Hybrid: A Startup That’s Modeling the Future of Arab-Israeli Peace and Economic Prosperity

Tel Aviv, Israel — Eitan Sella is, as he describes it, a typical Israeli startup entrepreneur: the 26-year-old has recently finished his mandatory service with the Israeli army, he identifies as a secular Jew, and he never went to university. What sets Sella apart from other tech entrepreneurs is his conviction that Israel’s high-tech industry is one of the best tools for achieving peace with Arabs inside and outside of the country.

“The startup industry is the only thing that’s going to save Israel from itself,” says Sella.

Sella is referring to the two major issues that he says have been holding back the high-tech industry, and Israel as a whole, in recent years: a lack of engineers and the Israeli-Arab conflict.

“We are not producing enough engineers to remain competitive with other countries,” says Sella.

On top of the 20,000 engineers who are currently working in high-tech, Israel would need 10,000 more engineers and computer scientists to secure development within the sector. This presents a major problem, as only five percent of today’s graduating high school students will have a certificate with studies in math.

Due to Israel’s strict immigration policy, the government decided that one of the solutions to the problem, without also weakening the visa process, would be to invest in manpower they could find in their own backyard. That is, the Arab-Israeli population.

Further complicating Israel’s economic plight is the Israeli-Arab conflict, which has long been fracturing the country. Sella and other experts agree that this division has also been hindering the development of the economy by not allowing the Arab-Israeli economy to flourish.

For instance, 54 percent of the Arab-Israeli population lives below the poverty line, versus the general population, which is less than half that at 19 percent. Many economists and business leaders argue that by lifting those Israelis out of poverty and engaging them in Israel’s modern economy would be a tremendous boost.

While there are government efforts being made to incorporate the Arab sector into the Jewish high-tech industry, such as Nazareth Business Incubator Center, a startup business incubator, it still appears to be a bit harder for Arab startups to attract investors.

“The profile of an Arab startup is much different than an Israeli’s,” says Sella in a phone interview. For starters, they are geographically further away, living outside of Israel’s “Silicon Wadi,” the Israeli equivalent of Silicon Valley, making connections harder to bridge. And they’re more often mid-career, — read: older.

“The typical narrative of the Israeli startup guy is to go the army, maybe go to college for a year or two, and then start your first start up at around 25,” says Sella.

Sella’s own startup, Hybrid, where he is managing director, is taking an unusual approach in fighting against Israel’s, and more specifically Arab-Israelis, economic future. With the help of a grant from the Israeli Ministry of Economy and Industry, Sella is partnering early stage Arab startups with the Israel Defence Forces’ (IDF) elite 8200 Alumni Association to leverage their success.

The 8200 Intelligence Unit, a division in the army that concentrates on signal intelligence and decryption, has had a large hand in making Israel the “startup nation,” with 70 percent of the country’s most successful startups having graduated from the program.

At Sella’s unique startup, ten Arab-Israeli startups will be given monetary assistance, from the government, as well as mentoring and networking opportunities with some of Silicon Wadi’s most influential entrepreneurs.

The program will run for about five months from start to finish, but the connections made will last a lifetime.

“A lot of business is just about knowing the right people,” says Sella.

Saul Singer and Dan Senor tried to explain the success of the IDF, specifically within the 8200 unit where you specialize in tech, in their 2009 book called, “Start-up Nation: The Story of Israel’s Economic Miracle”.

You have minimal guidance from the top, and are expected to improvise, even if this means breaking some rules,” say Singer and Senor in the book. “If you’re a junior officer, you call your higher-ups by their first names, and if you see them doing something wrong, you say so.”

While a lot of Israel’s success in the high-tech sector can be attributed to the IDF, Singer and Senor point to another important factor: Israel is a country of immigrants who are accustomed to the notion of starting everything from scratch.

The authors’ describe how, “nine out of ten Jewish Israelis today are immigrants or descendants of immigrants.” But with Israel’s current immigration laws, which are based solely on Jewish heritage, tech companies may find it harder and harder to embrace the diversity of foreign workers.

This would help to explain why the industry is finding it difficult to keep up with the demands of finding talented engineers and computer scientists in a highly competitive and globalized economy.

For the past two decades, Israel’s high-tech sector has been the backbone of the economy — an industry which accounts for a third of the country’s exports. However, Israel has been fading from relevance as a high-tech powerhouse in recent years.

In a report filed by the Ministry of Finance in Feb. 2016, they found that, “Since 2010, the rate of growth of the sector is only half the overall rate of growth in the economy and the sector stopped growing as a proportion of total exports.” One of the major problems they cited in the report was a lack of “skilled human resources.”

It’s not difficult to entice Israelis into the high-tech sector. As Sella jokes, they’re well known for failing once, twice, and still coming back for a third try.

Sella, at age 26, already has one other startup, called Wize, under his belt. Wize was a not-for-profit initiative that provided informal education for young people in the nightlife scene. In the four years that the startup was running, it received two grants from the Trump Foundation as well as reaching an audience of more than 50,000.

“It’s part of the culture. You fail. And then you start again.” But he seems to think that he has seized his golden egg opportunity by establish Hybrid in both Arab-dominated Nazareth and Jewish-dominated Tel Aviv.

But he seems to think that he has seized his golden egg opportunity by creating Hybrid, which has locations in both Arab-dominated Nazareth and Tel Aviv.

“Business opportunity in this sector is ripe,” said Sella during an interview with Israel21c. “In terms of the availability of unprecedented government assistance for initiatives from the Arab sector, increasing interest from the Israeli high-tech ecosystem and its potential to serve as a bridge between Israeli tech and the Arab-speaking market worldwide.”