Seven Questions for Asheem Chandna of Greylock Partners

It’s not every day that the chief executive of a publicly held company leaves for a start-up, and so today’s hiring of Verisign CEO Mark McLaughlin by the network security start-up Palo Alto Networks, which The Wall Street Journal reported today, is notable by that measure alone.

The start-up, backed by Greylock Partners, Sequoia Capital, Globespan Capital Partners and Jafco Ventures, tapped McLaughlin in a sign that it is gearing up for an IPO. I talked today with Asheem Chandna, a Palo Alto Networks director and partner at Greylock, about the new hire and about the crazy growth the company is going through right now.

AllThingsD: Asheem, I always ask people to start at the top: What is Palo Alto Networks and what does it do?

Asheem Chandna: We’re in the network security space. We build next-generation firewalls technologies. We ship an appliance that contains some subscription services on it so in a way it combines the business model of Cisco with that of Salesforce.com.

And how big is the business?

We disclosed that we’re on a run-rate to $200 million in revenue, and we have 4,500 customers. We’re cash-flow positive for the past five quarters, and we’ve been shipping product for 16 consecutive quarters. We have about 450 employees in the company today and we expect to add another 350 in the coming 12 months.

So you have more than 4,500 customers. Can you name any? Security companies are often reticent to do that.

We have many we can name, several of which we’ve done seven-figure deals with. Some we announced today: Qualcomm, eBay, Verisign, Cricket, the Los Angeles Community College district. Others we’ve named before include SanDisk and Constellation Energy.

And what prompted you to hire Mark McLaughlin from Verisign? Was it him or was it his experience at Verisign that got you interested?

What we were really focused on was leadership capability, what Jim Collins would call a Level 5 leader and the raw IQ, intensity and discipline. We’ve known Mark for several years, he’s an exceptional leader and one of the best leaders I personally know.

How did the search go down?

We had a search under way for eight months. It’s taken that long because this is a one-in-a-decade company. It’s one of the fastest growing companies in enterprise IT. We were deliberate and focused on really finding the right person, who would be a good cultural fit with the team. We hired Russell Reynolds to help us with the search. We reviewed more than 150 people in detail, and interviewed more than two dozen people. There were many senior executives at public companies who were interested in this position.

Every security company tries to solve a particular problem, and my understanding is that Palo Alto Networks can detect traffic coming from certain applications. So when I’m signed into Facebook or Tweetdeck or Skype on a network where your gear is in use, you can detect it and watch out for good and evil traffic on those applications, and block the bad traffic. Is that right?

Exactly. That’s one of the three basic innovations that are our bread and butter. The one you just described is really our headline feature. We can uniquely identify applications and users as they pass through the firewall and the network. The second is around malware. We can scan for malware at very high speeds, which is also something that hasn’t been done before. Finally, we collapse multiple network functions that are usually done on individual appliances into one large system but without a degradation of performance. We do Web filtering and intrusion detection, which are traditionally done on separate network appliances. Network administrators are struggling with appliance fatigue. We are giving them the ability to roll all those things into a single appliance with no degradation of performance.

So, since everyone is going to start asking: When are you going public? Are you going to be hiring bankers soon?

We haven’t set a date for any of that yet. The focus is really to build and grow the company to the next level. Going public is just another milestone. We want to be the biggest independent network security company in the industry.