Archive for Economic Development from Israel

Once upon a time, I lived on a kibbutz

by on June 12, 2008 at 12:00 pm

Returning to Israel after so many years was more than a rendezvous with nostalgia. My current life as a publicist, entrepreneur and blogger met the former me, a teenage girl with a pony-tail on an adventure that more than shaped the rest of her life.

This story is a very long one and not typical of my regular blog posts. For that reason, I’ve shortened the introduction – click on more if you’re interested in reading the entire piece. It’s a story of a journey back in time, back to Israel and the life I knew 23′ish years ago, hitching and living on the road and working on a far left Zionist kibbutz, a fact I didn’t know when I first arrived.

My first experience in Israel was a coming-of-age story in countless ways. I never saw Israel as a new country full of immigrants who went there to find a better life for many of the same reasons the oppressed and the misfits flocked to the States at the turn of the century.

Nearly all of my encounters during that trip so many years ago were with misfits — misfits who were on a journey to find themselves and each other. They came from nearly every corner of the world, had a wide range of belief systems and religions, and ranged from 17 to 70.

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Valley-Ho!

by on May 4, 2008 at 12:00 pm

If there’s one theme that I’ve thought about, talked about and written about the most over my career covering tech and finance it’s the debate of whether you need to relocate to Silicon Valley to be successful. In my case, there’s no doubt I’ve had a better career just by covering business in the Valley, so it’s hard for me to believe anyone who wants to profit from the startup ecosystem wouldn’t be more successful here. Over the years, I’ve read a lot of weak treatises that say Valley isn’t all that great, ultimately coming off either bitter or just naive, but here is a pretty nice piece arguing against Valley relocation. Although, I’m still not convinced.

The strongest point the writer makes is about the damaging affects of the temptation to bulk up on venture capital and not figure out a real business. There is a certain “Valley game” you can get sucked into that can cloud good judgment. Although, I think tying that to Web 2.0 is a bit misleading since the hottest Web 2.0 companies all bootstrapped themselves or lived on angel funding for most of their early days. And besides, really, isn’t knowing when to take money just a test of a good entrepreneur? Hell, I’ve been offered money to start a company before. It’s not access to cash that defines your worth, it’s the discipline to know if that’s the right thing for you and your business.

Per the point about it being harder to retain great people in the Valley, that argument can go both ways. Pro argument for the Valley: the Valley has more talent than anywhere else and they all know the costs and risks of being at a startup. Con: the best people always want to flock to the next hot startup. Personally, I think the latter is overstated. There are certain momentum seekers who will flock to the next pre-IPO name, but those are the people most entrepreneurs don’t want working for them, so actually that phenomenon can be a nice filter. After all smart people work at Mozilla, a company that has said it will never go public. Also, if startups are worried a hotter name will steal their coders, doesn’t that put a healthy pressure on startups to be the best they can. I just generally think competition is good for business. I guess it comes down to what you want: a nice business that might get acquired or to really build something big and lasting. If it’s the latter and you can’t make it in the Valley, are you really good enough to be a billion dollar company?

For good measure, here is a nice piece Evan Williams wrote about it earlier this year. As you’ll see he’s mixed too, but I think his story underscores the more practical point: There’s an undeniable correlation with being in the Valley and success, so if it’s easier why wouldn’t you just move? Evan also points out the social advantages of living in a place where there’s so much creativity and entrepreneurial spirit in the air. Indeed, that seems to be the part people outside the Valley miss. Because it’s one of those things you need to be around to understand. It is the norm to want to build something here– that’s incredibly powerful to entrepreneurs in other parts of the world who are used to feeling like outcasts or silly dreamers.

I’m thinking about this a lot today (while everyone else still seems to be obsessing about Micro-hoo!), as I finish up a column on Isreali entrepreneurs for BusinessWeek. I talked about this a lot over there: Whether all Israeli startups have to move their HQ to the Valley or not, so check out my column this week for more. Israel has benefitted greatly from this symbiotic relationship, but the question is whether it holds them back from being a true technology hub. One interesting note: the people who tend to argue you don’t have to move usually aren’t in the process of building a company. They have either already made their money (frequently, by relocating to the Valley) or are investors, attorneys or other members of the startup ecosystem in markets outside the Valley. In other words, there’s a logical argument that boosters of Atlanta, Austin, London or Tel Aviv can make, but when it’s actually your business and you’re the one trying to mitigate risk of failure, it’s another matter.

There’s something about it that’s like looking at a baseball team’s lineup in April. It could look like a killer team on paper, but somehow on the field they just don’t gel. A city could have every natural resource a startup needs, and somehow lack that cultural glue, support system or whatever you want to call it that is really the intangible reason people don’t leave the Valley once they are here. A lot about this in my book, and I’d love to hear thoughts from any readers once it’s out and I (hopefully!) have readers.

And with that hackneyed analogy, I am off to a Sunday baseball game! Any Israelis: send me some final thoughts before I file!

Why Israel is an Innovation Leader?Yet Tough Times Ahead

by on April 19, 2008 at 12:00 pm

Gil Schwed had an intriguing answer: Israel began as an experiment in Jewish history. Innovation was built into the Israeli experience from the beginning.

Also technology development has always been a strategic component of the Israeli military advantage. That knowledge gets transfered to commercial applications better in Israel than anywhere else outside of the US.

Combine these factors with the influx of Russian engineers and scientists over the past fifteen years and Israel integration into the global innovation economy?Voila! You have the ingredients for successful innovation. Israel is considered to be the foremost region (after Silicon Valley) for technology R&D ?lots of venture capital, successful start-ups, attractive to many multi-national corporations.

However, there are clearly major problems Israel faces to sustain and benefit from these advantages:

  • The wealth is more highly concentrated among a few, while poverty and despair increases for many. The digital divide is a wide chasm in Israel.
  • The education system is deteriorating and the continuance of a skilled workforce for technology?essential for sustained economic development in attracting global business?may be seriously limited.
  • The Israeli confidence in themselves is lower. I spoke with a wide spectrum of Israelis from religious to secular, family, friends, and new acquaintances. Collectively they signaled to me they are not pleased with what is happening both within Israel and from without. To put some perspective on this, recently 81% of the American public thinks our country is going in the wrong direction; however, they are mostly happy themselves and have more positive confidence in their institutions than the Israelis seem to do. Many Israelis do not have trust in their government, Arab and Iranian hostile intentions, and believe the quality of life in Israeli society is declining.

While Israeli innovation is a bright spot, Israeli mood seems to be in a slump.

Passover is a season of moving to hope from despair, to freedom from slavery, and to strength from weakness. Perhaps we can also see innovation as a driving force for improvement with positive intent from Israelis collectively for themselves.

Cisco Israel Uses Tech to Build Tolerance

by on April 19, 2008 at 12:00 pm

Can geographically dispersed teens in Israel and the Mediterranean countries create a web based community to increase their own improvement in school, their self-image (believing in themselves and wanting to change), English proficiency, and more their openness to others? Cisco Israel (a branch of the Global Internet company based in the SF Bay Area) is piloting a program that could be scaled to thousands to find out.

Zika Abzuk-Darnell is Cisco Israel Manager of Public Benefit Investment Europe and Emerging Markets.

She manages the social responsibility team. These are large projects that use technology for economic opportunity. Cisco is investing in youth. Web 2.0 technology is a mirror of Western society: the individual is the one who ventures and connects. In the Middle Eastern and African cultures it is difficult to do a program strictly for individuals. They view themselves as part of family and community.

Zika talked about an intriguing pilot program MYTEC ( Mediterranean Youth Technology club).

MYTEC shows how technology can be used for positive social change?web 2.0 with guidance. This enables students to learn about each other and participate. The teens (14-15 year olds) are recruited from Morocco, Egypt, Yemen, Israel, Palestine, Turkey, Greek Cyprus and Portugal. Religion and ethnic identity play an important role in each country. The challenge is: How to foster the interpersonal skills to create business leaders in a global economy that transcends religion and ethnicity.

Cisco selected young leaders (20-30 year olds) in each country to be the instructors for the teen participants. The company brought 20 of these leaders to Marrakesh to teach them English over a two week intensive training program. They also taught them team building and tolerance of others skills. Together they created and built an Internet platform to relate to the kids. One of the instructors was an Israeli Arab. The Arabs who live outside Israel did not know there were Israeli Arabs. They became a team; the social curriculum they developed for kids they experienced themselves. For example, each instructor brought a game from his country and taught it to the group to play together.

Instructors created a virtual development team. The knowledge of the platform is now In seven out of eight countries. Students are in classrooms twice a week in a community knowledge center equipped with computers to learn English, technology skills, and guided activities to learn about each others? culture. The Moroccan kids created a video of how to cook a Tagine. The Turkish kids tried to cook the dish together. They teach each other songs from their home countries. Using video conference software, they have guided conversations and they can post photos.

However, as with any community site trying to bridge differences during national conflict, there can be problems. For example, one of the Moroccan kids posted a message after 140 people were killed in Gaza that Israelis are slayers. Here is when Instructors showed ownership of the program. They took this example and turned it into a lesson on ethics of how to communicate on the Web. First, the instructors enabled a student debate on rules for posting opinions. Eventually, the students agreed on a protocol for confrontational messages in their web community. They discussed the caricature of Mohammed, what is allowed and freedom of speech; Israeli kids spoke of what they thought should be allowed. The kids in each country had their own debate; they developed ground rules of how to communicate. The kids have become ambassadors of change within communities. They learn technology and volunteer what they learn and open the community center and invite parents.

MYTEC is a good example of how Web 2.0 interactivity can be used for positive social change.

Check Point’s Gil Shwed Believes in Israel

by on April 17, 2008 at 12:00 pm

Checkpoints_gil_shwed_10 Our group met with Check Point’s CEO and founder Gil Schwed today in Tel Aviv suburb Ramat Gan, the same stretch of land where the Barkats’ grandfather, a bus driver once grew tomatoes. According to Rosenthal’s research, he is nicknamed “Gil Gates” after successfully growing Check Point into a $20 billion stock market value company by 2001.

I shot a 15 minute video of Gil telling his ’story’ on a Nokia GSM video phone, but it sadly seems to have disappeared. If I can somehow reclaim the footage, I’ll post the video at a later date. Scoble also shot him in high resolution so if my raw footage is lost, you can watch the interview on Fast Company.com later this month.

Checkpoints_gil_shwed_6

One of the things that was an underlying thread throughout all of his business examples and recap of Check Point’s history, was his love of Israel and his belief that running a technology company here is easier than it would be in the United States. Easier and more efficient. He also brought up several other points.

Says Gil, “we?ve had an entrepreneurial spirit for over 100 years. My parents came here, trying to build something new. First agriculture, then infrastructure and today, technology. One thing that really helps us here is that we don?t have a local market.

What if we had started Check Point in Boston rather than Tel Aviv? Here, we think more globally. In the states, France and Germany, you have large local markets, which means creating and thinking in those languages and for those cultures. We are thinking of customers who are 6,000+ miles away from home.”

Checkpoints_gil_shwed_7

More than anything else, he stressed the benefits of building a company in Israel. “People are loyal here,” says Gil. “They are driven, think globally, and have a lot of passion. Because they are far away from the energy of Silicon Valley, they are focused on products and listening to customers, not the hype and latest trends.”

He thinks that being in an environment where a new trend born every few months is distracting. In Silicon Valley, there’s always a new trend and if people don?t jump on that bandwagon when it hits, they feel left behind. “Not the case here,” he says. “People work at companies for 3-5 years or longer and don?t feel as if they?re being left behind. They feel like they?re part of a group, a community, that they?re building something.”

In Rosenthal’s book, what it means to be an Israeli entrepreneur comes through as strong as it did today when we chatted in one of his conference rooms on Tel Aviv’s Ha’solelim Street. She describes him as a ‘boyish looking bachelor with cropped hair and John Lennon glasses.’ I didn’t quite see him that way, but I do think she did a great job of bringing his dry and serious wit to life.

During his interview with her, he noted that Israel is a natural for start-ups. Yossi Vardi feels the same way as does numerous other driven and successful entrepreneurs in this country.

Like Gil’s references today, he brought up the impact that immigration has had on business growth, particularly technology. He has immigrant mentality – strong, committed, loyal, passionate, driven and practical. I have read in a few articles that wearing black clothes is one of Gil’s trademarks, so I expected him to walk through the door wearing all black, and he did. Not surprising that he thinks wearing all black is “practical.” When you travel as much as he does, it makes sense.

He tells an amusing story of his resourceful mother in the book, an example from childhood that I resonated with. I think his mother and my grandfather would have really hit it off since my grandfather pulled similar stunts on a regular basis when I was growing up.

He recalls traveling around the country with her. “She’d see a dairy and stop and ask, ‘can my kid watch how you milk cow? She knocked on the door of Ha’aretz and asked, ‘can my kid see how you print the newspaper?’

It’s the best way to raise kids in my opinion. It gives children a sense of adventure and shows them how easy it is to create it. If it doesn’t feel right or you’re not sure, just ask. How will you know if you don’t try? I was raised that way but its no surprise since I was raised my grandparents, a generation behind most of my counterparts.

That generation is closer to the early immigrant mentality that Israel is experiencing today. It is during this stage of building a new country that great innovation happens. Passion and energy levels are high. There isn’t a lot of fear nor is there much complacency.

People hunger for growth and knowledge and with these characteristics, comes great things, like the amazing technology that came out of Check Point more than ten years ago and is being launched today in incubators and start-ups. Great innovation is coming out of kibbutzim as well but that’s another story to be told. Stay tuned. It’s a story that will likely bring tears to your eyes.

 

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