For Israel, A Chai-Tech Success

With its clean architectural lines and acres of tinted-glass windows, the Jerusalem Technology Park would fit right into California's Silicon Valley, New York's Silicon Alley, and other high-tech centers around the U.S. So, too, would the numerous start-up companies, large and small, that have moved into the park during the past year or two.

Like their American counterparts, these high-tech firms employ the best brains venture-capital money can offer. Their employees–mostly twenty- and thirty-somethings with a sprinkling of over-forties — work impossibly long hours to stay competitive in an ultra-competitive world.

But this isn't the U.S., a fact that becomes apparent the minute you enter the lobby of Building 98, at the end of the complex.

On this early-autumn day at least 40 men are congregated in the entryway, swaying back and forth in prayer. It's 3:45 in the afternoon and they've come, as they do every work day, to daven mincha.

In Tel Aviv, where the techies tend to be less religious, the work week still revolves around Shabbat and the Jewish holidays. The language spoken around the office is Hebrew, and the seat-of-the-pants way ideas are hatched and problems solved is unmistakably, unabashedly Israeli.

In less than a decade, Israel has become one of the hottest players in the global high-tech industry, much of it Internet-driven.

Nicknamed Silicon Wadi, the country ranks third worldwide in the number of tech companies listed on the Nasdaq exchange. Only the United States and Japan have more patents registered per capita, and the Jewish state has the highest number of engineers (135 per 10,000 employees) in the world.

According to a recent Bank Hapoalim survey, tech salaries average more than $4,000 per month, 150 percent higher than the national average wage.

Israel has carved out a niche in several areas, most notably Internet security and telecommunications.

With their country already a leader in airport and personal security, some ambitious Israelis decided to extend their expertise to the computer. Check Point Software, the industry pioneer that protects the accounts of corporations worldwide, is said to be worth $18 billion.

In 1998, America Online paid $407 million for Mirabilis Ltd., an Israeli company that markets ICQ instant messaging technology. With the software, two people on opposite ends of the planet can log on to the Internet and hold a written conversation in real time.

Other Israeli companies like VocalTec have pioneered software enabling telephone calls via the computer at the cost of a local phone call to an Internet service provider. DeltaThree created a service using the Internet to place commercial long distance phone calls. Purchased by Ronald Lauder's RSL Communications, the company is valued at approximately $450 million. Many of the country's 3,000 to 4,000 start-ups are just getting up to speed.

In September, Virtouch, a Jerusalem-based company, began selling a computer mouse that lets the blind tactilely sense all the information–including graphics–on the computer screen. It was tested in a California school for the blind.

Industry observers say that Israel's emergence on the high-tech scene is not a fluke.

"The army is a very big element," asserts David Rosenberg, a business journalist and Internet expert. "They take the brightest 18-year-olds, bring them through a high-tech boot camp and put them to work on some of most advanced military projects in the world. By the time they come out, they have an unparalleled education."

The huge influx of Russian immigrants also helped jump-start the field, according to Rosenberg.

"It's a technology hotbed," says Lance Podell of the online comparison-shopping site Dealtime. Conceived in Israel, the company, like virtually all Israeli tech firms, has a large sales staff in the United States.

"All these sophisticated technologists are coming out of the army and they need to apply their skills to civilian tasks. There's an enormous market worldwide for this know-how."

While there is a large pool of home-grown talent in the States, Podell says, "there's a real shortage of skilled people. Israel is a tech-concentrated country, very heavily concentrated. Due to the workforce, you can get a venture up and running very quickly."

Which is not to say that Israel doesn't suffer from staffing problems. "There's a shortage of experienced computer personnel, and many companies are recruiting in America at job fairs and through advertising," says Jacob Richman, an Internet consultant and publisher of an online computer-job directory at

According to Richman, Israeli firms and the government as a whole are seeking diaspora Jews who might consider aliyah, "if there's a high-paying job and salary waiting." Why, then, does virtually every Israeli company feel compelled to open an office in the United States? "No serious company based in Tel Aviv can survive without a base in America," Rosenberg says.

Citing the physical distance between Israel and its customers, he adds, "when it comes to marketing a business or product, we're in the middle of nowhere. If you're setting up an Internet site for weddings or grocery shopping, you wouldn't set it up in Israel. You have to have your pulse on what your competitors are doing. You need to be close to your suppliers."