Nikesh Arora discusses acquisition challenges in cybersecurity (Part 2)

I always know that. Think about it. There's no way you could think of it like he does because you just said, no, this guy's coming in and now he's your boss. Look, my point is that I see it differently. I cannot win if 20 people around me don't feel they're winning. And for them to believe that they're winning, they have to believe they're a first class citizen. They have to believe that they're part of the team and their winning matters. And their winning is as much for themselves, that is for me. Has there been any acquisitions you did too early? When I walked in, we had just bought a company called Evident IO Palo Alto. Bought it before I got there and then we ended up buying a company called Redlock, which is the same space. The difference was one only worked on Amazon, the other one worked on all three clouds. And I suspect the one that had been bought early was too early, which was bought by my predecessor. But it didn't matter, the company bought it too early. And then we bought the second one, which was in the same space just further along. So sometimes you could buy stuff too early. It becomes a question of price stage and conviction that you marry the three. Right? Am I convinced this is going to be a big space in the future? Okay, if I'm convinced a big space in the future, I need to have a footprint in that space. Sometimes I can go spin up my own team and then go charge it down and go make it work. Or I can go out and acquire something. The question is, I go acquire something and how long have they been around in that space and how expensive is it going to get? And I think the current times our most sort of representative of the risk. Today companies are getting funded, valuations I don't understand right now. Imagine if I wanted to acquire a company today. The same company I'm trying to acquire today would be one third, one fourth the price three years ago in a different funding environment as compared to today, they're probably as early, but three times or four times more expensive today. So what do you do? You buy them if it makes sense on your strategy. Look, M and A is not a strategy. M and A is a mechanism to validate or to amplify, simplify your strategy or to execute your strategy. People come and always ask me, what's the M and A strategy? I don't have one. I buy companies when I believe I need to go win in a category and I don't have my team at the place I'd like them. To be at this point in time. I got to go look for another team that's got it figured out, and they have the right people in place. So you go buy it. If something's worth $200 million, it's worth $800 million. Because my job is to take the $208 million asset and turn that into a 5, $10 billion asset. If something's worth 200, it's worth 800. What does that mean? As a $300 billion company, I should be buying things, which I believe in the next five to 10 years will be worth five to $10 billion for us. So you're not going to remember the other five.