Unlocking Israeli High Tech's Secret Advantage

Several years after the world first took notice of the economic miracle in Israel, Israeli startups continue to enjoy an astonishing growth trajectory. The Israeli tech sector had its best year ever in 2014, posting a record $15 billion in exits, nearly twice the total in 2013 and three times the country’s 2012 combined exit value. The wave of tech startups, innovations and exits is continuing this year.

Israel’s tech sector is clustered around Tel Aviv in an area affectionately dubbed “Silicon Wadi,” an allusion to the U.S. tech epicenter that wryly incorporates an Arabic term that is also used in colloquial Hebrew to refer to a dry river bed or valley. The word’s multicultural pedigree symbolizes an important element in the incredible success of the Israel tech industry: the built-in advantage of its ethnic diversity.

As detailed in Start-Up Nation, a best-selling book that chronicles Israel’s economic miracle, the country’s impressive technology talent pool is making waves worldwide. With more than 3,000 high tech companies and startups, Israel has the highest concentration of tech companies in the world outside of Silicon Valley. It leads the world in the number of scientists and technicians in the workforce, with 145 per 10,000, as opposed to 85 in the U.S., over 70 in Japan and less than 60 in Germany. Over 25 percent of Israel’s work force is employed in technical professions, placing it first in that category as well. But there is more to the story than meets the eye.

Immigrants Provide a Competitive Edge

As any HR professional can tell you, human capital is at the heart of a company’s success. For Israeli high tech, multi-ethnic marketing and sales teams can be a company’s secret weapon. Israel is a nation of immigrants, with over 70 countries represented. According to Dan Senor, co-author of Start-Up Nation, “Two out of every three Israelis are newcomers, or the children or grandchildren of newcomers. Walk around Israeli neighborhoods, and you’ll find yourself dealing with Israelis from the U.S., France, Russia, Ethiopia, Poland, Yemen, and Australia, to name a few. Israel is also the most pro-immigration country; politicians there actually compete with each other with campaign promises to bring in more immigrants, not fewer.”

“The Israeli battery-operated car grid company Better Place was founded by the son of an Iraqi immigrant. The Israeli company Koolanoo — the third-largest social networking site in China — was founded by the child of an Iranian immigrant. The Internet music startup FoxyTunes — which was recently sold to Yahoo for tens of millions of dollars — was founded by a young Ukrainian immigrant.”

In Israel, multicultural teams bring a variety of backgrounds and experience to the table across all facets of operations. Given the wide range of nationalities represented, it’s not surprising that Israeli companies have special insight into what products will resonate around the world — and know how to effectively present new products to global audiences.

Multilingual Teams and Focus on English Provide an Advantage

English is commonly spoken at Israeli startups. At countless Israeli startups, company emails are written in English and signs around the office are in English. When a meeting begins, the speaker typically looks around to see if he or she should proceed in Hebrew or English. When in doubt, English is the default choice.

The focus on English isn’t just confined to tech companies. Visitors in Tel Aviv and the surrounding cities during the work week can expect to hear English spoken in public. If the men and women populating cafes are wearing jeans and t-shirts, they’re likely Israeli high tech workers. When Israeli tech companies go on their quarterly department field trips, the tour guide generally speaks English to the team.

Those seeking high tech jobs in Israel — even native-born Israelis — had better prepare their résumés in English. If the job requires English, candidates can expect an English language interview — even if the hiring manager speaks fluent Hebrew. Given that English is the default language of the tech world, the focus on English in Israel provides an advantage.  

Multiple Languages, Multiple Markets

While English remains the lingua franca of the tech world and Israel is well-positioned to capitalize on this due to its English proficiency, virtually the whole world uses technology. And that’s where Israel’s incredible ethnic diversity can provide an unstoppable advantage — provided that companies seize the opportunity.

At Panaya for example, the linguistic diversity goes beyond the classic Israeli business model. Like other Israeli startups, Panaya is packed with native English speakers. Company meetings are held in English, and rare is the Hebrew language email.

But if you enter the offices of Panaya, you will hear a dozen or more languages. Besides English and Hebrew, Panaya has native speakers of Spanish, French, Italian, Portuguese, German, Russian, Danish and Polish. Based on the markets they work in, sales and marketing teams also speak Japanese, Mandarin and a slew of other languages.

There are marketing and sales executives who specialize in Latin American, Asian and European markets. Some of their team members work in one language while other multi-lingual Panaya salespeople work in two or three languages — all in a day’s work.

Seizing the Multi-Ethnic, Multilingual Advantage

Surprisingly, even in multi-ethnic Israel, most companies rely on local offices or contractors in remote locations to handle sales and marketing. But Israel has a built-in advantage on international expertise, and this can make the predominate model of branching out to global marketing and sales (in the early stages) obsolete.

Companies that recognize their multi-ethnic advantage and leverage the “ingathering of the exiles” can build institutional knowledge that no level of “outsourcing” can approach. They can use data generated internally about global markets — by experts in local languages and culture — and bypass hired hands to handle core marketing and sales operations in the Israeli HQ.

As Panaya’s experience illustrates, international sales and marketing professionals can pool their shared experience in ways that are just not possible when teams are scattered across the globe. A German-speaking professional can listen and learn from a Dutch-speaking colleague sitting one desk away. By centralizing international services within Israel, Israeli companies can maximize the benefits of their collective knowledge. And by doing that, they can unlock Israeli high tech’s secret advantage — and continue its astonishing growth trajectory.

About the Author: Uzi Krieger is VP of Marketing at Panaya