(Real) Jewish Space Lasers - with Oded Ben-David

Summary

Podcast Summary: (Real) Jewish Space Lasers - with Oded Ben-David

Episode Title: (Real) Jewish Space Lasers
Host/Author: Ark Media
Hosts: Yonatan Adiri and Michal Lev-Ram
Release Date: June 11, 2025

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Introduction and Numbers of the Week ([00:00] - [02:05])

The episode kicks off with Yonatan Adiri and Michal Lev-Ram introducing the concept of "What's Your Number?" where they each present a significant figure relevant to Israel's economy and security.

• Yonatan Adiri mentions his number as $5 per interception, highlighting the cost-efficiency of Israel's laser-based Iron Beam interception system. He contrasts this with the $50,000 cost per interception for traditional Iron Dome systems, emphasizing the four-order-of-magnitude cost reduction.

  "Last week the country declassified the system's first generation which was successfully deployed operationally. Big news, $5 interceptions compared to $50,000 interceptions for IR. That's four orders of magnitude cheaper." ([00:11])

• Michal Ivram presents her number as 117 drones, referring to Ukraine's recent Operation Spider's Web attack on Russia, which reportedly destroyed 40 Russian warplanes and caused $7 billion in damages.

  "This reportedly destroyed 40 Russian warplanes and caused $7 billion in damages. That's what's estimated." ([00:41])

The hosts engage in a light-hearted debate over whose number holds more significance, ultimately conceding that Yonatan's number has greater implications for Israel's economy and security.

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Windex Update ([02:05] - [07:36])

The discussion shifts to the Windex, Ark Media's index of Israeli-based and Israeli-founded companies. The Windex saw significant activity during the week of June 2nd to 7th.

• Yonatan Adiri announces that eToro has joined the Windex, bringing the total to 51 companies.

  "This week was really incredible. The week of June 2nd to 7th for the Windex, it's on fire." ([04:05])

• The Windex outperformed major indices, rising 3.8%, surpassing both the S&P 500 (2.04%) and Nasdaq (1.35%).

• Lemonade.com, an AI-driven Insurtech pioneer, led the gains with a 19% increase in one week and a 152% rise over the trailing 12 months. Yonatan highlights the company's resilience amid market speculation about the impact of generative AI on Insurtech firms.

  "Well at least according to this week. And the strong data coming from Lemonade, that's not the case." ([05:17])

• Novocure, a 25-year-old medical device innovator specializing in treating glioblastoma, experienced an 11% drop in market cap but remains a cornerstone of Israel's medical technology sector.

  "Novocure is a 25 year old company, remarkable medical device company that really changed the pathway of treating glioblastoma..." ([06:53])

Yonatan and Michal express optimism about the overall performance of the Windex, despite some individual setbacks.

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Economic Projections and Gaza Humanitarian Fund (GHF) ([07:36] - [10:35])

Michal introduces a less positive economic update, noting that Israel's Ministry of Finance has downgraded growth projections for 2025 from 4.3% to 3.6% and for 2026 by an additional 1%.

• Yonatan Adiri emphasizes the significant economic impact of these cuts, equating 1.7% of Israel's GDP to nearly $10 billion. He criticizes the Ministry of Finance for releasing this information dishonestly during a sensitive period, eroding public trust.

  "The dishonesty of the Ministry of Finance. That's not the way you build trust..." ([10:27])

• The Gaza Humanitarian Fund (GHF) has come under scrutiny as media reports revealed that 700 million shekels intended for humanitarian aid were diverted from the Ministry of Finance. Yonatan suggests that while this strategy may be costly, it could enhance the prospects for peace in the region.

  "This may end up being a bit expensive and may have actually burdened the economy a bit. But overall if it works and it works well, this would actually mean that the odds of peace... are coming closer." ([09:35])

The hosts acknowledge the complexities and potential long-term implications of these economic adjustments.

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Layoffs and Economic Signals ([10:35] - [16:16])

Michal discusses recent layoffs at eBay and General Motors (GM), affecting over 200 workers in Israel and globally. These layoffs are linked to challenges in the tech and autonomous vehicle sectors.

• Yonatan Adiri views these layoffs as mixed signals amidst other positive economic indicators. He highlights ongoing growth in Israeli tech companies like Nvidia and Novocure, suggesting that the layoffs may be more about corporate restructuring than a broader economic downturn.

  "It's a bit more noise and signal right now, but we're going to keep an eye on that." ([13:06])

• The discussion extends to aviation disruptions caused by the war, with Lufthansa Russia resuming flights to Tel Aviv but facing operational challenges due to missile strikes. Yonatan shares personal anecdotes about flight cancellations, underscoring the broader economic and social impact.

  "I had to come back from New York. My flight got canceled... So from a personal side, and also for many Israelis, summer vacations have been canceled." ([13:48])

• Michal expresses concern that aviation uncertainties could deter venture capitalists and business travelers, further impacting Israel's economy. Yonatan remains cautiously optimistic, attributing ongoing issues to short-term geopolitical negotiations.

  "It's a bit more noise and signal right now... but let's see where it ends." ([16:16])

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Interview with Oded Ben-David on Iron Beam ([16:16] - [33:46])

The core of the episode is an in-depth interview with Oded Ben-David, Chief Technology Officer at ELOP, the Electro Optical division of Elbit Systems, focusing on Israel's Iron Beam laser interception system.

Introduction to Iron Beam

• Oded Ben-David starts with his unique number: 0.000002, representing the absorption rate of anti-reflective coatings on the optics used in high-power lasers.

  "Every piece of optics in the world has an anti reflective coating on it... these coatings absorb something like 0.1% of the energy... special anti reflective coating that has absorption of only 0.000002..." ([17:00])

• He provides his background as a Talpiot graduate, a physicist with over 30 years of experience in laser technology, underscoring his expertise in the field.

  "I'm a Talpiot graduate in Israel... I love lasers and I deal with lasers for more than 30 years." ([18:19])

How Iron Beam Works

• Oded explains the fundamental principle of the Iron Beam system, likening it to using a magnifying glass to focus sunlight to burn wood. The system uses high-power lasers to precisely target and disable incoming threats like rockets and drones instantaneously.

  "We are bringing energy in form of light... create the damage and burn it." ([19:15])

• He discusses the challenges of atmospheric interference, such as turbulence, and the technological solutions employed to mitigate these effects, drawing parallels with astronomical telescopes.

  "They do the same thing in astronomical big telescopes. They do the correction of the atmosphere..." ([20:56])

Operational Scenarios

• Oded describes a typical interception scenario: detecting an aerial threat, tracking it accurately, and deploying the laser to neutralize the threat before it becomes a danger.

  "So we need to track this target very accurately and then fire our laser at this target and cause the damage..." ([21:05])

Evolution of Laser Technology

• Yonatan reflects on the historical development of laser systems, referencing the 2008 debate between Iron Dome and the then-called Nautilus laser system. Oded explains that advancements in optical fiber laser technology over the past two decades have made high-power lasers more feasible, reliable, and scalable for military applications.

  "This is the technology related to optical fiber lasers... built like a Lego... stack them together... get the wattage that we need." ([22:28])

Limitations and Future Enhancements

• Oded acknowledges current limitations of the Iron Beam system, including atmospheric conditions and the necessity for precise tracking. He suggests that deploying such systems airborne could overcome some of these challenges by operating above atmospheric disturbances.

  "From the air, above the skies, you enjoy a much preferable atmosphere, much less interference." ([25:17])

• He highlights past and ongoing efforts to enhance the system's capabilities, including airborne prototypes that demonstrate air-to-air interception of UAVs.

  "We showed that we could shoot down UAVs from the air and enjoy the benefits of going to the air." ([25:35])

Economic Impact and Motivation

• Oded emphasizes the economic benefits of Iron Beam, noting that while the development and procurement are costly, the cost per interception drops to a few dollars, providing a sustainable defense mechanism against high-volume threats.

  "From the economical point of view, the kinetic interceptors are doing an amazing job... but you must go to something which is based on energy because then the cost of interception is, is a few dollars." ([27:17])

• He attributes the success of Iron Beam to the combined motivation driven by necessity and robust support from the Ministry of Defense, fostering an environment akin to a startup within a large, resource-rich organization.

  "We are 100 startups together because we are a big company... an amazing environment to do that." ([31:17])

Role in Modern Warfare

• Oded discusses the relevance of laser systems like Iron Beam in the evolving landscape of modern warfare, where low-cost, high-volume threats such as drones require equally cost-effective defense solutions.

  "We need something that can deal with those volumes and deal with those threats in a reasonable, economical way." ([31:34])

• He cites the increasing affordability and accessibility of drone technology, making energy-based interception systems essential for maintaining security.

  "To build all those threats is very, very easy and cheap... we need something that gives you a very low cost of interception." ([31:34])

Operational Milestones

• Oded recalls a pivotal moment in 2021 when Iron Beam successfully intercepting a UAV from the air validated the system's operational viability and technological prowess.

  "the test we did in 2021 when we shot the first, first UAV from the air, was really a touching moment." ([33:11])

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Conclusion and Final Thoughts ([33:46] - [37:20])

The hosts wrap up the episode by reflecting on the significance of Iron Beam's advancements and their broader implications for Israel's defense and economy.

• Yonatan Adiri marvels at the dramatic reduction in interception costs from $100,000 to $5, likening it to reducing the price of a car from a Mercedes to a Nespresso machine, underscoring the transformative impact of this technology.

  "From the $100,000 interception to a $5 interception... it's absolutely incredible." ([29:19])

• Michal Ivram highlights the economic success of Elbit Systems, whose stock has surged over 60% since the beginning of the year, attributing this growth to the company's innovation and critical role in national security.

  "It's not that common for a company that's been around as long as Elbit... to see the kind of stock performance that we're seeing from them." ([34:53])

• The conversation briefly touches on the interplay between major defense contractors like Elbit and Rafael, suggesting that their collaboration fosters a robust environment for technological breakthroughs.

  "You can teach an old dog new tricks." ([34:19])

• The episode concludes with a mention of President Donald Trump's social media post criticizing the continuation of Elon Musk's government contracts, linking it to the competitive landscape of defense systems like Iron Beam and Golden Dome. Yonatan speculates on future competitive dynamics in the global interception system market.

  "If you have Iron Dome, then better would be Golden Dome... how do you beat that?" ([36:10])

The hosts encourage listeners to subscribe, rate, and review the podcast, and hint at future episodes that will delve deeper into Israel's innovative startup ecosystem.

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Notable Quotes:

1. Yonatan Adiri ([00:11]): "Last week the country declassified the system's first generation which was successfully deployed operationally. Big news, $5 interceptions compared to $50,000 interceptions for IR. That's four orders of magnitude cheaper."

2. Oded Ben-David ([27:17]): "From the economical point of view, the kinetic interceptors are doing an amazing job... but you must go to something which is based on energy because then the cost of interception is, is a few dollars."

3. Michal Ivram ([34:53]): "It's not that common for a company that's been around as long as Elbit... to see the kind of stock performance that we're seeing from them."

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Conclusion:

This episode of "What's Your Number?" offers a comprehensive exploration of Israel's cutting-edge Iron Beam system, detailing its technological advancements, economic implications, and strategic importance in modern warfare. Through insightful discussion and expert testimony from Oded Ben-David, listeners gain a nuanced understanding of how innovative defense technologies are reshaping Israel's security landscape and economic future.

Transcript

[Yonatan Adiri]

Foreign.

[Michal Ivram]

You are listening to an art media podcast. So Yonatan, what's your number this week?

[Yonatan Adiri]

My number is five, as in $5 per interception. This is the cost of Israel's laser based iron beam interception. Last week the country declassified the system's first generation which was successfully deployed operationally. Big news, $5 interceptions compared to $50,000 interceptions for IR. That's four orders of magnitude cheaper. And that introduces an entirely new interception economics. We're going to talk about all that later in the episode.

[Michal Ivram]

Okay, My number is 117. This is the number of drones that were reportedly used in Ukraine's recent Operation Spider's Web attack on Russia, which everybody is still talking about. This reportedly destroyed 40 Russian warplanes and caused $7 billion in damages. That's what's estimated. Not clear the extent of it quite, but this is really like a modern day Trojan horse story here and I think really indicative of the changing nature of warfare. So whose number wins?

[Yonatan Adiri]

Somebody just wrote on Twitter that this is now the game of drones. What's going on between Ukraine and Russia? Also the retaliation was heavy from Russia. It is a big number, but I would say my number wins. It's very consequential for Israel. It's very consequential for its economy and very consequential for our safety here. It is, as we'll hear later today, groundbreaking innovation. And although it's a small number, it is a very strong number.

[Michal Ivram]

I would have to agree. And I feel like you've been winning a lot lately, so don't let it go to your head. But you win. You got it. All right. Welcome to what's yous Number From Ark Media where we focus on Israel's economy through a global lens. I'm Michal Ivram.

[Yonatan Adiri]

And I'm Yonatan Adiri.

[Michal Ivram]

Yonatan, it is around 10:30am here in Palo Alto.

[Yonatan Adiri]

9:30Pm here in Tel Aviv.

[Michal Ivram]

Did you have a good shavuot by the way? I haven't seen you for a while.

[Yonatan Adiri]

I had a great shavuot yesterday night. Saw with my son five and a half hours of Roland Garros finals. Sinner versus Alcaraz. I have to say I was a pro sinner guy ended up losing after having three match points and losing them. So a lot of screams around the Adiri household here in Tel Aviv, but it is what it is.

[Michal Ivram]

Okay. And hopefully some cheesecake latter last week as well.

[Yonatan Adiri]

Yeah, the full experience.

[Michal Ivram]

Good, good. Okay. Well we've got a lot in store for today's episode There has been no shortage of news in both of our locations. I would say tons going on on today's episode. We are calling it Jewish Space Lasers. Hopefully everybody gets the reference there. Thank you Marjorie Taylor Greene for giving us the inspiration. We're going to do today's long play which is our deep dive into one critical issue that's impacting the Israeli economy with oded Ben David who chief Technology Officer at Elop or Elop, the electro optical division of Elbit Systems. This is our first guest on what's yous Number? We are super excited because Odette is going to be able to tell us all about Iron Beam which Yonatan just mentioned. It's been described as a system that can cook rockets and drones at a low cost. I don't think that's the technical term, but we will find out more from ODED shortly. First, as usual, we'll take a look at some of this week's other pressing news, AKA our big shorts which include some key numbers that should be on your radar, like the Windex. Stay with us onto our big shorts. Let's kick things off with this week's what's your number index or Windex. This is our very own index of Israeli based and or Israeli founded companies and we now have 51 companies on the Windex since Etoro joined just a few weeks ago. So Yonatan, how is the Windex looking this week? Week?

[Yonatan Adiri]

Etoro joined on its BRIS on its eighth day of trade and joined our Windex and so welcome Etoro.

[Michal Ivram]

It's better than a pacifier dipped in wine, right?

[Yonatan Adiri]

Exactly.

[Michal Ivram]

You get to be on the Windex.

[Yonatan Adiri]

This week was really incredible. The week of June 2nd to 7th for the Windex, it's on fire. Our very own index rose 3.8% outperforming both the S and P and Nasdaq. S and P by 2.04% and NASDAQ by 1.35. Lots of Israeli companies in the green this week. The Leading one is AI driven Insuratech Pioneer Lemonade.com with a 19% increase in one week, completing 152% rise in the 12 trailing months. This is mainly due to continued performance of AI driven clearing of issued claims and this is a very strong capacity from the company. There was speculation in Wall Street. We spoke about that a couple episodes ago with regards to fiverr.com and Wix. Whether or not generative AI or the path towards generative AI is going to render some of these companies a bit less attractive to investors. Well at least according to this week. And the strong data coming from Lemonade, that's not the case.

[Michal Ivram]

Yeah, this is a really interesting company. Daniel Schreiber, one of the co founders, has been around for a while, actually used to live here in Palo Alto with his family. But the sector is interesting. We've seen a lot of volatility in insurance. And by the way, speaking of volatility, Lemonade also sells to the California homeowners market, which has been really, really hit hard by the fires recently. A lot of the more traditional insurance companies have been pulling out of the state.

[Yonatan Adiri]

True. And Lemonade has fought some serious headwinds. You know, its top price was about four times what it is right now in market cap and share price. So still a long way to go, but it's quite a remarkable path. Over the last, I would say 10 to 12 trailing months, we see it steadily going up and reclaiming its position. I would say in the red. Very few Israel companies in the red in New York this past week. But one of my favorite Israeli founded companies, medical device innovator, Novocure, I come from the medical AI innovation space. So these are some of the role models for the Israeli ecosystem. Novocure is a 25 year old company, remarkable medical device company that really changed the pathway of treating glioblastoma, that is brain cancer. Their device Optune has been around, a very innovative device, impacted the lives of many thousands and tens of thousands of patients suffering from this horrible disease. So last week was not a good week. The company lost 11% back to its 2 billion-ish market cap. But still a company to look for very strong technology. And really one of those cases make you proud of the choices Israeli entrepreneurs make in terms of the change they want to see in the world.

[Michal Ivram]

Do we have a sense of why they're down?

[Yonatan Adiri]

So I think overall the stock has been performing a bit in a volatile way recently because it is expanding its success in glioblastoma to other diseases, ailments and other types of tumors. And so the market is trying to figure out the multiple. Right. Is this a glioblastoma specifically company or can this set of IP scale broadly in oncology? I think that's why we're seeing the volatility. But I would say again for me, as with Lemonade, which was a pioneer in its own field with AI driven Insuratech, this is another pioneer hallmark of the Israeli medical device and healthcare ecosystem. It's a company to watch. The better the share does, the better the impact they do in the World.

[Michal Ivram]

Okay, well it sounds like the, the Windex has had a good week overall though. So that's a positive note there. Moving along on a less positive note here, Israel's Ministry of Finance recently cut growth projections from 4.3% to 3.6%. And this represents a.07% cut in projected economic growth for Israel in 2025. The explanation was, or at least part of the explanation was the extended war and also US tariffs. Both of these are realities that, you know, we don't know where they end and when they end. So a lot of uncertainties. And in light of that, I guess how certain is this number? I mean it could be better, it could also be worse, right?

[Yonatan Adiri]

Yeah, yeah. So look, another 1% was shaved off the projection for 2026 growth. So when you kind of add those numbers together, these are meaningful numbers. Remember, 1% of the Israeli GDP is order of magnitude $5.5 billion. So 1.7% gets you close to 10 billion. Call it 9. This is a significant number. Just to give you a sense, it's the entirety of the Israeli transportation budget. So this is a big number. I think two things to remember here that affected us this week. One is a very important piece of the fog of war is what's called the ghf. The Gaza Humanitarian Fund has been exposed that actually some of the funding going into the operation of the fund went from the Israeli Ministry of Finance to the of 700 million shekels. That's no small number which has been exposed by the media last week. This is a very important leverage in the war, showing to the world that a US driven in partnership with Israel, non UN system can deliver aid in Gaza. This may end up being a bit expensive and may have actually burdened the economy a bit. But overall if it works and it works well, this would actually mean that the odds of peace and then the sort of next day in Gaza are coming closer. I think the last point to make here, which got me really pissed off is the dishonesty of the Ministry of Finance. That's not the way you build trust, not with the Israeli public and neither with the ranking agencies. The figure that came out on Thursday night. So remember, Israel doesn't work on Friday, Thursday night, Shavuot evening, over a long weekend. That's how you bury bad News came in 1am between Thursday and Friday and it came at the foothills of Minister Smotrich saying the day before we're going to release very good macro data. Right. So 48 hours before he knew what the data is it's okay. We're fighting a war. We're making efforts to change the humanitarian system and methodology of delivery. These are important pieces. The Israeli public can sustain that. The growth figures can sustain that. But at least let's be honest about that.

[Michal Ivram]

Yeah, this is a kind of a double blow in that sense to people and companies. Trust is. It's a huge issue.

[Yonatan Adiri]

A rare commodity.

[Michal Ivram]

A rare commodity these days, for sure. Okay, well, you know, on the GHF side, I think there's a lot more for us to dive into because it is an economic issue, especially in light of some of these newer revelations, I guess. So more to be said there on a future episode, but let's move along. There's so much to get to. Just real quick. We recently found out that ebay is shutting down its R and D center in Netanya, and this is going to affect more than 200 workers in the country. This follows just last month, in early May, General Motors decision to lay off hundreds of workers, workers. And this was linked to the closure of Cruise, the automaker's autonomous vehicle subsidiary. So Both eBay and GM are facing some really key, unique challenges in both of their industries. And the Cruise shutdown, by the way, impacted workers outside of Israel as well. EBay's been challenged. Its growth has really stalled over the last few years. So I think the question here is obviously not good economic news when you've got layoffs, especially in the innovation and tech sector, which is so hugely important to the Israeli economy. On the other hand, is this a pattern? Is this a trend? If these are two companies, major companies, albeit, but two companies that are challenged. What do you think, Yonatan?

[Yonatan Adiri]

So I think mixed signals. I would say a bit more of noise than signal here because, you know, I'll just give you a couple more signals that came in on the other end, which are, I think, more prominent and more significant. Nvidia just decided to double its real estate in Israel, anticipating expanding growth on the site. Nova measurements, which performed really well over the last few weeks in trading in New York, is also enjoying its unique position in the silicon space and growing. We have seen an order magnitude $200 million raised over 10 days with the big series C by Israeli company Empathy. So funding continues to flow, the big giants continue to expand. And I think you're right. I think, you know, Both eBay and GM have their own specific kind of restructuring and challenges. We gotta keep an eye on that because clearly, at the end of the day, the 400,000 kind of 10% of the workforce of the Israelis that operate and work in and around the innovation economy are indeed the major barometer to sort of where the next three to five years are going to be and how the economy recovers from the war. So I think you're right to kind of point out to those. To me, it's a bit more noise and signal right now, but we're going to keep an eye on that.

[Michal Ivram]

Okay. Speaking of some of the mixed signals that we're seeing during the war, Lufthansa Russia has said that they will gradually restart flights in and out of tel Aviv. On June 23, they paused flights again after the strike near Ben Gurion Airport by a Houthi missile. This is still a huge issue. I know we've kind of celebrated the return of Ryanair, which, by the way, has been delayed again. There have been so many issues here, so many kind of false starts. This has huge impact. It's tourism, it's business travel, it's. You name it. And speaking of trust, this doesn't bode well for that. Right. And we need it. So what are you reading into this?

[Yonatan Adiri]

I think I'll give you a bifocal view. Right. So on one end, on a personal side, a couple of weeks ago, I had to come back from New York. My flight got canceled. I had to fly through Abu Dhabi to go back to Israel. A lot of discomfort. This week I'm flying.

[Michal Ivram]

This is inefficient.

[Yonatan Adiri]

Yeah. Next week, I'm flying again to Washington and New York again through kind of spiraling in and out. So on the personal side, and also for many Israelis, summer vacations have been canceled, EasyJet, postpone and so on and so forth. But from a macro perspective, today, as we speak, in the next few hours, President Trump and Prime Minister Netanyahu are going to have a conversation after the Iranian response to the American proposal for the negotiations. This is still weighing heavily on the dynamic that and the Houthis. And so, historically speaking, from a kind of broader perspective, the fact that the market is growing this year by 3.4% as we still pursue war, that's been going on for almost 20 months right now, with Hezbollah practically gone. Lebanon rebuilding in ways that nobody could have imagined in the last 30 years with a bright, positive future. Syria starting to get its act together. We saw Trump in the Middle East. I think these dynamics, overall, the fact that we can't fly whenever we want and in a cheap way kind of just makes me feel a bit bad in the sense that I think of my father fighting six Day war in Yom Kippur and like complete shutdown, the market didn't operate. So to me, like on a personal note, of course this is meaningful and it is debilitating for the economy. But on the other hand, kind of when you take the bird's eye view, the next six to eight weeks, depending on where Iran US negotiations land and so on, may flights be the problem we deal with over the next six to eight weeks and let's see where it ends.

[Michal Ivram]

Yeah, I would say I'm probably a bit more worried about this than you are, Yonatan. I just think from an American perspective here, you look at flights and it's one thing if you have family in Israel, if you're visiting for personal reasons, but if you're a venture capitalist who's thinking about going, you're not gonna go. You don't wanna risk getting stuck. Flight cancellations, all this mess. And I think the uncertainty, just like we're seeing in other aspects of the economy, it's debilitating. So hopefully things get better, not worse.

[Yonatan Adiri]

Yeah, no, I agree, I don't belittle it. I think it's a big deal. But kind of in a greater scheme of things, I think that's sort of like a contained issue in the next six to eight weeks vis a vis the Iran negotiations are going to determine where this goes.

[Michal Ivram]

All right, let's get to our long play. This is our deep dive into one significant issue that's impacting the Israeli economy. And today's long play is on Israel's Iron Beam system. We get to hear from Mr. Laser Beam himself. Can I call him that? Oded Ben David. He is the Chief Technology Officer at ELOP, the Electro Optical division of Elbit Systems. And ODED is our first guest on what's yous Number. Oded, welcome to what's yous Number. Thank you for being here. First question for you is just what's your number? Did you bring a number to share?

[Oded Ben David]

Yes. So my number is very small number. It's 0.000002.

[Michal Ivram]

Okay, yeah.

[Yonatan Adiri]

Representing what?

[Oded Ben David]

Now there's a story behind this number. It's a very important number. Basically you know that every piece of optics in the world has an anti reflective coating on it. Like if you have glasses, you have anti reflective coating on it. And you know that these coatings absorb something like 0.1% of the energy penetrating them. Now think about the laser, high power laser, a big 100 kilowatt laser, going through this optics, you know what will happen? It will Explode very, very, very quickly. So when you're in the world of high power lasers, you need optics with very, very special anti reflective coating that has absorption of only 0.000002 or 1, like 2 parts per million. So your optics does not explode and can work with those huge lasers. So that's the number.

[Michal Ivram]

Okay, well, I already learned something new. I did not know that, and I'm looking forward to learning a lot more from you. But I think, first thing, just to kind of give listeners a bit of context, can you share some of the highlights of your background and your current role? What do we need to know? How'd you get into lasers?

[Oded Ben David]

I'm a Talpiot graduate in Israel, so obviously I served in the army doing some R D and I was doing work on lasers for many, many years. I'm a physicist, so I learned physics in the Hebrew University and in Weizmann Institute of Science. And I love lasers and I deal with lasers for more than 30 years.

[Yonatan Adiri]

Oh, that. By the way, just to give you a sense, Telpiot is probably 0.0001% of the Israelis. That's what Telpiot means, I think 20 out of every 200,000 every year, right? Something like that. So there's a 0.00 something behind Odette as well.

[Michal Ivram]

Well, and just real quick, before we dive into iron beam, can you walk us through, you know, for people who are more familiar with the use of lasers to point at things, or maybe for LASIK surgery, but not really beyond that, how does this system actually work?

[Oded Ben David]

So when I was a kid, I used to take a magnifying glass, take the sun and concentrate it on a piece of wood and burn this piece of wood and, and really burn it, because I could concentrate the sun to a very, very little spot. So this is basically what we're doing. We are bringing energy in form of light. These are photons of light. The trick is how to bring them to a very, very small spot on the target and just create the damage and burn it. Now, it's not so easy. You need to build a laser with many, many wattages. And when you build the systems like that, you need to pinpoint your laser very accurately at the target in a very precise way. Now, this works very quickly because it's light. The light moves iracuously at a speed of light, 300,000 kilometers per hour. There's no ballistics here. You don't wait for a missile to go. It's light, so it reaches the target instantly. Another thing that we have to overcome is our main nemesis, the atmosphere. When you look with your eyes in a very hot day on a road, you will see the air is kind of blurry, it's not focused. So same thing happens to laser, it's called turbulence. This is affecting also the laser. So one of the things those systems are doing is also correcting the atmosphere, sensing the atmosphere and correcting for it. By the way. Same thing is done in astronomy. When you look at big telescopes into the star, you see that the stars are glittering. Same reason, turbulence. They do the same thing in astronomical big telescopes. They do the correction of the atmosphere to let the light move more smoothly in.

[Michal Ivram]

Can you talk us through an actual scenario here? Let's say there's an aerial threat that's detected. What happens next?

[Oded Ben David]

So those systems usually have very strong observation channels of different kinds. So they look at the target, somebody is telling them a target is here, they look at this target in a very, very good piece of optics, and then they track it because the target is moving. It's a missile, it's a uav, it's whatever it's moving. So we need to track this target very accurately and then fire our laser at this target and cause the damage and cause the target to fall and to go away.

[Yonatan Adiri]

A couple of weeks ago, in our last episode before the declassification of the operational piece of the Israeli laser, we highlighted Elbit's capital raise in New York. Kind of gave a broad overview of the Israeli defense tech space and why that part of the industry is poised for growth. Take us back to 2008. I was then CTO to the President. There was quite a battle between Iron Dome and the laser of 2008. There was a lot of pressure. The system was called Nautilus at the time. And there was quite a battle of titans where Daniel Gold, who ended up developing Iron Dome, advocated for this system. Take us back to sort of why back then, laser was inferior. The choice was the right choice back then. I think kind of in hindsight it was. And when does this shift happen? Throughout the 20 year, more or less track that gets us to where we are today.

[Oded Ben David]

So it's a very good question. Why does it happen now? And why didn't it happen, you know, 20 years ago? There is a reason for that. Nautilus was based on a chemical laser. This is quite a difficult laser, chemical laser, quite dangerous, quite difficult to scale it up. The fact that we are discussing high power lasers today and that high power lasers are now getting operational very soon, is the technology related to optical fiber lasers. Now, everybody are familiar with optical fibers. You know, they bring the Internet into our home. These are very thin communication fibers we are looking at, get thicker fibers that have the lasing material inside them. And they allow us to build lasers which are built like a Lego. They're built from basic building blocks. Each one of them, we call them amplifiers in the professional language, is outputting like more than 1 kilowatt, more than 1,000 watts. And then you can stack them together, add 10, 20, 30, 100, and combine all this power together to get the wattage that we need in order to intercept all those UAVs and cruise missiles, et cetera, that are coming to attack us. So this is the technological thing that caused this to happen. Now it is. These laser are easier to build, they are more reliable, they can withstand what we call mil spec, the environmental conditions. You know, we're not in the factory. The laser is not sitting in a factory with an air condition without any vibr, without any shocks. Because, you know, there's so many lasers in factories. When you build a car today, you cut the metal with a laser. But conditions there are fixed. In our case, you need this to survive the environmental conditions of a military device. And today we can do it. And this is one of the special things that we know how to do very well in Elbit systems is how to build lasers like that so they will be robust and will survive the mil spec environment and will do the job.

[Yonatan Adiri]

So, oded, I think many people try to understand where is this going. There's a big fake thinking that now it's all done, Israel's safe, it has lasers everywhere, and, you know, we shouldn't worry. Whereas in effect, the system has its limitation. What's the limitation that you see for the system?

[Oded Ben David]

Well, first of all, the limitations come from the performance of the system itself. How much power you have, how accurate you track the target, how well you deal with the atmosphere and the objective conditions. If there are many clouds, if there's a lot of dust, if the atmospheric conditions are very bad. This is a limitation, by the way. This is one of the reasons why we in elbit believe that the best solution would be to do the same thing from the air. Airborne?

[Yonatan Adiri]

Yep. Above the skies, above the clouds, basically.

[Oded Ben David]

Above the clouds, above the skies, then you enjoy a much preferable atmosphere, much less interference.

[Michal Ivram]

That's not an entirely new concept. Right. Weren't there attempts to do this, to have this kind of system on aircraft in the past?

[Oded Ben David]

Past there was a program of the air Force research labs, like 20 years ago, a big one on a 747, a huge system that they built. And we also demonstrated, like four years ago, air to air interception with a prototype that we built in Elbit. And we showed that we could shoot down UAVs from the air and enjoy the benefits of going to the air. Now, obviously, when you're on an aircraft, you're much more flexible from the operational point of view, because, you know, in our case, the threat might come from the east, from Iran, it will go to Israel. So you can go and shoot them before they get above our heads. Shoot them far away. From here, you're much more flexible. You can get with your airplane or aircraft to the scene and intercept them before they reach you. So these are some of the big benefits of the airborne configuration.

[Yonatan Adiri]

So why Israel, oded? Why not Russia? Why not China? As far as we know, maybe it is a breakthrough in China and they're not sharing, but sort of just your perspective on that. And again, I think the dynamics here at what's your number? Are also related to economics. We're going from $50,000 to $100,000 Tamir interceptors into what, five, seven dollars per interception, depending on cost of energy and deployment. Right.

[Oded Ben David]

There are a few issues here. First, it's the necessity. Everybody and all the people in our teams that went to the safe room dozens of times in the last year and a half with their kids. Okay. I was giving a bath to my granddaughter a week ago, and in the middle, I had to take her with a towel and go to the safe room. So you don't need to explain motivation on this to.

[Michal Ivram]

You're in your safe room right now. Sorry to interrupt you, but just to point out. And there was a siren just a few minutes before you hopped on with us, right? Right.

[Oded Ben David]

Luckily, this ballistic missile fell on the way, so we didn't have the siren here. But I'm in the safe room now. So you really don't need to explain the motivation to our very professional teams. They are very highly motivated. They feel it on a daily basis. When you hear there are sirens and you understand that we need this, and we need this as soon as possible. It's one word, focus. We are very focused on it because we understand the necessity. You know, that on April 14, you can read about it, the state of Israel spent like, more than a billion dollars on intercepting the Iranian attack on Israel. So from the economical point of view, you can see that the kinetic interceptors are doing an amazing job, really they defend us and we thank them every day. But from the economical point of view, you must go to something which is based on energy because then the cost of interception is, is a few dollars. True, it's not easy and not cheap. It's quite expensive to develop the systems and to procure those systems. But once you have them, the cost of interception is negligible. And this is a huge, huge benefit. And the necessity plus the economical effect, this is what makes us so highly motivated to progress as much as we can. And we get a lot of push from our ministry, from our customers, the Ministry of Defense, who are helping us and pull pushing us and want us to go as fast as possible and to succeed as fast as possible. And they are very good partners, helping us quite significantly.

[Yonatan Adiri]

I remember back in the day, in 08, when Iron Dome was even more expensive, somebody made a comment, imagine a day where interceptions would go for the Mercedes price tag to an espresso price tag. And this is really what happened. I mean, it's incredible to see in 15 years we went from Mercedes cost per interception and we've had thousands of those to a double espresso cost of an interception. And those are unique interception economics. And really, I think, you know, also to kind of say thanks to you, to Elof, to the team, I mean, this is when I was in this field like was science fiction and now it is more science than it is fiction. It is a remarkable scientific achievement. Going airborne would be an incredible feat of the next generation. But going from Mercedes price tags to Nespresso price tags, it's absolutely incredible.

[Oded Ben David]

It's very important.

[Yonatan Adiri]

So from a bird's eye view, before we conclude, it's exciting to see a company the size and heritage of Elbit, right in conjunction with Rafael. These are not startup companies that kind of just think outside the box, not easy culturally. You mentioned focus and motivation as being, you know, primary causes for Israel's breakthroughs in this space. Can you share just a bit on culture? What is it in the culture at Elop, at Elbit, at Rafael, at your partners that gets the cycles to work?

[Oded Ben David]

Well, first of all, I always tell my engineers and my physicists that we are 100 startups together because we are as a big company, it's right, we're not a startup, we're a big company with all the bureaucracy of a big company, of course, but we have many, many amazing technologically programs and projects and we do really the state of the art technology in many fields and you have all this huge infrastructure behind you that you don't have as a start startup that can help you do everything. We know how to manufacture and design optics, coatings, mechanics, electronics. Whatever you want, you have in this, I call it the Disneyland of Elloc. You have everything you need in electro optics within reach. When you're a professional and you want to work and create and build new things, this is an amazing environment to do that. It enables you to do many things very quickly and very efficiently.

[Michal Ivram]

How critical or integral, I guess is this? We actually kicked off the episode talking about the changing nature of warfare. We mentioned this very innovative drone attack by Ukraine against Russia. So I guess the question is, how big of a role do lasers play in this new evolving way of war?

[Oded Ben David]

So you see that today to build all those threats is very, very easy and cheap. You know, an FPV quadcopter is around 400 to 500 US dollars. To build one when you build a few thousand. So the threats are very, very accurate and very cheap and the volumes are huge. So we need something that can deal with those volumes and deal with those threats in a reasonable, economical way. And I think that energy systems like hypower laser is one of the best answers for this threat which is growing and growing all around the world as we see.

[Michal Ivram]

It's actually pretty remarkable what you're talking about here. And again, what we saw with Ukraine is it's low cost threat threats and low cost defense systems basically starting to take root. Is that accurate?

[Oded Ben David]

Exactly. So we need something that gives you a very low cost of interception to get into the equation. This is essential to deal with the volumes of threats.

[Yonatan Adiri]

And just maybe a technical piece here, you need more than one interceptor to deal with a swarm or sort of a swarm of drones can be addressed with a single interceptor. Or, you know, we don't have to cover that. If it's a sensitive question, people are.

[Oded Ben David]

Doing all the calculations. What is needed? It depends on how much time you spend on each target, et cetera. These are specifications that are dealt with.

[Michal Ivram]

Oded, last question for you. Was there a moment you can point to where you knew that this was working, that you could operationalize this, that you'd kind of crossed some threshold and is there something you can share with us?

[Oded Ben David]

I think that the test we did in 2021 when we shot the first, first UAV from the air, was really a touching moment. I mean, we were all highly excited. We worked quite a lot on this and it was quite remarkable to see this UAV burnt and diving down. This was a moment for me of a lot of excitement and enthusiasm about the technology, that the technology works.

[Michal Ivram]

Thank you so much, Oded. Appreciate you taking the time.

[Yonatan Adiri]

Thank you so much.

[Oded Ben David]

Thank you very much.

[Yonatan Adiri]

That was great. I learned a lot. But, you know, I think it all comes down to the fact that at the end of the day, the fundamental code of startup nation, as we call it, or the essence of innovation during war is captured by the fact that, you know, he was there with his daughter in the safe room knowing that him and his team have to deliver, which really makes Israel first to beat the target. You know, just kind of think through the $100,000 interception to a $5 interception. Think of your car that you bought 10 years ago being worth now 5 DOL. That's just hard to imagine.

[Michal Ivram]

I think obviously necessity is a mother of invention. We are seeing that over and over. And by the way, it's also leading to great returns for the company. It's not that common for a company that's been around as long as elbit, as entrenched as it's been to see the kind of stock performance that we're seeing from them. It's up more than 60% since the start of the year. They recently hit an all time high stock price wise. And so that's really remarkable as well. And just goes to show that, that you can teach an old dog new tricks. And especially so when there's so much at stake. Like you said, Yonatan, it's true for.

[Yonatan Adiri]

The big ones, but imagine how many startups are being brewed right now, right within the sort of lessons learned from what we've been through over the last year and a half. And we're going to see, you know, in episode 100 of what's your number when we're going to talk about, you know, capital raised for those startups who left those teams to build their own vision. It's just a big beginning.

[Michal Ivram]

Well, we began our show with the numbers of the week and we're going to end with the words of the week as usual. And this week we've got a social media posting from president Donald Trump. I cannot believe we got through the entire episode without mentioning the Musk and Trump meltdown. But here it is and there is a connection to what we've been talking about. About the easiest way to save money in our budget, billions and billions of dollars, is to terminate Elon's governmental subsidies and contracts. The connection here, of course, is Golden Dome. And Yonatan, as we know, there's a lot at stake here and whether you love or hate? Elon Musk. SpaceX plays a critical role here, so who knows what happens next? There are a lot of words being thrown out right now. It's really hard to tell what will actually happen going forward.

[Yonatan Adiri]

Yeah, look in this game, also of brands, if Israel has Iron Dome, then better would be Golden Dome. The question is, if you have Iron Beam. Right, Speed of light, how do you beat that? So I'm curious to see which competitor comes on the global stage beating the speed of light for an interception system at $5. An interception.

[Michal Ivram]

All right, that is it for today's show. Thank you for tuning in to ARC Media's what's yous Number? We hope you found it interesting. And if you did, be sure to, like, subscribe, rate, review. You know the drill, but most importantly, please share it with others who you think will find it interesting. If you want to make suggestions or share your feedback, please reach out to us at what's Your number? @arc media.org.

[Yonatan Adiri]

What'S your number is produced by Elon Benatar and edited by Michalev Ram. Sound and video editing is by Martin, who are Virgo. Our theme music is by Midnight Generation. I'm Yonatadiri.

[Michal Ivram]

And I'm Michal Avram. See you back here next week.

[Yonatan Adiri]

See you next week.

[Michal Ivram]

This podcast offers general business and economic information and is not a comprehensive summary for investment decisions. It does not recommend or solicit any investment strategy or security.