The October 7 attack on Israel by Hamas caused shock and horror. Israel’s high technology business leaders are processing their pain and taking action to meet the acute and long-term needs of civil society, their employees, customers, and investors in the wake of this violence.
In addition to the human toll, the conflict and possibly broader war threaten an important part of the Israeli economy. High-tech industries “have for a few decades been the fastest growing sector in Israel and crucial for economic growth, accounting for 14% of jobs and almost a fifth of gross domestic product,” Reuters recently reported.
Over the last few weeks I interviewed Israeli technology executives and others to find out how they are meeting the unprecedented human need in the wake of these attacks and how they are keeping their businesses going.
Here is what they are doing:
- Helping disrupted families. After the initial shock and horror, leaders created teams and processes to solve problems normally associated with the government — such as helping children who lost their parents, families who lost their homes, and working families raising children with a parent deployed to the military.
- Listening to employees. CEOs initially stunned by the attacks realized their employees needed contact. Leaders spoke with their teams — asked how they were doing, what they needed, and (if appropriate) whether they were in a position to help.
- Serving customers and creating a stronger future. Companies with significant operations outside of Israel are continuing to do business thanks to longer hours worked by Israeli and overseas employees as well as support from customers and investors. Business leaders envision Israel coming back stronger after October 7.
How Israel’s High-Tech Sector Will Adapt And Recover
The Israeli government called up some 300,000 reservists for military service in the wake of the October 7 attack. Many of them work tech companies based in the U.S. and Israel, Reuters reported.
Israeli tech companies intend to keep serving customers even as some of their employees perform military duties. An example is ActiveFence, a New York- and Tel Aviv-based tech firm specializing in online threats.
ActiveFence will keep serving customers while he returns to Israel to serve in the army. “We have enough people worldwide to make sure everyone is in check,” Noam Schwartz, the company’s founder and CEO told Reuters.
After Intel
INTC
One investor expects increased investment in the Israeli tech and AI sectors due to their tie-ins to military spending. As Quincy Krosby, chief global strategist for LPL Financial, told Reuters, “When a country is caught literally off guard, the first thing they look at — beside the obvious problems with intelligence — is what was missed within the security systems.”
Venture Capitalist On How Companies Are Coping
One Israeli venture capitalist — Avi Eyal, founder and managing director of Entrée Capital — is looking to the future of Israel’s tech scene with optimism. Eyal told me in an October 26 interview that his firm has enjoyed “30 exits and IPOs and lost a handful.”
He expects some local VC activity in the fourth quarter of 2023 to be delayed due to a conflict that will last about two months. “Five to seven of our portfolio companies — 10% of the portfolio — are raising capital internationally,” he said. “Money will flow in the first quarter of 2024.”
Entrée’s employees are working longer hours to help those displaced by the October 7 attack and keep their companies going. “We have 20 people in Israel, four have been mobilized — two fighting and two in military intelligence,” Eyal told me. “People normally work eight or nine hours a day. Now they are working 12 hours a day.”
Entrée’s 65 portfolio companies in Israel are sending a “strong message of business continuity and resilience,” he said. This is happening despite the deployment of 13% of the firm’s portfolio company employees on average.
Yet the companies are operating with very little interruption. “We are keeping up to speed. There is no revenue impact. The sales pipeline impact is negligible. No more than 2% of the projects and proofs of concept are delayed two weeks to a month,” he said.
In addition, the firms’ companies are raising capital. “We have closed four rounds in the last 10 days — one we lead, the other three were led by VC firms in the U.S., France, and South Korea,” Eyal concluded.
Israel’s Civil Society Is Helping Families In Need
An Israeli government minister gave me many examples of how the country’s tech community is stepping into the civil society breech the government is not able to fill.
In an October 19 interview, Israeli Ministry of Foreign Affairs Innovation Director Andy David said, “Technology is Israel’s greatest growth engine.”
“Its education, research and development, and army training builds a community,” David added. “The community is giving back. Young entrepreneurs have access to top executives. It has organized itself around 20 technology applications to solve critical problems.”
The Israeli tech community is mobilizing in ways David said he has “never seen before” by finding “solutions for people affected by the tragedy.”
“There are hundreds of WhatsApp groups forming around helping to deal with the crisis,” David noted. “People from Israel are talking with people in Silicon Valley and other [cities.] They are unleashing creativity and energy.”
While David provided many examples of such creative solutions, one was particularly intriguing. A friend of David’s from San Francisco was in Israel for a wedding. They were supposed to go to dinner October 8, the day after the first attack. His friend — who was the head doctor for the U.S. Olympic ski team — was scheduled to stay in Israel for a few days. He wanted to help — but lacked a license to practice medical in Israel.
To solve the problem, David and colleagues created a digital form for doctors, nurses and paramedics who want to volunteer. The volunteers include their medical licenses and expertise.
Many volunteers signed up in a short period of time. “We now have 9,300 people who registered of which 5,300 are doctors — from Romania, the U.S. and Europe,” David explained. “We have a system for each doctor to be paired up with a local doctor friend who can help house them when they are here.”
David also envisions a quick recovery. “We suffered a huge blow. We are a strong country that was hit hard. Our community and creative energy are cushioning the economic impact. These new communities will be the foundation for a quick recovery leading to a bigger bounce back of the economy and growth,” he concluded.
Innoviz Technologies Takes A Hit And Moves Forward
The CEO of a $6 million (2022 revenue) publicly traded maker of autonomous driving technology told me his company is moving forward in the wake of the recent attacks.
In an October 19 interview, Innoviz Technologies CEO and Co-Founder Omer David Keilaf said his company “has the highest market share and will sign more customers soon. We are differentiated from the competition because we have higher resolution, a broader field of vision, a low cost design, and have worked with BMW five years to develop it.”
Some Innoviz employees are in the reserves and the rest are taking up the slack. “We have 500 people in Israel,” Keilaf told me. “Ten to 15% of our staff is in the military reserves. The remaining staff are working day and night. They are more focused and motivated to keep the company intact. Fifty percent of the teams are in the office. Others are working from home because schools are closed,”
Innoviz stepped into the void to help people in distress. “When the attack happened we had an all hands meeting with our 500 people in Israel,” he explained. “People felt suddenly disconnected. We needed to understand what was going on with everyone.”
The company donated money for equipment, bullet proof vests, personal equipment, and tents, as well as computers for children. “We helped make homes nicer for families with people in the reserves,” he concluded.
Aiming For $100 Million In Revenue, Pentera Gives Back
Pentera, an Israeli cybersecurity company about which I wrote in May, is giving back. In a statement, CEO Amitai Ratzon said, “The State of Israel is currently facing some of its most challenging days while preparing for weeks of conflict. In light of the significant increase in attempted cyberattacks on various entities in Israel, we believe it is our duty to contribute to strengthen the home front and enhance the economy’s readiness in this critical domain.”
Pentera — which expects to reach $100 million in 2024 revenue — currently has 1,000 customers. In an October 23 interview, Ratzon told me, “On October 7 everything changed. We were reminded that antisemitism is just around the block. Initially, there was shock and trauma. We didn’t understand. It took a few hours.”
Ratzon’s next step was to find out how his 180 employees in Israel were doing. “We asked: ‘Are you fine? Not? What’s happening?’ One employee managed to escape the attack. 30 of our employees are deployed from our R&D and marketing units,” he said.
Pentera’s organization proved resilient. “The positive side is we are a big company with 150 go-to-market people outside of Israel who are generating revenue,” Ratzon told me. “Our revenue is not impacted. We will do more than our target in 2024. Our employees are covering for one another to speak at conferences. Customers are reaching out and not wanting to bother our customer service people. We told them it is business as usual.”
While the business is strong, the human needs in Israel are significant. Pentera employees are volunteering with children living in a hotel after losing their homes. The company is staying close to families whose father was deployed — for example, helping the mother taking care of three kids and working full time. ”We are being proud,” he said. “Don’t drown in agony, start contributing.”
Pentera envisions a difficult few months. “There will be military operations in the next few months,” Ratzon said. “We will redo the company’s budget. During Covid we learned we can deal with uncertainty and stress. As Israelis we have to be more resourceful. The attack was terrifying and crazy. We have to digest and absorb it so we can move forward.”
Israeli Children’s Fund Helps Families Now And Long Term
A local entrepreneur is spearheading the Israeli Children’s Fund to help support Israeli children whose lives were upended by October 7. In an October 24 interview, Maya Orlicky, CEO of global digital bank Revolut, said “We are fundraising for military equipment and we want to shape the future of the surviving children.”
Orlicky assembled a group of entrepreneurs and technology executives from Israel to form ICF a few days after the attack. By October 24 ICF had 47 entrepreneurs and “the number keeps climbing,” she told me.
ICF is trying to help many children who are suffering. “There are thousands of kids impacted who have lost one or both parents,” Orlicky said. “There are kids of people who were kidnapped. We created an immediate relief fund to pay for nannies, rent for a bigger home where the children can stay with a host family, and car rentals.”
ICF’s “long term vision” is to help the children grow into leaders with support until age 22. “As they grow, we want to provide them critical care mentally, education, and professional mentoring,” she explained.
ICF is optimistic about the future. “We are fighting in the way we can — building an organization, fundraising and problem solving. We are helping families now. People are donating. The global technology community is tremendous,” she concluded.
Read the full article here
