Israel's Unit 8200, a Conveyor Belt of High-Tech Startups

Unit 8200 may or may not ring a bell, but you've likely heard of Viber, the popular instant messaging app or Wix, the cloud computing service. Viber, Wix, and hundreds of other high-tech startups have their origins in Unit 8200, the cyberware division of the Israeli Defense Forces (IDF). The links are Talmon Marco and Avishai Abrahami, Viber's, and Wix' founders, both of whom did their mandatory military service at or worked for Unit 8200.

Over the years, Unit 8200 has turned out thousands of tech-savvy entrepreneurs who, like Marco and Abrahami, went on to found their own tech companies or to occupy leading positions in established ones.

In what has become the world's premier example of military innovation, Unit 8200 is credited with playing a key role in developing Israel's high-tech know-how, which has resulted in the country having the highest concentration of startups per capita in the world and consistently ranking as a global leader in innovation.

Dubbed the "Startup Nation", Israel also benefits from a series of factors that boost its ability to foster innovation. Its open culture and small size make it easy for people from different sectors to collaborate on projects. Besides, Israel's small population of fewer than 9 million forces tech (and other) companies to look outwards to find markets for their products and services, contributing to the global outlook of many Israeli companies.

Most importantly, state support and funding for entrepreneurs and for educational programs in coding and technology have proven essential over time.

But Unit 8200 in itself has contributed a great deal to the innovation culture in the country and beyond, so it merits a closer look. Set up in the 1950s as the 2nd Intelligence Service Unit, Unit 8200 has undergone two name changes and one change of location before reaching its current iteration. 

For most of its history, the unit has been so secretive, that, until a decade ago, there was no public acknowledgment of its existence. To maintain this level of secrecy, recruits who joined the unit were asked not to share where they served, even with their close family.

In recent years, former Unit 8200 recruits have started to share some information about their experience, giving a glimpse into life in the military outfit.

Idan Tendler, the CEO of data analytics provider Fortscale, compares the management of Unit 8200 with that of a high-tech startup. It starts with scouting potential recruits; IDF recruiters comb the country's schools and after-school feeder programs for the brightest students with good analytical capabilities and, critically, coding skills. Applicants are then asked to complete a raft of online tests before they are admitted.

Once they're in, the youth are thrown in at the deep end. For example, Avishai Abrahami's first task was to break into the systems of a country that Israel identified as "hostile", to crack the data encryption and decrypt the data. In order to secure the large amount of computing power needed to carry out his task, he hijacked the systems of two other countries, using their processing power to decrypt the data of the target system.

It is tasks like these that make Unit 8200 the startup engine that it is. Demanding that young people think on their feet and execute tremendously complicated tasks with little guidance or supervision prepares them to continue to do the same after their military service is over. Having served in the unit also opens doors for former Unit 8200 members, because the military outfit is highly respected in high-tech circles.

"Just from my generation, there are more than 100 guys from the unit that I personally knew who built startups and sold them for a lot of money," Abrahami told Forbes in a 2016 interview. "There was a team of ten people in one room in the unit. I call it the magic room, because all of them created companies where the average market cap is half a billion dollars."

Startups founded by Unit 8200 alumni 

Innoviz is among the largest of the 600 or so Israeli startups focused on developing autonomous driving technologies. Founded in 2016 by a group of former IDF staff, the startup is working to develop perception technology and lidar sensors at affordable prices.

Lidar (an acronym that stands for laser imaging detection and ranging) is a form of laser-based computer vision that will enable the driverless cars of the future to "see", understand, and navigate the world around them. One of the main problems with the technology, aside from the need to improve its accuracy and range, is the fact that it remains very expensive, which hinders its deployment on a large scale.

With an estimated market capitalization of over $500 million, the startup is backed by tech giant Samsung and has secured BMW as one of the customers of its solutions, which are expected to be launched in 2021.

Cybereason is among the numerous cyberdefense startups to have come out of Unit 8200. Founded in 2012, the company has developed a security platform that helps companies detect, prevent, and analyze online threats.

While its current solutions help protect computers, servers, and mobile devices, in the future the company aims to expand to include wearables, autonomous cars, and other devices connected through the Internet of Things (IoT) among the technologies that its platform covers.

For Argus Cyber Security, a scaleup founded by Unit 8200 alumnus Ofer Ben-Noon, securing connected cars is not a plan for the distant future, but very much part and parcel of what the company is working on at the moment. Equipped with predictive intelligence and remote diagnostics, autonomous cars are increasingly susceptible to hacks, a risk that is only expected to grow as we inch closer to a driverless future.

Argus Cyber Security and its competitors are working to protect cars not against traffic accidents, but against hackers. A global leader in automotive cybersecurity, the scaleup is a prime example of why Israel, a country with little in the way of automotive manufacturing capabilities, has become a leader in the automotive sector. 

Team8 describes itself as a "think tank" that supports entrepreneurs through funding and mentoring. Focused on cyberdefense, Team8 has mentored 11 startups since it was founded in 2014 and enjoys the collaboration and backing of recognized companies like Intel, Cisco, and Microsoft. In June 2020, Team8 announced that it had raised $104 million to set up a venture capital arm that will improve its ability to invest in the startups that it finds promising.

Founded by IDF alumnus Ben Volkow, Otonomo has set out to develop a search engine for connected cars. Smart cars can collect a wide variety of data, ranging from information about the state of the vehicle to data about the behavior and health of its passengers. As was the case with the World Wide Web,  solutions will be necessary in order to organize, protect, and analyze the large amount of data that is expected to be collected. Enter Otonomo, which has launched a platform that promises to help with use cases as distinct as fleet management, parking, route planning, and remote diagnostics.

Military innovation

The startups above are but a small selection of the thousands of startups founded by former IDF and specifically Unit 8200 alumni. That the military would be a conveyor belt for innovation makes sense in Israel. All Israeli citizens who are not ethnic Arabs have to serve in the military for at least two years starting at the age of 18. Military service is a rite of passage for most young Israelis — it builds character, patriotism, and, as it turns out, life skills and even careers.

Evidently, the high level of funding that the military receives in Israel plays a role in the kind of projects and programs the organization runs. But other countries that spend more on the military than Israel don't have anywhere near as much success in using it as a source of innovation. All things considered, Unit 8200 and IDF have a unique set up, much of which continues to be wrapped up in secrecy.