Wanted: Arts majors for high-techFrom GlobsTechnology companies are looking for creativity, flexibility, and the ability to think outside the box.The average profile for a high-tech worker generally includes an education in systems engineering, computer engineering, or programming. However, in recent years, along with the blossoming of start-ups, many companies are turning to completely different fields to recruit workers. They are looking for creativity, flexibility, and the ability to think outside the box - attributes that are not necessarily typical of math and engineering graduates.This trend, which characterizes high-tech and start-up companies, reflects a broader trend: companies are increasingly seeking to hire workers who are not conventional fits for the traditional requirements, so they can contribute to intellectual diversity, and help them to see things a little differently.Shai Ozon, CEO of One1 Group, which employs 3,000 workers in IT, is a strong advocate of hiring management talents from different fields. “The idea is to bolster the management layer with people who come from different disciplines, and to diversify the style of management,” he says. “The reason is that we are in an industry that is constantly changing: the technology changes, the customers come from a wide variety for fields, and we are looking for people who will be able to speak in diverse languages, and not necessarily understand the intricate details of the product we are selling, but more relationship management and sales processes. We can teach them about the product.”Are there problems with today’s training?“Apple’s success did not stem from the fact that their computers were better than IBMs, rather from the synthesis of disciplines. For example, once, the role of information systems was to make sure the computer would work. Today, it is to give the business a competitive edge. It is not enough to speak the old language of technology; you need a broader business vision.”What characteristics are you looking for in employees?The people I am looking for may have backgrounds in law, industry and management, and as far as I'm concerned even art. The important thing is that they have some life experience. They first undergo an internship, for about a year and a half, in three levels of specialization: professional training in IT, management coaching, and in organizational culture the company’s business language. Each one of them will hold a variety of positions within the company along the way: projects, sales, etc., and they will see the big picture.“I am looking for assertive, creative people, who understand business, and from that, also sales processes. Personality and ability to communicate are extremely valuable. It is hard to find managers, and, generally, people look in the wrong place. The match has to be as close as possible. We have built a rigorous program, and I want to have 10 employees enter the first round. If I end up with a few good managers, I will be happy. Good managers are worth a lot of money.”Technology with creativityRSA (EMC Information Security division) Israel Director of Research and Innovation CTO Alon Kaufman says that using information for business purposes requires multi-disciplined people, and professional teams need to include, on the one hand, technical people, with backgrounds in statistics, mathematics, or computer science, and, on the other hand, content experts, who understand the business side, and the customers.“There are very few mathematicians who have a natural business sense, therefore, people who can translate and manage all the technical sides and direct them towards something business oriented that will speak to the customers, and will translate the information in the most practical manner into a final product, are very important. But thinking about the final product has to course through the blood of every one of the workers. So that they have the drive to find the simplest algorithm, and the most practical graphics. When we analyze the data, we need people who know how to ask questions, and know how to present the final product, visually speaking. Such a team could include an architect, a statistician, someone with a degree in computer science, and a physicist. The manager of such a team does not need to be an expert in one of the fields; the manager needs to have the personality traits to allow him to connect everyone, to communicate with the team, and to lead.”Is it possible to find such people?“It makes hiring very complicated. Depending on the candidate, you sometimes change the job description, because obviously you will never find yourself exactly. Typically, managers look for people who resemble themselves, but I think this is the biggest mistake - you should search for people who are different.”At the start-up company Innovid, the employee profile is also atypical for high-tech. “The company’s first employee was a Creative Director, which is a position that does not exist at high-tech companies,” says co-founder and global operations manager Zack Zigdon. “What we are creating is something new, and when you approach a client, you have to show him something to convince him. We need creative people to convince the advertisers.”Innovid offers advertisers a new way to present their products using videos that present viewers with options to be exposed to more and more information about the product. For instance, a viewer watching a car commercial may be able to book a test drive, view the car’s interior, or receive price quotes, while watching the commercial. The company has a full team of art and design school graduates working on the video advertising experience.Playtika Israel, which operates in the field of gaming on social networks, and whose primary platform is Facebook, has a hard time finding workers because the company is so specialized. According to head of HR Gabi Karni, she turns to candidates whom, in a typical recruit, she would not be interested in. The company’s content manager is a script writer, and working directly under him is a toy designer. The studio manager previously worked at an ad agency. The marketing manager is an entrepreneur, who previously founded a start-up. One worker was an IDF intelligence officer; his job is to research the competition. “Initially, it was because we had no choice,” says Karni, “But, later, I understood that, surprisingly, the variety and the heterogeneousness bring about our success as an innovative organization that creates products outside of the box. These workers come from a crossroads, seeking a new and challenging path. They come with motivation, hunger, and desire - this is what creates the synergy with the organizations culture and pace. Their learning curve is very steep, and they succeed exceptionally.”“Also seeking literature majors”As mentioned, seeking employees who do not fit the classic profile is not only typical in high-tech. McCann Valley (McXann Erickson ad agency Mitzpe Ramon extension) chairwoman Hana Rado, had a hard time finding young workers in the area. Hence, some of the senior staff relocated to the area from Tel Aviv, but there is a clear preference for Negev residents. “We take people with undergraduate degrees, who have no experience, and they undergo 3 months of training. For the time being, the training is in Tel Aviv, but soon it will be in Mitzpe Ramon. We have psychologists, economists, lawyers, communications majors, literature majors, people who understand language. People who like to write like journalists, economists, biologists. People who are interested in the Internet world. Wonderful people with values. It’s like a start-up in the desert."Published by Globes [online], Israel business news - www.globes-online.com - on December 30, 2013© Copyright of Globes Publisher Itonut (1983) Ltd. 2013 Globes - Wanted: Arts majors for high-tech      

INNOVATION NATIONIsrael – a small country of 7 million, in a constant state of war and with no natural resources – has become a hi-tech powerhouse. Joe Charlaff reports on why its talent for enterprise is pivotal to its futureThe serious money to be made in the cellular equipment market is in systems-on-a chip (SoC), which routes and transmits the ever-growing data stream. Provigent, which develops innovative SoC solutions for broadband wireless networks, is currently one of the most talked-about Israeli start-ups. The outfit has been profitable for 18 months (posting $40m revenue last year, up 60% on 2009) and already boasts Ericsson, Alcatel-Lucent and China’s Huawei Technologies as clients. After months of debate about whether it should go for a Nasdaq IPO, Provigent directors announced in March that they had decided to sell to semiconductor giant Broadcom, based in Irvine, California, for $313m (€221m). The deal marked Broadcom’s ninth Israeli acquisition.A few weeks later Facebook snapped up its first Israeli company, Snaptu, which had launched a Facebook mobile app a few weeks earlier, for a reported $70m. And rumours were growing in techie circles that Conduit, a start-up based in Rehovot that creates browser platforms for toolbars, is negotiating a $1bn deal, possibly with Google or Microsoft, that would be the biggest sale of an Israeli internet firm so far.For the past 40 years, since ECI Telecom put down roots there, an enclave along Israel’s coastal plain – which became known as Silicon Wadi (the Arabic word for valley) – has become a hotspot of computing, surveillance, videogames, transport and other innovations. This hi-tech oasis, largely concentrated in Tel Aviv and smaller cities, is now home to companies such as Microsoft, Google, and many other household names, making it an important part of Israel’s economy. Intel’s latest microprocessor was developed at its new $110m R&D centre in Haifa, and Intel Israel has been responsible for developing the Pentium and Centrino chips which power most PCs around the world. According to official figures, Israel’s hi-tech industries, which include the software, medical, electronic and advanced mechanical sectors, made up about 15% of the country’s $200bn GDP in 2009, and 40% of its exports.It’s not hard to see how this situation came about. The modern-day State of Israel is a small country in the desert, constantly at war with its neighbours and with little in the way of natural resources. It has arguably had to live off its wits since its founding in 1948, becoming a pioneer in the field of desalination and a leading exporter of defence products. Toss in the influence of the Israeli Army Intelligence Corps’ technology units, world- class academic institutions such as the Technion in Haifa and the Weizmann Institute of Science in Rehovot, and the shared Jewish experience of moving from place to place and starting afresh, and you can see where the nation’s resourcefulness stems from.But although Israel has the largest number of start-ups in the world in relation to its population – and is second only to the US in total – a growing number of successful home-grown companies are being gobbled up by larger foreign names.In selling out to US giants, Provigent – named by Ernst & Young as Israel’s most promising start-up for 2010 – and Snaptu are simply following in their peers’ footsteps. Only last April, Google paid $25m for start-up LabPixies, a leading developer of personalised web gadgets. Five months later it bought Quiksee for an estimated $10m. Founded in 2007, Quiksee produces location-based online tour technology, enabling users to create interactive 3D walkthroughs from simple video clips. The technology is regarded as the missing link in Google’s Street View service (used by Google Maps and Google Earth), which allows users to view images of streets around the world.Even in the depths of a global recession, 63 Israeli companies were acquired or merged in 2010 – a decline of 22% from the previous five-year average of 82 deals – according to the Israel Venture Capital Research Center (IVC). From 2009 to 2010, the size of the average deal fell 15%, from $37m to $32m. VC-backed deals (26) totaled $1.25bn, down from $1.54bn (28) in 2009.Three of last year’s M&A deals exceeded $200m and two were in the $100m-$200m range. The top 10 amounted to $1.4bn, 69% of the year’s total. The leading deals were 3M’s acquisition of Attenti, estimated at $230m; Mellanox’s $218m purchase of Voltaire, a Ra’anana-based provider of scale-out data-centre fabrics; and the $213m acquisition of network processer-maker Wintegra by PMC-Sierra, which already has a presence in Israel.Tel Aviv-based Attenti is a leading supplier of remote people- monitoring technologies, used to keep tabs on people awaiting trial or on probation, and by healthcare staff to assist in the care of elderly patients. The company’s CEO, Yoav Reisman, says: “3M’s culture of innovation fits well with our own, and its research-and-development capabilities and global reach will help accelerate the growth of our business.”Saul Singer, co-author of Start-Up Nation: The Story of Israel’s Economic Miracle, points out that no matter how hi-tech their products, the founders of Israeli businesses are entrepreneurs. When they reach the stage of scaling a company up, they become bored, preferring to move on to their next idea. “It’s not a bad thing,” he says. “Look at the career of an entrepreneur who is productive and able to build a few start-ups, then compare that productivity to someone who remains in the same company”.In his view, the pace of change over the next 20 years is likely to be greater than that of the past 50. “We don’t know what will happen, and in that situation it’s preferable to be in a start-up economy where there is much more flexibility. Start-ups are much better equipped to deal with rapid change as opposed to big companies and that makes them more valuable.”One problem is that Israel is a young nation with little experience of developing world-beating companies of its own. According to Todd Dollinger – chief executive of The Trendlines Group, which invests in and develops innovation-based businesses in the life sciences, cleantech, IT, security and other markets – few managers have “grown up” in large enterprises, meaning they lack the skills to engineer a company’s expansion. “Israelis who develop real skills in the sales and business- development realms do so while outside Israel – in the US, the UK and elsewhere,” he notes. “When they come back to Israel after succeeding abroad, they don’t stay in business development, they seem to move on to new ventures and their skills are lost.”A more serious hindrance is the lack of capital. Mindful of the rewards of a hi-tech culture – namely jobs, profits, investment opportunities and knowledge – governments in the 80s and 90s hatched Israel’s incubator system and various seed-funding mechanisms. Yet even at their peak, Israeli venture-capital funds were unable to offer large investments and following the global capital-market downturn, they struggled to raise cash. As a result, Israeli companies turned to foreign sources, which in many cases entailed basing their headquarters and senior management in the funder’s city. This has been exacerbated recently by a change in the R&D law – a cap on the penalty paid by companies if their operations are moved abroad. Dollinger adds: “The government’s insufficient support for education is a potential disaster. It’s bad for the country in every conceivable way.”“In general, start-ups can go two ways,” says Michael Eisenberg, a partner in Benchmark Israel II, a Herzliya-based fund that specialising in seed, start-up, and early-stage investments in ICT companies. “Either they sell or go public, otherwise the investors can’t get their money back. It’s about making money for the investors.“In Israel there is an issue about companies selling early and not going all the way to becoming a large company. A few reasons can be attributable to that: there has been some short- termism from fund managers looking for quick exits. There is a sea change and the trend is now for there to be larger, venture- capital backed companies, which is exactly what is needed, and the entrepreneurs are dreaming bigger, which will help the venture environment and lead to greater opportunities.”The financial crisis of 2008, which severely impacted institutional investors, was the major impediment to raising new funds. In 2009, only $234m was raised by Israeli VC funds and $200m of that was raised by just one of them, Sequoia Israel. In spite of improved macroeconomic conditions, Israeli VC funds were unable to attract new capital in 2010. Capital-raising trends in Israel generally correlate with trends in the US, which experienced a 50% reduction from 2009 levels.Last year, the government announced an incentive programme for Israeli institutions to invest in domestic VC funds that is expected to increase investment by $220m in 2011-12. According to IVC CEO Koby Simana, the situation is critical. “Without improvement, it threatens the survival of numerous Israeli hi-tech companies that cannot raise needed capital.Moreover, VC funds will not be able to finance new companies or, in some cases, support their existing portfolio companies.”Looking ahead, IVC is cautiously optimistic about capital- raising, based on a positive outlook for the local economy and government steps to stimulate investment. “However, most of the impact of the government plan will only be felt in 2012,” says Simana, “since local VC funds must first raise substantial amounts – 60% of the total capital of each fund – from foreign investors. It’s a real challenge for Israeli VC funds.” Many hi-tech companies that have not managed to raise capital face a threat to their very survival, he warns.Yoram Tietz, managing partner of Ernst & Young Israel, points out that Israel’s main assets are human capital and innovation – and says that without more investment, the country risks losing its crucial innovative edge. Faced with such a crisis, the Ministry of Finance and the Ministry of Industry and Trade have intervened, introducing a programme called the Competitive Advantage National Plan. Yuval Wollman, an adviser to the finance minister, explains: “Given that this is the growth engine of the Israeli economy, we thought that it would be wiser, strategically speaking, to capitalise on the advantages that we still have, examine the weaknesses and see what measures should be taken.”The ministries concluded that potentially innovative companies were being starved of capital from the Israeli market. At the moment it is common to exit start-ups early, with entrepreneurs aiming their initial public offerings at the US or agreeing mergers and acquisitions with large American companies. The government’s idea is to encourage companies to have their IPO in Israel so that they contribute to the economic ecosystem.The measures also include encouraging minorities, such as the Arab and ultra-orthodox Jewish communities, to join the hi-tech workforce through the higher education system. In addition, a fund is being established that will match government funding to private capital, facilitiating the transition of ideas from academic institutions to industry.To address the dramatic decline in the capital raised from local pension and provident funds (institutional investing domestically is only 0.2%, compared with 2% abroad), the government has allocated approximately $55m as a way of participating in the investment risk of Israeli institutional investors.And with seed-stage companies short of cash – raising only $39m in 2009, down 56% on the previous year – the government will allow investment in an R&D-focused company to be reported as an expense on day one, deductable against income from all sources over a three-year period.In addition, there will be tax incentives for large Israeli tech companies, such as the security specialist Check Point, to buy local start-ups, creating sub-industries within the Israeli market.Alan Feld, founder of Vintage Investment Partners, is convinced that the industry will get back on its feet, given time. His firm, which manages around $460m, has a database of more than 3,500 Israeli tech companies and tracks 90% of funds related to the sector on a quarterly basis. “We probably have the most active database of what’s happening out there,” he says.According to Feld, the decline in the amount invested in Israel between 2008 and 2009 is not dramatically different to what happened in the US in that period. While the drop in the amount invested was approximately 40%, the drop in the number of venture deals was only about 10%. Funds are investing in a far more capital-efficient way, he notes. In addition, venture funds have raised the bar by looking for better quality companies and being much more careful about how they invest. “We view that as being good for the industry as well. So, despite the drop in dollar terms, what’s more important is the number of deals done, which indicates a healthy level of activity.”A dramatic increase in angel investing, along with an increase in the number of venture funds returning to seed investing, also bodes well for the industry, and Feld believes that $600m-$900m will be raised by venture-capital funds this year – not far off the average raised after the crash of 2001. “We anticipate committing to at least three funds in 2011,” he says.As far as Singer is concerned, Israeli tech has huge opportunities for growth. “The ecosystem that has developed with American companies has barely begun with the same kind of companies in Europe, Latin America and Asia,” he says. “Siemens, Deutsche Telecom and Samsung are in Israel, but so many other companies outside the US are not. Why shouldn’t these other regions gain the same advantage as US companies have by injecting themselves with Israeli innovation?”There is considerable room for US firms already in Israel to increase their involvement, says Singer, and for those that are not in Israel yet. As well as exporting technological innovations, the country is making a name for itself in the field of innovative business models. In recent years two of its more conspicuous successes have been Better Place, which provides electric- vehicle networks and services internationally, and food company Strauss-Elite, whose coffee division operates in 12 countries (including Brazil, where it merged with a domestic operator to form the nation’s second-largest coffee manufacturer).It may be down now – but if history is anything to go by, Israel is far from out. 

Start-up notionsThe real roots of Israel's economic miracle The 1990s were a revolutionary time Israel's economic development. The government created Yozma, the innovative venture capital vehicle structured by the Israeli government, saw an inrush of venture capital, a wave of NASDAQ IPOs, and benefited from a surge in corporate technology acquisitions. Recent accounts represent the period as a case study for governments looking to foster entrepreneurship. But that story is so incomplete as to mislead policy makers. In fact, developments in the 1990s were the fruits of a process almost forty years old.The real timeline:1.    1950s. The seeds of Israel’s entrepreneurial revolution were sown in the late 1940s and 1950s. Israel’s first (Weizmann) and fourth (Katzir) presidents were scientists. Both believed strongly in the role of science in national defense and societal prosperity; in and of itself unique in the world and a strong message about national priorities. The first military technology transfers took place then, half a century before Mirabilis created ICQ, the first instant messaging system.2.    1960s. R&D got a huge boost in the 1960s, in part from the sudden 1967 French weapons embargo: military self-reliance became defense policy, leading to massive investments in military R&D and the seeding of what would become an entrepreneurial hothouse, the Intelligence Signal Corp (Unit 8200). In 1968 the Katchalski Committee recommended the establishment of the Office of the Chief Scientist (OCS) to help fix market failures in commercializing R&D.3.    1970s. The early 1970s saw Israel’s first NASDAQ IPO (1972; by medical imaging pioneer, Elscint), the embryonic involvement of top-tier US-based venture capital, and very significantly, the establishment in Israel in 1974 of Intel’s first international R&D center. In 1977 the influential BIRD foundation was created to fund technology-based product development between Israeli and US companies.4.    1980s. By the early 1980s there were numerous top-tier VC investments, and by 1984 the NASDAQ value of the first wave of a dozen Israeli tech ventures was $780 million. In 1984 the government passed the milestone Law for the Encouragement of R&D. In 1985 the first limited partnership venture capital fund, Athena Venture Partners, was established with $23 million. In 1987 the cancellation of the Lavi fighter-plane mega-project flooded the market with thousands of engineers who swelled the ranks of startups. By 1989 I even had enough material for my speech in Berlin at the European Venture Capital Association conference, “The History of Israeli’ Technological Entrepreneurship.”You can’t write American history without Jefferson and Washington, yet the authors of Start-Up Nation tried to do the equivalent, overlooking founding fathers like Uzia Galil and Dan Tolkowsky. They’ve even neglected the founding sons—people like Zohar Zisapel (founder of 29 IT firms) and Efi Arazi (founder of Scitex). There are consequences to this revisionism. For example, by focusing on the 90s, policymakers have neglected the parallel entrepreneurship ecosystem that preceded—and enabled—initiatives like Yozma.But it was this ecosystem that, by 1990, made Israel’s entrepreneurial revolution a fait accompli; so much so that by 1997 there had been 68 NASDAQ IPOs—all before Yozma’s investments started bearing fruit.And in truth the massive Russian immigration of scientists and engineers has had little direct impact on Israel’s entrepreneurial revolution—in the 90s most had no choice but to accept K-12 teaching or low-level service jobs; Israel’s vast incubator program, admirably privatized, has bred a relatively low number of successful ventures; and Israel’s culture and institutions were anti-entrepreneurial until the mid-1990s, with labor and the government owning huge portions of the economy, wealth being scorned, and marginal tax rates discouraging extra work.Israel’s entrepreneurial accomplishments have indeed been nothing short of miraculous. Since 1972, over 160 Israeli ventures have been listed on NASDAQ, more than any other country outside of the U.S. and Canada, and hundreds of tech ventures have been acquired. Tens, if not hundreds, of billions of dollars of value have been created. The world benefits from Israeli innovations, such as the USB memory stick, instant messaging and new generation cardiac stents, to name a few. The entrepreneurs who created such novel products have disproportionately contributed to Israel’s growth. So it is only natural for policy makers around the world to want to learn from Israel’s remarkable experience. But they will only reach the right conclusions if they first get the history right.