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Zscaler CEO: WFH requires need for more ransomware protection plans

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Jay Chaudhry, Zscaler Co-Founder and CEO, joins Yahoo Finance Live to discuss the company's latest financial results and the state of cybersecurity as the pandemic accelerates ransomware attacks.

Video Transcript


MYLES UDLAND: All right, welcome back to Yahoo Finance Live. Let's take a look at shares of ZScaler. The stock is popping this morning, up nearly 15% after the company came out with its quarterly results that beat expectations on both the top and the bottom line.

And joining us now to talk through the latest quarter and everything going on in the world of corporate security is Jay Chaundhry. He's the co-founder and the CEO at ZScaler. Jay, thanks so much for hopping on this morning. Let's just start with the drivers that you're seeing in the most recent quarter, and something you said on the call really stood out to me, talking about the new normal for workforce, really, security needs that you're seeing from your customers. I'd love if you could talk through how that is really impacting what you've seen in the business so far.

JAY CHAUNDHRY: Yeah. Thank you for the opportunity. I mean, ZScaler was started in 2008 with a simple notion-- applications could be anywhere, users could be anywhere. They should be able to access those applications securely, the fast experience. COVID has accelerated the need for being able to work from anywhere.

People talk of the new normal, it's a new thing. We have been securing users to access applications for the last 10, 12 years in a very elegant and simple way, and now it's accelerating. And the new normal is you should be able to work from anywhere. And we are right there with our customers over the past 15 months. We have enabled millions and millions of users to do that.

We feel very gratified because when employees need to work because our economy depends upon it, we're able to play an important role, and this is simply accelerating. And coming back to the office still needs security and there's more and more need for what's called zero trust security. It means, don't do security the old way. Do it the new way.

BRIAN SOZZI: Jay, one part of the unfortunate new reality is ransomware attacks, and they're coming in from everywhere. How much is your business accelerated after the Colonial pipeline hack?

JAY CHAUNDHRY: I would say that there have been more and more inbound calls from CIOs and CISOs. It started with SolarWinds and then Colonial pipe. So there's bigger urgency to do something about it. I'm not sure I can quantify the impact, but it has raised the urgency.

And it is actually not surprising that so many of these companies are being hit, because they're still doing security the old way. They think that the data center's a castle and they've got a moat of security appliances like firewalls to protect it. Well, the reality is, the wall has been breached. Every company has been infected, and the infection once goes in it just creates havoc.

That's where zero trust comes in. I was glad to see Biden administration talk about this new deal that says companies got to do zero trust architecture, which is like a switchboard. You get connected to a switchboard. If you're good, validated, you get connected. Otherwise you don't. The notion of castle and moat goes away. And that's really what we have done for companies, like Siemens, Shell, Mars, the [? Kadahs ?] of the world, and these companies are benefiting from it. I hope the rest of the enterprises move faster to embrace zero trust so that they can eliminate the risk of ransomware and the like.

JULIE HYMAN: Jay, it's Julie here. You mentioned the Biden administration, and there is also reportedly a plan for better reporting of these hacks. It was actually fairly shocking to me that prior to this attack on the Colonial pipeline, these things were not necessarily disclosed, if there were cyber attacks on pipelines. How important do you think that is, and how important do you think this sort of government-private sector cooperation is?

JAY CHAUNDHRY: First of all, I think reporting is important. There's no need to hide things under the rug, so it's a good thing. I mean, companies have been doing it, but now I hope there'll be more and more of it.

Regarding the second part of cooperation between private and public sector, I think it's fundamental. This is not to say government should be dictating everything, but government can play a big role. I think we needed some of this stuff, especially when nation states are teaming up against it. So making funding available, asking states, asking federal bodies to embrace zero trust, because states and federal government can be very slow in embracing change. This, we hope, will accelerate it and better protect our country.

BRIAN SOZZI: Jay, it seems as though your business is really accelerating. Are you able to find the skilled tech talent to support your growth?

JAY CHAUNDHRY: It's a competitive market. There isn't enough technical expertise available in the security space. But overall, our job, overall, is to simplify security so you don't need a rocket scientists to do it. Our job is to hide the complexity. For example, to deploy old-school solutions-- the traditional appliances and the firewall-- you needed a lot of people. Configuration used to be complex. Our cloud native solutions make it pretty simple to deploy and simple to implement.

So, yes, there's shortage of security. We actually hire some of the college grads and train them. That's actually one of the best things we have been able to do for lack of talent. But for enterprises, creating simplicity for them is probably the best thing. That doesn't mean that they won't need experts. That means there should need fewer experts because solutions are simpler and they simply work.

MYLES UDLAND: All right, well, Jay, you've been speaking with three non-rocket scientists who are all working from home, and lord knows what kind of vulnerabilities we're exposing our corporate network to, so hopefully it's all staying safe for VZ corporate over there. Jay Chaundhry, co-founder, CEO at ZScaler. Jay, really appreciate the time this morning.

JAY CHAUNDHRY: Thank you. I appreciate the opportunity.