“There is no recipe for creating an innovation ecosystem,” says Dror Bin, CEO of the Israel Innovation Authority. “Many countries contact us and ask how they can replicate what we have built here. You need to have all the right ingredients, but for it to be successful, what you need is magic.”
Five months into his position as the head of the government agency charged with addressing the needs of Israel’s hi-tech sector, Bin, 54, brings a wealth of wisdom and experience to the job. After being asked three times to apply for the job – and refusing twice – he has taken the helm of the IIA with 25 years of leadership at some of Israel’s largest companies.
The IIA was created to address the needs of the entire tech sector, from providing grants for young entrepreneurs to connecting foreign corporations with local companies to developing innovative projects on the state level. The office employs more than 150 employees in the Malha Technology Park in Jerusalem, after moving from Airport City last year due to a law requiring all government offices to be based in the capital.
It’s like a factory here,” Bin says. “We have divisions focused on academia, infrastructure, start-ups, growth companies, manufacturing plants, and government policy. Each division is working to create an environment where innovation can happen.”
Bin gives an example of a project the IIA undertook to help develop Israel’s foodtech sector, which today is a global innovation leader.
“Six years ago, there was no foodtech here,” Bin says. “The start-up division created an incubator for foodtech in Ashdod in partnership with the Strauss Corporation, and suddenly, within a very short time, you have a lot of companies here, and Israel is recognized as one of the world leaders, and investors take interest. And it all started in this incubator we created for foodtech.”
Is Bin saying that IIA gets all the credit for creating the industry?
“No, it’s more complicated than that,” he says. “There is a general philosophical debate about whether progress comes top-down or bottom-up, but the approach of the IIA, and the chief scientist before it, was to help the private sector do what it knows how to do. In this case, we saw that the ingredients for success were all there. If you don’t have the talent and the other elements needed, the ecosystem will not succeed.
“Even if you have all the right ingredients, you still need that magic spark I mentioned earlier. In this case, we gave a nudge to the industry to help it develop, and there was a spark. In other cases, we have given industries a nudge, and it hasn’t worked. We don’t have a magic formula.”
IIA is looking for the most interesting projects to invest in through the entire life cycle of innovation, from giving grants to university research projects and promising early-stage start-ups to working with start-ups to get direct investments in development projects.
“Our objective is to make sure Israeli technology remains at the forefront of innovation going forward,” Bin says. “We are not looking to invest where people are investing already. We are looking to identify the needs of the future by funding the highest-risk projects, where the innovation is three-to-five years ahead.”
IIA also promotes larger-scale projects that have a national interest. High among these is the National Drone Initiative that is working to develop a centralized network that will be able to manage hundreds of autonomous drones delivering commercial and medical products around the country.
“This is a great example of what we are trying to do,” Bin says. “A lot of Israeli companies are developing great technology, but then they skip Israel to deploy it abroad in larger markets. That means that while it is great that the economy gets the benefits of the company’s job placements and tax revenues, the country isn’t enjoying the fruits of our own innovation. We want that to change.
“For the drone project, we created a win-win situation in which we brought local drone companies together so they can test their products locally before they go global, and regulators here can learn how to adapt to the innovation and adopt laws before the technology forces them to react. We spearheaded a coordinated initiative where you can develop and test drones in the air while having full control of the airspace, in coordination with security forces. There is nowhere else in the world where you can do something like this.”
“At the same time, the vision is to reach a point when self-driving drones will do deliveries of food, products, emergency medical needs and, eventually, move people as well. This will bring many benefits to the economy in terms of transportation infrastructure, speed and costs. The regulatory bodies that deal with these fields are quite risk-averse, and a project like this allows them to learn to understand how it works before they are exposed to the risks.”
Are drone deliveries really in our immediate future?
“That is the question we are looking to answer,” Bin says. “There are many technology, safety, security and commercial aspects that we are trying to work out and answer, but I believe we are approaching a future in which drones will deliver packages to our homes. They probably won’t come up to your porch, but maybe to your roof, or the parking lot in front of your home. I’d say the odds are higher than 50% that we will succeed.”
Other innovations in the transportation field are also under way.
“We hope to have autonomous taxis driving here by next year,” and not only the robotaxis that Mobileye unveiled last month, Bin says. “We helped the regulators create a new law that will allow autonomous cars to operate here. There is a different mindset now than several years ago, when they didn’t let Uber launch its ride-sharing app here.”
Another project is looking to make Israel’s roads smarter, but using data to better manage traffic.
“If you can traffic data from all the roads into a single database and give access to government bodies, they can find new ways to manage the roads,” Bin says. “The new government now understands that technology is the key to dealing with many major challenges, and transportation is a field where Israel has a lot of problems.”
Another pressing national issue Bin’s IIA focuses on is agricultural technology. Israel’s upcoming budget includes a contentious new reform to increase competition and lower prices for eggs and produce by increasing imports, a move that farmers say will destroy the livelihoods of thousands of agriculture workers. As part of the reform, the government would increase funding for agritech projects that would increase efficiency and production for a smaller number of producers.
“The agricultural reform is definitely a step in the right direction,” Bin says. “Technology can create a higher value to supply the needs of our country, as well as allowing us to compete on the global level and making sure that exports can continue. Right now, local agriculture doesn’t have any competitive advantages.”
Bin says he is also happy to see that tackling climate change is high on the government’s agenda. Last week, IIA published a report about the growth of the field in Israel in recent years, saying that one in 10 new tech start-ups is focused on climate technologies, with some 637 companies currently operating in the field. The government has invested a total of $280 million in promoting climate tech research and development between 2018 and 2020, led by IIA, it said.
“Climate change is a great challenge to humanity, and we must find more cost-effective ways to make food while producing fewer gases,” Bin says. “We are very involved with this matter, and we are going to change the world.”
Israel’s human capital shortage is a very pressing concern for Bin. A shortage of talent available in the workforce is hampering the progress of the rapidly growing tech ecosystem. The labor force currently lacks some 13,000 to 20,000 engineers and hi-tech personnel, with 60% of hi-tech firms reporting difficulties in hiring appropriate staff, according to government reports.
There are new government initiatives being created to increase the pool of labor by importing workers, but critics say those are just band-aids that would mask deeper problems.
“We need better education and technical training but the growth can’t come only from education,” Bin says. “It can’t be done fast enough. There will be 150,000-250,000 new job openings in the coming five years, so we need 50%-80% growth.
“Israel needs to bring in new talent from around the world, whether it is more Jews making aliyah, former Israelis returning home, or bringing in non-Jews to work here. We also need to work harder to integrate populations that are underrepresented in the tech ecosystem, like Arabs and haredim. Women are also less prominent in the field than they could be.
“We are working to see how we can make it happen. We need to make the right connections, find the right talent, and create the regulatory and tax environment that will make people want to come and work here.”
Is Israel in danger of losing its technological edge?
“When you see the reports showing data about Israel’s declining academic achievements in the sciences, it can be worrying. Increasing the state’s investment in education is important, but that is outside our jurisdiction. But I would say that improving students’ performance isn’t an issue of spending more money, but, rather, looking at how the system is structured, improving the educational methodology, and giving a higher level of autonomy to the schools. That’s where to start.”
With so many fields of innovation under his jurisdiction, what technologies does Bin find most exciting?
“I get excited by all technology,” he smiles, and takes a moment to think.
“Artificial intelligence is going to change our lives in ways we can’t imagine. There is a theory that in 10-20 years, or maybe more, AI will be smarter than people, and be able to invest in new products and do its own research in ways we can’t even imagine now. One of the projects we are working on is a national program for AI, with the government investing in creating an AI infrastructure and developing regulations for it. That will be very exciting.”
Bioconvergence is another exciting emerging development.
“In technology, most innovation comes in the fields of electronic sciences and software,” Bin says. “There have been incredible advances in biology in the past two decades, with an understanding of DNA, RNA and all those things that people don’t understand but talk about a lot during the pandemic. Science now understands the smallest building blocks of life, and now we can put them together with software and electronics to create a whole new level of innovation, with new types of medical devices, electronic organs, and the like.”
Meanwhile, Bin is keeping an eye out as Israel’s hi-tech ecosystem changes shape in the wake of unprecedented investment in the sector this year. More than $18.5 billion has been injected into Israeli start-ups so far in 2021, on pace to more than double previous funding records during a year that has been called an era of hypergrowth.
“The pyramid has flipped,” Bin says. “It used to be that Israel had a large number of relatively small start-ups that were hoping to be acquired, and a few international giants with large facilities here. Now we have a situation where we have a base of hundreds of large Israeli companies supporting the ecosystem.
“Meanwhile, we have 21 different ministries in the new government that understand the role that technology needs to play for us to continue growing.
“Other countries ask us how they can replicate our success, but it is all about the magic.”