Gil Shwed

To succeed in business, you must be able to react quickly to obstacles. For Gil Shwed, CEO of Check Point Software Technologies, this maxim was put to the test in May 1994 at the Spring Networld+Interop conference in Las Vegas.

As a last-minute entry to the show, Check Point wasn't listed in the exhibit catalog and had to share a booth with another vendor. So, after arriving at the conference hall with a stack of promotional posters for Check Point's flagship Firewall-1 product, Shwed grabbed a few and began posting them outside the main entrance.

Immediately, a security guard approached and told Shwed to stop what he was doing. "The guard said, 'It will cost $500 to post your advertisements here.' I said, 'OK, where and when do I pay?' And he replied, 'You pay me, right now,' " recalled Shwed.

Not long after this crash course in Vegas-style situational economics, conference organizers informed Shwed that he would need to submit a press release to prove that Firewall-1 was indeed a new product. No problem, said Shwed, who spent a few hours scouring through other companies' releases and sat down and penned Check Point's first-ever corporate communication.

"We didn't even know what a press release was at that time," he said.

But despite being the head of one of Israel's most successful IT firms—Check Point generated slightly more than $575 million in annual revenue last year—Shwed isn't the kind of CEO who gets driven around in a plush limo, with champagne glasses tinkling in the backseat bar. In fact, Shwed doesn't often drive a car right now. Instead, this proponent of electric energy sources has for the past few months been riding his Segway to work.

To those who've worked with him, this is an example of the low-key approach Shwed brings to his job. "He's probably the most successful entrepreneur whose name you don't often see or hear mentioned publicly," said Jerry Ungerman, vice chairman of the board of directors for Check Point.

Ray Rothrock, managing general partner at Venrock Associates, a Menlo Park, Calif.-based venture capital firm, and a member of Check Point's board, describes Shwed, 38, as an analytical type who continually collects data about what's going on around him and arrives at his own conclusions.

"He's a pretty quiet guy who doesn't have to dominate the conversation and beat you about the head to get your attention. He's careful when he speaks and only speaks about things he understands, and he likes to dig in and go deep on everything," Rothrock said.

Shwed is also an avid cook and has been known to hold management meetings at his home, where he prepares sumptuous, multicourse meals for his branch office managers from around the world, Rothrock said. "It's a very effective management tactic."

Shwed's interest in technology began at age 12, when he started studying computer languages after school. After quickly learning all of the computer languages of that time, Shwed started hanging out at the computer department at Hebrew University in Jerusalem, where the Shwed family lived. When Shwed was 16, the university put him in charge of its computer systems. At that time, officials were considering buying a mainframe, and one of Shwed's first moves was to talk them out of it, recalled Ran Shwed, Gil's younger brother.

"He basically told them, 'Don't buy a mainframe, buy several PCs, and I will use software to combine them into a network, and it'll be more powerful than a mainframe," said the younger Shwed.

Gil then wrote up a paper outlining the project and submitted it to university officials, who informed him that if the paper had been submitted by a Ph.D. candidate, it would have been the top paper in that year's class, according to the younger Shwed.

Later, as part of his compulsory military service in Israel, Shwed worked in a classified intelligence unit that focused on computers, which is where he had the inspiration for what would eventually become Firewall-1. Dr. Dorit Dor, vice president of products at Check Point, served in the military with Shwed and says he was well-known in his unit for not wearing a uniform. "We had strong talent around us, but Gil was very visible in creating product-type solutions, and was also known for his nonstandard way of thinking," she said.

In April 1993, after completing his service, Shwed and fellow entrepreneurs Shlomo Kramer and Marius Nacht set up shop in Kramer's grandmother's apartment in Ramat Gan, a suburb of Tel Aviv, and developed Firewall-1, using $250,000 in venture capital and several borrowed PCs.

The early days of this Israeli version of the Hewlett-Packard garage were the stuff of startup legend. In fact, Shwed still tells the story about "Grandmother's Apartment" to new employees during orientation. April in Ramat Gan can be chilly, with winds whipping in from the Mediterranean, so Shwed and his colleagues set up operations in a small, windowless bedroom, where the heat from their PCs kept the temperature bearable. When summer rolled around, they moved to the living room, which had windows to compensate for the apartment's lack of air conditioning.

Next: Firewall-1 Development Begins

Working 16-hour days, and emerging from the apartment only about once a week for a late-night meal, the trio by September had developed Firewall-1 into a working prototype. Their only indulgence was copious amounts of Coca-Cola, which Shwed describes as their primary sustenance. "Liquid, caffeine, sugar it was actually our main source of nutrition," he said.

Once Shwed and his Check Point colleagues finished the prototype for Firewall-1, it was time to market their creation. In April 1994, Shwed traveled to the U.S. to find a distribution network for Firewall-1. "My task was simple: Go to the U.S. for two weeks and come back with a million-dollar check," Shwed recalled.

While many investors were indeed intrigued by Firewall-1, they weren't convinced the Internet was commercially viable. "We initially didn't know how to size the market, and a lot of people told us to come back in three years or so," he said.

He soon realized Check Point's best chance for success would be to sell Firewall-1 through channel partners, thereby exposing the product to the largest possible audience. "We were three guys from Israel realizing the only way to get to the global market was through the reseller channels around the world," Shwed recalled.

Shwed has remained committed to the channel, and Check Point's recent moves to diversify its technology portfolio have stoked its channel partners' interest in the company.

After winning Best Of Show at Interop, a feeding frenzy of vendors swarmed around Check Point's booth, and Shwed soon had inked a lucrative OEM agreement with Sun Microsystems.

Shwed's ability to "go big-game hunting" and land the Sun deal was key to Check Point's emergence, said Charlie Federman, managing partner at New York venture capital firm Crossbar Capital, and former partner at BRM Group, an early Check Point investor. "Gil isn't formally trained in business, but he has an innate sense of what it takes to build a business," Federman said. "When [the Check Point trio] would all be together, and there would be a hard business decision to make, Gil would be the one to step in and make it."

Shwed and his colleagues didn't actually invent the firewall, but they're regarded as the first to effectively market the technology to enterprises, which says a lot about his ability to juggle technology and business development.

Although Shwed had the idea for the firewall during his time in the military, he says interacting with other, more intelligent members of his unit was the most valuable lesson he learned during his service, and one he has applied to his management of Check Point.

"The real secret of success, in my opinion, is when you are in an environment where there are many people smarter than you," Shwed said. "In those situations, it's not about competing with those people, but finding ways to add value while also learning from them.

"If you try to find a unique way of looking at a problem, that's how you can make a difference," Shwed said.