Israel’s Chief Scientist Avi Hasson talks about the cornerstones of the Israeli psyche such as determination and guts that have kept his nation at the forefront of innovation.
By Anna Teo, Business Times
– PHOTO: YEN MENG JIIN
IF Israel takes a leaf out of chipmaker Intel’s book with an “Israel Inside” branding campaign, the tagline would be found on just about everything commonly used by people around the world – from computers and cellphones, online social networks and supermarket cash registers, to sources of clean energy, medical devices and miracle drugs.
The remark – attributed to an American-Israeli venture capitalist in Start-Up Nation, the 2009 bestseller that delves into what’s behind Israel’s economic miracle – sums up the prevalence of Israeli technology in everyday life. The “embattled sliver of a country”, home to 7.8 million people, is usually in the news over hostilities with one or other of its Middle East neighbours. Rather less widely known, particularly before Start-Up Nation, are its slew of trailblazing feats of technological and biomedical innovation or its list of “world’s number one or two” rankings – not only on a per capita basis (number of start-ups; number of university degrees; ratio of scientists in the workforce; venture capital dollars; etc) but even in absolute terms (R&D spending as a percentage of GDP; country with the most companies listed on the NASDAQ, after the US).
Little wonder, perhaps, that Avi Hasson, the country’s Chief Scientist, baulks when asked what, in his view, is the top Israeli innovation.
“Wow, there’s no way you’re going to drag me into that, because I’ll be insulting half a dozen people,” he says, chuckling. “If you take a look at the list (of Israeli innovations), it’s a very, very long list. What I’d say is – it includes a lot of things that impact the daily life of each one of us. It’s the phones we talk on, the water we drink, it’s a lot of different things created with Israeli technology. Not always by Israeli companies but by Israeli technology.”
Indeed, Israeli researchers came up with not only the cellphone, anti-virus software, voicemail technology, the ICQ instant messaging software and Intel’s 8088,MMX and Centrino microprocessors, they also produced cherry tomatoes, the world’s first epilator, as well as an air supply system that frees scuba divers from air tanks.
For all the constant sabre-rattling by foes all around, Israel has drawn a multitude of multinationals that chose, strategically, to set up core R&D operations in the country. As the “Israel Inside” wit put it, “the reason that Israel is inside almost everything we touch is because almost every company we touch is inside Israel”.
IBM, Motorola, Intel, Microsoft were among the early birds, followed by Cisco Systems, Hewlett Packard, Alcatel Lucent, Philips Electronics in the 1990s, and more recently, eBay, Google and Apple. In all, more than 250 MNCs have established R&D centres across Israel’s “SiliconWadi”, its high-tech community spread out over much of the country, from the coastal plains between Haifa and Tel Aviv, to clusters around Jerusalem and Beersheva down south.
“We have a lot of start-ups and large established Israeli companies, but the MNCs represent a big part of the story,” says Mr Hasson. He is speaking to BT after giving a talk on Israel’s innovation ecosystem, an event organised by the Singapore Venture Capital & Private Equity Association. The purview of Israel’s Chief Scientist is not so much scientific or technological matters but rather to encourage and drive industry R&D.
“The main reason MNCs come to Israel is because they look for innovation, for R&D talent, for a supportive environment,” says the former venture capitalist. “It’s the technology. It’s not about being a hub or services industry; in that respect, it’s very different from Singapore and others. This is why, if you look into what they’re actually doing there, you’d find that in many cases, it’s the really leading-edge, the most advanced, products that are being done in those R&D centres in Israel. Only out-of-the-box thinking.”
Intel CEO Paul Otellini has said that some of the chipmaker’s “most sophisticated engineering efforts” are carried out in Israel. And an American eBay executive told the authors of Start-Up Nation : “Google, Cisco, Microsoft, Intel, eBay… the list goes on. The best-kept secret is that we all live and die by the work of our Israeli teams… What we do in Israel is unlike what we do anywhere else in the world.”
Indeed, most MNCs in Israel thrive by acquiring local brainpower, via start-ups, Mr Hasson adds.
He cites Cisco, Broadcom and Microsoft among those that have each “bought a dozen” Israeli start-ups, along with growing organically. “It’s a big part of the strategy” – as much for the host country’s dynamic ecosystem as for the MNCs’ own competitive edge. Among Israel’s home-grown successes, its biggest company, Teva Pharmaceutical Industries, for instance, is the world’s largest manufacturer of generic drugs. With its concentration of high-tech start-ups – more than 4,000 in the small country, the highest density anywhere – many see Israel giving Silicon Valley a run for its money. Mr Hasson – who spent two decades in the high-tech telecommunications sector before becoming Chief Scientist two years ago – himself seems a little more circumspect.
During a visit to Tel Aviv late last year, Microsoft CEO Steve Ballmer had cited Israel as the number one place, outside of California, with the atmosphere and assets of Silicon Valley, Mr Hasson tells BT.
That may be so “but I won’t say it’s the only place in the world”, he declares.
“Today you have more cities coming in; certainly more and more countries understand the importance of innovation, entrepreneurs, SMEs and so on; resources are being dedicated to these. It’s amazing, if you go to Shanghai or Berlin or many other places… Singapore has always been a very strong place for innovation.”
But yes, “Israel still has a strong position”, he says. And as Chief Scientist, charged with implementing government policy to spur industrial R&D, he plays a key role in ensuring that Israel maintains its first-tier innovation hub status.
“It’s a six-year tenure, regardless of how many ministers come and go,” he says of his appointment, emphasising that the Chief Scientist is “not a political position” even though it comes under the Ministry of Industry, Trade & Labour. “There’s no intervention in the professional activities,” he adds.
Formed in 1969, Israel’s Office of the Chief Scientist runs various schemes, chiefly grants for R&D, that include support for Israeli firms to undertake joint projects with foreign partners. Israel has some 50 bi-lateral R&D pacts with countries world-wide, of which four are bi-national funds – with the United States, Canada, South Korea and Singapore. As chairman of the Singapore-Israel Industrial R&D Foundation, Mr Hasson comes to Singapore at least once a year to attend board meetings. One Israeli scheme in particular has earned worldwide notice. Yozma (which means “initiative” in Hebrew) sees the government co-investing with venture capitalists in new Israeli technologies but getting out once the project is up and running – an unusually good deal, from an investor’s perspective. Widely credited with creating the country’s flourishing VC industry and fuelling its high-tech drive, Yozma is also seen as one of the few cases anywhere, if not the only case, of successful government intervention in venture capital. But while the high-tech sector is a key pillar and engine of the economy, the most defining feature of Israel’s economic dynamism is not so much technology but entrepreneurship, says Mr Hasson.
“You’ll find entrepreneurs in Israel not only in the high-tech sector, you’ll find them in totally different sectors as well.” Indeed, entrepreneurship is a disease in Israel, he says. “Absolutely. If you sit in a Tel Aviv restaurant and start talking with the waiter, you’ll see that he is either thinking about an idea or is actually working in a start-up but also working as a waiter. I think ‘entrepreneur’ is a good word. There are places in the world where if you say ‘I am an entrepreneur’, the other person says, ‘Oh, you’re unemployed.’ In Israel, it’s something to strive for. Entrepreneurs are role models, very highly regarded. And again, not only in high tech.”
In Start-Up Nation, authors Dan Senor and Saul Singer dig into how Israel’s adversity-driven culture fosters a unique, potent combination of innovative and entrepreneurial intensity. Call it a “culture of disagreement and debate”, Israeli impudence or sheer chutzpah. The book is replete with examples of how a willingness to take on higher authorities, rather than simply following directives from the top; indeed, “gall, brazen nerve, effrontery, incredible guts, presumption plus arrogance” – apparently typical traits, the “normal mode of being” for Israelis at all levels – translate to steely determination and double-quick action when an Israeli decides to get something done.
As Mr Hasson told his Singapore audience of entrepreneurs and venture capitalists at the talk earlier: “Ideas are not the most important; probably 15 people in this room have the same ideas, but only one of you will do something about it.”
Referring to the book, he tells BT:“Start-Up Nation doesn’t only mean that we are a nation of start-ups; it also means that the nation itself was a start-up. If you look into the story of the creation of the modern state of Israel, it’s very similar to a start-up, you know. Against the odds, limited resources, and so on, that’s a big part of the ethos, certainly.”
In other words, self-preservation instincts lie behind the entrepreneurial bent of Israelis ?
“I think it’s part of it,” says Mr Hasson. “Part of it is tenacity and endurance, which again, is reflected also in other parts of the Israeli psyche. Withstanding hardship is something that both Israelis and the Jewish people know about, if you think about it.
“In fact, if you think about it, a lot of the ‘secrets’ were there even before the state was created. Jewish people suffered a lot, they had to be very creative because often they were prohibited from certain professions. They couldn’t own land, they had to invent themselves.
Sometimes they couldn’t be employed so they had to start their own business, they had to be entrepreneurs. They were global merchants so they travelled globally, and they also had knowledge and created communities worldwide. Add to that the importance of education. You know, the Jewish mother would always say to her child, ‘After all that we’ve done for you, the least you can give back is a Nobel Prize!’ So there’s a constant push for excellence that is there. It’s a big part of the values. It’s very powerful when you combine the two; I think it’s part of the ‘secret’…”
There’s also the fact about Israel being a nation of immigrants, who are, by definition, risk-takers, “not averse to starting over”, as Start-Up Nation points out.
Not least, the book also attributes Israel’s entrepreneurial culture in no small part to a critical rite of passage for every 18-year-old Israeli – enlistment in the Israel Defence Forces (IDF). The Israeli army is known to be highly technology-driven, innovative and enterprising. At the same time, it is classically free of hierarchies and traditions. The mandatory military stint is akin to boot camp for new tech entrepreneurs, and Israelis strive to be recruited into the IDF’s elite units the way students elsewhere vie for admission to top prestigious universities.
With his calm, cheerful demeanour, Mr Hasson might not come across like a “typical” Israeli, as stereotypes go. But his is a fairly typical background, he says, although he spent five years in the military as an intelligence officer, two years longer than the compulsory stint for males. “I served in one of those technology-oriented military intelligence units, and yes, I would have to say it (military service) is a very important part of the (Israeli) story, absolutely.”
His unit, Talpiot, is in fact what’s described in Start-Up Nation as “the elite of the elite in the Israeli military”, where cadets receive more rigorous academic training than what the typical undergraduate would get in Israel or anywhere else; learn about the technological needs of all IDF branches; and are trained, at the same time, to find cross-disciplinary solutions to specific military problems.
“Especially in these types of units, you get practical work experience of many kinds, you can consider as the beginning of your career in this sector,” he says. He started work in the high-tech industry immediately after his military stint, going to university only a while later. For a decade through the 1990s, he did market and technology research, business development and consulting in leading telecommunication firms such as ECI Telecom and ECtel.
Around 2000, he was approached by Gemini Israel Funds, one of the country’s first government-funded venture capital firms and a top-tier fund. As a general partner at Gemini, he managed the fund’s investments in the communications and consumer electronics sectors, and spent a few years in Boston. During his decade at Gemini, he also travelled and lectured, both in Israel and in the US, on venture capital and high-tech subjects.
What he did not do, unlike many of his army mates, was start a business. “No, no, I cannot claim to be an entrepreneur,” he says. “I have tremendous respect for entrepreneurs. When I was a venture capitalist, I worked with entrepreneurs extensively.”
And when he was offered the job of Chief Scientist towards the end of 2010, he was ready for the move.
“This is where I start to get embarrassed, but it’s basically about giving back – giving back to the country and the community. For 20 years I’ve benefitted and experienced first-hand a lot of the good things about Israel’s knowledge industry and innovation ecosystem, and I thought it was the right time to try and contribute a bit from the government’s position.”
A typical week sees him spending two days at each of the OCS offices in Jerusalem and Tel Aviv, leaving one day – “the best day of the week” – to visit companies, universities and laboratories.
When he first became Chief Scientist, he “put down a long list of goals for the job”, he says. One key priority is to strengthen the relationship between academia and industry. “We’ve done a lot to go upstream towards academia and try to create that pipeline, pull those technologies coming into industry in a coherent way.” Indeed, Israel is regularly ranked among the top 10 in the world for its research collaboration between university and industry – an alliance that has resulted in commercial successes.
“Another thing is really to shift the focus of resources towards other markets than just the US and Europe,” Mr Hasson says. “It has started with my visits – if you look at my travel calendar, you’ll see many more visits to Asia, Latin America, than to US or Europe, even though today, if you do a snapshot, the majority of our activities is still with those territories.”
After all, Israel used to have the biggest number of companies listed on NASDAQ, after the US. “We’re now just matched, I think even surpassed, by China,” he notes.