Google’s $32bn Wiz acquisition is Israel’s ‘Facebook moment’

The deal to buy leading cloud security firm Wiz for $32 billion, announced this week by Alphabet, Google’s parent firm, is its biggest to date. The tech giant said the deal represents the acceleration of two large and growing trends in the AI era: improved cloud security and the ability to use multiple clouds. But there’s a much wider impact on the global – and in particular the Israeli – tech ecosystem, with one of the most impactful “trickle-down” moments on a burgeoning tech sector ever seen.

Israel will experience trickle-down innovation through new founders brimming with the knowledge learned at Wiz and the courage to dare to build; trickle-down culture as other founders and firms become willing to build companies of this size; and trickle-down investment through the many newly minted millionaires who will participate in funding new companies across the board. 

This isn’t just a landmark deal; it’s a watershed for Israel’s tech ecosystem and a guiding light for other promising tech enterprises, with ambitions to follow in their footsteps. 

Israel’s Facebook moment

This acquisition will be benchmarked against other global tech events, like Facebook’s transformative IPO in 2012. That created massive wealth, spurred innovation, and solidified the company’s position as a dominant force in the tech world. The Wiz acquisition is on that scale, a true game-changer not just for the company, but for the wider ecosystem.

Facebook’s 2012 IPO raised approximately $16 billion, making it one of the largest tech listings at the time. More importantly for the Silicon Valley ecosystem, this influx of capital created an estimated 1,000 new millionaires and had a profound impact on the Valley’s early-stage funding ecosystem.  

Many of these entrepreneurs went on to found or invest in other successful startups, supercharging innovation and growth. This was highlighted most dramatically in early Facebook employees’ involvement in founding or funding firms like YouTube, Spotify, Asana, Quora and Tinder. Similarly, the Wiz deal is Israel’s ‘Facebook moment,’ not only in its creation of a new wave of millionaires and billionaires who will reinvest wealth and expertise back into the Israeli and global ecosystem, but through talent circulation and the empowerment of a new generation of ambitious builders. It’s the launch of a new era of growth that will solidify Israel as a formidable global tech force.

If Wiz can deliver such an impact on the global ecosystem, it can also inspire other Wiz-sized outcomes and long-term platforms built in Israel, from companies like Monday.com and Lemonade (already public) to Cato Networks, Via, and Lendbuzz, which should be going public soon. 

It won’t be too long before we see the emergence of a Wiz, Lemonade, or Via “mafia” along the lines of the “PayPal Mafia,” the many former employees who went on to found new ventures themselves. 

A triumph for Israel 

This deal is a testament to Israel’s innovation and cybersecurity prowess and is primed to unleash a similarly positive domino effect as the Facebook IPO. The financial implications are staggering, with the potential to generate a record tax windfall for Israel, during a time of war. 

Should Google complete the acquisition of Wiz for $32 billion (around a fifteenth of Israel’s 2024 national budget), the estimated tax revenue from the sale would be between $3-4 billion (~3% of Israel’s entire national budget). 

This influx of funds could be transformative, negating planned budget cuts and preventing an increase in the country’s deficit. In fact, Finance Ministry officials have even suggested that it could pave the way to roll back some tax hikes planned for 2025. This deal is not only a victory for Israel’s tech sector but for its economy as a whole. Especially after a difficult 18 months of war,  a war that has been draining emotionally, and physically and which has increased day-to-day spending for the average Israeli. Before the war, then deficit was below 1.5% and military spending was $1.8 billion monthly, while, as the conflict continued, the deficit peaked at ~8% as military spending increased to $4.7 billion per month.

Funneling some of these funds into supporting the ecosystem, particularly through STEM education in K-12 schools and government-backed frontier technologies (such as space, energy, and neuro/brain-computer interfaces), could further solidify Israel’s position as a global leader in innovation. These investments would not only sustain the growth of Israel’s tech sector but also empower the next generation of talent, strengthening the country’s long-term technological and economic resilience. 

A resounding message through business

Google’s CEO Sundar Pichai summed it up perfectly when announcing the deal, saying it “will turbocharge improved cloud security and the ability to use multiple clouds.” In what are clearly trying times, this deal signifies the continuation of leading global companies investing heavily in Israel and relying on its cutting-edge technology. It is confirmation that the Israeli tech ecosystem, even after one of its most difficult times as a country, is and will continue to thrive.