EXCLUSIVE: INTERVIEW WITH CEO OF THE ISRAEL INNOVATION AUTHORITY - DROR BIN
(Video: ILTV)
Israeli tech investments experienced a substantial drop of over 70% compared to the same quarter of the previous year, surpassing the decline observed in other markets. This alarming trend has raised concerns about the potential detachment of Israeli tech from global industry trends.
Head of the Israeli innovation authority, Dror Bin, says that since 14% of the Israeli workforce comes from the High-Tech industry, it has become the focal point of all Israeli innovation around the world. Additionally, he noted that huge Tech hubs have been developing in several locations around Asia and Europe, making the competition significantly fiercer than it once was, which means that despite Israel's widely-known reputation as the "startup nation", it can't afford to rest on its laurels.
Bin also spoke of generative AI, as the rise of image generators and chatbots such as ChatGPT and Bard is felt around the world. He said he believes that utilized properly, it can be a force for good, helping humanity deal with multiple impending crises, such as global and healthcare allocation and transportation challenges. He sat down for an interview with ILTV.
Dror Bin. We're here at the Israel Innovation Authority to talk about the latest report coming out. What can you tell us about it? What characterizes the Israeli hi-tech sector?
"Well, yes, this is the 2023 report, kind of the state of the Israeli high tech. And you know, when you look upon the data or the numbers, it's in quite an amazing situation. It has become really like the axis of the Israeli economy.
"And what do I mean by that? It contributes 18% of the total GDP of the country and this is a phenomenal number just as a reference or as a benchmark in the U.S., it's about nine to 10% of GDP. In the EU, it's about five to 6%. So this is really unique. Today about 14% of the workforce of Israeli employees work in the high-tech sector.
"It is the main engine for growth in the last decade in terms of employment, the Israeli high tech grew by 6% on average every year, while the rest of the economy grew at the pace of 2%. Not to mention the growth in salaries of people who work in tech.
"So this is really many times we use the term that the Itech is the engine of the Israeli economy. But when you look upon the numbers, this is indeed the case and it has become pivotal and even crucial to the success and prosperous of the prosperity of the Israeli economy."
And so what differentiates Israel's high-tech sector from other tech hubs worldwide?
"That's a good question and actually we now perceive ourselves as being in a kind of competition. If you look back ten or 15 years ago, most of the startups were created in Silicon Valley and in Israel and this is why Israel received the title Startup Nation.
"But in the last decade, I believe that things have changed and many of the developed and developing economies have realized that technological innovation is the key to the future economy and invested a lot in developing their own tech hubs. And today we see multiple tech hubs in the US. By the way, not only in Silicon Valley but also in other metropolitan areas in Europe.
"You see quite a few tech hubs rising in Asia. This is also the case and all these tech hubs and this is quite a new situation are competing basically for the same resources. So all of this is quite a new paradigm for the global high tech.
"And obviously Israel is in the top league of tech hubs in the world in terms of the number of high-tech companies and this is something that is new in the report. We have about 9000 high-tech companies and we are the third in absolute number in the world compared to other tech hubs.
"And when you factor in the size of the country, this is quite amazing. So we want to sustain our lead position as a leading tech hub and to improve our competitiveness even. And this is for me, as the CEO of the Innovation Authority, the main mission of the Innovation Authority, to make sure that we sustain and improve our competitiveness situation."
And so, according to the report, what are some of the challenges that the Israeli high tech sector is facing?
"Yeah, well, I think we are looking at multiple challenges as we speak. First of all, there is a global slowdown because of the global macroeconomics, the geopolitical situation between the US. And China, the war in Europe, the increase in inflation, and as a result, also in the interest rate. So all of this is changing completely the appetite of investors to take risks and invest in early stage companies or even in growth companies.
"We see this trend everywhere. In all tech hubs, we see a sharp decline in investments. So this is obviously the first challenge. This is not the first slowdown. In the last two decades, I think we had, I don't know, three or four such slowdowns in the high tech. And from each one of those slowdowns, the Israeli high tech only got out stronger.
"So I hope, I believe that this will be the case also this time. But every such slowdown also brings with it a phase change. And what do I mean by that? Most of the innovation and disruptiveness came in the last decade from the move to digital economy. I believe that today we are almost at the end of this wave.
"Now, we speak a lot about generative AI, and this probably will bring another wave of innovation. But I believe that humanity needs innovation also in different areas, not just digital economy, but in the real economy. And what do I mean by that? By 2050, the global population is going to grow, going to reach almost 10 billion people.
"It's also going to be much older people over the age of 60. I think they're going to be something like 2 billion people. So how do you provide healthcare to such population in a cost effective way? How do you provide food? How do you provide efficient transportation? How do you provide energy? How do you do all of that when you want to zero gas emissions and get to a sustainable planet?
"So all of those challenges require technological innovation they will not solve by themselves. So all these challenges are going to be the forefront of disruptive innovation that is going to come out. And we believe that Israel has a lot to contribute in this area."
And so are you at all optimistic for the future?
"Very optimistic. I think that the local hub is very strong. We have extraordinary entrepreneurs. The toughest challenge that you give them, the more enthusiasm you see, you get. We have here a very sophisticated VC community, about 500 different investment verticals.
"We have great universities and researchers. So all the ingredients are there. And I think that over the last decades, the Israeli high tech showed a lot of resilience and ability to adopt itself to what the world needs. And I'm quite certain it will happen also this time."
First published: 12:58, 06.28.23