This Temasek-backed startup builder tackles cyber security with army experience


Cyber security has always been one of the more obscure topics of the tech industry, deemed the inscrutable domain of hacking gurus. Now it’s coming to the mainstream as cyber security means more to the layperson than just protecting a computer from viruses. Hacking stories are in the forefront, from compromised election campaigns to companies and governments losing tons of money and credibility because of security risks.

This is why Tel Aviv-based Team8 came together. The Israeli startup was founded in 2013 by Nadav Zafrir, Israel Grimberg, and Liran Grinberg to address the growing threat of cyber attacks. The team decided the way to do that was to nurture and build new startups that created innovative security products.

“The state of cyber security wasn’t what it is right now but it was obvious it was going to get worse,” Zafrir, Team8 CEO, tells Tech in Asia. “There were basic things missing: cyber security companies didn’t consider the attacker’s perspective and faced a lack of resources.” This made their solutions niche and shallow in terms of technology, he explains.

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Startup building

To address these challenges, the company works like an incubator but only builds one company per year. The 12- to 18-month process involves working with each company founder to do market research, ideation, and validation. Then it makes a first investment of US$5 million in the new startup, which becomes part of Team8’s stable.

Zafrir feels this singular focus helps achieve better results. “It’s better to stay focused and do one a year. It’s very cumbersome to find the right people and technology,” he says. In fact, the lack of scalability is one weakness in Team8’s model, he muses.

Nevertheless, Team8 has received a disclosed total of US$56 million across three funding rounds, from investors including Microsoft, Cisco, Eric Schmidt’s Innovation Endeavors, and more. Singapore’s Temasek Holdings and Japan’s Mitsui came in for the company’s series B round last year.

This paves the way for Team8’s companies to tackle cyber security challenges in Asia, where a 2015 report by telco Singtel found that businesses and governments are more likely to be hit by cyber attacks.

“[Our relationship with Temasek] is unique in terms of the positioning and the support we get,” explains Zafrir. “It’s putting us in front of some of the major decision makers in finance and the government.”

The Singapore government has stressed the need for cyber vigilance and Singtel itself set up a cyber security institute last year, to train local companies in this area. Team8 is working with Singtel on sharing research, insights, and expertise. It also helps build awareness and connections through events like Rethink Cyber, which was organized with the collaboration of SGX and CIO Academy.

“Singapore is interesting in the sense of the Smart Nation,” says Zafrir, highlighting the digital reinvention the city-state is going through. “It’s unique in the way it’s run – it’s small and condensed but extremely advanced technologically. So things like a smart electrical grid, smart transportation, and smart health, provide many opportunities for us to work together.”

Team8 wants Singapore to be one of its major hubs worldwide, along with one in New York. The two locations will complement the company’s headquarters in Tel Aviv.

They won’t all be building companies like the Tel Aviv base, but they will complement the mothership in other ways. New York, for example, will help lay down go-to-market strategies while Singapore will serve as a hub for both the Asian markets as well as research and development.

“There’s a talent pool we would like to start considering not only for the go-to-market in Asia but also for development purposes there,” Zafrir says.

Strategic advantage

Team8’s uniquely placed in the cyber security arena because of two factors:

One is the aforementioned “attacker’s perspective,” which allows Team8’s companies to think like their adversaries and undermine their decision-making rather than their tools. The other is a near-endless supply of highly trained talent that comes out of Unit 8200, Israel’s elite intelligence corps, which is like an equivalent to the US’ National Security Agency.

Zafrir is a former commander of the unit and Grimberg was head of its cyber division. This gives them an insight to the kind of talent that comes out of the Israeli military, with superb technical training and understanding of cyber threats.

Like the entire Israeli military, Unit 8200 benefits from the country’s mandatory military service for young adults. This helps the army screen potential talent and provide training at an early age. “Specifically what 8200 was able to do was create a screening program for those with the aptitude to become the next tech innovators and train them fast,” Zafrir explains.

Much of that talent, when discharged from the service, is skilled enough to be invaluable to any tech organization. Team8 had that in mind from the get-go. “We thought, if we built the house right, we could attract the top 1 percent coming out of the military,” Zafrir says.

Military experience is also what enables Team8’s talent to adopt the attacker’s perspective. “A lot of the security perspectives out there today are reactive and passive in nature,” Zafrir explains. “The problem is, attackers are evolving much faster and permutations happen all the time.”

So instead, firms like Team8 portfolio company Illusive Networks try to anticipate and disrupt attackers’ ways of thinking and decision-making. For example, Illusive plans for attackers who do penetrate a network – it fills the network with deceptive data that slows them down and confuses them. It can also gather data about how attackers move inside a network to help prepare for future attacks.

To drive the army connection home, about 60 to 70 percent of Illusive’s developers come from 8200, according to founder and CEO Ofer Israeli.

“Attackers are as good as their decision-making ability and operational skills,” Zafrir says. “The most difficult thing for an attacker is not to penetrate a network but to navigate it. That’s where understanding the philosophy and vulnerability of attackers comes in.”