In this podcast, Jay Chaudhry, CEO, chairman, and founder of Zscaler, talks about entrepreneurship, AI, and the business of Zscaler with Motley Fool co-founder and CEO Tom Gardner.
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A full transcript is below.
This podcast was recorded on Jan. 04, 2026.
Jay Chaudhry In 2018? You got one product, Zscaler intron access. Then private access game. Then digital experience game. They all became Zscaler zero trussa users. Then we built it for Cloud workloads, branches, IOTT devices. The platform is expanding. We get no lack of market. I don't worry about competition. Our competitions all legacy stuff. My competition is generally inertia.
Mac Greer: That was Jay Chaudhry, founder and CEO of the Cloud security company Zscaler. I'm Motley Fool producer Mac Greer. Now, Motley Fool CEO Tom Gardner recently talked with Chaudhry about entrepreneurship, AI, and the business of Zscaler. Tom was joined by a team of fools, including our chief investment officer, our chief technology officer, and our head of cybersecurity. Enjoy.
Tom Gardner: Well, hello to all of our Motley Fool members. We're so happy to be able to spend this time together talking about a wonderful company in the public markets that's served us well as investors thus far, and that is Zscaler, a Cloud security company that protects people and applications without using traditional firewalls or VPNs. Zscaler's applications sit between an individual user and the internet or a company's applications and make sure every connection is safe in a zero trust exchange. Company has a market capitalization of about $39 billion today, which is around seven times higher than when it came public about seven years ago. We know those numbers pretty well because at Molly full and Hidden Gems, we first recommended Z Scaler back in 2018 around 30 $835 a share. We've made more than 50 recommendations of Zscaler over those seven years. We have never sold a share, which is not unusual for us at the Motley Fool. We really like to focus on the long term business performance and invest accordingly. But those returns since coming public are about 30% a year, and that's market beating fantastically. We get the pleasure of spending the next hour with the company's founder and CEO Jay Chaudhry, who has spent time with fools in the past. Jay, I wanted to start with a surprise question. What was the first moment in your life when you realized you wanted to start a company? I know that you have started, I believe, five companies, so you can talk about also when you decided to start Zscaler, but the origin of entrepreneurship for you, where did it come from?
Jay Chaudhry: Many people plan entrepreneurship. They have a journey, they plan. For me, I may call it, I'm an accidental entrepreneur. Having been born and raised in a tiny village in the foot of the Himalayas in Northern India, without electricity, without water. I had no idea about companies and entrepreneurship is. But I was always a hardworking, good student, got into engineering, and came to the US to do my masters. I thought I'll be a software engineer for most of my life. Like most engineers, the first time I got into entrepreneurship was sitting in Atlanta, reading about this company called Netscape that had just gone public around 95 96 time frame, and reading about this young chat, Mark and reason and say, wow, this young guy is starting a company that's going to change the world where you could access information using a standard browser, no special software. That should be very powerful because it's wonderful. But then I said, If that happens, everyone connects the Internet, which means someone has to worry about cybersecurity. That may be an opportunity, and then talking to my wife, I was saying, If this young guy could do a start up, why shouldn't I do a start-up was the first time. Idea coming out of nowhere, and it just built upon it. That's how I moved away from being a business leader in a corporate world, corporate America, to be a start-up guy.
Tom Gardner: You started your first company, then, but you have a list of successful businesses you started before beginning Zscaler, maybe just a quick walking tour of those, and then why when you arrived at Zscaler, did you say, this one, I believe you said, this one is forever.
Jay Chaudhry: That's right. The first company was Secure IT. For that company, I failed to raise VC funding. Because I had no experience in any start-up world. Since I got passionate about it, so my wife and I talked, we put a life saving line to get the company started to make it more exciting. My wife quit her job. There's no turning back, burned the bridges behind. Was the notion. The company took off. We're very focused. We're very good at what we're doing. The business took off. That company got acquired in less than two years, and everything went so well. I said, wow, start ups are supposed to be hard. This was easy. This must be a fluke. Let's do it again. Also you want a bigger challenge in life. Then we said, this time, we do not need to talk to any VC. In fact, I said we could only put so much money in one start-up, so we should do multiple start-ups, but do them like raising having kids. You stagger them one or two years apart. We ended up starting three companies. One e-procurement ASP using RIBA software that has precursor to SAS, single tenant application software provider, an email security company called Cipher Trust, and a wireless security company called Air Defense. Good luck, good timing, great teams. They all became successful and eventually got acquired by large companies. That took me to 2007, 2008 time frame. At this stage, I had no interest in doing one more start-up and selling it. I want to do something big, something lasting. That's where I was looking for what could be the long term opportunity where we could build a business. That's where the ideas of Zscaler came in. Sometimes I got told, Jee, how did you come up with that idea? Must be some very creative thing? Not really. It was really common sense. If you think about 2007, 2008, Internet was a big source of information. I've been using Salesforce and NetSuite since year 2001, when each of them was under $10 million in annual sales. But I used them. I thought SAS is the way to go. SAS should take off. Then AWS had just launched infrastructure as a service, compute as a service, storage as service, which made so much sense because why not do compute as a service? Then Apple had just launched iPhone with a big screen. I said, if we all become mobile and applications are everywhere, we all are you going to keep on building these modes with firewalls? It'll be a crazy idea. Let's think outside the box. Let's flip the security thing on its head and not do firewall and build something totally different. Like a switchboard, a policy engine, where everyone's untrusted, the network is merely the transport. You don't do network security. Those were some of the ideas we thought of, and that sort, Zscaler was born.
Tom Gardner: For somebody who's not deeply knowledgeable about cybersecurity, can you just explain that shift from firewall? Explain what a firewall is. Explain VPN and why Zscalers view was unique and innovative.
Jay Chaudhry: Absolutely. The firewall with security is generally called castle and moat security. If you need to protect your castle, what do you do? You build a moat around it so bad guys can come in, and then there's one place to get in, and that's the moat has a special door and they check you before they let you in. Once you're in, you're supposed to be a trusted good party. Now, that model worked fine for the traditional world of computers. Here's your data center, and here are some devices sitting there, and you have a network connecting them, and you want to make sure that if you connect the Internet, the moat is a firewall. It's like a door. It's like a gate keeping the data center safe. Then you had to move to 50 offices. Now you're connecting your data center to 50 offices. It's almost like you had a big castle. Then you have 50 small castles. Then you connect the big castle to 50 small castles through tunnels. But once somebody gets inside the castle, they can reach everywhere. That's the problem of the network security firewall security model. You're in, you can cause lots of havoc. Now, what firewalls tried to do was, if you're worried about that, why don't I create more walls? A wall here, wall, here, wall, here, wall here. I'll sell you lots of firewalls. It creates a big problem, maintenance, all that stuff. That's the model I was familiar with. In my first start up security IT, I was actually designing, architecting, selling supporting firewalls. I've seen all the limitations of it. That's why I wanted to bring disruptive idea. Also, I'm a big fan of reading about technological changes. I've always believed that technology incrementally changes all the time. But every decade or every two decades, there's a step function change. That's what drives innovation, that's what drives business productivity.
Give you a couple of examples. There used to be analog world, which did pretty good. Then we had to shift to digital world, digital technology, much better, much cleaner. In the world of software, we used to have application in our data center from vendors like Siebel Systems, and the like. Then came Salesforce. It says, why do you have to keep on worrying about buying servers, deploying all that stuff? Connect to me like a utility service and use it. Those are staff function changes. When I looked at the world of IT, I said, applications are changing, but nothing has changed the world of cybersecurity. Same old 30-year-old firewall technology. We need to do things differently. Let's not trust anyone. At the end of the day, Users need to access applications. How do they make sure the right person can have access to right applications? I thought of a simple metaphor, an old school phone switchboard. Years ago, if you want to talk to John, you called a switchboard and said, please connect me to John. You are connected. You had a great conversation. Then you said, I want to talk to the president of the US. The switchboard said, sorry. You're not allowed to go away. It's really connecting the right party to right party. Such a simple elegant architecture. I like simply Syrian innovations. The way I also thought was the service should be simple. We all used to love DVD players. You recall those DVD players? They were wonderful. Then Netflix came around and say, Move over. You simply click on a button. You get what you want. That's the service I envision for Zscaler.
Tom Gardner: Jumping ahead to today's challenges, these days, everything is in tech is like 99% AI. Some of the stuff that CTO keeps me up is one article specific regarding Enthropic where they had an AI orchestrated cyber attack that they thwarted. The new innovative techniques, AI is amazing for innovation. It's helped the Motley Fool tremendously helps so many companies that we're looking at, but it also creates brand new threats that did not exist a year ago. How does that play into some of the things Zscaler is doing these days?
Jay Chaudhry: I have often said, AI is wonderful. AI is powerful, AI is dangerous. It's almost like any new technology. A knife in the kitchen is a wonderful tool unless it's abused. Here are some of the bad things AI can do that makes it very hard for companies to protect themselves. When an attacker attacks, they find a target. It's like a bank robber has to find which of the fib branches do I want to break. They can break in without getting caught. In the cyber world, they find our public IP, my firewall, my VPN, my application portal. It used to take weeks for hackers to find some of those cyber targets for your company. No, you can submit the query to Chat GPT, and it can give you a beautiful tableau format of all the firewalls with vulnerabilities in them. Makes it so much easier. Then often people will do phishing emails. Those emails sometimes could be typos, missing spellings, coming from Nigeria or wherever.
Now, Chat GPT can do beautiful phishing email with the writing style of your CFO and come from your CFO. That's hard. Makes it hard. Three. Once the bad guys get on your copid network using stolen credential with VPN or something like that, now you can use automation of AI, and AI automation can allow you to find mission critical applications and crypt them, or do whatever needs to be done and ask for ransom. The enthropic attack you talked about, it's essentially hijacking an agent. Agents are somewhat like people. People have been the weakest link. I believe in future, agents will be much weaker link because the code can be changed, things can be hijacked, and no agent on your network has access to all applications. They can try to do bad thing. The Zero Trust architecture we pioneered at ZSCAR actually plays an important role. The Zero Trust architecture, as I described, the switchboard says, everything is an island, everything is untrusted. You come to a check post, you get connected to the right party. If enterprises embrace zero trust architecture, these hijacked agents or users whose credentials have been stolen, they won't be able to get past maybe a given application beyond that. It's fundamentally very powerful architecture to safely embrace AI security. There are other aspects of it, but starting with a zero trust where agents are only trusted for a given amount of time to do certain tasks and no more is the right way to do these things.
Tom Gardner: I think I'm going to turn philosophical here, but perhaps also because of your remarkable life story, not even dreaming that you would be a software engineer in your earliest childhood years or maybe even having access to that technology, if you have electricity and running water in the early years of your life, I guess I'm going to ask a philosophical question about what you think will happen with employment. We don't have a crystal ball, but almost reaching outside of Zscaler's business for a moment and just thinking, what does the next generation do for jobs or what does a mid career employee who isn't advancing their skills with AI tooling rapidly enough, what does that future look like for?
Jay Chaudhry: Yeah, if you think about the past, we learned from the past. Every time new technology came, the people who felt like lots of jobs will go away. When spreadsheets came around, people thought that, man, all these accounting people had no future. It was all wrong. I do believe AI is going to create lots and lots of new jobs, but every time technology has come, it needed better skills for people to do a better job or to have a better job. My advice to people will be embrace AI, learn skill set because it's going to create a whole range of new jobs. While everyone is fascinated by AI technology, it's still non deterministic. It's probabilistic. There are many jobs, we're non deterministic is not good enough for many areas, so somebody needs to validate all the stuff has to be done. I am always an optimist. I think technology is always created newer opportunities. I think AI will create new opportunities. But people who are really learning better, doing a better job will do better. I encourage people to say, Embrace AI learn about it, and that's going to create a better future for them.
Tom Gardner: A bit of a light hearted question then a question about the business that you're running. My lighthearted question, well, it's quite serious for many people. What recommendations would you have given your expertise in this domain for the average person with regard to their own security in the era of rising new technologies? What should somebody be doing in their home that they're not yet doing?
Jay Chaudhry: Number one risk a consumer at home has is fishing. With fishing, they steal your credentials, so they can go and steal your money from your bank. That's probably the biggest risk for an average consumer. One should be mindful of what they're clicking in and whatnot, though it's hard on the mobile phone. It's hard to even see the URL. Good to have some level of software protection for fishing and a number of these software available to make sure you endpoint is safe. That's the number one thing you do. Number two, I think being a little bit savvy to look for some of the things that look silly out there and not fall for them. But just using a little common sense goes a long way. But it's a lot easier than some of the stuff we deal with at enterprise. At enterprises, things are highly targeted. Nation states are coming after you. Consumers aren't really target those big things, but they are target of fishing, so they can go and get you money. Fishing is the most common thing for them.
Tom Gardner: One of the things that I when talking to investors and our members is the My Fool. Try to have members see I'll express it two ways. One that I believe mathematically, the truth is that if the average investor doubled their average holding period, they would get better returns. Even if they'll have some losers in their portfolio, but simply by the act of doubling their holding period, it align them more with the business, obviously, it's more tax advantage and there are many other reasons to do so. But when I look at what you've created at Zscaler, and obviously, the company came public in 2018, and I mentioned it's up seven times in the seven years, when I run my numbers on the business, and I know you can't comment on this, I believe Zscaler could deliver 15% a year for the next ten years. I think it'd be one of those defining companies for this era. I'm wondering how you think about time horizon? There are institutions coming and talking to you on quarterly reports about your operating margins. There's the pressure to be ready to report every 90 days. You've obviously mastered that in seven years. But I think many investors would be interested to hear, what is the time horizon of the CEO? How do you think stakeholders of the company, whether they're employees, customers, shareholders? How should they think about their partnership with ZScaler to align them to the interests and the activities and the decision making process of the CEO?
Jay Chaudhry: First of all, I look at the opportunity starting with is how big is the market and how serious the demand? Is this product needed? Is it vitamins or is it a painkiller? It's pretty obvious that cyber is needed badly. There's no such thing as, I can live without it. That's number one thing for a market segment. Number two, is the market big enough or is the market small? The market has growing at a pretty rapid pace. It's being disrupted. You can't even look at the segments you looked at five years ago. When the market is massive and growing, this is a great opportunity. Then the third thing you look at is, does the company offer a compelling solution which has barrier to entry? With on Global Cloud bigger with 55 some billion users, or 45% of fortune fire on companies as a customers, we have proven track record. One of the things I'm very proud of outside typical financial numbers is our NPS net promoter score has been sitting between 75 and 85 most of the time. That's remarkable. An NPS of a typical SAS company generally sits in 30 35 range. That's being happy, smart customers. I'll give you a beautiful stat. About nine months ago, one weekend I was sitting at home, looking at some of travels. I said, I met this CSO, and he told me he bought Z color the third time at his third company. I got curious. I looked at my data and looked at large companies who I generally meet with. 285 of the CXOs had bought Zscaler two times.
Company A, then they went to company B, 84 had bought it three times, 45 had bought it four times, and they keep on coming. They like us. Having a large customer base with the first motor advantage that we did is good for us. Then you look at and say the evolving product set. We have evolved, and investor used to say, in 2018, you got one product, Zscaler Internet Access. Oh, then private access came. Then digital experience came. They all became Zscaler for you, zero trustle users. Then we built it for cloud workloads, branches, IOTT devices. The platform has expanding. We get no lack of market. I don't worry about competition. Our competitions all legacy stuff. My competition is generally inertia. We are changing the world. We start with people who are progressive with thought leaders, then others are come along. I think we have plenty of potential opportunities to grow. My role model has been ServiceNow. I've been working with ServiceNow. One of the board members of service at Zscaler was the president of global sales, David Schneider. He has been a mentor and board member. Just like they have done a great job. We have a very big platform, and it's growing. I think we have plenty of opportunities. For the long run to keep on growing this business. To me, personally, Zscaler is not just a business. It's a mission. I mean, when you think about some of the biggest, the big companies, depend upon Zscalers so they can keep on doing the business. Wow. The feeling of satisfaction, the feeling of accomplishment is fantastic. Then people say, Jay, when are you retiring? What do you mean retiring, man? I'm having so much fun. We're in the early stage. We have a lot to achieve. Let's go.
Tom Gardner: Thank you for sharing your story and your thoughts and your solutions and your view to the future. We enjoyed it so much, and we look forward to talking again in the future.
Jay Chaudhry: Tom and Tim, thank you so much. I really enjoyed that conversation.
Tom Gardner: Thanks so much, Jay.
Mac Greer: As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or againstTt, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For the Motley Fool Money team, I'm Mac Greer. Thanks for listening, and we will see you tomorrow.
