This Israeli Army Unit Has Become an Incubator for Tech Startups

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[00:00:18] [SPEAKER_03]: Welcome to Tech News Briefing. It's Tuesday, September 3rd.

[00:00:22] [SPEAKER_03]: I'm Zoe Thomas for The Wall Street Journal.

[00:00:25] [SPEAKER_03]: YouTube stars want more respect from traditional media

[00:00:28] [SPEAKER_03]: and a bigger chunk of advertising dollars.

[00:00:31] [SPEAKER_03]: We'll tell you what the platform and its creators are doing to win both.

[00:00:36] [SPEAKER_03]: And then, a unit of the Israeli Army is churning out founders for some of Silicon Valley's hottest startups.

[00:00:43] [SPEAKER_03]: Our reporter Myles Krupa joins us to explain how this elite unit became an incubator for tech companies.

[00:00:54] [SPEAKER_03]: But first, despite the mega popularity of some YouTube channels,

[00:00:59] [SPEAKER_03]: a chasm remains between the star power and earning potential of celebrities who produce their own YouTube content

[00:01:06] [SPEAKER_03]: and the talent featured in TV series, movies, and late night shows.

[00:01:11] [SPEAKER_03]: YouTube and its stars would like to change that.

[00:01:14] [SPEAKER_03]: Here to tell us more is our reporter Isabella Seminetti.

[00:01:17] [SPEAKER_03]: So, Isabella, how significant is YouTube's viewership and how does it compare to TV networks?

[00:01:23] [SPEAKER_04]: So, it's not exactly apples to apples how the viewership for YouTube and traditional TV shows is measured.

[00:01:30] [SPEAKER_04]: But what we do know is that for shows like Hot Ones, which is a celebrity interview show over spicy chicken wings on YouTube,

[00:01:39] [SPEAKER_04]: the viewership tends to be a lot younger than traditional TV shows.

[00:01:43] [SPEAKER_04]: And the videos often get millions of views from Hot Ones.

[00:01:47] [SPEAKER_04]: Directly, I got data that for its most recent season, it averaged over four million viewers.

[00:01:54] [SPEAKER_04]: That's a pretty substantial viewership if we're just looking at that compared to traditional TV ratings.

[00:01:59] [SPEAKER_03]: How does ad spending on YouTube compare to traditional TV?

[00:02:03] [SPEAKER_04]: Some ad buyers are hesitant to invest in spending on YouTube because violent videos

[00:02:13] [SPEAKER_04]: that might look bad for brands and they don't want their brand seen next to those kinds of videos.

[00:02:20] [SPEAKER_04]: But increasingly, buyers are spending more on YouTube.

[00:02:27] [SPEAKER_04]: And YouTube also has a program called YouTube Select where buyers can place their content next to brand safe videos, so to speak.

[00:02:37] [SPEAKER_03]: The show you mentioned Hot Ones, it's been nominated for daytime Emmys in the past.

[00:02:42] [SPEAKER_03]: But you're reporting that YouTube is supporting creators and getting more awards.

[00:02:47] [SPEAKER_03]: How is it going about that?

[00:02:48] [SPEAKER_04]: Some content creators like Sean Evans, who's the host of the show, Hot Ones, have submitted the show for Emmys consideration.

[00:03:01] [SPEAKER_04]: And so YouTube has helped support creators by helping them with advertising and marketing efforts.

[00:03:08] [SPEAKER_04]: It's not from a financial perspective but just by providing support and guidance to them along the way.

[00:03:14] [SPEAKER_04]: Another creator who YouTube has spoken with about awards and recognition is Amelia DeMoldenburg,

[00:03:23] [SPEAKER_04]: who's the host of the show Chicken Shop Date, which is another celebrity interview chicken show.

[00:03:30] [SPEAKER_04]: And the children's music personality, Miss Rachel and Brett McLaughlin and Link Neal,

[00:03:38] [SPEAKER_04]: who are the hosts of the variety show Good Mythical Morning.

[00:03:42] [SPEAKER_03]: What do YouTube and its creators see as the benefit of winning these traditional media awards?

[00:03:48] [SPEAKER_04]: A financial incentive for winning an award or getting more recognition is that that can drive up

[00:03:55] [SPEAKER_04]: advertising rates potentially and generate more money for the creators.

[00:04:02] [SPEAKER_04]: And I think for some of the creators, that's part of the reason why they want this traditional awards recognition.

[00:04:09] [SPEAKER_04]: Alongside with just the reason that they feel that they hold the same place in the culture

[00:04:14] [SPEAKER_04]: that these traditional media outlets and TV shows occupy and they want the same recognition.

[00:04:21] [SPEAKER_03]: That was our reporter Isabella Siminetti.

[00:04:25] [SPEAKER_03]: Coming up, Silicon Valley investors can't get enough of founders who served in an elite unit of the Israeli Army.

[00:04:32] [SPEAKER_03]: We'll tell you why after the break.

[00:05:17] [SPEAKER_03]: Startup investment is harder to come by than it was just a few years ago.

[00:05:22] [SPEAKER_03]: Venture funding has fallen by half since its peak in 2022.

[00:05:26] [SPEAKER_03]: But if the startups founder has served in the Israeli military's elite unit 8200,

[00:05:32] [SPEAKER_03]: Silicon Valley investors are scrambling to back that.

[00:05:36] [SPEAKER_03]: Here to tell us more is our reporter Miles Krupa.

[00:05:39] [SPEAKER_03]: Miles, tell us a bit more about unit 8200. How does it recruit its members?

[00:05:44] [SPEAKER_01]: It effectively started as an intelligence gathering unit, what they call signal intelligence.

[00:05:51] [SPEAKER_01]: Trying to figure out what your foreign adversaries are doing at any given time and when they might attack you.

[00:05:58] [SPEAKER_01]: But over time it's evolved into this really tech heavy part of the military that develops a lot of cybersecurity tools,

[00:06:06] [SPEAKER_01]: both for keeping Israeli systems secure and then also hacking into the systems of enemies like Iran.

[00:06:14] [SPEAKER_01]: For most Israelis, military service is mandatory.

[00:06:18] [SPEAKER_01]: And so it does recruiting pretty early, as early as grade school,

[00:06:22] [SPEAKER_01]: and it's viewed as one of the top destinations for Israelis coming into the military alongside the Air Force.

[00:06:29] [SPEAKER_01]: And it's also one of the biggest departments of the military.

[00:06:32] [SPEAKER_01]: It has thousands of active duty soldiers at any given time,

[00:06:36] [SPEAKER_01]: and it's part of this larger intelligence body called AMON.

[00:06:41] [SPEAKER_03]: You spoke with unit 8200 alumni. What did they tell you they learned while serving?

[00:06:46] [SPEAKER_01]: They definitely learned, first of all, some practical sort of cybersecurity skills.

[00:06:50] [SPEAKER_01]: The latest state-of-the-art that the Israeli military is working on to defend its country can also be applicable in the business sector.

[00:06:59] [SPEAKER_01]: So that's the first thing.

[00:07:00] [SPEAKER_01]: Then the second thing is just these people are thrown into leadership roles very early on.

[00:07:04] [SPEAKER_01]: And so they have to learn how to operate within a team.

[00:07:07] [SPEAKER_01]: They're thrown into the fire both from a technological point of view and from an organizational point of view.

[00:07:13] [SPEAKER_03]: How does the work culture of this unit compare to a Silicon Valley startup?

[00:07:18] [SPEAKER_01]: People see a lot of similarities between that kind of like fast-moving, open-ended, anything can happen atmosphere

[00:07:26] [SPEAKER_01]: that you see in unit 8200 and the way a lot of really fast-growing startups operate.

[00:07:32] [SPEAKER_01]: Talking to venture capitalists, talking to people who have both served in 8200 and then gone on to start companies,

[00:07:39] [SPEAKER_01]: that's a comparison that comes up a lot.

[00:07:41] [SPEAKER_03]: So let's talk about some of the businesses that people who left the unit have founded.

[00:07:46] [SPEAKER_03]: Can you tell us about some of them and what they have in common?

[00:07:48] [SPEAKER_01]: Yeah, well one that's been in the news a lot recently is a company called Wiz,

[00:07:52] [SPEAKER_01]: which Google made an offer to purchase for $23 billion.

[00:07:57] [SPEAKER_01]: The talks eventually fell apart and Wiz has decided that it wants to go public instead of being acquired.

[00:08:03] [SPEAKER_01]: But basically what Wiz does is for companies with data in the cloud,

[00:08:08] [SPEAKER_01]: it could be Amazon, Google or Microsoft Cloud,

[00:08:11] [SPEAKER_01]: they're able to look across those different cloud environments for potential cybersecurity vulnerabilities

[00:08:18] [SPEAKER_01]: that would allow hackers to infiltrate that data.

[00:08:21] [SPEAKER_03]: And is that what other unit 8200 founders have focused their companies on?

[00:08:26] [SPEAKER_01]: It definitely has a focus partly because this is technology that they worked on inside the unit itself

[00:08:32] [SPEAKER_01]: and because it's just a massive business opportunity right now.

[00:08:36] [SPEAKER_01]: More and more companies are moving to the cloud every year

[00:08:39] [SPEAKER_01]: and especially moving more data to the cloud because they're trying to make use of artificial intelligence systems

[00:08:45] [SPEAKER_01]: like GPT-4 from OpenAI and these other large language models.

[00:08:50] [SPEAKER_01]: There's this big rush to put data on the cloud and then the question becomes how do you secure it?

[00:08:55] [SPEAKER_03]: And what was the approximate total value of these companies?

[00:08:58] [SPEAKER_01]: We were able to identify at least nine publicly traded companies whose founders had served in 8200

[00:09:05] [SPEAKER_01]: and those are worth anywhere from 190 billion to 200 billion depending on the day.

[00:09:12] [SPEAKER_01]: And then there are dozens of private companies, many of them also worth a billion dollars each.

[00:09:18] [SPEAKER_03]: So tell us about some of the big backers of 8200 companies.

[00:09:22] [SPEAKER_01]: There's one firm called Cyber Starts in particular that is led by Gilly Ronin

[00:09:26] [SPEAKER_01]: who's also a former 8200 member himself.

[00:09:30] [SPEAKER_01]: He was a very early backer of Wiz, another company called Cyera

[00:09:34] [SPEAKER_01]: that was recently valued at 1.4 billion dollars

[00:09:37] [SPEAKER_01]: and interestingly Gilly was a former partner at this Silicon Valley firm called Sequoia

[00:09:42] [SPEAKER_01]: and he now sends a lot of the companies that he invests into Sequoia

[00:09:47] [SPEAKER_01]: and Sequoia has invested in at least four that I can count

[00:09:51] [SPEAKER_01]: that also have 8200 ties and we're backed by him.

[00:09:55] [SPEAKER_03]: How has the success of 8200 companies changed things for the unit itself?

[00:09:59] [SPEAKER_01]: A few people I talked to lamented that people who are entering 8200,

[00:10:05] [SPEAKER_01]: these really young soldiers are increasingly commercial.

[00:10:09] [SPEAKER_01]: Even before they really begin their service they're already asking questions about

[00:10:12] [SPEAKER_01]: how do I get a job at a tech company? How much money can I make?

[00:10:15] [SPEAKER_01]: Some people worry that kind of commercial focus is distracting from the mission,

[00:10:19] [SPEAKER_01]: the ultimate mission of protecting the state of Israel

[00:10:21] [SPEAKER_01]: and so that seems to be a bit of a tension at the moment.

[00:10:25] [SPEAKER_03]: That was our reporter Myles Krupa and that's it for Tech News Briefing.

[00:10:30] [SPEAKER_03]: Today's show was produced by Zoe Culkin with supervising producer Katherine Milsoff.

[00:10:35] [SPEAKER_03]: I'm Zoe Thomas for The Wall Street Journal.

[00:10:37] [SPEAKER_03]: We'll be back this afternoon with TNB Tech Minute.

[00:10:40] [SPEAKER_03]: Thanks for listening.