Israeli innovation

In 1964, I remember standing with a fellow graduate student outside the Weizmann Insititute of Science in Rehovot, and talking about founding technically based companies there on the model of Boston, where the many universities had spawned a hi-tech industry. At that time, the first company had been launched by Prof. Joffe of the WI to develop infra-red (night vision) instruments that were sought by the IDF. The first biotech company was Biotechnology General, founded by Haim Aviv of the WI, and he sold it some 20 years later for millions of dollars. It is today one of the leading biotech companies in the world. Of course, it took many years for the Weizmann High-techology Park to grow there outside the WI, but now it is an impressive conglomeration of buildings and companies indeed.
This is symptomatic of the growth of innovative hi-tech companies in Israel. After the US, Israel with a mere 7 million people, has the second largest concentration of hi-tech companies in the world. It is an astounding fact that Israel has more such companies than the whole of Western Europe combined (including the UK, France, Germany and Holland, with ca. 200 million people). The question is why is this? How is it that little Israel can have developed as such a center for high-technology?
I think there are three factors chiefly responsible for this phenomenon:
1. Risk-taking: Jews like taking risks, while on the contrary Japanese and Germans are risk-averse. There is something deeply cultural about this distinction. Jews are prepared to back their efforts, and if it leads to failure – too bad. But, in Japanese and German culture, failure is unacceptable, Japanese have been known to commit suicide if their company fails. Japanese students are much more conformist and follow instructions rather than use their own inventiveness. Jews on the other hand, both in Israel and the US, are more prepared to back their own inventiveness with their own and borrowed money.
2. Industriousness: Connected to risk taking is the sense that every Jews wants to be his own boss. Starting a company and controlling it are part of the culture of Jews everywhere. I refer to the book “Tribes” by Joel Kotkin in which he points out that it is the “industriousness” of a tribe that tends to determine the outcome of their economic status. Jews are extremely industrious. So are foreign Chinese and Indians (outside their mainlands), and so are the Japanese, as long as they can have someone else take the risk.
3. Scientific capability: No nation today can afford not to have a scientific/technological infrastructure, and only those who have adequately supported such an initiative have flourished. The Jews have always been great leaders in scientific development, having received 220 Nobel Prizes while constituting only 0.5% of the world’s population. Scientific capability is endemic in Israel and is one basis for the phenomenal development of the State in only 60 years, literally from nothing to being on a par with most well-off European countries (ca. $20,000 GDP/capita).
4. Entrepreneurial culture: There is another factor that is quite significant, since the US is the center for hi-tech start-ups and capital investment, it matters a lot that Israel has a similar culture to the US, where in both places Jews are predominant in both finance and science. This common culture tends to help Israeli hi-tech companies plug into the American market in a way that is more difficult for other countries, even the UK, where the language is the same but the culture is definitely different. It is for these reasons that companies like Intel and Motorola have based their major research components outside the US in Israel. And the Israeli Govt. is not passive in this respect, there are “incubators” for start-ups all over Israel. A large one exists in Beersheva for example, where premises of labs and offices can be rented at subsidized prices and advice is available. Also, the Ministry of Industry & Commerce gives grants of up to 50% of the capital costs for a new company.
Israeli innovations have lead to the development of the cell phone and the internet. Israel is a leader in computer/internet security and several companies have been bought by US leaders. Another example is the PillCam, a tiny swollowed camera that can be used for endoscopy without painful and invasive endoscopes. There is still a great deal that can be done in electronics, computers and healthcare, and Israeli companies are at the forefront in these areas.
(for more information about Israeli scientific innovation see www.israel21c.com and www.science.co.il )
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This article is based on a talk given at the AACI, Netanya 5/8/7

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