San Antonio Mayor Inspired by Visit to Israel

After five jam-packed days of business and government meetings interspersed with cultural and political side trips, Mayor Julián Castro and the delegation he led to Israel last week came away energized by that nation’s commitment to innovation, research and commercialization.

Castro echoed several members of the group when he said he’d expected Israel to be more of a war-weary, Third World-like nation. Like many, much of what he knew of the country had been gleaned primarily through the lens of conflict.

Instead, he saw something much different: a thriving economy that spends 4.5 percent of its gross domestic product on research and development, boasts per capita venture capital investments two and a half times that of the U.S., and nurtures the highest density of start-up companies in the world.

“Israel’s success, its ecosystem of innovation, should inspire San Antonio,” he said. “If it can succeed despite the challenging circumstances of the region, there’s no reason why San Antonio cannot also.”

The group met with a number of business incubators — one that invests in bioscience companies, another in water technologies and a third that focuses on clean energy and agricultural technologies.

BioMed SA, which promotes San Antonio’s $24.5 billion biomedical industry, signed a preliminary agreement with BioJerusalem that leaders say will pave the way for collaboration in diabetes research and other areas.

The San Antonio Water System signed a similar agreement with Ein Netafim, a water utility in the southern city of Eilat.

SAWS CEO Robert Puente said a grease-eating bacteria used by that utility piqued his interest — 70 percent of SAWS sewage leaks are caused by grease and debris buildup — and likely would be the first thing engineers here will pursue.

They also visited a saltwater desalination plant — which was valuable in part, Puente said, as a confirmation that SAWS’ decision to go with brackish water, rather than salt water desalination, was the right one.

Castro and others also were struck to see that most every home and apartment building were topped by solar water heaters, which generate 5 percent to 7 percent of the power produced in Israel, according to Odel Distel, director general of NEWTech, a government program promoting water technology and renewable energy sectors.

Solar water heaters were mandated out of necessity because of Israel’s fresh water scarcity, and to reduce the nation’s dependency on foreign oil, Distel said.

But a complete system in that country is only a few hundred dollars, while a system in the U.S. costs $5,000 to $7,000.

Robi Jalnos of Steve’s Plumbing and Yuda Doliner of Fencecrete, both of whom traveled with the group, are trying to change that. Their new company, Sun Freedom America, is partnering with an Israeli company to make less-expensive components.

That’s the only way, Jalnos said, that the technology will gain widespread use in the U.S.

Other businessmen on the visit also came away convinced that San Antonio could benefit from Israel’s economic models.

“Israel has institutionalized the process of innovation, and that’s a pretty remarkable thing,” said Alan Chesler, co-founder of Ehrenberg Chesler Investments, a San Antonio-based boutique investment firm that specializes in life sciences companies. “They have overcome some of the same challenges we have struggled with here. If Israel can do it, we can do it.”

In many ways, the visit became a living, breathing illustration of “Start-Up Nation,” a 2009 book by Dan Senor and Saul Singer that sought to quantify how Israel grew into such an economic powerhouse.

Chesler found the ideas in the book so compelling that he handed out 300 copies to friends and business associates. Everyone on the trip either had read it or was in the process of doing so.

“Oh, I see you have the New Testament,” joked Israeli Consul General to the Southwest Meir Shlomo, who accompanied the delegation from his home base in Houston, spying the book in someone’s carry-on bag.

Even the group’s guide, Yona Leshets, was chosen to lead the tour because, as he put it, “I have not read this book, I lived it.”

After five years as an intelligence officer in the Israeli Defense Force, Leshets went to work for a small startup that designed chips for the then-emerging cellphone market. The company ultimately was acquired by Intel for $1.6 billion.

And while San Antonio and Israel are worlds apart in many respects, the Alamo City now is striving to make a place for itself in the global economy.

A historic city in the context of a young nation, San Antonio also is a city that watched as Dallas, Houston and Austin pulled ahead — a poorer, less-educated city where landing call centers was seen as economic success.

The city has made recent strides in part by beginning to use what has become a common tool in Israel: the business incubator.

Dr. Steven Davis, a dermatologist and board member of BioMed SA, is also co-founder of StemBioSys, a start-up that uses nonembryonic stem cells from cord blood. The company is the first investment for The Texas Technology Development Center, or T3DC, an incubator led by Randy Goldsmith of San Antonio.

Davis said one reason there are so many incubators in Israel is the government offers up to 80 percent of research funds.

“When they have an idea, they all think there’s a chance that idea can work, because the mechanisms are in place. The government provides opportunities for private development.”

Encouraging innovation

The delegation heard time and again of the importance of government investment and policies that encourage innovation and growth.

“When we were at the stock exchange and the incubator meetings, what we saw is that these successes were not happening by accident,” said David Komet, president of Komet Asset Management in San Antonio. “We saw an intentional and enlightened process at work to capture and develop intellectual capital, commercialize it and move it out into the world market.”

There’s no question that with tight budgets, government investment can be more difficult, Castro said.

But Israel’s success “reminds us that we need to have the resolve to make investments in our own universities and public education system,” he said.

“It’s the only way the U.S. will continue to lead,” the mayor added. “These investments shouldn’t be seen as a burden, but as some of the best investments we can make.”

The admiration didn’t only flow one way. Komet recalled how impressed the director general of the Office of Industry, Trade and Labor was to learn that CPS Energy has plans to build 400 megawatts of solar energy here over the next five years, on top of the existing 14 megawatts and 30 more megawatts in the pipeline.

“The guy nearly fell out of his chair,” Komet said. “I felt really proud of San Antonio.”

To fill out the delegation’s understanding of Israel, the federation made sure the group members got regular doses of history, culture and politics along the way.

Walking in Jerusalem’s Old City, they got primers on the Western Wall, the Dome of the Rock and the Church of the Holy Sepulcher. They took a sobering tour of Yad Vashem, the Holocaust Memorial.

Each meal was a chance to hear a different perspective on the country, whether from a journalist, member of Parliament or entrepreneur.

Tour guide Leshets used several maps to explain the various borders and boundaries that have defined Israel and Jerusalem over the decades as the group drove much of the northern half of the country one day, lunching with young soldiers and taking a tour of the Golan Heights.