Israel and India share an affinity for high-tech, area panelists say
Friday, October 11, 2002 | byMARINA KRAKOVSKY
When Amos Barzilay left his native Israel for graduate school in the United States 20 years ago, he thought he might absorb some American culture. What he found, though, was that 80 percent of the students in his Ph.D. program were from India—and the remaining 20 percent were Israelis.
In retrospect, he understands that the phenomenon was not purely coincidental.
Barzilay, now a general partner in Walden International, a venture capital firm with offices in San Francisco and Palo Alto as well as in India, related this story during a panel discussion on doing high-tech business with the two countries.
The mix of Israelis and Indians makes sense, he explained to the audience at the Westin Santa Clara.
The five panelists—Israeli- and Indian-born high-tech executives and venture capitalists—told a full house of Silicon Valley entrepreneurs that both Israel and India have traits that encourage high-tech business.
"Science and technology have a lot of prestige in both those countries. The brightest kids end up in those fields," said Vivek Ragavan, the Indian CEO of Atrica, a Santa Clara-based firm whose engineering operation is in Israel.
Working together, The Indus Entrepreneurs (TiE), the California Israel Chamber of Commerce and the Consulate General of Israel in San Francisco were able to raise the level of the panel discussion far beyond cultural stereotyping. To foster camaraderie among members of the two communities, the organizers preceded the panel with a long networking reception and ensured mixed seating at the more than 20 tables that filled the hotel ballroom.
The two cultures' emphasis on education helps produce a high concentration of highly skilled and hardworking employees. "It's not just that we [in Israel] have the talent; it's concentrated in a very small community," explained Barzilay. Israel's army, too, facilitates high-tech business by providing specialized technical training and building cohesive work groups. "People graduate from the Israeli army and they have a complete team that works well together," he said.
In India, the main effect of the large pool of skilled workers has been low labor costs. "The numbers are so large, we can hire five engineers at the cost of just one here," said Prakash Agarwal, the CEO of the Santa Clara-based NeoMagic. "This is a difference we cannot ignore." Many American high-tech corporations certainly have not ignored it, setting up engineering offices in India for precisely this reason.
But nobody said that doing business in India is easy. Besides infrastructure problems, there are cultural roadblocks. "Unfortunately, Indians are not that sensitive about time," said Arjun Gupta, a founding partner at Telesoft Partners in San Mateo, which funds companies in telecommunications and information technology. "You may have a nine o'clock meeting and they may show up at midday."
Anat Bernstein-Reich, chief legal counsel for AcrossWorld Communications in Santa Clara, described one cultural difference. "Indians negotiate differently," she said, explaining that in India it's considered perfectly acceptable to negotiate the same deal again and again. "You can go back and renegotiate from the start, and maybe in a month meet again to renegotiate." She said it took her three trips to India to get what she wanted for her company.
Israelis are not without their own foibles, of course. Though Barzilay admires such Israeli cultural traits as ambition, industriousness and a willingness to make personal sacrifices, he described a certain stubbornness, as well. "They put you in one of only two categories: You agree with them, or you just don't get it." If you don't agree with them, he said, Israelis reason that "you are stupid or you just didn't listen." Not wanting to believe you're stupid, "they repeat and repeat and repeat."
Ragavan noticed a similar problem in both the Israeli companies he's managed. "One of the key issues with Israeli companies is the belief that you build a product and the market will come." Rather than designing a product to meet a market need, "they tend to be very technology-focused and technology-driven," he said, noting that Indian companies don't have this tendency.
The panel, moderated by Fortune magazine writer Adam Lashinsky, also discussed more serious concerns shared by the two countries, especially terrorism's effect on international business. Despite a history of terrorism in Israel and India, most executives said they travel frequently, including to Israel. "The perception is vastly overblown compared to the reality of the situation," said Ragavan.
While he pointed out that the bulk of terrorism in India is targeted at areas far from the high-tech centers, Gupta sees the current situation in both countries as a red flag. "I think there'll be an enormous flight of capital if the security situation doesn't improve."