What We Can Learn from a Thriving Tech Eco-System in Israel

There is an old adage that says ‘seeing is believing’.  After venturing with AceTech members Michael Benadiba, President of MBC Managed IT Services, Sheetal Jaitly, Founder & CEO of TribalScale and Vuk Magdelinic, Co-Founder & CEO of Overbond, on a whirlwind innovation trade mission to Israel led by Toronto Mayor John Tory, I saw a genuinely thriving, tech-savvy economy.   I firmly believe Canada can learn so much from Israel’s example and I’m going to share with you exactly how and why.

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Michael Benadiba and Mayor Tory

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Jodi Kovitz and Sheetal Jaitly

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Vuk Magdelinic and Jodi Kovitz

First, a little background. Mayor Tory invited 50 business, technology and investment leaders to Israel to “learn how government interventions have facilitated the rapid growth of Israel’s technology sector, learn from their innovations and connect Toronto (and Canada) businesses with opportunities,” in Israel.For me, as a leader of a non-profit organization that supports start-up founders in scaling their businesses on the world stage, my own goal was to learn how, just like Israel, we can build global connections and relationships, as well as foster innovation and collaborate as a tech-community.Why Israel?  As investment guru Warren Buffet has said, “Israel is the most promising investment hub outside of the U.S.” I was aware that Israel is rocking the world tech stage partly as a result of reading a fascinating book called Start-Up Nation. The book maps out why Israel, a tiny country, with no natural resources and a litany of challenges, has the largest density of tech start-ups in the world!But reading isn’t the same as seeing.  Mayor Tory said this throughout our trip, and he was right.  When we visited five cities in Israel & the West Bank and saw their innovation eco-system, and the amazing people behind it in action, all the lessons in the book came to life for me. Here are the four key lessons I believe we must learn:

 

  • Cultivate a culture and mindset that embraces guts

The way Israelis think and act is the perfect formula for innovation. For instance, Israelis have the guts and persistence to take risks. Even when risk results in failure, their society doesn’t see failure as a negative. In fact, their culture gives people the permission to fail – it’s an acceptable option and that inherently breeds innovation and resilience.These unique attitudes make a difference. To that end, in 2015, $4.5 billion USD was invested in Israeli start-ups, whereas in Canada, the number was half that.From seeing this mindset first-hand and the results it leads to, I believe we need to teach our own Toronto entrepreneurs and the broader population – especially our children – to take risks and to not fear failure.  As a mom of a 7-year-old, I am often reminding my daughter of the importance of her effort and reinforcing that failure is okay… actually, it’s better than okay. It’s necessary.

 

  • Galvanize GRIT, commitment and a Get It Done Well & NOW work ethic

During the trip, I met the incredible founders of iAngels, who offer accredited investors from around the globe the opportunity to co-invest with prominent angel investors in Israeli startup companies through an innovative crowdfunding platform.  As we spoke, I mentioned that we should follow-up. This was a classic Canadian casual invitation to connect at some point after I was back. But that’s not how things work in Israel. Right after I said it, they immediately responded with, “when and what time” and we talked the next day. As a result, we now have a plan on the books for January for an event in Toronto. They don’t set up a meeting in two months; they talk tomorrow. It’s just their way and we can learn from them to get things done well and NOW.This business approach is very much shaped by compulsory army service in Israel. When you’re on a military mission, it’s not like you can say, “I’ll try and get that done by week’s end”.  Military missions require staying the course and being committed every day. They orient people towards success. It’s the real-world example of “grit” psychologist Angela Duckworth writes about in her book Grit, which she describes as “a combination of passion and perseverance for a singularly important goal.” Duckworth says these qualities are hallmarks of high achievers. I believe that is why the army in Israel is a breeding ground for successful and innovative entrepreneurs.In addition, while in the military, Israelis receive high levels of technical training and are armed with enormous amounts of responsibility, which requires being highly motivated, creative and adaptive. This environment nurtures not just everyday entrepreneurs, but ones who establish a vast array of cutting-edge start-ups.To shine some light on that, I learned Israel has the highest number of engineers per capita in the world and that a staggering 1,400 start-ups formed in 2015.I’m not saying we need conscription to produce a more robust tech ecosystem. However, if we arm the 4,100 startups, 200,000 developers and 50 incubators and accelerators in Toronto with the same kinds of mindset and opportunity to develop these skills through the extensive programming we provide in the eco-system, we will be setting ourselves up collectively, for excellence.

 

  •  Start early with STEM focus in our education system:  It is no longer a “nice to have” for our kids to participate in the new world economy

It is all about STEM (Science, Technology, Engineering and Mathematics) education early on in Israel. They get it and are pioneering and proactively developing a STEM education system for youth, throughout all stages of their development, that has set the stage for its success on the world stage in innovation.It amazed me to see that even in tiny cities in Israel like Sderot, with a population of only 25,000 (a western Negev city located less than a mile from Gaza that is subjected to constant attack) – STEM education is the focus, creating opportunities for curious young minds.  Israel gets that creating a new generation of STEM excellence is essential in order to drive Israel’s high-tech industry and economy through the coming decades.  Michael Benadiba observed, “What amazed me the most was the education system’s ability to identify technical talent in grade-school children. Those pupils were moved through the system in order to encourage and enrich their interests. You then have the best of the best beginning a meaningful career in the IDF, where their enrichment is supercharged.  The result is a nation of bright and capable entrepreneurs coming out of their national military and education system.”   Michael Eisenberg, the Co-Founder of one of Israel’s top venture capitalists, Aleph, shared his experience and views on the role of the Israeli education system in their successful eco-system. What stood out to me, was when he shared the astounding fact that high school graduates are already highly skilled future high-tech talent and business leaders with serious expertise in engineering – before they even enter the army, where many of them get an unequaled education in cyber security and other STEM skills. There is much we can learn from Israel about how they are preparing their young for the new world economy.

 

  • Encourage the government to help foster innovation in the private sector – and collaborate

In Israel, I didn’t only see people from the private sector contributing to the tech boom – I also saw government support and collaboration at all levels of government. For instance, Israeli government ministries offer a variety of support programs for R&D totaling $400 million.  That means 4.3% of Israel’s GDP goes to R&D. Just imagine the places we could go if various levels of government were dedicated to that kind of spending on R&D and innovation? Even a municipal library has an incubator/accelerator built in!What’s more, tax laws and government investment policies in Israel are very friendly to foreign companies. For example, foreign companies benefit from a corporate tax rate of only 10% and investment grants of up to 24%. These pro-investment initiatives have translated into a bevy of multi-national corporations setting up shop in Israel.To that end, there are over 7,000 companies, 250 R&D incubators and 80+ Fortune Global 500 companies that have an R&D centre in Israel. The presence of multi-national corporations and government support is critical, it enables tech professionals to have a place to ply their trade and to engage in experiential, hands-on learning. It also sets up an ecosystem where entrepreneurs can smartly design their companies to provide the best solutions.  There are other numerous and constantly evolving government supported opportunities and programs related to capital and talent – key drivers of success in this industry.What has evolved from all of this is a community of tech experts often collaborating and constantly advancing together. That’s precisely the kind of community Mayor Tory articulated that he is committed to creating in the Toronto/Waterloo corridor, and more broadly, in partnership with our provincial and federal governments across Canada.  But we, as leaders in the non-profit segment of the eco-system, in addition to our own booming tech corporate industry players, all have a role to play. Let’s look to Israel as a shining example to follow, and together we can make that happen.Jodi Kovitz is the CEO of AceTech Ontario, a non-profit member-based community organization for technology leaders to network, seek guidance and offer advice.

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