Why Israeli Military is Good For StartupsJul. 14, 2013
Two years ago, a half-dozen programmers and entrepreneurs started working together in a Tel Aviv basement to create one of Israel’s 5,000 high-tech companies. It was a stealth company, but these 20-somethings were used to secrecy. Most had served together in the same military intelligence unit of the Israel Defense Forces.
In the army, they worked on algorithms that could predict the behavior of Israel’s enemies by plucking patterns from intercepted signals. Their new company was based on much the same idea–but it aimed to guess the preferences of consumers. It was called Any.Do. By the end of 2012 their productivity app for smartphones was one of the most popular downloads worldwide.
Each year, Israel’s military puts thousands of teenagers through technical courses, melds them into ready-made teams, and then graduates them into a country that attracts more venture capital investment per person than any in the world. The result, according to the 2009 book Start-Up Nation, is an “economic miracle” that’s seen high-tech exports balloon to $25 billion per year, about a quarter of Israel’s exports.
“What happens in the military is we take these really bright young 18-year-olds and say: Here’s a data center the size of Google and Facebook combined. Go do something mission critical,” says Michael Eisenberg, a general partner at the venture capital firm Benchmark Capital. “Now they are spilling out of the army, and we have the highest and best concentration in Israel of big-data engineers and analysts anywhere in the world.”
That explains why IBM, Google, Microsoft, EMC, Intel, General Electric, eBay, Cisco, and other giants all have major research centers in Israel, where more than 230,000 people are employed in high-tech fields. In the past two years, Israeli companies specializing in mobile computing, cybersecurity, and data storage have been snapped up for ever-increasing sums, culminating in the June acquisition of the mapping app Waze by Google for more than $1 billion.
For the full feature story on MIT Technology Review click here.