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A Return to Value: Building Real Businesses

A Return to Value: Building Real Businesses. Gil Shwed, Chairman & CEO Presented by Marius Nacht, SVP. Agenda. Evolution of the IT Start-Up Goals Fundamentals Creating value The Check Point Case Market and technology growth Financial results Creating customer value.

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A Return to Value: Building Real Businesses

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  1. A Return to Value: Building Real Businesses Gil Shwed, Chairman & CEO Presented by Marius Nacht, SVP

  2. Agenda • Evolution of the IT Start-Up • Goals • Fundamentals • Creating value • The Check Point Case • Market and technology growth • Financial results • Creating customer value

  3. The Tech Start-up:The Opportunity • Innovation and low cost of entry • Significant entrepreneurial opportunity • The Entrepreneur • Innovate & Make a difference • Be A Leader • Achieve Financial Success

  4. How Is This Achieved? • Customer Need • Products/Services that fills a real need • Customers are willing to pay for this • The Start-up Advantage • Focused & Creative • Expertise – Market & Technology • Fast & Flexible Innovation

  5. The Start-Up’s Plan: Pre-1995 • Created an Innovative Product, Technology or Service • Lean (2-4 people) “garage operation” • Spent cautiously and operated on limited resources • Found the Early Adopters • Made “real world” products • Started selling! • Built a company • Grew sales first, then grew company • Evolved the technology just ahead of market

  6. The Start-Up’s Plan: 1998 - 2000 Identified a HUGE Opportunity (or jumped on a “hot” bandwagon) • Hoped for big money rewards • Challenge was to gain mindshare Created Mindshare • Spent $$$ (before a real product) • Built a company that fit a HUGE opportunity Focused on internal growth • Built a big company prior to proven market/product RESULT: You’ve just lost your start-up advantages • Not as fast, focused or cost effective

  7. What does the Plan for a Post-2001 Start-Up Look Like? A Pre-1995 Start Up Plan…

  8. The Start-Up’s Plan: Pre-1995 The Start-Up’s Plan: Post-2001A Return to Value • Create an Innovative Product, Technology or Service • Lean (2-4 people) “garage operation” • Spend cautiously; operate on limited resources • Find the Early Adopters • Make “real world” products • Start selling! • Build a company • Grow sales first, then grow company • Evolve the technology just ahead of market • Created an Innovative Product, Technology or Service • Lean (2-4 people) “garage operation” • Spent cautiously; operate on limited resources • Found the Early Adopters • Made “real world” products • Started selling! • Built a company • Grew sales first, then grew company • Evolved the technology just ahead of market

  9. A Return to Value:Focus & Efficiency • Sales • Customers/Partners • Technology Efficient – Invest in the right places

  10. The Check Point Case:Creating Value

  11. Check Point Case: From Start-Up to World Class Company • 1993 – 1994: Launching Company • The Israeli version of a “garage operation”: • Headquarters = Grandmother’s apartment • Staff = 3 Founders (3 Developers added towards end of 1994) • Undercover development • Guerilla Marketing • 1995 – 2001: Building a World-Class Company • Worldwide Operations – Sales & Services • From $10M to $0.5B Sales • Global Organization • 300 R&D, 300 Sales, 200 Services

  12. 1999 1997 1994 VPN Firewalls • End-to-end Internet security platform • Desktop/Client security • eBusiness application security Check Point Case:Setting Technology Standards 2001 • Stateful Inspection • First shrink-wrapped firewall • Integrated • VPN/Firewall • OPSEC • Alliance • Gigabit Performance • VPN Enterprise Scalability • Security Dashboard

  13. Net Income Revenues EPS Creating Value:Check Point Revenues & Profits $1.20 $ 600 $ 500 $0.80 $ 400 Millions $ 300 $0.40 $ 200 $ 100 $0.00 $ 1995 1996 1997 1998 1999 2000 12 Month

  14. When starting – try to find • “Exploding” Markets • Hard to predict • Enough for many • Partner • Can’t do it all (and well) • Innovation • Technology • Utilization • Marketing

  15. Summary • “Economic Value” is back • Companies are measured on revenues and earnings • Grow only as much as you can afford / as much as is financially justified • “Start-up and Innovation” culture is back (“Get rich fast” might not work that well)

  16. How Is This Achieved? • Customer Need • Products/Services that fills a real need • Customers are willing to pay for this • The Start-up Advantage • Focused & Creative • Expertise – Market & Technology • Fast & Flexible Innovation

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