From IDF to IPO

Why does IDF military discipline seem to foster unruly innovative thinking, when this appears to happen almost nowhere else in the world?

By SHLOMO MAITAL
IDF soldiers (photo credit: REUTERS)
IDF soldiers
(photo credit: REUTERS)
“Military intelligence,” Groucho Marx once quipped, “is a contradiction in terms.” Come on, Groucho, you must be kidding. Israel’s military intelligence is no oxymoron. Along with other brainy army units, like Mamram (IDF computer systems), it is the spawning ground for what become powerful global businesses whose intelligent products make life better for people all over the world.
More than once, IDF (Israel Defense Forces) service has led to IPO (Initial Public Offering of shares by a startup company). The question is why does IDF military discipline seem to foster unruly innovative thinking, when this appears to happen almost nowhere else in the world? Take, for example, the global Israeli giant Check Point Software Technologies, a marker leader in network security. The company was born in July 1993. Three young friends – Gil Schwed, Shlomo Kramer and Marius Nacht – got together in a sweltering Tel Aviv apartment belonging to Kramer’s grandmother, to start a software business. The three realized that Internet networks could be hacked and thus needed firewall (a term they coined) protection.
They learned this in the IDF.
Schwed had served in the hi-tech Military Intelligence unit known as 8-200. There, he had developed unique firewall protection for highly sensitive military database networks, working at times with Kramer. His friend Marius Nacht was a graduate of Talpiot (Hebrew for small mountain peaks), an IDF program that chooses 30 to 100 genius-IQ recruits and puts them to work to tackle tough problems.
From time to time, Nacht hopped on his motorcycle and brought bottles of Coke to keep the three awake, as they toiled on four hours of sleep a night and wrote software code. In 8-200 Schwed had learned how to develop an idea, pitch it to superiors, and run a development project to implement it. With Check Point, he simply repeated what he had done in 8-200. Schwed, a fireball of energy who was only 24 when he launched Check Point, is still the company’s CEO. Nacht is vice-chairman. Kramer left to launch another startup in 2003.
At its peak in 2000, Check Point shares were worth nearly $23 billion. Its market capitalization today is $10.9b. Its 2010 revenues exceeded $1b., with $450 million in net profit.
Today 8-200 graduates have a network that fosters business enterprise. One of my students once compiled a list of startups founded and/or led by 8- 200 alumni – there were over 80 companies and the list was far from complete. It includes such wellknown firms as Audiocodes and Nice, as well as Mirabilus (inventor of instant messaging ICQ, later acquired by AOL).
It is not just the brainy army units that create innovations. For instance, Bernard Bar-Natan made aliya from Brooklyn in 1979 and did abbreviated military service as a medic. He was struck by the gap between the IDF’s hi-tech weapons and its very low-tech bandages, unchanged since World War II.
Medics were taught to use magazines, rocks, canteens, anything, to improvise pressure bandages.
Bar-Natan invented an elastic bandage that applies 30 pounds of pressure to a wound to stanch bleeding and founded a company, First Care. Its bandages are said to have saved the life of US Senator Gabrielle Giffords, shot in the head outside a Safeway store in Tucson, Arizona, last January 8.
What is it about IDF units that spurs hi-tech innovation? Saul Singer, co-author of “Start-Up Nation,” told “The Jerusalem Post” that he believes it is not specifically the hi-tech IDF units like 8-200 that are the main startup drivers. Rather, it is the cultural effect of IDF service. “In the IDF Israelis learn about teamwork, improvisation, leadership skills, sacrifice for a larger goal,” he says. “These are things you don’t learn in school or in business. It’s a kind of third stage in life.”
Singer’s views are supported by Dan Meridor, Deputy Prime Minister and Minister of Intelligence and Atomic Energy. Meridor is closely involved with the Talpiot program. When he speaks to Talpiot participants, he tells them, “when you’re under the command of 30- to 35-year-old colonels and generals, don’t listen to them! They know how to win wars the old way. They need somebody new who has never seen the old challenges and the old answers.… Don’t ask for advice! Seek the answers on your own.” Meridor told “Aviation Week” that the youngsters are instructed to operate on the edges of anarchy, or at least insubordination. This is the core of entrepreneurship and an aspect of military service few other armies cultivate.
I am helping to lead a Neaman Institute project for the European Union, identifying the drivers of innovation as the basis for pro-innovation policies.
We have found that cultural factors, such as Israelis’ resilience and stubborn persistence, are crucial. As Singer notes, Israel’s “IDF to IPO” culture is unique.
Army service in Israel, it appears, not only guards the country’s citizens in the present, but by fostering entrepreneurial skill it also helps build its future. • The writer is senior research associate, S. Neaman Institute, Technion.