Israelhas a booming economy.
Westernisation is sweeping the country, and its advances in
research and development are taking the global market by
storm.
The information security market is no exception. Although
comparing a location to Silicon Valley is a cliché, the
similarities are rife, and the country's reputation as an
international centre for research and development has been further
enhanced by investments from Microsoft and
IBM, among others.
The country's economy used to rely on agriculture, but has now
moved towards knowledge-intensive industries, with the aim of
ensuring that the country is at the forefront of high-tech
innovation, built on a sound infrastructure and an educated and
creative workforce.
Israel's economy continues to grow strongly, and increasing
demand from the international market for its technological
expertise plays a big part in this. In 2005, almost half of the
total industrial exports were technology based. Today, Israeli
entrepreneurs lead the way in many fields of software applications
and
homeland security.
So why are so many information security companies founded and
developed in Israel? "That is like me asking you why there are so
many umbrella manufacturers in the UK," says Israel Levy, president
and chief executive of ControlGuard. "We need security here like
you need umbrellas in the UK."
A need for security
But is it really that simple? "The security sector here in
Israel is huge," Levy says. Even as a flying visitor, that much is
apparent. Bags are checked on entry to most hotels, shops, bars and
buildings, and you cannot go too far without catching sight of army
or police. It is strange - although the tight security makes you
feel safe, it is also a constant reminder that you are in Israel, a
country that believes itself to be at war.
On entering the ControlGuard building in Herzlia near Tel Aviv,
visitors are confronted by the first layer of security: a guard at
the car park entrance who eyes visitors suspiciously and asks our
guide - a ControlGuard staff member - who we are. The mood is soon
lightened when he jokingly asks to check the car boot. Israelis
know to take security seriously, but they also tend to have a sense
of humour.
"Look at the Ministry of Defence and our army," says Levy. "We
have lots of people coming out of the army with ideas for security,
and they are good ideas because they have to be."
Nir Zamir, vice-president of marketing for information security
firm
Yoggie, agrees that Israel's wealth of knowledge about
information security is in line with its strong army and military
might.
"The industry is growing as the face of the battleground does.
We apologise that our technological advantage comes from our army,
but at least it is something good that comes out of the conflict,"
he says.
Sitting in the Yoggie offices, bungalows surrounded by lush
green countryside, any sign of conflict seems a million miles away.
The land stretches as far as you can see, and has potential for
huge expansion. Plans are already under way to convert a third
property into the company's marketing offices, and it is hard not
to think of it as the foundations of a "Yoggie empire" if the
company's growth continues to accelerate.
Yoggie recently released its new product, the Yoggie Pico, which
Zamir describes as an "interesting and sexy gadget". No bigger than
a flash drive, the Pico is a plug-in laptop security system. "There
has been an avalanche of interest from all over the world," Zamir
says. "The thing about Yoggie is that people need it now".
A thirst for innovation
Nick Outteridge is the director of business development for IT
security company PureSight, and is the Israeli company's only
British member of staff. "Israel needs superior security. Having
survived the holocaust, it sharpens minds. What they have suffered
has given them the edge."
At the age of 18, most Israeli men and single women are inducted
into the Israel Defence Force, women for two years and men for
three. Many IT security experts in Israel agree that this is where
the thirst for innovation and the need for security is embedded
into Israeli citizens.
"There are lots of people who come out of the army qualified in
security and develop start-up companies," says Yaacov Sherban,
chief executive for web security firm Applicure. "The Israeli
government and army have a tremendous need for security and put
investments into it - not just IT security, but physical security
too."
Eyal Adar, founder and chief executive of information risk
management firm White Cyber Knight, says, "We have a culture that
knows how to understand the needs of people and security. The
entire architecture of Israel is drawn from risk assessment, a
unique know-how when it comes to understanding risks. We just
engineer security solutions to match each risk."
Sdema Group, a homeland security provider, emphasises the
importance of security systems preventing breaches before they
happen, rather than finding a solution after the damage has been
done. Sdema Group was founded in 2004 by Shlomo Harnoy and Dror
Mor, both of whom have backgrounds in Shabak, Israel's equivalent
to MI5.
The political situation in Israel requires forward planning and
a state of high alert, says Batsheva Iluz, vice-president of
business development for Sdema Group. Iluz says that an
organisation can heighten its security and profitability by
creating an inclusive and efficient environment for security,
rather than buying one security product at a time. "Technology is
only part of the solution," she says.
Pre-emptive security systems
"Physical and IT security are co-dependent in Israel. A while
ago, there was a suicide bombing in Tel Aviv. Intelligence had
picked up this threat before, and had used cameras and technology
to track him. They knew where he was, but that is where IT security
stops," Iluz says.
"The security guards at the bar that the suspect tried to enter
refused him entrance. The bomb exploded outside and still caused
deaths, but not nearly as many as if physical security had not been
in place to stop him entering the packed building."
Guy Lifshitz, chief executive of information security firm
iTcon, says that Israel's political position and the conflict in
the country is why activity in the information security market in
Israel has grown enormously.
"Our government is a high target for all of the world. We
therefore have to be innovative and superior in protecting our
government from e-threats," he says.
Avishai Wool, chief technology officer and co-founder of network
security firm AlgoSec, says that education, rather that the army,
is the reason for strong research and development and numerous
security start-ups in Israel.
"The army is a melting pot, an effective filter of people. The
high-tech units separate the young, intelligent and driven children
they take on responsibility at a very young age and go to
university later because of their service in the army," he
says.
"Education is taken more seriously here. Students are older, and
therefore more focused and driven. And this is why we are seeing so
much talent and superior research and development - it is not just
about the military.
"The industry is booming out here, and all of the innovation
coming out of Israel has led to major US companies positioning
their development teams out here."
In the late 1990s and early 2000s, the Israeli government
offered funding to many start-up companies, and Almog Aley-Raz,
chief executive of biometric security firm PerSay, says that to
some extent this was the drive for innovation in the IT security
sector.
Government promotion had a significant impact on the Israeli
information security industry, and encouraging start-ups with
financial help aims to keep talent in Israel. "Otherwise, all of
the talent would have gone and done this in the US," Aley-Raz
says.
International business
At the end of the 1980s, the government and the Bank of Israel
began to implement a policy of full foreign currency
convertibility, decreasing the country's currency-control
regulations and consequently liberalising Israel's trade. This made
it easier for individuals to make portfolio investments abroad and
for foreigners to trade in Israel. Today, Israeli residents can
trade freely and make portfolio and direct investments
overseas.
Israeli information security companies are traded on the US
market, and many position their sales and marketing teams there.
"It is just practical," says Outteridge. "Because of time
differences, to sell to America you have to be in America.
"Everyone wants to make it big in the biggest market in the
world. It is important to have a footprint in the domestic land of
the US if you want to make it out there. People like to buy within
their homeland.
"I like to buy British for example, but I am happy to buy
outside of Britain if the technology is better."
Having worked for UK web security firm
SurfControl, Outteridge now notices cultural differences
working for an Israeli company. "They are very blunt people, they
tell it how it is, and that is refreshing. They are very bright
people."
With a population of more than seven million, Israel is a very
small market. So why don't start-ups head out to the US to build up
their businesses? "Moving staff out of Israel would be very hard.
There are big cultural differences, and it is not like Israel,
where everybody knows everybody," Wool says.
The overseas security market
Lifshitz says that there is often reluctance from foreign
customers to deploy Israeli products. "At the moment we are trying
to sell our service to other governments, but more developed
countries already have the structures in place. And besides, they
do not like to bring foreign talent in."
And it seems to work both ways, with Israeli security companies
admitting they like to use designers and manufacturers within
Israel, giving both ease of development and quality as reasons for
doing so.
Is the foreign reluctance to use Israeli security products
fuelled by Israel's political conflicts? "Not at all," says Adar.
"There are many collaboration issues between different governments
in different countries. It is just the fact that the technology is
coming from a different country."
Adar gives the US as an example. "It is difficult to sell to
America from outside - most Americans do not even know how to dial
out of the country."
The internal landscape
There is a great and arguably deserved pride among many Israeli
security companies. The market is strong, it is growing fast and it
is innovative.
The I Safe group was established by finance firm Managing
Investments Worldwide, with the plan to centralise services in the
security market. Most suppliers agree that the marketing
opportunities that I Safe creates are the biggest benefit. For
example, at London's Infosecurity Europe exhibition last April, I
Safe ran an Israel stand, decreasing the cost for each company and
maximising exposure.
Daniel Giron, director of the Department of Telecom, Computer
and Software Industries for the Ministry of Industry, Trade and
Labour, has granted I Safe a loan for the third year running. "The
idea of the I Safe group is very positive - the co-operation
between the companies is harmonised, the group is energetic and
alive, and sets a good example," Giron says.
I Safe has one rule, which sets the tone of the organisation:
there must be no competing companies in the group. It is this that
prevents network security firm CheckPoint from joining.
"We are too big for I Safe," says Eyal Katz, business
development manager for the firm. "There should be an equilibrium
between members, and CheckPoint would have too much power - it
would affect the productivity of the forum."
There was little evidence of a competitive atmosphere at the I
Safe conference, held on 5 September in Tel Aviv, as attendees
listened to one another's presentations and searched for
compatibility rather than a competitive edge.
Yaacov Sherban from web security firm Applicure even talked
about the possibility of Israeli technology companies joining
forces to make an integrated project. "There is a lot of synergy
between Israeli security companies, and everyone is filling a
different gap. In the long run, an idea would be to work with the
Israeli government to provide a single Israeli platform that
customers could build on."
Outside of the I Safe group, however, there is competition
within the industry. Lifshitz says that being in Israel makes
competition that bit tougher. "Because everyone is an expert, we
are always looking for an edge."
Israel claims the highest rate of research and development
investment in the world, with 4.8% in 2005, and says it ranks third
in entrepreneurship.
"The percentage of Israeli technology companies greatly
outweighs and goes beyond the size of the country. So naturally
there will be some competition. However, we all got here on the
same road, so there is a sense of unity, and we always try to see
how we can be better served together," Zamir says.
Foreign investment
Bill Gates explains why Microsoft has established an office in
Ra'anana, "For Microsoft, having a research and development centre
in Israel has been a great experience the quality of the people
here is fantastic."
With reasons such as motivated staff and an innovative
atmosphere backed by government-funded research and development
programmes, Cisco, Motorola and eBay have also invested in Israeli
technology.
Although Katz argues that telecommunications has been the
largest market to emerge from Israel in the past 12 years in purely
economic terms, the success of the information security industry is
undeniable. "The thing about Israel is that the cultural influence
shines through - Israelis see a huge task and just want to overcome
it," he says.
Giron says, "The security market is only rising. It is just a
pity that we need it so much."
And this is the crux of the matter: Israelis know that their
technology - especially in the information security sector - is
among the best in the world. They know that their researchers and
developers are among the most talented available.
But they are still burdened with the perhaps unjustified need to
have to apologise for it. And that is what makes this story of
growth and success just a little bit tainted.
● This article first appeared in Infosecurity
magazine