Startup nation at 75: creating something out of nothing
Israel boasts a tech scene that older and larger countries can only dream of, writes Charlotte Henry
Israeli firms lead the world in a number of fields. Some of the transformative inventions to have come out of the country include the navigation app Waze (bought by Google in 2013) and, back in 1979, the 8088 processor, which was created in Intel’s Haifa lab.
The country’s startups continue to attract attention. In 2021, amid the Covid-19 pandemic, a staggering $27bn was invested into Israel’s tech companies, according to data from Start-Up Nation Central, which aims to promote these firms around the world. That investment fell to $15.5bn in 2022, but that was still the second-highest year on record.
Country’s DIY spirit
When most people think of Israeli tech they think of cybersecurity, and with good reason. Check Point is a world-leading cybersecurity firm, founded in Israel in 1983. Its chief of staff, Gil Messing, tells Jewish News that Check Point “is the company that basically brought firewalls into the world and in many ways brought cybersecurity to the world”. While others lay claim to creating the first firewall, there is no doubting the importance of Check Point, which works with governments and companies around the globe.
Elbit Systems is another hugely influential company. It operates in the defence sector, producing high-tech hardware from helmets to UAVs (drones). It was established in 1966 and in 2022 generated $15.5bn in revenue. EVP and CTO Shuki Yehuda refers to the “innovation country of Israel” when discussing the country’s tech ecosystem.
What is it that has spawned this culture, these companies? There are a number of theories. One is the DIY spirit of the country. “By definition, our culture here is to create something out of nothing,” says Messing.
Amir Mizroch, who covered tech as a reporter at the Wall Street Journal and then worked as the head off communications for Start-up Nation Central, explains: “Until the discovery of natural gas offshore, Israel had no natural resources to monetise – it had to rely on the ingenuity and resourcefulness of its people. Resources were allocated to encourage this in the army and various defence research bodies, top-flight universities and research institutions, and funding to kickstart the country’s venture capital industry.”
Necessity and people’s drive are a recurring theme. Yehuda said that “we have in Israel a unique spirit of trying to combine our defence requirements… we didn’t choose our borders or our threat”. However, he adds that these often-difficult demands bring with them the “opportunity to create something that we can be distinguished between different countries”.
Indeed, many people consider the army and Israel’s national service requirements a key driver of the country’s technological development. In particular, the elite 8200 intelligence unit is often portrayed as a breeding ground for talent. Yehuda was part of that unit during his service and says “it’s not important, it’s crucial” for Israeli tech. Check Point’s Messing is less sure. He says that while the training in the army, in whatever field you work, gives “a lot of advantage” when it comes to career, because it’s professional, “the idea that many people globally had the connection between the army and specifically this [the cybersecurity] industry is more of a myth than reality”.
It’s not just in defence and security where Israel has come to thrive, though. Indeed, according to Mizroch, “the greatest Israeli tech products are the ones you don’t actually see, but the whole world uses”. He noted that Amazon Web Services uses chips that are from Israel’s Anapurna Labs, while “a lot of the computer vision chip design that’s in Apple’s phones” come from Israeli companies such as Sensetime. Ultimately, “everything you use has some Israeli product, engineering, design”, says Mizroch.
Tackling the climate crisis
Then there is green and agricultural tech. Israeli companies are working hard to help solve the climate crisis. According to PLANETech, a non-profit joint venture between the Consensus Business Group and the Israel Innovation Institute, there has been consistent development in Israel’s climate tech companies, with funding growing by 340 percent between 2018 and 2021. PLANETech even sent people to Cop27, a demonstration of Israel’s commitment to climate tech.
An example of one of these thriving climate-focused firms is Herzliya-based SolarEdge, which offers a variety of smart energy solutions. Shani Zanescu, a climate tech investor who co-founded PLANETech, explained why this sector is doing so well in Israel:
“The climate tech sector is resilient to market downturns, politics, or any other externality. Add it to the fact that we see more and more experienced founders moving to establish climate tech companies, and transitioning from cyber, fintech, and [software as a service] Saas to this field.”
Zanescu believes that “we can expect a continued growth of climate top-notch technologies coming from Israel to address the world’s most pressing challenge, climate change”.
What next?
The story, though, is not just about new companies being founded over the past 75 years. Many of Silicon Valley’s biggest firms have staff in Israel – Apple alone has 2,000 employees in the country. That said, the domestic ecosystem continues to grow organically too. For instance, Messing says 42 companies alone have been founded by Check Point alumni. He also believes the industry in Israel can thrive more by improving diversity and including more women, Arabs and those from the strictly Orthodox community. “If these populations would not be part of the tech industry, then at a certain point is going to be a shortage of talent,” he says.
For many, the focus is, understandably, now on artificial intelligence (AI). We are already seeing that companies such as Google, Meta, Intel and Microsoft using Israeli technology, according to Mizroch, who highlights that many research and development leads in the field come from Israel. He also says work in the area of greentech is likely to continue to grow, with fintech and crypto development in Israel always worth watching too.
Elbit’s Yehuda adds that the helmet technology his company produces could be adapted and used in the metaverse. He also believes that companies from his country can be at the heart of the automotive transportation revolution that is clearly on the way.
MobilEye is one company from Israel that has made itself a key part of the automotive sector. Founded in 1999 by Prof Amnon Shashua, it developed the original single-camera-based system used for automatic emergency braking in vehicles. A MobilEye spokesperson explained:
“MobilEye’s success laid the cornerstone of the Israel start-up culture, which combines a highly educated workforce with the driven, problem-solving, internationalist mindset embraced by Israelis.”
The government plays something of a role in what comes next too. It has supported the industry through measures such as tax breaks. Messing believes that to really support the country’s tech scene now “the best thing the government can do is just let it be”.
Israel, then, may only be 75 years young, but when it comes to technology, it has long established itself as one of the key centres of innovation, with much more to come.
- Charlotte Henry is a technology journalist and podcaster
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