You may have heard of Israel’s vaunted 8200 military unit, which produces more startups per capita than Stanford. Here, Geektime speaks to entrepreneurs who served in other branches of the IDF about how the army helped them
Much ink has been spilled over the fact that Israel, a small country with slightly over 7 million people, has over 4,800 startup companies and attracts more venture capital per person than any other country in the world: $170 per person as opposed to $70 per person in the U.S.
One factor that has been trotted out to explain this phenomenon is Israel’s mandatory military service for most teenagers.
In fact, the number 8200 has become almost synonymous with Israeli startup culture. Mooly Eden, who heads Intel’s Israel branch, relates that every time he goes abroad, someone asks him if he served in 8200, Israel’s elite, technologically sophisticated intelligence unit. In fact, if you speak Hebrew and can’t afford tuition at Stanford, serving in 8200 may be your next best ticket to entrepreneurship.
As CEO of Geektime, I often hear complaints from would-be entrepreneurs that ex-8200 soldiers have a leg up when it comes to launching successful companies.
While it’s true that serving in 8200 or other tech units of the IDF offers a fast track to entrepreneurship, we talked to several entrepreneurs and venture capitalists who said that any military service, even in non-intelligence roles, gives you the characteristics you need to succeed. In other words, the Israeli hi-tech industry isn’t just 8200, 9900 or the IDF computer unit. It’s also combat units like Givati and Golani, the armored corps, paratroopers and air force.
To prove our point, we interviewed several hi-tech success stories with a wide array of military backgrounds.
In Israel, Dov Moran needs no introduction. He is a founder, investor and company builder who once served as the head of the Israeli Navy’s microcomputer department. His company M—Systems, which offers flash-based memory solutions, was sold to SanDisk in 2006 for $1.6 billion.
Maya Gura sold her startup, The Gifts Project (a platform for group gifts) to e-commerce giant eBay in 2011. In the IDF, she served as a chief of staff in the personnel department. Despite the fact that she didn’t serve in a technological unit, she attributes much of her startup’s success to her team, which was mostly composed of 8200 alumni.
Ori Lahav and Yaron Galai haven’t had an exit yet, but they run a startup that you may have heard of: Outbrain. Outbrain is arguably the world’s most successful content recommendation engine, with over 500 million users and partnerships with publishers like Le Monde, The Telegraph, ABC, ESPN, Fox News and CNN. The company has raised more than $100 million in five funding rounds and today employs over 450 people. Lahav and Galai, who founded the company in 2007, both served in the navy. Ori was a ship commander and Yaron was an arms officer on a missile boat.
Leadership, great people, and focus
Lahav and Galai say that to grow a company as big as theirs, you need three qualities: leadership, great people, and focus.
In terms of leadership, Lahav says, “Outbrain invented and pioneered content recommendations on the Internet. By doing this we solved a problem for three communities. For newspapers, we helped them develop a significant and sustainable new revenue source at a time when they were desperate for income. For marketers, we provided them with the opportunity to tell their brand story in a more effective way than any other ad format on the Internet. So the first ingredient of success is to be the first to come up with a new business model that solves problems for all parties involved.”
In terms of people, Galai adds, “From the moment we started the company we made sure to hire the very best people in each field. When you bring together excellent people who enjoy working together to change the world, then you can actually change the world.”
Galai says that focus consists of “having a strong understanding of who we are, who we want to serve and our guiding principles. One of the most important ingredients in building a big company is obsessively adhering to our principles, what we describe as our company’s lodestar.”
From foot soldier to CEO
Eyal Waldman, currently CEO of Mellanox Technologies, served as a deputy battalion commander in the infantry. He founded the company in 1999 and guided it through three rounds of private funding totaling $89 million as well as two public rounds totaling $220 million. Today, the company has 1,900 employees.
Oren Harnevo founded Eyeview in 2007 and is now its CEO. His company develops personalized video for the advertising industry. The company has raised $35 million so far in three rounds of funding and has about 100 employees. While in the IDF, he served as a sergeant in the paratroopers.
According to Dov Moran, the route to an exit is paved with hard work. “You need to work hard and be focused on your domain. It’s important not to be afraid of failure, and also you need to keep your eyes open to pain points and to technology that is advancing at a crazy pace.”
Harnevo and Waldman concur.
“To build a large and thriving company you need to persevere, build a very professional team and understand the market well,” says Waldman.
It’s not just a matter of working hard, says Gura, you need to work “intensively, aggressively, doggedly, have great teamwork, luck and a lot of connections. It goes without saying that it helps to be in the right place at the right time and to be able to pivot quickly when necessary. “
“No one cares what unit you served in,” says Harnevo. “Just build a good company and hire a good technology officer if you need to. In the United States, most CEOs come from sales, finance or marketing backgrounds.”
Advice from The Little Prince
Lahav and Galai say they draw their inspiration from Antoine de Saint-Exupéry (author of The Little Prince). He said that, “If you want to build a ship, don’t drum up the men to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.”
And what does the IDF have do with that?
“I’ve always felt that the IDF forced me to mature quickly,” says Maya Gura. “I learned to grit my teeth, to courageously carry out missions I didn’t want to do, to exercise self-control, to give up when I must and, most of all, to trust. My commander Ariel Capon went on to become the managing director of the Tel Aviv municipality. He is one of the most honest and fair people I’ve ever encountered. I learned a tremendous amount from him. One of the things I learned was how to perform tasks quickly and efficiently. I know it surprises a lot of people that I learned how to be efficient in the army, but if you ask Ron Gura, my brother-in-law and former business partner, he’ll tell you he same thing. He also learned how to be highly productive in the IDF. Together we managed the company in a very streamlined way. Every IDF unit has its challenges, especially combat units, but not only those. Most of us undergo a process of transformation and maturation in the army.”
Gura says that her current business partner was in the paratroopers as opposed to a computer unit, “But still, you can immediately discern his ability to work in a team, to focus when carrying out missions and to withstand uncertainty. The experience we gain in the army – battling both physical and social challenges – gets manifested later on in entrepreneurship or in any other task later in life that requires effort.”
Moran, on the other hand, says the greatest benefit he derived from his army service is “the great responsibility in a wide range of projects thrust upon you as a young and inexperienced person.”
According to Harnevo, “The idea that coming from a technological background helps an entrepreneur build a tech company is correct. But you can get the technology elsewhere, like from your studies, work after the army or alternatively, you can just partner with someone who has a tech background.
“Besides, who says you need to build a tech company? Technology is just a piece of it, often not the biggest piece. Most successful companies are not led by technologists but by special people who have a drive to succeed. Technology, like sales, recruitment, operations and marketing is most often just one element in a complex machine.”
Harnevo says that the key is human capital, “not to compromise on high-quality people and to keep only the best employees.”
“In my [paratroopers] unit, we started out with 30 people. Fifteen joined us along the way and after two years only 14 of us were left. Those 14 were the best suited to our team. All 14 were highly motivated and full of pride. In a startup, as in a combat unit, it’s important to build the best team, not to compromise, to fire people if you have to, to put the right person in the right job. And for everyone to go into battle together and win. In short, not to give up and to persevere in the mission.”
Learning from failure
Lahav and Galai say that the most important trait they acquired in the IDF was the ability to learn from failure. “When things go well, there aren’t a lot of learning opportunities,” says Lahav.
“We are trying to build a learning organization that is self-questioning and where ego doesn’t get in the way,” Lahav explains. “Another important element is the ability to lead in conditions of uncertainty. When I became the commander of a ship as a young officer, it was clear to me that I was the least professional person on board. Nevertheless, I had the responsibility to lead the team, to go out to sea whether it was stormy or calm, to carry out missions whether they were routine or dangerous, to bring the team and the ship back safely to port. I knew it and the soldiers knew it.
“Necessity created a kind of leadership that doesn’t derive from professional training (which comes with time) but from mutual trust between a commander who takes decisions and soldiers who do their best to carry them out. I believe this applies to anyone who commanded in the field and had to lead in the face of a great deal of uncertainty. Which is what happens in a startup every day.”
Gura adds, “Just like in the army, in the startup world you also need to ‘forge ahead, not give up, not be afraid and fight to the end.’”
Waldman says that, “Being an officer in Golani helped me later when I needed to cope with stress.” His tip for those soldiers who didn’t serve in technological units? “Work towards success at all times, and don’t give up when it gets hard.”
A funder weighs in
Who would be better to ask about the significance of army service in the Israeli hi-tech scene than investors?
Izhar Shay, a hi-tech entrepreneur and venture capitalist says that “IDF service in 8200, especially in the unit’s technical branches, is without a doubt an important training ground for future entrepreneurs. In many cases it gives them a boost in the difficult contest of getting investors’ attention.
“But for someone investing in young startups, the human element is the most important.”
For Daniel Cohen a general partner at VC fund Carmel Ventures, the army is significant no matter where you serve.
“Almost everyone I know treats this period as a very significant shaper of who they are. For some, the IDF gives them relevant professional training, whether in computers (8200) or communications (army radio). But professional training is just a part of what drives successful entrepreneurship. Good entrepreneurs know how to do much more: work in a team, exercise leadership, withstand pressure, read people and so on. A lot of this can be acquired anywhere in the army, both in 8200 and outside of it.”
The right stuff
“The more significant question,” says Shay, “is what challenges did the entrepreneurs face in their past? Did they exhibit creativity and determination in achieving their goals. Did they manifest leadership and management skills and what ability do they have to work in a stressful environment and in collaboration with others.”
Shay believes these qualities can be found in those who didn’t serve in technological units. “A Golani platoon sergeant, a staff commander on a navy ship or an artillery officer all deal with challenging situations in their army service and we can judge them on that basis. An entrepreneur must exhibit a lot of courage, hard work, determination, leadership and management ability. From this standpoint, people from all units are on the same scale. Either they have what it takes to win the startup game, or they don’t, no matter what unit they served in.”
“In all my years in venture capital,” says Cohen, “I had the opportunity to work with and invest in excellent people who came from the Signal Corps, Air Force, Navy, paratroopers, Golani and Artillery. I noticed advantages to entrepreneurs who underwent regular service of the kind that enables them to develop and overcome obstacles. Personally, I served three years in artillery. It turns out you can have a hi-tech career after all without serving in intelligence.”
Shay has good news as well. “There are entrepreneurs in Israel today from all walks of army life, who are at a very good starting point for realizing their dreams. From those who never once touched a keyboard in the army to cyber warriors and tech champions in khaki.” Nothing like an optimistic ending.
Simona Weinglass translated the original piece and contributed reporting.