Lessons to learn from ‘Silicon Wadi’

28th June 2018

Russell Haworth

Russell Haworth

The smallest countries can sometimes pack a disproportionate punch. Israel is about the size of Wales – and 473 times smaller than the US – yet it’s one country making serious waves in the global technology industry. Its ‘Silicon Wadi’ (valley in Arabic) is gaining serious momentum, and the figures are impressive.

Israel has more start-ups per capita than any other country and attracts more venture capital per person than anywhere on the planet. More importantly, the technological advancements being made in everything from cyber security to fintech will light the path to a digital future that serves all inhabitants of the globe. With the Duke of Cambridge, Prince William, visiting the Middle East this week it’s a timely reminder of the importance of building strong and successful relationships outside of the UK to help all our advancement – be it for the benefit of cyber security or greater diplomacy.

I have been to Tel Aviv on a number of occasions and return to the UK exhilarated by the energy and focus I have seen. Multinational tech companies such as Apple, Facebook, Microsoft and Google have research facilities in Israel, but the natural start-up talent from the country itself has also attracted numerous and significant investments and acquisitions. Ride-hailing service Gett saw a £231m investment from Volkswagen in 2016 while the satellite navigation app Waze was acquired by Google in 2013 for about £1bn. One of the most recent – and the largest by value – acquisition was of Mobileye, a self-driving vehicle technology company, by Intel for $15.3bn in 2017.

The country’s tech capability is of interest as many of the areas Nominet is working within are having standards set by Israel. It is known as a global cyber security hub, and was second only to the US in industry investment 2017. It also has a robust and growing industry around drones and autonomous driving. General Motors, for example, has been working in Israel for almost two decades, praising the local companies’ “versatility”. They are joined in their interest by Toyota, Skoda, Fiat, Ford, Honda, Volvo, BMW and Hyundai, to name just a few. How can we learn from their approach to innovation to help supercharge the UK industry and ensure we keep pace with the technology leaders of the world?

There are many theories about why and how Israel has seen such enormous growth and success in emerging technology industries. There is a two-tier system in play to develop and monetise tech in Israel. One, to build a product and then sell it overseas, and two, where global brands are setting up in situ to harness the expertise of a super-smart workforce. One thought is that the military has also played a part as an incubator; Israel’s largest military unit is the cyber and intelligence division and military service is obligatory.

Israeli defence force Unit 8200 is, in fact, the Harvard of cyber security. The unit selects talented recruits from high schools, immersing them in feeder programmes to learn computer coding and hacking before being enrolled in the military unit. As a result, many young adults are emerging from service at 21 years old with the creativity, critical thinking skills and ambition to forge ahead in cyber security – which could go some way to explain some of the activity.

The UK has no obligatory military service – and I wouldn’t be advocating a change – but it highlights that we do have some channels that are not being tapped into enough. Similar school screening programmes and more rigorously managed careers support throughout our children’s education could be a major win for the UK digital economy if there were the appetite and impetus to implement these. We are a diverse nation, with talent that needs to be recognised and nurtured, and entrepreneurs that need to be accelerated. Start-up mentality and agility will produce the products our country needs to cope with increasing cyber threats and meet the demand for digital. We need to proactively support this, removing barriers to success as well as implementing robust processes and programmes.

In Israel, there has been a rise in equity crowdfunding and in accelerator programmes too, many of which focus on underserved members of society. Support for new businesses, combined with a focus on diversity and accessibility, is a powerful cocktail. The UK is already one of the best countries in Europe for making investments in tech companies, thanks to attractive tax breaks. There are also initial efforts to support new talent, such as CyLon, Europe’s first cyber security accelerator programme, which Nominet is partnering. CyLon has seen impressive results for its Cohort members, which begs the question of why there aren’t more organisations like it operating across the UK and the continent at a time when cyber security is critical – for all.

Seeing the bigger picture of cyber security and associated risks is paramount. In global terms, Israel is setting the bar, increasingly becoming the place where we can learn lessons in innovation and be inspired to push ourselves and ideas further to think differently about the digital challenges we face. The innovation and resource we need as a nation cannot always be homegrown. We must look outwards to protect from within.