Israeli technology - much of it developed by startups and small companies - is known around the world. In many areas - cybersecurity, AI, finance, and others - “made in Israel” is a badge of quality, improving the lives of millions around the world. And companies around the world are welcome to join up with the Israeli ecosystem and develop partnerships to take new technology global.
But in order for Israeli technology to get out there, it needs to be tested and perfected - and the best place to do that is in Israel itself. Unfortunately, though, many Israeli startups don’t do that - preferring instead to do their testing abroad. For many of them, it’s an issue of scaling: The Israeli market is small, and they view running a successful test in a nation of under 10 million, a market largely isolated from the rest of the world, as very different from markets of hundreds of millions. Many also think that there’s little point in building a product or service for the Israeli market that is just going to have to be revamped for the “real” world. Better to do testing abroad, thus perfecting applications and services in the markets they are going to be serving.
Satisfying global markets
But in my opinion, entrepreneurs who think this way are making a mistake. The best way to satisfy global markets is to perfect technology at home. True, the Israeli market will never have the dimensions of markets in the US, Europe or Asia - but Israel offers other benefits that startups won't find abroad; among them the strong and assertive feedback they can expect from local customers. Israeli customers are known to be tougher and more demanding than their counterparts overseas, and because they are using a product or service developed locally, they will be more attentive to its effectiveness. Meanwhile, products and services tested abroad are more likely to get “lost in the shuffle,” ignored or at best given scant attention by the much larger and more “polite” markets there.
As far as scaling is concerned, it’s usually built into the product or service; entrepreneurs know they need to develop technology that can scale to much bigger markets, enabling them to partner with companies in the US, Europe and Asia. But the core technology itself has to be good enough to compete - and excel - in the face of the strong competition from local and international companies aiming for the same markets, and testing locally is a better way to ensure that the core technology is strong enough to compete abroad.
And, of course, there is the issue of budget - especially in a period where investors are demanding that startups be more careful with their funds. Rolling out a local testing effort is often cheaper than one abroad - the offices are already set up, the staff already on payroll - thus making for a more efficient effort, both logistically and financially. And keeping testing local also helps speed up the development process. It’s a lot easier for locally-based companies to get the help of an outside consultant to help with a thorny development problem, for example. The Israeli tech ecosystem also provides a wide range of talent physically located (in many cases) just a short drive away from a startup’s office; solving a problem that requires an in-house consultation can lead to a much quicker turnaround than if a startup were trying to orchestrate a remediation effort from thousands of miles away.
In addition, the tightness of Israel's tech ecosystem means that finding partners to test out systems and products with is not difficult; indeed, you are usually no more than just two phone calls away from a senior executive of a publicly traded corporation.
How to work with Israel
With that, here are some things to keep in mind when partnering with an Israeli firm for proof of concept product and technology testing:
Select your partner carefully, and ensure you are working with the right partner for your needs. Early stage companies are generally less “picky,” and will be willing to work with a smaller company in a smaller market. But any company will be seeking out a partner that is serious about moving their technology ahead; if an Israeli tech CEO meets a mid-level manager who shows enthusiasm for what their company is doing, they will expect concrete ideas on how to move forward - for fear that they might engage in a long and expensive relationship that could eventually lead to a dead end. A concrete plan forward will win you the “loyalty” of a top-flight Israeli tech firm.
Make sure you get an executive “buy-in” with your Israeli partner. Companies in Israel are typically run by the CEOs who are very active in the business. Make sure you have the right visibility and nurture the relationship.
Allocate sufficient resources to communications and set expectations correctly. Your Israeli partner will expect you to remain engaged and not just throw them to the sidelines when a substitute American or European partner with similar technology appears. If you see the Israeli partner as purely an R&D partner, be clear about that up front.
Map out any potential regulatory gaps, in Israel and abroad. If the concept requires certain data privacy rules to be followed, for example, make sure to understand them and tackle them early on.
Experience shows that there are striking advantages in running your proof of concept testing in Israel; it’s a vibrant market that is quick to adopt (or reject) new technologies. For example, our banking system was one of the first to go digital and there’s hardly anything you can’t do online with your bank - including signing up for a mortgage. And Israel is far from an “isolated market;” Israeli firms large and small have connections with affiliates in America, Europe and Asia. For example, when our own company ran a pilot technology testing program with Toyota in Israel, the global team was watching closely; they still are in fact. Global corporations - from car companies to giant software and hardware players - all have local representatives that collaborate with the local ecosystem.
By “going local,” Israeli startups can save themselves a great deal of time and effort in developing their technologies. Companies from around the world seek out Israeli partners with whom they seek to develop technologies, a sure sign of the vibrancy of the local ecosystem. Why not take advantage of all Israel offers to perfect those technologies?
The writer is CEO of Ravin.AI