Howes: Israel’s business reality challenges perception
Jerusalem — Images of knife-wielding Palestinians and gun-toting Israeli soldiers make TV and scare tourists. But alienating business investors?
Maybe not so much. Even as 4,000 rockets fired from the Gaza Strip pummeled southern Israel last summer, the country booked $3.4 billion in venture capital investments, and it’s on track to exceed $5 billion this year, according to Our Crowd, an Israel-based venture capital firm.
High-tech firms in Tel Aviv, the nation’s business and cultural hub, last summer took to Facebook to find office space for embattled tech brethren in the south. Israelis pushed to buy goods and services from small and medium-sized businesses there in a show of support. And investors kept pouring in the cash.
“Despite the political surroundings, the business here is literally going off the charts,” Jon Medved, a serial entrepreneur and CEO of Our Crowd, told more than 20 Michigan CEOs in Israel this week to see what makes the entrepreneurial ethos of “Start-Up Nation” tick. “We will ... double the family business, if you will, over two years.”
The disconnect can be jarring, if not humbling. Business in a capital long associated with geopolitical wrangling and recurring waves of sectarian violence shows the kind of resilience and toughness even the most hardened Detroit veteran should admire.
Companies here continue to attract smart money from home and abroad because the burgeoning high-tech scene, focused intensely on mobility, digital medicine and agricultural technology, continues to innovate and to demonstrate a knack for turning ideas into impressive financial returns.
Whoever says a picture is worth a thousand words should come to Jerusalem, meet with its entrepreneurs, scan the rankings that place Israel at or near the top for high-tech clusters and venture-capital investing. Images and politicized rhetoric on both sides, amplified by the international media, can be deceiving — and a guarantee for missed business opportunities.
Kinda sounds a little like Detroit, eh, the most misunderstood and maligned city in the United States, Chapter 9 restructuring and the automotive turnaround notwithstanding?
“We’re far safer than every average American city,” says Jerusalem Mayor Nir Barkat, who made a fortune as a player in Israel’s high-tech scene before being elected mayor seven years ago. “I was waiting for that question.
“The high-tech sector is very much immune to nervousness because the business is global. Tourism is more sensitive to nervousness.”
Jerusalem, the nation’s capital, is a city of 830,000 people. So far this year, seven have died because of violent crime or terrorism, the mayor says, far less than last year’s murder rates in comparably sized Indianapolis (135) or Jacksonville, Fla. (117).
That’s a sharp contrast to the city’s image in other parts of the world, reputedly a battle zone continually perched in the crossfire of warring civilizations. It’s not, Israelis stressed this week, even as they acknowledged the implications of the recent wave.
Still, the stabbings and the official Israeli responses have revived scary new headlines here and abroad, as well as old generalizations. The attacks appear to have ebbed for now. Yet evidence of the increased presence of well-armed police, especially in such places as Jerusalem’s Old City, remains an undeniable reality Israelis manage, sometimes aggressively, because they have to.
They know the ugliness beneath the pictures of victims, either of stabbings or shootings in self-defense, reinforces public opinion, especially abroad. In meetings so far this week, they seldom missed making off-hand allusions to the “difficult times,” the occasional war or their “tough neighborhood.”
“Now I would go back and say, ‘Don’t worry about it,’” Doug Rothwell, CEO of Business Leaders for Michigan and a member of the mission here, says of Jerusalem. “Perfectly safe.”
Shows of force by the municipal police and border police help. A walk through the Old City’s narrow streets, past tiny shops selling trinkets and rugs, T-shirts from Michigan and the Alabama Crimson Tide, underscores a seriousness over security concerns seldom seen in the United States.
For would-be investors? Not so much. Israel’s high-tech expertise and its entrepreneurial bent are an open secret in the go-go sectors dominated by Silicon Valley giants. For them, the question is not whether to invest in Israel, it’s when, in what and who.
“Foreign direct investment is high and it’s growing fast,” says Salco Kleerekopper, chairman of Tel Aviv-based Tasc Consulting & Capital. “In general, the people who have done business in Israel before are really not worried.”
That’s because they came and they saw, much like Toyota Motor Co. executives trained in the company mantra to “go and see.” It’s remarkable what can be learned.
Daniel Howes is a Detroit News columnist and associate business editor. Watch for his columns through November on the Michigan CEO mission to Israel.
His column runs Tuesdays, Thursdays and Fridays and can be found here. Catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.