How is Israel developing the tools that will allow us to keep up the pace of growth?
Israel may be known as the “Start-up Nation,” but the factors that made Israel a start-up capital won’t sustain it as such or necessarily help it in the transition from “start-up nation” to “scale-up nation.”
More global start-up competition
According to a report from the OECD organization, “In 2015, South Korea for the first time spent a higher proportion of its GDP on R&D — 4.3 per cent — than Israel, which spent 4.2%.”
Start-up scenes are growing by leaps and bounds in places such as New York, London, and Singapore, all international financial hubs. And in India, Eastern Europe, and emerging economies across the globe, cheap outsourced labor is being employed more efficiently and with more innovative applications. Amidst this climate, how can Israel retain its status as a high-tech powerhouse that continues to attract venture capital, create jobs, and produce stunning technology?
Having gotten this whole starting up thing down pat, the next logical step would be towards becoming a Scale-up Nation.
Israel is a developed nation with a high cost of living and an increasing cost of labor. It won’t be able to grow or maintain its position as a competitive high-tech hub if costs aren’t controlled. But Israel can still grow by increasing the efficiency and overall quality of its products.
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Automated Quality Assurance (QA) testing is a prime example of how Israel can continue to gain a decisive advantage by embracing and correctly implementing technological advances that can drive up both efficiency and quality. With Automated QA for example, labor costs go down as fewer workers are needed, productivity goes up as tests can be run 24/7, and the speed and scope of agile development increases.
Scaling up
If the American dream is a house with two cars in the suburbs, the Israeli dream is to build a start-up, exit for millions, and repeat. But this formula, which has produced plenty of Israeli multi-millionaires and billionaires, works only 10% of the time on average and, and, doesn’t create the kind of industry leading, large enterprises necessary to take an economy to the next level.
Harvard Business Review noted that growth ventures seem to be more beneficial to the economy than start-ups, “Study after study shows the following: Relatively high-growth ventures are often at least 16 years old, and are disproportionately high drivers of jobs, growth, value, and sustainability.”
Based on our own experience since founding the company in 1997, instead of selling the company and calling it a day, QualiTest sold off parts of the company when it needed to raise capital to expand, often buying them back later. Today, we have expanded, employing 3,000+ workers worldwide and over 2,000 in Israel alone.
By choosing to scale up, even when many were cashing out, we were able to innovate in a way that would be impossible as a start-up. The company’s scope and expertise now allow it to offer custom offshoring solutions based across several countries, recruit top professionals, and invest in automation and crowdsourcing technologies.
While Israel’s reputation as a start-up nation isn’t about to disappear, the way in which it has created, defined, and sustained its ingenuity and status as a high-tech hub must now begin to evolve. QualiTest is a key part of that ongoing story.
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