Business Report

Israel’s Military-Entrepreneurial Complex Owns Big Data

Technology to track enemies powers Israel’s move into commercial prediction software.

Military spending accounts for the technological success of many regions.

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.

Ben Milne
This story is part of our September/October 2013 Issue
See the rest of the issue
Subscribe

Israel’s military-entrepreneurial complex has lent it a particular edge in analytics and big data. “Their main expertise was to extract intent from messages that are being sent across different communications channels,” says Any.Do CEO Omer Perchik of his team. “What we’re building is a kind of action engine where we extract the user’s intent from his tasks and enable him to actually execute those tasks from within his mobile device.”

Military service in Israel is generally compulsory, lasting two or more years. Many would-be entrepreneurs apply to the IDF’s computer training academy, known as Mamram. Located at a base outside Tel Aviv, it acts a bit like a school for startups, teaching programming and project management to cadets in olive-green uniforms. Young hackers with proven skills get recruited by specialized intelligence units such as Matzov, the army’s cybersecurity division, or units involved in signals intelligence and eavesdropping.

“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.

Tal Marian, founder of the TechLoft, a shared workspace in the “Tech Mile” around Rothschild Boulevard in Tel Aviv, says the effects on the startup scene have been profound. “Some of the military units work like a civilian organization,” he says. There’s “the feeling that if you come up with a good idea that answers a real need of that unit’s mission, you will get the funding and manpower and time you need.”

Sometimes the military connection to startups is obvious: the miniaturized camera and power pack in a camera pill developed by Given Imaging is based on the equipment in the nose of a military drone. Other connections are more obscure. Some aspects of Israeli expertise in mobile communications networks, for example, were developed as part of a defensive measure against terror attacks by Palestinians. The details are still top secret.

Another factor boosting Israel’s startup scene is the low cost of college, about $3,000 a year. Students typically emerge from military service and university with no debt, which allows many to take a year off to pursue their dreams.

Sometimes they come true. The success of Waze has reinvigorated an already bubbling market. Just as Any.Do is based on predictive analysis of large amounts of data, Waze applies the same techniques to crowdsource accurate traffic information and maps in real time. It’s widely believed that the Israeli military has a decade-long lead on the U.S. and Europe in big-data skills. Waze’s co-founder, Uri Levine, also got his start as a military software developer. 

“Big data was not a brand 10 years ago, but it was already there in intelligence organizations,” says Elik Ber, a former military officer now working for Meidata, a business research company. “Now when a consumer company wants to know who bought their product everywhere in the world, they’re facing the same kind of challenge.”

Get stories like this before anyone else with First Look.

Subscribe today
Already a Premium subscriber? Log in.

Uh oh–you've read all of your free articles for this month.

Insider Premium
$179.95/yr US PRICE

More from Business Impact
The Next Silicon Valley

How technology advances are changing the economy and providing new opportunities in many industries.

Want more award-winning journalism? Subscribe and become an Insider.
  • Insider Premium {! insider.prices.premium !}*

    {! insider.display.menuOptionsLabel !}

    Our award winning magazine, unlimited access to our story archive, special discounts to MIT Technology Review Events, and exclusive content.

    See details+

    What's Included

    Bimonthly magazine delivery and unlimited 24/7 access to MIT Technology Review’s website

    The Download: our daily newsletter of what's important in technology and innovation

    Access to the magazine PDF archive—thousands of articles going back to 1899 at your fingertips

    Special discounts to select partner offerings

    Discount to MIT Technology Review events

    Ad-free web experience

    First Look: exclusive early access to important stories, before they’re available to anyone else

    Insider Conversations: listen in on in-depth calls between our editors and today’s thought leaders

  • Insider Plus {! insider.prices.plus !}* Best Value

    {! insider.display.menuOptionsLabel !}

    Everything included in Insider Basic, plus ad-free web experience, select discounts to partner offerings and MIT Technology Review events

    See details+

    What's Included

    Bimonthly magazine delivery and unlimited 24/7 access to MIT Technology Review’s website

    The Download: our daily newsletter of what's important in technology and innovation

    Access to the magazine PDF archive—thousands of articles going back to 1899 at your fingertips

    Special discounts to select partner offerings

    Discount to MIT Technology Review events

    Ad-free web experience

  • Insider Basic {! insider.prices.basic !}*

    {! insider.display.menuOptionsLabel !}

    Six issues of our award winning magazine and daily delivery of The Download, our newsletter of what’s important in technology and innovation.

    See details+

    What's Included

    Bimonthly magazine delivery and unlimited 24/7 access to MIT Technology Review’s website

    The Download: our daily newsletter of what's important in technology and innovation

/
You've read all of your free articles this month. This is your last free article this month. You've read of free articles this month. or  for unlimited online access.