Israel’s Knesset member Erel Margalit talks about using technology to transform the Middle East
A brand is as important to a country as it is to a company — or a region. To learn more about such values ahead of the Wharton Nation Brand Conference set for October 28, the [email protected] Show on Wharton Business Radio, Sirius XM channel 111, hosted Erel Margalit, an Israeli Knesset member and an accomplished venture capitalist — founder of Jerusalem Venture Partners — whose vision helped create many cultural and business centers. He spoke with Tom Lincoln, conference director, about how to improve not just Israel’s brand but that of the entire Middle East.
An edited version of that interview appears below.
[email protected]: In the book Start-Up Nation, published in 2009, you were mentioned as one of Israel’s start-up nation architects. As one of the primary people driving Israel’s reputation for innovation and entrepreneurship, could you describe some of the innovations that have come out of Israel — like water, energy, agriculture and high-tech?
Erel Margalit: Israel’s big drive for fusing innovation and business came in the 1990s, when one of the major revolutions occurred: Telephone systems around the world turned from voice, where you said, “Hello, Mom, it’s me,” to data, where you really created a foundation of the communication infrastructure. Today, this network serves as a big video network around the world. That has to do with defense-related technologies like optics and like wireless. … It was really about making them civilian applications. And the rise of venture capital in Israel in the beginning of the 1990s was a key force that merged together with the entrepreneurship, with science, with the American-style management that came into Israel during these years with companies like Intel, Motorola and digital IBM. It led to one of the biggest revolutions, and we started with communication and software. It was the foundation of the Internet revolution as well.
Currently, a lot of this is cybersecurity. I had the pleasure of investing in a cybersecurity incubator that I founded in Be’er Sheva. It is also about new themes that are now coming together, like the combination of food, agriculture and health care, water technology, alternative energy, and a variety of additional themes that need technology in order to transform themselves and the environment in which we live.
[email protected]: A lot of the innovation coming out of Israel has been coming out for decades. One of your biggest successes has been to promote cooperative initiatives within Israel, with the goal of turning areas in the north and the south into international hubs of innovation. I understand that you’re now intending to do the same on the regional level. You have a new “converging interests, economic and security” plan, and it aims to develop projects in which Israeli and Arab partners cooperate — a kind of start-up region. What kinds of converging interests might lead to this cooperation?
Margalit: Just on the political level, whenever people talk about an agreement in the Middle East between the Israelis and the Palestinians, they usually confine it to what Israel needs to give up, and to a very narrow political solution of a two-state solution between the Israelis and the Palestinians — which, you know, we are all for. But one of the big themes that I’m talking about is not only what Israel needs to give up — in other words, land for peace — but also, what it is that Israel can gain for its own interests, and what can the region gain from countries working together, rather than just standing alone?
“One of the big themes … is not only what Israel needs to give up … but also what Israel can gain for its own interests.”
There are two major threats. One is that many countries still feel quite threatened by Iran, and there’s a big infusion of capital going into Iran. The other is the rise of ISIS and fundamentalism. When it meets poverty, extremism becomes very dangerous. So one of the things that I’m saying to the countries around us, like Egypt, like Jordan, like Saudi Arabia and the Gulf states, like Morocco or Tunisia, is: “Hey, this region was called in ancient times the Fertile Crescent. And it’s been a while since we have been using the very strong traditional cities like Cairo and Jerusalem and Aman and Casablanca, and other major cities in the region, and bringing the message of innovation and cooperation.”
Instead of standing and looking at the big influx of capital into Iran and just worrying about it, I’m saying, let’s create several big regional projects around water because the Middle East is drying up and Israel and some other countries have very strong water distillation technology, irrigation technology, something that the region needs in a big way. Agriculture [too] because the region needs to feed itself. There are a lot of people in the region, and many of the crops, because of the changes in weather, need new strategies. The U.S. and Israel and Europe and different countries in the region could work together on agricultural strategies and food strategies. They could feed the people in a way that would give more prosperity and a better day-to-day existence to a lot of people.
And then there’s energy. The region has been known for its fossil fuels. But today, there are alternative energies, solar energy and others, that the region could be working on, in order to move away from fossil fuels into alternative energy, which will keep the region cleaner.
And then finally, there’s technology. A lot of people have been talking about “start-up nation,” and how technology is very strong in Israel. But one of the things that I’ve seen in addition to that is that there are major hubs of growing innovation in other parts of the region as well, that as an Israeli, as an entrepreneur, as a venture capitalist, as a political figure, wants to bring innovation into the political world, I’m looking at themes that we can cooperate on in places like Ramallah [in the West Bank], in places like Cairo and Aman, in places like Istanbul.
What I’m calling for, what I’m saying, is “Let’s call it the power of yalla.” Yalla, in Arabic, means, “Let’s move.” And we’re using that concept in Hebrew as well. I’m saying if we wait for all the political figures to figure this out, we’re going to wait for a long time. There is a new generation of innovators, of people that are saying what they can do rather than just what they cannot do. I’m calling for a regional project of different themes that we can move on together, and I’m presenting this in different Arab countries.
I’m presenting this in the U.S., in Europe, to the Chinese, to others who want to hear about this. And I’m saying, “Let’s take some major themes and move them forward.” That would give a background to the political negotiations, but it would also make the things that we can work on together tangible, real, and bring more prosperity to a lot of people who are talented, that want a new chapter, and who want to see how they could