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A Market Inspired Approach to Israeli Progress: Ben Gurion, Ber Sheva and Big Tech

David Ben Gurion, one of the founding fathers of Israel, is famed for a number of reasons. In many ways, he led the Jewish people to statehood. Followers of Jabotinsky, just take a breath; it’s not personal. David Ben Gurion achieved a great deal, but he is perhaps best known for his quirky love for the Negev desert. His kibbutz in Sde Boker is extremely arid and away from much of civilization. Ber Sheva the desert capital, was until very recently, a ghost town. It is located in Israel's southern desert, a region that is sparsely populated and accounts for forty percent of the country's total land area. Too hot to ambulate and too dusty to drive, the city has for a long time been barren or at best, struggling.

Ber Sheva

When I first saw Ber Sheva seven years ago on my way to a military training base outside Arad, I was fascinated that the city could even exist. It looked more like a Tatooine Detroit than a proper first world city. Bedouins, often times with camels, roamed through the streets on their way to market. The city hosted Russians, Moroccans, Indians and Arsim. I’m not making a statement on the value of these demographics, just the obvious oddity of assortment. On the contrary, I owe a lot to the immigrant community of Ber Sheva who have hosted me on multiple occasions. The streets used to be near empty. The citizens had an extremely low standard of living, but seemed relatively unwilling to explore the possibility of living outside the city itself. The seasonal storms of solar brutality, sand and rocket fire would have driven me, had I ever been inclined to live there in the first place.

The people who lived in Ber Sheva were not there by choice originally. Today this is not necessarily the case. The city has improved dramatically. A number of large scale developments have been built in the city which are slowly watering the desert flower. When I returned to the city this past summer to see some old friends, I was amazed.

Ber Sheva’s Ben Gurion University has grown in size and reputation. Students from all over Israel and the world are moving to the city to attend the school. This has given the city a young hype which has fostered a vibrant nightlife. Many young people from surrounding communities now commute in for major events and more relaxed festivities.

The Israeli government has invested heavily in the city. In similar fashion to US moves in the 1980’s, the Israeli government has moved a great deal of its military infrastructure to the south of the country and especially to Ber Sheva. This includes an important military hospital, intelligence units, cyber security forces and human resources divisions. Ber Sheva has become a military hub for the country and the relocation of many forces has sponsored citywide growth.

Ber Sheva is also starting to catch on to the hi-tech boom that has saturated Israel’s coast. Hi-tech infrastructure is going into non coastal cities now including Jerusalem, Nazareth and Ber Sheva. This infrastructure includes incubators, conferences and venture capital firms. One way to look at recent development is to say that partnerships, young minds and money are giving the city of Ber Sheva hope.

This hope can be seen around the city. The central bus station which used to look more like an open air wild west hitching rail, now more closely resembles a Swiss airport replete with typical Israeli kiosks. The city also hosts a set of giant malls which act as oases of air conditioning and economic injection. New parks and green spaces have come in as well. The city is shifting and it may be the beginning of a new wave of growth.

New technology, new infrastructure

Speaking of waves, let’s confront the obvious. Ber Sheva is still in a desert. The Negev is arid and it lacks water. Ber Sheva improving is not necessarily an indicator of future regional growth. If the Negev is ever to be developed and inhabited en masse, the progress of Ber Sheva is going to have to be a base camp, not an outpost. When David Ben Gurion announced that the Negev would be a center of innovation for desalination, solar power and wind power, he was either prophetic or naive.

There were few indicators that an innovation based economic boom could be foretasted. Though highly educated persons were not rare in the country, there was practically no available capital to start ventures. Israel had not yet set itself aside as a home of microprocessor development, cyber security or even ag tech. The drip irrigation giant, Netafim, wouldn’t be incorporated for another ten years. Ben Gurion’s prediction can be compared to a man who operates a dog kennel and says, “this is where the future of vacuum innovation will be!” Room for improvement does not directly translate to improvement. David Ben Gurion, a founding father of Israel, was that dog kennel owner and the Children of Israel have become great vacuum innovators.

The scientific and innovation community is now blooming, in many ways as a direct counterpoint to the environmental challenges it had to face. Israel is at the forefront of water tech. It leads the world in water recycling. Technologists have managed to clean toilet and bath “runoff,” and use it to irrigate the fields. Israel leads the world in water recycling at around 86%. The next best country in this category is Spain at around 19%. Israel is also at the forefront of the efficiency models of water usage. There have also been advertising campaigns around the country that actually work to preserve water; this is in itself a technology; this process is an indicator that communications systems can play a pivotal role in cross industry effectiveness. Other developed efficiency models in water tech include the drip irrigation systems created by the aforementioned Netafim.

The tech wave hasn’t just been limited to water. Israel is one of the countries at the forefront of solar tech. A good friend of mine started a solar panel installation company in Tel Aviv. Business is booming. He chooses the jobs he takes and works with partners in the industry to learn. When offered contracts that he feels are wrong for his company, he’ll suggest another. The solar tech ecosystem in Israel is ripe. It’s this exact attitude of cordial business dealings that foster ecosystems.

Anyways, due to the entropic nature of technological improvement, there is an organic price decline in Chinese manufactured solar panels. Furthermore, American trade disputes with China are artificially lowering the costs of solar panels. The Israeli solar ecosystem is harnessing impressive early growth curves to create a niche value proposition in global energy markets. The Israelis will never be power players in solar tech where hard logistics is at play. That means manufacturing or distribution is off the table, but as early adopters, Israelis have a leg up on how to avoid or confront expected failures. This means that experience and knowledge based areas like coordination, installation management, consulting, research and development could find host in Israel’s labor market.

The movement toward this transitioned labor market is promoted by outside investment. One manifestation of foreign trust is that fortune 500 industrial resources are being pumped into the country. A joint General Electric/Bright Source Energy project is building one of the largest solar energy towers in the world. At an estimated cost of 570 million dollars, this is a massive capital injection into an already growing industry sector.

What is the point that I'm making here? I'm acknowledging that Israel has technological growth momentum and that momentum has found a footing in Ber Sheva.

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