“Israeli government should allow tech companies to work 24/7”
Dror Bin, the Chief Executive Officer of the Israel Innovation Authority, promises not to allow politics in his office and calls for new policies for the local industry to thrive
"If politics will enter the Israel Innovation Authority, I will not be there. Politics will not take hold on my watch," said Bin, who joined the authority after holding several positions in the high-tech industry, exclusively to Calcalist. When he said this, Bin probably knew that if so far the authority has been free from any political threat, then the move to the Ministry of Science - now called the Ministry of Innovation in Science and Technology - has cast a heavy shadow on the authority’s conduct. The first evidence of this was the unofficial announcement that the authority’s Chairman Ami Applebaum would be replaced by a representative of the Ministry of Science as soon as the transition to the new ministry will be completed.
Bin (54) has held every possible position in Israeli high-tech. He entered his new position only after representatives from the authority approached him and urged him to apply. Before that, he served as a partner at the consulting firm Shaldor, as an independent partner in venture capital fund Viola, and held several senior positions at Comverse, including VP of global sales and VP of global development. In his most recent role, he managed the Zisapel brothers' technology company RAD.
What led you to reach a role that many saw as a retirement position?
"I did not initiate it, they approached me and asked me, and it attracted me. There is a sense of a mission to this position. In Friday night dinners, there are always complaints that the government does not do this and does not do that, and now I had the opportunity to do the things I think about. I felt it was an opportunity to do things I have not done until today."
Does that also mean getting out of RAD's incubator?
"We have made a big change in RAD in recent years. In the past, the innovation came from startups, and the big companies would acquire the small companies. But in recent years, the big companies, and not just RAD, have innovation as part of them. That is the reason that fewer companies are launched and fewer entrepreneurs go out to build companies, while many start ventures within the big companies.
Was this move accompanied by a drop in wages?
"A dramatic drop. I would not have taken this job for the money if I had not made enough money in the past. A sane person should be asked why he agrees to receive such a pay cut."
"Lower regulatory barriers"
Bin is the second Chief Executive Officer of the Innovation Authority, which was founded by Avi Hasson who was the Chief Scientist of the Ministry of Economy and led the move to build the authority as an independent statutory authority. The first Chief Executive Officer of the Authority was Aharon Aharon, former CEO of Apple Israel, who was able to cement a stable and independent status for the authority.
How will you take the Innovation Authority forward?
"Aharon did an amazing job. Today, Israeli high-tech faces completely different challenges from those it had when the authority was established. Israel has a historic opportunity. In the past, we had a pyramid that at its base were small startups, whose goal was to be acquired, and at the top, there were five to 10 big companies. Not huge companies, but at most, medium in international terms like Check Point, Mellanox, and Teva. There were very few of them. In the past year and a half, there are about 70 companies that have raised huge sums, there are many companies that began publicly trading and raised billions of dollars, and we have more than 100 companies that are on their way to becoming huge.
"We are on our way to being the center for Israeli giant companies. It is good that there are many large multinational companies here, but if we want the Israeli economy to benefit the Israeli high-tech, it needs local giants whose business centers are here, whose employment diversity is here, who will hire another person on the business, legal sides, for every tech person hired," Bin said.
"This is where the authority comes into the picture. It is not enough for companies to raise money. There are barriers, and the biggest of all is human capital. There is currently not enough human capital to support growth. There is a shortage of marketing, support, and technology staff. It brings a spike in salaries, which makes it harder for us to compete internationally. It leads to the outsourcing of tens of thousands of jobs. Companies that are less rich and can not compete with the big companies deal with mass departures. For many years there have been talks of a shortage of 10,000 people, but the real number is much higher."
What can the authority do about this?
"We need to engage in policy. In the past, our main mandate was mainly giving grants but today we deal with many other things. In the field of human capital, we talk about three main issues: bringing in workers from abroad, workers’ placement and return, and dealing with underrepresented populations. I do not believe that the problem of human capital can be solved in the immediate term. The shortage is so great that it can only be reduced but not solved. In the end, we want the big companies to be based here."
Do you believe that the Ultra-Orthodox will enter high-tech in Israel?
"Right now I think so. There is an Ultra-Orthodox employment model within their communities, which I prefer less because I favor integration rather than segregation, and it works. However, the Holy Grail is their integration in our industry. We have not yet found the model that will resonate with them. We need to act so there will be a mass of ultra-Orthodox in high-tech. When there is an urgent need for people, they too will enter this world. The industry has an important role in their integration. Our job is not to give up until that happens, if we give up, the scenario of two countries, high-tech and the rest of Israel will happen."
Do you think that Prime Minister Naftali Bennett's goal of 15% of employed Israelis in the high-tech sector is realistic?
"There is no limit to the potential of Israeli high-tech. It is hard for me to say that this is a realistic goal to achieve within five years because of the lack of human capital. There is a great danger that the opposite will happen. Israeli high-tech’s number of employees grows by 6% annually and just to maintain this pace it needs to grow by about 12% in five years. That means training an additional 150,000 workers in five years compared to the 330,000 there are now. If we will be able to train the workforce here and not in Ukraine and India and allow for a comfortable regulatory environment, we may be able to reach 15% of the population working in high-tech.”
“This issue is also very much related to the integration of under-represented populations - Ultra-Orthodox, Arabs, and women. If we want to increase the human capital, we must reach populations that are not represented in high-tech. Most immediately, the women who are already at the center of the country and available, and also, reaching out to the Ultra-Orthodox and the Arabs. A dedicated plan has been drawn up for the Arab society with a budget of NIS 250 million ($78 million) for the next five years. There will be a program that will combine employment and entrepreneurship in Arab society. This is the first time that the State of Israel has invested such an amount in the integration of the Arab population. We do not want there to be two countries here, one thriving high-tech state while the other is left behind."
Do you not think that there is already a high-tech state and the rest of Israel?
"I think it could be much more serious and I am very worried. A lot of high-tech companies reach people who are not related to high-tech. People who sell office equipment, and lawyers, and consulting companies. There are many businesses, and high-tech does not want to break away from Israel. We have to increase the number of people who benefit from it. Continued current trends of wage increases, a chronic shortage of human capital, and a continued growing antagonism will lead to the industry’s disengagement from the rest of the country."
So what will connect the high-tech industry to Israel?
"The government must wake up and jump at this unique opportunity. It may change the face of our economy forever. If we do things right, within five years Israel can be a world center of massive companies. We must not miss this opportunity. There is a fine line between realizing the opportunity and losing the potential. The government must help the high-tech industry now that it is at its peak and that does not necessarily mean money. The government needs to reduce barriers, help with training, allow tech companies to work 24/7 - including weekends and holidays for major global companies.”
"Another thing we want to make a significant change in is the local introduction of technologies that are developed in Israel. It is a crazy situation that Israeli technologies in a variety of fields do not come into use here because of regulation. It is absurd our economy does not benefit from its own technology. At the moment, it is not happening because of regulation and conservatism, and we need to take down this wall to have enabling regulation. One that will allow the use of these new technologies that will help the local economy grow.”
"Be careful with China"
The U.S. fears the cooperation between Israel and China, as evident by the frequent visits to Israel by senior government officials. Both the high-tech industry in Israel and the authority have in the past encouraged Israeli companies to work in China, encouraged cooperation and investment.
Should the Israeli high-tech industry focus on China or fear it?
“Every company CEO should make his own consideration. At the authority level, we are not promoting anything proactive with China. We have collaborations there, as with a lot of countries. Beyond what we have today we have no plans to promote new things there, but a company that decides it is important for it to work in China and wants help from us, we will be happy to help. “
“But one has to be careful with China because it is a kind of a mystery. I established RAD's Be’er Sheva Center after closing a center in China. Working there and succeeding there is very complex. Compared to China, I see India as a tremendous opportunity. India is a rising power that is very relevant to the Israeli economy, also because of its language and culture. There are a lot of business opportunities there. It is a huge market in size and there are the smartest people in the world. A market that loves technology very much."
How realistic is the issue of bringing foreign workers to Israel?
"It is very realistic. You can bring workers here who will come for a year, two years. Both new immigrants and foreign experts. I do not want cheap programmers. They can stay in India. We need experts, workers with high added value."
Are there areas where the authority does not want to invest?
"We do not invest where the private market is. Where there are investors and a market, there is no need for us. We invest in groundbreaking and risky areas whose time to market is very long. A private fund will not invest in a venture that will take ten years to advance, and that's our place.”