In less than a decade, Tel Aviv has become the second biggest start-up hub in the world. Now it’s poised to take on Silicon Valley in the quest for the next big thing in high-tech, writes ARTHUR GOLDSTUCK.
The line-up at last week’s Digital-Life-Design (DLD) innovation festival in Tel Aviv was as astonishing as the high-tech explosion that has placed the city at the epicentre of the information revolution.
The inventor of the USB flash drive, the founder of global navigation app Waze, and a former president of Israel who won the Nobel Prize and helped inspire the electric vehicle revolution all shared their visions of the next big thing.
But it was Steffi Czerny, who founded DLD in Germany, who offered the overriding perspective on the significance of the event: “If you want to see what’s next, come to Israel,” she told an audience that included delegates from several dozen countries.
The event attracts start-up entrepreneurs, high-tech giants like Intel and Microsoft, and government trade representatives from countries like France and the Netherlands. Two start-ups from South Africa, WhereIsMyTransport and Funda, were there as regional winners of a global startup contest.
All delegates were alert for either the next big investment opportunity or the next big thing in technology. Most of all, they were on the outlook for the technology that will shape the future.
As a result, it is not only the new ideas and apps that make an impact at DLD, but also the ideas that will shape the future. Ironically, many of these ideas come from arguably the oldest man at the event: 91-year-old former Israeli president Shimon Peres, a Nobel Peace Prize laureate and one of the main drivers of Israeli investment in research and development for the past 50 years. His passion for electric vehicles has been an inspiration for research into battery technology and the electric grid.
His thoughts on what it takes to predict the future in themselves help to understand what will be important in the future: “We can predict things up to a point,” he told the audience. “To do that we need maximum information. And for that we need a combination of a human being with imagination, and infinite patience.”
Asked to make three predictions for the next big area of technology breakthrough, he had no hesitation: “The first domain will be about medicine. The second will be about sharing; instead of having our own houses and car, we will share most things, as we do with shared rides and accommodation today. It will change our assumptions of capitalism. Then I can see a third change that is particularly important: robotics.”
He struck a cautionary note, however, warning against an obsession with technology for its own sake.
“We invest so much in robotics that is not being invested in human beings. The human being produces thoughts, which means the human being is superior to the robot. Why make a better robot instead of a better human being?”
His conclusion: “The human being has a long way to go.”
Not that there was a shortage of start-ups and established companies trying to show the way. Tel Aviv has the distinction of having more startups per capita than any economic hub in the world outside Silicon Valley. Of around 3400 startups in Israel, 972 are in Tel Aviv. With 40 per cent growth in number of tech startups since 2012, some suggest it may even overtake Silicon Valley.
The city also hosts 49 research and development centres for multinational organisations like Google and Facebook, and 58 co-working spaces and startup accelerators.
Those may sound like mere numbers, but they add up to an equation that begins to explain Israel’s impact on the high-tech world. One of the smallest yet most revolutionary technologies originating there, the USB flash drive, was invented by Dov Moran and his company, M-Systems. It’s $1,6bn sale to SanDisk in 2006 still ranks as one of the biggest ever acquisitions of an Israeli high-tech company
“It’s about opportunity,” Moran said in a panel discussion at DLD. “It grows and grows and grows, and every success brings us new entrepreneurs who then know what to do next.”
He, too, offered a forecast for the next huge thing or two: “The industry of self-driven cars, and the effect of genome research on health, are going to change the world.”
A slightly different perspective came from Shahar Waiser, founder and CEO of Israel’s answer to Uber, a taxi app called Gett that is now also available in New York, London and Moscow. Revenue has been growing at 300 per cent a year for the past three years, and it is likely to be one of the next “unicorns” – startups with a valuation of $1-billion a year.
The one area where we won’t see a unicorn, said Waiser, was telecommunications. Quite simply, the big unicorns like WhatsApp and Facebook have cut short the meteoric growth in profits we once saw from telcos.
But it goes beyond just the industry sector, he said: “It’s very difficult if take something with both a digital and offline component and scale it. There is no company with a telecommunications component, where it has more than $100-million in revenues, that keeps growing at the kind of 300 per cent growth we are seeing.
“Food research is one area where we may see unicorns emerge. Transportation is another.”
In short, sectors that address urgent human needs.
And it means that, from food to medicine to the sharing economy, the DLD festival put several signposts on the roadmap to a future that will confirm one of the oldest rules of innovation: “Necessity is the mother of invention.”