The State of Israel has welcomed the opportunity to self-style itself as a technology startup nation. Scotland coined the term Silicon Glen to denote its tech growth zone just outside Edinburgh and beyond, Utah has Silicon Slopes and Dubai has Silicon Oasis. Logically enough then, Israel went for Silicon Wadi as the term to symbolize the location of its tech business hub, with the term ‘wadi’ meaning dry desert river bed in Arabic and colloquial Hebrew.

But why should Israel have shown its mettle in the tech market? What drove this region to become a software-centric startup nation of young companies vying for a place on the global tech map?

Part of the answer comes down to the local mindset, mentality and morals — after all, the country is well accustomed to fighting for its place. The wider answer is the combination of resources (largely human, not natural ones), higher education, the widespread use of English and the steadfast grasp the nettle attitude that typifies the local culture.

Curses into blessings

“We have a longstanding tradition of turning curses into blessings,” said Jon Medved, CEO of OurCrowd, a Jerusalem-based global venture investment platform organization. “We don’t have huge natural resources, so we have worked hard to develop our skills-base in the country. I don’t want to over-play the Jewish rhetoric, but there is a certain mentality that leans towards risk acceptance here… and people develop that from a young age. In my view, great achievements (in life – and in technology) are made by taking lots of risks, but in a calculated way with a diversified approach to everything.” 

Does Medved think that Israel can produce the next Twitter, the next Amazon or the next Uber? He’s sanguine but balanced on that score. “There’s an old Jewish saying: the age of prophecy ended with the prophets,” he said, suggesting that anything is possible and nobody really knows what’s coming next.

Medved acknowledges the need for software application development to be spread across as wide a democratic transept as possible.

“People talk about the need to ensure we include neuro-diverse skill sets in the software business. So it’s not going too far to suggest that we also need to inject culturally-diverse skills into the global mission to build code and manage data. Some parts of the world are good at the execution side of managing information technology operations, others are better at the ‘ideation’ side of the spectrum… and I think Israel falls into the latter category,” said OurCrowd’s Medved.

Since its inception in 2013, OurCrowd has been behind some $1.4 billion in committed funds for over 200 startups and 20 funds. The organization offers its services for both institutions and individuals and works to vet and select emerging companies to invest in. Technologies developed under the OurCrowd umbrella include software application startups focused on everything from AI-enabled smart driving sensors to MedTech, HealthTech and SportsTech innovators.

From the army to apps

Medved’s insight into Israel’s technology industry comes from his position as an American born Jewish man who relocated to the Holy Land some 40 years ago. His sentiments are reflected by chairman and chief scientist of the Israeli Innovation Society Dr Ami Applebaum.

“The mindset of military service excellence is instilled in every citizen from childhood,” said Dr Applebaum. “You [as an individual] know that you will be stretched to the extreme limits of your abilities… a good deal of that drive has to stay with people throughout adolescence and as they enter the workforce. The army teaches you teamwork and the skills to make life and death decisions. Given our global reliance on [mission critical] software, a lot of the technology we touch every day is also responsible for our personal welfare at a similar level,” said Applebaum, speaking at a recent press gathering.

So the trend here is clear enough, Israel needed to create and make (as in the maker culture movement) if it wanted to build a new industrial base. With other more oil-rich states around it not necessarily driven by that play of the cards, the country has tried to make the best of the hand it has been dealt.

“Much has already been made of Israel’s high-tech industry stemming from graduates that have completed drafts in the country’s elite military intelligence units such as the Unit 8200 Intelligence division. While most Western software developers may not feel like they have too many parallels with the armed forces in any part of the world, there are actually a lot of shared skills,” said Liran Grinberg, Partner and Co-founder of Team8.

Grinberg points out that good software comes from experimentation, problem solving and the ability to be able to adapt to change as quickly as possible – so perhaps the connection isn’t that tough to make. “Software flourishes when developers are able to fail fast and move on to do better,” he added.

Matriculation situation

While the Baby Boomers and most of Generation-X will find the notion of early exposure to computer science classes quite alien (depending on whether or not they have children themselves), CTO and co-founder of .NET debugging company OzCode Omer Raviv points out that from their early school days, Israel’s students (like those in the West and other developed nations) are encouraged to engage with software.

“There are fairly advanced computing studies as early as middle school (ages 13–14), through to college matriculation [entering university],” said Raviv. “Software is a huge industry in Israel and there’s always a massive demand for good software people. As a result, whether it’s in engineering, product management, sales, or even non-technical roles such as HR, positions related to software offer the best compensation packages in the market, attracting the top talents. These beat the relatively-low salaries in Israel for the traditional professions; ask most Israeli mothers today if they would prefer their children to be doctors, lawyers, or software professionals… and it’s a no-brainer for them.”

Startup nation

The term startup nation was the title of a 2009 book by Dan Senor and Saul Singer about the economy of Israel. Just as many people might not remember that Scotland’s John Logie Baird is credited with the invention of television, many others may not know that Israeli software engineers developed Google Suggest (sometimes called autocomplete), the list of suggestions that appears instantly in drop down form as you type a search request on the Google homepage.

What happens next will be interesting. Israel can’t call itself a startup technology nation forever i.e. more and more of these tech innovators will need to graduate to become fully-blown operational concerns. Although what often happens is the smaller tech disruptors end up getting bought by international tech heavyweights — the ICQ messaging system purchase by AOL (developed by Israeli company Mirabilis) being among the most famous of these. We can also see major firms like Microsoft and others establishing production plants and research centres in the region, so Israel won’t want to see its talent being bled outwards either.

Either way, Israel’s technology zone has put itself on the map from what (to outside eyes at least) appeared to almost nothing at the turn of the last millennium. Software development works well in a melting pot, it just needs some hot sauce… and they have that too.