Digital Israel, or Israel’s digital presence, has been little more than an extension of U.S. and European companies placed among the smart people in Tel Aviv, Haifa and Caesarea. There are lots of very capable engineers, computer scientists and physicists in Israel and the culture seems especially suited to turn out focused individuals who are competent and confident, which are ideal for computer science and internet technology. But the market for digital products and services is small in Israel, simply because the country’s entire population is only eight million people. And as far as attracting manufacturing the Israeli labor market is not competitive. The place for digital opportunity and growth in Israel has to be at the creative end, where new technology and new business ideas are at play. American companies have connected with that.
Thus far, the extent of Israel’s digital signature has been its ability to attract big companies from Silicon Valley and Europe, and also to foster startups. The coastal plane of northern Israel where Tel Aviv is located is nicknamed Silicon Wadi (wadi meaning valley in Hebrew), but the newest nickname for Israel is “startup nation.” There has been an ongoing stream of high tech digital stratups based specifically on technologies that dovetail with larger companies needs. Things like face-recognition software that work with unprecedented accuracy, or algorithms that deliver highly tailored advertisements to specific website accounts.
With a globally distributed Jewish culture, it’s not surprising that internet technologies are of interest to Israelis, but there’s a particular area of digital technology where Israeli’s excel, and that’s security. The people of Israel live at the edge of conflict everyday. Cyber-security means more to people who live with continual, immediate threats than to those who do not. Infrastructure management (like gas and electric utilities), which is designed for convenience in America is thought about in terms of security in Israel. Infrastructure alone is important and the U.S. could, and is, learning a great deal from Israeli companies like RAD group, which specializes in infrastructure security consulting.
But even with a long successful growth of online consulting companies and digital technology companies, Israel has not produced big players. Israel has no Microsoft, or Google, or Cisco, or Facebook. Israel is not home to a culture that produces global server-based companies that dominate their own niches. Countries all around the world are envious of U.S. digital properties. That envy plays out in lots of ways, often negative ways, like bad-mouthing U.S. culture and business. But take a look at those places where the criticism comes from and more than likely you will find a Silicon Valley wannabee. When you look around the world for digital technology centers you find them on every continent and in most countries, but Israel is the most effective of the Silicon Valley imitators.
A Second Technology Location
In September, 2013 Israel took a new step forward in developing their digital profile. The Prime Minister, Benjamin Netanyahu, helped inaugurate the Advanced Technology Park (ATP) on the campus of Ben Gurion University in the Negev desert. The first building of ATP is open and busy executing against the growth of a much more ambitious program. ATP is focused on cyber-security. This technology center is designed around an existing, ongoing collaboration with German telecommunications company, Telekom. For almost ten years Telekom has focused on digital security projects at their Innovation Laboratories (T-Labs) in Mountain View, California, Ben Gurion University in Be’er Sheva, Israel and three locations in Germany. It’s been a fruitful project that has mastered new technologies and new working processes that combine academics, defense forces and technology companies.
T-Labs experience is the model for the Advanced Technology Park path of development. The disciplined focus on cyber-security along with participation from all three sectors: academics, military and technology companies is expected to allow Israel to develop technology expertise all their own. This is where Israel may be able to initiate a global grade digital company specializing in a unique niche. Up until now, Tel Aviv has been the uncontested center of Israel’s technology sector. With more than 1200 high tech companies and 700 early-stage startups, Tel Aviv with its population of 400,000 people is where European and American technology giants establish their Israel branches. Among the companies who have established Israeli research centers are Cisco, Microsoft, Apple, IBM, Motorola, Hewlett Packard, eBay, SAP, Oracle and Google.
These are the companies who have leveraged a concentration of intelligence and talent available in Israel. But, the usual process of growth with these companies involves buying Israeli startups once they have proven their worth. Israel serves as a place to outsource research. Thus far, this arrangement has not seemed to carry Israel into a sweet spot where Silicon Valley magic takes hold and giant technology companies grow from scratch. The Advanced Technology Park at Ben Gurion University, seventy miles southwest of Tel Aviv is the logical antidote, The combination of an intense area of specialty, along with coordinated academic, military and commercial participation is what made Silicon Valley take off in the 1970s and continue in a self-sustaining pattern. This same combination is present at the Advanced Technology Park.
So there are the best laid plans for Israel’s technical takeoff. However, there is a darker side to this project. Security, by its very nature, easily leads to abuse. All the bad publicity the US National Security Administration has suffered in 2013 is testament to the moral and ethical issues involved when military, and business interact. It doesn’t have to turn out badly, but the possibility is always there. The Advanced Technology Park is located close to the Palestinian Gaza strip. There are encounters between ATP and Gaza; missile launches out of Gaza are not uncommon. Just where is the line drawn between defensive security and technical aggression becomes the all important question. But it’s a question being asked in many places around the world, so Israel has an opportunity even with these challenging moral areas of security.
Security is an absolutely essential area of digital development. Someone has to devise methods for protecting information flows so they are not improperly pilfered. Infrastructure, financial data, medical records and personal communications all produce legitimate security concerns. There is a huge void where professional technology can and should be developed to structure information exchanges with guaranteed safety. Israel is aiming at these needs and has now launched an institution intended to become a world leader of digital security. For now questions remain about the financing for a startup community and if it will materialize around the Advanced Technology Park. Ultimately, the question of significance is will ATP establish its own digital brands that become global giants.
If the digital cycle spins around the rise and eventual decline of niche controlling businesses, like Microsoft or Google, then the Israeli digital cycle is now in the pre-launch phase before a giant controlling company takes hold. The niche is selected and the most important support institutions are involved. A process for coordinating the way these institutions interact is also already developed from experience. There is even a startup financial community already in place. So, what happens next? We will stay focused on developments at ATP in Be’er Sheva, Israel.