Exporting Startup Nation’s Cyber Wares to a Conservative Europe

Entrepreneurs Anat Bar-Gera and Shira Kaplan believe Israeli cyber firms can succeed in Switzerland, but first they need to rid themselves of some bad habits.

Anat Bar-Gera (right) and Shira Kaplan.
Dagmar Caminada

“Start by taking a deep breath, and wear a nice suit with a tie. It’s not Silicon Valley here and you’re not Mark Zuckerberg. And wear a watch, a good watch you borrowed from your grandfather – because it’s the first thing the Swiss look at. After all, it’s a materialistic world. Enter the room as if you’ve been CEO of a company with over 200 employees for 20 years, you have a salary and aren’t hungry. Position yourself in a place of business maturity and talk to the customer as if you’re someone who’ll be there for him 10 years down the line. If you don’t give him that feeling, he’ll see you as a child who will vanish at the moment of truth. And this is the soft underbelly of the organization – the information technology network and protection of it.”

Shira Kaplan is imparting this free advice to Israeli entrepreneurs who want to do business in classic Europe, and Switzerland in particular. Kaplan and her partner, Anat Bar-Gera, are behind an intriguingly titled company, Cyverse AG, which has an ambitious goal: to sell Israeli cybertechnology to Swiss companies.

Why is that ambitious? Because of the enormous gap between the entrepreneurial culture of the Israeli startup industry and the Swiss corporate business culture. But Kaplan and Bar-Gera believe they can help serve bridge these differences.

“I had a conversation with the head of information security at a multinational Swiss company in the field of automation,” relates Kaplan. “He told me: ‘I’m sick of hearing about veterans of [elite Israeli intelligence unit] 8200’ – and that’s a Swiss person who actually knows what 8200 is, the majority don’t. He’s not looking to hear that the entrepreneur is a world champion; he’s looking for a mature entrepreneur who’s ready to do business. Israelis aren’t patient enough to finish the marathon. They think in the short term, while in Switzerland – and German-speaking Europe in general – they want to know that you’ll be there in the distant future too. Like their companies, some of which have existed for 100 to 150 years. Business in Switzerland is a long-term relationship, based on trust between the customer and supplier. Whoever thinks they can do business with a European company on the basis of one meeting – forget about it.”

Israelis don’t have that maturity?

“Think about an Israeli cyber company. It has young people who raised millions of dollars based on a presentation to [venture capital] funds. What is their chance of closing a deal with a multinational corporation? If it’s a startup whose founders are looking to sell it with a few pilots and zero customers, that’s okay but not appropriate for Switzerland. In contrast, a startup entrepreneur who spent a decade at Check Point and is already over 35 – that’s a good sign for them.”

Kaplan visited Israel earlier this year to participate in the CyberTech Security Conference – one of the largest cyber events in the world, with dozens of varisized companies exhibiting.

“Take, for example, a company such as CyberArk,” says Kaplan, referencing the Israeli company that trades in New York at a $1.1 billion market cap. “On the stage, CEO Udi Mokady spoke and said, ‘Success happened overnight, but it took 15 years.’ This is a company that was founded in 1999 – quite the reverse of the DNA of Israeli entrepreneurs.”

Nothing Kaplan and Bar-Gera say is intended to scare off Israeli entrepreneurs. In fact, the opportunities awaiting Israeli cyber companies in Europe are greater than ever, they say. “The main reason for that is the wave of international cyberattacks, which drove enormous growth in the industry,” said Bar-Gera. “I was just at the World Economic Forum in Davos and the topic of every other conversation was cyber. Another reason is that the global companies know that if they take startups, they’ll get much greater flexibility and adaptability of the product to their needs, which won’t happen if they take a product from IBM or Cisco.

“Europe is hysterical because of the [recent] terror wave, and there’s a correlation between terrorism and cyberspace. There’s an escalation of extremist terror cells in the heart of Europe, and this significantly raises the cyber risks, because, as [Prime Minister Benjamin] Netanyahu said in his speech at the conference, the ‘forces that seek to take humanity back are using some of the forces that take humanity forward,’” adds Kaplan.

A third reason for strengthening information security solutions is that Swiss banking institutions, which are very conservative, are being forced to join the modern banking world with online services and applications, and along with digitalization comes risk. “The large Swiss corporations understand that the real solutions will come not from the giant companies but startups,” notes Kaplan.

Kaplan and Bar-Gera both live in Switzerland, so their business is concentrated there. “Switzerland is a very rich country,” says Kaplan. Large Swiss companies are now looking for cyber solutions outside of the country. Switzerland lacks innovation, partly because it’s a rich place with little impulse for innovation because they don’t feel a crisis, she says. “It’s also an environment with very conservative investors.”

At the same time, Swiss companies are now ready to work with startups but remain cautious, she adds. “The IT manager at a leading Swiss bank told me that before any installation, he wants to look at the financial report of the startup – to know that the firm is not going to collapse tomorrow. I was surprised that they really wanted to see a profit and loss statement, but it’s actually very logical. Think about the damage that could be caused to the entire cyber industry if a company in Switzerland installed a solution from an Israeli startup, and after a year it collapsed. It would be a stain on the entire Israeli industry. What motivates me is not just business, it’s also Zionism – to show the beauty of Startup Nation and cybersecurity.”

The Europeans are also not devoid of prejudices. “Many of them are scared of Israel,” admits Kaplan. “They ask me if the cyber products have any ‘backdoors’ connected to the Mossad or the Israeli government.”

“Many times the customer asks us, ‘Who else has the startup sold to in Switzerland?’ When a Swiss company buys, it’s a seal of approval for other companies. This is a small market and information security managers speak to each other, so there’s great importance for the first installation – and after that it’s easier and faster. Meeting precise deadlines is very important, too – and that’s also something Israeli companies don’t excel at,” adds Bar-Gera.

The two businesswomen have strong links both to Switzerland and the cyber industry. Bar-Gera, 58, has lived in Switzerland for 25 years. She has a law degree from the Hebrew University of Jerusalem and an MBA from INSEAD. After working as an investment banker for UBS for two years, she joined her husband in business and has subsequently become a telecoms and internet entrepreneur, with a number of exits to her credit. She’s a member of the World Economic Forum’s Global Agenda Council on the Future of Digital Communications; the Entrepreneurship Advisory Council for INSEAD; and is also board member for the Swiss Technion Society.

Kaplan, 32, was on a politics fast track before joining up with Bar-Gera. When she was younger, she was active in the Seeds of Peace organization that brings together Jewish and Arab youth, and she attended their summer camp in the United States – which she calls “a life-changing experience.” She did her military service in Unit 8200, and even before leaving the army applied to nine colleges in America. She went to Harvard with an almost full scholarship and graduated with a degree in government.

“I had the clear intention of going into politics in Israel, to make peace,” she says. But she went to Switzerland following the relocation of her husband, who works for accounting firm KPMG. She found work at the Julius Baer bank in Zurich while finishing her MBA at the University of St. Gallen in Switzerland (her thesis was on Swiss venture capital investments in Israeli cybersecurity startups). This was the seed from which Cyverse grew, she says.

The division of labor between the two women is clear: Bar-Gera, Cyverse’s chairwoman, has very high-level contacts in Switzerland; CEO Kaplan is responsible for the contacts in Israel. She visits Israel every six weeks or so, and knows the local cyber industry very well. “Shira came one day and said, ‘I heard a lot about you. I live in Zurich, too, and have such and such an idea,” recalls Ben-Gera of how they got together.

Why didn’t you throw her out?

“The dialogue between us lasted about half a year, until she convinced me. The cyber sector wasn’t alien to me, but these were things I didn’t focus on. Over time, I saw the potential to leverage the contacts I have in Switzerland with the amazing ecosystem in Israel. The cyber issue worries every director and CEO today. Heads fly if senior executives don’t deal with these issues in advance the way that they should. We manage to find very interesting companies in the cyber sector and connect them with the finest multinational firms from Switzerland and Germany.”

Cyverse’s business model is quite simple, but with a twist. As a broker, Cyverse takes a certain percentage of the deal, but Bar-Gera and Kaplan mostly choose not to take the money in cash, but in equity – as shares in the startup. This is because they believe in these firms in the long term and want to become strategic partners, they say.

What are they looking for? Companies with a relevant product and product that already works, explains Kaplan. In addition, it should be a mature entrepreneur who comes across well with European partners; a player who’s a strategic partner with long-term staying power; and large deals – a few hundred thousand Swiss francs and up, adds Kaplan.

The other side of the business is to bring Swiss entrepreneurs in to invest in Israeli cyber firms, although this process is still at an early stage.