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Interview: ThetaRay CEO Gazit explains how ‘deep learning’ finds a cyber-needle in the cyber-haystack

By NexChange
Venture Capital

Not too long ago, a large bank decided to jump into the online lending game. Suddenly the bank began losing millions.

Something wasn’t right. Lending had been a profit center.

“You are seeing a new world of fraud,” says Mark Gazit, CEO of ThetaRay, an Israel-based startup wielding the power of machine learning and big data to catch the bad guys in cyberspace. ThetaRay was invited to investigate. No one knew what they were looking for – just that something was wrong.

They were hunting for a needle in a haystack. Maybe.

The job of tracking down hackers is growing more and more complex as cyberthiefs resort to increasingly complex strategies to steal money, interfere with the power grid, and disrupt all manner of businesses.

ThetaRay offers a unique approach to pinpointing invaders. “We use deep learning,” says Gazit, referring to a type of machine learning operating under the rubric of artificial intelligence.

The strength of ThetaRay, he says, is that it lacks expertise in any industry and isn’t rules-based. Users can adapt the system to the operations of an oil field, a power system, or a financial institution. Which explains the eclectic array of customers: GE was its first customer and is a major investor.

In the case of the bank losing millions, the ThetaRay technology “learned” the proper way the backend system worked and then, within 15 seconds, spotted anomalies in three fields. Now each field is a number that has no meaning to the software per se. But the technology recognized anomalous relationships in the field that programmers knew to be age, transaction size, and transaction type.

The issues? The age was unusually young and the size of the loan was too small for the transaction type. “They were giving mortgages to minors,” Gazit exclaims. “In the physical world that wouldn’t even be possible.” Gazit adds: Today’s criminals seek to steal small amounts over thousands and thousands of transactions to avoid detection.

After spending 7 ½ years in the Israeli Air Force Gazit went into the private sector where he was paid to break into banking systems. A serial entrepreneur, he has founded and sold major companies in Israel including Netvision, an internet service provider, and SkyVision, which provides encrypted communications. “Obama used it when he was in Africa,” Gazit says.

The brains behind the technology are two professors, co-founders Amir Averbuch of Tel Aviv University, and Ronald Coifman of Yale University. Since its founding three years ago, ThetaRay has raised $30 million and employs 50 people around the globe, mostly scientists.

Photo: David.Asch

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