The Zscaler Business Model

Zscaler is on fire right now. They have 13M users from a base of 5k companies, doubled their bookings in Q1 2015 over last year, and recently closed a $10M deal with a Global 100 consumer goods company, which sounds like Nestle or Unilever, through a partnership with BT. Zscaler is also innovation driven, having recently introduced a cloud based WAF, which is similar to the Incapsula’s of the world. Indeed, Zscaler is a very interesting start-up that takes the form of many different companies. In some respects, they’re  like a FireEye, Incapsula, F5, and Aryaka Networks. Although they’re not a CDN, they employ CDN like infrastructure with hundred plus PoPs all over the world. In terms of revenue, if we take their 13M users x $1/user – $10/user selling price, that equates to $13M/month – $130M/month. That number seems a bit high. Regardless, if Zscaler is generating $10M/month, that’s still an impressive number, and major accomplishment for a start-up.

Zscaler doesn’t offer traditional caching services and middle mile content acceleration, as Akamai would. With that being said, Zscaler also resembles the traditional carrier. CenturyLink, Level 3, and a handful of US carriers offer Zscaler like services, which include a WAF, DLP, Antivirus, Malware Protection, APT, and configuration / reporting via a dashboard. The carriers use 3rd party products like Fortinet, Symantec, Cisco, Imperva, and so on. Some carriers had to develop this type of offering, in order to serve certain government customers. And when it comes to the delivery of the security service, some carriers provide it via an MPLS port that extends to branch locations. One port offers MPLS, voice, data, Internet Access, and security in an any-to-any topology.

In order to use Zscaler, all customers have to do is route (DNS) their Internet traffic to their network, just like its done with a CDN. Zscaler doesn’t have CDN infrastructure for content acceleration, so it just filters and sanitizes the traffic. In one way, Zscaler is like a middle mile comprehensive cloud security solution. Carrier offerings are more like last mile security solution over dedicated network that has Internet Access. Lastly, there are big differences in pricing and install times between the two, with Zscaler having the upper hand in both. Carrier solutions are designed for large enterprise customers, and Zscaler is a great fit for large enterprises, and affordable enough for the SMB / SME markert. Kudos to Zscaler for doing  what very few starts have done in bringing together so many different offerings in one portfolio, and providing it as a cloud service.


Digiprove sealCopyright secured by Digiprove © 2015