When Jon Medved, a Jerusalem-based venture capitalist, examines the books of young start-ups seeking seed money, one number matters most -- 8200. Unit 8200 is the Israel Defense Force's super-secret electronic espionage program. It is also the most important driver behind the success of Israel's high-tech business sector. Veterans of the unit have spun off some 50 tech start-ups worth billions of dollars in the past decade. "Everybody who matters in high tech here is ex-8200," says Medved. "I salivate over these guys."
A partial list of 8200 vets-cum-millionaires includes Gil Shwed, one of Israel's youngest billionaires. He spent four years in the unit in the late 1980s, then went on to found Check Point Software, whose firewall technology now protects the networks of 98 percent of the Fortune 500 companies. Shlomo Dovrat, an 8200 vet, sold his financial software company to a U.S. competitor for $210 million. Two other alums of the secretive unit, brothers Yehuda and Zohar Zisapel, are a veritable start-up factory. They've sold 23 telecommunications companies -- six went public on New York's NASDAQ, and seven sold for more than $1 billion each.
What exactly happens inside 8200 that makes its personnel so well placed to become high-tech millionaires? No one really knows. The unit is so secret that the Israeli government won't even discuss it. What is known is that it is responsible for eavesdropping and other forms of advanced espionage. It puts 21-year-old soldiers in charge of multimillion-dollar budgets and gives them wide latitude to innovate. The environment is high pressure -- where a timely algorithm or clever thread of Linux code can mean the difference between a suicide bomber getting through Israel's defenses or getting nabbed in the nick of time. "It's the attitude. Innovation is expected, demanded," says Oded Melamed, an 8200 veteran and cofounder of Altair Semiconductor, a mobile broadband technology company.
No one doubts that the unit's members are some of the best and brightest. In Israel's system of mandatory service, tech-savvy 18-year-olds compete for places in 8200 the way U.S. high school students vie for spots in Ivy League universities. With such a successful pedigree, who could blame them?