Amit Paranjape’s Blog

Israel – ‘The Startup Nation’, Lessons for India

Posted in Current Affairs, Information Technology by Amit Paranjape on February 11, 2018

I recently returned from an interesting visit to Israel – the ‘Startup Nation’, as part of a delegation invited by the Israel government. The goal of the visit was to learn more about the Israeli startup and innovation ecosystem, and improve startups level contact between India and Israel. It is quite impressive to note the progress Israel has achieved since its creation in 1948. Its growth and innovation in a variety of sectors: agriculture, water management, defense, cyber security, information technology, semiconductors and others, provide great learning examples. During this short trip, we were able to visit startups, co-working spaces, maker-spaces, venture capitalists, incubators, universities, and supporting agencies. We also attended a couple of industry conferences (Cybertech 2018, Tel Aviv and 2018 OurCrowd Global Investor Summit, Jerusalem).

In the packed agenda, we didn’t get to see a lot of this country’s tourist attractions – but the brief tours of Haifa, Old City of Jaffa, and the historic city of Jerusalem were very interesting (I will write about this in a separate article). Suffice to say, Israel can be a great travel destination for the Indian tourist. This small country has a lot to offer: great history & culture, diverse nature, nightlife, good food, and a chance to meet with great people.

Israel is a small country, with an area of around 20,000 sq km (just a bit bigger than Pune District), and a population of 8.5 million (less than half of Mumbai). Faced with multiple geopolitical, climate and geographical challenges, it has made tremendous progress in building a world class innovation and startup ecosystem, over the past few decades. Today, Israel has over 7,000 startups, over 350 VC Funds, and over 300 corporate R&D centers. There were over 100 startup exits, worth $23 billion in 2017. This was a big jump from $10 billion in 2016 – largely driven by the huge acquisition of Mobileye (Computer Vision, Machine Learning Tech – for self-driving cars, other applications) by Intel for $15 billion, in August 2017.  The Mobileye exit is a great case-study and success-story for Israeli startups. Historically, U.S. has been the biggest market for Israeli tech startups and companies. Today, Israel has the 3rd largest number of NASDAQ listed companies (following U.S. and China).

What drives this startup and innovation miracle? In this article, I will attempt to highlight some key attributes and reasons. I will also summarize some lessons that could be learned and applied to the Indian ecosystem. For detailed reading on Israel’s startup ecosystem, I would recommend an excellent book: ‘Startup Nation’ by Dan Senor and Saul Singer (a bit old; published in 2011 – but still quite relevant).

There are three primary factors that have helped in laying the foundation of the Israeli startup and innovation ecosystem:

  1. Culture & Education (Scarcity of Natural Resources, Tough Environment, Military Service, Networking)
  2. Role of Government (Support for Universities, Incubators, Strategic Focus on R&D)
  3. VCs, Multi-National Corporations, and the Corporate Ecosystem

 

Culture

Israel has faced a tough environment (nature and geopolitics) since it was created in 1948. A large part of the country is desert, with very limited water resources. Israel has fought multiple wars with its neighbours over the past 70 years, and national security is a top priority. These necessities have driven the need to innovate in agriculture, water management and defense sectors, and has driven a culture of ‘problem solving’, with constrained resources. The culture promotes ‘Okay to Fail’ and a ‘Challenge Everything’ attitude.

Military service is mandatory in Israel after age 18. Students enter a three-year program and are trained in a variety of different skills. Depending on their capabilities and openings, they are assigned specific departments and roles. They learn military and other hard-skills in various tech and non-tech areas. They learn important soft-skills such as leadership, discipline and team-work. They also learn about tough decision making, especially in uncertain situations. They build great networks, which often last them a life-time, and are very useful during their startup/corporate life.

Israel is a small country, and is highly networked. A popular saying, we heard multiple times during our visit – “Everyone is connected to everyone else with a maximum ‘one degree of separation’”. These networks are critical in entrepreneurship to help recruit the right people, get the right early customers, raise funding, etc.

One example of the military service training and its direct connection to successful entrepreneurship and startups is the ‘8200 Unit’. We heard about this in multiple presentations during our visit. The ‘8200 Unit’ is one of Israel’s top military intelligence unit, involved with a variety of cyber-security, cyber warfare related initiatives. This unit usually ends up recruiting the top engineering and mathematics students during the military service. These recruits are trained by the top experts and work on challenging projects. The alumni of this unit later on end up studying at the top universities, working with the corporates and starting key startups (especially in the cyber-security, data analytics and related areas).

Education

For a country of just around 8 million people – Israel has 8 top ranked global universities and over 50 colleges. It has 12 Nobel Laureates. The country is among the top in the world in R&D spending (combined government and corporate) as a percentage of GDP at 4.3%. (For comparison – India spends less than 0.8%).

Israel is also benefitting from ‘brain gain’. Top Israeli PhD students who have studied in U.S. and other top global universities are moving back to their country, after gaining top academic research and corporate R&D experience.

On a related note, it is worthwhile to mention that Israel has started attracting a good number of Indian students in higher education (Now at about 1,000 – still significantly smaller than the number that goes to U.S…but rising).

The Israeli education system encourages a culture of risk taking and asking questions, right from the early years.

Government support for startups and innovation

The Israeli Government also plays an important role in the startup and innovation ecosystem, both directly and indirectly.

Directly, it supports many entrepreneurship programs, funds, and incubators (total of 19). The incubators provide the risk capital, facilities and mentoring. Many incubators are connected with the universities. This helps the university students with their startup ideas, and also enables access to professors and other experts for mentoring.

As mentioned earlier the government also plays an important role in funding the universities as well for various research projects.

Another indirect way in which government supports the startups is through funding strategic R&D projects in agri-tech, water management and defense. As discussed earlier, these are key priority areas, and availability of funds and pilot projects (government is the customer) also helps startups.

In 1993, the government helped start the Israeli VC industry, by backing the Yozma Fund. Tax reforms for the corporate sector have brought corporate tax down to 10%. In addition, the Israel Innovation Authority provides direct R&D funding for projects.

Role of corporate sector

Many large and medium sized tech multi-nationals have a strong presence in Israel. Over 320 R&D and Tech centers of multi-national companies are located here. These include Intel, IBM, Microsoft, Cisco, TI, Samsung, Oracle, SAP … (just to name a few). Around half of Israel’s tech workforce is employed by these multi-nationals. Many of them are based in Israel’s high-tech hub, Haifa. In fact, Haifa reminds you of Silicon Valley for multiple reasons. The city is located by the sea and has Israel’s most important harbour. Major part of the city is located on the hills next to the sea. Haifa is home to many tech companies and also one of Israel’s top engineering universities, Technion. The sea, the drive through the hills, the tech company campuses in close proximity, the university all remind you of the San Francisco Bay Area.

A good example is Intel (which has been here for over 30 years). They are doing world class high-end R&D here, comparable with the best in the world (e.g. Silicon Valley). The earlier mentioned book ‘Startup Nation’ has a great case-study on Intel Israel’s work on the power saving chips.

These large multi-national companies have invested in Israel due to two main reasons: 1. Availability of top science & engineering talent (from universities and startups). 2. ‘Brain Gain’ phenomenon.

People who have worked in these companies have excellent global exposure to not only the latest technology, but also to markets. Many hi-tech startups in Israel are founded by the alumni of these multi-national companies. Some of these startups also get good exits, with these multi-nationals buy them out. Following the exit, the entrepreneurs move onto newer startups, and also become VCs – thereby further continuing the cycle of further development.

Lessons for India

There are many lessons applicable to India, which can be learned from Israel’s startup and innovation ecosystem. Some of these lessons maybe more relevant than the ones from Silicon Valley. These lessons can be categorized across culture, education, role of government, and role of corporates.

But before we get into those, it is important to note that there is a widespread myth that most entrepreneurs and successful startup founders are fresh undergrads or college drop-outs. Bill Gates and Mark Zuckerberg are big exceptions, not the rule.

Experience is a key factor for successful high value IP (Intellectual Property) driven startups. The average age of startup founders in the Silicon Valley and Israel is closer to 40. A typical startup founder is someone who has completed higher education (MS/PhD) and worked further in research/development for some years. This experience is not only useful for gaining deeper domain knowledge, but to also gain a good network of potential co-founders, employees, pilot customers, partners and investors.

While it is important to teach entrepreneurship to undergraduate students and giving them opportunities to build on their ideas – it is unrealistic to expect many breakthrough startups to come out of undergraduate colleges.

Culture & Education

Culture is difficult to emulate. It’s a more fundamental thing. Yet there are some aspects of the culture that are common across the two India and Israel (e.g. ability to do more with less, with constrained resources). These abilities in India need to be encouraged and rewarded. Of course, there is a right way of doing things and doing a total ‘Jugaad’. Need a right balance.

Indian education system discourages asking questions and challenging the authority – quite opposite of the Israeli system. Changing this is a huge task.

At the higher education level, a significant shift is required. India’s investment in R&D is very low across the board, and this also reflects in our funding of our higher education and research institutes. This needs to change. Of course, the efficiency and utilization of these funds also needs significant improvement.

We need to focus on improving our Masters and PhD level programs. We need quality, not quantity. We need to focus on relevant, market-ready IP creation. Today, our institutions like the IITs produce some of the best undergraduates in the world. However, the same cannot be said about our Masters and PhD students. Some of our best undergrads end up doing MS/PhDs outside India (mostly in U.S. and in Europe, Japan, and other countries). This is a key issue and needs immediate attention (will need a separate article to discuss this in detail). The Indian government is taking some steps in this direction (like the recently announced PhD scholarships), but a lot more needs to be done. We need to track and improve the number of IIT, IISER, IISc B.Tech/MS graduates, who do PhDs in India.

Since we don’t produce many world class PhDs, the multi-national R&D centers don’t recruit them here. This is one reason good students are not doing PhDs in India, since there are very few good corporate R&D job opportunities. This is partially a chicken and egg problem. The cycle can be broken by upgrading our research facilities and PhD programs and improving the supply.

In some aspects IITs and the new IISERs are comparable with the best in the world. But they need a long way to go, before we could count some of these in the top-50 global universities. The quality vs. quantity argument is valid here too. Yes, we need more institutes; but we also need sustained focus (and resources/funding) to get at least 1-2 of the old IITs to world class level.

To further improve the quality of PhD programs in India, we need more university to university collaborations. These need to move forward with concrete programs at the department levels – and not just stay at signing ‘MoUs’.

Role of Government

As discussed earlier, the government has to play a key role in improving higher education (Masters and PhD programs). In conjunction, it is also critical to improve our basic research & development capabilities. We need large investments and great execution (like ISRO). As mentioned earlier, our R&D spend as a percentage of GDP is way low at 0.8% (compared to 4.3% for Israel, and 2.5% for China).

Government also needs to fund creation of Incubators that provide funding, support and mentoring for deserving startups. Here again, quality is more important than quantity. As mentioned earlier, Israel has less than 20 incubators. We need more startups with good solid IP; not yet another ‘me-to’ incremental e-business innovation, that too copied from a U.S. startup idea. We need more startups in cyber-security, agri-tech, energy, AI, healthcare, biotech, advanced manufacturing, materials, etc. and less in e-commerce.

A good example of successful (yet low profile) incubator in India, which supports startups with high value IP, in the areas of biotech, materials, energy, is the Innovation Center at National Chemical Laboratory in Pune. We need more startups founded by PhDs and senior R&D professionals, who have created some new, non-trivial IP.

Third and important long term area for government support is exploring the ‘DARPA’ (Defense Advanced Research Projects Agency) https://en.wikipedia.org/wiki/DARPA model from U.S. Israel follows a similar model.

DARPA is a U.S. government agency that funds strategic projects in the area of defense and national security. A good portion of this funding is received by the private sector. DARPA provides strong program management and oversight (by its own program managers) on these projects, executed by the private sector. This ensures good execution and efficient usage of the R&D dollars. The Program Managers from DARPA are industry veterans and are experts in specific domain areas.

In U.S. and Israel, the offshoots of defense related spending on strategic projects (through DARPA and other agencies) has resulted in many dual use products and technologies. These technologies are later commercialized or built upon by established companies and even startups. In many respects such agencies provide a basic R&D foundation (much like state supported universities), and help the overall innovation and startup ecosystem.

In India, the DRDO model is mostly all government (public sector). We need to understand, evaluate (and adapt as required) the DARPA model for India as well (Note – a detailed discussion around DARPA and other similar approaches will need a separate article.)

Role of Corporates

Indian private sector companies in tech and other sectors also need a strategic product/IP vision. Today, along with the government, the private sector too contributes to a significantly lower R&D spend, compared to their international peers.

In the IT space, India has been largely focused on the Software Services. Some of these large companies are sitting on large cash piles. The IT Services market is ripe for disruption with cloud, automation and other structural shifts. Now is the time for these IT Services companies to start investing more in product R&D and IP creation. They can also allocate more funds for their venture capital arms, which can in turn drive funding of IP driven product startups.

Closing Comments

We need to progress in multiple areas simultaneously, if we want to build a good, high-value IP driven startup ecosystem. Israel provides some good learning examples. We needs to move to a ‘product’ and ‘solution’ mind-set. ‘Make in India’ should not just be about manufacturing, but also about IP creation, core R&D and import substitution in strategic areas. We need to improve startup to startup and university to university level contacts and close collaborations with Israel, U.S. and other countries. The Indo-Israel Joint Innovation Fund announced last year during PM Modi’s visit is a good start. The Indian market is important for Israeli startups, and joint IP development should be explored. Lastly, we need better alignment between defense driven R&D and funding with our universities, corporate R&D and startups.

(This article is also being republished on Swarajya https://swarajyamag.com/ )

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Artificial Intelligence (AI) – Current Landscape, and implications for India

Posted in Information Technology by Amit Paranjape on October 5, 2016

Few days back, I did a ‘tweet storm’ (twitter term for a series of tweets on a particular topic) on Artificial Intelligence (AI). I discussed the overall landscape and what AI means for India. This thread consists of 23 tweets (these tweets appear as a single thread on twitter…I have also numbered them as 1/n, 2/n, etc.). I have reproduced these tweets below in a single document. I guess, this is one way to convey a series of ‘micro-blogs’ into a ‘blog’! (Note: If you want to access the entire tweets thread on twitter, click this link: https://twitter.com/aparanjape/status/782186570585559041)

 

Please let me know your thoughts, comments on the points below.

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My ‘tweet storm’ (series of tweets) on ‘Artificial Intelligence’ … see thread below. #AI

 

Highly recommended primer (see video below) for anyone interested in Artificial Intelligence, Deep Learning and Machine Learning. (1/n)

See this link: https://twitter.com/aparanjape/status/742326806666059777

In 2030, when personal digital assistants, driverless cars, intelligent robots are common, we will look back at 2016 as: ‘Year of AI’ (2/n)

#AI Many path-breaking developments in hardware, software are happening right now..important milestones are being achieved every month.(3/n)

#AI Google’s #AphaGo computer winning against the ‘Go’ world champion Lee Sedol .. IBM’s #Watson’s breakthroughs in cancer diagnostics (4/n)

#AI 2016 breakthroughs (cont.) Uber launching the first fleet of driver-less cabs in Pittsburgh… Automated script writing, etc. (5/n).

A key thing to note is how the top tech leaders: Google, FB, IBM, Amazon, MSFT are all prioritizing #AI as their top priority in 2016 (6/n)

These tech leaders are making big investments in their R&D, partnering with universities, buying startups related to #AI (7/n)

Here is an example: ‘Microsoft merges Bing, Cortana, and Research to make 5,000-strong #AI division’ http://arstechnica.com/information-technology/2016/09/microsoft-merges-bing-cortana-and-research-to-make-5000-strong-ai-division/ … (8/n)

The tech leaders are also collaborating together in #AI, with respect to processes, data access (key driver) https://techcrunch.com/2016/09/28/facebook-amazon-google-ibm-and-microsoft-come-together-to-create-historic-partnership-on-ai/ … (9/n)

Some SV billionaires and VCs (including @elonmusk, @peterthiel…) have created a non-profit #AI research co: https://openai.com/blog/  (10/n)

Chinese tech leaders like Baidu are also making big investments in #AI (in China and in their SV labs) http://www.forbes.com/sites/gilpress/2016/09/30/faster-artificial-intelligence-baidu-benchmarks-hardware-for-deep-learning/#62ebe2e27420 … (11/n)

Over the past many decades, DARPA has been a leader in strategic tech investments. #AI is a key priority: http://www.darpa.mil/program/explainable-artificial-intelligence … (12/n)

Many European companies are also prioritizing #AI investments (automotive, aerospace, healthcare, etc.). (13/n).

So, where is India in all this? The #AI wave is both a big threat (if we don’t do anything!) and an opportunity for India. (14/n).

Like in many tech races of the past, India is already well behind in the #AI race… but we can (and we should!) try to catch up. (15/n).

#AI can present a big threat to the traditional Indian IT Service Outsourcing model … A model that worked well for past 2 decades. (16/n)

Manufacturing and traditional services sector job growth is also at risk, with #AI driven automation. (17/n).

Like with any new tech disruption, #AI also brings in new opportunities… but in order to leverage these, we to have to move fast. (18/n)

India needs to set up a multi-year strategic program focused on #AI and robotics, which involves the govt and the private sector. (19/n).

This is a ‘moon-shot’ opportunity and needs a @ISRO like long-term program (look at @ISRO’s long term goals set in 60s/70s). #AI (20/n)

We need to invest in setting up world class #AI R&D labs (in our research institutions like the IITs, IISERs…or create new ones). (21/n).

We also need to create good long term incentive structures for the private sector to invest in their own #AI R&D initiatives. (22/n).

Such government and private labs can attract/retain top Indian talent in #AI (that today, we are losing to U.S., Europe). (23/n)

Okay…I think I am going to pause here on this #AI tweet storm :)… Sorry for flooding your timeline! May continue again later though 🙂

#AI Was planning to write a blog-post about this …. but realized that I prefer @twitter and the tweet-storm method a lot more!

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The ‘Touch’ vs. ‘Tactile’ Debate For Computers & Mobile Handsets

Posted in Information Technology, Science & Technology by Amit Paranjape on December 19, 2011

There is a lot of discussion out there about how the ‘Touch’ display keypads are going to increasingly take over from the conventional ‘Tactile’ ones. The rise of iPhone, iPad and other Tablets, Touch Smart Phones are making touch interfaces more and more prominent.

In fact some people have already started writing the obituaries of the good old fashioned tactile keyboard. But not so fast.

I for one cannot just figure out how a touch keyboard can replicate the tactile feedback of contact keys. Or the contoured feel of a mobile handset’s QWERTY keypad.
Touch is fine when you have to type a little, and when you are largely just reading/interacting – but definitely not ideal for writing documents, emails and blog posts like this one. And let us look at some other areas as well. Can you imagine a pianist playing on a touch pad piano? Maybe a ‘Tabla’ (a popular Indian percussion instrument, that has a reasonably flat surface.
Some of my friends who are big cheerleaders of ‘Touch’ (and think that I may be stuck in the stone age…) talk about how swipe, page turn and other gestures are improving interactivity and productivity. But to me they are just better replacements of the nearly 40 year old ‘Mouse’. I agree – the Mouse needs a replacement and a touch pad is a presents a very good improvement. But just cannot see a touch pad being used for heavy duty typing!
Wonder what you think?

Why Doctors Hate Electronic Medical Records (EMRs)

Posted in Healthcare & Medicine, Information Technology by Amit Paranjape on June 22, 2010

Having studied the Electronic Medical Records (EMRs) space for a few years now, it’s clear to me that EMR adoption is a huge challenge. Even in developed markets like the US, successful implementation rates are pretty low (especially in small clinics). In spite of a huge Federal Government Incentive Program, the progress is gradual (at best).

In India the picture is a lot worse. My assessment is that EMR adoption here is in low single digits.

There are many theories and observations about why doctors dislike Electronic Medical Records (EMRs). One often discussed observation is that doctors are ‘technophobes’. I personally don’t think that’s true. On the contrary many doctors, whether in US or in India are ‘gadget freaks’ (when it comes to devices like new smartphones, laptops, cameras, etc.).

The primary issue is that of software usability. Many traditional EMR systems are quite complicated and difficult to use. These systems at times resemble heavy duty ERPs (Enterprise Resource Planning IT Systems) that run the operations of large multi-million dollar corporations.  A small clinic doesn’t need all this complexity. These EMRs may actually end up hurting the efficiency of a clinic, rather than improve it. Also many of these systems do not enable interactions with patients for chronic disease management, e-consultation, telemedicine, etc.  Doctors are looking for simple systems that can improve their productivity, as well as support better patient care. In absence of these, they are perfectly ok going back to their old paper notes based methods.

I recently came across an excellent article in ‘The Journal of Surgical Radiology’ by Shahid Shah, Column: Why MDs Dread EMRs”. The author has done a great job of summarizing the major reasons that are hurdles to effective adoption. I encourage the readers to go through this article for a detailed insight into the real issues.

Musings on an eBook Reader and Tablet PC Combination

Posted in Information Technology, Science & Technology by Amit Paranjape on January 28, 2010

I had originally blogged about this topic about 6 months back. See original post ““. Also attached below.

After Apple’s much anticipated iPad announcement today, I thought I will revisit this topic once again. I think the LCD display in the Apple iPad would still have certain limitations as compared to the epaper technology display in the Amazon Kindle. The readability and feel of the iPad screen may not be like that of a paper book. It remains to be seen how much ‘real life’ the iPad LCD screen actually feels like.

In terms of creating a ‘hybrid solution’ like the one I had described in the earlier post, the Barnes & Nobles Nook comes a little closer. In the sense that they are using the epaper technology for the display screen and a small touch sensitive multi-color LCD display for the interactive features. Though I wonder that in the midst of Apple and Amazon, does Barnes & Nobles have a chance?  It remains to be seen what approach Microsoft takes in its own Tablet PC (no details/dates as yet).

Going forward, I wonder how the epaper/LCD screen gap would get bridged? Lot of research work is going on in the epaper technology area. Future epaper displays could feature full color support and some level of touch sensitive surfaces. Till that time though, a simple hybrid may not be a bad solution?

What are your thoughts?

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Original Post, Dated: July 28, 2009

I have followed the news around Amazon’s Kindle with great interest. I think it will be a tech game-changer. It fundamentally tries to address the readability issues associated with the LCD screens in other devices. Though, I haven’t had a chance to use it as yet, I can imagine how the epaper display technology can produce images and text that is very close to printed paper. In my view, this capability alone will lead to a large scale adoption of this device in the coming years.

I also see a huge opportunity in a ‘next gen’ Tablet PC. I haven’t digged deep into reasons why the existing Windows based Tablet PCs haven’t been that successful over the past few decade. Is it the cost? Or usability? Or both?

There is a lot of discussion in the media around Apple launching a new Tablet – I am sure this will be a game changing device, given Apple’s innovation track record. My initial thought when I first read about it was – here’s comes a potential Kindle killer. But then I realized that the Kindle’s display will be a major advantage over the tradional LCD display.

A tablet’s LCD display is critical for many functions (graphics, media, interactive software and tools, etc.), and doubt if there’s a substitute.

My simple thought: Why can’t someone create a smart, usable tablet computer with an epaper display on the back side??

Such a device could provide you with both capabilities in one single device! You can read a book and then if you want to use your tablet, just flip the device around! Isn’t it as simple as adding an epaper like display onto a tablet device??

As a user, I for one would definitely queue up to buy such a device, at a premium!

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