From Socialism to Capitalism Makes a Startup Nation

In the space of 15 years, Israel’s economy made a huge change. Moving from socialism to capitalism is the story of the State of Israel. Now it ranks at #19 on the UN’s Human Development Index.

The Bible describes Israel as “The land of milk and honey.” That for many people translates to a land rich in resources. But in truth, 60% of that land is desert that had not seen a drop of water or a green tree for innumerous centuries.

Until the early 2000s, Israel was an economic basket case. In general, life there was very challenging. That is what happens when Socialism is the rule of the land.

After the 2003 Israeli legislative election, in what many observers regarded as a surprise move, then Prime Minister Ariel Sharon offered Benjamin Netanyahu the office of the Finance Ministry. The times were of economic uncertainty. Sharon and Netanyahu came to an agreement that Netanyahu would have complete freedom as Finance Minister and have Sharon back all of the reforms he was going to make. And reforms were made by the new Finance Minister.

Netanyahu’s goal was to restore Israel’s economy and to inject into it a new life, unknown to the country thus far. His plan involved a move toward more liberalized markets. He went ahead and reduced the size of the public sector, froze government spending for three years, and capped the budget deficit. The taxation system was streamlined and taxes were cut. A host of state assets worth billions of dollars were privatized, including banks, oil refineries, the El Al national airline, and Zim Integrated Shipping Services. The retirement ages, for both men and women, were raised, and currency exchange laws were further liberalized. Commercial banks were forced to spin off their long-term savings. In addition, Netanyahu attacked monopolies and cartels to increase competition.

The Israeli economy started to grow fast and unemployment fell significantly and Netanyahu was widely credited to have performed an ‘economic miracle.’

With the economic revolution, Israelis began seeking opportunities. Considering the country’s lack of resources, they turned to the one resource every human being possess – brain and imagination.

Israeli society is very competitive and it tasks the individual. With an economy that was moving toward prosperity, the Israeli brain was searching to come up with ideas no one yet had come up with – in innovations and inventions. That led, over the years, to Israel becoming known as a ‘startup nation,’ bringing to the country prosperity it had never seen.

Moving forward, in recent years we have been witnessing rather an interesting phenomenon. Many countries have been sending delegations and businessmen to Israel to learn about that new brand ‘startup nation’ phenomenon.

When it comes to innovations and entrepreneurship, the State of Israel’s popularity has risen to a new height and brought about a number of interesting programs.

In Los Angeles, where I reside, several local organizations periodically host heads of Israeli startup companies who arrive to introduce their originations and seek partnership or funds to continue their company’s development and growth.

One such host is American Friends of Tel Aviv University that recently, under the banner of “IDEAS Immersion Program Brings Top International Student Entrepreneurs to California’s Tech Epicenters” hosted a group of students, Israelis and foreign, who are studying in Israel for their MBA (Master of Business Administration) while gaining expertise in entrepreneurship.

In its third year of activities, IDEAS (Israel, Digital, Entrepreneurs, Arts and Science) Immersion hosted in California’s tech capitals a group of student novice entrepreneurs for a two-week intensive startup acceleration program.

IDEAS Immersion partners with Los Angeles and San Francisco based tech/entertainment/science business leaders, angel investors and venture capitalists, attending as mentors to the participants and providing them with the tools and networks to succeed, as well as serving as a launch pad for their startups.

IDEAS Immersion
IDEAS Immersion

At a public event, held in Santa Monica, hosted by Philosophie, the students – who come from Israel, Turkey, Sweden, South Africa, Georgia and the U.S. – had the opportunity to pitch their startups in the making to angel investors and the community for feedback, insights and advice.

The five companies that were carefully selected to participate in IDEAS Immersion from the Sofaer Global MBA Program, at TAU’s Coller School of Management, one of Israel’s top business school, were:

BrightPaths: a platform to help prevent undesired employee turnover. Represented by Itay Lotan and Oren Blank;

GoldBuzz: a workplace social celebration platform. Represented by Richard Kampel and Maya Lazarovich;

PlantOptics: an integrated greenhouse control system. Represented by Alex Joseph and Elif Kara;

Viibe: a concept dating app that brings dates back to dating. Represented by Shiran Shmerling and Ron Biton;

WeStream: an online platform used as a marketplace for content production. Represented by Avi Forchheimer and Tamar Prudize.

David Dorfman (4th from L 2nd row) & IDEAS Immersion students-Photo credit AFTAU
David Dorfman (4th from L 2nd row) & IDEAS Immersion students-Photo credit AFTAU

David Dorfman, Founder of IDEAS Immersion and Vice President of American Friends of TAU USA Western Region claims that, “As Tel Aviv University continues to grow as a hotbed for tech entrepreneurs, this program is a special opportunity to bring together seasoned and budding talent from around the globe to collaborate and accelerate their ideas. We’re proud to host these students and work with an impressive lineup of investors and corporate sponsors as we work to further connect the Israeli and American tech communities.”

L-to-R: David Dorfman (AFTAU & Host), Eran Gilad (Scopus Ventures), Ben McMaster (Philosophie), Behzad Kianmahd (TAU Ventures), Dr. Daniel Nazarian (TAU Ventures) - Photo credit AFTA
L-to-R: David Dorfman (AFTAU & Host), Eran Gilad (Scopus Ventures), Ben McMaster (Philosophie), Behzad Kianmahd (TAU Ventures), Dr. Daniel Nazarian (TAU Ventures) – Photo credit AFTA

Israelis are known for their ability to develop and initiate new ideas, but are weak in marketing and developing markets in the world. Many Israeli companies encounter a barrier that prevents them from penetrating a new market of an unknown and new business culture. Therefore, the ability to penetrate a new market and receive tips and advice from local people who speak the same language, on one hand, and on the other hand are known to be able to establish business, constitutes a distinct advantage.

As part of the IDEAS Immersion Program, the students meet mentors from the business world throughout the United States. The uniqueness of the program brings the students together with mentors not only for the three-week visit duration, rather, they are accompanied throughout their studies for the high-education degree.

Earlier this month, at a Friday evening Shabbat get together dinner with the group of entrepreneurs from Tel Aviv University program, hosted by the Asaf family, in the ambiance beauty of Malibu Point Dume, I met two of these mentors, Moti Asaf1 and Ofer Alon2, and I heard their most interesting vision.

Moti Asaf
Moti Asaf-Photo credit Moti Asaf

“Our goal is to build a business community made of Tel Aviv University graduates, who succeeded in business in the United States and beyond. These businessmen will devote time to mentor the students from their studies’ starting point until they have established their first joint venture. The vast experience these TAU graduates have already accumulated in the United States and their ability to connect the budding entrepreneurs with the business world is an advantage for these entrepreneurs who have to deal with many complex issues,” Moti Asaf told me.

Ofer Alon
Ofer Alon-Photo credit Ofer Alon

And Ofer added: “Our intention is to accompany each entrepreneur from the point of locating him or her among native Israelis, especially from the periphery, and give them the tools to cope with the academic and entrepreneurship challenges. Our program addresses several aspects.”

  1. To accompany the students at the beginning of their business careers and give them different perspectives of the American marketplace;
  2. Guide the entrepreneurs on how to penetrate the American market, and how to minimize possible marketing errors;
  3. Link the entrepreneurs with the business community, open doors for them to initiate pilot programs;
  4. And most importantly, to be a listening ear and give the entrepreneurs an open line to consult with the mentor;
  5. Our experience in the industry and our desire to give back to the community could provide solutions and distinguished contribution to the students’ community. Needless to say, all this is done on a voluntary basis and with generous personal donations,” Ofer concluded.

With programs like IDEAS Immersion Israel will continue to excel.

As of 2015, according to on the UN’s Human Development Index, Israel ranks at #19 in the top 20 nations in the world. That places her in the category of “Very Highly Developed” country, allowing the country to enjoy a higher standard of living similarly to other Western countries such as Austria, France and Finland. This prosperity with the advanced economy Israel has been creating and enjoying, allows the country to have a sophisticated welfare state, modern infrastructure, rivaling many other Western countries, and a high-technology sector competitively on par with Silicon Valley.

One has to take a deep breath to be able to catch up on Israel’s fast moving entrepreneurial industry in many fields. It is the wisdom of the mind that keeps on giving.

1Moti Assaf, a Serial entrepreneur founded and then sold companies to Verint and Logic, with 30 years of experience in IT Technology & Business Development; an expert in design and development of Anti-Terrorism and Anti-Fraud systems, as well as in web intelligence for data harvesting systems. Also with vast experience in HLS and Intelligence.

2Ofer Alon, a CPA and MBA who worked at Ernest & Young IPO, due-diligence, tax and business consulting, is the CEO of a specialized auto financing company with vast experience in lending and purchasing of installment contracts. Previously, entrepreneur and founder of a global electronic marketplace for real estate contracts.

During the 2006 second Lebanon War, Nurit Greenger, referenced then as the “Accidental Reporter” felt compelled to become an activist. Being an ‘out-of-the-box thinker, Nurit is a passionately committed advocate for Jews, Israel, the United States, and the Free World in general. From Southern California, Nurit serves as a “one-woman Hasbarah army” for Israel who believes that if you stand for nothing, you will fall for anything.
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