F5's December 2019 acquisition of Shape Security for $1 billion marks a significant milestone in online fraud protection. My years at Shape as a board member have been hugely satisfying and rewarding. It has been an honor to collaborate closely with Shape’s team and especially with Founder and CEO Derek Smith, an incredible entrepreneur and leader whose tenacity and commitment to the cause have brought us to this moment.
Shape is a great example of the kind of work we love to do at Wing. At Wing, we back companies building business products seeking to disrupt or create massive markets. We collaborate with extraordinary entrepreneurs before their products have customer adoption and often at company formation. We engage deeply with them and their teams over many years, often spanning a decade. I first met Derek in 2007. He was instrumental in FireEye’s success, from recommending board members to helping us find large customers. Derek and I became friends and collaborated on multiple companies over the next few years. He approached me with the idea for Shape in mid-2011. We brainstormed a number of times over the next few months, and I joined the board at the initial financing in early 2012.
At the time that Shape started, it was already apparent that online fraud and credential theft were significant problems. Shape revealed that the truth was much worse than anyone expected – on average, 90% of online login attempts are attacks. Today many of the largest high-value commerce sites, representing hundreds of millions of unique logins per day, are protected by Shape. Remarkably, despite extensive engineering and customer success teams, as well as a direct go-to-market approach into Global 1000 customers, Shape has always been operationally disciplined and as a result was close to being cash flow positive.
Success at a startup is a team sport. Team Shape was tenacious! I remember a customer engagement with a top 2 US bank, which took more than two and a half years of concerted effort, 3 dozen trips to NYC, and all-nighters from many at Shape. We eventually won the business by delivering capabilities that competitors a hundred times larger could not despite intensive effort and dedicated teams. Derek’s Co-founders Sumit Agarwal and Justin Call were relentless in attacking such seemingly insurmountable problems, serving as needed in multiple roles across the company. We were lucky to recruit Hasan Imam, who transformed our sales efforts starting with a dozen customers four years ago. Shuman Ghosemajumder led the spectacular technology team - FAANG recruiters would hang out near the elevators in Shape’s old offices to try to hire our engineers. Shape had one of the best boards I have ever worked with: collegial, deeply experienced in the domain, wicked sharp, with mutual respect and admiration for each other and the founders, and never a wasted word.
Shape’s acquisition is a milestone for Wing as well. This is the 20th billion dollar realized outcome for our investment team and the 1st where Wing was an investor from cradle to adulthood in a company completely independent of our alma-mater firms. While I am of course thrilled about what this means for the Shape team, I will miss working with the founders, the team, and the board members on a day-to-day basis. Team Shape will always be part of the Wing family, and we look forward to continuing our relationship with you in the years to come.