00] late, you're late, then catching it becomes hard.
Logan: were you?
Jay: So, for almost everything I've done, it's essentially first mover, please get up maybe a couple of years sooner, but not a whole lot sooner than that.
Logan: Yeah. So, so, so you, you, you were maybe a little too early to it, but you survived through that
Jay: of years. But I think we ran a tight business.
Logan: We did not kind of say, I raised 50 million, a hundred million dollars from this VC phone. Let's go and burn it. I think some currents, when money becomes easy and companies there's too much money, the discipline just disappears.
It, it's not a good thing. Even if you want to save it,
Jay: Everyone in your team says, man, they're 200 million sitting. Let's go. And you can't go faster sometimes. There's a level where you can go fast. Beyond that, you're actually burning money and you're not really getting some ROI. So those factors have to be
Logan: yeah, there's, there's only so much you can will the market. To move faster than it naturally is. And so there's like a requisite of survival that comes if you're, if you're, if you're too early, your job is to survive until the market ultimately gets there. And there, there are a lot of perverse incentives with venture capital.
And once you start viewing it as a validating factor of your progress, employees start thinking the same thing. And how long? So, so you started those 708 and then your first outside capital, when did Lightspeed invest?
Jay: So that was a, uh, interesting investment because I had no plan to take any, any money because the notion was what I'm doing is fairly crazy. And I can do that better with my own money by taking risk by being crazy than [00:34:00] someone else's money. That's really how I believe it. Okay. I think Lightspeed and EMC came by accident.
I wasn't looking. In fact, Ravi from Lightspeed had talked to me several times. Um, EMC, RSA, security CEO was after me to put some money and I kept on saying, no, no, no. And finally, uh, he had Pat Gelsinger, who was kind of head of ventures at EMC talk to me and all. So I think they put what some 25
Logan: Invested. Uh, so that was, that was 13,
Jay: something, maybe
Logan: 14, 12 or
Jay: And, and at that time I was trying to have them go away by. Uh, telling them no, and they wanted me to name the price and I named very high and the silk came in. So the deal got done with EMC, but I didn't want just one institutional, uh, company to be the investor. It kind of looks like EMC company. I wanted another independent party.
So I called Ravi Lightspeed and say, here's an opportunity, uh, to put in a few million
Logan: Oh, got it. Interesting. So, and then, and then ultimately you, you raised more along
Jay: uh, for
Logan: getting ready,
Jay: for IPO.
Logan: getting ready for IPO.
Logan: How did you, as you, as you reflect on, um, I guess that what you did differently, uh, across your, your, from your fifth venture, Back to your first, obviously your ambition changed and what you're going after.
But are there other ways you felt like you really evolved as a leader or things that you did different beyond like the size of the pie? Maybe you're pursuing
Jay: Of course, uh, many, many changes.
Logan: any that's to stand out most notably.
Jay: Uh, first it was to start thinking bigger, being able to make bigger investments [00:36:00] in R and D. Okay. I mean, I put somewhere about 50 million into this company, uh, without even worrying about who to go because I, I just was fully in, uh, sales teams, for example, when I felt good about the Red Eve.
I was the first sales guy, uh, Manoj Apte, our head of products, was my SE. We would do all the selling. I believe that if Every CEO should go and sell the first number of deals. If they can't sell, if your product management leaders can't sell, they shouldn't be in the business. Uh,
Logan: And what do you think is that just how much of that is making sure you understand the nuances of the product in the early days versus you are the biggest evangelist. And so if you can't communicate it, no one else can.
Jay: yeah, second part is probably more important. Especially, so when I hire product managers at C Skill, say for your product, you got to sell the first 5 million dollars, 10 million dollars, and 5, 10 customers. If you can't, you have no right to tell the field to sell. You should be able to do that. So, that's kind of, Standard, uh, practice at Zscaler. But the things I did differently, I, I hired about 30 person sales team in one shot at Zscaler. Okay. Uh, pretty global team. We had done a handful of deals in the U. S. and validated the stuff. And we went big. And half of the team was outside the U. S. So, It worked well, actually, it took my business to half international, half U.
S. pretty quickly. That is a good lesson learned. It's a little bit bold move.
Logan: and you've been a solo founder ish. I mean, your wife has been involved intimately, but,
Jay: yeah, the brilliant guy, this Kalash, who's the chief architect, [00:38:00] he was at Netscaler.
Logan: he was not
Jay: He was the technical, technical brain behind. What helps me is being an engineer who has done software development. I'm technical enough. to figure out the areas that I need to do. If I had not come from engineering back, I couldn't really do what I've done before.
I mean, there's like And if I had been an engineer and hadn't been exposed to sales at IBM of the world, I probably wouldn't have taken a chance. That experience, which is kind of, wasn't part of the plan, it just evolved, hasn't been any helpful. But you do need brilliant people. I had a great team, the first ten people be hired.
All came from Netscaler, about half of them in India, half of them here, and that was a, is a brilliant team, and most of them are still with us here.
Logan: as you now, uh, hearing the Z sailor story.
Logan: Um, you were fairly visionary or forward thinking about where things were going. Going at some point. I assume you've started being more taking more feedback from the customers around different products and areas to go into. When did When did that shift happen?
And I guess, how do you balance today that, um, visionary element of where you think the world can go with the practical element of X customers calling you up from Y thing
Jay: you do both. For example, at Zscaler, the first product was, how do you access internet and SaaS applications securely? And that was the Platform replacing the entire Internet gateway. That was a big, big undertaking.
Logan: mostly focused on the, the highest reselling the highest fees or reselling to the,
Jay: Enterprises all
Logan: All along.
Jay: enterprise business. And that's my training for IBM. I always like enterprises. SMB gets [00:40:00] a little tricky enterprise level. So then we want to make sure customers can access internal applications in your data center, AWS and wherever else. So for that, we pioneered this zero trust private access technology.
Totally disrupted. Nothing to do with anything in the world. So, that was a disruptive move. On internet access, we kept on evolving and taking feedback from customers. Because, once you set it up. Customers say, you got this, give me this, give me this. So you're rounding off the product. But the second product came as private access.
And that got rounded out. That's really the foundation of zero trust has evolved and done amazingly well. Everyone is trying to copy zero, C scale private access. Uh, but now it's evolving. Big idea, evolution. evangelize it for quite some time. Then you're the next level. We, there are many innovations and then taking the same technology.
From users to applications, to workload to workload communications. Workloads are similar like users, they talk to Internet, they talk to each other. Why shouldn't they talk through our Zero Trust Switchboard technology? Then taking the same idea to IoT, OT communications. How should they talk? Where do they talk?
We have taken the same core technology. Taken to multiple markets. It's, it's pretty exciting. So we are combining both. Incremental improvements. And some of the disruptive, but you don't do disruptive every day. X years have disruptive ideas, then you go to the next level.
Logan: we're, um, I, I guess as we sit here, it's, it's 2025 and we're, uh, there's this, there's this artificial intelligence thing that's going on. Uh, obviously implications for every. single business, um, I would assume it's making, [00:42:00] um, uh, the ability to proliferate new types of attacks and all that pretty meaningful.
So maybe you speak a little bit about for, for people that aren't in the weeds of security, what's going on and what does that mean for Zscalage business?
Jay: So, AI is amazing. I mean, it can do wonders for you. And for goodness, for badness. Now, what's badness? You can say, Chad GPT, tell me all the firewalls and VPNs of this company. that have security vulnerabilities and tell, give it to me in a tabular format. Now, JAT GPT is trying to put some, uh, inhibitors so they don't answer a specific company query.
But you can break the answer in the question in three questions. And you get it. It's so easy to find the attack surface to attack company. Things that were taken weeks, now are done in seconds. So it's dangerous stuff. Once, for example, you get into the company through VPN, now the chat GPT kind of these Gen AI technologies can help you find.
Some of the critical applications, automation for sake of doing damage. So it's, it's dangerous, but it's also very powerful. It can allow you to do things you couldn't do before. Now for that, we are very excited because think of it. 45 percent of the Fortune 500 companies have their traffic go through Cisco.
We are the communication hub like an international airport. There's some 50 million users who go to a cloud every day. They generate. Over 500 billion transactions. Every time you go to Salesforce, email, Google, whatever, it's 500 billion. Now those [00:44:00] communication logs also have reconnaissance activity going on.
Imagine being able to feed These large language models with all that private data, it's high quality data, it's vast quantity. I should be able to answer, get any kind of questions about risks, this, that, these, uh, kill chains, attack chains, and all that kind of stuff. Those are some big projects we are working on, and I think we are in a very good position because of the data.
Now, if I can find all that stuff, I can feed information back to my. Exchange to real life, real time loops. to give you far better security. Those are some big, big opportunities.
Logan: Do you think the net? Benefits of AI to companies like yourself able to do some of the things you just you just outlined versus the net benefit to attackers and their ability to proliferate. Do you think in in five years time we're talking about more hacks because the hackers are now enabled through all this or are we talking about more?
Protection because companies like yourself were able to leverage it.
Jay: I think that so many smart companies like Zscaler who actually can do far better with AI. The problem is not that hackers are smarter or they're better. But there's a problem. The problem is inertia with large enterprises. Hackers have no inertia. I see so many companies. There's a, everything takes longer.
They need to move a lot faster. If they do, we'll be in better shape. That's one. The second part is I think the reason we are all getting attacked is because the foundation of security is you get on the network, you're inside the castle, once you're in, lots of damage get done. We got to move to zero trust [00:46:00] architecture, which means you're not on any network, you're always untrusted.
You are connected to a given application with the least privilege. Nothing more than that. Unfortunately, this world, all these enterprises are spending, have spent so much money on firewalls and VPN, they are no longer able to keep up. Talking about Castle and Mort, they were very good when you only had armies with arrows and whatever.
Once cannons got invented, air force got invented, you can't do these castles and moats. Too much money is getting spent. I see so many customers. They got breached. Purse opens up. They have 500 firewalls. They buy another 500. To do what? Create another moat, another moat, another moat. I think the world has to move.
Inertia needs to be taken over. Technology. It's hard, but inertia is harder. Human beings, job security, all that stuff is what we're fighting. Ah, my number one challenge to sell is not competing against other competitors. It is inertia and mindset change.
Logan: for people that maybe aren't as deep in this field. I mean, the analogy, I guess, of zero trust, I'll use this building. Uh, once I got checked into this building, uh, theoretically I could go walk around and do whatever I want. And they did, okay, Logan got into the building. He he's, he's fine. Let's go let him do whatever I want.
You're building. Uh, rightfully has different doors that I can go into, and
Jay: Yes,
Logan: there's zero trust assumption that I am a good actor, so let's make sure Lobin's gated
Jay: you will be escorted to a given
Logan: Yeah, so there'll be cameras up around and all that.
Jay: escorted
Logan: Let's, let's assume that Logan's a bad actor. Probably a safe, safe assumption, but it's, it's the, it's the world that, uh, you know, who knows, right?
All [00:48:00] these things could be happening
Jay: That's what we pioneered. Now, the challenge is when new technology comes and incumbents are threatened, They all incorporate that wording. So lots of customers are confused. They think that somebody is spinning up firewalls in the cloud and VPN in the cloud. It is a zero trust thing. Unfortunately, it's a false sense of security.
And we have to educate our customers in this
Logan: it's, it's security is an interesting market in general to me and I, I'm fortunate enough to be investors, investor in a handful of cybersecurity companies that are doing well, but it's, at times it can be difficult to assess the efficacy of it. And in some ways you're buying, um, Some element of security, like, like mental security, uh, where it's, Hey, well, I didn't.
My partner told me this, my friend told me this, and he's a CISO at a big company, and therefore I should trust it. And so, I'm sympathetic to the job. Most jobs are, um, you either need to adopt innovative technology, but you can't get fired for it, or you don't need to adopt it, uh, but you can't, you don't need to be early adopter, but you can get fired for it.
Security is sort of this weird box, and so it's hard to make these decisions. I guess, how would you counsel people that are trying to think through their security posture? So besides by Zscaler.
Jay: the, the biggest advice I give customers is technology incrementally changes all the time, but you need to look at some of the disruptive technology to get some benefits out of it. And when you look at it, you're going to face natural inertia. Inertia is less at the C level, the lower you go down in the organization and the bigger the change, the bigger the discomfort.
So actually we work with CIOs and CISOs. They try to find change catalyst. People who are actually, uh, forward thinkers and get them on board and the rest of the team gets on board because in [00:50:00] large enterprises, you just can't say this is being done. So bringing mindset change, cultural change is part of the job that successful CIOs and CISOs do.
Logan: So I'm curious you've, um, uh, Zscaler has been around now 17, 16,
Jay: 17 years.
Logan: years. Uh, at different points in time, I'm sure you've, you've felt like the pure disruptor in totality versus needing your, your, uh, Company not to feel complacent about the position and hey, we still need to keep going after all this stuff I'm curious as you reflect on descaler in its own journey and trying to Change culture at different points in time or of all of the culture.
I'm curious how you've been able to communicate being a change agent within the org or effectively Made people want to attack a different hill or something
Jay: I mean, the bigger you become, the harder the job becomes. So, uh, the biggest thing I try to do is. But we are hiring leaders in the next level to make sure these people have the passion and fire and desire to do something. So When I look for hiring people, irrespective of what the job is, I look for three things at the highest level.
Number one, do they have passion and fire and desire to do something to make a difference? And they're not just looking for a job. Because once people have that, they actually make things happen. Number two, people who are sharp, quick study, curious to learn. Because things are changing all the time.
Whatever you knew till last year. is okay, but if you aren't curious and quick study, you're going to fall behind. So that's number two. The number three people who are willing to adapt, change, try new things, fail and pick up and change and move on. If [00:52:00] you have made no mistake, you're playing too safe and you're playing too safe.
You're never going to get anywhere out there. So we encourage people to take risks. These are the kind of things. Uh, we try to do, and if I have my direct leadership aligned, have full conviction area, and we do the next level and the next level, hopefully things carry on.
Logan: This is just so there's the passion there's the curiosity and then the risk seeking ability to change evolve all of that Um, is that does that tie? I assume your interview process or the questions you ask are some derivative questions of that Do those then tie to the cultural values of the organization in some way or is that?
Jay: Absolutely. So, for most of the leadership roles, uh, at director levels and higher up, Brandon Castle, who is our head of HR. And I are largely looking for these attributes. I don't need to interview someone, how good are you in sales or engineering? But we are looking for these kind of stuff, the cultural fit.
We're very proud of our culture, right? We are all about teamwork, open communication, innovation, passion, as well as, uh,
customer obsession. Customer obsession is one of the key things. It makes it so wonderful when a customer says, C Scaler. You had changed on so much for us, our customers are proud of the amount of money they save by disrupting all these old products, the cyber posture. and business agility and productivity.
We are viewed as a more mission critical application than even office 365 because everything works through us. So it's a big responsibility and we take it seriously. We have the maturity and experience to handle the biggest of the biggest companies out [00:54:00] there. We work hard. To make it happen.
Jay: 18,
Logan: So you guys went public in
Jay: 2008.
Logan: and as we were talking before, the stocks done quite well since the, uh, since since the IPO, um. There's, there's been an element of reticence, I would say, of, um, certain Silicon Valley or technology companies to go public. And obviously the market's been a little murky over the last couple of years.
Um, I'm curious, do you feel that being in the public markets has made? Zscaler a better business in certain ways, or is it just, you know, something that you guys, uh, it was just the next step along the journey.
Jay: So, I have run the business the same way, post IPO and pre IPO. We are always prudent. We wanted to invest in technology and go to market. We want to minimize our overhead investment. Overhead means Uh, other areas, uh, administration, finance, all that kind of stuff. So having done that, we had the freedom to keep on investing, so nothing has changed in the area.
Uh, what has changed? The biggest surprise to me was the brand actually went up significantly. Um, a lot of these large companies. They actually wanted to know that you are a public company and we know your numbers and everything. Um, it has been good. I think companies, it's good to go public. But obviously, you need to make sure your products and technology are ready.
You need to deliver consistent results.
Logan: I know you're not motivated by, uh, the money element of all this, and you've continued to go all in on each venture. Um, Zscaler's been personally, uh, lucrative for you and your wife, uh, [00:56:00] and family. I'm curious, um, you don't need to keep. Doing this. I don't, I don't think, uh, financially, I think you could retire and hang up somewhere.
What keeps you, what keeps you motivated today and enjoying the job that is running a 30 billion, 8, 000 person
Jay: Yeah. Look, to me, um, your life is very precious. And life is made of time. And if you want to really Make something of life. You don't waste your time. You do something to make a difference in the world. Zscaler, for me, is not a business. It's a mission. I mean, think of it. The whole world runs online, interconnected.
The feeling that United Airlines and Siemens and cheese of the world are actually secured by Zscaler employees and Zscaler technology is very satisfying. It's wonderful. Otherwise You know, different people have different priorities in life. I have always liked to learn and do something. I, my wife and I talked about it sometime, and I said, I wonder if I, what will I do, man?
I mean, I get bored sitting at home. And this is a fun thing with a great team, great customers, great friendship, great relationships. Uh, it's just exciting.
Logan: Isn't it interesting that, uh, I'm sure that the IPO itself, there's, there's a picture here for, for people that can see it, there's, uh, you know, about the, the IPO offering over there. I'm sure that was a particularly gratifying, fulfilling moment, but it's a cliche. Uh, but I think it's true that like, it's, it's a point in the journey.
Uh, it's not, The end of the journey. I'm sure that was a fun day for you and all your employees, but, uh, there's, there's, there's no point, I assume [00:58:00] for you that if you'd enjoy the process, there's no day you're working towards and all of this.
Jay: That's right. I think it's all in your mind. I think the human mind is so powerful. The attitude, the positivism. Sure, it comes from success. But success breeds success too. But success doesn't happen unless you focus, you go the extra mile, you make it happen. That's how I take it. And also, to me personally, I wanted to be a role model for my kids and my wife and both.
They are good kids. I take more pride in having a great family, uh, life than business life. When I would do my lawnmower in my backyard, my two sons will be with me learning, figuring out. That's how life needs to be. I think those are good things.
Logan: I'm curious. A lot of, um, people I've been fortunate enough to talk to at different measures of financial success. And, um, it sounds like you've done a bunch of, Things to try and make sure the family wasn't overly influenced by the financial elements of that. I guess, I mean, you don't need to give all the tactics, uh, the J school of, uh, of parenting and all that, but are there, besides making them join you on the lawnmower, uh, are there, are there one, two, three things that you sort of reflect on and you're like, boy, I'm really glad that I did this so that my kids weren't.
Exposed to things that we wouldn't have or just anything that sort of stands out. I mean, I went the, the J parenting tips. I have a, I have a, I have a son on the way here. So I, uh, you know, I want to make sure I do it right.
Jay: I think kids follow parents early on. So, trying to lead a normal, middle [01:00:00] class family life, so they appreciate what the life is all about, was one of the The basic things, but then also spending time with them, uh, doing things so they have interest in learning and education that is important part of it.
Um, I think those are the type of things, spending time. I know startups are hard. Sometimes people say, Oh, you're spending all the time at the startup. Uh, we invented, my wife and I, these bonding walks in the evening after dinner. Family goes together, spends 30, 40 minutes to get to know. All those things are important.
Uh, role model is important, aren't
Logan: Kids are particularly observational, right? It's not what you say so much as, uh, what they see you, what they see you do. Yeah,
Jay: That's right.
Logan: I think that's a great place to NJ. I really appreciate you doing this. And, uh, yeah, I, I, the lessons, uh, that you have about building companies, uh, as well as parenting and all that.
I think they're super applicable to, uh, to a lot of entrepreneurs out there.
Jay: Yeah, we all learn from each other.
Logan: Yeah, I guess, I guess one before you hop. Anything, if you were, if you were thinking about starting a new company today, that wasn't within Zscaler, is there anything that, um, you find particularly interesting, uh,
Jay: I think AI is going to fundamentally change everything in life. So a lot of those businesses will be around those.
Logan: take it to the fullest extension and
Jay: don't go and compete with OpenAI and Google of the world. Find an area where you have better expertise and understanding and build something around it.
Logan: Go all in. Yeah. Jay, thanks for doing this. [01:02:00] Thank you for joining this episode of the Logan Bartlett show with founder and CEO of Zscaler Jay Chaudhry. If you enjoyed this conversation, we'd appreciate it if you subscribe to us on whatever podcast platform you're listening to us on, as well as shared with anyone else you think might find it interesting.
It really helps us continue to grow the show and find new listeners. We'll see you back here next week with another great guest on the Logan Bartlett show. Have a great weekend, everyone.