Most articles regarding the new economy, startups, unicorns, GAFA or BTAX only focus on Silicon Valley and China; however, a veritable ‘startup nation’ is emerging in the heart of the Mediterranean Basin. I’ve just returned from a short trip to Israel, and I have to say – the country really amazed me! Tel Aviv, its capital city, couldn’t be further removed from the usual clichés: the energy of its young people and the sophistication of its ecosystem give this country of 8 million people a real edge.

To understand the reasons for this wave of startups, we must look at the four pillars on which the present-day Israeli economy is built:


1. Innovating from necessity

“It wasn’t the smartest guy who invented the wheel – it was the person who needed it the most!”

This has always struck a chord with me personally and it’s the best explanation for the innovation and entrepreneurial frenzy currently sweeping through Tel Aviv. One figure says it all: in Israel, there is one startup for every 2,000 people – the highest density of any city in the world! The region’s shortage of both natural resources and fresh water and its poor, mainly sandy soil forced Israelis to look for solutions from biotechnology from an early stage just to keep going. It is thanks to these constraints that the cherry tomato was invented in Israel around 30 years ago[1].


2. Global since day one

Because the domestic market was practically non-existent and commercial relations with its neighbors virtually impossible, Israeli entrepreneurs had to think globally from day one. Many times, the testing ground for a technology or new product was not actually Israel but some other country – and the product was launched domestically years later.


3. The defense industry as a hotbed of innovation

Most entrepreneurs I met with have spent time with research or elite units of the Israeli Defence Forces. A lot of high-tech products and business software currently on the market are operational versions of projects initiated by defense industry research units. There are numerous gateways and links between civilian and military spheres.


4. Cash is a commodity

“Startupers” looking for funding can leverage a highly developed and diverse financing network (e.g., Angels, VC, Corporate) as well as a dense ecosystem of incubators and accelerators. And, there is no shortage of cash in the country – a feature specific to Israel. Just like in the Valley or in China, there is more money to invest than projects to invest it in. It is investors who must demonstrate the added value they can bring (in the form of access to networks, talent, markets, etc.) Cash on the table provides no great advantage.


So, we must get interested in Tel Aviv! I made this trip with Stéphane Akkaoui (Partner with The Social Client, Head of R&D) as part of our tech watch and innovation program. We met with about 20 startups and identified four businesses (some very small) that could potentially integrate our worldwide partnership network program:


  1. An advanced web voice synchronization solution
  2. A digital IVR featuring a highly complementary solution to the offering of our partner DialOnce
  3. An innovative voice-analysis solution that focuses not only on language comprehension but on low-frequency vocals
  4. A simplified solution for getting chatbots to work on FAQs


Over the next few weeks, proof of concept (POC) will be initiated with these four potential partners with a view to evaluating their solution reliability, ROI and fit with our markets. If you’re interested in being a part of these tests, let us know!


Artificial Intelligence (AI) was also on the radar for this trip but there is nothing new to report. Once again, we encountered the three broad approaches to deploying AI-based products:


  1. Easily the most widespread approach is where the startup leverages an Open Source (Stanford NLP is one of the most popular) and adds its own layer of intelligence, reflecting its specific features and requirements; this advantage is rapid deployment on the back of a tried and tested learning solution
  2. Highly research-based startups comprising several people with PhDs in linguistics or machine learning who are busy developing their own learning and AI algorithms; these individuals generally have a better mastery of technology and overall capabilities of their solution – but the project timeframe tend to be long
  3. The third group of startups prefer to focus on their product’s value-added and Artificial Intelligence as a solution – they generally outsource their operational functions and can be big players (e.g., Google API.AI, IBM’s Watson, Facebook’s or Microsoft’s LUIS service) or pure players from the groups above


This trip merely confirmed what we already know in relation to AI: as regards Customer Experience, there is currently no magic solution that replaces a customer adviser directly with a machine. More than ever, proposed solutions need to be deployed as part of a “human support” mindset, i.e., enhancing capabilities and not replacing or substituting them.


Many thanks to Lee Recht from Start-Up Nation Central, Adi Soffer-Teeni and Roni Bonjack of Facebook Israel and Thibaut Bayart from ZTP for their help and availability during the organization of this trip.

Arnaud De Lacoste

Chief Marketing Officer, Partnerships & Innovation - Committed to reshaping the Customer Experience Management industry for the future and to transforming the industry.