Israels tech CEOs and venture capitalists join war against Hamas.jpgw1440

Israel’s tech CEOs and venture capitalists join war against Hamas

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Last week, Or Shoval, a 29-year-old CEO of an Israeli technology startup, was on vacation in an Egyptian coastal town celebrating his recent engagement. His 18-month-old medical software startup was thriving and he was preparing to fly to the US for a major healthcare conference.

But on Saturday morning he woke up to a flood of messages and texts that Israel was under attack by Hamas and hundreds had already been killed.

Now Shoval is one of about 360,000 reservists, or four percent of Israel’s total population, called up to join the country’s fight against Hamas, the Palestinian militant group that controls the Gaza Strip. About 15 percent of his company is now in active service, but the work continues, especially since his company, like most startups, serves customers and has investors outside of Israel.

“I have a gun on my knees, I have a helmet on my head and I have a vest, but I wait for half an hour … so I work for half an hour,” Shoval said in a telephone interview while he was driving from a friend’s funeral , who was killed in the Hamas attack over the weekend, returned to his base. “You’re fighting, and two hours later you’re having a conference call with the rest of your team.”

Thousands of Israeli engineers, venture capitalists and start-up founders are among those being called up to serve in the military’s combat units as they prepare to invade Gaza. The technology sector contributes about a fifth of Israel’s gross domestic product, and many major U.S. technology companies, including Intel, Amazon and Google, have large operations in the country. Israeli startups make up a large portion of the country’s exports and many people in the tech industry refer to the country as a “startup nation” because of its high concentration of tech companies.

“It’s not just men. There are women who are being drafted and there are wives whose husbands are being drafted – the disruption is over,” said Eyal Bino, founding partner of venture capital firm 97212 Ventures. Still, “morale is high to ensure there is no disruption to services and also to defeat Hamas.”

Not the entire tech world supports Israel’s war against Hamas. On Tuesday, a coalition of workers at Amazon and Google called on their employers to stop selling technology to the Israeli government as part of a cloud computing partnership called Project Nimbus. The workers’ group called Amazon and Google “complicit in this devastation” in the Gaza Strip. Amazon spokesman Brad Glasser said the company was “deeply saddened by the tragic loss of life” and was focused on the safety of its employees. Regarding Nimbus, he said that Amazon Web Services “is focused on bringing the benefits of our world-leading cloud technology to all of our customers, regardless of where they are located.” (Amazon founder Jeff Bezos owns the Washington Post and interim CEO Patty Stonesifer sits on Amazon’s board.)

All Israelis are required to do military service after high school, and most remain in the reserves after finishing school. The country’s tech founders and venture capitalists often come from elite cyberintelligence units like Unit 8200. But many tech workers completed their military service as regular infantry, which meant they could be called up as reservists for use in front-line combat units.

On Saturday, hundreds of Hamas fighters broke through the high-tech fence Israel had erected around Gaza, a Palestinian territory of two million people and one of the most densely populated places in the world. The attackers rampaged through communities in southern Israel, killing at least 900 people. Israel responded with a heavy bombing raid on Gaza, killing at least 680 people.

But the war is just beginning. Given the likely grueling search of the Gaza Strip for about 100 Israeli hostages kidnapped by Hamas and the possibility of further attacks by Hezbollah in the north and other militant groups in the West Bank, it is unclear how long and how long the Israeli reservists will fight for their companies.

The impact on tech companies and the rest of the economy could be severe.

Workers drafted into reserve service still receive compensation from their employer for the time they spend in the army, said Ofir Angel, chairman of Auren Israel, the Tel Aviv office of an international consulting firm. Angel estimates that most companies in Israel recruit 10 to 25 percent of their staff.

Most workers called up for reserve duty are between 21 and 35 years old, according to Angel, which is also the prime age for tech workers in Israel. Angel predicts that Israel’s tech sector will have a higher percentage of labor shortages than other sectors such as agriculture.

Of his company’s 30 employees, five – mostly young men – were called up for reserve duty, a number that could rise if the war dragged on. Meanwhile, some of his remaining female workers are having to reduce their hours because they are now working more at home as their spouses are called up for reserve duty.

“The real challenge is that we typically like to make general calculations that each employee generates three times their salary for the company,” says Angel. If the employee is expected to serve, Angel adds, that means less productivity and activity for the company. He predicts the conflict will cause “significant” damage to Israel’s GDP.

Israeli companies are used to young workers leaving their jobs for reserve duty; Workers under 35 generally have one or two weeks of scheduled reserve duty per year, Angel says. However, these deployments are planned well in advance and companies have more time to adapt to changes in their workforce. Now Angel’s employees are being told to report to a base and leave within a few hours.

On Saturday morning, David, a venture capitalist who declined to reveal his full name because he is on active military duty, was busy preparing his children for the day when sirens blared, warning of an impending missile attack.

David, an Orthodox Jew, turned off his phone on the Sabbath. But when attacks continued, he knew something was deeply wrong. He turned on his phone, watched the news, and then called his reserve commander.

At 1 p.m., David was in uniform at a military base. The scale of the attack and mobilization was unlike anything he had ever seen, he said. Even an older friend who served in the 1973 Yom Kippur War, when Israel was also surprised by an invasion from Syria and Egypt, told David that this time things were different.

“Thousands and thousands of soldiers, all heading to the base,” David said. “A lot of anger, a lot of frustration, a lot of shock, a lot of people were completely caught off guard, including me.”

Tech founders, venture capitalists and engineers who were not drafted are donating money to equip reservists with better equipment and organizing support for people who lost family members in the attacks.

“My wife and I just moved out so we could donate our apartment to a bereaved family, a woman whose brother was killed,” said David Stark, general partner at Ground Up Ventures in Jerusalem. Major American venture capital firms such as Index Ventures and General Catalyst have also pledged to donate to humanitarian relief efforts in Israel, and mental health startups are offering free services to Israelis.

Many of the networks of tech workers banding together to provide support were formed last year when many tech founders and venture capitalists joined the political opposition to Prime Minister Benjamin Netanyahu’s attempts to weaken the power of the country’s judiciary, a move , which was observed by many Israelis as anti-democratic.

Months of political unrest have put Israel’s tech sector in an already difficult position, said Amir Mizroch, communications director at Israeli startup hub Start-Up Nation Central. Due to political uncertainty, large foreign investors withdrew their money from Israel.

“While startups and the tech economy in Europe and America may be getting back on their feet, this is not the case yet,” Mizroch said. But the war is pushing divisions among Israelis into the background, he said.

Bino, the venture capitalist, agreed.

“This is a very big moment in Israel’s history, and right now I think everyone’s mission is to come together to defeat Hamas,” he said. “We’ll worry about the rest later.”

Lisa Bonos and Caroline O’Donovan contributed to this report.