Zscaler co-founder Jay Chaudhry's focus on IT security has led to major success
Jay Chaudhry, co-founder CEO Zscaler
October 28, 2021
This year, there was a three-fold increase in encrypted attacks compared to last year, according to a study by Zscaler, a cybersecurity firm based in San Jose, California. The study, Zscaler’s annual State of Encrypted Attacks Report, which was released today, tracked and analyzed over 20 billion threats blocked by the company’s software over HTTPS, an internet protocol originally designed for secure communication over networks.
The technology industry was the worst hit business accounting for 50 percent of attacks since January this year. Attacks on healthcare, which was the most-targeted industry last year, decreased by 27 percent.
Each day in more than 200 countries, Zscaler’s cybersecurity software analyzes more than 190 billion transactions, extracting over 300 trillion signals and detecting and blocking 100 million threats.
“This is a game with bad guys…remember if they try 100 times they need to get in only once. They can fail 99 times and they are still in. If we fail once it’s a big deal,” Zscaler co-founder Jay Chaudhry told Ravi Kumar, president of Infosys, the Indian information technology services company, in an interview.
Zscaler’s cloud-based software, enhanced by machine learning and artificial intelligence capabilities, is distributed across more than 150 data centers around the world, servicing more than 450 major companies. Siemens, for instance, uses Zscaler to secure the traffic of its 350,000 users in 185 countries. In the UK, National Health Services provides a secure online portal to more than a million patients through Zscaler.
Zscaler, which has more than 3,900 employees, was founded in 2008 by Jay Chaudhry, 63-years-old, and Kailash Kailash. In 2018, it became a public company by listing on the Nasdaq stock exchange.
Demand for cybersecurity software is growing rapidly since businesses are increasingly moving their information technology infrastructure and applications to the cloud in order to improve productivity, agility, and contain costs.
In the fiscal year that ended July 2021, Zscaler’s revenues grew by 56% to $673 million. This year, its revenues are estimated to grow by about 50%, to around $1 billion. In fiscal year 2021, the company had a net loss of $262 million. Wall Street analysts, who favor companies with rapidly rising revenues, estimate Zscaler had a small profit last year, if $279 million in stock compensation expenses, a non-cash charge, are excluded.
Zscaler has several competitors including Palo Alto Networks, run by Nikesh Arora, Checkpoint Software, Fortinet as well as cloud-based security services from Amazon, Microsoft and Google. Yet investors are enthusiastic about Zscaler’s business prospects, valuing the loss-making company at $43 billion, which is 43 times its fiscal year 2022 sales estimate.
Amit Sinha, 45, is Zscaler’s Chief Technology Officer and, since 2017, a member of its board of directors. Earlier Sinha served as CTO of Chaudhry’s previous venture AirDefense, which was acquired by Motorola. Sinha stayed on as CTO of Motorola’s enterprise networking and communications business, before teaming up again with Chaudhry at Zscaler in 2010. Sinha also served as Chief Technologist at Engim, which he co-founded.
Sinha earned an MS and PhD in Electrical Engineering and Computer Science from the Massachusetts Institute of Technology, and a B.Tech. in Electrical Engineering from the Indian Institute of Technology, Delhi, where he was awarded the President of India Gold Medal. He holds 27 US patents and has contributed to several books and dozens of conference and journal papers. Sinha and his family members own Zscaler stock: worth over $226 million.
Co-founder Kailash Kailash, who is Zscaler’s chief architect, owns a negligible amount of stock. He earned a Masters in computer technology from IIT Delhi, 1982 and a BTech in electronic engineering from Benares Hindu University (BHU), India, 1980.
Chaudhry ran into Kailash, at a conference in San Jose, California,.when he was contemplating founding Zscaler. Kailash, a classmate at BHU, is “a brilliant computer scientist, and exactly the person who could help me realize my vision for transforming the security industry,” Chaudhry told graduating students at BHU in February this year. As he looked to his next venture Zscaler, “I had a different purpose and I approached it with a changed mindset. I wanted to build something lasting.”
Prior to founding Zscaler, Chaudhry founded and led several businesses dealing with computer and information technology security issues. His AirDefense, a wireless security pioneer, was acquired by Motorola. From 2000 to 2006, he founded and led CipherTrust, a leading email security gateway, before its merger with Secure Computing.
In 1996, “I was fascinated by the internet…My family had no history of entrepreneurship. But in the mid-1990s, as the internet was just taking off…I asked myself: Why can’t I do a startup?” Chaudhry told BHU students. Instead of viewing the internet at the time as simply a vehicle for commerce, he saw an opportunity to help companies navigate the new security challenges they would face.
After pitching the idea to venture capitalists and failing to raise funding, “my wife, Jyoti, and I made the decision to put our life savings into a startup we called SecureIT. I managed sales and marketing, and Jyoti managed finance, human resources, and company operations. As anyone who has started a company can attest, the hours are long and the strain on the family can be difficult.” in 1998, SecureIT was acquired by VeriSign.
Another of Chaudhry’s venture CoreHarbor, an ecommerce solution, was acquired by USi/AT&T. Earlier, for a decade he worked in engineering, sales, marketing and management at IBM, Unisys and NCR.
Chaudhry grew up in Panoh, a village in Himachal Pradesh, India, at thefoot hills of the Himalayas. His home did not have electricity or running water until he was in the 10th grade. He moved to the U.S. in 1980 for graduate studies at the University of Cincinnati. He visirs Panoh often.
The Chaudhry’s have a daughter and two sons. Jay Chaudhry is a vegetrain and a health freak who is “crazy about exercise,” he told The Mercury News. He likes reading about history, global politics and psychology and enjoys hiking and white water rafting.
Chaudhry earned his MBA in Marketing, MS in Computer Engineering and MS in Industrial Engineering – all from the University of Cincinnati. He earned his Bachelor of Technology in Electronics Engineering from Benares Hindu University, India. It was not his idea to attend BHU, he told a gathering of alumni early this year. “I had been encouraged by my (school) teachers who believed in my capabilities. The university shaped me in part due to the rigor of the work, but also due to the people I met who would become lifelong friends and colleagues.” He has completed the Executive Management Program from Harvard Business School.
Early this year Chaudhry donated $3 million to tackle COVID-19 in India. Jay and Jyoti Chaudhry have set up a charitable foundation. But, since its a private foundation, its annual contributions are not publicly disclosed. Chaudhry is not among the twelve Indian billionaires who have signed the Giving Pledge. So far 216 billionaires around the globe have signed the pledge to donate at least half of their wealth to philanthropic causes.
The Chaudhry family collectively own Zscaler stock worth $8.5 billion. Jay Chaudhry’s net worth is estimated to be $18 billion by Forbes, making him the wealthiest Indian American. Though Zscaler is based in California, Chaudhry lives in Nevada. Unlike California, Nevada does not levy a state income tax on its residents.
“I was driven by the sense of accomplishment that came with bringing an idea to life,” Chaudhry told BHU graduates. His two life lessons, he said were, “If you love what you do, you’ll never work a day in your life,” and “take risks and dream big.”
