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Chutzpah Lessons From The Israeli Startup Scene

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Editor’s Note: Omar Téllez served as the president of the public transit mapping service Moovit and sits on the company’s advisory board; he previously worked as an executive at Synchronoss Technlogies. 

I’ll always remember my first time at Ben ­Gurion airport.

After a 12-­hour trip from JFK, I was called to the front of the immigration line: “The guy wearing the Moovit t­shirt, please come forward!” For a second I thought I’d done something wrong and was going to get in trouble, but then the immigration officer said with a heavy accent “Welcome to Israel! We are proud of our startup and want the world to know that we are a high tech powerhouse,” as he gave me my passport and waved me off.

I must have saved at least an hour in the line, but all I could think about was how excited I was to be in a country in which even the immigration corps supported the ecosystem that I was part of, and, yes of course, how glad I was that I had worn that t­-shirt.

No wonder they call it “Start-up Nation” I said to myself, as I took a cab to my hotel and wondered what other things I had to learn about this thriving ecosystem in Israel.

Uri Levine, a good friend from Silicon Valley and Waze founder, had asked me to come to Israel to check out two crazy guys that had done a soft launch of an app that they claimed to be “The Waze of Public Transportation”. Uri was on their board, and thought they could use some help to take Moovit internationally.

While I knew that the Israeli startup world was booming, I was blissfully unaware that on a per capita basis, the Israeli hi­gh-tech and venture capital sectors were larger than in any other country in the world. What’s even more surprising, I would later learn, is that the Israeli hi­gh-tech startup exit amounts increased by 980% over the past five years to a record of $9.2 billion in 2014 (like Mobileye, Viber and Waze are examples of recent record exits).

While I knew that the Israeli startup world was booming, I was blissfully unaware that on a per capita basis, the Israeli hi­gh-tech and venture capital sectors were larger than in any other country in the world.

Sure, working with Israeli startups comes with a number of thrills, but there are plenty of learning curves as well.

Their tenacious work ethos, their egalitarian and meritocratic idiosyncrasy, and their richness of diversity, are clear upsides of being part of the Israeli start-­up world.

But, as with any other ecosystem there are challenges that one will need to address, such as their very direct communication style, the ability to work and be effective with 7-­10 hour time zone differences, and their limited market and insularity which can impact their access to capital.

On the positive side, after several conference calls in which my Israeli team participated from bomb shelters while sirens blared, it finally became clear what the word “chutzpah” meant. The funny thing is that I’m not really sure Israelis see this as a big risk; it’s just the way it has to be done, no questions asked.

I was awed by this and have to submit that since then it became increasingly difficult to accept that meetings in NYC were cancelled just because a couple inches of snow had fallen. It is this tenacious ethos, one could argue, that has led over 70 Israeli companies to be listed in NASDAQ, more than Europe, Japan, Korea and China… combined.

The Israeli Defense Force has created a country in which “sugar coating” is perceived as offensive and where a healthy cynicism for authority is encouraged. If you’re the type of person that will blush or gasp, during a product review when someone yells, “this is perhaps the most stupid idea I’ve ever heard of!” you definitely need to work on getting tougher skin.

While in New York or San Francisco, a comment like that from a manager would’ve likely generated an awkward silence and then scuttled the meeting, in Tel Aviv this is considered a great outcome, and building the skills needed to jiu-­jitsu or channel that reaction energy will be extremely relevant.

In the end, this spirit pushes the team’s thinking to generate better products. Also, to be fair sometimes Israeli’s are eager to discuss things just for the heck of it, as if it were a national sport.

Even walking into a bar on Tel Aviv’s Rothschild Boulevard, by far one of the trendiest cities in the Mediterranean, can be a weird experience. I’ve counted up to seven languages being spoken and several ethnicities present in a 2­-meter radius.

It’s no wonder that with over 4,000 startups in the Greater Tel Aviv area, Israel is ranked 1st in the world for innovative capacity in 2014 by the IMD Global Competitiveness Yearbook.

Smart, eager, tech savvy, native speakers of a variety of languages including Spanish, Portuguese, French, German, Italian, and Russian, are always around. If you’re a startup that aims to be in 45 countries and 500 cities, in a 2­-year period, then these international resources can come in extremely handy.

It’s no wonder that with over 4,000 startups in the Greater Tel Aviv area, Israel is ranked 1st in the world for innovative capacity in 2014 by the IMD Global Competitiveness Yearbook.

Getting used to long hours traveling and managing the side effects, comes with the territory when working with Israeli start­ups. However hard I tried, for some unknown reason, it was impossible to soothe the jet lag when I traveled to Tel Aviv for board meetings.

Similarly, being able to adapt to work in different time zones and managing the communication challenges to make the most out of it is vital when working with Israeli startups. Meetings that kicked off at midnight, in which we looped in San Francisco, New York, Paris, Sao Paulo, Madrid, Rome and Tel Aviv, were common. Preparing tight agendas and becoming masters with Google Hangout became a much-­valued skill to address this challenge.

While there’s an abundant VC offering for A and B rounds in Israel, capital availability for larger rounds can be limited, and as such pitching to Sand Hill Road becomes a necessity.

In fact, Dun & Bradstreet reports that there’s only two VC’s in Israel with over $1 billion in capital under management: Pitango and Star Ventures. But while there are large VCs like Sequoia that have offices in Herzliya and actively invest in Israel, to my huge surprise, there are others in the Valley that take the, “we do not invest in Israeli startups” position.

One clear pushback that we heard from these investors was how difficult it was for them to extrapolate success in Israel, with a population smaller than New York City, to the rest of the world.

In the end, the funny thing about Israelis is that they’ll be the first ones to acknowledge that they’re hard to work with.

In fact, they’ll have a good loud laugh about it. They recognize that while their modus operandi can be perceived as abrasive, opinionated, free of bullshit and politics, it gets things done quicker than most.

Featured Image: James Emery/Flickr UNDER A CC BY 2.0 LICENSE