Start Up Nation; Israeli Chutzpah is Alive and Well

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By Ruth Judah.

In 2009 Start Up Nation was published. Written by Dan Senor and Saul Singer, the book flows with brilliant stories of Israeli entrepreneurial prowess. The authors defined the Israeli culture as the perfect balance of interconnectedness, questioning mentality and motivated independent citizens. Most likely the army creates or develops this mentality in the young recruits. No–one is certain but doubtless there is an impact of compulsory service.

5 years since the book was released to accolades and bestseller lists, the Israeli Start Up industry is alive and well. A Forbes article (Geromel, 5/16/2012) is but one source of the latest figures.

*Today Israel has more companies on the NASDAQ than Europe, Japan, Korea, India and China combined.

*Israel raises 2.5 times more global venture capital as the US and 30 times more than Europe, 80 times more than India and 350 times more than China.

*34% of Israeli’s hold a university degree compared with 30% of Americans and Chinese.

*Israel has the highest level of R and D spending relative to GDP in the world.

Wharton Business School defined Israeli Start Up companies ( 02/27/2014) as following, “a trajectory that starts with forming a team and developing an idea, then raising two or three rounds of venture capital and ending within a few years by selling out to a larger firm.” This does not mean that Start Up companies are small businesses or entrepreneurial. Yet they mostly are both and they are funded with enough investment to allow the innovation and creation of new technology.

If the business model works, the sale of the companies in a few years from creation likely results in a multi-million dollar payout to the venture capitalist and to the creators. The Start Up company typically becomes the R & D division of a large, often global company. The tragedy is that Israel loses the talent and product which the inventors have created as the purchaser is rarely Israel. At the same time, the wealth is focused on a small number of people and the social divide gets wider.

Success is its own magnet and predictably, the current energy in Israel is blossoming today with constantly innovating entrepreneurial activity. A GEM report of 2012 researched the motivation for this unprecedented cultural success. The numbers show that the motive for creating new ventures in Israel comes from opportunity as opposed to necessity. The opportunities are available for fund raising and mentors are in place to guide creative thinking. It’s therefore quite common for post army twenty-something’s to try their hand at a Start Up. In the same way that Management Consultancy and Finance are career paths that are made electrifyingly easy, appealing and available to graduates from top US universities, today the small company financing, guidance and innovational paths are the prize waiting for young Israelis.

The process is streamlined in such a succinct way that The Taglit Birthright Organization started a Start Up Nation group in 2012 for young Jewish entrepreneurs. Kids on this program are taken to Israel where they are introduced to newly started up companies in Herziliya and Tel Aviv and then visit students enrolled in a cutting edge program offered at IDC Herziliya in Entrepreneurship. These Americans are given the chance, often for the first time in their lives, to pitch and evaluate their business ideas with several venture capitalists. The Taglit group’s co-leader, Craig Kramer, said the program is unique because it allows participants the first-hand experience of meeting successful entrepreneurs. “They get to pitch their ideas and get direct feedback from people who have been there and done that,” said Kramer. “First-hand experience in Israel lets them bridge the gap from idea to reality much more easily.”

On May 1st in Santa Monica, Bina LA, an organization that works to develop interaction and interrelationship with young Israeli’s and young Americans, held a lecture called, Israel’s High Tech Heroes. A delegation of four young Israeli entrepreneurs was brought to LA by The Jewish Federation and UCLA Hillel and they spoke at a well attended evening event. They all credited their military service with providing training, camaraderie and competition that provided them with tools, network, skills, attitude, fearlessness, creativity and determination to be the successful entrepreneur that they wanted to be.

In various ways the foursome described the Israel business framework that now, more than ever, creates a continual outpouring of young Israeli’s who are able to find success in Start-Ups. Of course there are many small businesses that don’t innovate with the use of hitch but it is frequently the cyber military back ground that exposes young minds to creative and productive innovation. Combining that stimulation with an ecosystem of services, mentors and investors, is a proven path to repeated success.

Each of the High Tech Heroes has a background in the most elite IDF units, both cyber/tech and combat units, and now each of them lead an enterprise although they cover a spectrum of industries. The delegation members include Guy Katsovich an alumnus of the prestigious IDF cyber unit 8200. He currently heads up marketing and business development for the Israeli start-up Veribo. Veribo is a company specializing in online reputation management.

Yael Vizel served in the Israeli Air Force’s (IAF) elite tech unit and became the first woman commander of the unit. As an expert computer scientist, Yael was responsible for leading IAF ground-tech and aerial-tech combat missions. Following a degree in Electrical Engineering from the Technion University she went on to work for five years as a computer chip designer for Elbit Systems in Israel. Vizelthen founded Zeekit, an online company that allows a person to virtually try on clothes for a better e-commerce experience.

Roei Deutch sold his first media start-up at the age of 15. During his army years he joined the prestigious cyber unit 8200 and served mandatory time but Roei now serves as the Director of New Media for the Israeli political party Yesh Atid. New Media and Social Media outreach are widely credited for sparking Yesh Atid’s rise in the polls to win a surprising 19 seats in the 2013 Israeli Knesset Elections.

Shiri Ladelsky is also an alumnus of the prestigious IDF cyber unit 8200. While serving in 8200, Ladelsky specialized in psychological analysis and linguistics. While the details of her intelligence service remain top secret, it was certainly an experience that primed her for her role in a software Start Up called Vibits. Now a Computer Science and Linguistics student at Tel Aviv University, Ladelsky runs Vibits, a company which focuses on personality features for human resource departments via visualized CV and psychological analysis and prediction. The concept sounds impressive but there is currently little more known about the company’s potential.

Israel is still the world’s leading Start Up Nation. The past was only a hint of the future inventions and innovations. Israeli Military intelligence has been the backbone of an endless list of new ideas that have been developed by small companies or R&D divisions of larger organizations. Back in 1950, it was the sweet creation of the Golden Hamster as a pet that was recognized. Today, the list is vastly more impressive.

In no particular order, you might have heard of Dr Gabi Iddan from Given Imagine developing the PillCam capsule endoscope, an ingestible camera in a pill that can detect GI disorders. There is the World’s smallest camera, just 0.99mm in diameter, which was also an invention that was birthed in Israeli military intelligence. Then there’s the creation of reusable plastic trays by Tal-Ya Water Technologies which successfully captures and reuses dew from the air, reducing the need to water crops by up to 50 percent. Have you come across the super iron battery, a new class of a rechargeable electric battery that is more environmentally friendly because the super-iron eventually rusts?

The scope of creativity reaches everywhere including various board games including Rummikum and Hidato. In the 1950’s there was demand for the Wonder Pot, a Pot that can bake food on the stove. The internet abounds in lists of the top 64 inventions that have recently come from Israel and yet the story doesn’t end here.

It is not the creation of a single product that brands Israeli Start Up culture. Israel will walk the world into the next decades because of its continual innovation and design mentality. Perhaps since the Greek and Roman Empires there has been no country which produced a culture blossoming with such innovation and invention. The future is looking good and Golda Meir would not be surprised. She set the tone for Start Up culture when she said, all those years ago, “We do not rejoice in victories. We rejoice when a new kind of cotton is grown and when strawberries bloom in Israel.