Israeli Prime Minister Benjamin Netanyahu, center, opens the weekly cabinet meeting at his Jerusalem office on Sunday, Dec. 4, 2016.

Israeli Prime Minister Benjamin Netanyahu, center, opens the weekly cabinet meeting at his Jerusalem office on Sunday, Dec. 4, 2016. Gali Tibbon, Pool via AP

What the US Should Learn from Israel’s Silicon Valley

The world’s hottest cybersecurity market is powered by a unique collaboration of government, industry, finance and academia.

The debate over where “the Silicon Valley for cybersecurity” will be located is over. For some time now, the answer has been Tel Aviv. The Startup Nation has been producing new cybersecurity companies at a breathtaking speed. Boston, long a prospect in the race, seemingly has decided to settle for the consolation prize of being the preferred home from which to take Israeli startups public.

While I was in Tel Aviv speaking at the Globe’s Israel Business Conference, the Governor of Massachusetts was also there trying to find the next Cyber Ark and calmly reassuring Israeli founders that the weather in New England is not so bad.

The story of how Israel has become a factory for producing new technologies is familiar to most people in the space: take the best and the brightest out of high school, assign them to Unit 8200 for their obligatory military service, give them a few years in computer science finishing school, and then fund their startup.

This narrative only captures some of the success factors. What it cannot explain is how so many young Israeli entrepreneurs have could tackle problem sets like industrial control systems, telecommunications, and automobile security. These are problems that few Stanford computer science majors are in a position to tackle. These young entrepreneurs lack the industry knowledge and connections necessary to even discover the problem. Meanwhile, the United States worries that the generation of technologists who keep these systems running is going to retire or die.

U.S. venture capitalists routinely complain of a lack of true innovations, threatening to quit if they get pitched one more food delivery app or another Uber for X. Yet, what else do “young and hungry” twenty-something entrepreneurs in the United States know?

Beyond 8200, what Israel has is a top to bottom organization for cybersecurity that starts with the National Cyber Bureau, which oversees the national computer emergency response team (CERT) that coordinates with private sector-led collaboration centers. As Dr. Yaniv Harnel explained in his presentation at the conference, Israel is now in the process of building out a series of sector-based CERTs. The model should be familiar to anyone who has worked in the U.S. defense industrial base with its Russian nesting-dolls of collaborative mechanisms.

They then add to this operational activity close collaboration between academia and the venture capital community through a series of Cyber Innovation and Research Centers. Rami Efrati, the former head of the civilian division of the National Cyber Bureau, told Aviation Week that in less than two years after the creation of the first Cyber Innovation and Research Centers, “the number of Israeli companies associated with cybersecurity increased from 50 to 220, raising more than $400 million in 78 funding cycles.”

The result is that an alum of 8200 is able to build a startup that addresses problems inside sectors that few people even understand.

The model may not translate perfectly to the United States. Israel is a small country in which sector-based organizations can pull in all relative members in a way that the ISACs in the United States have struggled to do. Regulation also seems to have created closer ties between industry and government rather than created a standoff (there are likely lessons to learned here as well). But the collaborative model between government, industry, finance and academia in Israel can and should be replicated in the United States.

This post appears courtesy of CFR.org.

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