Israel’s open secret
The sale of Mobileye to Intel for the whopping amount of $15 billion is the latest in a long list of exits by Israeli high-tech companies acquired by large foreign corporations.
Over the past decade alone, dozens of Israeli high-tech companies have been sold at prices ranging from $25 million to $1b. (Waze). Most were acquired by world-renowned corporations such as Google, Microsoft, Facebook, Groupon, and a few large cybersecurity companies. In total, the amount spent on Israeli companies in the past decade comes to about $200b. In addition, a number of other Israeli companies, such as ISCAR, have been sold for incredibly high amounts.
However, beyond the glamorous success story of Israeli software companies and their huge exits lies a different story that is just as fascinating. This story is an open secret that has not been written about much in the media. It’s a story about the training of the brightest computer and software geniuses, who then went on to found the most successful start-ups our planet has seen. It just so happens that 80% of them served in the Israeli military and contributed to the security of our country before they ventured out into the business world.
It is well known that Israeli schools are not doing a very successful job of educating students in math and sciences. There is something in the Israeli educational system that makes it difficult for gifted students to excel in school. For the most part, they are left to suffer from intense boredom in mediocre math classes, which is the norm in Israeli schools. But then something surprising happens: these bright young kids are recruited into elite IDF intelligence, technology, computer and cyber units where they can finally put their high-level capabilities to use.
In a long and cumbersome process, the IDF identifies, summons, examines and chooses the best and brightest young Israelis who are most suitable for these positions. The IDF inducts and trains these young recruits for a long period so that they can serve in elite security units, dealing with such matters as aerospace technology, cyber-warfare, cryptography and more.
Most of these recruits serve in the intelligence branch of the army, while others are inducted into air force or navy intelligence, or even the Mossad or Shin Bet (Israeli Security Agency). These special units incorporate new recruits to work in conjunction with more seasoned soldiers to create amazing technological developments to help ensure that Israel is kept safe.
The State of Israel’s intelligence and operational needs require that it remain at the forefront of technology. Technology and computer engineering are our best weapons and are integral to our fight to survive in the dangerous world in which we live. The IDF is developing a wide range of software and technologies that can identify unusual patterns; locate terrorist suspects and weapons; uncover cyber attacks and launch counter-attacks; recognize irregularities that signal security breaches, both physical and virtual; build cybersecurity systems; and create software programs that can extract huge amounts of information.
There are many incredible technologies currently being developed in IDF units by young conscripts, as well as by veterans employed by military institutions. These unique and powerful developments could easily be sold for billions of dollars to international buyers and make headlines. Instead, they are kept secret and are used for the benefit of the Israeli military.
Over the years, these advances are honed and improved and a portion of the military start-ups move over into the civilian world where they become available for acquisition by global giants. And in some cases, civilian companies are involved in the manufacturing and development of security technologies used by the IDF.
Over the years, the IDF and Israeli intelligence organizations have provided their engineers and employees who work together to develop these technologies suitable work environments, great benefits and incentives on par with private-sector high-tech companies (well, maybe not with the same salaries). Despite these great conditions, many soldiers who serve in such units still end up joining the private sector when they finish their required years of military service.
For example, people who served in Unit 8200 went on to set up a non-profit organization that encourages veterans of this unit to found start-ups in which they can design new technologies and eventually be acquired for billions of dollars by international corporations. This is possible because the knowledge and experience they gain during their IDF service, combined with their incredible talent, are excellent preparation for succeeding in the business world.
In a certain sense, it could even be said that the State of Israel is developing and nurturing a future generation high-tech and software entrepreneurs through its military training tracks by enabling these talented young people to take part in the development of unique cybersecurity technologies. This type of opportunity doesn’t exist anywhere else in the world for 18-year-olds.
There’s nothing wrong with this setup – in fact it’s a win-win situation. The Israeli security establishment is able to develop cutting-edge technologies and young Israelis gain once-in-a-lifetime work experience that helps them build their careers. And the country benefits every time a company is acquired by receiving huge amounts in direct and indirect taxes.
Perhaps this model should be adopted for Israeli sports teams, too.
The writer is a former IDF brigadier-general who served as a division head in the Shin Bet (Israel Security Agency).
Translated by Hannah Hochner.