Israeli Army Grads Lead Business Revolution
Israel's military elite has helped make the country a
technology powerhouse.
By David Rosenberg
From the September 2000 issue - Red Herring Magazine
Meet the dean of the educational program that has turned out
probably more Israeli high-tech leaders than any other. Each year
Albert Tregar is responsible for educating between 300 and 400
students who represent some of the best computer talent
graduating from Israel's high schools. But that's about all the
program has in common with CalTech or M.I.T. Students graduate
after six months of grinding 14-hour days. The campus, rather
than a collection of ivy-covered quadrangles, is a mishmash of
tumbledown prefab huts and office buildings. There are no football
teams and no frats. And Albert Tregar is just as likely to be toting
an automatic weapon around campus as he is a briefcase.
That's because he is a colonel in the Israel Defense Forces (IDF)
signal corps, and his students are privates. He presides over the
corps' training course for programmers and is responsible for
computer logistics for the army, air force, and navy. His graduates,
along with those of other elite programs, are deployed throughout
the armed services to do everything from reviving crashed
computers to heading sophisticated military intelligence projects.
Never mind what you've heard about Israel's world-class
universities like the Technion-Israel Institute of Technology and
the Weizmann Institute of Science. Col. Tregar's students are
likely to have graduated from one of these schools, but their real
education -- from concrete technical skills to more amorphous
leadership and problem-solving skills -- has come from their army
service. Col. Tregar's IDF programming school gets to choose the
best, train them, and quickly put them into the field, where they
could very well wind up practicing various forms of technological
warfare.
CLASS SYSTEM
IDF students tend to form lifelong friendships, which have helped
many graduates become successful high-tech entrepreneurs. "A
typical thing in the U.S. is that you get an M.B.A. and you work for
Hewlett-Packard (NYSE: HWP) for a few years. Then you get a VC
and start a company," says Martin Gerstel, who spent most of his
career in Silicon Valley before moving to Israel and becoming
chairman and chief financial officer of Compugen, a developer of
genetics technologies. "In Israel, people typically starting
high-tech companies are coming out of the military."
That's certainly the case at Compugen, whose technology is used
by pharmaceutical and biotech companies to identify human genes.
The company's three founders -- president Eli Mintz, chief
technology officer Simchon Faigler, and vice president of software
development Amir Natan -- became friends when they were in the
army's elite Talpiot program. Talpiot is a special army training
program that puts the best high school graduates through a
rigorous curriculum of computer science, physics, and math, then
places them in key assignments in, say, intelligence units.
Compugen's CEO, Mor Amitai, is also a Talpiot graduate, as are
roughly 10 percent of its 120 employees. In fact, Compugen's army
connections run even deeper. "We brought in people from other
parts of the army we worked in -- 25 out of the 60
mathematicians came from Compugen through army connections,"
says Talpiot alum Lior Ma'ayan, vice president and general manager
of LabOnWeb.com, Compugen's Internet research tool.
The IDF is a citizens' army in the classic sense: at the age of 18,
the great majority of Israelis are herded through basic training and
assigned to tasks ranging from serving in an elite commando unit
to serving coffee. In some ways the training program feels less like
a fighting force than a huge and unusually well-armed summer
camp, though one with a mission-critical program. "The difference
between the U.S. and Israel is that in Israel the enemy is across
the border. Here the threat is immediate, and you have to act
fast," says Benny Levin, the chairman and CEO of Nice Systems, a
$120-million-a-year developer of digital recording and logging
systems that he founded in 1986 with colleagues who worked in
military intelligence.
Mr. Levin's view of Israel's national defense is not exaggerated.
The IDF is the army that turned the Egyptian air force into
wreckage within the first few hours of the Six Day War, rescued
hostages from Entebbe Airport, and knocked out Saddam Hussein's
nuclear reactors. In a more creative sphere, the army and Israeli
defense contractors developed the world's first pilotless plane,
launched satellites into space, and created a host of other
technologies likely never to be revealed.
The selection process for Israel's army-trained technology elite
starts when teenagers apply to programs, usually in their last two
years of high school. Only volunteers are eligible to be chosen for
the army's training programs. The most selective program, Talpiot,
accepts only 30 applicants, or 1 in 10, a year. Officers say the
army doesn't look for fuzzy traits like creativity and leadership; it
focuses on measurable qualities. Extremely high aptitude in math
and science, along with success in rigorous exams, are the key
qualifications.
REBOOT CAMP
Talpiot's M.O. is total immersion, whether the subject is software
coding or the Arabic language. The programming course is just six
onths long, but classes run from 8 a.m. to 10 p.m., five and a
half days a week. Although many soldiers say that the program's
immersion approach is an effective way to learn, Col. Tregar says
t's simply the only way to cram a lot of information into a very
short period of time. There's little time to spend on theory and
skills that won't directly relate to the students' army postings later
on. "In an academic setting, you'll learn about models for parallel
processors and the structure of compilers -- those kinds of
things," Col. Tregar says. "It's true it gives you a much broader
understanding, but on a practical level, you won't have to deal
with them in your first job. People with academic degrees that
come to the IDF need to undergo considerable training before
being put into practical assignments."
The tight schedule and emphasis on practicality mean that soldiers
begin work on real-world assignments almost immediately. Before
they've gotten much beyond cracking open a textbook, trainees
are already helping to identify problems in the field and devise
solutions, making do with limited time and resources. The best
soldiers, by their early 20s, are overseeing important projects,
often working with private-sector defense contractors. This is
where the chief attributes of the Israeli startup are learned -- the
cowboy attitude, the dedication to one's team members, and the
pursuit of perfection. "I wouldn't say anyone is teaching you how
to launch a company," says Amnon Yacoby, who has founded two
companies since he left military intelligence. Today he is president
and CEO of Floware Wireless Systems, a maker of
point-to-multipoint broadband wireless access systems. "What you
do learn is how to turn an idea into a real product or real
application or real solution."
Take the air force operational software and development center,
known by its Hebrew acronym, MAMDAS. It designs some of the
world's most sophisticated military software, and most of its
personnel are in their early 20s. The key to its success, says
Lieutenant Colonel Zafrir, an officer in the unit (the army censor
prohibits publication of some officers' full names), lies in the close
integration of development and operation and close cooperation
between designers and people who use the technology in the field.
Developers work on projects from start to finish. "Management is
very tight and standards are very high," says Col. Zafrir's
colleague, Lieutenant Colonel Zeev. "We demand creative, efficient
solutions. Systems pass through very severe checks." By the time
they've finished their stint of six years or so, their level of practical
experience far outweighs that of most foreign managers their age.
The IDF's speed-learning approach naturally has its shortcomings
-- shortcomings that are often evident in Israeli startups: the
programs generally turn out graduates with insufficient managerial
and marketing skills for developing a company, especially when
faced with the challenges of penetrating the big, distant, and
unfamiliar U.S. market. And although Mr. Gerstel admires Israelis'
army-developed focus on technical perfection, there are
drawbacks to it. As a Silicon Valley alum, his role at Compugen has
been to help its Israeli army-vet managers to overcome those
problems. "In Israel if something is 90 percent done, it's not done.
A parachute that's 90 percent okay isn't okay. The net result is a
company with extremely good technology, but sometimes the
planning, the market assessment, and the financial aspects are not
focal points."
Not everyone is convinced that army training gives future
high-tech executives any special skills or insights. Shlomo Kalish,
founder and chairman of Jerusalem Global and the technology
incubator Yazam, says the army has the benefits of an elite
university in that, because of the draft, its applicant pool is
virtually the country's entire high school population, which is then
rigorously screened. "Why are people who go through Harvard
University so successful?" Mr. Kalish asks. "Is it because of
Harvard? Or is it because they were highly screened? Pilots are
screened in the same way."
And of course many of Israel's technology elite never served in
high-tech units. Mr. Kalish was a fighter pilot and went on to get a
doctorate in marketing. Air force pilots, along with soldiers from
elite units like the paratroopers, may not learn much about
computer code, but they do know something about leadership,
planning, and teamwork. Those qualities are the main reasons that
Dellet, a new U.S.-based seed investor, is taking stakes in Israeli
startups. All the companies Dellet has invested in to date have
recruited managers from elite army units in intelligence and the air
force, says Michael Gartenberg, a Dellet managing director and a
former research and development director at the Gartner Group, an
IT research firm. "The elite fighting units breed tremendous
commanders," he says. "They have the same qualities as a
high-tech entrepreneur: boundless dedication and the philosophy
that the only acceptable path is success."
A lifetime of tight contacts is another benefit of the Israeli army
for potential entrepreneurs. The networking, which sometimes
occurs as early as basic training, extends through coursework and
grows intense once a rookie is assigned to a permanent unit.
Startup founders are typically not just a pick-up team of army
veterans, but friends who worked together in the same unit. The
day the fledgling company opens its garage doors to business, the
top managers already know each other well, both personally and
professionally. Those networks remain intact not only because of
the closeness of Israeli society, but also because most men
continue reserve duty into their 40s.
The partnership between Elad Baron, Daniel Steiner, Moshe Livne,
and Yossi Moriel, for example, begun in the army, spawned nothing
less than a small business empire. "Moshe and I were kind of 'gray
hat' programmers. We were not intended to be real programmers;
we were chosen by the commander of the base, who was very
oriented toward high tech and wanted to cut the red tape in
software development at his own base. He pulled me out and used
me as a programmer instead of as a communications operator," Mr.
Baron says, recalling how the four met. "Daniel and Yossi were
from MAMRAM, the army computer center, and were official
programmers and officers. When we had to design a system to
contact the army's mainframe, we started to know each other."
Mr. Baron is CEO of Whale Communications, which provides
network security solutions for e-commerce clients; Mr. Steiner is
Whale's president. Mr. Moriel runs RepliWeb, a developer of
Web-site replication technology. Mr. Livne heads their first
startup, SoftLink, which develops technology for mission-critical
file-transfer applications.
GENERATION WHY
Moving forward, the army's role in the high-tech world could be
decreasing due to one felicitous factor: peace. Army service has
always been seen as a rite of passage into Israeli adulthood, but
as Israel gradually reaches peace agreements with its neighbors,
observers have detected less motivation to serve. Add to that the
impatience of many teenagers to get rich quick. As part of his job,
Col. Zafrir visits high schools to recruit for MAMDAS. Recently, he
says, students have begun to wonder why they should spend
seven or more years in an army programming assignment when
they could be out after three years of regular service and starting
a first business.
While it does make sense, officers claim that interest in the
technology units is as strong as ever, although that interest is due
more to career concerns than to patriotism. Those same officers
say that if high school graduates seem less motivated at times
than the previous generation, they compensate by having stronger
computer skills than ever. It seems that old soldiers never die,
especially when they have an IPO in their future.
David Rosenberg is a former Jerusalem Post editor; he is writing a
book about global technology. Write to letters@redherring.com.
©1997-2000 Red Herring Communications. All Rights Reserved.
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