How Australia’s startup ecosystem can become more like Israel’s, but only if the government moves quickly
Wednesday, October 3, 2018/
In July 2018 on an AI Trade Mission to Israel hosted by the NSW Dept of Industry and the Austrade Landing Pad in Tel Aviv, David Fairfull, the chief executive and co-founder of Metigy, reflected on what local and federal government, education institutions and all entrepreneurs could learn from the success of the Israel Startup Nation program. Here are his observations.
I have been aware of the Israeli Startup Nation phenomenon for some time and been intrigued by it. For those familiar with the various global technology growth markets, Israel has truly established itself as a market that punches above its weight. But what makes this country of only eight million people so effective at producing great technology and developing entrepreneurs who really embrace rapid global growth? Is it a replicable formula, a mindset, a natural sense of urgency, or all of the above?
I was excited about being immersed in the Israeli tech scene and understanding it first-hand. Doing that, naturally raised the question, how could we replicate that success here in Australia?
There are some specific cultural issues particular to Israel, that for better or worse, Australia can’t replicate. Let’s face it, Australian’s enjoy a “very comfortable” mindset generated from our peaceful distance from others. Where Israel’s, surrounded by neighbours who are often less than friendly, possess a sense of alertness, urgency and a state of preparedness for whatever comes at them, which they have adeptly turned into a cultural need for speed.
It is impressive to observe the speed at which Israeli entrepreneurs are comfortable operating and the directness they apply to working with others globally. While making the most of enjoying the safety we have and our easy-going nature, Australian entrepreneurs could be doing a lot more to bring that sense of urgency to think global, to the way our teams work and their enthusiasm to tackle whatever challenges come at us.
With a total population of only eight million to work with, most Israeli startups just accept the real opportunity is global. So they start global, rather than slowly roll up to the idea once they have squeezed as much as they can out of a population of 25 million.
While some Australian startups definitely embrace being global early, many also start local and then come to the realisation they need to think beyond this market. But how much more might be achieved early if this were the mindset from day one? Israel demonstrates the outcomes with many startups scaling and selling inside two-three years, quite frequently.
Another unique element that influences the business culture in Israel, is the compulsory military service for all men and women between the ages of 18 and 21. It was obvious to me this has a unique impact on the startup mindset. In essence, a significant percentage of 21-year-old Israelis already have leadership experience, which they are getting in their third year of service.
They have learned to work as a team, lead others in high-stress situations, and adapt and overcome. Nearly half go through a military intelligence unit and they have worked with technologies like satellite, drones, communications, security and cyber, so you can imagine the capability that comes from that grounding in technology followed by a formal education at some of the best universities, and nearly everyone gets a tertiary qualification.
While all of those elements are significant, what trumps all this is that these budding tech entrepreneurs have developed an incredible network or alumni from their military service of people they know and trust to perform under pressure. By contrast, Australian’s leave university and enter the workforce with far fewer skills and a relatively passive network of peers.
So what can Australia take from that and apply to our strengths?
While I am not suggesting we would choose to re-create those circumstances, we can replicate the positive outcomes with some practical medium-term shifts in our approach to education and leadership development.
With some focus and effort, our educational programs could introduce leadership skills to all business and engineering technology-oriented courses. Perhaps even an additional year applied to actively learning about entrepreneurship and leadership, and delivered in co-operation with leaders in the tech ecosystem, and supported with a significant scholarship program so students can continue their commitment. However, this would still pale in comparison to the investment happening in Israel.
Bringing industry and education together is the key to graduating global market ready capability. Teach leadership aligned with practical knowledge, to deliver well-rounded entrepreneurs, rather than just qualified graduates. There are some great examples of this already occurring, with the Sydney School of Entrepreneurship as one example, but we could pursue it with more speed and purpose.
Governments need to commit to pursuing the concept of innovation and supporting the technology sector, just as the Israeli government has, by inadvertently and deliberately fostering the development of an emerging class of leadership capable tech-oriented professionals.
While the NSW Government, led by clearly capable and passionate ministers committed to fostering innovation, such as Matt Kean and his innovation team in the NSW Dept of Industry, there is more to do to create an environment where startups can aspire to ‘start’ global.
We need federal and state governments, education, and the tech sector working in concert to create a world-class hub for emerging technologies, and it is disappointing to see the signals that the Federal Government may be winding back their focus by scrapping the innovation portfolio and moving away from the National Innovation and Science Agenda.
I am sure I am not the only entrepreneur to be disappointed by the introduction of training levies on visas for professionals — a move that actually discourages growing startups trying to hire a globally capable workforce.
The potential to create a globally capable technology workforce built on the strength of Australians who are just naturally inquisitive and innovative is incredible. This could provide the next generation of Australia’s wealth, as it has in Israel, but only if we act now.
The consequences of not taking action are serious.
In the field of AI alone which has the ability to guide human decision making, imagine a future where foreign entrepreneurs and governments influence the development of technology that guides the daily decision making of the Australian population, as we interact with products and apps, just through the moral and cultural bias applied to product design and development.
Australia must play its part in influencing our own future, and to do that we need to lead in key technologies. This will only happen if we evolve our approach to being the clever country.
If you are interested in learning more about the Israeli market first-hand then I recommend reaching out to the innovation team at the NSW Department of Industry or the Austrade Tel Aviv Landing Pad who jointly ran a highly professional program that has no doubt created some great opportunities and fast-tracked the thinking for the eight innovative AI businesses that participated in the program.
From the frontlines
A cultural war: What Hayne's report means for fintechs, accountants and small-business lending Charlotte Petris Timelio founder
Seed-stage capital raising: Why you should keep the deal simple Jason Rose Early-stage investor
In a perfect world: Canva's Melanie Perkins dreams about the future of Australian startups Melanie Perkins Canva co-founder
Swipe right for (data) validation: What dating apps can teach us about data security Leah Callon-Butler intimate.io co-founder
How do Australian startups tap into the $140 billion of dry powder sitting in the US? Andrea Kowalski Bailador partner
What founders can do now to prepare for a possible 2019 recession Les Szekely EVP co-founder
Uncertain about R&D in Australia? Here's all your questions answered Remco Marcelis Standard Ledger founder
What it's like being a trans woman in Australia's startup ecosystem Joan Westenberg StartupSmart columnist