With great power comes great responsibility. High-tech's global conquest has the duty of shaping the next generation Israeli high-tech is in the best position ever. The fastest growing sector, with almost immediate global impact, and record-breaking capital raising offers entrepreneurs the opportunity to take matters into their own hands and start investing in educating the next generation of workers, a privilege their predecessors never had. Look around you. You're surrounded by technology on all sides, now more than ever. Family photos collect in cloud accounts, television is viewed more and more via the web, computer games are merely an excuse for virtual social encounters, vehicles are becoming smarter and less polluting, and your table is filled with sustainable food products.
Behind the scenes, companies and organizations are also undergoing a similar process, arming themselves with data security services and an accelerated transition to cloud computing. They have no choice. To continue to grow, and remain relevant, they need the absolute latest technology.
Our burgeoning high-tech sector is the result. It's easy to deal with the aesthetics of valuations and terms of employment, but anyone taking the long view of the reality around us can see there’s a good reason for all this: we are consuming technology at an ever-increasing rate. Processes that once took a decade to mature are now turbo-charged.
It’s no wonder that capital raising for privately-held high-tech companies from funds and investors reaches new peaks every year - if not every quarter. In the first three quarters of this year, private technology companies around the world raised over $450 billion, more than half of that in the second quarter alone. (This refers to privately-held companies only. Giants like Apple, Microsoft and Alphabet, each crossed the $2 trillion market cap mark for the first time in 2021).
And yet, we’re still only at the start of the golden age of technology. How can we tell? Take a look at the Fortune 500 ranking. These companies generated $13.8 trillion in revenue this year. But, nearly 70 years after this list was first published, tech companies are still in the minority, and don’t comprise even 10% of the list.
Equal responsibility for the industry’s future
Israeli start-ups are in the best position they’ve ever been. The entrepreneurs who lead them have the talent to identify real needs, find solutions, raise large amounts of capital - and fast. Israeli high-tech companies have the greatest potential ever to grow, access the devices found in every pocket or our workplace computer servers. In other words, Israeli companies are at a point where they can conquer the world quickly.
That means that the 52 unicorns that Israel has are only the beginning. We’re already witnessing a growing number of Israeli companies crossing the $10 billion mark and, in a decade, I believe we will even see some companies valued at over $100 billion. The Fortune 500 list will also look completely different; it’s not a wild hypothesis if we assume that the proportion of technology companies on the list will increase significantly - perhaps even thanks to some Israeli entrepreneurs.
But success comes with huge responsibility. The dominant position of these unicorns - which have raised a combined $12 billion since the beginning of the year - equivalent to about 9% of the state budget - gives them not only responsibility, but the ability to take action, too.
Israeli unicorns and other high-tech companies are not industry outliers. They are the backbone of the Israeli economy. They share responsibility not only for their own fate, but also for the fate of the industry as a whole. Unlike their predecessors, the current generation of entrepreneurs well understands that the future of the company they helm depends, in the long run, on the talent pool of that will develop here by the next decade. They understand that the bottleneck for any future company growth is not capital - it is talent.
Think outside the box and long term
Therefore, nothing would befit Israeli high-tech companies more than to take the lead in shaping the next generation of high-tech workers in Israel. Take the initiative, roll up your sleeves, and get going. Entrepreneurs: do not wait for others, just do it yourself. Change will come, but not at the pace you’d expect.
The official figure for Israel’s high-tech worker shortage currently stands at 14,000. If each unicorn or growth company increases its talent pool organically and take responsibility for producing a relative increase of 10% more employees who were not previously employed in high-tech, the companies will benefit and the industry will be able to maintain consistent growth. If companies succeed in producing this additional workforce, the entire industry could grow exponentially.
You are creative people who think outside the box - use that. Invest in bringing workers into non-technological areas within the high-tech ecosystem: build digital literacy education programs for kindergarteners, adopt high schools and provide them with extracurricular technological training, help technology graduates from the Arab sector work in the profession, or invest in founding a new university. It doesn’t matter what or how - just think about the long term.
If each company invests 10% of its annual budget in talent development and education, or increases its workforce by 10% by recruiting workers from outside the industry, the net gain will be theirs. It will ensure their future and the accelerated growth of the Israeli industry. And who knows, it might lead to making the Fortune 500 list.
The author is a Senior Managing Director at investment firm Blackstone and head of Blackstone Israel.
Published by Globes, Israel business news - en.globes.co.il - on December 9, 2021.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.