Former NSA and Israeli SIGINT Eavesdroppers Cashing In On Cyber Security Craze

Meet The Ex-NSA And Ex-Unit 8200 Spies Cashing In On Security Fears

Kashmir Hill and Thomas Fox-Brewster

September 29, 2014 print edition

From left to right: Ted Schlein, Lior Div, Jay Kaplan, Eran Barak, Oren Falkowitz, and Rob Seger

Before Edward Snowden smashed its digital doors wide open, the National SecurityAgency was seen as the mysterious keeper of an arsenal of dark-voodoo hacking weapons. Now we know the truth: NSA employees are almost too good at what they do–as are their counterparts at Israel’s elite military signal intelligence group, Unit 8200. Unlike people at most government agencies, NSAers and Unit 8200 alums include world experts in their craft, in this case hacking and defending networks and devices. With data breaches now a daily news item, a stint at either agency has become résumé gold for entrepreneurs. Some agency folks are leaving more out of a moral duty to restore some balance back to the private sector. In the last year ex-NSA founders have snagged $9 million for bug-bounty firm Synack, $2.5 million for attack-detection firm Area 1 Security and $10.3 million for e-mail encryption play Virtru. “I think it’s a direct correlation to Snowden,” says TedSchlein, a veteran cybersecurity venture investor at Kleiner Perkins Caufield & Byers. The path from spy to startup is also in full swing in Israel, where entrepreneurs envy the earlier success of 8200 alums such as Gil Shwed andMarius Nacht, the billionaire cofounders of Check Point Software, and Nir Zuk, founder of Palo Alto Networks (market value: $6.6 billion). Here are some of the more high-profile defectors and players in the spy-versus-spy game.

1. LEV KADYSHEVITCH, Head Of Research, Biocatch

Its algorithms determine the identity of users based on how they interact with apps, exploiting research on human response to certain phenomena, such as the brief disappearance of a mouse cursor. The 8200-alum-packed firm has $14 million in funding.

2. GIORA ENGEL, Cofounder, LightCyber

With his Unit 8200 buddy Michael Mumcuoglu he established LightCyber in 2011 to detect breaches using a network appliance that flags strange-looking traffic. It has raised $12 million to date from VCs and Check Point’s billionaire cofounder Marius Nacht.

3. TED SCHLEIN, Managing Partner, Kleiner Perkins Caufield & Byers

Schlein did not belong to either spy agency but he recognizes their potential. Silicon Valley’s top cybersecurity financier recently backed two NSAer firms: Synack and Area 1 Security. “The portrayal of the NSA doing things that are bad is not making it the hot place to work inside the intelligence community. I think a lot of their creativity is being curtailed,” says Schlein. “As a VC, I think it’s wonderful. As a citizen of the U.S., I’d make a different argument.”

4. LIOR DIV, CEO, CybeReason

The Unit 8200 alum moved his startup from Israel to Boston to tap talent and a bigger market. Its software infers the presence of an attack under way and displays the situation in an easy-to-grasp graphical interface. Div raised $4.6 million earlier this year from Charles River Ventures.

5. JAY KAPLAN and 10. MARK KUHR, Cofounders, Synack

Kaplan and Mark Kuhr, both 28, spent four years in offensive security at NSA’s counterterrorism division, hacking around for weak spots and finding plenty to exploit. They quit early last year and quickly raised $1.5 million to launch Synack, an army of several hundred freelancers who get paid if they find bugs in clients’ codes–except this time the bugs get fixed. “We don’t work for the NSA anymore. We wouldn’t leave a vulnerability or anything like that,” says Kaplan. “But we would turn away China’s elite hacking force as a customer.”

6. ERAN BARAK, CEO and cofounder, Hexadite

Barak was a five-year veteran and officer at Unit 8200 before going into business earlier this year. Hexadite plans to bring automated incident response to the masses. It already has four customers in Israel and the U.S. YL Ventures backed Barak and his colleagues with $2.5 million.

7. OREN FALKOWITZ, Cofounder, Area 1 Security

Falkowitz spent six years at the NSA crunching mountains of data to uncover attacks. He and five colleagues left in 2012 to start Sqrrl, an analytics firm in Boston. He moved to Silicon Valley this year to launch Area 1, which monitors employee clicks and flags any dangerous behavior or deviations. It received $2.5 million in funding in May. “There are lots of mafias out here: PayPal, Palantir. I don’t want to use the word mafia,’ but I want one for NSA grads,” he says. “People who come from there have an innate knowledge that you can’t teach.”

8. ROB SEGER, Cofounder, Morta Security

Seger’s two years in the NSA’s Protocol Exploitation office is not on his LinkedIn profile. He left the agency to consult in 2008 and two years ago started Morta to spot threats already inside a network firewall. “When we told investors we were ex-NSAers interested in going into security, they instantly wanted to give us money,” says Seger. Palo Alto Networks bought the firm this year. “Historically, everyone was fearful of the NSA, but no one actively disliked ex-NSAers. Snowden changed that.”

9. GILI RAANAN, Partner, Sequoia Capital

Raanan, an 8200 alum and VC in Herzliya, Israel, started and sold two security software firms and now funds the 8200 diaspora, with money in Adallom, Mintigo and Seculert. He prizes the talent that the Israel military consistently produces at a young age. “Graduates have the frame of mind that nothing is impossible. It goes beyond the tech, it’s a state of mind for life.”