GROWING ISRAELI HIGH-TECH INDUSTRY LEAD BY MEDICAL & CYBERSECURITY START-UPS

How War Made Israel Good at Creating Medical Tech: Paul Brent, Globe & Mail, Nov. 2, 2015 — Last year, six of the 10 companies on Forbes’s Top 10 Health Tech Changing the World were Israeli.

Israeli Tech Startups Tap Former Military Officers: Orr Hirschauge, Wall Street Journal, Oct. 26, 2015 — Last year, Cytegic Ltd., a cybersecurity startup here, approached Carmi Gillon, former chief of Israel’s domestic-intelligence agency about serving as its chairman.

London’s Boris Johnson Bearish on BDS, Bullish on Trade Upon Visiting Israel: Bradley Martin, JNS, Nov. 13, 2015 — “It’s fantastic to see that cutting-edge technology, such as Cycle Safety Shield developed by Mobileye in Israel, is being utilized to help make London’s roads safer,” said London Mayor Boris Johnson during his trade mission to Israel this week.

Culture, Religion and Israel’s Economy: Samuel Gregg, Jerusalem Post, Aug. 30, 2015— Amid what seems to be a growing onslaught of regional and international challenge and unrest, one rare piece of good news is the Israeli economy.

 

On Topic Links

 

MIT Honors 3 Israelis Among its Top 35 Under 35 Scientists: David Shamah, Times of Israel, Nov. 15, 2015

Foreign Investors Demonstrate Confidence in Israel (from a Startup Nation to an Exit Nation): Yoram Ettinger, Ettinger Report, Oct. 16, 2015  

Israeli Demography Expert Refutes Claim That Baby Boom Is Bad for Jewish State’s Economy: Ruthie Blum, Algemeiner, Sept. 27, 2015

In Landmark Visit, Indian President Strengthens Alliance With Israel: Bradley Martin, JNS, Nov. 13, 2015

                                                                             

 

HOW WAR MADE ISRAEL GOOD AT CREATING MEDICAL TECH

Paul Brent                                                 

Globe & Mail, Nov. 2, 2015

 

Last year, six of the 10 companies on Forbes’s Top 10 Health Tech Changing the World were Israeli. The country, already known as an incubator of high-technology businesses, is a strong player in a growing global medical devices market, which is expected to grow by billions of dollars in the next few years, according to market research companies.

 

Investment in startup tech companies in Israel has grown to more than $5-billion (U.S.) in 2015, according to Jon Medved, Jerusalem-based founder and chief executive officer of OurCrowd, an equity-crowdfunding group for those investing in Israeli and global startups. Global tech giants are paying attention and transforming the country from simply a place where tech ideas come to life into a research and development hub. Waterloo, Ont.-based smartphone maker BlackBerry Ltd. acquired security startup WatchDox this year, joining giants such as Apple, Google, and Samsung, which all operate R&D facilities there.

 

While much of the attention has been on the success and eventual takeover of tech startups such as Waze (the GPS application acquired by Google Inc.) or LinX (a camera tech company purchased by Apple Inc.), the country is making great strides in medical products. A 2012 study from Israel’s ministry of industry, trade and labour found 656 medical device companies operating there and that it is the leading country in terms of patents granted per capita in the medical devices field. Israeli government figures compiled this year show 725 medical devices companies, comprising more than one-half its 1,380 active life sciences companies).

 

An aging world population bodes well for the global medical devices market as the over-65 population is expected to grow to more than one billion in the next five years, with much of that occurring in developed economies. A report by Britain-based market research firm Visiongain forecasts the medical devices market to swell to nearly $400-billion (U.S.) in 2017 from $321-billion in 2012.

 

“Israel, for 30, maybe 40, years has been a leader in basic medical research. They have some of the best practical operating hospitals and research hospitals in the world. They have pioneered all sorts of techniques. The speed of innovation from laboratory to practice is strong,” says Steven Schoenfeld, founder and chief investment officer of BlueStar Global Investors LLC, a New York-based firm that specializes in the Israeli capital markets. While the company offers an index tracking about 120 Israeli companies listed in a number of countries (of which 27 per cent are in the health care field), it plans to launch an exchange traded fund focusing on the Israeli tech sector. A couple of other companies offer Israel-focused ETFs, while some technology funds include Israeli companies.

 

According to one academic, Israel’s unique, hothouse ecosystem is behind its success in the development of medical products. “There is a lot of willingness to experiment which doesn’t tend to exist in other societies,” says Guy David, a professor of health care management at the University of Pennsylvania’s Wharton School.

 

Dr. David, who was born and raised in Israel, now regularly takes Wharton students to Israel to learn about medical and tech startups. It’s the non-hierarchical, best-idea wins approach that is echoed by the country’s citizen army (where orders are regularly questioned and teamwork is prized). That army experience is, he believes, a big part of the success story. Add in the unfortunate reality of frequent trauma and requirement for rehabilitation for many citizens because of wars and terrorism fuelling the success of companies such as ReWalk Robotics’ customizable exoskeleton or medical imaging company Surgical Theater (founded by two former Israeli air force pilots).

 

“The medical society in the U.S. – and it is true for Canada as well – it is very stagnant in a way. Doctors are very skeptical when you come and introduce new things. I think it is in the culture both for patients and physicians in Israel to adopt those things.” The Wharton professor says Israel’s “no rules” business culture is the reason most successful startups are eventually acquired by foreign firms. “It is startup nation, but not scale-up nation. To scale up things you need to follow rules, you need institutions, you need organization, you need order, you need patience. None of those characteristics exist in that country.”

 

Israel is now looking to move its medical innovations from the idea and prototype phase to widespread use and acceptance. For instance, Israel is seeking to capitalize on clinical experience in Canada, says Rafael Barak, the country’s ambassador in Canada. Israeli life sciences companies “need clinical experience and Canada has it,” he explains. The ambassador points to the success that Teva Pharmaceutical Industries Ltd. has had in Canada as an example of what the two countries can do together. Teva, the world’s largest generic drug maker, has extensive operations in Canada.

 

The two countries have more in common than they might think, he adds. “I think in a way we are suffering from the same sickness, that the American companies are buying us for cheap.” However, Israel has an advantage, says Henri Rothschild, president of the Canada-Israel Industrial Research and Development Foundation (CIIRDF), an Ottawa-based organization that promotes collaborative research and development between private-sector companies in both countries, with a focus on the commercialization of new technologies. The CIIRDF is focused on “the spillover effect of technology developed for one purpose applying to another,” says Dr. Rothschild, a former chief scientist at Industry Canada.

 

“That is the essence of Israeli comparative advantage. It is not that they have capability in defence, capability in medical and capability in communications. They do in all those areas. It is that right now, technologies cut across the board.”                  

                                                                       

Contents

                       

   

ISRAELI TECH STARTUPS TAP FORMER MILITARY OFFICERS                                                                  

Orr Hirschauge                

Wall Street Journal, Oct. 26, 2015

 

Last year, Cytegic Ltd., a cybersecurity startup here, approached Carmi Gillon, former chief of Israel’s domestic-intelligence agency about serving as its chairman. “I know nothing about cybersecurity,” he remembers telling a banker seeking advice on how to thwart hackers, around the same time. For many Israeli tech startups, that’s not a problem. As they scramble for funding and compete for programmers, they are also looking for a few good men—preferably former military and intelligence officers.

 

Israel is punching above its weight amid today’s tech boom, fostering a bevy of startups and tech innovation, particularly in military-related fields like cybersecurity and homeland security. That is partly due to the close ties between Israel’s tech-savvy military and its startup scene. Nothing underscores that connection more than a big-name former Israeli general or spymaster on the team. The brass can help bring a young company gravitas in the eyes of prospective clients, executives say. It can also help bring in funding, or open doors with former military and government colleagues, in Israel and overseas.

 

“With governmental clients, like homeland-security departments, the fact that someone they knew in a previous military role is sitting across the table is valuable,” says Nimrod Kozlovski, a partner at Jerusalem Venture Partners, a cybersecurity-focused venture-capital firm. Few have a bigger Rolodex than retired Lt. Gen. Ehud Barak. A former prime minister, he also served at one time or another as defense minister, army chief of staff and chief of military intelligence.

 

In May, Mr. Barak, 73 years old, joined the board of FST21 Ltd., which uses facial, voice and behavioral recognition to authenticate identities. FST21 was founded by Maj. Gen. Aharon Ze’evi-Farkash, another former head of military intelligence. Mr. Barak said Israel’s new breed of startup founders can learn a trick or two from the old guard. “It’s a combination of the freshness of the tech entrepreneurs and their innovative curiosity, with the experience of the veterans,” he says.

 

Retired Brig. Gen. Pinchas Buchris joined Adallom Inc., a cloud-security startup, in 2012, eventually becoming its vice president of cyberstrategy before Microsoft Corp. snapped up the company earlier this year. He retired from active military service in 2002, after leading the Israeli army’s military intelligence Unit 8200—the country’s equivalent of the National Security Agency. Packed with tech-savvy recruits doing their mandatory military service, the unit has spawned much of the current generation of startup entrepreneurs and programmers. Gen. Buchris, 59, says he feels at home among Israel’s young, tech startup scene. “I’m three decades their elder, but this is no different than what I experienced in the army,” he says.

 

Retired Lt. Gen. Gabi Ashkenazi, 61, a former infantry and armored-divisions officer who also served as the Israel Defense Forces’ chief of staff, joined Windward Ltd., a Tel Aviv-based maritime data and analytics company, in February as an adviser to the company’s board. Windward Chief Executive Ami Daniel said Gen. Ashkenazi gives his company credibility “in a domain where clients want to remain anonymous.” Gen. Ashkenazi said he was “delighted” to be working to bring innovation to a “world where I spent most of my life.”

 

The transition isn’t always easy. Gen. Ze’evi-Farkash, 67, CEO of FST21, the company that recruited Mr. Barak to its board, said he needed to get used to doing things like setting his own meetings without a secretary. “Suddenly you work in a flat organization with no barriers between you and others,” he says. He also had to get used to reporting to a board of directors. “As a commander, you get assignments and resources,” he says. “You are not required to report back to the board.”

 

Mr. Gillon, 65, the former boss of Israel’s domestic intelligence agency, or Shin Bet, had some early missteps after taking over as Cytegic’s chairman. He started his career as an elite bodyguard for the service, climbing the ranks to become the agency’s chief spymaster in 1995. He left a year later in the fallout over the assassination of Israeli Prime Minister Yitzhak Rabin. Before Cytegic came knocking, Mr. Gillon had run an insurance company, served as Israel’s ambassador to Denmark and as vice president of the Hebrew University of Jerusalem.

 

Shortly after taking over as chairman of Cytegic, he overruled the company’s management team over where the company should roll out its product—a tool for managing an organization’s exposure to high-tech cyber intruders. Mr. Gillon wanted Cytegic to hit smaller markets first, before venturing into the U.S. “After a couple of months I realized I was wrong,” he says now.

 

Shay Zandani, the company’s CEO, said he values Mr. Gillon’s contacts and his “high-level strategic thinking.” He attributes part of the $6 million of funds the company has raised to Mr. Gillon’s investor outreach. Still, he says, “I think we lost some six months” with Mr. Gillon’s marketing misfire.                                                                                                    

 

Contents

                       

   

 

LONDON’S BORIS JOHNSON BEARISH ON BDS,

BULLISH ON TRADE UPON VISITING ISRAEL                                                           

Bradley Martin                          

                                                                       

JNS, Nov. 13, 2015

 

“It’s fantastic to see that cutting-edge technology, such as Cycle Safety Shield developed by Mobileye in Israel, is being utilized to help make London’s roads safer,” said London Mayor Boris Johnson during his trade mission to Israel this week. Johnson arrived in Israel with an official trade delegation, mainly to promote bilateral trade in technology between the cities of London and Tel Aviv. His mission was to promote the British capital’s high-tech sector, in a bid to get more Israeli companies to expand to London and make IPOs (initial public offerings) on its stock markets.

 

London is currently home to 141 Israeli high-tech firms, according to London & Partners (the mayor’s promotional agency) and the IVC Research Center. There are currently 16 Israeli tech firms listed across London Stock Exchange’s markets with a combined market value of £3.7 billion ($5.6 billion).

 

Johnson was also very critical of the movement to boycott Israel, deriding them as “a bunch of corduroy-jacketed lefty academics.” “I cannot think of anything more foolish than to say that you want to have any kind of divestment or sanctions or whatever or boycott, against a country that when all is said and done is the only democracy in the region,” he said in an interview with Israel’s Channel 2.

 

While the focus of Johnson’s trip was to expand tech ties between London and Tel Aviv, the mayor took the opportunity to visit other parts of Israel. While lauding Israel’s diversity, he joined Israeli President Reuven Rivlin in Jerusalem to attend and participate in a friendly Jewish-Arab soccer game. This was the kickoff for a new soccer season organized by the “Equalizer” organization. Working with about 140 schools across Israel to build confidence and understanding between Jewish and Arab children, the organization itself is supported by the British Embassy in Israel.

 

Rivlin thanked Johnson for his support of this project to promote coexistence. The mayor thanked Rivlin for his warm welcome and expressed his pride at the opportunity to visit Israel, and especially Jerusalem. Johnson also visited the Western Wall in Jerusalem for the first time in his life, affirming his Russian Jewish ancestry. Calling his visit to one of Judaism’s holiest sites a “great privilege,” he joined in prayers for peace in Jerusalem.

 

“That’s what Jerusalem is all about. It is about the great faiths coming together in one place in the holiest city in the world. I think that anyone who comes here wants to see that spirit of understanding,” Johnson said. Johnson’s planned tour of the Palestinian territories in the West Bank was cancelled, following his criticism of the BDS movement against Israel. Shortly after arriving in Ramallah, Palestinian Authority Prime Minister Rami Hamdallah warned that Johnson’s security would be “at risk” if he went ahead with his visit.

 

Johnson was due to meet with a Palestinian youth group and businesswoman, but his invitations to those events were retracted following his anti-boycott comments. Though the London mayor did tone down his original comment by saying that there wasn’t anything wrong with wearing a corduroy jacket, he stood by his condemnation of the boycott movement against Israel. It is expected that as a result of this Johnson’s diplomatic mission, technological trade and cultural cooperation will continue to expand greatly between the City of London and the State of Israel.        

 

Contents                                                                                      

   

CULTURE, RELIGION AND ISRAEL’S ECONOMY                                                     

Samuel Gregg

                                                

Jerusalem Post, Aug. 30, 2015

 

Amid what seems to be a growing onslaught of regional and international challenge and unrest, one rare piece of good news is the Israeli economy. Despite the broader global market turmoil, Israel’s economy has weathered the years since 2008 relatively well – certainly in comparison to most Western European nations.

 

As illustrated in a June report produced by the Kohelet Policy Forum, nominal and real incomes in Israel have continued to grow since 2008, the unemployment rate had fallen to just under six percent, inequality continues to drop and the labor force is expanding. Over the past three years, Israel’s ranking in the Index of Economic Freedom has continued to improve, while America’s has generally declined.

 

Certainly Israel faces some major economic challenges, and the uncertainty which has racked the global marketplace in recent days has not skipped over Israel. The Kohelet report underscored excessive regulation, over-bureaucratization and lower labor productivity compared to the OECD average. But it’s no exaggeration to say that many developed economies – mired in debt, out-of-control welfare spending and high unemployment – would envy the Israeli economy’s current overall trajectory.

 

It’s the economist’s job to try and understand why some economies, like Israel’s, are doing comparatively better than others. Less well-known, however, is that more economists are looking beyond strictly economic explanations to explain economic successes and failures. As it turns out, they are discovering that culture matters.

 

The most advanced work in this area has been by the 2006 Nobel economist Edmund Phelps. For several years, he has been advancing the thesis that while good policy is important, the value commitments prevailing in a given society help explain why economies with very similar structures and institutions can produce quite different economic outcomes. Much of this argument is summarized in Phelp’s 2013 book, Mass Flourishing. Here Phelps draws on a range of data to argue that developed nations which attach higher value to economic security than economic freedom run a higher risk of economic decline in an increasingly competitive global economy.

 

This, Phelps maintains, helps to explain why much of Western Europe is apparently incapable of engaging in substantive economic reform. If most Western Europeans are asked what they value more – liberty or security – you can safely bet they will nominate security. Placing a premium on security has economic consequences and helps explain why Western Europe has such low levels of entrepreneurship and innovation compared to America.

 

Culture’s economic significance, however, goes beyond the liberty/security nexus. It’s not a coincidence that the word “culture” is derived from the word “cult.” This reflects the fact that a society’s dominant cult – i.e., religion – is always central to its culture. That suggests that more attention should be paid to religion’s role in shaping economic outcomes. Is it the case that a society like Israel – the Jewish homeland for the Jewish people, with a majority of Jewish citizens (with obviously varying levels of religious commitment) – is more likely to emphasize certain values which, in turn, will have particular economic consequences? This isn’t a new discussion. 110 years ago, Max Weber famously raised the issue in his Protestant Ethic and the Spirit of Capitalism. While many scholars (including myself) have taken issue with Weber’s particular claim that certain forms of Protestant Christianity helped to facilitate capitalism’s emergence, few dispute that religious belief has some type of impact upon an economy’s character.

 

Take, for instance, Judaism. As the theologian Michael Novak underscores in his seminal text, The Spirit of Democratic Capitalism, some of Judaism’s most sacred texts, such as the Book of Genesis, stress that humans aren’t meant to be passive. Instead they are commanded to work and be creative. Over the centuries, this helped generate a respect for economic liberty and commerce among Jews that was largely absent from the surrounding pagan cultures. The worlds of Greece and Rome, for instance, generally disdained commercial activity in favor of cultures that valued military valor.

 

Judaism also articulates a linear understanding of history and holds that human freedom has a role in unfolding it. By contrast, Greco-Roman culture not only embodied circular conceptions of time, but their religions portrayed the gods as rather frivolous creatures who treated human beings as mere playthings. In other words, Judaism holds that neither the world nor the human beings who inhabit it are ultimately meaningless. This is likely to facilitate very different perspectives on the significance of human choice and action, including in the economy.

 

Christianity was fortune enough to inherit Judaism’s emphasis upon these things. Indeed, scholars such as the sociologist Rodney Stark have produced compelling arguments to suggest that it was precisely because Judaism and Christianity prevailed over the Greco-Roman pagan religions that capitalism first developed and eventually flourished in Western Europe. That doesn’t mean the process was somehow automatic. Other factors, particularly the development of specific property arrangements and the rule of law, played major roles in capitalism’s rise in the West and its ongoing embrace by cultures in which Jews and Christians are distinct minorities.

 

That said, we need more research on the ways in which religion and culture shape economic life. That’s especially important for a country like Israel in which Judaism is central to the nation’s self-understanding. Israel is certainly more committed to economic freedom than it was, say, 20 years ago. But exploring the links between Judaism and the development of market economies contains significant potential to shift the cultural balance more toward economic liberty and subsequently wider prosperity for all – an analysis which becomes all that much more critical in these days of uncertainty and economic turmoil.                                                                          

On Topic

 

MIT Honors 3 Israelis Among its Top 35 Under 35 Scientists: David Shamah, Times of Israel, Nov. 15, 2015—Three Israelis are among 35 honored this year by MIT with its annual list of young researchers who have had a huge impact on the world – and are expected to go on to do much more

Foreign Investors Demonstrate Confidence in Israel (from a Startup Nation to an Exit Nation): Yoram Ettinger, Ettinger Report, Oct. 16, 2015  

Israeli Demography Expert Refutes Claim That Baby Boom Is Bad for Jewish State’s Economy: Ruthie Blum, Algemeiner, Sept. 27, 2015—Israel’s population explosion is cause for economic optimism, not woe, says the author of several studies on the demographic make-up of and forecast for the Jewish state.

In Landmark Visit, Indian President Strengthens Alliance With Israel: Bradley Martin, JNS, Nov. 13, 2015 —In the first-ever official visit by an Indian head of state to Israel, President Pranab Mukherjee arrived in Jerusalem this week to discuss a wide range of issues including the negotiation of an extensive free-trade agreement, bilateral cooperation in agricultural and other technologies, and expanded counter-terrorism coordination.