Coronavirus may force Israeli tech sector out of ‘white boys club,’ VC guru says

The spread of the coronavirus pandemic has highlighted the deep social disparities that have evolved in Israel over the years, and has brought to the fore the failure of its government and its tech sector to bring a more diverse population into its “all white boys” tech club, according to Alan Feld, an Canadian-Israeli founder and managing partner of Vintage Investment Partners.

Vintage is an Israeli venture investing group with $2 billion under management. The VC firm invests in venture capital firms and startups in Israel, Europe and the US, and combines secondary funds, co-investment funds and funds of funds.

“In my 26 years working in the sector I have met the most amazing people and talented young entrepreneurs,” Feld said in an interview last week in Vintage’s offices in Herzliya, as Israel was poised to celebrate the Jewish new year. “But Israel’s high-tech revolution has not filtered sufficiently to the rest of the country.

“We have failed to include Haredim, Arabs, and Ethiopians, and also women. They are not sufficiently part of this trend. This is a failing of both the government and us as an industry. We have done not nearly enough to take this tremendous miracle of Startup Nation and make it broadly available. We have that obligation.”

In first-ever hackathon for Haredim at Facebook offices in Tel Aviv, ultra-Orthodox teams tackle bringing tech to study of ancient Jewish texts, November 16, 2017 (Shoshanna Solomon/Times of Israel)

This disparity must be closed, Feld said, to ensure that Israel continues to live up to its nickname of Startup Nation.

“There is power in diversity,” he said. “Research has shown that the more diverse the company, the better the quality of products because you can better meet the needs of a diverse audience.”

But instead of focusing on a message of inclusion, Feld said, each community has been mainly looking out for its own narrow interests.

The government has often taken a tone that says “us versus them, Balkanizing the country instead of focusing on the common good. When you define the ‘we’ narrowly, you create fear, prejudice. Instead of talking down biases, we keep on increasing them,” he said.

To bring in the populations, including women and people with disabilities, that have been largely been sidelined by the tech bonanza enjoyed by a “bastion of white males,” education and training, though essential, are not enough, he said. “Companies must make an effort to absorb these populations,” he said, and the value of diversity must be instilled in Israeli schoolchildren in their early years.

“People tend to hire people who look, talk and think like them. Not only are we excluding super talented people, the lack of diversity fosters group think and inhibits innovation,” he said. This lack of awareness and diversity is a “huge obstacle” for the continued strength of Startup Nation, he said.

Illustrative: Beds at a new coronavirus critical care unit at Sheba Medical Center (Courtesy)

The coronavirus pandemic — which has “dramatically accelerated” the adoption of technologies to enable remote healthcare, education and work — could prove to be a “great equalizer” at the end of the day, he said, and has the ability, if managed correctly, to close social gaps.

High quality teachers can now be accessed by everyone online, as the virus has sped up the adoption of technologies that enable distance learning, he said. “A lot of great content can be made available to the periphery,” he said. And the same goes for healthcare, with people living in the north and south of the country being able to consult virtually with specialist doctors based in the center of the country, instead of having to trek all the way there.

Even so, he said, the tech revolution and the changes it will bring will have to be managed. “There will be fundamental changes” to how people live and work, he said. Business that don’t adopt technology won’t be able to survive in this new tech-dominated world, he said. And many businesses in fields like travel, hotels, taxis, restaurants and office rentals will all feel a “huge shift” spurred by the virus.

“There will be no parachute,” he said. “People thought they’d have 10 years to adjust to the technological revolution that was already underway. Now, because of COVID-19, there is no time to adjust.”

“There will be a long-term dislocation of jobs, and the government must set out a strategy for how to deal with all of those people whose jobs will never come back,” he said. “There is no strategy at the moment in Israel or anywhere. This is of tremendous concern.”

Looking forward, Feld said that the tech fields that will get the biggest boost from the coronavirus pandemic will be healthcare, where trends for remote care and at-home care will intensify, and education technologies, to better allow for remote learning. Business travel will also change dramatically, he said. “To have a first business meeting on Zoom was unacceptable before COVID-19,” he said. “This is not the case anymore.”

Because of its technological prowess, Feld said, Israel is well positioned to benefit from the tech revolution speeded up by the virus. “I am a long-term optimist,” he said. “But it is essential to make technology accessible to everybody. Otherwise, we will be in very big trouble.”

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Written by Aakash Malu


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