Discover Israel: Start-up Nation

Israel is a remarkable, fascinating and controversial country, bursting with energy, innovation, attractions and interesting challenges. With (by far) the highest number of start-ups per capita of any country, and massive venture capital investments, Israel is one of the world's premier technology and entrepreneurship hubs and has been dubbed the “start-up nation”.

What factors in the Israeli society contribute to the exceptional economic growth of this merely 68-year old country? What are the best (generally applicable) practices from Israeli firms? And how could we ourselves capitalise on new technologies, or even invest in or collaborate with Israeli firms? These are the questions we set out to explore during our 5-day visit to Israel, an MBA study tour and mini elective led by INSEAD Professor Ziv Carmon.

We had a super packed schedule, visiting firms from the IT, electronics, biotech, VC, social entrepreneurship and agriculture sector. We had the opportunity to meet some of the most remarkable Israelis as well as INSEAD alumni living and working in Israel. On top of all this, we also squeezed in time for cultural and tourist activities – all in all, a truly dazzling and amazing week in this fascinating country. Read on below about the highlights of our trip.

Day 1

After a delicious breakfast of burekas (savoury pastries filled with spinach or cheese) and rugelach (a typical Ashkenazi pastry with sweet fillings) in Tel Aviv we got on our bus to start the trek. We had three Jerusalem companies on our schedule before lunch: Mobileye, Orcam and Intel. Mobileye and Orcam both specialise in vision-based technology with different applications: one for autonomous driving systems (Mobileye) and one to assist visually impaired people (Orcam). It was truly mind-blowing to get an insight into these cutting-edge technologies and we had a great discussion about the different applications and opportunities they provide.

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Intel is an extremely important part of Israel’s history, and in the same way, Israel is an extremely important part of Intel. Intel opened its first office outside of the US in Israel in 1974, and since then, many innovations have come out of the Israeli offices, such as the first chip for laptop PCs and other blockbuster chips. Intel exports 4.25 billion USD of products annually out of Israel, which accounts for 8% of total Israeli industrial exports, 12% of Israeli tech exports and ultimately Intel accounts for 1.5% of Israel’s GDP with over 10,000 employees! After learning about the incredible story of Intel in Israel, Shai Kavas, COO of Business Client Security Innovation, explained to us how they are able to foster a culture of innovation at Intel despite it being such a large corporation.

This is done mostly by encouraging its employees to be corporate intrapreneurs through various methods. Shai was actually able to turn the Jerusalem office from the least to the most innovative office in one year by encouraging its employees to think outside of the box. Many companies are now looking to his services to turn themselves into innovation leaders!

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After lunch, we went to visit Yad Vashem, Israel’s Holocaust memorial and museum. This was an extremely moving experience for many of us. The memorial is full of stories, very sad stories obviously, but this makes the experience more personal as it tries to put the visitors into the shoes of the Jews in the time before and during the Holocaust. Emotionally this can be very hard, but no visit to Israel would be complete without this iconic and important memorial of one of the greatest tragedies of mankind.

Our day ended with dinner and drinks at a very nice restaurant in the Neve Tzedek neighbourhood in Tel Aviv, where around 20 INSEAD alumni joined us to share their experience about living and working in Israel post INSEAD. It was a great way to end an amazing first day of the trek.

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Day 2

We started the day by meeting Dr. Michal Tsur, the CMO of Kaltura, a firm providing a searchable platform which allows users, especially enterprises, to create, collaborate and distribute video content. We learnt about Michal’s many different endeavours before Kaltura, and a strong attribute she shares with many entrepreneurs in Israel – they are not afraid to fail. Another value she highlighted to us was the importance of team spirit. “A company bonded only by one single brilliant idea tends to fall apart quickly if the idea does not work out,” she said. “A team with great chemistry, however, can soon adapt to the challenge and pivot to continue.”

Next, we went over to the buzzing Tel Aviv University (TAU) to meet the founder of Cyber Spark, Roni Zehavi. We had a great discussion about the cyber security ecosystem and the role played by government, industry, people and universities. Israel punches above its weight in the world arena when it comes to cyber security. To learn more, we headed over to Check Point, the world’s largest cyber security company. After a great session with the VP of the FP&A department, the CEO, Mr. Gil Shwed joined us.

A very humble and genuine person, he answered all our questions right from ideation, investors, teams, scaling and future applications. He stayed longer with us than he was scheduled to, which was really an honour and indication of the quality of the discussion we had with him. One of our takeaways was his advice to suspend a product if the market is not ready yet and come back later. He also cautioned against raising too much money and other bad decisions in start-ups.

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We spent the evening at the beach, which offered a beautiful view of the sunset and a cool breeze provided us relief from a hot day. Over a nice local seafood dinner we reflected upon the stories of the amazing companies and entrepreneurs we had met so far. They are really inspiring and helped us to internalise the concepts we’ve read in various business books.

Day 3

In the upscale area of Tel Aviv, we met Mr. Avi Zeevi, the co-founder and general partner of Carmel Ventures at their office. We had a very insightful discussion about innovation and people development in Israel. Israel is constrained geographically and has several cards stacked against it (which reminded us of Singapore in the 1960’s), which forces the state to innovate, globalise and develop talent. A well-known fact: the military, where both men and women serve mandatorily, is a strong people developer.

It also has the highest R&D investment in the world, when compared to GDP – a whopping 4.2%. Echoing the sentiments of the entrepreneurs, Mr Zeevi pointed out that an enthusiastic team is key to success. He also emphasised the importance of understanding the market dynamics, in addition to a scalable business model.

Our second stop was at NICE where we were greeted by the VP, Mr. Itai Brezis. NICE specialises in human behaviour data analysis for the B2B market in (almost) real time. A service centre, with customers, their emotions and the service centre agent’s capabilities (which can sometimes be mismatched) is a good example where NICE’s solutions could be used. The company started out as a voice recording company but adapted to market needs and reinvented itself to add on sales optimisation, cross channel analytics and retail solutions.

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For lunch, we made a pit stop at Hakosem, a popular shawarma and falafel joint in Tel Aviv, followed by a visit to the Pearl Cohen start-up accelerator where we had the chance to talk to six young entrepreneurs. We had many interesting takeaways from this discussion: share your business idea with everyone and adjust or change the idea if needed; partners are important but what is more important is someone who has a different background and a different perspective. Some entrepreneurs even involved their significant other in a few business decisions. Finally, we met with Mr. Imad Telhami, the founder of Babcom (and four other companies) who provided us with some great social entrepreneurship insights.

After a packed and productive day it was time to check out the nightlife in Tel Aviv!

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Day 4

The day started with a meeting at JVP - a VC based in Jerusalem that has been at the forefront of innovation in Israel (Nerds Award for being the best VC in 2015, Most Active VC Award by amount of investments, etc.). Founded in 1993 with local government support, it is one of the earliest and top performing VCs, managing 10 funds and 1.1bn ILS in portfolios. Leveraging the industry expertise from their full time partners and advisors, JVP focuses on Big Data cyber security, storage and enterprise software, as well as Media, Mobile and IOT.

Overall JVP meets over 900 companies per year and invests in 1% of them after a careful selection process. Examples of companies invested include Cyberark (IPO’ed) and Cyactive (Investment of 400K ILS and sale to Paypal for 60MM ILS). Apart from its economic impact, JVP was also pivotal in improving the social environment around its office location: amongst other activities, it helped to build a music club and supermarket, thereby making the vicinity more desirable to potential new inhabitants and entrepreneurs.

Next we met another VC named Ourcrowd, which again, has a very unique VC model by leveraging crowd funding where they co-invest in a company together with multiple accredited crowd-investors, placing 170 MM ILS in more than 90 companies over the past 2 years (latest select ratio being around 2%). It was super interesting to learn more about their extremely sophisticated selection process.

As a highlight at the end of the day, we met with the ex-Finance Minister of Israel and potential future Prime Minister, Yair Lapid, for a very engaging discussion about Israel’s political and economic landscape. According to Lapid, the key to Israel’s survival and the basis for its “start-up nation” lies in the quality of the public education. Yet, this sector is about to be disrupted majorly in the future, given that with the internet, students now “know more than the teacher”. Hence, a stronger emphasis is needed on “how to learn” and “how to acquire new skills” rather than “what to learn”. Lapid believes that the country that first masters this challenge will be the one to lead the educational landscape in the world – and Israel aspires to be that country.

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Day 5

Day 5 had yet another amazing line-up of companies and speakers in store. In the morning we learned about the potential “next big thing”, a spectrometer possibly built into our phones. Use cases you ask? Well, how about checking out the purity of that hummus? Thanks to products like Scio, from its parent company Consumer Physics, we will be able to hold our phone right next to almost any product and receive information about its physical specifics – such as its purity, fat content or protein level. It can also discover whether a specific pill is the actual drug that it claims to be, which we tested with a little round blue pill (while the spectrometer claimed the pill to be Viagra we could not be sure as we couldn’t find a volunteer in our group to test it). It looks like the technology will be available very soon and we were all excited to be able to use it in the near future.

At Beyond Verbal, an interesting start-up relying on applied research into the mechanisms of human intonations, we saw a product demo analysing Leonardo DiCaprio’s Oscar acceptance speech, and some of the findings were in line with what everyone was thinking. Leo’s voice reflected nostalgia as the poor chap was awarded an Oscar for what some deemed to be his least deserving performance (“Wolf of Wall Street” anyone?) and also reflected a bit of acting and insincerity when talking about global warming. We also watched an analysis of Donald Trump’s speech, which confirmed everything we always thought about him - he’s an actor with the potential to take away an Oscar from Leo. You can check out the technology we experienced by downloading an app called “Moodies” from the same company.

The last company visit of our trek was at Netafim – a company revolutionising agriculture by significantly reducing the amount of water used through farming practices. The presentation conducted by a former McKinsey consultant helped us all understand the problems faced by global agriculture and, frankly, humanity – in the grand scheme of things, Netafim’s revolutionary “drip” technology can help solve world hunger in the future.

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After another extremely busy day, we headed for a final tour of Tel Aviv and a visit to one of its food markets for more shawarma and hummus... who can resist these delicious dishes? As our trek was coming to an end we couldn’t help but be in awe at all the amazing companies and people we had met throughout our five short days in Israel – truly, a “start-up nation” indeed!

Authors: Daniel Zachmann, Jon Su , Oscar Zhang, Tom Zacharski, Joshua Bao, Alice Yang and Amily Chuang

Edited by: Nithin Bharathy, Avantika Jain, Tarun Kinra, Irene Peschel and Sujin Saj Samuel

Photos: Chetna Shastry and Jia Yu