Gil Shwed: Israel wants to throw out its high tech

Gil Shwed

Check Point's CEO talks about the difficulties of being incorporated in Israel and attempts to hire more Arabs and haredi Jews.

Check Point Software Technologies Ltd. (Nasdaq: CHKP) cofounder and CEO Gil Shwed, one of the few rich people in Israel that has not been subjected to public opprobrium, wants to give a little love in return. "I think that this is a good place, and I'm happy to be living here. A great many things can be improved. You can look at the empty half of the glass and say that the situation is bad, but can also look at the full half. The Israeli public lives a good day-to-day life. The standard of living is rising constantly, and people are quite satisfied."

On the other hand, Shwed is well aware of the social gaps and different sections of the Israeli public, and tries not to ignore the responsibility of key players like him to Israeli society. Last January, for example, Check Point joined a program for promoting diversification in hiring, procurement, and products as part of its core business activity, with the aim of reaching out to employees from the Arab and haredi (ultra-Orthodox) sectors.

"I think that as a person who believes in equal opportunity, I have to ask myself whether I'm really realizing it. Beyond that, we have to find as many good people as possible, and as we expand the range of people to whom we are appealing, I hope we succeed in finding these people. This year, for example, we have already hired 20 employees from the Arab sector, and I think that the target set is that 10% of the new employees we hire this year will be either from this sector or the haredi sector. I don't know whether or not this is overambitious, because I don't know, for example, whether the Arab public has 10% representation in the universities' computer science faculties."

"Globes": Does Check Point have some kind of strategy for meeting this target?

Shwed: "I think that the most important thing to do is to create a social network of people. People join a company in which they can identify with people who resemble them. You see this in the circle of IDF units, but this is irrelevant to these two sectors. The way to do this is therefore to find anchors - people who will know these people. I saw this 18 years ago with the immigrants from Russia. People talked about very high-quality personnel, so we started actively looking for immigrants from Russia, and within a few years, a network like this began to form, and began to attract more people, until you could hear Russian spoken in the elevator. That's what we're trying to do here.

"So we're doing it with recruiting concerns that are more familiar with these sectors and are trying to bring us CVs and hold special days at which managers from these sectors speak, so that people feel they can identify with them. I think that as soon as there are such identity figures, people will want to work at the company."

When Shwed is asked whether Check Point's decision to join the project is an attempt to counter the separationist trends of these sectors in Israeli society and the hatred that reached a peak last summer, he expresses himself in diplomatic language: "There may be places that discriminate, but I know that there are none at Check Point. Arabs and haredim have been working here for many years; the question is how I can attract more people from these sectors."

Cyber risks and opportunities

Shwed is inclined to be statesmanlike, but when he has criticism to express, he does not hold back. "In recent years, they have really been trying to expel high tech from Israel. This is a global industry. There can be a great many good people here but the company can be registered in the US or the Isle of Jersey, and you can get a lot of money and benefits from the state, but in the end, the income, the profits and headquarters go elsewhere.

"As early as 40 years ago, Israel was able to attract companies here, and persuade them to put their headquarters here. At Check Point, for example, 99% of the sales come from outside the country, but now, when we want to acquire a company and transfer its business to Israel, instead of telling us, 'Go ahead, move it here and you'll get benefits, and we'll help you,' the Ministry of Finance says, 'No. There is a list of conditions.' For example, if we don't transfer 95% of the employees, we get nothing, but you can't acquire a US company with 200 employees and fire 190 of them.

"They passed the Law for the Encouragement of Capital Investment several years ago, but they're still making bureaucracy and problems for us. In the previous government, they neglected these things. We don't act like other industries that hire lobbyists and exert pressure through the press, but what I'm afraid of is that companies will simply go elsewhere. In five or 10 years, the Minister of Finance will look to see where the profits of the big companies are, and will see that they aren't in Israel. They'll see that their headquarters aren't here, and that there are 200 startups whose headquarters have suddenly been moved from Tel Aviv or the Galilee or the Negev to Switzerland, Ireland, or the US.

"Personally, I've never considered moving Check Point overseas, but there has been a lot of pressure on me to do it. Shareholders prefer a US company to an Israeli company. For the US investors, Israel, Afghanistan, and Iraq are all the same."

Check Point is regarded as the company that invented the firewall. In recent years, it has become one of the highly regarded companies in technology. The number and power of the threats, and the fact that technology present in our lives more than ever, increases the risk, but also the opportunities to succeed in the field.

In order to maintain its standing as a cyberspace leader, Check Point acquired two companies this year and merged them into itself. Hyperwise Security, which can identify threats by monitoring irregular actions in hardware, was acquired in February for $50-80 million, and Lacoon Mobile Security, which specializes in security solutions for organizational smartphones, was acquired two months later for $100 million.

"We have very great opportunities today," Shwed says. "We made a significant entry into the mobile sphere and coping with future threats last year, in addition to the auto industry and critical infrastructure. For example, look at this box," he says, pointing to one of the company's products. "It's suitable for power stations and water stations. It also has capabilities for the protocols that must protect critical infrastructure, and is also rugged. It is suitable for environments with high temperatures. See how heavy it is. All the systems with traffic lights or water or electricity are now networked and can be penetrated and that's pretty scary."

Is Israel prepared for such threats?

"It's prepared, but not enough. It may be better prepared than other countries, and it has the advantage of being a small country with a limited number of lines reaching the country, which can more easily be monitored, but it's not a simple problem. The attacks don't have to come from outside. There is an excellent National Cyber Bureau here, but I estimate it will take 3-5 years before we're ready. No country has a real cyber army, and in a situation of a general attack against Israel, no one is able to conduct a regular defense of it. Check Point will protect itself fairly well, but there are another thousand companies that lack the tools and the people that know how to operate them, and they'll be the point through which others are penetrated.

"I think that Israel has tens of thousands, if not hundreds of thousands, of clandestine agents inside computers, and that some can operate them remotely. The threat can come from both organizations and from countries. The problem with the cyber weapon is that it moves from the major powers to children in less than a week. As soon as breaches are discovered, within a few days, they become tools published all over the Internet, and everyone can use them."

"I prefer change on a micro scale"

If Yossi Vardi, a 73 year-old boy, is the godfather of entrepreneurs and exits, Shwed is the responsible adult of Israeli high tech. He founded Check Point in 1993 with Marius Nacht and Shlomo Kramer, went public with the company in 1996, and has been its actual manager since its first day. Up until 2001, he held three positions in the company: CEO, president, and chairman. He gave up the presidency 14 years ago, and passed the chairmanship to Nacht only two weeks ago. He does not regard himself as a workaholic.

"In contrast to previous years, today I have a fantastic management team. While once I spent half my time traveling and solving every problem, today there are people who do a lot of what I did by myself then, and I can go twice a week to pick up my kids from the school bus at 3 PM. I don't have to travel overseas every week. But I always remind myself that this job is what I love doing: being with intelligent people and dealing with something that interests me and is mine, and I probably won't find that anywhere else. Sometimes I tell myself that I feel like sleeping another two hours. Maybe after I bring the kids to kindergarten, I can go back home to sleep? Then I tell myself, 'What for?'

"I have days on which my schedule is fairly empty, and those are days on which I'm not very happy. Then, when I have a day on which I'm here until seven in the evening and have a meeting every half hour, and I have to finish doing something, on that day I come home happy and full of energy. I love the freedom, but I love more the pressure and solving problems and feeling that I've accomplished something."

Shwed owns 13.5% of Check Point, the current market value of which is over $14 billion. He has appeared on the list of the wealthiest Israelis for years, but in contrast to almost all the other super-rich, he arouses almost no hostility, perhaps because he does not behave ostentatiously, or perhaps because in contrast to many of the big tycoons, who increase their wealth through financial tricks, Shwed's company makes a product, or perhaps (as Shwed himself tends to think) because his company does not sell its product to the public at large.

"Were I in the consumer field, every customer entering my store or my restaurant would have something to say about it. That's not the case with me. My area isn't here. In any case, my motivation has always been to create an industry. My education is Jerusalemite, not capitalistic. My father always regarded the stock exchange as a casino, and never invested in it."

When asked about the changes that have occurred in the country since the social protest four years ago, he gives a rather original answer, certainly for someone who is both a rich man on the one hand, and someone with socioeconomic awareness on the other: "I think that many things there were correct, but a great many mistakes were made. It started with the housing crisis, which I think is a praiseworthy target, but then it dissipated, and left very little behind it. It also failed to solve the housing crisis. I also think that that the public that came to the protest was not the disadvantaged public; it was the middle classes - people who are successful. They made a lot of mistakes, and in some cases, they hurt themselves."

In any case, Shwed has decided to make his social contribution from below, through small steps, not through major measures, protests, and declarations. "Because I decided that I didn't want to get into politics in any way, I prefer doing things on a small scale," he says.

Published by Globes [online], Israel business news - www.globes-online.com - on September 16, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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