Jay Choudhury runs businesses, makes fortunes, You can’t help but contribute to the proliferation of an entire industry, even if you didn’t grow up in rural India, emigrated to the US in 1980 to study engineering and marketing, and then went on to work for tech giants IBM and Unisys.
“I come from a small farming family and have no entrepreneurial experience, so did I ever think about starting a business as a child? [or] “There was never a time early in my career where I thought, ‘Oh, is that right?'” Chaudhry, the billionaire founder and CEO of cloud security company Zscaler, told CNBC Make It.
In 1996, Silicon Valley’s dot-com boom — the huge success stories of tech startups like Netscape — led Choudhury to ask, “Why not start a company?” He made the rash decision to quit his executive job at IQ Software, an Atlanta-based tech company, and his wife, Jyoti, quit her job as a systems analyst at the telecommunications giant BellSouth.
The two poured about $500,000 of their savings into SecureIT, a cybersecurity software startup they co-founded in 1997. At the time, “fewer than 5 percent of Fortune 500 companies had firewalls,” says Chaudhry. “Within 18 months, we had firewalls in about 50 percent of companies.” [the] “Fortune 500”
The timing was perfect: Choudhury sold SecureIT to VeriSign in an all-stock transaction for nearly $70 million in 1998. Over the next decade, the couple founded two more cybersecurity companies and an e-commerce firm, both of which were acquired.
By 2007, they were already wealthy entrepreneurs, but Chowdhury became “bored” without work and decided it was time to “start one big company and focus 200 percent on it,” he says.
The company, Zscaler, aimed to help businesses move away from antiquated firewalls into the cloud era. Chaudhry says the couple invested $50 million of their own money. Today, the company has annual revenue of $1.6 billion and a market capitalization of about $30 billion.
Choudhury’s own net worth is estimated at $11.5 billion, according to Forbes magazine.
Here, Choudhury talks about risking his family’s savings to follow his instincts, how his upbringing influenced his relationship with money, and his advice for anyone wanting to quit their job and start their own business.
CNBC Make It: What made you decide to bet your entire life savings on a startup idea? In an industry that didn’t exist yet?
Chaudhry: This happened because I love reading and technology.
In 1996, Netscape had just launched and gone public, and I was fascinated by it. [Netscape co-founder] Marc Andreessen could start a company. He was young. [right] Why not start a company after graduating from college?
My wife and I have discussed this several times, and the more I think about it, the more convinced I become. [Netscape’s web browser] It’s a way to access information and should become commonplace. But connecting every business to the Internet creates security risks.
That was just my simple idea. There was no IDC or Gartner research on the market size. It was mostly based on our gut feeling.
Intuition is one thing; having every dollar bet on your name is another.
At first, I started out by saying, “Let’s raise some venture capital.” I had no experience raising funds, but I quickly realized that it wasn’t going to be easy. [1996]Atlanta wasn’t a mecca for venture capital, so I kept getting told, “You have no experience.”
We were disappointed, but our conviction grew and we said, “Why not put our savings on the line?”
I didn’t know anything, so I didn’t really know how big the risk was, I couldn’t quantify it.
How did you accept that risk?
After much discussion, we both asked each other, “What’s the worst that can happen?” The company could close and we’d lose all our savings.
The next question was, “Will we find work?” We were very confident that we could.
I was never blessed with money growing up, so there was never this idea that I had to buy A, B, and C. Our lifestyle was pretty simple. Our house in Alpharetta, Georgia was $200,000, a typical upper-middle-class home for the time. We didn’t have fancy cars or high bills.
At the time, our only child was in public school, and the expenses weren’t that high. We said, “Let’s take a chance.”
When your bet paid off, did that success give you the confidence to take bigger risks? Have any of your other adventures been as risky as your first one?
of [financial] SecureIT’s risk was about 1,000 times greater than Zscaler’s risk, and the amount I invested in Zscaler was a tiny fraction of my net worth.
But Zscaler did it much harder. We put more money into it than all those other companies combined. We took bigger bets. We hired faster to solve really hard problems. We wanted to do something big, something lasting.
We were trying to solve a futuristic problem. Will it work? Will the market take off? Will it not? It was all unknown.
So if you ask about the likelihood of Zscaler succeeding, the stakes are much higher, because in the case of SecureIT, it was clear that they needed a firewall to connect to the internet.
What is your best advice for someone thinking about quitting their job and starting their own business?
First, build your confidence by learning more about what you want to do. Don’t just scratch the surface.
Second, start by putting your own money to work. This is really part of testing your belief. If you really believe, you’ll bet on yourself. It also means doing your homework, being prepared, and being serious about it.
You can also make decisions however you like. If Zscaler was primarily owned by VCs, it probably would have shut down. It took us a few years to get any real traction in the market, and then the VCs can give up on you and move on. They say, “This is one of my 20 investments.”
You put your own money into it and this is the only business you have.
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