Nadir Izrael, Co-founder & CTO at Armis Security: Armis got acquired by ServiceNow for $7.75B

0:00Hello and welcome to the Scaling Europe show presented by Deal. This episode is sponsored by SurrealDB, the multimodal database for AI agents. Omni, the AI analytics platform trusted by growing companies like Perplexity and Symbesia and VentureComet, the platform that gives startups and scale-ups real-time equity tracking, daily business insights and automated management information. Thank you for joining me. Please like, comment and subscribe.

0:33Hello and welcome back to the Scaling Europe show. I'm Seb Johnson. Today I've got a great guest, Nadir, co-founder and CTO of Armist Security. It's been busy a few months for you. It has been.

0:45Nadir Israel:Yes. Thank you for having me. Not at all. It's my absolute pleasure. Look, for those who don't know, can you give a brief introduction? I'm sure people would have heard of Armist. Maybe they wouldn't know specifically what problems you guys are solving. Can you give a super quick introduction? Of course. Armis has been around for about a decade now, and it's gone through a couple of phases of evolution. When Armis started, it set out to be the best in the world in understanding your environment, understanding your devices, your digital footprint, and essentially create what we used to call the Google Maps of your environment.

1:19Nadir Israel:And if you think about critical infrastructure, hospitals, factories, power plants, things like that. There's a lot of that digital infrastructure out there to discover. These days, I think the evolution of that has come into understanding entirely your entire attack surface and manage your exposure against different enemies and threat actors worldwide. Amazing. And the big news is the the news of the acquisition, you're being acquired by ServiceNow in an all cash deal for, I think, $7.75 billion, which is by all measures an absolutely phenomenal result. So, you know, congratulations. How does that feel?

2:00Nadir Israel:Thank you. It's actually, to me, a testament to the success of all the people in the company and everyone who kind of brought it to where it is. It's definitely a moment of pride, but it's also a really, really interesting inflection point in manifesting Armis' vision from within this umbrella of ServiceNow, which honestly, there are very few companies out there that would be so aligned and so appropriate, I'd say, for both the market as well as the products Armis has. So it's a very, very exciting moment and the best is yet to come. Yeah, absolutely. Can you touch a bit on where did this deal come from?

2:43Based on my research, it absolutely seems like an amazing place for the next stage of the journey. But how did this deal come about?

2:52Nadir Israel:Well, I think ourselves and ServiceNow have been partnered for a long time now. We have a lot of the same mutual customers, which isn't a terrible surprise because ServiceNow, the biggest companies in the world, they all have ServiceNow. Now, you'd be hard pressed to find one that doesn't. But I think we've found that a lot of our mutual customers expected us to work very closely to each other. And we have. And I think for the last few years, there's been a very thriving partnership from both a business as well as a technology standpoint. And eventually, it kind of coalesced into what just happened right now.

3:32Nadir Israel:I think that from a ServiceNow perspective, we are a very, very tight fit from a security standpoint for all of their customers from the perspective of IT and workflows that they normally are known for. And it just made a lot of sense. And a few months ago, Amit Zaveri, the kind of second in command guy at ServiceNow, called up Yevgeny, my co-founder and my better half, and told him, like, why don't we talk about something more interesting than just partnership. And, you know, a few months later, here we are. Amazing. It must have been exciting to have those conversations. I'm curious, how's it been received internally?

4:18I mean, this must be an amazing result for so many of the employees that have been building for such a long time. What was the reaction like?

4:24Nadir Israel:Yeah, no, it was phenomenal. I think that, first of all, obviously, it's a huge acquisition and people are very proud of what they've done, but also they're very excited and happy about it. I also think that ServiceNow is a great company. I think that maybe a different company or a different outcome might have made people feel a little bit more wary, but no, people were excited about the company, excited about prospects, wanted to learn more about the vision that ServiceNow has around anything from AI to the broader security market. And the funny thing is that because of how these types of acquisitions work and the fact that we're currently in this kind of limbo regulatory period, then people get excited, but then the day later, they need to come to work and everything is just basically normal for an indeterminate amount of time until the acquisition goes through.

5:20Nadir Israel:So it's an interesting kind of playing around with all the different emotions in this. Yeah, I had somebody from Wiz who are saying a similar thing, right? And, you know, they've been stuck in this place for a long time and it feels like, you know, there's a lot of excitement and optimism, but there's also just like, well, we've just got to do our job and deliver. Day to day, we've still got to do what we set out to do. I imagine one of the things that made Armus attractive to ServiceNow was some of the financial profile that you've managed to kind of grow to accrue to. I mean, I read that you're doing, you know, north of$300 million of ARR, still growing 50 % year over year.

5:57Where's that growth coming from?

6:00Nadir Israel:Well, I think, first of all, you're right that the combination of not just people and technology, but also the phenomenal growth curve that Armus has is a very attractive piece to a very ambitious buyer, in this case, of ServiceNow. They want to take their security business much farther and become one of the biggest security companies in the world. And I think that Armis is a key piece in being able to make that happen. And I think that growth in that measure and to your point, north of 300, at this point, way north of 300 because of the way the curve goes. I think it starts, first of all, with the very fundamental DNA of a company.

6:45Nadir Israel:Is a company at its very core, at its very culture, is it a company that aggressively just wants to be number one? Um, or is it a company that just, you know, builds product or ships product or does other things? I think that Armus has always been a very ambitious company. It's always placed its customers first. Uh, whenever there's a problem, whenever there's an issue, everybody kind of drops everything and goes and does whatever is needed to fix it. And I think that that mentality from the very beginning, but all the way through, even to today is at the core of the growth that we experienced.

7:18Nadir Israel:Customers love Armus. Uh, they expand quite a bit as Armus launches new products. There's a lot of adoption of those new products as well. And it's a very, very healthy business in that sense, but also, again, a very aggressive one, one where we want to listen what our customers need and then go and execute as fast as we can and build new things. It's garnered Armus a lot of success, but also quite a few friends and good relationships with partners and customers along the way as well. Yeah, I mean, it makes total sense. And yeah, the growth, you know, when I read it, I was like, I saw the 300 million was last summer.

7:53And I thought, well, if they're growing this rate year over year, they must be, yeah, it's amazing results and amazing news. I always want to touch on like cybersecurity in kind of the age of AI and how has it changed? You know, you've been building this company for 10 years. I imagine it's a very different world to be building cybersecurity tools in today than it was even four years ago. For sure.

8:15Nadir Israel:First of all, hands down, there's no question about it. I think AI is transforming cybersecurity in more ways than one. First is the, I don't want to call it the generic way, but the way that it affects all industries. At the end of the day, you either evolve your company to leverage AI significantly, or you die. Like, it's that simple. So I think that fundamentally, not just the products that have always incorporated AI need to shift up gears and use more and more different technologies, but also all of the internal operations, everything from coding to marketing to anything else. That's the generic way.

8:55Nadir Israel:But the two other ways that I think cybersecurity is unique is one, cybersecurity for AI and the fact that that is changing the landscape of everything. at the end of the day, as companies embrace AI more, they become significantly more vulnerable. Their attack surface that we talked about in the beginning as our mission is becoming that much more complex and it's becoming more complex very, very fast. It's not just about the adoption of AI itself. It's the fact that AI relies on pretty much every piece of data and every asset within your environment. So you better understand all of these different assets and all of these different things so that you can protect yourself well.

9:33Nadir Israel:And in an age where you have to embrace that form of AI, security for AI is a crucial piece. And that is an entire platform that Armus is geared and is gearing up towards. But the second piece, which is even more interesting, maybe, is the fact that in cybersecurity, there is always an adversary. And that adversary is also adopting AI. There are countless, countless already incidents and things that have been seen in different environments where AI is used to attack either weaponizing existing AI platforms or building your own. And the result of that is that things are moving at machine speed now, not at human speed.

10:14Nadir Israel:You have to be able to embrace not just massive automation, but have the right data in place and the right workflows to be able to push through that and transform your security organization. All of these are changing cybersecurity completely and completely upending, by the way, incumbents, newcomers. If you're not changing with all of that, you're bound to eventually die off in favor of new solutions. Interesting. And how do you think your new home within ServiceNow is going to enable you to, I guess, make the most of the new opportunity that AI is presenting? I think in a lot of different ways.

10:54Nadir Israel:It wasn't for nothing that I was saying before that there are very few companies that fit so well from both a go-to-market as well as a technology and product perspective. ServiceNow is ultimately all about AI. They understand that the world is going there and they understand that there is a need to rebuild how organizations run themselves in an age where very likely agents are going to outnumber humans within organizations by orders of magnitude. We're about to enter an age that I don't think the doctrines for managing organizations even exist yet. The playbooks for how to manage a 10 million agent organization, for instance, isn't there yet.

11:35Nadir Israel:Now in that realm, I think that ServiceNow has a very right path and strategy when it comes to what they call AI control tower, the focus on observability. Like ask yourself, for instance, if something bad happens in an organization where the majority of entities are not human, how do you even know what went wrong in the decision-making process? Like what data caused what agent to tell what agent something else? Observability is key. Now into that world, I think that security and trust is a must. I think that first of all, being able to secure the foundation so that all of these different agents and all of that control tower framework actually work on sanitized true data that you can trust, but also protecting the entire mechanism and protecting an entire organization, which again, the attack surface just grew exponentially compared to what it was before.

12:28Nadir Israel:I think that those two things are two sides of the same coin. I think ServiceNow understands that really well, which is why they've engaged us as well. But beyond that, I think that the future is going to look a lot more mixed than we're used to. Cybersecurity isn't going to be off to the side as something. It's going to be embedded right at the fabric of how organizations run. Interesting. And are there things that you're seeing, you know, are you seeing different levels of awareness of the risks with different companies that you're speaking to? Are some companies thinking, oh, goodness, this really has changed everything.

13:04We need to be at the forefront of this. Whereas some companies, are they still not quite aware of how the world is changing?

13:09Nadir Israel:I think like in everything in life, some companies are quick to adopt. Some companies are not. Not to say that, by the way, companies that are quick to adopt are necessarily right. I mean, a lot of times that adoption doesn't have any kind of defined use case or aim. They just sort of rush into it and hope for the best. So I think that realistically, a lot of companies are kind of floundering about and not really sure how to go about this. But I do see companies that have a much more clear vision, that it's clear to them what they're trying to achieve and what they're trying to do. I think ultimately, if you are grounded by the strategic objectives of an organization and AI is being placed in a way where it's either achieve that goal much faster or bigger or be more efficient on the path to it.

13:58Nadir Israel:I think that that's the right compass. That's the right North Star. And I think that those organizations normally and usually also understand that security is a really, really crucial part of that equation as well. And you tend to see that the security teams are also as forward-thinking as the organization itself, or at least in most cases they are. Yeah, that's super interesting. I also wanted to talk a bit about your background. I know you spent time in the IDF. My old boss was there. I used to work at Deal. His company was then acquired by Deal. So many great founders I speak to spent time there.

14:36It seems like this absolute breeding ground for entrepreneurs. What about it do you think gives people this sort of entrepreneurial streak?

14:44Nadir Israel:Yeah, I always joke that my background is about as cliche as it comes when it comes to Israeli cybersecurity founders. same Unit 8200, which is like the NSA of Israel, and same background. But I think the reason is pretty simple. You, at a very young age, it's placed in your hands the responsibility for something huge, something that is no less than the safety and security of your country. and with the full weight of the fact that mistakes cost lives and it's a very, very real fight every day. And on top of that, you're given a mission and it's kind of like, it doesn't matter, you know, what resources you have or don't have.

15:34Nadir Israel:You need to get the mission done no matter what. And you're always strapped for resources. There's always, you're always wanting for more and you don't have those resources. So I think you adopt a mentality where on the one hand, it's a do or die. And on the other hand, you do it or you win with whatever you have in your hand. And that obviously lends itself really well from a DNA and a cultural standpoint to starting startups. And beyond that, I think I've had the privilege of serving with some of the most brilliant people I've ever met in my entire life. And those people happen to be either my co-founders or my future employees or a lot of folks who I've worked with along the way.

16:15Nadir Israel:The network that comes from being able to work with the best of the best is insane. And I think that that, coupled with the evolving ecosystem in Israel of entrepreneurs helping other entrepreneurs, a very healthy ecosystem of VCs and other functions around that, has cultivated something that is crazy. But I I think that ultimately that military background is both, it's responsible for both the DNA and the basic way of thinking, but also for bringing together so many really smart people that you can then build an entire network from. Yeah, I think that's super interesting. I think both points are, yeah, they sound spot on.

16:54That network effect point is not something I thought about because, you know, when you look at the Israeli ecosystem, similar to something like Sweden, which is just punches way above its way in terms of like unicorns per capita. It's interesting that, yeah, I guess timing the IDF brings together like-minded people into similar units, I imagine, who are building amazing things, that then, yeah, creates that network. I hadn't really thought of that. But yeah, I mean, that was super interesting. Has that been a large source of either customers, employees, investors? Have they all come through that network that you've built through that?

17:26Nadir Israel:A lot of them. I think less so customers because the Israeli market in comparison is tiny and you usually target the US. But there are actually, especially in cybersecurity, there are CISOs of different companies that tend to be Israelis at some point. There's more and more of them, I'd say. But mainly, I'd say employees and investors, definitely. I think that when you start a company, you go to the best people you know. Those people are people that you've worked with. You know exactly how they function under pressure. You know how much work they're willing to put into things that they believe in.

18:02Nadir Israel:and they make for the best employees and obviously the best co-founders that you can start from. But I also say that a lot of folks in the ecosystem of investors in Israel are also former alumni of different units and they know exactly who you are. I think it makes it much easier or at least much more effective for them to back channel information and vet people so that you're not bringing on the wrong people or funding the wrong founders. And I think that ultimately you get amazing results. There's a reason why in a very repetitive fashion, Israel has been able to produce some really amazing startups in a bunch of different fields, cybersecurity being, I think, chief of them, but increasingly, by the way, AI as well.

18:53Definitely, definitely. It feels like an interesting turning point for the region actually where it is branching out from cybersecurity to a bunch of amazing AI startups. And I think you've done a bit of investing yourself. Is that right?

19:04Nadir Israel:Yeah, myself and Evgeny, my co-founder, we invest in quite a few different startups. It actually comes first and foremost from the fact that, you know, the ecosystem in Israel is pretty amazing when it comes to founders helping founders. When we started off, we had a ton of help from different friends, different people that we knew from previous lives. and there's a part of this that's kind of giving back, but there's also a part of this that just, I very much enjoy the helping founders not make some of the same mistakes maybe that we did and also helping them get on the right track from the very beginning.

19:43Nadir Israel:And investing in early teams is a really good way to solidify that connection as well and create a situation where you can advise them, and they don't feel like they're bothering you when they're texting you or asking you questions as well. But yeah, we've been fortunate to invest in some of the best companies out there, but also a lot of different teams that are just building their companies at different phases. And we're very proud of that portfolio, yeah. Amazing, we're out of time, but thank you so much for joining me in this. You've been on an amazing journey. And again, congratulations on the acquisition.

20:20Nadir Israel:Thank you so much for having me and thanks for the great conversation.

20:31Thank you.