On the Record with Deddy Lavid, CoFounder & CEO of Cyvers
Hometown: I grew up in Beit Shean, where my father was actually the mayor.
Hobbies: traveling and spending quality time with my daughters
3 words to describe you: consistent, target oriented, and patient
Favorite food: pasta, pizza
It is an interesting time in Crypto, how does the FTX situation impact Cyvers?
In general it’s a bearish market, but even more so in the crypto space. But there are two sides to this coin. On one hand, it’s harder to close deals with crypto businesses right now because they are in survival mode. On the other hand, the post FTX fall creates a wave of more regulation and more security in order to stabilize the web3 market, and this creates a lot of opportunity for Cyvers. We’re seeing an interesting push and pull dynamic where in some ways it’s harder to fundraise or close deals, but at the same time, there’s more demand for advanced blockchain security solutions like ours.
Do you think anything could have been done differently?
The situation with FTX was not preventable due to lack of corporate governance. This comes down to activity that is registered or not registered in the blockchain. When we look at the blockchain infrastructure, we look at the transactions between entities and see the topologies and behaviors on the blockchain. At this point, if we see indicative signs of a potential attack (creating fake wallets, do they interact on their own or with mixers, etc…), we can move from the exploitation phase to the preparation phase. This is the sort of criminal activity that we can detect and prevent before it’s registered in the blockchain. Once it’s registered, it’s irreversible, and we cannot do anything.
Can you tell us a bit more about your background and how it led you to crypto and founding Cyvers?
I have a technical background in computer science and machine learning, with a focus in detection. In 2015 I was part of the team building the Iron Dome national defense system in Israel. The Iron Dome is a detection system which calculates the trajectory of an incoming rocket and sends out an intercepting missile. After that, I co-founded Presenso which focused on the detection of machine failures in order to decrease machine downtime and increase their yield. After Presenso was acquired, I co-founded several global development centers and led multiple projects related to industrial detection. So, in general, my background is varied across multiple detection sectors (industrial, defense, etc…), and I have expertise and patents in the field of critical events detection.
In 2021 I took some time to reflect on my next step. I had already managed teams with 300+ people; I had directed teams working on multiple products simultaneously with budgets of $60-70M a year. Despite that success, however, I didn’t feel like continuing on that career trajectory was for me. I actually took a week without my wife or daughter to go back to my parents’ house in Beit Shean to consider my next move. At that point, I had invested in crypto a bit, and I knew that a lot of people were not investing in crypto because of the instability. So I decided to apply my expertise in detection and prediction of malicious activity to the crypto world.
And after you figured out what your next step would be, how did your founding team come together?
I’ve known my cofounder, Meir, for fifteen years. He was actually a sergeant in my reserves unit and reported to me when I was an infantry company commander. But he also has a strong technology background, and he was working at SKF which acquired my startup, Presenso. He became the Operations Officer at my organization in SKF which specialized in industrial analytics. We worked very closely together there, and it was through that that we realized we could solve this new “problem” together. We were experienced in detecting critical events in the industrial world, and we knew we could create a similar solution for attack detection in the crypto world.
It’s really interesting that you two had such a long and productive working relationship from the army to the tech world! You’ve mentioned that the two of you knew you could solve the detection problem in crypto—what makes Cyvers a unique product from a technological perspective?
Since FTX, we’ve had lots of companies come to us inquiring about our solutions, and there’s really a clear differentiation between us and our competitors. In the crypto space there are 3 clusters of solutions:
Post attack: The first, and most established cluster, is what I call “regular tech or compliance”, and it pertains to solutions after a cyber attack. It pertains to anti-money laundering, terror financing, sanctions etc…, and there are already several solutions that can trace the funds after the attack.
Pre-deployment (protocol code): Before the attacks there is another cluster of companies that brings traditional security solutions to the crypto space. They do auditing, static code review, and analysis to find potential vulnerabilities in the smart contract code.
Post deployment/pre-attack: In the middle of this process, though, there’s no solution. This is our cluster, and I like to think we are the dominant and most advanced solution in this field. We monitor real time security incidents or attacks in crypto and web3 spaces.
What are the most interesting applications of blockchain and blockchain security beyond tokens and crypto?
I believe that the entities that are really on the brink of adopting blockchain are the big banks–Goldman Sachs, CitiBank, etc… We are working with EY and they are a bridge to traditional finance. These entities know how to establish regulation because they have a real responsibility to their customers. This would be great for Cyvers because we know how to defend defined protocols and decentralized finance solutions like community pools. We know how to assist custodians. And, obviously, we work with digital and crypto banks.
So keeping along with your market predictions, how do you think the next 5 years of blockchain and crypto will play out and where does Cyvers fit into that picture?
As I mentioned, I believe that innovation in the market will move towards traditional finance. We are already in discussions with several banks of Israel, including CBDC (Central Bank Digital Coin). Recently we’ve had a very speculative market, but people are looking for stability, and we are part of the wave of security solutions that can bring stability to the market.
As you talk about blockchain moving into traditional finance, what sort of security is needed for private vs public blockchains?
Private blockchain is much easier to secure because there is more control; you don’t have interactions with other blockchains. At the same time, while private blockchains may be more secure, they have limited abilities because they only interact internally.
Public blockchain interactions are much more complex; the attackers have more surfaces. The defense is much richer—you have to create more advanced solutions.
Given all of your experience and success, what has been your biggest or most unexpected challenge?
People think that because Presenso was acquired, that it was all smooth sailing, but there were a lot of challenges along the way. It was a very hard and conservative market at the time, and it took us almost 3 years to get to the first million. This created a lot of difficulties with fundraising—it took us 4 years to raise $3.5 million compared to Cyvers closing an $8 million round in less than 8 months! It was an anxiety producing situation because I was only 30 years old, and I was managing people who were older than me, with families and outside responsibilities. Every few months we would collect another SAFE and raise a few hundred thousand dollars. At the same time, the experience also taught me that you need to have patience and resourcefulness.You can’t be an entrepreneur if you’re going to panic at every possible downfall. Finally, in 2018, there was a boom, and we were able to close several contracts, including a $10 million contract with Siemens. After that we had both investors and potential acquirers approaching us, and we ultimately decided to go with the acquisition.
Lastly, as a multi-time founder, what advice do you have for aspiring entrepreneurs?
To start, founders have to find the right market. There are multiple factors to consider: are you in a market that’s big enough or a smaller market where you can make the space? How is the market going to evolve? It’s not easy to find or predict.
Lastly, I believe in hard work. There’s no magic in entrepreneurship. You don’t convince investors or acquirers just because you’re more talented than others. A winning startup runs faster than its competitors with high capital efficiency. You have to have a better business, better technology, better solutions, and then you become attractive for acquisition. But that means that you have to work very efficiently and stay extremely focused. That’s basically my formula for success: work efficiently and solve problems faster. There is always going to be competition, but a potential acquirer needs to believe that your technology can boost their business. Successful founders need to work harder, more efficiently, and be extremely focused in order to bring innovation faster than everyone else.
Deddy Lavid is a serial ML-entrepreneur. He is skilled in giving life to abstract, cutting-edge ideas and turning them into powerhouses. He has founded 3 startups from the ground up (a 0 to 1 kind of person), including one which was acquired, and one that is currently growing fast. Deddy loves envisioning the future and builds amazing teams that focus on making these visions a reality.
He created an SW startup for predictive maintenance using ML which became the worldwide AI center of excellence in SKF corporation and quickly set a high standard for Data Science technologies and initiatives within the corporation. Deddy has managed 5 global development centers from around the world (managing close to 300 people, and he holds 11 patents in automated anomaly detection.
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