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Israel Rising

Paul Harper

This past January, some of Pitt Business’ leading minds in entrepreneurship met for lunch at the University Club. Their guest that day was Gregg Roman of the Jewish Federation of Greater Pittsburgh. No one was more excited to pick his brain than Paul Harper, clinical assistant professor of business administration.

Months earlier, Harper traveled to Israel on an academic expedition that introduced him and other professors from U.S. schools, including Dartmouth, Columbia, and Pennsylvania, to the country’s booming tech scene. In a whirlwind seven days, he toured Intel’s Fab 28 chip-manufacturing plant and Better Place’s electric vehicle facility, met with leading venture capitalists, pharmaceutical executives, and government officials, and talked shop with professors from Hebrew University of Jerusalem. Thoroughly impressed, Harper came home with an ambitious goal—to ignite new partnerships between Israeli businesses, the University of Pittsburgh, and the City of Pittsburgh.

At that January lunch, over sandwiches and soda, Harper found a kindred spirit in Roman. Recalled Harper, “Gregg comes in and explains what the federation is looking for. Everything he’s saying, I’m like, wow, it’s almost every word that I wrote in my proposal.” Building a pipeline between Israel’s tech firms and Pittsburgh is part of Roman’s mission as the Jewish Federation’s community relations council director. “If you witnessed this lunch, it was like we were finishing each other’s sentences,” Harper says. “When it was over, I said to Gregg that we should meet ASAP. It was a Friday. He said, ‘How about 9 a.m. Monday?’ ”

That lunch was the moment Harper knew he had something. The following week, three Katz MBA students began his newly created project course on Israeli entrepreneurship. Trading textbooks for hands-on experiences, the students wrote a case study, interviewed stakeholders, and ultimately traveled to Tel Aviv for a week of business immersions. The course is step one in what Harper envisions as a broader undertaking to position the Katz Graduate School of Business and College of Business Administration as a leader in teaching entrepreneurship that is, in Harper’s words, “global in its perspective and technological in its implementation.” Already, Harper has forged new connections with individuals from Pitt’s law, medicine, and engineering schools. His focus begins with Israel, but can later expand to Ireland, Korea, and other countries that fit the venturing profile.

“There is a Pittsburgh-Tel Aviv nexus to unearth, cultivate, and grow. We’re at time zero for the establishment of a global economic network on entrepreneurship and venturing,” Harper says.

Dennis P. Slevin, the Tom W. Olofson Chair in Entrepreneurial Studies and professor of business administration, sees the potential. “The high tech and medical devices coming from Israel are a hand-in-glove fit with Pittsburgh,” he says. Like Harper, Slevin exudes passion for entrepreneurial endeavors, which dates back to the 1960s when he founded two equipment repair companies in West Virginia coal country. Today, Slevin’s research focuses on entrepreneurial orientation and project implementation.

Lessons of a Startup Nation

But why study Israel? In most b-schools, emerging economies of BRICS nations (Brazil, Russia, India, China, and South Africa) lionize global strategy discussions. In comparison, Israel’s population of 8 million is miniscule. Israel possesses scant natural resources. Worse, Israel’s strongest enemies are close neighbors. But the challenges, contrary to holding Israel back, sow the seeds of innovation.

This is the premise of the book Startup Nation: The Story of Israel’s Economic Miracle (2009) by Dan Senor and Saul Singer, an inspiration for Harper’s class. The book asks the question of how Israel produces more startups than larger nations like Japan, Canada, and the United Kingdom. How does Israel, per person, attract twice the venture capital investment as the United States? The answer is an amalgamation of factors: innovation clusters, compulsory military service, a liberal immigration policy, and the inherent chutzpah of Israeli people. “What makes the current Israeli blend so powerful is that it is a mashup of the founders’ patriotism, drive, and constant consciousness of scarcity and adversity and the curiosity and restlessness that have deep roots in Israeli and Jewish history,” the authors write in Startup Nation. Multinationals with significant Israel operations include IBM, Intel Corporation, Google, Microsoft, Motorola Inc., Hewlett-Packard, Siemens AG, General Electric, and Johnson & Johnson.

President Barack Obama, in a March 2013 visit to Israel, spoke glowingly of “Israel’s shining future in your scientists and your entrepreneurs,” adding that, “Only in Israel could you see the Dead Sea Scrolls and the place where the technology onboard the Mars Rover originated at the same time.”

This abiding entrepreneurial ethos is what intrigues Harper. In his first spring term Israel course, his group of three students wrote a case study involving innovation in the therapeutics and pharmacy industry, touching upon challenges facing generic drug manufacturers. One of the companies that figured prominently was based upon connections Harper made during his initial visit to Israel.

“Before this class, I had no idea about the pharmaceutical industry,” says Stefan Katz, a German student in Harper’s course, enrolled in Katz through the exchange program with the European Business School. “I learned a lot about the industry dynamics, the perils facing it, and the opportunities that exist because of these perils. I find myself now drawn to that industry.”

Katz was also among the students enrolled in Harper’s second spring course. The class, this time composed of more students, focused on Israel’s leap toward energy independence. A natural gas supply discovered under the Mediterranean Sea is believed to be abundant enough to position Israel as an energy exporter, but geopolitics complicates matters.

Harper’s spring courses culminated with a six-day trip to Israel in April. While there, his core group of three students met with executives from Teva Pharmaceutical Industries Ltd., Clal Industries’ biotechnology division, and Delek Group’s energy and natural gas division; senior government officials in the areas of technology, fuel choice, and land usage; and members of IDC Herzliya, which is considered to have one of Israel’s top entrepreneurship programs. Travel expenses were covered by the International Business Center and Slevin’s Olofson Chair.

“I was impressed by the enthusiasm of young Israelis, their business ideas, their energy, and their drive in building a strong economy despite their difficult geopolitical situation,” says Thy-Diep Ta, a German student from the University of Augsburg.

Pittsburgh Poised for Breakthrough

In addition to being a lunch guest at the University Club, Roman, of the Jewish Federation of Greater Pittsburgh, guest lectured a College of Business Administration spring course taught by Visiting Clinical Professor Bud Smith. Roman provided expertise in geopolitics, culture, and the strengths, weaknesses, opportunities, and threats to the Israeli economy. “There is a significant Israeli business presence in Pennsylvania. The state has a trade office in Jerusalem. Philadelphia is a little more developed than us, but we’re trying to build new connections,” Roman says.

Roman’s optimism has company. Elliot Dater, a partner with Schnader Harrison Segal & Lewis LLP in Pittsburgh, sees parallels between Israel’s innovation ecosystem and technology-based economic developments taking root in Pittsburgh. “I think Pittsburgh makes a lot of sense for Israeli companies. Our research institutions provide outstanding human capital. There is a lower cost structure for operations. The local community is supportive and energetic. And with Pittsburgh Technology Council, Innovation Works, the Pittsburgh Life Sciences Greenhouse, and others, there is a similar environment for similar industries,” Dater says.

Dater, an adjunct law professor in Pitt’s School of Law, represents Israeli clients in the United States. He previously spent seven years practicing law in Tel Aviv, representing emerging growth companies in the technology, medical device, and life sciences industries. Spencer A. Brown, executive director of the UPMC Center for Innovation in Restorative Medicine is also collaborating with Harper. “Israel is generating new and innovative technology, especially in the area of imaging and energy-based technologies. The UPMC Center for Innovation in Restorative Medicine is positioned and structured to accelerate new biotechnology platforms of Israeli companies for U.S. market entry,” Brown says.

Harper, who joined the Katz faculty in 2012, credits his colleagues in the organizations and entrepreneurship area for offering abundant support. “A certain amount of interest in entrepreneurship has always existed among our students but that interest has grown,” says Sue Cohen, associate professor of business administration. “This may reflect shifts in the economy, but I think it also reflects the fact that entrepreneurship at Katz means much more than starting a company. Many courses immerse students in challenges that are central to technology-led new business venturing.”

She points to Katz’s Certificate in Technology, Innovation, and Entrepreneurship, which features coursework in commercialization, product development, and new venture initiation. Additionally, each year, the business school hosts the Randall Family Big Idea Competition, a University-wide showcase that brings together students, faculty, alumni, entrepreneurs, and investors. MBA students also have the opportunity to work in summer internships through the Institute for Entrepreneurial Excellence and with the Swanson School of Engineering.

Harper is only getting started. He envisions the creation of a MBA-level capstone course on global venturing in which students travel to Israel, the creation of student Consulting Field Projects and internships in Israel, the publication of a series of Katz-authored case studies on Israeli entrepreneurship, and the start of an exchange program between Pitt and Israeli schools. And that’s not everything. Later he sees Katz hosting an international conference that brings Israeli tech companies to Pittsburgh. For his part, Harper intends to research what is innate to Israeli venturing. What personality characteristics, social and professional networks, and federal policy decisions create the right petri dish of opportunity?

In a way, Harper embodies the daring spirit of his courses. “We’re taking entrepreneurship from a local concept to one where it is part of a global movement,” Harper says. “Katz already has campuses on various continents through its Executive MBA program. So why not do more?”