The billionaire founder of Palo Alto Networks started a new cybersecurity company. Here's why many people are calling it 'crazy.'

After more than two decades of crafting Palo Alto Networks into a formidable $125 billion cybersecurity powerhouse, billionaire Nir Zuk is embarking on a daring new journey. His latest venture, Cylake, marks a significant departure from the cloud-centric model he once promoted. Instead, Cylake is set to deliver an AI-driven, hardware-based security solution tailored for government entities, defense contractors, and other highly regulated sectors that require stringent data protection measures. Zuk has secured $45 million in funding from Greylock, the same venture capital firm that supported Palo Alto Networks during its formative years. He believes that a substantial segment of the market has been overlooked in the rush towards cloud solutions. "The industry has over-rotated toward delivering everything in the cloud, leaving many critical customers stranded decades behind," Zuk shared in an exclusive conversation with Business Insider. Reflecting on his past experiences, Zuk recalled how skeptics dismissed his vision for cloud-based cybersecurity when he founded Palo Alto Networks in 2005. Now, as he sets out to establish a hardware company in 2026, he is once again facing similar skepticism. "You're crazy. Nobody starts a hardware company to run on premises in 2026, especially in cybersecurity," has been the prevailing sentiment, according to Zuk. Palo Alto Networks has since become the largest independent cybersecurity firm globally, with Zuk's stake valued at around $1.4 billion. After stepping down as CTO last year, he is excited about this new venture, stating, "I enjoy being seen as the underdog. I know there’s a market out there." The surge in cybersecurity threats, exacerbated by the rise of malicious actors leveraging AI, has led to a flourishing environment for cybersecurity startups, which raised nearly $14 billion in 2025 alone. This marks a 47% rise compared to the previous year, reflecting the industry's growing demand for innovative solutions. Amidst these developments, experts predict that geopolitical tensions, such as the ongoing conflict in Iran, may lead to increased cyber attacks this year. It’s common in Silicon Valley for venture capitalists to invest in founders launching their second or third enterprises. Asheem Chandna from Greylock remarked, "When someone has a success as monumental as Palo Alto Networks, the expectation is high. The question is, can we create something even larger?" Chandna envisions a vast opportunity worth over a hundred billion dollars, particularly for industries like defense and regulated sectors that cannot utilize cloud infrastructure for sensitive data. He praised Zuk as a "magnet for talent" and a "brilliant technologist" who is both competitive and customer-focused. Joining Zuk at Cylake are co-founders Wilson Xu, who previously led engineering at Palo Alto Networks, and Udi Shamir, a co-founder of SentinelOne. Zuk's inspiration for Cylake began years ago, but it wasn’t until last summer, following Palo Alto's acquisition of CyberArk for $25 billion, that he decided to pursue this new path. "Customers expressed the desire for our products, but their needs couldn’t be met with cloud solutions," he recounted. At 54 years old and already a billionaire, Zuk emphasizes that his new venture is not driven by financial gain. "Firstly, I love building things. Secondly, if I don’t do this, no one will," he stated, underscoring his passion for innovation in the cybersecurity landscape.