Silicon Valley brothers build billion dollar cyber-security fortunes

0

Cyber-security has unlocked riches for Ken and Michael Xie.

The Chinese-born brothers are now billionaires from their stakes in Fortinet Inc., the Silicon Valley-based network security software firm they co-founded almost two decades ago, according to the Bloomberg Billionaires Index.

Spurred by high-profile data breaches and malware attacks, cyber-security has become a growing priority for companies. Cloud-focused firms including Fortinet and Palo Alto Networks Inc. have benefited as businesses update their computer infrastructures, posing a threat to more established network software providers such as Cisco Systems Inc. and Juniper Networks Inc. Fortinet counts most Fortune 500 companies as its customers, according to its website.

- ADVERTISEMENT -

“It’s been one of the innovative companies for next-generation products as companies have looked to cyber more,” said Mandeep Singh, senior technology analyst at Bloomberg Intelligence. “It’s a fragmented market, so there’s plenty of room for a player to boost their position.”

The cyber-security software market should grow 10 percent a year through 2023, according to research firm MarketsandMarkets. Fortinet is outpacing that, with 2018 revenue increasing 20 percent to $1.8 billion from a year earlier. The firm’s shares closed at $81.22 on Wednesday, more than six times its 2009 public offering price. They dipped on Thursday after fourth-quarter adjusted profit missed analysts’ estimates.

“We are excited about significant opportunity ahead,” Ken Xie, 56, who’s chief executive officer, said on a call Wednesday after Fortinet reported results. He predicted continued growth in 2019, but added “you need to keep up the innovation.”

A spokeswoman for Sunnyvale, California-based Fortinet didn’t immediately respond to requests for comment.

Ken Xie has been a U.S. citizen since 1998 and started his first cyber-security company while studying electrical engineering at Stanford University. He co-founded Fortinet in 2000 after creating and then leaving another online security firm, NetScreen Technologies. Juniper Networks acquired NetScreen in a 2004 all-stock deal valued at $4 billion.

A decade and a half later, Fortinet’s $13 billion valuation exceeds that of Juniper Networks. Ken Xie is the largest individual shareholder, with a 7.4 percent stake worth $1 billion. He’s also collected more than $40 million through share transactions, according to data compiled by Bloomberg.

Michael Xie, the firm’s president and chief technology officer, studied electrical engineering at Canada’s University of Manitoba. He owns a 7.1 percent stake, with almost half held through family trusts, and has collected more than $70 million through share transactions.

Among other cyber-security companies, Check Point Software Technologies Ltd. CEO Gil Shwed has a $2.9 billion stake and Palo Alto Networks co-founder Nir Zuk’s shares are worth almost $300 million.

“It’s a space that keeps changing and growing fast, keeping me learning every day,” Ken Xie said in an interview last year. “And that I like.”

Share

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Yes, I would like to receive emails from DESI TALK Headlines!. Sign me up!


By submitting this form, you are consenting to receive marketing emails from: News India Times | Desi Talk Headlines | Desi Talk Chicago, 35 JOURNAL SQ, JERSEY CITY, NJ, 07306, http://www.newsindiatimes.com. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact