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Stopping for a break in Jaffa while biking around Tel Aviv on the weekend with my friend and Chameleon Collective partner Danny Fishman

5 Thoughts Following My 7th Trip To Israel

I recently got back from another week in Start-Up Nation. My 7th trip in 20 months. The best thing about each trip is the deepening of personal relationships that occurs as you spend more time with people you like and respect. Each trip also brings additional context in to what makes Israel such a special tech ecosystem. And each trip gives me greater confidence in my core investment thesis that — as amazing as the world thinks the Israel tech ecosystem is, the world still has no idea of the innovation and value creation to come.

It was a great week to be in Israel. The weather was warm, and as always, there was lots happening that I was able to participate in, including Silicon Dragon Israel, a great Made In Jerusalem Meetup, Mentor Day at The Barclays Accelerator powered by Techstars, and a fun Lighthouse Meetup .

This post highlights five thoughts about the Israel tech sector that came in to greater focus for me during the trip.

1) Israel Will Be a Major Player in Drone Technology, Which Will Be A HUGE Industry

According to a great report by PWC, the total addressable value of drone powered solutions in applicable industries is estimated at over $127 billion. That figure represents the value of businesses and labor in eight industries that could be replaced by drones. In other words, while toy drones, and drone racing leagues are great fun, many industries are going to be significantly disrupted by the pending drone revolution. I believe that Israeli companies are well positioned to innovate and create massive shareholder value in this rapidly evolving new space.

The major lesson I took from Startup Nation is that Israel’s tech prowess all starts with the military. And almost since its birth in 1948, Israel has been a world leader in the technology surrounding ISR (intelligence, surveillance, and reconnaissance). Israel is widely recognized as one of “The Five Most Deadly Drone Powers in the World”.

Israelis are taking the drone technology learned while serving in the army, iterating and improving on it, and launching a new industry and another wave of world leading companies. I was blown away by Flytrex, which offers a cloud based, end-to-end, drone delivery solution for businesses. Flytrex CEO, Yariv Bash, not only Co-Founded Flytrex, Yariv also Co-Founded Space IL in 2011 to land the first Israeli spacecraft on the Moon as part of Google’s Lunar XPRIZE In January, SpaceIL became one of the five finalists.

Convexum is building a safe and fully automatic counter-drone perimeter protection solution. Regulus is developing an end-to-end security solution and a new standard for securing autonomous systems, drones and robots from attacks on their systems and from other interferences to the mission.

I could go on and on, but you get my drift. I already knew Israel was a player in the drone industry. But this trip opened my eyes to the massive impact Israeli companies are going to have in the (soon to be) $127 billion global drone industry as Israelis take the drone and cyber tech learned in the army, and bring it to bear on this nascent but booming industry.

I’m so excited about Israeli drone companies, I’m hosting this conference call with four Israeli drone experts on March 21st

2) While Uber Unravels, Via is Truly Changing The World

When I invested in ride sharing powerhouse Via last year, I couldn‘t’ have been more excited. Yet the response I got from most people was “Isn’t Uber going to crush them?”. I’d explain how Via was different, it was disrupting public transportation, not the cab industry. While Uber has Pool, I shared my belief that Uber couldn’t be everything to everyone, and by focusing on true ride sharing, Via was giving a better experience to both the drivers and the passengers (it’s a two sided marketplace). That’s why Via is now picking up more passengers in NYC during morning and night rush hour than Uber.

Critically, as Via evolves it’s wildly complex ride sharing software, it’s also aggregating an immense amount of rider data, enabling it’s competitive advantage in both software and data to grow by the day. Ultimately, Via is building the software platform for the future of public transportation.

I had the pleasure of meeting with Oren Shoval, Co-founder and CTO of Via, at Via’s new office in Tel Aviv, and Via is executing remarkably well on the globally aspirational vision I invested in with such enthusiasm. On February 1st, Via announced a partnership with public transportation colossus Keolis, and announced the launch of their public transit service in Paris: PLUS by Via. Parisians using the LeCab app and selecting the PLUS option, are now seamlessly matched with other passengers headed their way, sharing a ride in a beautiful vehicle. The service will is powered by Via’s revolutionary technology and operated by LeCab, France’s preeminent premium on-demand car service. The Keolis Group is one of the world’s leading public transport companies, operating in 16 countries with 56,000 employees., In 2015, Keolis transported 3 billion passengers. And Keolis chose Via. This announcement marks the first of a number of global strategic partnerships Via will be announcing in the coming months.

Via is truly poised to disrupt public transportation around the world.

3) The Israeli Tech Industry Works Hand-In-Hand With The Government to Set Policy, To the Benefit of The Tech Industry and The State of Israel

In the first post I ever wrote on Israel, I stated that “High marks should go to the Israeli government which has long helped foster it’s tech ecosystem”. I highlighted the great work of the Israel Economic Mission in New York and the Office of the Chief Scientists (OCS) which recently became The Israel Innovation Authority.

What I didn’t really appreciate until this trip is the closeness with which the industry works with the government to shape policy favorable for the further development of Israel’s tech ecosystem. This closeness is best exemplified by the IATI (Israel Advanced Technologies Industry), headed by Karin Mayer Rubinstein, Israel’s umbrella organization for the tech industry to work with/lobby Israel’s government. IATI membership, which numbers over 700 entities, is a who’s who of the Israel tech ecosystem, from tech companies large and small, to VCs, incubators, law firms, accounting firms, Tech Transfer orgs, and banks.

A recent example of the great work of the IATI was the governments response to BEPS (Base Erosion and Profit Shifting), the OECD initiative that addressed the gaps and mismatches in tax rules that incentivize companies to shift profits to low or no-tax locations where there is little or no economic activity/R&D. In response to the new OECD rules, IATI worked with Israeli legislators, the Prime Minister’s office, and the Treasury Office for Tax Authority to optimize a response to the new rules. In just 7 months, Israel announced a decrease in the tax rates associated with the R&D activities addressed in the new OECD rules. This lower tax rate makes Israel a far more attractive location for the large amount of global R&D that will be seeking new homes in response to the new rules. Thsi should be a big win for the tech industry and the State of Israel.

I appreciate the time that Erez Tsur, IATI Co-Chairperson, spent with me in Israel and subsequently, to help me better understand the work and impact of the IATIA.

4) It’s Happening In Modi’in

In the post I wrote about my 6th trip to Israel, I stated that “Jerusalem Is Totally Happening”. And this trip further confirmed that view. The Made In Jerusalem Monthly Happy Hour I attended was packed. The Happy Hour had that palpable buzz that permeates an event where people feel that something truly special is going on. Earlier in the day I visited Hometalk and caught up on their sizzling progress in their amazing new offices. I also got a tour of Hebrew U’s remarkable 3-D printing Lab.

On my way to Jerusalem, I stopped in Modi’in (half way between Jerusalem and Tel Aviv), and visited the nice new offices of IT Central Station (the Yelp of Enterprise IT), my 2nd Israeli investment (made in 2013). Modi’in has a population of about 90,5,00, making it Israel’s 17th largest city. But the city is booming. Cranes galore. It has a great shared work space, MESH, where IT Central Station officed before recently moving to it’s new digs.

The bigger point here is it’s really happening all over Israel. It’s happening in Haifa (Iraels 3rd largest city, see Augury). It’s happening in Israel’s cybertech oasis in Bersheba (#8). It’s happening in Beit Shemesh (#15, see Viewbix). It’s happening in Raanana (#23, see Lighthouse). It’s happening in tiny Caesarea (at 5,000, people, not in the top 100 cities, see Nielsen Innovate)

Tel Aviv will always be Israel’s Silicon Valley. But innovation is happening everywhere in Israel, thanks, in part, to some great government initiatives, but largely, thanks to he entrepreneurial spirit that’s imbues life in Israel.

5) Israel Is Full of Cheerleaders For Israel Tech, To The Benefit of The Community & The World

A highlight of my my 7th trip was coffee in Jerusalem with Saul Singer, who is still touring the world telling the Startup Nation story. To his credit, the book remains a pillar of Israel’s status as an innovation juggernaut.

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Coffee with Saul Singer was a trip highlight — the book Startup Nation changed the direction of my life

During my visit I also had the opportunity to hang with my friend Hillel Fuld, the Robert Scoble of Israel (Hillel’s Twitter feed is a must for anyone in Israel tech).

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Trying Hillel Fuld’s Snapchat Spectacles Was A Blast

I was on VC Izhar Shay’s radio show talking about the Israel tech ecosystem. Erez Tsur taught me the IATI supports foreign delegations arriving in Israel to learn from the Israeli tech ecosystem and to scout for relevant technologies for their business. I watched my friend Ilan Regenbaum, Deputy Director of Innovation for the Israel Air Force, give a talk on Israeli Innovation to a delegation from South Africa.

Israel has a core competency in telling it’s innovation story within Israel and to the greater world. This teaches the world how to innovate as they help themselves innovate better. The Israel tech ecosystem, and the rest of the world are the better for it.

For many of the reasons stated above, and for many not mentioned here, I continue to be hugely optimistic about the future of the Israeli tech ecosystem. It was really another amazing week. I learned so much. I met so many great people and saw so many great companies. I can’t wait for my 8th trip to Israel in May.

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