Dan Senor: The Start-Up Nation at 70 (JFN 2018)


welcome and thank you
I want to- it’s a real pleasure to be here this this audience is quite
extraordinary I want to start this morning by showing you a photo it is a
photo of a young man I don’t know if anyone can recognize where that is
anyone recognize that it’s in Iran it’s in Isfahan iran the photo was taken in
1959 if you google today Ishfahan Iran you’ll see that historic site that’s
standing behind that man photo was taken in 1959 and it is a photo of my
late father Jim Senor so you may be wondering what my father was doing in
Iran in the late 1950s kind of a logical question
my father was a committed Zionist he was a career Jewish professional he was
a protege of Rabbi Abba Hillel silver who was very involved in debates in the
United States after World War two about the founding of the State of Israel US
recognition of the State of Israel and my father took a job working for the
Joint Distribution Committee in Iran so he picked up and moved to Tehran and he
did what the joint does all over the place which is help in this case was the
local Persian community helping him get organized
I was recently going through some of his papers and in fact I found his business
card which is pretty amazing you can see Tehran there and his address and number
and I also found a bunch of letters that he had written from Iran back to the
United States to his family describing his experiences in Iran one of those
experiences was a trip he took in 1958 from Iran to Israel now imagine you’re
you’re a committed Zionist and you have the opportunity American Zionist you
have the opportunity to travel from Iran to Israel and just to give you some
context Iran and Israel had quite close relations at that point it was a massive
earthquake in Iran you know Israeli experts came to help them deal with it
they dealt with all sorts of water irrigation issues so they had a close
relationship so my father took a trip from Iran to Israel 1958 Israel’s just
ten years old and when- he wrote a letter describing his impressions of
Israel attend through his eyes now there were many things that
jumped out at me and I’m not gonna go through all of them but two I would like
to focus on one what was striking is how impressed he was with the ingenuity the
resourcefulness the creativity of the Israeli people which is something that
very much resonated with me and two while he didn’t say this explicitly
there was a sense in the tone of his letter that you know Israel was still
very much an experiment there was no sense of inevitability or permanence
about this experiment of the founding of the modern State of Israel you know by
that point is what I already fought two wars the ’48 war of independence in
which Israel lost 1% of its population the 56 war he arrived just soon after
that and there was a sense that there could be another war at any moment it
was well before the 67 war which was almost like a pivot point for Israel in
terms of its military might and the perception of it so it was like a hinge
moment things could very much go one way or the other and I I sometimes marvel at
you know how my father would have perceived what’s going on here in at year
70 even before year 70 I think about what he would have thought about the
incredible accomplishments of this place and the accomplishments range I mean
obviously Israel’s vibrant civil society its resilient you know free society its
extraordinary military its citizens army that has kept so many Israelis kept the
country safe and secure and of course something that I focus on is Israel’s
innovation economy now why is this important because without a dynamic
economy Israel not people to be sub sufficient and wouldn’t be able to be
independent it wouldn’t be able to provide for its own defense needs it
wouldn’t be able to keep Israelis here it wouldn’t give it geopolitical
leverage around the world but the problem is Israel’s domestic
population is tiny so Israel’s economy can’t depend on the
local population just servicing a few million people the only way Israel’s
economy thrives and grows as if it’s connected to the world if it’s both
exporting to the world and if people from around the world companies
investors governments are betting on Israel betting on Israeli talent that’s
the only way it continues to grow so that was basically one of the themes of
our book startup nation in 2009 if we can pull up the slide so one measurement
of how Israel is connected to the world is whether or not multinational
corporations are investing in Israel what does that mean investing is I mean
opening up R&D centers actually setting up shop here sort of innovation labs to
put Israelis to work on their problems on these multinational problems so
that’s a metric so when we wrote startup nation in 2009 we obviously looked at
that question I mean multinationals to be clear they
set up shop elsewhere in the world but they typically set up shop if they want
to penetrate a local market so go to China because it’s a massive market
Israel doesn’t have a massive market its market is a little smaller than China’s
or than one axis like it’s a- they want a regional hub play for logistics
like they’ll go to Dubai because they set up shop there and it’s a way to
access the Persian Gulf from the broader broader Arab world Israel is a tiny
population no domestic market and it’s completely isolated in the region so
there’s no you don’t come here to do logistics for the region so the fact
that they were setting up shop here to solve problems not take advantage of a
market and not take advantage of regional logistics was quite
unique you can pull up the slide in 2009 when we released startup nation
there were 126 multinationals that had R&D centers here
that which is the high- by the way highest per capita in the world of any
country where you have that many multinationals set up here employing
putting to work that many people but what’s even more interesting is where
they were coming from so the overwhelming majority of those
multinationals were coming from the rich world mostly from North America and
Europe okay so fast forward to today to 2017 in
2009 we had 126 in today we have 360 so just in the little less than the last-
less than a decade in the first decade six decades of Israel’s history that
about 126 multinational set up shop here in the last decade alone two and a half
times that number there’s a bunch of reasons why as andre says our book
fortunately much to our surprise has been translated all over the world
government from around the world are wanting to know israel’s innovation
story start-up nation central which paul talked a little bit about last night is
busy engaging a lot of these countries and companies and bringing them here and
helping them set up and then also as more and more operations get set up
others in their own ecosystems around the world hear about it and the buzz
continues and they want to be here so that it’s the numbers extraordinary okay
but to me what’s even more interesting is where are they coming from okay first
of all the diversity of companies right so you have companies like Facebook and
Apple Apple set up its first R&D center outside Cupertino California in Israel
you have auto companies now for GM the CTOs of those companies say they spend
more time in outside of Detroit there’s no city they spend more time in than Tel
Aviv because the future of the automobile is the future of a
communications device that’s basically what it is communications enabling
autonomous semi autonomous driving all the auto companies want to be here I can
go on and on and on with the range of companies that want to be here but as I
said where are they coming from it’s no longer just the rich world
now I’m going to use four simple metrics today one as I mentioned multinational
setting up R&D centers from around the world to multinationals that have
acquired an Israeli startup 3 an investment firm or an investor from
abroad that’s invested in Israeli startup or invested in Israeli VC fund
and four a startup nation central engagement in SNC engagement which means
when we do engagements we we this nonprofit as startup nation central we
are engaging with governments were engaging with NGOs we’re engaging with
companies we’re engaging with investors and and figuring out a way for them to
come here often in their behest they’re interested in doing it and we kind of
help them GPS through Israel and figure out how they can find what they need on
the ground to solve the problems and if you look at this map it’s no longer just
the rich world it’s no longer just North America and Europe
you have sprinklings obviously through Latin America sprinklings through Africa
we heard a little bit about that a few minutes ago but look at China and India
wasn’t even on our radar when we wrote up startup nation in 2009 there’s a
little bit but not a lot and now there’s massive massive incoming from China and
India so why are they coming why are they coming from these different parts
of the world well there’s a couple of factors I want to focus on one the
changing map of innovation globally the the changing geography the new geography
of innovation it used to be all Silicon Valley centric it’s not anymore we can
we can take off the slide I’ll come back a little in a little later the the
Silicon Valley is no long when we wrote startup nation everyone in the world
thought Silicon Valley was it and we were saying look there’s this other
place you need to know about called Israel now just to give you a sense in
2007 Silicon Valley attracted 82% of the global venture capital around the world
8 out of every 10 venture capital dollars globally was being deployed in
Israel- in Silicon Valley in 2017 a decade later that number had dropped to
53% in Silicon Valley in the United States so think about that almost half
of all venture capital dollars now are being deployed around the world unicorns
which is the term used for a startup a technology tech technology startup that
has a valuation of a billion dollars or more
there are 218 of these unicorns around the world
half of them only half of them are in the United States so why all of a sudden
is enough innovation being distributed globally and not so concentrated in
Silicon Valley the reason is because the developing world as you heard earlier
from Tehran the developing world has massive problems to solve massive if
they want to stay if they want to just keep up they have to almost leapfrog the
developed world in anything everything related from telecommunications to
healthcare access to education to basic essential services I mean you take India
for example okay India in the 1970s India was a part of
the non-aligned movement which was the block of nations at the United Nations
developing countries bloc of developing countries that had an automatic majority
in the General Assembly and they used that non-aligned movement to basically
pass anti-israel resolution after anti-israel resolution in in the UN you
fast forward to this past year Prime Minister Modi came to Israel first
time in an Indian leader came on an official trip to Israel sort of shocking
given the history of India’s efforts to isolate Israel diplomatically and
economically and then soon after says seven months later Prime Minister
Netanyahu led a delegation to India that start up nation central was a part of
a big part of that delegation and it was an amazing trip both trips were amazing
but at the end of the trip in New Delhi the two governments signed nine
agreements to partner on everything from medical research to space exploration
to thermal solar energy to battery technology innovation to Agrotech agro
tech I mean in the three years before these trips Israel had set up 28 centers
of excellence throughout India in rural areas of India’s to teach tens of
thousands of farmers how to use Israeli technologies to increase the yields on
their fields by five to ten times five to ten times I mean think about if you
multiply that across the subcontinent this is what India desperately needs
this could unleash a second agricultural revolution to help India contend with
the massive challenges of a growing population India’s population will soon
be larger than China’s a growing the demands of growing middle class
urbanization the the challenges facing a country like India are extraordinary so
it’s not just that they’ve figured out that they need innovation it’s that
they’ve decided they need to partner with Israel now why would they partner
with Israel this tiny speck of a country of all the people and all the places
India could partner with people say is it about the tech it’s great Israeli
tech tech is part of it but it’s not enough because unlike when we wrote
startup nation in 2009 tech today is pretty widely available right the costs
for tech have come way down the combination of cheap computing power
smartphones cellular networks cloud storage even free artificial
intelligence tools like Google’s tensorflow these things are available
now to anyone with an internet connection so the tech is important but
it’s not enough they want to know how the talent the brains and there’s
something unique about Israeli society in terms of how it develops its
young people whether it’s through the Scout Movement
whether it’s through the Mechina programs whether it’s through that
crucible leadership experience that is the IDF whether it is about living in a
society with over 70 nationalities represented and the challenges and the
tensions and the frictions and the rewards that come from that experience
young Israelis are just wired differently and when you combine the
tech with that talent that’s why the developing world is coming to Israel to
say help us solve our problems China okay
so China about 10% of the capital being raised today deployed in Israel is
coming from China Alibaba we’ve all heard of Alibaba the
company is valued at half a trillion dollars with the tea Alibaba has already
acquired an Israeli startup Jack Ma has come to Israel Alibaba has announced a
15 billion dollar global R&D initiative and it wants to at one of the anchor
offices for this global R&D initiative to be in Israel Ronny Chen prominent
Chinese businessman has brought work with essence startup nation central to
bring delegations here that include executives from Alibaba and 10 cent
bright foods bright foods which is the largest food producer in China has
acquired a controlling stake in Tnuva because Tnuva has the highest
yielding cows in the world and so China wants to know how to do it milk tech
this should be a sector milk tech okay actually my my my favorite story here if
you can just pull up the slides for a second my favorites are when I hear
about all these delegations coming here there’s there’s delegation from Shenzhen
University of economic economic professors and Business School
professors and they were also coming here to learn about how Israel does it
how they can connect with Israel and this what I’m about to show you appeared on Facebook which was you know the Chinese delegation got a little bit of
downtime and so they and so they went down to the Dead Sea and this is a this
was on Facebook this is one of the professors from Shenzhen University
sitting on the Dead Sea reading the Chinese edition of startup nation this
is like it’s right okay we have arrived right you can you can pull down the
slide I won’t keep you distracted that is Chinese that is Chinese Chinese
that’s the Chinese edition of startup nation so what does all this mean what
are the opportunities here I would just leave you with two thoughts
one is the opportunities for Israel in the world
are enormous beyond what we could have ever imagined when we wrote startup
nation almost you know 18 months will be 10 years so almost 10 years ago we could
never have imagined where Israel would be in the world right and the fact that
it was connected to the rich world was an accomplishment
now now Israel is indispensable to this new geography of innovation
there’s new geography this new map where innovation is being distributed around
the world that everyone around the world is trying innovation rich countries poor
countries everyone’s trying to innovate but what’s striking is how many of them
including the especially the developing world wants to partner with Israel to
solve its problem it wants that Israeli know-how we can pull up pull up the
slide the last slide so that’s my father as you know he wrote a letter in in
which he was in a sense marveling about what Israel would be and I you know I
sensed his sense of Israel just being an experiment Saul Saul singer and I wrote
startup nation which as many respects was our our letter to our children
marveling at what Israel had become and I think the challenge for all of us is
to just think about what Israel will become in the next 10 years or in the
next 70 years as it continues to reach out and connect through innovation to
the world that’s the opportunity the challenge is that we’re running out of these young
people in Israel in other words that the shortages here are immense there’s so
much demand when you increase from 126 by two and a half times just on
innovation centers there are only so many Israelis currently plugged in to
the Israeli labor force that can do these jobs so how do we fulfill that
promise how do we keep marveling at what Israel is doing here and is doing around
the world we have to further develop talent inside Israel develop that
pipeline of human capital it serves two purposes it serves two purposes A it
maintains Israel’s connective tissue to the world and B it fulfills our our
obligation here to help those demographics of Israeli society those
corners of Israeli societies of Israeli society that have not experienced the
promise of this amazing innovation economy and that’s our other focus for
instance its startup nation central we’re focused not only on the
opportunities of taking Israel abroad and bringing abroad to Israel but also
figuring out how to develop the potential here in Israel now Israel for
three millennia has been at the crossroads of empires right there’s a
Roman Empire then there were the Babylonians and the and the Egyptian
Empire and the Persian Empire and Israel was sort of caught in the crossroads and
then later on there were Israel’s at the crossroads of the Ottoman Empire and the
British Empire Israel’s are the new crossroads today it’s at the crossroads
of this new geography of global innovation and Israel is integrated into
it not only integrated it is central to it an understanding how Israel can
continue to thrive and and prosper and leverage that connection to this new
crossroads it finds itself and the global innovation ecosystem is a central
question for our times thanks for listening

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