“We now have evidence they’re sitting on the machines, connected to industrial control infrastructure, that allow them to effectively turn the power off or effect sabotage…. They have the ability to shut the power off. All that’s missing is some political motivation.”
Good morning and happy Saint Patrick’s Day, Cyber Saturday readers.
If you’re in the habit of strolling the showroom floor at cybersecurity conferences, you’ll likely have encountered a booth wherein a man pulverizes data center appliances with a sledgehammer. To neighboring stands, this kiosk is a nuisance. To transfixed foot traffic, it is “Zscaler.”
Even in the lead-up this week to hotly anticipated initial public offerings from Dropbox and Spotify, Zscaler somehow still thrust itself into the spotlight. Founded 11 years ago, the cloud security firm on Friday became the first tech “unicorn“—or billion-dollar startup—to go public in 2018. Further, the company’s market performance utterly shattered Wall Street’s expectations. Despite raising the price of its shares twice in the days preceding the IPO, Zscaler’s 16.8 million shares more than doubled to $33 per share during their first day of trading. That’s not a “pop”—it’s a KA-BOOM.
I caught up with Jay Chaudhry, Zscaler’s founder and CEO, in the hours after his company listed on the NASDAQ exchange. He said he did not regret the IPO price point, even though it left considerable money on the table. “We felt it was a good price,” he said, noting that underwriters Morgan Stanley and Goldman Sachs helped select it. “I’m not going to second guess the decision.”
Chaudhry is capitalizing on businesses’ transition to the cloud in the same way that Marc Benioff, founder and CEO of Salesforce, did before him. Zscaler funnels the Internet traffic of its customers, including industrial titans like Siemens and GE, through its global network of more than 100 data centers for inspection, filtering, and scrubbing. “Network security is dead because you no longer control the network,” Chaudhry is fond of saying. Instead of circumscribing corporations within moats, Zscaler employs omnipresent sentries.
Zscaler does not go unchallenged, however. In its prospectus filing, the company listed tech giants like Symantec (which acquired Blue Coat for $4.65 billion in 2016) and Cisco (which acquired OpenDNS for $635 million in 2015) among its competition. The incumbents are keen to double down on this growing area of the market, but Chaudhry believes he can outrun them.
Zscaler is Chaudhry’s fifth company. The Indian entrepreneur, who grew up in a small Himalayan village and moved to the U.S. for graduate school, told me it is also his last—though he does have another act in him. “When I retire, my next conviction is to build a non-profit in a philanthropic area to fix education,” Chaudhry told me. He said he admires Microsoft cofounder Bill Gates’ approach to charitable giving; which is to say, “funding philanthropy as a business, not just throwing money out there.”
If Zscaler’s market debut is any indication, Chaudhry will have that opportunity. Until then, he said he plans to pour proceeds from the IPO into Zscaler’s sales and marketing. I suspect that might involve more hardware clobbering at trade shows.
Get that green, dear readers, and have a great weekend.
Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.
Lights out. Russian state hackers have been establishing a frightening, digital foothold within America’s power plants, the Trump administration warned Thursday. Moscow’s intruders have had access to sabotage the operation of critical facilities, as new screenshots in a notice from the Department of Homeland Security has revealed. This is the first time the government has officially accused agents of the Kremlin as culprits behind this recent attack campaign, dubbed “Dragonfly” by security researchers.
Short-seller surprise. Cybersecurity firm CTS Labs said Tuesday it discovered four security vulnerabilities in computer chips made by AMD. CTS caught flak for alerting AMD to the issues only one day prior to disclosing its findings, a move likely motivated by its apparent “economic interest” in the performance of the chipmaker’s shares. Although CTS withheld technical details about how to exploit the flaws, critics argued that CTS’s disclosures were irresponsible. (Industry best practices dictate that CTS should have given AMD months to address such problems before going public.)
SEC no evil. The U.S. Securities and Exchange Commission charged Jun Ying, a chief information officer at Equifax, of trading on inside information with respect to the credit bureau’s big data breach last year. The executive, who was in line to become the company’s global CIO, sold $1 million worth of shares based on confidential info that alerted him to the hack, the SEC alleged. By selling off before Equifax’s public disclosures, the exec allegedly avoided more $117,000 in potential losses.
Go, greased lightning. Twitter and Square CEO Jack Dorsey is one of the investors in a $2.5 million fundraising round for Lightning Labs, a company that is helping to develop a key piece of technology for Bitcoin’s payment network. On Thursday, the company released an early version of the so-called Lightning Network, which aims to make cryptocurrency transfers cheaper and faster. Other investors in the new round included Litecoin creator Charlie Lee, Robinhood cofounder Vlad Tenev, former PayPal chief operating officer David Sacks, and Tesla and SpaceX backer Bill Lee.
Is it just me or does this whole achieving-immortality-at-the-cost-of-death thing sound rather like a Catch 22? Guess I’ll wait for the early reviews to trickle in before testing it out.
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—Eric Chien, a director of security at cybersecurity firm Symantec, told the New York Times that Russian state hackers have burrowed deeply into American power plants to the point where they can shut off parts of the nation’s energy supply at will. Chien told me much the same when I spoke to him in the fall, but his warnings have acquired renewed urgency in light of the Department of Homeland Security’s new report detailing Moscow’s access to U.S. industrial control critical systems.
How a Bank’s AI Credit Card Could Help Solve the Equifax Problem, by Jen Wieczner
IBM and Cloudflare Join Forces to Take on Amazon, by Robert Hackett
What to Know About Gina Haspel, the Apparent New Director of the CIA, by Chris Morris
How YouTube Pushes Viewers Toward Extremism, by David Z. Morris
What We Know So Far About James Comey’s Top-Secret Book, by Natasha Bach
ONE MORE THING
What the kids are into. Last weekend my high school-aged cousins asked to play my old Xbox gaming console on which I used to pwn noobs in Halo, a great video game. My cousins freaked out at the sight of irremovable power cables extending from the system’s oversized controllers. OK, fine. What do they do for fun? Apparently, they—and all of their friends—are obsessed with a battle royal survival game called Fortnite, which you can read more about in this Rolling Stone review. The game is coming soon to smartphones and, yes, I intend to whoop the little’uns when it’s out.