Israel's reputation as the "startup nation" precedes it. Over the past 20 years or so, the Jewish state has welcomed the opportunity to position itself as a global force in the field of technological innovations – something that, when all is said and done, comes down to the local mindset, mentality, and morals of hundreds of entrepreneurs who seek to spearhead various fields in the high tech industry.
High tech is one of the main growth engines for the Israeli economy. In fact, the past decade has seen it finalize 1,210 mega-deals amounting to 385 billion shekels ($111 billion). The total exits value throughout the 2010-2019 decade represents an 800% surge in exits value and a 50% increase in the number of overall deals materialized from the previous decade.
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Seeking to propel Israel's startup nation status forward, the Israel Innovation Authority, previously known as the Office of the Chief Scientist at the Economy Ministry, has evolved into an independent, publicly funded agency, whose mission statement is to "provide a variety of practical tools and funding platforms aimed at effectively addressing the dynamic needs of the local and international innovation ecosystems."
Israel Innovation Authority Director Aharon Aharon describes himself as a "worrier on the national level." He recently sat down with Israel Hayom to discuss what lies ahead for the startup nation as the economic fallout from coronavirus crisis is starting to pummel Israel's legendary high tech sector.
Q: It seems as if we're failing in the little things, and our tech nation is once again under restrictions because we haven't been able to put together epidemiological research. Maybe we aren't as advanced as they tell us we are?
"We're always moving in two lanes: one, which is vital, is the long-term strategy for Israeli innovation, whose goal is to prepare for future challenges. The other aspect is toward a methodological, systemic, and built-in system of activity with Israeli companies. I don't criticize activity I'm not familiar with, I can say that when activity is subject to oversight, management, and is consistent and coherent, all sides involved can predict the results and manage them – both in terms of strategic decisions and how to implement them."
Q: Google, Samsung, Apple, and Microsoft all invest in the healthcare field. World expenditure on healthcare is up dramatically and is estimated to reach $10 trillion by 2022. How did we find ourselves in the situation that in 2020 a single virus brings the world to a standstill?
"What are all these companies interested in? The connection between the data element, figures, because they deal with data, and healthcare systems. There is a close link between the sophisticated use of information in making healthcare systems more efficient. When it comes to corona, we didn't have enough information. The economy has become closely tied to heath, and in global terms, we are seeing the world economy come to a stop. That's because we didn't know much about the virus that arrived from China."
"China took very aggressive action, as is acceptable there. For example, enacting total lockdowns on cities. Because there wasn't enough information, other places took similar action. Today we are at a more reasonable stage, in which we can examine what real public health damage has occurred and what economic prices we are willing to pay."
Q: What can be done to prevent a future situation in which we are almost helpless in the face of a threat of this kind? How can the field of bio-convergence help us deal with the current situation and possible future ones?
"First of all, we'll see it [bio-convergence] in the field of diagnostics. Bio-convergence will allow better and faster diagnostics. One of the fundamental problems we have with the current virus now is to detect its existence.
"Not long ago, I read in Israel Hayom that 'chains of infection' are estimated at five days. After five days we don't need to know what the chain was, because everyone is infecting everyone. If we could do it in 15 minutes, we'd be in a much better situation.
"Another field in which bio-convergence is relevant is in finding a vaccine faster, through methods based on data or biological sensors that can detect things. The third field in which bio-convergence is relevant is for more consistent monitoring."
Q: Part of your job at Apple was to develop its smartwatch, a symbol of monitoring.
"True, one of my favorite things for monitoring is the watch, but it's a field that is very relevant to what we're talking about. The ability to constantly monitor in order to find aberrations could be critical. In other words, when a person suddenly feels unusual symptoms that can be measured, like a higher temperature or pulse, we can issue a warning in real-time. When a person like that is infected and gets results within 15 minutes, the outbreak chain is cut off at a relatively early stage. If we identified a carrier in a matter of minutes, we'd be in great shape."
Q: You've mentioned processes that are being sped up because of coronavirus. In 2030, will we be better able to handle a virus like this?
"The wake-up call wasn't the result of the virus, but the economic fallout. If you want to jump ahead to 2030, most methods would have caused diagnostics and processes to find a vaccine to become much faster. By the way, the world being 'shut down' is a problem of diagnostics, not a problem of the lack of a vaccine. Either way, coronavirus has given an unbelievable boost to all healthcare systems."
Q: Aside from coronavirus, is there something else we should be worried about right now in the area of healthcare and technology?
"Yes. One danger is the existence of chronic illnesses, which aren't going to disappear. Another danger is the incorrect use of technology. The more accessible technology is, the more it is likely to reach entities that wish us ill. The use, for example, of sensors to monitor a medical condition. That requires that information be protected so as not to receive incorrect information about someone. We don't want a very sick person to be considered healthy, or the opposite. 'Turning' a lot of healthy people into patients would keep the healthcare system busy and could crush it."
Q: It doesn't need to be a cyber attack. We only need to look at the erroneous Shin Bet tracking messages that people have been getting.
"Precision tracking is too invasive and could violate people's privacy. We need to find a balance between privacy and precise tracking. That's exactly the balance I deal with finding, between technology and regulation.
Q: Another ramification of coronavirus is the situation in high-tech. How worried should we be about the layoffs at Amdocs and Israel Aerospace Industries?
"The high tech industry is no different from any other industry. With Amdocs, its business hasn't been showing good results for a while. It has a lot of competitors and its market value stems from the services it supplies. Its level of service was affected because its main customer was AT&T, whose activity took a hit of six to seven percent, which means Amdocs' did too.
"In general, the high-tech sector has seen a drop in demand that's reflected in sales. According to our statistics, that's 25-30%. That is a major drop. We are also expecting a 25-30% drop in funding this year, according to our models. On the other hand, there are companies that are up, like Wix, or Playtika, because people are sitting at home and playing.
"To handle this, we've developed a plan called the 'fast lane,' which is designed to help companies that suffered drops in sales and funding and are therefore fighting to survive. We invested NIS 500 million [$146 million] in that plan for companies that need cash to survive the crisis. We have launched other programs at a combined cost of over a billion shekels to help the economy."
Q: Do you think the bubble is about to burst?
"The bubble is bursting, slowly. Even before coronavirus, we saw less investment in small and new companies. That means that in four to five years there will be fewer companies like that. It's the result of most investors going with more mature companies, where the risk is lower. With biotech companies, for example, it takes them 10 to 15 years to mature. People say, 'Why invest now? I have better options for my money.'
"Corona has sped up all these processes, and there is a paradigmatic change that we are ignoring: that the time before corona and the time after it will be different. We are already seeing that in the form of work from home. There are companies that have announced they won't go back to offices. That's a statement that carries with it widespread ramifications. Where will innovation come from, if not from conversations in the hallway? Without innovation that results from walking with people and meeting them in the halls or informal work, these companies might be hurt."
Q: You sound worried.
"I'm always worried. That's my job. I worry on the national level. The goal is to adjust ourselves to fit the paradigmatic shift. It's not an easy challenge. There are some excellent companies that could wind up closing. This is a very real crisis."
Q: Do you foresee a situation in which laid-off high tech workers go into other fields?
"What will a laid-off high tech worker do? Work in a restaurant? The leisure sector? They are laying people off left and right. I think that high-tech is still the best place to work for a high salary. There are about 25,000 laid off high-tech workers, and they are the first major sector that has to return, and soon."
Q: Is the government doing enough?
"In a crisis situation, there's never enough to go around. High-tech's big advantage is that it generates growth. In other words, high-tech will lead the economy out of the crisis."
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