Jay Chaudhry put $500K of savings into SecureIT and sold it for ~$70M (interview)

SecureIT was a cybersecurity software startup founded in 1997 in Atlanta that deployed firewalls to large companies.

Firewalls would be needed by every internet-connected company, so the founders staked their entire savings on a market with no analyst studies behind it.

About $500,000 of the founders' own life savings

In an interview with CNBC Make It, Chaudhry says Netscape's launch and IPO in 1996 made him ask why he should not start a company. He quit his executive job at IQ Software and his wife Jyoti left her job at BellSouth. They first tried to raise venture capital but, he says, Atlanta was not a VC hub and investors told him he had no experience. He says there was no IDC or Gartner study on market size; the decision rested on his gut that internet connection brings security risk.

With conviction growing, the couple put their life savings, roughly $500,000, into SecureIT, co-founded in 1997. They weighed the worst case, losing the savings, and judged they could find jobs. Chaudhry told CNBC their lifestyle was modest, with a $200,000 house and one child in public school, so the overhead was low. He says SecureIT's firewalls reached about 50% of the Fortune 500 within 18 months.

In 1998 SecureIT was sold to VeriSign in an all-stock deal worth nearly $70 million, per CNBC. The couple later founded two more cybersecurity companies and an e-commerce business, each acquired, and in 2007 started Zscaler, into which they put $50 million of their own money, Chaudhry says.

Chaudhry says Netscape's success convinced him that every company would connect to the internet and so need security.

Venture capital was hard to raise for a first-time founder in Atlanta in 1996, so the couple self-funded.

He says it was obvious that connecting to the internet required firewalls, so SecureIT's market risk was lower than Zscaler's later.

A modest lifestyle and confidence they could find jobs made the loss of their savings tolerable, he says.

When outside investors pass, a founder funding the first company personally can fit its pace to evidence; Chaudhry says that is also a test of conviction.

As of 2024-07-15 CNBC reports Chaudhry as Zscaler's founder and CEO with a Forbes-estimated net worth of $11.5 billion; Zscaler has about $1.6 billion in annual revenue and a roughly $30 billion market value. SecureIT's results above are the founder's own account, not independently verified in the interview.