In this lecture, Ophir Marko talks about the social impacts of innovation and looks at how the state of Israel transformed from an economy based on agriculture to one based on high tech.

1. Today I’ll be talking about the social impacts of innovation, and I’d like to do that by
looking at the case study of a small middle-eastern country called Israel.
1

2. Before we begin, I’d like to introduce myself. My name is Ophir Marko. I joined my
first startup when I was 14, and my second one at the age of 15. Both were successful
companies, and I was able to leverage my experience working for a dynamic
environment when I applied to become an intelligence officer. I have a degree in
Physics from the Technion – Israel Institute of Technology, where I have also led
BizTEC, Israel’s innovation competition for entrepreneurs.
I would also like to introduce another person, who is not present today.
2

3. When my grandfather was born, the first computer was still 20 years away from being
announced.
Travel was done by ships and trains. Few owned cars, and airplanes were just
becoming safe enough for the general public.
Just a year before, in 1927, the telephone got a new look, when designers combined
the receiver and transmitter. Telegrams were still the popular way of transmitting
information.
Also in 1928, the first television sets were presented.
3

4. Technology has evolved in many ways since 1928. It has evolved in ways they barely
imagined back then.
Google, with Project Glass, is re-imagining what a personal communication device is.
Apple has already disrupted our lives with the nuisance of iPhone. Hundreds of fiber
optic lines connect the world with information travelling at the speed of light. One
third of the entire world population (about 2.5 billion people) are connected to each
other with the internet. How did all this happen in such a short period of time? How
did these technologies engulf our lives, and what are the impacts?
4

5. To really understand the impact innovation has had on Israeli society, I’d like to
mention some of the companies and technologies developed in Israel which
you might have heard of:
Voice Mail – Comverse
Instant Messaging – ICQ (Mirabilis)
Voice over IP (VoIP) – VocalTech
Thumb-drive – Msystems
Firewall – Checkpoint
Telecom Billing – Amdocs
Call Center Logging – Nice/Verint
Antivirus – Aladdin, Commtouch
Generic drugs – Teva
Stents – Medinol
Regeneration of spinal cord cells – Proneuron
Virtual Colonoscopy – Given Imaging
64 slice CT – Philips
5

6. 6

7. For the first 20 years Israel is mostly a socialist country, having strong influence from
many immigrants from Eastern Europe. As such, value is placed on labor, and the role
models of the time are factory workers, farmers, and land developers. Most work in
innovation is done in the fields of agriculture, and due to ongoing war in the region
with neighboring countries, military innovation is inevitable.
Engineers and scientists are being slowly churned out by the 3 existing technical
institutes.
7

8. 1967 serves as a tipping point for military R&D. After the 6 day war, an international
arms embargo is imposed. As the mentality of Israel after the Holocaust is to never
be dependent on others for survival, a tremendous effort is put into defense R&D.
The army, seeing it is short of scientists and engineers, begins an academic reserve
program. In return for 3 more years of service, higher education is provided for those
selected for the program. The education is free, and upon completion of the
academic degree, individuals were placed in positions of power over a (relatively)
large R&D budget, which led to very creative solutions.
8

9. Alongside the defense sector, civilian sectors were not far behind. The academic
reserve churned hundreds of experienced scientists and engineers each year which
then entered into the civilian sectors. Multi-nationals such as Intel and Motorola
entered Israel. Foreign Direct Investment was driven by R&D, not labor or
manufacturing. However, due to a labor-socialist tradition, there was still an
antagonism towards individual entrepreneurship.
In 1968 the government establishes the Office of Chief Scientist (OCS). The OCS is
directly responsible for an R&D budget which is spent on tech companies within
Israel, whether they are local or foreign made no difference.
9

10. The 1990s were the tipping point for the tech industries. There is a high availability of
technologies alongside foreign investments. The defense industry is reduced
dramatically in size due to established deterrence. When the Soviet Union collapsed,
1.2 Million Russians emigrated to Israel. Over 30% of Russian immigrants hold
advanced degrees. Support is given by the government through the OCS and various
incubator programs.
Whereas Israel tried to emulate Europe in the past, it was now looking towards the
US. In fact, after embracing good European practices, it went on to embrace the
stronger points of the US culture.
All these factors converging led to an inevitable tipping point.
10

11. In an area of only 100 Km2 (out of a total of merely 22,000) are concentrated 6
Technology Transfer Offices, over 23 incubators, thousands of start-ups, under 100
VC’s, leading multinationals and tech clusters
11

12. 1992 was the first year when software exports outweighed citrus exports. Until then,
Israel was known for Jaffa ™ brand oranges, which were exported worldwide. Within
7 years, that industry was largely forgotten due to tech guys becoming the new role
models.
12

13. 13

14. Intel and Microsoft build their first overseas R&D centers in Israel, and “geeks” are
the new role models.
Teva develops Copaxone ™, for treating multiple sclerosis (MS)
Intel develops the core duo
A team of 50 Israelis work full-time at CERN, operating the Large Hadron Collider
(LHC)
Ilan Ramon is celebrated as the first Israeli astronaut
Mooly Eden (left), VP of Intel Corporation
Yossi Vardi (center), investor in ICQ
Gil Shwed (right), founder of CheckPoint
14

15. This is the south-side of the city of Netanya, where I was born. Netanya, up to the
80s, was a city known as the Diamond Center of Israel. The diamond industry had it’s
HQ here and combined with proximity to the seaside, tourism was strong in the area.
The 1980s saw a decline in the diamond industry, as cheap labor was no longer
available and the competitive edge diminished. Crime rates rose, and at the
beginning of the 90s, Netanya was not considered one of the best places to live.
The picture on the left is from 1993, of an area adjacent to a developing industrial
complex. The complex was home to a brewery, a canary and a few office buildings.
During the 90s, the complex grew to house Cellcom (One of Israel’s leading telecom
providers), Elbit (No. 2 defense tech company), Tower, Saifun, WSI, Commtouch and
others. The growth led to an influx of tech companies establishing their HQs here,
since it was prime real estate available for cheap (sometimes subsidized) prices.
Within 10 years the population of the city was reinforced by young couples and early
families, mostly with higher education and good backgrounds. Crime rates decreased
significantly, and additional real estate was developed. Service providers, such as
restaurants, lawyers, patent attorneys, post offices, furniture companies, car
dealerships, etc. were all forming around the high tech industry. High schools, which
require students to choose majors, saw a rise in demand for electronics, physics,
biology and chemistry.
15

16. 16

17. 17

18. More often than not, it is necessary to look at the impact of innovation through the
lens of time.
Progress and innovation will always be hindered by those who fear change. Change is
not something we can always plan for, but it is important to be able to adapt and
embrace it when it does happen.
18