How Israel builds its hi-tech start-ups

Israel's focus on national security has helped it build a vibrant cluster of cybersecurity businesses. Can other nations copy it?

Many of the new companies in Israel are founded by individuals who have come out of Unit 8200 - Israel's equivalent of Britain's GCHQ or America's NSA - a "signals intelligence" agency which has moved heavily into cyber-operations.

So how does 8200 feed into the private sector? One man who knows is Nadav Zafrir. He joined 8200 in 2005 and ran the organisation between 2009 and 2013. He is now co-founder and chief executive of Team 8, a company-building platform based around cybersecurity which aims to found and establish five companies in five years.

Innovation and tech had a strong role in Israel even in the pre-cyber age but Mr Zafrir argues the key to recent success has been identifying talent young.

Israel has mandatory national service which means that 8200 has access to people when they are still at school. It starts trying to spot potential among 18-year-olds who could join its ranks. The key attribute they are looking for is not necessarily an existing skill-set but the ability to learn quickly.

The speed of evolution in technology means being able to predict who can learn fast is vital when recruiting people.

"Sometimes when you are screening them, you don't even know what kind of technology or problems they are going to be dealing with by the time they actually sit there and have the responsibility upon their shoulders," Mr Zafrir explained in an interview in London.

He says the emphasis is on training people even younger - down to elementary school level (up to 12 years old) with more focus on extra-curricular activities as well as maths and computer sciences.

There is also an acceptance that they will not stay long, although, he says, that's not a problem because if they join at 18, do four years, and then leave, they will already have far more hands-on experience than their peers in other countries.

"You get a lot of responsibility at an extremely young age," he says. "You find yourself with 50 or 60 subordinates when you are 20, 21 or 22 with an immense responsibility on very young shoulders.

"That's a good entrepreneurial school."

Exactly what kind of cyber-operations 8200 gets up to is classified and not something that Mr Zafrir will comment on, although Israel has been linked - along with the US - to the Stuxnet virus that targeted Iran's nuclear programme.


Changing world

Mr Zafrir - who joined the intelligence world from the regular military having started as a paratrooper - recalls the shift in the late 1990s and early 2000s, as it became clear that understanding cyberspace was going to be vital if intelligence services were to remain relevant.

There was also another learning process which involved the military understanding the world of hackers.

"It is getting much better now," he says. "We literally had to redefine control (and) hierarchy as otherwise we wouldn't be able to create the magic that these kids can bring with them.

"I think a lot of them are more agile, better prepared, speak languages that we didn't even know existed in terms of coding and stuff like that," he says. "We had to adapt not only the recruiting process, but also the day-to-day control systems in many ways in order to create this magic."

In the past people would be selected but, as awareness of 8200 has grown, people increasingly seek to join, not least because they know it could be the route to a lucrative career afterwards. That is something that can cause resentment with those who serve in the regular military and do not necessarily enjoy the same opportunities.

The idea of people moving in and then quickly out of the intelligence world and starting up companies is one that the UK has largely struggled with - though there are a few exceptions.

In the US, the links between the private sector and the NSA are closer but Mr Zafrir says that, in Israel, an acceptance that people will not stay long is supported by the country's leadership since innovation and economics are seen as being intimately linked to national security.

He argues that it may not be so simple for other countries to replicate the Israeli model in its totality as it draws on a culture of national security, plus national service is at its core.

But he does think some of the concepts are replicable - in particular, thinking early about what skill-sets are needed and then focusing on those at school and university to make sure they are relevant, as well as thinking more broadly about predicting which people are best at learning the latest skills.

But does the close relationship between 8200 and the private sector also carry risks?

Mr Zafrir says he has heard of, but not himself seen, evidence that people are wary of Israeli companies thanks to fears about their intelligence background.

"I think there is an understanding that, at the end of the day, first of all you have to trust someone and the fact that we bring the attackers' perspective into the game brings a lot of value," he explains.

"The membrane or the wall between the intelligence services and the Israeli hi-tech start-ups and also the incumbents is pretty well set: there's the security military side and then the tech. Once you are out, you are out."