From 1950s Rationing to Modern High-Tech Boom: Israel’s Economic Success Story: Shoshanna Solomon, Times of Israel, Apr. 18, 2018— From a war-torn nation struggling for survival and lacking natural resources, the biblical land of milk and honey has become a technological powerhouse which has seen economic growth for 15 consecutive years.
Israeli Space Team Still Shooting for the Moon: Abigail Klein Leichman, Israel 21C, Apr. 2, 2018— The Google Lunar X Prize competition expired on March 31 with no winner.
The Satellites of Chelm: Yaakov Katz, Jerusalem Post, Jan. 29, 2017 — In 1977, a young officer in the IDF’s Intelligence Corps came up with what seemed at the time, like a crazy idea.
Israel At 70: Top Venture Capitalists Offer Their Take On Future Innovation: Simona Shemer, NoCamels, April 19, 2018— Israel is marking the 70th anniversary of the founding of the modern state with a theme that centers on “A Legacy of Innovation.”
On Topic Links
Pioneers of Innovation: 13 Israeli Startups Making Their Mark On The World: Ido Levy, NoCamels, Apr. 18, 2018
A Big Chunk of Israel’s Tech Scene is Actually Not Based in Israel: Gerrit De Vynck, Bloomberg, Mar. 29, 2018
Israel is One of World’s Leading Economies, OECD Report Finds: Ariel Whitman, Israel Hayom, Mar. 12, 2018
Behind Israel’s High-Tech Reputation Is a Low-Tech Economy: Gwen Ackerman, Bloomberg, Feb. 14, 2018
FROM 1950S RATIONING TO MODERN HIGH-TECH BOOM: ISRAEL’S ECONOMIC SUCCESS STORY
Times of Israel, Apr. 18, 2018
From a war-torn nation struggling for survival and lacking natural resources, the biblical land of milk and honey has become a technological powerhouse which has seen economic growth for 15 consecutive years. “We can stop and look back with satisfaction” at the “amazing achievements made by the Israeli economy in the 70 years of the State’s existence,” Bank of Israel Governor Karnit Flug said at a press conference in Jerusalem in March.
Israelis’ standard of living has risen from 30 percent of Americans’ standard of living at the time of the state’s founding to 60% today. Israel’s economy has experienced a yearly average growth of 3.3% since 2000, higher than in many OECD countries, partly driven by a strong population growth. Its labor market is close to full employment and the unemployment level is the lowest it has been in decades. Israeli tech firms raised record funds in 2017 and the year saw $23 billion worth of company exits, defined as merger and acquisition deals and initial public offerings of shares. The nation has some 94 companies listed on the Nasdaq exchange.
The country’s population surged from 806,000 at the founding of the nation to 8.84 million today, and the state has absorbed some 3.2 million immigrants over the years. Life expectancy for Jewish men jumped to almost 81 years from 65 in 1949, and for women to just over 84, compared with just below 68 in 1949. The nation is ranked the 11th-happiest country in the world, and, to top it all, it has also found natural gas reserves off its shores, which will help lead the tiny country to energy independence…
If you look at the “big picture, at the perspective of 70 years,” the Israeli economy by and large “clearly did very well,” said Omer Moav, professor of economics at the University of Warwick in Coventry, UK, and at the IDC Herzliya, in a phone interview. The country has gone from a “chronic balance of payments,” huge debt, and runaway inflation to “a balance of payments surplus, a surplus of assets over liabilities, and inflation that we would like to be a little higher,” Flug said.
And all of this has taken place while absorbing and resettling huge waves of immigrants and fighting off hostile neighbors. How did this come to pass? Israel’s economic success is due to a number of factors that have merged to bring the nation to its current state. A lack of natural resources pushed its dwellers to find alternative ways to cope, leading to the development of drip irrigation and water desalination plants — technologies that are now sold globally. The wars the country has fought have led the nation’s military to develop cutting edge technologies that have also permeated the civilian sphere, creating the basis of Israel’s thriving tech scene.
The country has also managed to absorb huge waves of immigration, and this population surge has contributed to a mix of cultures and languages — from Russian to Arabic and Ethiopian and English — that have remained distinct as much as they have melded, creating friction at times but also a fertile ground for innovation. The impact of the immigration was such that “there had to be rationing of resources in the early 50s, like oil and food,” said Prof. Eytan Sheshinski, an emeritus lecturer in economics at the Hebrew University of Jerusalem in a phone interview.
This rationing continued well into the 60s, with the government deeply involved in the economy. From 1950 through 1955, Israel’s economy grew by about 13% each year, and just under 10% in the subsequent years into the 1960s, according to “Start-Up Nation,” a book by Dan Senor and Saul Singer that documents the story of Israel’s “economic miracle.” The government provided jobs and set up infrastructure projects using money from overseas, mainly from Jews abroad but also from German reparations given as compensation for Nazi crimes. “These were critical to the economy” and helped build roads, ports and trains, Sheshinski said.
Then, in the 70s, inflation started. The 1973 Yom Kippur war forced the country to recruit most of the labor force to the military effort for up to six months, bringing business activity to a halt. Government policies that artificially propped up salaries led to ballooning debt, and tax rates were raised. Hyperinflation hit in the early 80s and in 1984 it reached 445%. This “disrupted the function of the economy — and there was a large deficit in the balance of payments,” Sheshinski said. In 1985 a stabilization plan led by finance minister Shimon Peres together with US secretary of state George Shultz and IMF economist Stanley Fischer, was set up to reduce public debt, curb government spending, and start a spurt of privatization of government-owned companies.
The program “froze prices and wages and stopped inflation,” Sheshinski said. “The privatization created a competitive industry and continued well into 1990s.” At the same time the government undertook a program of liberalizing the economy, opening the Israeli markets to imports and lifting curbs on the currency. “Israel became part of the global economy,” Sheshinski said. Because of the small size of the economy, the industry focused on foreign markets, boosting Israel’s exports. In the 1990s the government also had the foresight to set up a program called Yozma, which helped create a local venture fund industry that invested in burgeoning Israeli technologies.
Then, the boom of the internet broke down geographic barriers and Israeli entrepreneurship mushroomed. “The internet very much suited the Israeli character and many young people entered the field,” said Yossi Vardi, an Israeli entrepreneur and investor who backed Mirabilis, the founders of ICQ, the first instant messaging program for the web. It was sold to America Online in 1998 for some $300 million. “Israel is a small country with no local market, and the barrier to entry for the internet was very low; some managed, others failed, but it inspired people,” Vardi said in a phone interview.
A wave of immigration in the 90s brought with it more than 900,000 new immigrants, many of them engineers, professors and scientists from the former Soviet Union who fed Israel’s nascent tech scene with much needed professional skills. “Our ability to absorb immigrants and integrate them is something not many other countries have done,” said Yaniv Pagot, an economist and head of strategy for the Ayalon Group, an Israeli institutional investor. “This is an achievement that has huge economic implications and also long term social impact.” It was a combination of venture capital money, the internet, an influx of engineers and scientists, hardheadedness and determination, and years of thinking out of the box to finding solutions to pressing needs that has led to Israel’s thriving tech industry.
The main achievement of Israel’s economy is that “we have gone from being a very poor weak and small country, 70 years ago, to an innovation powerhouse, globally known as a center for startups and innovation,” said Saul Singer, the co-author of “Start-Up Nation.” Not only does Israel have “the highest density of startups of any country in the world,” he said, “Israel’s startup ecosystem continues to grow and attract more investment and large companies from all over the world, who are buying up Israeli technologies and are setting up research and development centers locally.”…
[To Read the Full Article Click the Following Link—Ed.]
ISRAELI SPACE TEAM STILL SHOOTING FOR THE MOON
Abigail Klein Leichman
Israel 21C, Apr. 2, 2018
The Google Lunar X Prize competition expired on March 31 with no winner. Yet Israel’s team, the nonprofit SpaceIL, is continuing its mission of landing an unmanned module on the moon – with plans to launch on a SpaceX Falcon 9 via Spaceflight Industries in the fourth quarter of 2018, even if Lunar X does not find another major sponsor.
“We are moving forward with the project, regardless of the terms or status of the Google Lunar X Prize,” said newly appointed SpaceIL CEO Ido Anteby, formerly of the Israel Atomic Energy Commission. “SpaceIL and Israel Aerospace Industries are committed to landing the first Israeli spacecraft on the moon, and we plan to launch before the end of this year.” So far, only three world superpowers, the United States, Russia, and China, with their tremendous resources, have achieved controlled lunar landings.
“Our mission was never about winning the prize money – although $20 million would have been nice,” said Anteby. “It’s about showing the next generation that anything is possible – that even our small country can push the limits of imagination. “The impact of our spacecraft’s launch and its historic weeks-long journey to land on the moon will resonate for years to come, and we hope to inspire new forays into science, technology, and space exploration.”
SpaceIL was Israel’s entry in the Google Lunar X Prize Moon Race, started in 2007 to inspire innovators from around the world to develop low-cost methods of robotic space exploration. To win the $20 million grand prize, a privately funded team had to have been the first to successfully place a spacecraft on the moon’s surface, travel 500 meters on the moon, and transmit high-definition video and images back to Earth – all before the competition’s deadline, March 31, 2018. SpaceIL was the first of 16 competitors to sign a launch contract and one of only five teams to proceed in the contest.
The mission’s scientist, Prof. Oded Aharonson of the Weizmann Institute of Science, has helped the team determine that the spacecraft should aim to land on Mare Serenitatis, (Serene Sea) an area in the moon’s northern hemisphere. This site has a strong magnetic field that will allow the magnetometer aboard the spacecraft to take measurements and collect data about its characteristics during the landing, and transmit these back to Earth.
The engine and fuel tanks were recently integrated into the spacecraft’s body inside the “clean room” at IAI’s space facility. “In parallel, we are making progress with our simulator system, with the navigation control software development, with the ground control stations and with the preparations for testing the spacecraft and its subsystems,” Anteby reported.
The craft’s cameras successfully passed an environment test in which they were placed in a vacuum chamber simulating the extreme temperatures that the spacecraft will encounter during its voyage. They’re now being integrated into the craft. SpaceIL has signed a contract for satellite communication services to keep track of the location of the spacecraft on its journey to the moon. Members of the team also went to Cape Canaveral in Florida to begin coordinating with all the entities taking part in the launch, particularly SpaceX, and to see the large hangar where the spacecraft will undergo its last pre-launch tests and will be fueled.
As for SpaceIL’s mission to inspire young people to explore STEM subjects, the nonprofit is telling its story to 500,000 children nationwide through a volunteer network, and has chosen 100 schools to take part in “Moon Games,” a unique educational program in collaboration with the Israel Space Agency. SpaceIL recently sponsored an activity at the Holon Technological Fair for 30,000 Israeli ninth-graders, “Do you have what it takes to build a spacecraft that will land on the moon?” that presented the young visitors with various challenges involving creative thinking, spatial vision, mathematical thinking and more.
Israeli kids flying on El Al during the Passover season will receive the third issue of SpaceIL’s fun workbook series, Who Wants to Reach the Moon? on the theme of “Women in Space.” And for children from any country, SpaceIL has introduced its Moon Kids website in English, chock full of fun interactive content about the moon and outer space. Contents
THE SATELLITES OF CHELM
Jerusalem Post, Apr. 12, 2017
In 1977, a young officer in the IDF’s Intelligence Corps came up with what seemed at the time, like a crazy idea. Egyptian president Anwar Sadat had made his historic visit to Jerusalem and it was clear that if peace was going to happen, Israel would need to withdraw from the Sinai Peninsula, the territory it had captured a decade earlier during the Six Day War.
The problem was that Israel needed Sinai. The peninsula served as a buffer between pre-1967 Israel and Egypt. If Egypt launched another surprise invasion like it did on Yom Kippur in 1973, it would first have to reconquer Sinai and Israel would have time to prepare. Israel couldn’t withdraw before finding a way to keep eyes on the ground. As the head of the research and development division in the Military Intelligence Directorate it was Col. Haim Eshed’s job to come up with technological solutions for operational problems. His idea for keeping an eye on the Sinai? Build a satellite.
Convincing the government to invest in satellites was a long shot. Space was supposed to be off limits to small countries like Israel and was, at the time, the sole domain of superpowers. Only seven countries had launched satellites into space. The last to do so had been the United Kingdom in 1971. The idea was bold for another reason as well. Until then, Israel’s space experience was limited. In 1961, the country launched a meteorological research rocket called Shavit (Hebrew for comet), but it was far from being able to place a satellite in space. And then in 1965, Israel considered establishing a space program but the government rejected the proposal, citing budget and technological constraints.
Eshed knew all of this but he was determined. He first approved the idea with his boss and together they brought it to IDF chief of staff Lt.-Gen. Rafael Eitan, who initially dismissed it as “Luftgesheft”, a Yiddish expression used to describe something as a waste of time. Israel, Eitan argued, needed to begin focusing on the withdrawal of military bases and towns from Sinai and their relocation inside the country. A satellite would be a waste of money. Anyhow, the chief of staff said, the air force had told him that its aircraft could provide all of the aerial reconnaissance the country needed even after a withdrawal.
Eitan also claimed that once there was peace, Israelis could simply drive into Sinai to look around and see if the Egyptians were preparing for war. But Eshed and his commanding officer pushed back. “That’s impossible,” they said. “We would need to look inside every single Beduin tent to really know what is going on.” Reconnaissance flights over Egypt, they argued, were also out of the question, since Israel wouldn’t be able to violate Egyptian sovereignty after it had reached a peace deal. The only viable option was to build a satellite.
It took some pushing, guts and creativity, but Eshed ultimately succeeded and Israel launched its first satellite into space in 1988, gaining membership in the exclusive club of nations with independent satellite-launching capabilities, joining the US, Russia, France, Japan, China, India and the United Kingdom. In the years since, Israel has grown into a satellite superpower. As with the other military platforms it specializes in developing, Israel has shied away from building big satellites and instead designs what are known as “mini satellites,” which weigh about 300 kilograms in comparison to America’s “mammoth” 25-ton models.
By 2016, with the launch of the Ofek-11, Israel had nearly 10 spy satellites in space, most of which use electro-optical sensors, cameras that can take high-resolution photos. In addition, Israel has a number of communication satellites of the Amos series, almost all of which have been designed and manufactured by Israel Aerospace Industries…[To Read the Full Article Click the Following Link—Ed.] Contents
ISRAEL AT 70: TOP VENTURE CAPITALISTS
OFFER THEIR TAKE ON FUTURE INNOVATION
NoCamels, April 19, 2018
Israel is marking the 70th anniversary of the founding of the modern state with a theme that centers on “A Legacy of Innovation.” But while much of the country has been focusing on the groundbreaking and innovative achievements of the past 70 years, what the future may hold is just as compelling.
While celebrations for Israel’s 70th birthday are underway, NoCamels has interviewed experts from six of the top venture capitalist firms in the country, picking their brains about the future of Israeli innovation across industries, and what startups are catching their eye in automotive, cybersecurity, artificial intelligence, big data, digital health, agritech, and retail. Here’s what VC leaders from OurCrowd, Bessemer Venture Partners, Jerusalem Venture Partners, YL Ventures, Maniv Mobility, and Vertex Ventures had to say.
“People always ask me how Israel maintains its edge,” Jon Medved, CEO of equity crowdfunding platform OurCrowd tells NoCamels, “Israel is particularly strong in its multidisciplinary nature. This is the culture of Israeli tech. Of course, the Israeli army is the most multidisciplinary system, but it checks all the boxes and we make it work.” Israel is made up of people with skills and experience in many different areas sectors, like for example, a doctor who also knows how to code, Medved says. Israelis also know how to put together the right multidisciplinary team, he adds, bringing together a machine learning specialist with a group developing a new product for the automotive industry, or an imaging tech expert with a farmer to work on a forthcoming project.
Adam Fisher, a founder and partner of Bessemer Venture Partners, echoes Medved’s sentiment, telling NoCamels, “Other countries are often too dependent on one type of expertise. Israelis are experts across many sectors and we continue to see that through their curiosity and diverse interests.” Israel is also full of multidisciplinary teams that don’t come from the same background, he says, noting like Medved that while the origins of tech are in the military, there are now enough independent companies in the country to sustain it. Fisher calls the Israeli character “fearless and naive,” and says the next decade will see tech penetrate every aspect of business in Israel,” explaining that he believes Israeli startups will soon disrupt unexpected industries, like shipping and insurance.
Yonatan Machado, a co-head of the Jerusalem Venture Partners early stage investment vehicle JVP Labs and co-founder of JVP Play, the platform matching early-stage Israeli startups with leading multinational companies like PepsiCo, Tesco, and Barclays, also predicts this disruption, telling NoCamels that tech will pour into retail, even more so than today. “In Israel, a big part of the focus of innovation was happening in the digital space, not something that the average person would understand. Now, much more tech affects our physical lives and affects the average person. What we’re going to see is more disruptions to the physical experience.”
What does this mean for the Israeli innovator? Ofer Schreiber, a partner at YL Ventures, a global VC firm with offices in San Francisco and Tel Aviv focusing on seed-stage and deep-technology B2B (business to business) companies in cybersecurity, enterprise software, and autonomous vehicles, puts it boldly saying that “Israel is turning into ‘scale-up nation,’ meaning that in the future we will see more leading global companies founded in Israel, together with a healthy M&A (mergers and acquisitions) activity.”…
[To Read the Full Article Click the Following Link—Ed.]
On Topic Links
Pioneers of Innovation: 13 Israeli Startups Making Their Mark On The World: Ido Levy, NoCamels, Apr. 18, 2018—Israel has over the past two decades soared to become the nation with the highest number of startups per capita in the world. With over 8,000 currently active startups and established companies, and innovation across a number of fields including medical, agricultural, automotive, cloud computing, cybersecurity (and much more), Israel is a powerhouse for pioneering tech and has certainly earned its moniker “Startup Nation.”
A Big Chunk of Israel’s Tech Scene is Actually Not Based in Israel: Gerrit De Vynck, Bloomberg, Mar. 29, 2018—Last year, Ben Fried pitched a fintech startup to Israeli investors — and got nowhere. The venture firms wanted to see if he could sell the idea in the U.S. first. “I’ve heard it from many investors,” says the former Israeli Air Force captain. “They push you out the door as soon as possible.”
Israel is One of World’s Leading Economies, OECD Report Finds: Ariel Whitman, Israel Hayom, Mar. 12, 2018—A new report by the Organization for Economic Cooperation and Development has found that the Israeli economy is one of the strongest economies in the world today.
Behind Israel’s High-Tech Reputation Is a Low-Tech Economy: Gwen Ackerman, Bloomberg, Feb. 14, 2018—When Israeli Prime Minister Benjamin Netanyahu boasts about his country’s powerhouse technology, he glosses over the fax machines that banks still use, the homes that take nearly three years to build and the classrooms that don’t have a single computer.