Silicon Nazareth

There is a great deal of underused and underappreciated entrepreneurial energy among Israel’s Arab population.

Integrating Arab citizens into the high-tech and start-up industries at a Tsofen High Technology Center (photo credit: COURTESY TSOFEN HIGH TECHNOLOGY CENTERS)
Integrating Arab citizens into the high-tech and start-up industries at a Tsofen High Technology Center
ENERGY SECURITY. This is the mantra heard repeatedly as fierce debate continues over the contractual conditions under which Noble Energy and Delek Group will develop, sell and export Israel’s offshore natural gas.
But lost in this debate is another type of energy security, perhaps even more crucial ‒ the energy of human talent and imagination. There is a worrisome talent shortage developing in Israel and few seem to be even aware of it.
According to the Swiss business school IMD, in its annual World Talent Report, Israel ranks 18th in the world in developing, attracting and maintaining talent, down three places from a year earlier and drastically below the eighth place it held just a decade ago. For the start-up nation, where close to half its economic growth is driven by high-tech, this is a serious problem.
Among the many obstacles start-ups face, as they strive for sustained growth, are bureaucracy, taxes and a weak Tel Aviv capital market. But hiring talented engineers and scientists is, they tell me, perhaps the major one. While Israel’s per capita income is 40 percent below that of the United States, the cost of living in Israel (including housing) is nearly equal to that in New York City.
One partial solution may be right under our noses. There is a great deal of underused and underappreciated entrepreneurial energy among Israel’s Arab population. Very quietly, Arabs are increasingly working in high-tech and launching their own start-ups. Today, some 2,000 Arabs work in high-tech, up from just a few hundred a decade ago.
The numbers are very small but growing.
One of the major driving forces behind this mini-trend is a remarkable computer scientist named Smadar Nehab, who holds an MSc degree from the Weizmann Institute. Leiden University, Netherlands, recently ranked Weizmann 10th in the world among research universities, the only university in the top 10 outside the US.
After working in Silicon Valley for top companies, she returned home and, in 2008, founded Tsofen High Technology Centers ‒ an Arab-Jewish organization that promotes integrating Arab citizens into Israel’s high-tech and start-up industries.
Tsofen does this by creating high-tech centers in Arab towns and cities. The main one is in Nazareth, and it is sufficiently full of creative energy to merit the term Silicon Nazareth.
This city of 80,000 had only a handful of high-tech jobs in 2008; today, there are many, and a third are filled by Arab women.
Nehab recently told the business daily TheMarker that there are 600 Arabs working in software in Nazareth today, up from only 30 in 2008. And 90 percent of them were placed by Tsofen. There is strong Jewish-Arab integration. At Galil Software in Nazareth, 15 percent of the workers are Jewish. Amdocs, a global giant that sells cell phone-billing software, has a thriving Nazareth branch. So does Broadcom, a global semiconductor company, which opened an R&D center in Nazareth a year ago.
These numbers are still relatively small, but they are growing. And the key, Nehab rightly observes, is Arab mothers.
In 1965, when Singapore’s founding President Lee Kwan Yew led his tiny country to independence, he called on Singapore’s mothers to demand that their children study math, so they could study engineering in college. They did, and Singapore grew wealthy from its engineering talent.
But do Arab mothers want their sons and daughters to work in high-tech? Nehab said, quoting an Israeli Arab senior manager at Intel, that once every junior (Arab) doctor in Afula was more respected than development managers responsible for dozens of employees at Intel… no one knew what the managers actually did. Arab mothers, like Jewish mothers, wanted their children to become doctors. But, today, it is changing.
A SIGNIFICANT chunk of start-up nation and high-tech industry is driven by those from elite IDF technology units, like 8200. This background is something Israeli Arabs can’t share. But this can be overcome, especially by planting startup aspirations among Arab youth.
Tsofen, and Nehab, understand clearly that the key is working with young people.
Twice yearly, Tsofen sponsors Hackathons in which teams of young people work intensively on creative ideas, simulating a start-up environment.
I spoke with Prof. Opher Etzion, who heads the Technological Empowerment Institute in the Yezreel Valley Academic College, nestled in the lovely valley just below Nazareth. Etzion recently organized a Yozmaton event for Jewish and Arab high school students, ages 14-17, together with Nizar Bitar, who heads Arab student promotion at the college.
In a three-day marathon, mixed teams had to pick a “social-technological initiative,” design a product and construct an initial version. Each team also designed and performed a TV show, in a real TV studio, before a panel of judges. The young people were helped by a team of experienced mentors.
The winning team built an “app” that teaches dancing, using a “smart ball” that can be programmed for movement and changes in color. The choreography is programmed within the ball, and the different colors designate dance moves.
The judges noted that this idea has commercial potential.
A Yozmaton staff member commented, “I loved the immediate and wonderful connection created between Jews and Arabs – love that crosses the borders.”
Bank of Israel Governor Karnit Flug has noted that failing to better integrate Israel’s 1.7 million Arabs and some 800,000 ultra-Orthodox, together nearly a third of the population, into the labor force can cost Israel 1.3 percent in GDP growth. At a time when the economy is growing at only three percent annually, this is an intolerable price.
A 2014 study of the Israeli Arab labor market by the Bank of Israel’s Nitsa Kasir and Tel Aviv University economist Eran Yashiv, paints a rather bleak picture ‒ unemployment among Arab men is twice that of Jewish men; Arab women are three times less likely to have a job than Jewish women, and Jewish men earn twice what their Arab counterparts earn. Dropout rates from Arab schools are double those in Jewish schools.
But there are bright spots. The report shows that the Civil Service’s Arab work force share is about 8 percent, up from 2 percent in 2007, but short of its 10 percent target set for 2012. Also, there are eight times as many Arabs and Druse in the police as there were a decade ago.
Kasir and Yashiv calculate, for instance, the rate of return on public investment in promoting Arab women’s employment.
They find the result is seven percent “by the most conservative estimates.” I think this could become a project funded by Mitzva Bonds (see The Report, June 1) ‒ social performance bonds that pay off only when proven results accrue; no conventional government bonds pay interest even close to seven percent.
More recently, Economy Ministry figures show that a third of Arab women are currently in the labor force, up from only one in five 20 years ago. Hundreds of millions of shekels have been invested by the government in job training and counseling for Israeli Arabs.
Drilling down beneath the dry statistics lies the prickly issue of Arab- Jewish relations. How do Israeli Jews and Arabs perceive each other? The ranking expert on this subject is Haifa University Sociology Professor Sammy Smooha. His 2013 study, “Still Playing by the Rules,” the latest available, presents a mixed picture.
On the one hand, based on annually conducted field studies, Smooha concluded that in the decade since 2003 the attitudes of Arabs in Israel toward the state and the Jewish majority “became harsher”: at the same time, “there is stability or even moderation in Jewish attitudes toward Arab citizens.”
However, Ron Gerlitz, co-director of Sikkuy, an Arab-Jewish group dedicated to advancing civic equality, disagrees, noting that more than 20 pieces of legislation were introduced in the previous Knesset that targeted Arab citizens’ sense of belonging in Israeli society.
According to the latest Global Startup Ecosystem Ranking, Tel Aviv ranks fifth in the world, behind Silicon Valley, New York City, Los Angeles and Boston.
And, for the first time, Jerusalem made it into the top 50. With some 6,900 hightech companies, 80 percent of them startups, Israel has earned its start-up nation nickname.
Imagination, talent, creativity, none are bounded by culture or religion. The human spirit knows only the limitations we ourselves place on it. Israel cannot afford to overlook one-fifth of its citizens, Israeli Arabs, in its search for entrepreneurial energy to fuel its crucial high-tech sector. I look forward one day to seeing Silicon Nazareth join the list of the world’s hotbeds of technology-driven start-ups.
“High tech is possible in Arab society,” Nehab asserts. She is leaving Tsofen, saying she prefers that other managers “take it to the next level.”
The writer is senior research fellow at the S. Neaman Institute, Technion, and blogs at