“I don’t have a background of entrepreneurship in my family of small farmers. So if you were to ask me, ‘Did I ever think about becoming an entrepreneur in my childhood (or) early career?’, the truth is no,” Chaudhry, the billionaire founder and CEO of cloud security company Zscaler, tells JOBsNews Make It.
In 1996, Chaudhry asked himself the question of why he shouldn’t start a company, when the dot-com boom hit Silicon Valley (the success stories of tech startups like Netscape). He made the hasty decision to leave his job as an executive at Atlanta-based tech company IQ Software, and his wife Jyoti left her job as a systems analyst at telecommunications giant BellSouth.
Together, they invested their entire savings — about $500,000 — into SecureIT, a cybersecurity software startup they co-founded in 1997. At the time, “maybe less than 5% of Fortune 500 companies had firewalls,” Chaudhry says. “Within 18 months, we had deployed firewalls at about 50% of Fortune 500 companies.”
His timing was perfect: In 1998, Chaudhry sold SecureIT to VeriSign in an all-stock deal worth Almost 70 million dollarsOver the next decade, the couple founded two more cybersecurity companies and an e-commerce business, each of which was acquired.
By 2007, they were already wealthy entrepreneurs, and Chaudhry, who was “bored” without something to work on, decided it was time to launch “a big company and focus 200% on it,” he says.
That company was Zscaler, which aimed to help businesses move away from outdated firewalls and into the cloud era. The pair invested $50 million of their own money, Chaudhry says. Today, it generates 1.6 billion dollars in annual revenue and has a market value of approximately $30 billion.
Chaudhry’s net worth is estimated at 11.5 billion dollars by Forbes.
Here, Chaudhry talks about risking his family’s savings to follow his instincts, how his upbringing influenced his relationship with money, and the advice he’d give to someone who wants to quit their job to start a business.
JOBsNews Make It: What prompted you to put your entire life savings into a startup idea? In an industry that didn’t really exist yet?
Chaudhry: This happened because I love reading and I love technology.
In 1996, Netscape had just launched and gone public, and I was fascinated. I said, “Yeah, (Netscape co-founder) Marc Andreessen I could start a company—I was a young kid fresh out of college—why shouldn’t I start a company?
My wife and I talked about it several times, and the more we thought about it, the more convinced we were that (Netscape’s web browser) is the way to access information and should become popular. But if every business is connected to the Internet, that means there will be security risks.
That was my simple way of thinking. There was no IDC or Gartner study on the size of the market. It was largely based on what our intuition told us.
It’s one thing to have a hunch, it’s quite another to bet every dollar on your name.
It all started when we said, “Let’s go get venture capital funding.” I had no experience raising funds and I soon realized that it wasn’t that easy. This was 1996, Atlanta was not a venture capital mecca and we always heard, “Hey, you have no experience.”
We were disappointed, but our conviction was growing, which led me to say, “Why don’t we risk our life savings?”
I didn’t know anything, so I didn’t really know how big the risk was. I couldn’t quantify it.
How did you make peace with that risk?
After talking for a while, we asked ourselves, “What’s the worst that could happen?” The company could close and we would lose all our savings.
The next question was, “Will we be able to find work?” There was a lot of confidence that we could.
Growing up, I never had any money, so I never had the idea that I had to buy A, B, and C. Our lifestyle was pretty simple. Our house in Alpharetta, Georgia, cost $200,000 (a nice, typical middle-class house at the time) and we didn’t have any fancy cars or high mortgages.
At the time, our only child was in a public school. There weren’t a lot of overhead costs. We said, “Let’s take a chance.”
When a gamble pays off, does that success make you feel more confident about taking bigger risks? Were any of your other ventures as risky as that first one?
The (financial) risk of SecureIT was approximately 1000 times greater than the risk of Zscaler. The amount I invested in Zscaler was a small fraction of my net worth.
But Zscaler was much harder. I invested more money in it than all the others combined. I bet more. I hired people faster to solve some very hard problems. I wanted to do something big, something lasting.
We were trying to solve a problem that was futuristic. Would it be successful or not? Would the market take off or not? All of that was unknown.
So if you ask me what are the chances of success for Zscaler, the risk is much higher, because with SecureIT it was pretty obvious that when you connect to the Internet, you need firewalls.
What is the best advice for someone who is thinking about leaving their job to start their own business?
First, build your conviction by learning more about what you want to do. Don’t just do some of the superficial work.
Second, start by investing your own money. That’s actually part of testing your conviction. If you really have conviction, you’ll take the risk. That also means you’ve done some serious homework, you’re ready, and you’re committed.
You can also make decisions the way you want. If Zscaler was majority owned by VCs, they probably could have shut it down. It took us a few years to start gaining traction in the market, and VCs can write you off and move on. They say, “It’s one of my 20 investments.”
When you put your own money in this is the only business you have.
Do you want to stop worrying about money? Sign up for JOBsNews’s new online course Achieve financial well-being: be happier, richer and more financially secureWe’ll teach you the psychology of money, how to manage your stress and create healthy habits, and simple ways to increase your savings, get out of debt, and invest for the future. Get started today and use code EARLYBIRD to get a 30% introductory discount until September 2, 2024.
Also, subscribe to JOBsNews’s Make It newsletter for tips and tricks to succeed at work, with money and in life.
JOBs Apply News
For the Latest JOBs Apply News, Follow ©JOBs Apply News on Twitter and Linkedin Page.