When you think of areas where innovation and start-ups are rife, it’s usually places like Silicon Valley and countries such as South Korea and Singapore that spring to mind most readily. But recently there’s another place that’s been attracting a serious reputation as a start-up heavyweight – and it doesn’t begin with ‘s’.
It’s Israel. A country better known for its history, both ancient and modern, is also becoming known for its thriving start-up scene. A glimpse at the statistics shows that, for a country with a population of a little over eight million, it’s punching well above its weight:
- Israel has 15% of the world’s investment in cybersecurity
- The tech start-up community contributes 15% to the national GDP
- Israel attracts more venture capital per person than any other country in the world
- There are more companies listed on the NASDAQ from Israel than from any other other country bar the USA and China.
So what is it about Israel that attracts and promotes a thriving start-up culture and what can Australian agencies learn from it?
1. Creating a culture of chutzpah
A vibrant start-up culture comes about through more than just economic and political conditions, it begins with a mindset. The idea of ‘chutzpah’ is defined by The Heureka as:
‘... it’s essentially “rudeness”, but it has a good meaning when it comes to business. When Israelis say you have chutzpah they mean you know what you want and go for it. They mean you have great tenacity. They mean you’ll do what it takes’
Chutzpah is promoted from the cradle. Israelis are taught to question everything, to be fluid in coming up with solutions and to be uncompromising in getting results, coincidentally all qualities needed to run a successful start-up.
The website Freakonomics describes an incident that puts chutzpah into perspective. Paypal president Scott Thompson went to Israel to purchase an Israeli start-up, FraudSciences. He gives the following account of his initial meeting with the team:
‘Every question was penetrating. I actually started to get nervous up there. I’d never before heard so many unconventional observations — one after the other. Junior employees had no inhibition about challenging how we had been doing things for years. I’d never seen this kind of completely unvarnished, unintimidated, and undistracted attitude. I found myself thinking, “who works for whom here? Did we just buy FraudSciences, or did they buy us?’
This attitude is supplemented by a focus on what The Heureka terms as multidisciplinary thinking. Multidisciplinary thinking is the ability and confidence to apply what you’ve learnt to an entirely different field, to go from software to electronics without blinking. This agility is put down to the nature of the compulsory national service Israeli citizens undergo at eighteen. The training breeds maturity, promotes analytical skills and emphasises flat hierarchies. As one general in the Israeli army noted,
‘They are taught to get the job done and figure out how. And especially in the reserves, barriers are broken; young people command their teachers or bosses, no one salutes, and privates address generals by their nicknames.’
Citizens leave the experience with advanced critical-thinking skills, confidence in their abilities and unique life-experience. All these qualities are ideal for a culture focused on innovation and solving the unsolvable.
2. Israel attracts talent
Israel is home to many different cultures. It is estimated that it’s home to over 70 different nationalities. Part of this is due to its positive approach to immigration. Israel as known as one of the most pro-immigration nations in the world. Israelis view migrants as ‘natural risk-takers’ and have seen the value in an influx of exciting new skillsets when newcomers land. For example, Freakonomics notes that, when Israel saw a wave of immigration from the Soviet Union in the nineties and noughties, they also saw a wave of engineering talent, which allowed their tech scene to thrive despite the burst of the dot-com bubble.
They have recently introduced special visas for tech entrepreneurs. The proviso is that, to be awarded the visa, an entrepreneur must work at one of Israel’s twelve incubators and accelerators for a period. The entrepreneur visa is in addition to the specialist visas Israel awards to highly-skilled employees. Of the 4000 awarded annually, a quarter go to those in tech industries.
The value of immigration is summed up by Bob Rosenschein, founder of answers.com. He said to Haaretz, ‘immigrants have a fresh perspective and need to be hungrier to succeed. They don’t necessarily have the connections, so they have to graft from the get-go. It brings a wonderful and unique energy to the place.’
3. Everyone is on the same page when it comes to innovation
The drive for innovation crosses party lines. Since the early nineties, there has been an unremitting and bipartisan commitment to developing a tech culture. As commentator Alec McCauley observed during his time there:
‘Its people haven’t suddenly become more entrepreneurial, nor has its geopolitical situation become less stable. But one substantial thing has changed: In the early 1990s the government adopted a strong bipartisan push towards innovation as a national economic priority. They recognised that innovation was a driver of productivity, which was in turn the ultimate driver of economic growth. It used public policy levers to encourage research and development and incentivised commercialisation of technological innovation. It linked the military, universities, corporates, government, and start-ups. And it began to directly support industrial research and development by investing in early-stage technology start-ups to help them reach the proof of concept stage.’
Israel is a nation that can’t rely on natural resources. To turn the economy around, it was imperative that Israel harnessed the resources it did have and nurtured them. Its unwavering commitment to this has created a thriving economy. In fact, start-ups have added so much to the economy that, according to CNN, ‘for the past five years Israel’s GDP has substantially outstripped the average GDP growth-rate of developed countries.’
What can Australia learn from Israel?
Even though Australia has a vastly different makeup from Israel, there are many lessons we can take from their approach to innovation. Prime Minister Malcolm Turnbull acknowledged this earlier in the year when he announced the launch of an innovation landing pad in Tel Aviv. He noted it was important to help Australian entrepreneurs and investors ‘connect with Israel’s deep innovation ecosystem and otherwise soak up the chutzpah, the readiness to challenge authority, that is as thoroughly Israeli as it is Australian.’
If we want to develop a culture of ‘start-up chutzpah’ it’s not merely a case of throwing money at policies and programs and hoping something sticks. We need to take our cue from Israel and examine the resources, talent and opportunities we have and look at how we can harness them. We also need to celebrate the culture we already have, create spaces for those in government, in technology and in business to get together and collaborate. We have all the tools needed to create a really exciting start-up culture. Now it’s time to take it to the next level.
Got an exciting start-up idea, but are not sure how to get the idea off the ground? Learn from those who’ve done it by attending StartUp @ CeBIT 2017.