Palo Alto Networks Founder Nir Zuk Launches Hardware AI Security Startup Cylake After Raising $45 Million

After spending over 25 years building Palo Alto Networks into a $125 billion cybersecurity titan, billionaire Nir Zuk is once again challenging industry norms. Following his retirement last year after two decades as chief technology officer, Zuk has launched a new venture called Cylake. The startup represents a deliberate pivot away from the cloud-based models he helped pioneer, instead focusing on an AI-powered, hardware-based security system designed for governments, defense contractors, and other highly regulated entities that cannot move sensitive data to the cloud. Cylake has secured $45 million in initial funding from Greylock, the same firm that backed Palo Alto Networks in its formative years. Zuk estimates that the rapid global shift toward cloud computing has left approximately one-third of the market behind. In an exclusive interview, he argued that the industry has overrotated toward cloud delivery, effectively stagnating critical customers in legacy environments. "The industry has overrotated toward delivering everything in the cloud, and that has left many of the most important customers stuck 20 years behind," Zuk stated. This contrarian approach mirrors the skepticism Zuk faced in 2005 when he first proposed cloud-based cybersecurity, a concept then viewed as unfeasible. Today, he encounters similar skepticism regarding his return to on-premises hardware in 2026. "They tell me I'm crazy: Nobody starts a hardware company to run on premises in 2026," Zuk admitted, adding with characteristic confidence, "I like to be crazy. I know there is a market out there." The timing aligns with a surge in cybersecurity investment. Startups raised nearly $14 billion in 2025, a 47% increase from the previous year, driven by escalating threats from AI-powered bad actors and geopolitical tensions. Asheem Chandna, a partner at Greylock and longtime board member of Palo Alto Networks, supports the venture, noting that a success of such magnitude sets a high bar. Chandna sees a potential "hundred billion dollar plus opportunity" serving customers in defense, regulated industries, and sovereign nations who are restricted from using public cloud infrastructure. Joining Zuk as co-founders are Wilson Xu, who previously led engineering at Palo Alto Networks, and Udi Shamir, a co-founder of SentinelOne. Zuk revealed that the concept for Cylake had been brewing for years, but he felt ready to depart only after Palo Alto Networks acquired CyberArk for $25 billion, marking a natural conclusion to his tenure. He recalled frequent customer feedback that they wanted to utilize Palo Alto's advanced capabilities but were prevented from doing so by cloud-only constraints. "It's not something a company built around delivering everything from the cloud can solve," he explained. At 54, already a billionaire with an estimated $1.4 billion stake in his former company, Zuk emphasizes that his motivation is not financial. "First, I like to build things," he said. "And second, if I didn't do it, nobody would do it." With Cylake, Zuk aims to secure the future of organizations that remain tethered to on-premises infrastructure in an era increasingly dominated by AI-driven threats.