Israeli Innovation and the ‘Startup Nation’

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These are just a few of the technological disciplines that have earned Israel the nickname “Startup Nation.”

By 2009, 63 Israeli companies were listed on the NASDAQ, and by 2017, 94 companies were listed. That’s more than any country outside of the U.S. and China. How did a country roughly the size of New Jersey and a population of 8.5 million people accomplish such a feat?

Barry Bogage, the executive director of the Maryland/Israel Development Center, chalks it up to the fall of the Soviet Union in the late ’80s and early ’90s when there was mass immigration of Russian Jewry to Israel.

“A large proportion of that immigrant population was scientists and engineers,” Bogage said. “There was a ‘brain gain’ in Israel of a lot of smart people. Parallel to that, Israel was just emerging from a period of hyper-inflation in the mid-’80s. They had a lucky convergence of their economy stabilizing and then all these people arriving.”

Dating as far back as the ’30s, Bogage credits the society with making advancements in agricultural innovation with methods such as irrigation.

“They didn’t have a lot of water, so what were you going to do?” Bogage said. “They figured out how to make that into technology and also commercialize it. Their agricultural technology has evolved as well. They used all that technology and they became big agricultural producers for years and exporters.”

Barry Bogage (The Associated)

Bogage estimates that there are more than 30 Israeli companies with facilities in Maryland. The state could be attractive to Israeli businesses for a number of reasons, but the executive director of the MIDC says that sometimes it breaks down to much simpler logic.

“They go wherever the market is; there’s nothing magic about it,” Bogage said. “If you’re a foreign company entering a new market, you go where there’s a business reason to go, or you go where you have family. We’ve got the market here. We have one of the most educated economies in the country.”

One of the biggest fields in which many Israeli businesses have found success is cybersecurity. One such company, Cyberbit, which is a subsidiary of the Israeli-owned Elbit Systems Ltd., creates cybersecurity products that not only assist the Israel Defense Forces, but American businesses as well.

Last August, Cyberbit provided its platform for the Baltimore Cyber Range LLC, a cybersecurity center based downtown at Power Plant Live. Bruce Spector, chair of the board for the Cyber Range, said the project took shape after Gov. Larry Hogan took a trip to Israel in an attempt to bring the country’s cybersecurity technology to the state for workforce development.

“Cyberbit sees a large number of cyber threats as part of that work,” Spector said. “What they do very cleverly is they store these threats, they catalog them in a library. Then the companion system is the network simulator that can act like other people’s networks. It’s revolutionary from a training perspective. It teaches professionals how to become better.”

In other words, those in cybersecurity can learn from these training programs that simulate real attacks. In this way, they can be better prepared for hackers or other threats.

Sam Friedman, the regional director of sales for Cyberbit, says that the policies of the IDF toward its soldiers are one way in which this technological boom could be explained.

Bruce Spector (David Stuck)

“They have to come with all sorts of solutions for the army to use,” Friedman said. “When they finish their service, Israel doesn’t just hold on to that information. They help these kids out of the army and let them take the things that they built in the military and turn it into companies. They do very well for themselves because these are military-grade security or hardware solutions. The difference with almost every military government everywhere else in the world is you create something, and it’s owned by the army. In Israel, they can take the software they built and do something with it.”

Bogage said that it’s not just cybersecurity where Israeli technology is flourishing. For example, Mobileye, which creates driverless vehicles, was sold to Intel for $15 billion last August. Bogage also cited Israeli artificial intelligence companies, software analytics and medical marijuana research.

As for why Maryland serves as a hotbed for Israeli tech, Spector credited an “extremely productive administration in Annapolis” and Hogan’s emphasis on bringing the latest and greatest products from the Jewish state to the state he governs.

“I think there’s an over- proportionately well-trained workforce in Israel,” Spector added. “Their academics there are outstanding. … People are trained to think out of the box. Part of that is survival. Nobody there wants to be a schlepper. They all want to get better. That’s just almost a national feeling there.”

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