Recently, I have been commiserating with a bunch of of my companies and VC colleagues about the talent shortage in Israel. Yup. I am back again to talk about the talent shortage. However, now it is more acute.
Israel does NOT have a shortage of talented people. The country is teaming with creative and entrepreneurial talent in both technology, the arts and design and you name it. However, we are short on talent to transform Start Up Nation into Scale Up Nation.
Earlier this, we realized that we have no fewer than 6 companies in our Israeli portfolio that are growing at better than 100% per year and/or have reached 100 employees and are struggling to hire three groups of people: engineering talent, sales talent and scaleable management talent. There is a harrowing scarcity and the competition over the limited supply is intense.
Internet scale engineers are missing all over the start up economy. When I say internet scale that includes consumer internet, cloud, SAAS etc. It takes months to fill R&D positions when a company is scaling customers at rocket speed. This is due to years of neglect in internet scale training and internet technologies. I highlighted this approximately two years ago in the Humus Manifesto and now it is biting us big time in the proverbial butt.
The second set of talent missing is management for internet scale businesses. We have loads of talent in semiconductor management but we have not made the management transition to internet scale. It is critically difficult to find management in Israel that can manage both at this scale and at the speed of internet scale businesses. Since internet scale businesses are typically run by founder CEOs and product development is more intrinsically woven into the heart of the business, there is a price to be paid for separating the sales and marketing management, and other scale up management functions form the product organization. The dearth of talent is thereby forcing a difficult choice of building a big management bridge abroad or settling for sub-optimal management team in Israel.
Third, the sales model for these companies has changed to more of an inside sales model, with phone sales and internet marketing become core to scaling up. We do not have enough sales people with language skills to be able to scale these operations close to product, and, as I said above, it is important to keep it close to product. I find it ironic that as the country struggles to deal with illegal Sudanese immigration, we cannot find engineering or sales talent from around the world to make aliya and move to Israel.
Third, the sales model for these companies has changed to more of an inside sales model, with phone sales and internet marketing become core to scaling up. We do not have enough sales people with language skills to be able to scale these operations close to product, and, as I said above, it is important to keep it close to product. I find it ironic that as the country struggles to deal with illegal Sudanese immigration, we cannot find engineering or sales talent from around the world to make aliya and move to Israel.
I wish I had good ideas for how to solve this quickly, but I don't. And this dearth of talent is putting Scale Up Nation at risk at a time when venture investment is contracting in Israel to begin with. As always, I am optimistic, because we always find a way. However, we need to find away quick before the market spaces are taken by our now global competition.