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By Matthew Kalman
Tel Aviv stands apart as a hub for tech innovation thanks to one single
overriding influence: the Israeli armed forces.
Rothschild Boulevard has always been one of the grandest streets in Tel Aviv,
with its broad tree-lined central promenade and elegant Bauhaus architecture.
The cafes, kiosks and benches teem with young entrepreneurs who seem to survive
on a diet of caffeine and wi-fi. Of Israel s 5,000 tech companies, city
planners have counted 600 start-ups in the single square mile around
Rothschild. Israel has more companies on Nasdaq than any country beside the US
and China, and it attracts more venture funding per capita than anywhere in the
world. Its tech sector employs 230,000 people in a population of eight million,
earning more than a quarter of the country s total exports.
Just off the southern end of the boulevard is the Shalom Meir Tower once the
tallest building in the Middle East. A lift door in the corner of the mezzanine
leads to a municipal library on the seventh floor that had been forgotten by
all but its ageing clientele. In 2011, it was refurbished as a shared workspace
for start-ups. The fourth group of 13 companies has just finished their
four-month session, which includes meetings with potential partners, lectures
by business experts, networking not to mention a great view over the city's
beach.
The pattern is repeated all the way down Rothschild, where incubators and
start-ups compete for space among the coffee shops and restaurants. There are
similar tech hubs in many cities throughout the world, but Avner Warner,
Director of International Economic Development at the Tel Aviv Global City
Administration, says Tel Aviv stands apart because of a single overriding
influence on early-stage Israeli companies: the Israeli armed forces.
The military gives them their technological experience, managerial experience
and networks, says Warner. For the average person, the greatest barrier to
being an entrepreneur is 'Where the hell do I start? What do I do first?' Most
people just get confused at this point and go get a normal job. That s the
experience the army gives them. It s understanding how you actually build a
product, which is the same as managing a project in the army.
Big data pioneers
Inside the HQ of the Mamram, the Israel Defence Forces (IDF) technical support
unit in nearby Ramat Gan, computer training course commander Capt. H (her full
name is classified) says new recruits on a six-month intensive programming
course study from dawn till night and are taught programming skills, teamwork,
project management and most importantly how to be creative. It s like a
school for start-ups.
When you do a degree in computer science you study the technical things," she
says. "You study how to write a code, mathematics. We don t focus on that. We
focus on how to work in a team. How to understand what your client needs and
make software that fits his demands. How to write good code that you will be
able to de-bug and maintain."
Tal Marian, founder of the TechLoft, a commercial shared workspace just off
Rothschild, says the results of the military training are obvious. Some of the
military units work like a civilian organisation," says Marian. "They encourage
entrepreneurship, the feeling that if you come up with a good idea that answers
a real need of that unit s mission, you will get the funding and manpower and
the time you need."
After years of helping to solve the nation s major security threats, the
challenges of gaming and mobile apps pale by comparison, he adds.
Sometimes, the military technology connection is obvious. The miniaturised
camera and power pack in the Given Imaging camera pill is based on equipment in
the nose of a military drone, for example. Israel raced a decade ahead in the
management and use of large data sets or big data that drive many consumer
apps because of expertise developed by Unit 8200, the intelligence-gathering
arm that is now the largest unit in the IDF.
IBM has spent nearly $1bn ( 640m) on four Israeli companies that all developed
big data storage solutions: Storwize, XIV, Diligent and FileX. Earlier this
year, Google acquired the mapping app Waze for more than $1 bn.
The founders of Waze received their technical training in Israeli military
intelligence. The giant Israeli tech firms Nice, Comverse and Check Point were
all created by Unit 8200 alumni or based on technology originally developed by
the unit.
Youthful exuberance
Across the boulevard, Yaron Tal is Chief Technical Officer of 6Scan, a website
security start-up he founded with ex-army buddies. A white-hat hacker (one that
works for non-malicious motives), since the age of 12, he was running his own
web security consultancy by the age of 17, before being head-hunted for Matzov,
the army s cyber-security unit.
Entrepreneurs in Israel are unique, he says. Their approach to problems is
different to others because the army is a huge incubator for innovation and
entrepreneurship. The army gave us a few million dollars at the age of 18 and
asked us to build technology and systems that address problems that only people
10 or 20 years older are dealing with in other parts of the world. That kind of
pressure and challenge really brings a lot of things out of you.
Tal skipped university to work at a start-up before launching his own, but
another important driver of the tech scene is the fact that Israeli university
students pay only about $3,100 ( 2,000) a year in tuition fees. They emerge
from military service and three years of studying with zero debt, eager to take
a year off to pursue their dreams.
That youthful exuberance, combined with the rigorous military training in
technology and project management, has found a natural home among cafes running
down the centre of Rothschild.
Recruiting to 6Scan became easy after they opened an office on the boulevard,
according to Tal. The street is full of start-ups. We talk together, help each
other. There are no big companies here, which is great. We live very near the
office. We love the vibe, the place, the other start-ups, the restaurants. It s
easier to bring developers to the company when you say it s in Rothschild even
though we don t have much money to offer. We offer them equity and a good place
to spend each day.