April 4, 2011

April 4, 2011 Raising chutzpah

Jameson Berkow,  Financial Post

Published:  Monday, April 04, 2011

Professor Peretz Lavie is a serial entrepreneur and president of The Technion: Israel Institute of Technology. He was in Toronto last week to speak to the Economic Club of Canada about Israel’s thriving high-tech startup economy. Financial Post technology reporter Jameson Berkow had a chance to sit down with Prof. Lavie to discuss the origins of that booming industry and how Canada might be able to replicate some of that success. The following is an edited transcription of their conversation.

Q  Your institution notes that Israel is home to about 4,000 high-tech startups, the equivalent to the entire European continent in absolute numbers. What do you believe accounts for that?

A  There is something about Israel, the combination of excellent education plus some attributes that are unique to Israel that make it such an innovative society.

Israeli Professor Peretz Lavie says one of the secrets to success in innovation is to not give up on the young. Tim Fraser / National Post
Israeli Professor Peretz Lavie says one of the secrets to success in innovation is to not give up on the young.
Tim Fraser / National Post

Q  What are some examples of those attributes?

A  There are Israeli characteristics. If you are [here] and you give a talk to students and you ask questions, the fear of the hierarchy is so embedded in the culture that the fear of being embarrassed in public is a major issue. For Israelis, the hierarchy is very weak. They challenge you whether you are a professor, whether you are a CEO, whether you are a politician, they constantly challenge you so there is no fear of failure, we call it chutzpah. It is part of the spirit and I think the characteristic of the Israeli culture; the ability to find solutions where everybody says there is no solution; the resilience, you fail? that is part of the game, we’ll do it again.

Q  Is it Israeli chutzpah that has attracted large technology firms such as Intel Corp. and Microsoft Corp. to open research centres in Israel?

A  Microsoft, Google, Yahoo, every major company has an R&D centre in Israel. Many of the microchips for [Intel Corp.] were developed in Haifa. I was in the U.S. and I visited several of these companies in Silicon Valley three weeks ago and I asked them what brought you to Israel? They said if we have a problem that cannot be solved, we know that the centre that will do it is in Israel. It is like the elite troops that [Israel] has and they have 30 centres all over the world. But if they need something that is tough where there is no other solution, they know the only place where it can be done is in Israel.

Q  Canadians are not exactly known for their chutzpah. Quite the opposite in fact, we are known for being shy and non-confrontational. Do those characteristics represent a barrier to fostering the same entrepreneurial drive and passion?

A  I believe so. I think that to really invest in innovative technologies you must take risks, you must have this chutzpah. In the book Startup Nation the authors describe a scenario in which somebody is buying an Israeli company and when he met the employees for one second he wasn’t so sure who was buying who because of the way they asked him questions and talked about the company. So I think you need a society that encourages shorter distances between different hierarchies.

Q  You mentioned that Israel went from being a Jaffaoranges economy to one based on semi-conductors in recent decades. What else might account for that transformation?

A  We had an influx of one million people from the former Soviet Union. They were highly educated, highly talented, with an inclination toward the natural sciences. So the number of engineers and scientists in Israel, mostly because of the Russian immigration, is the largest in the world per capita. I also should credit the government. It is interesting and very few people know that during the 1960s when Levi Eshkol was prime minister, he established in every ministry a chief scientist position and the chief scientist was given a budget for research and development. It helped to generate some of these companies, and then there was a community of venture capitalists that developed and continued to fuel this trend.

Q  That is a stark contrast to Canada, which is currently facing a serious labour shortage for technology-related positions. Do you have any advice for how Canada can encourage more students to study math and science?

A  The philosophy is you have to encourage these children at the age of 8 or 9, otherwise don’t invest. That is wrong, it can be done and it is incredible. We have something called the ‘pre-academic centre’ in which we take 700 youth a year after their army service and they come to the centre for six to 18 months depending on how much they need to complete the course. Out of this 700, two thirds are accepted to the Technion. So one of the keys is not to give up on the young people who drop out and facilitate some education that will allow them to catch up and join university and professional schools. I see it as a national mission.