Why Israel? Outside of Silicon Valley, Israel is arguably the best place in the world to look at how start-up culture has permeated the broader economy, culture, and everyday life.
On a per capital basis, Israel has the highest amount of VC $ invested, and the most number of startup companies in the world, and more public companies on NASDAQ than any other country outside of the US. Seemingly all Israeli taxi cabs and riders use GetTaxi, a cooler-than-Uber (or Lyft) app; the City of Tel Aviv is laced with water dispensaries and bike sharing stations run by local startups; every Tel Aviv café has companies being pitched and deals being done; high school kids and 18-20 year olds doing their mandatory military service write code and plan their first startups. This is a country that truly “gets” the startup ethos. After all, the country itself is a startup, carved out of the sand and rocks of Palestine in the aftermath of WWII. The country’s founders’ greatest asset was their sheer will and determination to succeed with limited resources and surrounded by neighbors who actively tried to make them fail – sound like any startups you know?
Today there are more than 70 active VC firms in Israel with more than $10 billion under management, plus more than 3500 startup companies – all of this in a country about the size of New Jersey with a population of just over 8 million people!
OK, but what does this mean for Oregon and the Portland Metro Region? There are several elements of the Israel success story that can translate and resonates to us:
• Strength of new people. The influx of educated and creative immigrants into Israel has been one of the biggest drivers of their success. While Portland cannot circumvent US immigration laws, Portland has in recent years become a destination point for young creative types. These are the drivers of an entrepreneur culture, and essential for the continual reinvention of a community. People move to Portland for many different reasons, but a common theme is that is a great place to live. People who have choices usually don’t want to live in expensive, dirty, congested, or socially regressive cities regardless of their career options. Portland didn’t invest in public transportation, urban redevelopment, land use, or clean water and air just to attract entrepreneurs, but our livability is our greatest assets; we should actively promoting our livability to attract fresh talent to the region.
• Strength of place. 15-20 years ago most Israeli tech companies were located up the coast in either Haifa or Netanya rather than Tel Aviv – analogous to Intel and Tektronix in Hillsboro / Beaverton rather than Portland. Today, there is a huge and growing software startup scene in the heart of Tel Aviv centered around Rothschild Boulevard. The big tech companies are still up the coast in Haifa, but the heart and soul of the Israeli startup scene is in a very compact geographic area of Tel Aviv – about a dozen blocks long and a few blocks wide. Ditto for Portland. The area roughly circumscribed by Big Pink to Bridgeport Brew Pub over to the food courts on Alder is becoming a hub of startup companies and talent. Portland needs to recognize what is happening here and promote the kind of community interaction spots – coffee shops, brew pubs, open rooms for meetups, etc. – that can continue to foster and drive the entrepreneur culture.
• Strength of being a “small market.” In a country of 8 million people virtually surrounded by countries with economic embargoes on Israel, very few Israeli companies can survive without quickly looking to markets far beyond their borders. They have to grow up fast and be able to go toe-to-toe with bigger companies in far away places. For Portland, we don’t have the same market access problem. But we do have a capital access problem. Most of our startups need to go Silicon Valley or Seattle or elsewhere to raise venture capital given the dearth of institutional venture capital headquartered in the Region. In recent years, our top startups such as Urban Airship, Puppet Labs, Jama, and others have done this very successfully. And with Portland Seed Fund, we take our companies to both Seattle and Silicon Valley as part of their mentor program. But we as a community need to do more to help our emerging companies build the networks in the locations with the dough. The lack of VC $ is is a regional weakness that we can turn into a strength! Just like the Israeli companies have to be thinking about serving markets outside of Israel from Day 1, our emerging companies must do the same to be able to be good enough to go toe-to-toe with the best companies in the Valley since that is their competition for VC $.