Applied AI, Israel, and Technology-Country Fit
Michael Fertik’s Featured Op-Ed in the Times of Israel
The technology is a perfect fit for a country that blends AI expertise and engineering experience to turn problems into solutions.
Israel is poised to become a global AI superpower.
Will the Jewish state surpass America, Europe, or China on big fundamental models for artificial intelligence?
No. But Israel will strike gold when it comes to applied AI – the multi-trillion-dollar value AI – that is currently hyperscaling before our eyes.
The essential distinction here is between fundamental R&D-based artificial intelligence – the kind pioneered in labs that do not need to seek near-term commercial application – and applied AI – the artificial intelligence breakthroughs that are specifically designed to bring innovation to market immediately.
Taking a step back, the big global story right now is that the United States and China are in a great-power competition. They are the elephant-sized strategic adversaries that dominate geopolitics, and.this war extends into every feature of life, including artificial intelligence.
China began to outpace the US in STEM PhDs in the past decade, now pumping out about 75,000 to the US’s 40,000 per year. Quality, freedom of thought, innovation, and productivity are all relevant open questions, but the US and China are undoubtedly going to be leading the pack in the numbers game.
Of course, my bet is on the United States, not because it is investing hundreds of billions of dollars into basic R&D and chip manufacture, but because I believe it is impossible, in the longer term, for command economics like President Xi Jinping’s to prevail. They just stifle the creativity of their best people. (For the curious, India graduates about 25,000 science and engineering PhDs per year, while the UK, France, and Germany combined produce about 23,000. Israel makes an impressive showing pound-for-pound, graduating 1,500 annually.)
By any major measure, the war for fundamental R&D in artificial intelligence will be fought between the United States and China, with India and Western Europe bringing up the rear.
Israel just doesn’t have the scale of personnel or capital to compete for a place in the top five or even ten in this category.
However, Israel, alongside the US, is primed to lead the world in applied AI.This could not be more important because applied AI is where virtually all the profit will be made in the coming years.
Israel can take first place in software code generation using generative AI, probably the most important commercial application of AI in the world right now. It can lead in optimizing medical diagnosis and treatment using generative AI, real estate development and hospitality design, and semiconductor chip innovation. Education and urban development are also important categories of innovation, though they are not as suited to venture-backed businesses.
What makes applied AI different from all other AI?
It requires a special set of hybrid skills that have been naturally distilled in Zion – the perfect blend of PhD expertise and engineering experience that turns problems into solutions.
So Israel and applied AI exemplify a concept I call technology-country fit.
Many academically trained PhDs – even the ones who want to enter industry – are are unwilling to write software code. Just as important, too many software engineers aren’t keen to become fluent enough in machine learning.
However, this type of ambidextrous attitude is commonplace in Tel Aviv and Jerusalem.
Many attribute this mental flexibility to Israel’s mandatory military service, where egos and ranks are thrust aside, and outcomes are everything, and where young soldiers are responsible for solving almost insurmountable, timely challenges on a shoestring.
Technology-country fit is the reason the 2024 Stanford AI Index ranked Israel first globally in AI talent concentration.
It is the reason Ilya Sutskever, the brains behind OpenAI, has reportedly begun hiring local Israeli talent.
And it is the reason I have opened my first-ever Israeli subsidiary, Modelcode Chai – the Tel Aviv branch of Modelcode.ai – bent on solving the trillion-dollar global challenge of legacy code.
The time is now; the place is Israel.
As the world’s biggest economies race to solve the most significant challenges of our generation, tiny Israel will be on hand to fast-track theories into commercially useful applications that change lives in real-time.
MICHAEL FERTIK Entrepreneur | Venture Capitalist | New York Times Bestselling Author