The Emergence of Innovative Israeli Technology Companies

Innovation is the central issue in economic prosperity.
— Michael Porter

Israel is a very small country. It is smaller than New Jersey with a population less than that of New York City. It has no natural resources. It is surrounded by enemies that have been trying to eliminate it since its inception over sixty years ago. It is constantly in a state of war. 

It is also the most innovative country in the world.

As Jared Diamond said, “Human societies vary in lots of independent factors affecting their openness to innovation.” This in part explains Israel’s success. Israel is one of the most open countries in the world and the only democracy in the Middle East. It has the highest ratio of university degrees to the population in the world as well as the highest percentage in the world of home computers per capita. In Yossi Vardi’s school, there are children from 48 nationalities from every color, race, and religion.

Many of the everyday tech products we take for granted were invented in Israel. Every major technology company has a large operation in Israel. The advancements in software, hardware, cleantech, pharmaceuticals, biotech, agriculture, irrigation, Internet, medicine, and medical devices are truly astonishing. As Bill Gates said, “Israel represents the leading edge of innovation.”

This was most evident during the recent Israel Conference on June 3rd, 2010, where a number of Israeli technology companies were on display. Companies representing cleantech, biotech, mobile software, water desalination, as well and Internet technologies were presenting their latest innovations. As I listened to one amazing company after next, spoke to the founders and CEOs, and learned more about their attitude toward entrepreneurship, I realized this success is a cultural phenomenon, positioning this small country as the world leader in these industries. Steve Jobs famously said, “Innovation distinguishes between a leader and a follower.” Israel’s leadership position is becoming very clear.

Albert Einstein said, “The true sign of intelligence is not knowledge but imagination.”  The Israeli entrepreneurs are extremely smart, courageous, hard working, and imaginative. 
Israelis do not take no for an answer and are not easily intimidated. After all, they are used to dealing with terrorist from a young age. How could a mere VC possibly intimidate them? Another important factor is the ever present common sense. Although that seems rudimentary, Voltaire famously said, “Common sense is not so common.”

Peter Drucker said, “Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.” There is much we can learn from this amazing group of entrepreneurs. As my favorite president, Ronald Reagan said, “There are no great limits to growth because there are no limits of human intelligence, imagination, and wonder. 

If you have not read the book, the Start-Up Nation, I highly recommend it. It explains why Israel has become the most incredible, innovative incubator in history.

Ivan Nikkhoo