"Russian" entrepreneurs come to the forefront of Israeli high-tech
Now, the people who led the largest Israeli tech exits and funding rounds of the year are the same people who saw their engineer parents employed in jobs like security and cleaning. In a recent series of interviews, they reveal to Calcalist what it means to be part of Israel’s new Russian generation, and what unique talents and characteristics they bring to the country’s tech sector.
It is two weeks before the end of an unusual election season, and Soviet-born politician Avigdor Lieberman, whose voting base is overwhelmingly Soviet-born as well, is forecasted to be the kingmaker. Israeli news outlets are discussing at length the Russian vote. “The stereotypes about the Russian community don’t annoy me,” Yevgeny Dibrov said in a recent interview. What he finds ridiculous, he said, is that the media continues to refer to the Russian community as a homogeneous, geographically segregated minority group. Today, Russian Jews make up around a ninth of Israel’s population. In the past, he explained, most of the new immigrants from Russia gravitated to the same cities, typically outside the country’s affluent center. But today, many Russian-Israelis reside or work in tech-heavy areas like Tel Aviv and affluent coastal city Herzliya, where many of the country’s startups and multinational companies have offices.
Dibrov himself worked many years in Herzliya and Tel Aviv. He was the first employee hired for cloud security startup Adallom, acquired by Microsoft in 2015 for $320 million. He then moved on to co-found and head IoT security company Armis Inc., which raised $65 million in April. Dibrov, 31, was born in the Ukraine but spent most of his life in Israel, and he represents the new Russian voice, the one that doesn’t conform to any stereotype. In his own words, he and his generation are the new face of the Russian-Israeli tech ecosystem: forget “Boris from IT.”
This is 2019’s output so far when it comes to Soviet-born entrepreneurs: Palo Alto Networks Inc. paid $560 million for Israeli information security firm Demisto Inc., co-founded by Slavik Markovich; Palo Alto also acquired cloud security company Twistlock Ltd, co-founded by Dima Stopel, for $410 million; Symantec Corp. reportedly paid $250 million for security company Luminate Security Ltd., co-founded by Leonid Belkind; Cybersecurity startup GuardiCore Ltd., co-founded and headed by Pavel Gurvich, raised a $60 million series C funding round; And at the end of July, content creation startup Lightricks Ltd., co-founded and headed by Zeev Farbman, raised $135 million at a $1 billion valuation, giving it the official unicorn stamp.
“We are certainly moving to the fore, and it’s a logical process,” Dibrov said. When his parents’ generation immigrated to Israel, they did not know Hebrew, but they found it relatively easy to integrate into the tech industry as language was less of a barrier, he explained. Those who had non-tech education, like his mother, who had a master’s in economics, found it infinitely more difficult to gain employment in their field. The next generation, those who are in their forties or fifties today, became high-level tech employees, but almost none became entrepreneurs, he said.
“From 2010 on, something changed, and I see more and more Soviet-born entrepreneurs,” Dibrov said. “Michael Moritz from Sequoia Capital, which invested in Armis, once told me that he prefers to invest in an entrepreneur with an immigration background and not in someone who was born to wealth, as immigrants will work harder and strive to prove themselves more,” he said.
“The collapse of the Soviet Union impacted me deeply. It was quite a maturing experience, at the age of 10,” Farbman, on the brink of turning 40, recalled in a recent interview. Even after many years in Israel, he still speaks with a slight Russian accent. “My childhood was sheltered, and we spent many free hours hunting rabbits or fishing. Today we don’t understand how we did it, but back then it was very clear that if we did not have enough protein in our diet and needed to supplement—hunting was just a basic need. And then we landed in Israel, and I remember being surprised the most by the fact that people wore their shirts untucked.”
Farbman was born in Zaporizhia, a city in southeastern Ukraine that suffered from heavy air pollution. His little brother developed bronchitis, leading doctors to recommend his parents relocate to somewhere with cleaner air. His parents moved the family to Yakutia, officially known as the Sakha Republic, a vast area that borders the eastern Siberian seas of the arctic and houses less than 1 million people despite spanning over 3 million square kilometers. In Yakutia, his parents—both machine and electronic engineers—operated a satellite ground station. The family immigrated to coastal Israeli town Netanya in 1992, when he was 13.
When it was time for his mandatory military service, Farbman was drafted to an anti-aircraft unit, where he met his future co-founders. They founded Lightricks in 2013. At that time, Farbman was working towards his computer science PhD, specializing in computer vision and image processing. The company developed some of the world’s most popular apps for visual content creation, including photo editing app Facetune, which was named one of the Apple Store’s Best of 2013 and Google Play’s best app of 2014. Kim Kardashian, Kanye West, and Katie Perry have all recommended it.
Lightricks’ has an annual turnover of over $100 million, and expects to triple it soon. “We want to reach revenues of $300 million and 500 employees next year,” Farbman said, adding that some of the money raised in the company’s recent round will also be used for acquisitions.
Farbman is of the opinion that his background plays a major part in his outlook and perspective, and in the way he conducts himself as CEO. It is perhaps not surprising, then, that Lightricks still resides in the same offices they leased when they had just started out, and that Farbman has no intention of moving to better digs anytime soon.
“I have a fixation on financial indices, and consider it important to not burn money and not rely on external elements,” Farbman explained. When they founded Lightricks, they did not turn to outside investors but instead tried to succeed as a business with revenues from the get-go, “unlike most startups today,” he said. “It is true that there are countless examples of companies that started bringing in revenue years after being founded and succeeded above and beyond, such as Facebook. But I thought about things in a way that is influenced by my Russian upbringing—you want to see that things work, rather than believing in stories.”
Investors were knocking on Lightricks’ doors from its early days, but Farbman was hesitant. “That’s where my inner Russian comes out: you bake a bun, you sell it, you receive money—that’s the basic concept of a business.” For people who grew up in the U.S. and are more familiar with the financial world, the notion of shareholders that become partners may be more natural, he said, but in his case he initially thought that the “capitalist investors” were attempting to take over his company. “Today they are very good friends that are invited to my birthday parties,” he said.
Lightricks raised funds for the first time in August 2015, when Facetune had already brought in over $10 million. The company’s second round, in November 2018, was mostly secondary, giving employees the option of cashing in on their options immediately without waiting for an exit. That is also part of Farbman’s worldview. “Financial motivation is a very significant part of the tech industry, but for some reason people shy away from discussing it. We issued dividend as early as 2013, because I thought it important that people would come into contact with the money.”
Lightricks has raised over $200 million to date, its latest round reflecting a tripling of its valuation in just eight months. Estimates in the industry are that many of the company’s employees are already millionaires, and not just on paper.
Farbman is not so sure a distinct Russian community still exists in Israel, at least in the same way it once did. “In the end, people with a PhD in computer science have a lot more in common than people who happen to belong to the same geographical area.” But he himself has also undergone a process with regard to his Russian identity. “When I was growing closer to religion during my teenage years in a religious school, I wanted to distance myself from that label. You immigrate, and your parents undergo a complicated process: my mom, for example, initially worked as a waitress before ‘advancing’ to a retirement home, and my dad worked as a welder. You’re a bit ashamed, you want to distance yourself. Today I am proud of them and what they accomplished.”
Michael Marash, 49, co-founder and CEO of medtech company P-Cure Ltd., thought he would be an academic growing up. In 1990, he was two years into his medical degree in Grodno, Belarus, and planning on making the switch to research, when his parents decided to immigrate to Israel. At age 20, without speaking a word of Hebrew, Marash enrolled in Tel Aviv University’s exact sciences faculty. Later, he received a master’s in molecular genetics from the Hebrew University of Jerusalem before enrolling in the Israeli military's medical corps. While in the army, he earned an MBA from Ben-Gurion University of the Negev. After receiving a PhD in genetics from the Weizmann Institute of Science, he worked as the chief technology officer of medtech company Vecta Pharmaceuticals Ltd.
In 2006, he made the leap to the other side and founded P-Cure as part of a technological incubator in Netanya. The company develops proton therapy technology for treating cancer, has raised $30 million to date, and intends to expand its team soon from 30 to 50 people.
Marash, who still speaks with a heavy accent and looks a little like Russian president Vladimir Putin—”I get comments sometimes,” he admitted—is not sure he can attribute his success in the tech industry to his non-Israeli roots, but rather points at a combination of factors. “There are things I do different than younger entrepreneurs, but I think it is more down to age than to background,” he said. “It is true that there is something like a Russian work ethic or discipline, but they are also age-dependent, and so nothing is clear-cut.”
While he had felt Israeli since the beginning, Marash said, the Russian identity has always remained. “In a way that surprised me, it is actually with age and with the years that I’ve learned to accept myself more and feel more comfortable with my ethnicity,” he said.
Dibrov, adversely, does believe there is some notion of “Russian work ethic” that is constant in the background. He was three-years-old when his family came to Israel, and grew up in Rehovot—another city with a large Jewish Russian community—with his mother and maternal grandparents, who were very involved in his upbringing. He learned chess as an extracurricular activity, as do many Israeli children of Russian origin, and was exposed to the Russian classics from a young age. He did his mandatory military service at one of the military’s tech units, and then obtained a BSc in electrical engineering and computer science from the Technion Israel Institute of Technology. He was recruited to Adallom by co-founder and former CEO Assaf Rappaport, who was Dibrov’s team leader during his military service, and he remained with the company until its acquisition by Microsoft.
“At the age of 25 I was Adallom’s vice president of business development, and after the exit I realised I wanted to create something of my own,” he explained. He was unemployed for a month, something his family found hard to stomach, coming as they did from a culture that preached constant work. You cannot reduce it all to a Russian mentality, he said. Something deeper in his upbringing had shaped his character, which he said combines traditional Jewish Russian values with young Israeli drive. What he learned from his grandparents, he said, was that you need to be the best at what you do. “But it is also like that in the Israeli high school, military, and tech environments—they reward those who work hard and well.”
Armis, which Dibrov founded with army friend Nadir Izrael, develops and markets security software for enterprise IoT systems and has raised $112 million to date. The company employs 200 people, half in Israel and half in Palo Alto, where Dibrov currently resides. It has an annual turnover of several tens of millions of dollars, and is valued at a few hundred million dollars.
And still, for many, Dibrov is still a “Russian in the tech industry.” Like Marash, who is sometimes called Alex by people in the industry as some sort of a generic Russian moniker, Dibrov was made aware repeatedly of the stereotypes some Israelis hold regarding Russian Jews. The more ugly ones include questioning their Jewish ancestry and associating them with excessive drinking. “I don’t even know if I remember something from my life in Russia, or if I built it from stories,” Dibrov said. “But the stereotypes amuse me.”
Dima Broslavsky, 32, also immigrated to Israel at the age of three, and still finds himself contending with the stereotypes—and with his Russian upbringing. In the Ukraine, his parents were both civil engineers. In Israel, his father worked for a decade as a dishwasher and his mother worked a manufacturing line, until they managed to establish an independent company in their area of expertise.
“When we arrived in Ashdod in the 1990s we lived in a completely Russian neighborhood, but because of that the school had plenty of computer-related enrichment programs, and that gave kids the chance to become familiarized with advanced technologies,” Broslavsky said. “I’ve always had—and still have—some sort of split identity. I see myself as completely Israeli and I don’t think there’s such as thing as Russian work ethic or discipline, but there is a toolset you receive at home.”
Though his parents prefered he defer his military service for academic education, Broslavsky chose instead to enlist in the intelligence corps, where he met Yuval Ariav, later one of the co-founders of data-based credit startup Fundbox Inc., who recruited Broslavsky as the first employee. Today he is the company’s chief architect. His parents were initially disappointed when he chose not to continue to tertiary education, Broslavsky said, but that disappointment abated with the years as Fundbox went on to raise over $100 million from the likes of Jeff Bezos.
Soviet-born people can be found in all roles and positions in the Israeli tech industry, but they are still a relative rarity among the top brass or founders. “I would have expected to see more Jewish Russian startup founders,” said Igor Rabinovich, chief technical officer at early stage venture firm AltaIR Capital. AltaIR was founded by Igor Ryabenkiy, himself a Soviet-born Israeli himself and a well-known figure in the Russian tech community.
Many people choose the safer side of the industry, like they were taught at home, Rabinovich explained—they receive a relevant degree and find a good, secure job at a tech company. “It used to be that out of 10-20 startups I saw each week, all had someone Russian in a prominent role but almost never at the front of the company or in a leading position,” he said. Today, Rabinovich also serves as CEO of IoT cybersecurity company Akita, incorporated as HighIoT Ltd., which has received backing from AltaIR.
Rabinovich immigrated from Chisinau, Moldova to Israel in 1991, served in the Israeli military’s central computing system unit Mamram (Center of Computing and Information Systems), worked as an employee at ECI Telecom and Managix and then as a freelance consultant. It is a classic career trajectory for Soviet-born Israeli Jews, he said. “Somehow, most Russian guys feel pretty comfortable going in that direction, not inventing something new but consulting in a domain they developed expertise in,” he explained. “It is less risky,” he said. “I hardly have any Russian friends today who don’t have their own consulting firm.”
All men interviewed for this article, however, said there is no specific networking or group for Soviet-born Israelis. “It took a while until we joined the manufacturing lines of the tech industry—mainly serving at unit 8200 and similar technological units—but from the moment it happened we’re following the same path as everyone else does,” Broslavsky said.
Dima Broslavsky, chief architect at Fundbox. Photo: Tomi Harpaz