Check Point CEO Wants Faster Growth

 

Let's say you start a company in 1993, you made it public in 1996, you sell your product in 88 countries and you still execute it in December of 2017. Why do not you take your billions and navigate? Why are you still at the helm of the company and anxious to accelerate its growth?

My December 18 interview with said CEO, Gil Shwed, co-founder and CEO of Check Point Software Technologies, based in Tel Aviv, answers these and other questions that may shed light on whether to invest in the company's stock.

Shwed, whose 17.8% of Check Point was worth $ 2.9 billion on December 18, according to Forbes, served in the 8200 unit of the Israel Defense Force, after which he worked at the Hebrew University.

In 1993, he worked with some 8200 colleagues from the unit in the Tel Aviv area of ​​Shlomo Kramer's grandmother, who went on to invest in a series of Israeli winners, to develop a world-class firewall to protect computer networks. hackers. In 1995, his investors wanted Shwed to take the company to the public, which he finally did in 1996.

Since then, the company has grown substantially. Income and profits for 2016 were $ 1.7 billion and $ 725 million, respectively, and its market capitalization as of December 18 was $ 17.8 billion, an annual rate of 22.1% since its initial public offering in July 1996.

If there is something wrong with this image, the only thing that jumps is the growth of the company. In the last three years, its revenues have increased at a rate of 7.7%, which is less than the industry's growth of 11.4% during that period, according to Morningstar.

Shwed is not satisfied with that growth rate. As he says: "Our growth rate is not fast enough, how are we going to accelerate it?" We need to add new customers, more technologies and new, but adjacent markets We already sell in the main countries but we see opportunities to sell more in China , where we have between 30 and 50 people, in India, which is a big market, and we are opening Africa. "

Check Point's growth has been based mainly on geographic expansion. "When we started in 1993 we were three men in Israel, it was clear that to be successful we would have to win in the US market.For the first two years, we were traveling all the time." Our first virtual address was in Boston and our first Sales and marketing function was in Silicon Valley, where we used a great headhunter to hire a leader for that activity. "

The goal of Shwed was to build a global structure for Check Point that differed from the two predominant models he saw at that time. He explained, "At that time, there were two predominant models of globalization: hiring employees around the world who were governed by an Israeli executive or hiring a US CEO who would run the global company, which tended to fail. We decided to hire him, the best people in his class to lead the countries where we operate. "

Check Point has greatly expanded the networks of which it is located and hires talent. As Shwed explained: "It has been 15 years since I was able to hire from my network in 8200. Now we hire Arabs / Israelis, Orthodox Jews, people from specific IDF units, university graduates from Tel Aviv, Beer-Sheva, the Technion, and the Hebrew University, who start here as interns. "

Check Point now has most of its R & D in Israel. "95% of our R & D is done in Israel and the balance we got from acquisitions in Silicon Valley, Boston and near Washington DC R & D people make incremental improvements to products based on comments from many sources , including product management, customer surveys, and customer requirements on specific projects, and we're also looking for more creative ideas. "

The company sells globally through system integrators and has opened offices around the world to help support these partners and their customers. He explained, "We sell in 88 countries and have 70 offices around the world, we work with partners in these countries who are large, medium and small system integrators, once established in the US, where we get 40% of Our sales: people from other countries asked to use our product We have created a network or resellers around the world and our 1,700 to 2,000 people in our global offices provide pre-sale assistance, such as the organization of seminars and access to our technicians . "

Check Point has expanded its product line through internal development and some acquisitions. "Over time, we have incorporated many different functions into our original product: the firewall, and in most of these functions, we are the best in its class, and we believe that customers would prefer to buy this before buying products from 15 different suppliers and building their own. We also made six or seven acquisitions, in the US, Europe and Israel, "he said.

Shwed is not like many entrepreneurs, I call them sprinters in my next book, Startup Cities, who start a company, make it grow quickly and sell it to someone else. While Shwed is what I call a marathon runner, he started with an idea and continues to build his company, defends the sprinters.

It is rare to find these marathon runners. "There are many good ideas in the world: the market can not absorb thousands of big technology companies, it's the same in Boston, Israel and Silicon Valley, some of the most successful companies are managed by former entrepreneurs." Israeli companies such as Check Point , Mellanox Technologies and Wix are managed by its founders, many successful entrepreneurs left Check Point, "Shwed said.

It stays at Check Point because it feels like home. As he explained, "it's almost my whole life, I want to be in a place where I'm well connected and familiar, but it's still interesting because I'm always looking for new challenges, Check Point needs to evolve all the time, I'd get bored doing the same job." .

The 24-year globalization journey of Shwed has produced some interesting ideas. "To be a successful global company, you must have a set of global values ​​and a global organization, you must hire local staff in each country where you operate, and you must find the right balance between the only global organization and respect for local values ​​and ways of operate ".

If you can accelerate Check Point's revenue growth rate, this action could be a good investment.