Stanford and MIT receive well-deserved recognition as hotbeds of entrepreneurship, but neither of those is as singularly influential in the US as the Israel Insitute of Technology, better known as the Technion. Since the university’s founding over one hundred years ago, a quarter of the university’s graduates have started businesses. Since 2004, graduates of the Technion have won four Nobel Prizes, and a remarkable two-thirds of Israeli companies listed on NASDAQ have been founded by graduates of the Technion. Israel is often referred to as “start-up nation”, and the Technion has contributed more than any other institution to that reputation.
Article by Peter High, published on Forbes.
Peretz Lavie, President of the Technion
Since 2009, Peretz Lavie has served as President of the Technion. During that time, he has hired faculty who are experts across traditional academic silos, encouraged more professors and students to get involved in starting businesses, and in the process has bolstered the university’s reputation as a hot-house for new businesses.
Peter High: President Lavie, the Technion, for those who may not be as familiar with it, has a really storied place in Israeli entrepreneurial culture. Many people refer to your nation as startup nation, and many rightly believe that your university is at least partially, if not largely, responsible for that boom in entrepreneurship. Amazingly, a full quarter of the graduates of the university have started businesses. How has the university been such a hotbed of entrepreneurship?
Peretz Lavie: Indeed the Technion is the engine behind a startup nation. I have been asked this question many, many times and I have come to the conclusion that a world class university that plays such a major role in the economy of its environment or its state must have three ingredients: excellent students, excellent faculty members, and this is obvious, but it must have also a third ingredient and it is not so clear when you think about universities. This is a statement of mission. A mission statement must be part of the DNA of the university. I’ll give you some examples from the history of the Technion where the mission statement historically changed the Israeli economy. First, the Technion was established in the early 20th century as a mission to allow the Jewish people to get an education in engineering. When the decision was made to establish the Technion in 1905, Jews in Europe could not study engineering. So there was a mission for this engineering school to allow engineering education for the Jewish people.
Then, the school was opened in 1924 after the First World War. When the state was established, David Ben Gurion, the legendary prime minister of Israel, made a decision that the Technion would be one of the more important institutes for the future of the newly established state. He picked a site on the top of the Carmel Mountain, and he also made the decision of which faculty to open first: the faculty of aeronautical engineering. Why? Because he realized that this was important for the future of the state even as early as 1954. The same year, the Israeli aircraft industry was established which is now one of the three largest industrial complexes in Israel and every one of the 5,000 engineers was educated at the Technion.
Another example is 1969. The Technion decided to open a micro-electronic institute. At that time, few people knew how to spell micro-electronic. The decision was made to provide the country with badly needed semiconductors that were deprived by an embargo that was imposed on Israel by Charles de Gaulle after the Six Day War. So the university had the mission to serve the country and mankind as part of its DNA.
Students who were educated under such an environment knew that when they graduate from the Technion, they also should serve a mission. Therefore combining excellent students and excellent faculty with the DNA of the university that it serve higher goals: humanity, the country, etc., I think you have an outcome like changing the economy and changing the environment.
High: You have spent considerable time in the United States. As I think about the comparison between the US and Israel, they are each country that have a great deal of immigrants from all over the world. There is something about going to a different land where one’s future is uncertain that is fundamentally entrepreneurial. I have always believed that in the US that we have entrepreneurship in our DNA in some ways and it strikes me that Israel is exactly the same in many cases as well. Is that a hypothesis that you share?
Lavie: Yes, I share your hypothesis, but again, we have an added layer that in our region, necessity is the mother of invention because of where we are and the neighbourhood in which we live. We have needs and a reason to be inventive. So if you add to this layer that you mentioned, immigration, to the nature of the country and the fact that we must be on our tiptoes with respect to our inventive capacity, then you also get very motivated students, faculties, and universities.
High: With all the exposure you have to entrepreneurs, do you think that entrepreneurship can be taught, or does it require attributes that one is born with? To what extent is it nature versus nurture?
Lavie: I’m very skeptical that you can teach entrepreneurship or that you can make someone who doesn’t have the fire in his belly change and become an entrepreneur. Either you have it or you do not. Being entrepreneurial and being innovative is affected by a multitude of factors. First, how the student or the entrepreneur is educated. The ability to take risk or the ability to sustain failure is very important. Remember, among startups only one in ten is successful. Some entrepreneurs are successful only in their seventh or eighth attempt, so you must be resilient to failures. The need to achieve is very important. These are characteristics of sometimes immigrants as you said yourself, or people who need to live in an environment or a neighborhood that constantly challenges them. What you can do in order to direct them or to make them a better entrepreneur is to give them some tools. You can provide them with role models, and this is what we are doing in the Technion, you can provide them with some basic information that can help them to build their own business plan, how to present their ideas, etc. So it’s a mixture of some basic tools that you can provide them, and I believe, personality and the history of a person that makes them an entrepreneur.
High: I know that a key aspect of the curriculum at the Technion is learning by doing, as well as combining disciplines that have traditionally been silo’d. Please describe these two approaches.
Lavie: Yes, it is very interesting. When I meet Technion graduates ten years after they left the school and I ask them, can you go back and tell me, “What did the Technion give you? What was the most important education you got at the Technion?” They almost unanimously tell me, “The Technion taught us how to think, how to solve problems. So I’m in a high tech company and there is not a single area that I’m not familiar with and I can tackle any problem.” We give a very broad education and we demand a lot of independence. And this bridging across areas is very important.
Science was done in the past in silos as you mentioned. You were an expert in your field, you didn’t need any others, you did your own thing and that’s it. Science in the 21st century, and it is going to be even more emphasized in the second half of the 21st century, must be based on several areas of expertise. You cannot rely on your own knowledge, you must bridge different areas. So most of the research centers in the Technion now are interdisciplinary. I’m now recruiting faculty members who can be conversant both in computer science and biology and medicine, because in the future, you won’t be able to deal with medicine without knowledge of big data. And I have now in the faculty of mechanical engineering, a cell biologist, and in the computer science [faculty], I have a biologist. This is, I believe, how science will be done in the future. So it is very important, the interdisciplinary approach or the multidisciplinary, both to educate students and for research. Research in the future will be done by people who can bridge between different fields of science.
High: You mentioned your conversations with alumni, President Lavie, I can only imagine that this is a great luxury for current students, that there are in fact so many role models to emulate. It is easier to do so when you know that others that have been through the same program have been successful, perhaps in some comparable way to what you envision for yourself. Can you talk a bit about the role that alumni play in fostering opportunities for students, in acting as advisors, etc.?
Lavie: Excellent question. I’ll give you an example. Professor Dan Shechtman, who won the Nobel Prize in chemistry in 2011, has taught a course for 27 years called “Entrepreneurship” that is open to all students of the Technion. Every year, the course enrolls between 200 and 600 students. In this course, Danny, the motivator of the course, presented the students role models of Technion graduates who made it, and they discussed both the success stories and the failures. Since I am an amateur entrepreneur, I gave, for the last 17 years, both my experience in entrepreneurship and in academia. And you have to see these students fill the hall with their shining eyes who swallow every word they say and the questions that they ask later. And I believe that presenting the students with role models of, as I said, both the success and the failures, will provide them with some idea regarding what is entrepreneurship and how to proceed.
In addition to that, we have several programs on campus in which alumni take upon themselves to guide groups of students who are building a business plan or have an idea; we call it “Technion for Life.” There is a national competition called BizTEC in which 75 groups are selected out of hundreds in order to continue to develop their ideas to a point that they can start their own company. Each one of these groups is accompanied by a Technion alumnus in the comparable field. So we do a lot to provide the students with the experience and the excitement of being able to build your own ideas based on the experience of others. This is very important.
High: You have also developed a partnership with Cornell University and you are in the process of working with them to develop a campus on Roosevelt Island in New York. I am curious: how did you choose New York and how did you choose Cornell?
Lavie: Well, the story is very interesting. We were approached by Mayor Bloomberg to participate in the competition to open a research centre in New York, and he was very candid and open. He said, “We are envious of the Silicon Valley, we’d like New York to become the technology capital of the world.” And I must admit, in the beginning, I thought that somebody was pulling my leg, but then we realized that indeed they wanted the Technion to participate. At the first phase, there were 55 universities. Now the city provided free land for 99 years, and $100 million, provided that you match with $100 million of your own. We are a state university so we didn’t have this money and the committee suggested that we provide them with a program and then find an American university that would share our vision and take upon itself the financial responsibility. And indeed, the program we suggested to New York was based on our experience in a multidisciplinary approach to research and education. And we suggested building in New York three hubs that have a common denominator. The first is the hub of connective media that is tailor-made to the industrial strength of the city: the finance world, the media, the advertisement industry. Then, a second hub dedicated to a healthier life, not disease-oriented, but improving the quality of life using technology. And the third one, a hub of the built environment. And the common denominator of these hubs was big data and information technology.
The city liked the proposal, so we moved to the second stage, and then we started to look for a partner. After two disappointments, I got a telephone call from Sandy Weill, and he convinced me that Cornell and the Technion was a match made in heaven. An hour later, I got a telephone call from David Skorton, the President of Cornell. In a week, I was with my team in New York and we came to an agreement. The agreement was to establish the Technion Cornell Innovation Institute, which would be part of Cornell Tech. We will adapt our program of three hubs for this new partnership. It’s amazing that immediately after that, we got a gift from Irwin Jacobs, one of the founders of Qualcomm. Now, we are referred to as Jacobs Technion Cornell Institute (JTCI).
Now, two years later we are up and running. Roosevelt Island will be ready in 2017 and Google provided us with space in their headquarters in Chelsea. We have 60,000 square feet there and we are already full of students, faculty, and post-docs. I visited the site, and the excitement – you can feel it in the air – it’s incredible. The impact on New York is already visible. Recently, I met the comptroller of the state of New York, Mr. DiNapoli, and he issued a report about what happened to high tech industry in New York in the last three years. They mentioned the establishment of Cornell Tech and JTCI as one of the reasons for the incredible increase in the number of employers and the number of businesses in high tech. I had to pinch myself to make sure that I was not dreaming.
High: You have been affiliated with multiple startups in your career. As you mentioned, you humbly refer to yourself as an “amateur entrepreneur.” Do you encourage faculty to get involved in businesses and to be active in management or on the boards of companies that students are developing, and if so, what are the advantages that you see to faculty in addition to students?
Lavie: The tension between what is called applied science and basic science exists on the campus of every university. There are faculty members who say, “I am interested in gaining knowledge, I’d like to understand how the body works, what are the laws of nature, I have no interest whatsoever in applying my findings to anything.” On the other hand, there are people like me who feel that if they have a basic finding, the next step is to see what can be done in order to improve human life. I believe that this tension is a healthy tension. When there is a bias toward one of them, then it is unhealthy. But you have to encourage both groups.
What I did when I became president was to encourage people who believe that they could apply their findings. First, I established a fund, which I call a proof of concept fund. Any faculty member who has an idea that can become a useful technology can apply to the fund and get support for the proof of concept, and this is the entry to the pipeline.
Then I established a second fund that participates in financing, not in the startup phase, but in the second and third round of financing. Why? First to provide confidence to outside investors and second, to protect our equity in this newly established company. I see the results: in the last six years, the Technion spinoff companies raised $271 million and between six and thirteen companies every year spin off based on Technion technologies. I believe in the future this will be a source of income to the Technion because we split revenues 50/50 between the faculty member and the Technion. Again, this encourages faculty members who have the ability and they have fire in their belly to go to the applied mode.
Some examples of companies that were brought about through these programs are Mazor, which is a company that produces robotics for spine surgery and ReWalk, a company that provides the paraplegic with the ability to walk. There are others coming on in future months. So this is my own belief, that this tension between applied and basic research is a healthy one and you should encourage both groups to do what they like to do.
High: If one thinks about some of the stereotypes of an entrepreneur, President Lavie, one thinks someone who works at all hours, and sacrifices tremendously when it comes to sleep. You are a pioneer in sleep research, interestingly enough, so you are actually in a position to advise and work with entrepreneurs. In preparation for our conversation, I was fascinated to learn about the concepts of the “sleep gate” and the “forbidden zone for sleep.” Can you describe these concepts, and how they might be applied to entrepreneurs?
Lavie: These were studies that I did during the ‘80s and ‘90s, and indeed those were the two terms that I used in the literature: the “sleep gate” and the “forbidden zone for sleep.” For many years, the ruling concept was that sleepiness or the accumulated need for sleep is a linear process or an exponential process: we wake up in the morning fresh and full of energy, and then during the day there is an accumulation of fatigue and the need to sleep which reaches a peak during the evening hours. And we knew there were morning people and evening people, so for morning people, the peak is earlier and for evening people the peak is later. There was a bump during the afternoon that was called the siesta zone, but this was the concept.
My studies showed that indeed sleepiness and the accumulation of sleepiness is not a linear, nor an exponential concept. There is a period during the evening hours that I termed the “forbidden zone for sleep” that is the best period for creative work. Just before the sleep gate is open, and again it is different for evening people and morning people, say between 6 o’clock in the afternoon and 8 or 9 o’clock at night, we are at the best with respect to our alertness. It is difficult to fall asleep at that period, and if you need to do some creative thinking and some work that requires concentration, it is the best time. This was contrary to the ruling concept was that sleepiness accumulated throughout the day. Nevertheless, we have a period of high alertness. And then sleepiness, or the ability to go to sleep is almost an all or none phenomenon. The sleep gate is a short period of time during which you can easily fall asleep and it’s not an accumulated process.
For many years, people thought that this forbidden zone and sleep gate occur only in Haifa and is typical of the students of the Technion. Later, it was found out, that indeed this is the rule everywhere in the world. The name of the concept has been changed to the Wake Maintenance Zone not the forbidden zone for sleep, and they found the sleep gate is a true phenomenon. It has many implications to the design of shift work, the design of day work, how to treat insomniacs, or how to change the pattern of sleepiness. We found that melatonin, the hormone that was for many years considered to be the opener of the sleep gate starts to increase in the blood stream about an hour before the sleep gate is open and it’s locked to the sleep gate, so this provides us with information about when to take melatonin if you’d like to use it as a sleeping pill.
High: How strictly do you apply your findings to your own life?
Lavie: I try to synchronize my behavior to the sleep gate even though as the president, your nights are very long and when you go to sleep you have so much on your mind that even the sleep gate is not always open on time.
High: Through your work and your collaboration with your fellow professors, students, and alumni of your university, you have reason to think a lot about trends – about which ones have legs and which ones do not. I’m curious, what are a couple of those that you’re particularly excited about in the next year or two or three?
Lavie: There are two trends, both of them technology dependent, that excite me. First the ability to use technology to monitor different bodily functions. There are in the Technion now, several groups working on very inexpensive sensors to detect tuberculosis and malaria based on nanotechnology. This is amazing and I was involved, in one of my companies, in detecting atherosclerosis based on very non-invasive technologies that will allow us to do it in ten minutes, to really make a prediction regarding the future health of arteries. This is something which is very promising. Many universities and many industries are working on it: wristwatches that monitor your bodily functions etc. I’m very excited by this trend.
The second is the ability to communicate between people speaking different languages using automatic translation, I believe is around the corner. And this will change the way we push globalization in a way that we cannot even fathom. I just want to give you an example of MOOCs, massive online open courses. The Technion put one course in nanotechnology in two languages. One in English has 33,000 registered and one in Arabic with 8,800 registered on the Coursera platform. It was a smashing success. I believe that the ability to overcome the barrier of language using technology is one of the most exciting trends for the future.