X-HUB Tokyo, which supports the overseas expansion of domestic startups, held a case study seminar on the latest economic trends and innovations of Japanese companies in Israel. Israel, a start-up superpower second only to Silicon Valley, has formed a well-built ecosystem. At this event, from the perspective of startups and large business enterprises, speakers shared secrets on how to be successful in business in Israel by seeking out and cooperating with technology startups there.

The latest Trends of the Israeli Ecosystem and Key Points of Work Styles in Japanese Companies

〈Speaker〉MORIYAMA Daiki, Deloitte Israel

I am a designated employee for Deloitte Israel of Tohmatsu Venture Support Co, Ltd., with the task of supporting Japanese companies in working with the local Israeli people. I will talk about the ecosystem in Israel, the latest trends, and something which may serve as an insight into the work style in Japanese companies.

First of all, I think that the most important thing to mention is that my impression of Israel was completely different than the impression given to me by media reports in Japan of Israel. The media in Japan reports about the Gaza Strip and Jerusalem, but not about Tel Aviv, which is the second most populated city in Israel. Tel Aviv is essentially a resort city. It faces the Mediterranean Sea, is very clean, and full of delicious food. It may be strange to say that such innovation comes from a resort city, but given the background of the relationships between neighboring countries, with the importing of state-of-the-art military technology and converting it to private use perhaps being the main innovation. The entrepreneurs start their businesses by looking at the flow of the market based on the technology that they learned during their military service, not from what they learned in college.

Israeli technologies are undoubtedly cutting-edge, but most of these technologies can only be managed by large companies.　Silicon Valley startups tend to be service-oriented, but Israel has many things that can’t be used as-is, such as sensors, and cannot reach end users unless they cooperate with large companies. So I feel that it is important to be aware of what you want to do with the technology.

Through individual discussions with more than 80 Japanese companies in the past year, the quality of Israeli technology was not brought up, but I get the impression that they still have concerns about doing business with Israel. Most cannot take that first step because of their concern; “Is Israel the right partner for business?”

Typically, when doing business with startups, first comes deciding what you want to do. Then, you seek out the appropriate technologies. After finding them, you can integrate the technology with the operating company. These three steps make up the standard process.

Israel is a very open-minded country, unlike Silicon Valley where it is difficult for newcomers to join the inner circles due to the piled up vested interests. Also, Israel is pro-Japanese, so we can easily make appointments with companies we wish to meet with relative ease. That is why the biggest concern is not seeking out technologies, but the third process of integrating with the Japanese business that follows.

Regarding the first step, it is possible to cultivate trusting relationship with Israel by communicating remotely without the need of an actual office located in Israel. For example, most startups that we took a stake in did not have their offices in Israel when deciding to invest. Some of you firmly believe that you need a local base, but if the ecosystem is different, then conditions are also different. In an open-minded country like Israel, if you have a specific sense of purpose, you can take the first step without having a local presence.

The community in Israel is smaller than that of Silicon Valley. As to how small it is, think of it as you being able to walk around the city for two hours and that you will definitely run into someone you know. That’s why one’s reputation can get around quickly. It is often said that Japanese people tend to use the word “maybe,” but Israelis prefer a definite “yes” or “no.” I heard that “maybe” gets them confused as to what they should do.

The last point I want to make is that about 370 companies have their offices in their business locales to search for different kinds of innovations. Among those are approximately 25 Japanese companies. Even if Japanese companies think of their actions as positive, Israel is already meeting with companies from other countries. If we think about it in this way, we are lagging behind, so we need to make a turn around at some point. Otherwise, Japanese companies will never be chosen by Israeli startups. Therefore, it is important to know what the strong points of a Japanese company are. I feel that it is very important to have a perspective on what, as a major company, can be given, and not what can be taken.

Business Partnership with an Israeli Tech Company to Focus Our Business

〈Speaker〉 KOBAYASHI Takanori, NeuroSpace

I am going to talk about our sleep-related business, what we aim to do, how we have created a business with SleepTech, and how we have collaborated with EarlySense, Ltd., with a focus on continuous sleep.

NeuroSpace began from the sleep impediments I once had myself. Our CTO has studied basic research on sleep at the University of Tsukuba and the University of Texas, so he is familiar with both the academic and scientific areas surrounding sleep. He has also studied how to improve sleep quality through analysis and solutions. With the information from our CTO, I wondered whether or not we should jump into the hardware aspect and develop it. In a venture company, where manpower and money are limited, I communicated quite closely with Israeli companies about our strategy before creating a business partnership.

Our strong point is that we have done a collective type of sleep training for other businesses since establishing our company in 2013. Since our establishment, for a few years we have provided a customized seminar for companies by giving questionnaires about specific sleep worries in the company and analyzing the data.

Until now, we have provided optimized programs for the organizations, but now I believe it is important to provide personalized advice for each person via an app based on each individual’s daily sleep data. We then provided a solution for each and every person using our technology and started a partnership with EarlySense.

We were considering whether or not to develop the devices ourselves, but we did not have the capital or the human resources. Given our situation, it was not a good idea to develop the device by ourselves. We found that EarlySense’s device was excellent on both UIUX and scientific evidence. For these reasons, we took EarlySense’s device to create our SleepTech business, with a focus on improving the sleep of our customers. Gathering accurate data is of great value, and our company sleep program has made a great deal of progress.

Lastly, we saw what we should focus on and what the core of our company was, and decided to rely on another company which has excellent technology and products. This is how we created SleepTech business in Japan.
Thank you for your attention.