The future of Israeli high-tech: Jewish brains aren't enough
Netanyahu's claim that Israel's economic growth is unaffected by the general political situation is highly questionable.
By Carlo Strenger Tags: Israel education Israel newsThe Cellcom media conference that took place Tuesday at the Smolarcz Auditorium at Tel Aviv University was an experience to engender optimism. Hundreds of high-tech companies were represented; there was a strong sense of buzzing innovation and openness to the world. Ralph Simon, considered one of the prophets of the mobile phone, kept saying how Israel's high-tech industry reflected Jewish entrepreneurship, brains and daring, and how Israel could be a leader in mobile phone technology. The praise of Israel's high-tech industry, which has been the engine of the country's economic growth since the 1990s, has been sung many times - and for good reason.
Nevertheless, many commentators have pointed out a worrying tendency in this sector. Companies that have grown over the years into large, stable presences like Checkpoint, Amdocs and Comverse, are relatively rare. The typical Israeli high-tech entrepreneur rarely dreams about growing a company to this stage, and much of the industry is geared towards early exits.
This is often associated with a flaw in Israel's mentality. Accepted "wisdom" is that Israelis want the quick, big buck rather than consistent growth. I disagree: the search for the quick exit is not primarily a result of greed and lack of willingness to hang in there for the long run. My own experience with Israeli high-tech entrepreneurs shows the opposite. The best of them wish nothing more than to leave a mark and develop products and companies that are there to stay.
What then contributes to the mentality of the quick exit? I think that it is first and foremost the general sense that everything here is built on quicksand. Israel's political class is notoriously incapable of long-term planning, as the following examples show:
The technology for water desalinization has been economically viable for at least 15 years. Israel could by now export water rather than suffering from a dangerous shortage, if it had invested in desalinization plants in time. But Israel's governments did too little and too late; as a result Israel's citizenry is now threatened with drought taxes.
The second example has ominous consequences for the high-tech industry and for the country as a whole. Israel's higher education system has grown enormously in the last years - but the state's higher education budget has actually decreased during this time. All experts have been warning that Israel's current standing in the academic world is a function of investments until the 1970s. But the recent governments have kept slashing investment in Israel's one, most important asset: knowledge and brains. As a result, Israel keeps losing some of its best researchers to the top universities in the U.S., and the high-tech industry may soon be short of highly qualified academics essential for cutting-edge technological development.
But more than anything, Israel has been devoid of a clear foreign policy. This creates a persistent sense of insecurity about the future. Benjamin Netanyahu has claimed for years that Israel's economic growth is no longer affected by the general political situation; that Israel can continue on its current path for a long time without paying an economic price. This is a highly questionable assumption. Foreign investors may indeed think that the political situation does not constitute a risk factor when it comes to R&D on a small scale: knowledge generated by small companies can be moved very quickly from one country to the next.
The same doesn't hold true for production facilities and large companies; they require huge investment, and they cannot be moved quickly in case of emergency. The option of a third intifada or the resumption of hostilities in some other form looms large because of the political stalemate. This situation is certainly not conducive to a state of mind that leads to development of companies for the long haul.
Israel's lack of a political horizon and long-term planning are the main reasons why our high-tech industry is oriented towards short-term gains. If Israel's citizens are sometimes accused of just living for the day, we cannot blame them anymore than we should accuse the high-tech sector of short sightedness. High-tech entrepreneurs and investors cannot plan further ahead than the infrastructure of the state allows.
Click here for Carlo Strenger's blog
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hello , why you do not use your resources ( arabs living in Israel and in west bank) .
ex Soviets and Jews Educated Abroad?
the future is bright with ideas that will save the Jews and the world
"The vast majority of Jews would not accept any peace plan that doesn`t leave a Jewish Israel. Rather than putting the onus on Israel to make offers that are continually rejected,let the Palestinians tell us what plan they have that leaves a Jewish Israel. Let`s start from there." - Sam Find a map of Israel from early 1967. Both the PLO and Hamas have stated that they will accept those borders without further negotiation. I think Israel would be wise to negotiate FROM that point to where the Old City of Jerusalem and a few critical areas of the settlements are part of Israel. In fact there had been negotiations giving Israel much more than a minimum of the settlements, but Netanyahu has rejected them. He has as a precondition that negotiations will have to start over. So then start with the Green Line which both the PA, PLO and Hamas have stated as acceptable.
The vast majority of Jews would not accept any peace plan that doesn't leave a Jewish Israel. Rather than putting the onus on Israel to make offers that are continually rejected,let the Palestinians tell us what plan they have that leaves a Jewish Israel. Let's start from there.
True today as it was yesterday. "Israel has no foreign policy, only a defense policy." Moshe Dayan. The last intifada coincided with an exodus of Israelis from all walks of life. The next would be no different. The Arabs would stay though. The demographics, bad as they seem for the Jewish State would get worse quicker than already predicted. Another factor to bear in mind. Israel had sympathy from many quarters after Camp David's failure, as Arafat got the lions share of the blame, then Bush's war on terror post 9/11, merged the so called 'war' with Israel's own war on Palestinian extremists. This time there would be far more sympathy for the Palestinians. The 'war on terror' being seen as counterproductive in much of the world and running out of steam, and Abbas/Fayad the moderate and respectable face of Palestinians aspirations 'plucked like a chicken' first by Sharon and now Netanyahu. Israel would crush the revolt no doubt, but may live to regret its intransigence over settlements in the aftermath.
While Strenger makes some good points, I disagree with his overall conclusion. The reason why Israeli tech companies grab the quick "exit" and don't hang in there for the long run is because of the venture capital funds that invest in these companies. VC funds can't afford to wait 10-15 years until the company becomes another Amdocs. The funds exert tremendous pressure on the companies for an early exit so the fund can make 5-10x on their investment for their investors in order for them to then go out and raise their next fund for even more money. That is a much bigger problem for the high-tech industry in Israel.
Author's water desalination project could be handled by entrepreneurs -not only the state, as write implies. 2. Israel is expanding tech into renewable energy & clean tech & bio-sciences with impressive results for the future. Re education : entrepreneurs need to help with setting goal and focusing improving it. Last the business owners themselves will have to be the ones taking longer term views and creating large milt-national firms.
...for those making major, long-term investments; it's not "rocket science," and it's been true for centuries. The notable exceptions are those where the investing entities have little or no choice; i.e. the extractors of natural resources must obviously go wherever those resources are found--and do. But otherwise...
I think Israel success in developping large organisations has to be measured in accordance to its size. I am not sure that Switzerland, although enjoying stability, peace (and boredom) since ages has more per capita large technology based companies than Israel. Israeli "instability" and governmental chaos is also a tremendous incentive for individual creativity ! and the large and quite organized israeli Army is a safe heaven for developping daring new technologies that can later be developped for business. Being raised as a nice guy does not necessarily prepares you for developping a business from scratch. The chaotic environment Israelis have to face might also produce positive consequences ?
True today as it was yesterday. "Israel has no foreign policy, only a defense policy." Moshe Dayan. The last intifada coincided with an exodus of Israelis from all walks of life. The next would be no different. The Arabs would stay though. The demographics, bad as they seem for the Jewish State would get worse quicker than already predicted. Another factor to bear in mind. Israel had sympathy from many quarters after Camp David's failure, as Arafat got the lions share of the blame, then Bush's war on terror post 9/11, merged the so called 'war' with Israel's own war on Palestinian extremists. This time there would be far more sympathy for the Palestinians. The 'war on terror' being seen as counterproductive in much of the world and running out of steam, and Abbas/Fayad the moderate and respectable face of Palestinians aspirations 'plucked like a chicken' first by Sharon and now Netanyahu. Israel would crush the revolt no doubt, but may live to regret its intransigence over settlements in the aftermath.
True today as it was yesterday. "Israel has no foreign policy, only a defense policy." Moshe Dayan. The last intifada coincided with an exodus of Israelis from all walks of life. The next would be no different. The Arabs would stay though. The demographics, bad as they seem for the Jewish State would get worse quicker than already predicted. Another factor to bear in mind. Israel had sympathy from many quarters after Camp David's failure, as Arafat got the lions share of the blame, then Bush's war on terror post 9/11, merged the so called 'war' with Israel's own war on Palestinian extremists. This time there would be far more sympathy for the Palestinians. The 'war on terror' being seen as counterproductive in much of the world and running out of steam, and Abbas/Fayad the moderate and respectable face of Palestinians aspirations 'plucked like a chicken' first by Sharon and now Netanyahu. Israel would crush the revolt no doubt, but may live to regret its intransigence over settlements in the aftermath.
What use will an Israel dominated by the Ultra-Orthodox have for brains or high-tech? Looking into Israel's future 50 years ago was looking at a nation transitioning from agriculture to high-tech for it's exports. Looking into Israel's future now is looking at a nation where the secular is gradually being subjugated by the religious extremists.