Money and imagination
By Vincent Heeringa,
Israel has more technology companies listed on the US stock exchange, NASDAQ, than any other nation. "Israeli mothers want their sons to drop out and become entrepreneurs," reports Thomas Friedman in the New York Times. Friedman is an astute observer of economic things, such as the idea that the world is flat.
Actually, he wrote the book by that name. A regular NYT columnist and a Pulitzer prize winner, he’s written a terrific little piece while in Israel (he’s also an Arab-Ireal expert) about the importance of imagination and commercial success. I have stolen some excerpts in the hope that a link to his site will allow it.
“If you want to know why Israel’s stock market and car sales are at record highs — while Israel’s government is paralyzed by scandals and war with Hamas and doesn’t even have a finance minister — it’s because of this ecosystem of young innovators and venture capitalists. Last year, VCs poured about $1.4 billion into Israeli start-ups, which puts Israel in a league with India and China.
"...when the world becomes this flat — with so many distributed tools of innovation and connectivity empowering individuals from anywhere to compete, connect and collaborate — the most important competition is between you and your own imagination, because energetic, innovative and connected individuals can now act on their imaginations farther, faster, deeper and cheaper than ever before.
“Those countries and companies that empower their individuals to imagine and act quickly on their imagination are going to thrive. So while there are reasons to be pessimistic about Israel these days, there is one huge reason for optimism: this country has a culture that nurtures and rewards individual imagination — one with no respect for limits or hierarchies, or fear of failure. It’s a perfect fit with this era of globalization.
“We are not investing in products or business plans today, but in people who have the ability to imagine and connect dots,” said Nimrod Kozlovski, a top Israeli expert on Internet law who also works with start-ups. Israel is not good at building big companies, he explained, but it is very good at producing people who say, “Wouldn’t it be great if you could do this ...,” then create a start-up to do it — which is later bought out and expanded by an Intel, Microsoft or Google.
"...My guess is that the flatter the world becomes, the wider the economic gap we will see between those countries that empower individual imagination and those that don’t. High oil prices can temporarily disguise that gap, but it’s growing."
Perhaps we need a little hostile enemy action in NZ to get the message that we need a huge jump in imagination and ambition to survive.
Comments
Ben Kepes
Israel is a very interesting economic development model. They have a plethora of incubators and rabidly and rapidly assist startups - both hi-tech and not so. Google Stef Wertheimer and find out about the industrial parks he set up at tefen and other places. This is a model that New Zealand should look at and replicate in a way sympathetic to our fundamentals. Progress progress…….
Raf Manji
Incubators are great but its the people that run them and the investors that bankroll them that count. NZ is making progress but there are not enough people with imagination to take an idea and run with it. At least that is my experience so far. When you look at Israel or Silicon Valley even the one key standout is people prepared to put money to work.
That means taking risk. I think NZ investors are very conservative which is why eventually the NZX will be owned by overseas players.
Hats off to Rod Drury and co for having a go. Imagination and the intention to create are powerful forces.
Paul Spence
So to summarise…living in a war zone forges successful entrepreneurs?
NZ may be an economic slug, but at least there is very little chance of being blown to pieces when I pop down to the shops to buy a loaf of bread.
Ben Kepes
Paul - true quality of life is higher here in NZ but not for the security and danger reasons you describe. Having spent a significant amount of time in Israel I can report that what we hear on the media is far from the actuality and one doesn't fear "being blown to pieces when I pop down to the shops to buy a loaf of bread"
David MacGregor
I think the interesting thing that Vince highlighted was the comment that Israeli startups don't aspire to be big companies (rather than his cheeky red herring about war zone issues that seems to have diverted the conversation).
I don't think New Zealand entrepreneurs aspire to be big either. This idea has been discussed at length elsewhere, usually bemoaning the fact. I see it as an excellent aspect of the New Zealand economy. To be nimble and adaptive would seem to me to be advantages.
Companies like 42 Below who sell to global concerns are a variation of listing on the NASDAQ with the intention of selling to a bigger fish. It is an inevitability of life in New Zealand and essential if we are to stay fresh.
Then again, thinking about what 'Big' means, I'd be delighted to earn gigantic returns from an idea that has been created and delivers profits for the imaginable future without ever needing single 'staff member' - something a little JK Rowlings-ish perhaps?
Jason Kemp
I'd like to see Thomas l Friedman debate John Ralston Saul on some of these "flat earth" ideas.
I doubt that the actions in Gaza have much to do with Israeli entrepreneurship. Instead Israels strong links to the U.S and huge foreign policy mindshare as well as access to US capital are definite contributing factors.
The equivalent of KEA for Israel has been active for generations in the U.S and that has to be a huge advantage.
Cultural values based on respect for learning and exploration produce successful societies everywhere around the world.
There is a feature "Greater Expectations" in the Listener (http://www.listener.co.nz/issue/3500/features/8944.html) arguing that families that place a premium on education effectively leveraging expectations to get a better result.
If we want more entrepreneurs we need to engage early and set similar expectations to those Israeli mothers mentioned at the beginning of this piece.
The Nasdaq stat is interesting - would like to know more about that.
Andrew B
One of the key reasons that Israel has strong R&D is due to the tax incentives and economic structures that encourage investment and risk, and reward success. Benjamin Netanyahu deregulated the economy, weaned the welfare state, and got many people out of a public buracracy and into productive roles that grow economic growth. Not that Israel is problem free in these areas, but they have come a long way in a short time. Twenty years ago NZ under Roger Douglas started the same thing, but then stopped in midtrack and never finished the job. When NZ encourages entrepreneurship and starts rewarding instead of punishing people for trying to make money then things may change. Where is the incentive to put kiwi ingenuity and imagination to work?
Paul Spence
Yes, I was being a little mischievous by responding to Vincent's closing comment.
Andrew B and others above make some good points about what underpins the disproportionate success of Israel's tech sector.
Jason van Gent
We often talk about what role the Government can play with financial incentives and infrastructure etc, but as an entrepreneur / inventor or whatever label you would like to give us, it is not the infrastructure that drives us and to be frank we are not the kind of people who really think hard about what we are about to jump into… (if we did to much thinking we probably would never take that first step to start with)
While I admit that finding the cash to fund a project is always hard to come by it is still not the driver of the entrepreneur more often than not it is the lack of funds that drive them.
The biggest hurdle I think in starting a company from an idea is the lack of knowledge of all the aspects of running a successful business, and this I think is where we become stuck.
For any company/Idea to take off you need more than the founder to get it started and keep it moving, and this is where I/we had our biggest hurdles, we found cash when we needed it - I had the back up of Wellingtons CreativeHQ incubator so I cant cry for want of infrastructure.
It wasn't till I had brought in partners to the business that we really started to make tracks, People always admire new products/concepts but it is getting the right people involved where it becomes a company (probably where the term company comes from?).
So here is what I believe needs to be addressed, Entrepreneurs need friends who are prepared to get their hands dirty and who are able to put some skin in the game.
All the really smart successful people are already busy working really hard doing what they do. What we need is a coming together of the "really smart been there done that people" and the "I have a really great idea but what the hell do I do with it now people"
A speed dating service could work well.
Jason
Ben Kepes
Jason is right - the issue here is definitely not a lack of good people with good ideas and it's probably not a lack of cash, infrastructure of whatever. what it may well be is a lack of people able to translate a good idea into a workable product offering and then to scale that offering to grow the business through to viability. The key here is vision and strategy - issues I've talked about at length over on my blog - ConnectNZ are doing some good things around this, The IOD is trying but it's possibly a little out of its depth and NZTE and the various EDA's are courageously trying to push this area. Watch this space because it's a particular area that will come to attention in the next few years….
Raf Manji
Jason you are so right. Business is all about people and in start up ventures that takes on extra importance. Each person you add must be fully aligned to the purpose and vision of the business and the values it operates by.
Great ideas are easy to come by but people still have to deliver them.
Try www.vortexdna.com to see how this works in practice.
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