Managing Partner & Co-Founder, NextLeap Ventures - connecting investors with Israeli High-Tech Innovation.
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Israel has long been known as the “Startup Nation” with more than 6,000 active startups, making it the world leader for startups per capita. Recently, with the increase in unicorns (Israel has the highest number of unicorns per capita) as well as R&D centers of multinational corporations (530 R&D centers), Israel is transforming to become the “Scale-Up Nation.”
What are the secrets that make a country with only 9 million people have so many successful high-tech companies? Well, in my opinion, it’s all about the people and the location. Innovation and entrepreneurship are a necessity. There’s no other way. You must innovate and create to survive. When it comes to Israel, I call it “The Island Syndrome.”
Through leading a company based in Israel, I’ve encountered many residents who have several characteristics that make them innovative and entrepreneurial. Other startup founders and leaders around the world can learn from these qualities.
Adopt a global mindset.
Although Israel isn’t a geographical island, from my perspective, it does have the characteristics of an island since it’s surrounded by the Mediterranean Sea on one side and by countries that don’t have democratic-free market economies. In fact, the distance between Israel and another OECD country is more than a thousand miles, with air transport or sea transport being the only transportation options. This means that any business, startup or large corporation that aspires to succeed must think at a global scale from day zero. The market is just too small to enable a big economical success if one doesn’t target international markets from the get-go.
Be resourceful.
I’ve observed that “islanders” typically develop a set of survival characteristics that allow them to flourish in a remote area. They can have limited resources available at hand and must be resourceful and find new innovative ways of doing things in a more optimized manner. This is an especially important trait for startups that typically have limited resources and need to find creative ways to grow and expand their business.
Prioritize diversity.
Israel has many different cultures represented in its population. The State of Israel was established as a Jewish Democratic State, home to Jewish people from around the world. The Jewish people were scattered around the globe for thousands of years without a country of their own, and in the past 100 years, Jewish people from America, Europe, Africa, Asia and Australia are making Aliya (the Hebrew word for “going up,” which means relocating to Israel). This makes Israel the “melting pot” of the Jewish people.
In addition, about one-fifth of the population of Israel are Arabs (Muslims and Christians). Although they’re a minority, they’re well-represented in many places including the Knesset (Israel’s parliament), the healthcare system and, to a growing extent, in academia and industry as well.
Israel is diverse in other areas as well. For example, others and I have observed that Tel Aviv is friendly to the LGBTQ+ community. Furthermore, Israel has the highest number of vegans per capita, roughly 4% of the population. All of these factors combine to create a highly diversified population, and I believe diversification is important for improving the entrepreneurial and innovative spirit. Companies, therefore, can increase their diversity to further drive innovation and better business results.
Learn and adapt.
Immigrants have something in common: They’re forced to learn and adapt to survive. They learn many new things such as languages, people, culture, places, customs and sometimes even new norms. They must adapt to the new environment and “learn new tricks” to succeed. High-tech companies operate in a dynamic ecosystem that keeps changing exponentially, so it’s critical for them to evolve, adapt and change to fit the ever-changing world.
Take risks to overcome obstacles.
If you live in New York City, you’ve heard of “Chutzpah.” It’s the Hebrew word that means something like “daring to do/say the unconventional thing in order to maximize results.” I’ve noticed that Israelis typically like to choose their own way of living. Many Israelis don’t take “no” for an answer, and they realize that sometimes it’s better to ask for forgiveness than to ask for permission.
In general, I’ve observed that Israelis also don’t like the concept of “impossible.” If you want to get an Israeli to do something that seems difficult to achieve, you challenge them by saying something like, “Oh, I don’t think you can achieve this.” So, have audacious goals and find a way to make things happen.
Be friendly.
Israelis are often very direct in their approach, and this sometimes requires adjustment for non-Israelis at first. However, most of the time they have a highly friendly nature, in my opinion. Look to foster long-term relationships with customers, partners, investors and employees.
In summary, human capital is the most important asset that Israel has. The country fosters an uncompromised focus on innovation and entrepreneurship to survive and flourish. These qualities are the reasons why our venture firm is so excited about the opportunity in the Israeli market, and you can learn to emulate them within your markets as well.
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