A European Perspective on Israel’s Startup Success

TAGS: culture / israel / startups /
Jan. 03, 2020 / Axell Team

Mobileye, Waze, Wix, Fiverr, MyHeritage and many other Israeli companies achieved international admiration. All were born in the so called Startup Nation – in Israel.

I first moved to the holy land in 2018 after I have lived in Silicon Valley for a while. What caught my interest was the tremendous innovation power coming from a very small population of just 8 million people.

I arrived with the goal to find out more about their ‘secret’ success DNA, which made Israel rise to one of the most tech-savvy countries globally. Seemingly, a large amount of globally recognized corporations shared my interest and opened up their innovation outposts in and around Tel Aviv in order to learn and collaborate with the local innovation ecosystem. 

During the first 30 days in Israel I scheduled over 100 meetings with locals, ranging from founders, investors, accelerators, corporates, politicians, military officers, religious people to usual individuals who don’t really care about innovation. 

I was surprised so many people were interested in meeting with me and even made time on short notice. However, afterwards I was told this is supposed to be typical for Israelis. It‘s the ‚getting things done‘ mentality as each new conversation can help grasp new opportunities. 

Based on my conversations, I was able to identify many characteristics that define the Israeli culture, mindset and behavior. Here are the 8 most significant ones:

1. Israel is famously low on natural resources, despite being in the otherwise oil-rich middle east. Consequently, the country is forced to create growth in other domains, which supports the urge for technological innovation to develop economic growth.

2. Israel is surrounded by political opponents. For decades the country has always been ready to defend itself as it faces permanent military conflicts. This sensitive situation demands progress. Stagnation is no option. Israel has to be one step ahead at all times to anticipate foreign actions against its interests. As a consequence, Israel became the global center of gravity when it comes to cyber-intelligence.

3. Israel uses its military as an incubator for innovation. Military service is mandatory in the Startup Nation. Man are on duty for three years and women for two years. Right after graduation, the 20-somethings join the army and receive not only a first class technological education, but also a tremendous amount of responsibility. Possibly a person in his twenties is in charge of hundreds of people, which leads to outstanding leadership skills. But not only the skills matter, also the close network within the army. Many startups get established by friends who first met during their service. Remember: Your network is your net worth.

4. Israel is direct and informal. Especially the army culture formed this behavior. Unlike most countries, the Israeli army encourages to speak up to superiors if someone has justified doubts about a decision made. An open culture, where people tell their forthright opinion is core to challenging the status quo and coming up with novel approaches. 

5. Israel puts a lot of focus on education. 75% of the country’s population are Jews and due to frequent political persecution throughout the past, Jews tried to learn academic professions, which allowed them to move places quickly. A doctor, lawyer or banker doesn’t need big machinery or assets and can practice almost everywhere. A high educational level is still of great importance in modern days. Namely, one who can comprehend complex problems is more likely to come up with big solutions. 

6. Israel is the inventor of risk-affinity. Not literally, but figuratively. If you remember the past, Jews had to take big risks for many times. This coined a mentality of permanent departure and movement. In comparison, taking risks to do a startup are very low. Thus, the fear of failure is significantly lower in contrast to other countries. 

7. Israel is a melting pot. Multiculturalism is a core building block of the Israeli culture. Due to the Zionism-movement, people from all over the world move to Israel and bring diverse skill sets, problem solving capabilities and ideas to the table. 

8. Israel has purpose. There is a big community feeling as the common vision for Israel is to be the safe harbor for every single Jew. Togetherness triggers the mutual support, which is crucial attribute when building a startup.

While more and more global corporations come and try to work with the startup community, they often lack:

  • a deep understanding of cultural subtleties
  • a deep network within the ecosystem
  • as well as proven processes to create new products and services in order to effectively collaborate with startups.  

That’s why we have established Axell – the innovation hub for financial services incumbents, who see Israel as a strategically relevant innovation hotspot.

  • We define concrete problem statements together with our corporate clients.
  • We scout scout and select the right technology partners.
  • We accompany the entire POC as trusted advisors.

Our frameworks are proven and have created positive impact at various clients like AIG, Generali, Maccabi, Ayalon, TAL, and many more.

If your financial services company considers Israel as interesting, but you still don’t really know how best to approach this project, then we are the right ones to talk to. 

Yours truly – Daniel || Follow us on LinkedIn

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