Google had some positive and negative news recently. The good news was that the cloud division made $10 billion in a quarter for the first time, including earnings from Google Workplace software and Google Cloud infrastructure services. This must have softened the blow of missing out on a potential $20+ billion acquisition for the second time in less than a month.
The first missed opportunity was the rumored deal to buy HubSpot, a Boston-based CRM and marketing software company. Although the price was never disclosed, the company’s market cap is around $30 billion, indicating a substantial potential deal. However, Bloomberg reported on July 10 that the companies were no longer pursuing an acquisition.
Following this, rumors began circulating that Google was eyeing Wiz, a cloud security startup valued at $12 billion. Google, known for never paying more than $12.5 billion for an acquisition, was reportedly offering $23 billion for Wiz, making it the most lucrative deal ever proposed for a startup.
Despite the tempting offer, Wiz’s CEO Assaf Rappaport and co-founders decided to turn it down. In an email to employees, Rappaport expressed confidence in the company’s growth potential, aiming to reach milestones like $1 billion in ARR and an IPO. This bold move raised questions about why Wiz would walk away from such a significant deal.
Analysts speculated on various reasons for the deal falling through. Chirag Mehta suggested that Wiz might have wanted to explore other options before committing to an acquisition, while Google could have uncovered issues during due diligence. Additionally, regulatory constraints and market dynamics may have influenced the decision, with some believing that Wiz saw staying independent as a strategic advantage.
Despite the failed deal, Wiz has been experiencing rapid growth. Founded in early 2020, the startup reached $100 million ARR in just 18 months and aims to hit $1 billion ARR next year. With a valuation of 46 times its current ARR if the $23 billion deal had gone through, Wiz’s decision to remain independent could pay off in the long run.
The company’s success story, from its founders’ previous startup achievements to its impressive fundraising efforts, showcases its potential in the competitive tech landscape. While Google continues to struggle with closing major deals, Wiz’s story emphasizes the value of strategic independence and organic growth in the startup world.
