Short on tech firms, Modiin gets a push from entrepreneurs

Each morning, thousands of workers commute to jobs far out of town, but one local activist is trying to change that

MESH entrepreneurs gather for a group photo (Photo credit: Courtesy)
MESH entrepreneurs gather for a group photo (Photo credit: Courtesy)

On the face of it, the city of Modiin has what it takes to be a tech hub in Israel, or even Israel’s main tech hub. The average age of its 85,000-plus residents is 34, according to the Modiin municipality, and 65% of the residents have a higher education degree. On average, Modiin residents earn 30% more than workers in the rest of Israel, and a significant number of the city’s professionals work in technology-related fields, according to municipal data.

But nearly all those tech workers commute to jobs outside the city – this, despite the fact that Modiin was planned from the ground up and designed specifically to appeal to middle-class Israelis, many of whom are employed in tech, research, or sales jobs for Israel’s biggest technology companies. Yet there are few such firms located in the city. In fact, one of Modiin’s biggest technology “companies” is an accelerator called MESH, the Modiin Entrepreneur Start-Up Hub.

Although the city was indeed planned carefully, “Modiin never positioned itself as a ‘high-tech city’ and there were no areas allocated specifically for offices or high-tech firms,” a Modiin municipality spokesperson told The Times of Israel.

Modiin is located in the heart of Israel – halfway between Jerusalem and Tel Aviv, sandwiched between two major east-west highways, and soon to be connected by fast rail to both those cities. Scheduled for completion in 2018, the fast railway will bring residents to and from either city in 20 minutes or so. Young, well-educated, and dynamic, Modiin is seen as the heart of “middle-class Israel” – a place where young families with moderate political and religious views and lifestyles have a home.

Many of those “middle Israelis” work in companies associated with Israel’s tech revolution – but few of the people employed in jobs like that work in the city. Modiin’s biggest employers are NISKO, which markets switches, lightbulbs, and cables, and Kravitz, the office supply chain; both companies have large warehouses in Modiin, as does nationwide supermarket chain Supersol. Over 60% of jobs in the city are tied to local services (teaching, health funds, etc.) and retail (Modiin has several large malls). According to local activists, as many as 80% of the city’s workforce is employed outside the city (the municipality disputes this, saying that one-third of workers have in-town jobs).

One thing everyone agrees on is that there are a lot of people in Modiin employed in advanced technology companies of all types – as many as 10,000 – and nearly all of them commute. With an excellent transportation network, plenty of space, and a workforce well-suited to tech jobs, residents question why a city whose construction began in 1994 at the dawn of the high-tech era did not include a plan to attract companies in tech, biotech, and other advanced industries.

“It’s a good question,” said local tech activist Moshe Porat, who built MESH and is the central tech figure in a town where nearly everyone has to commute to an out-of-town job.

“We’ve tried hard to build an environment that will make entrepreneurs comfortable and even attract tech companies to the city, but there is only so much a small organization like ours can do on its own,” said Porat. “Setting policy to attract tech companies is really an issue for government, not for a local tech accelerator.”

MESH folk celebrate Hanukah with some donuts (Photo credit: Courtesy)
MESH folk celebrate Hanukah with some donuts (Photo credit: Courtesy)

Porat, the CEO and creator of MESH, has lived in Modiin for 16 years and decided that his town was big enough for a tech community of its own – so he began building it “one beer tech meet-up, lecture, and mini-conference at a time. The result is MESH, which we opened last year and recently expanded, making it the largest tech working space in Israel,” Porat said.

Over 40 companies – some with a dozen employees, many with just one or two – have opened up in MESH, which calls itself a “hybrid hub,” catering to advanced companies and brand new start-ups. Companies pay for their space – a suite, an office, or just a desk – on a sliding scale (MESH does not take equity or additional payments for services), and provides the usual office services, as well as meeting spaces, mentors, and events for companies in the accelerator, as well as for the growing entrepreneurial community in the city (there are dozens of people working on start-ups from their homes and apartments, said Porat).

Most of the entrepreneurs in MESH are locals, although there are a smattering of people from Beit Shemesh, Rehovot, and even Hadera. The average age of the MESH entrepreneurs is older than in Tel Aviv accelerators, and most are married with kids – meaning, said Porat, that they are more serious and grounded than entrepreneurs in other places.

Moshe Porat (Photo credit: Courtesy)
Moshe Porat (Photo credit: Courtesy)

“One of the big problems in Modiin is how expensive rents are, so for the lower rent alone, many entrepreneurs flock to us, because we charge very affordable rates,” said Porat. MESH is located in the Ligad industrial area of the city, surrounded mostly by warehouses and logistics centers for supermarkets, retailers, food importers, and other distinctly non-high tech companies.

One reason MESH is affordable, in fact, is because it got a deal on the lease on the offices of the Office Depot chain, which became available when the company went into bankruptcy several years ago, said Porat. Entrepreneurs working at MESH say that there is no bus service to the site – they drive in or bike – and that mail service is spotty at best, because the area is so isolated from the rest of the city.

Despite the challenges, entrepreneurs who have joined MESH express satisfaction with the service. One happy customer is Ro’i Almog, CEO of InfoNeto, a company that uses big data and natural language processing to comb through resumés, saving organizations hundreds of hours of work when they need to interview and hire personnel.

“This isn’t a keyword search system, because even though a candidate used the right keywords it doesn’t meant they can do the job,” said Almog. “Our patented algorithms look at the applicant’s experience, interests, comments, activities, education, etc. and determines the context – how they used their skills, and whether those skills are a good match for the job they are applying for.”

According to Almog, tests show that his system has an 80% accuracy rate – meaning that it picked out the right candidate the first time (i.e., the one who was eventually hired).

MESH is a great place for his staff of ten to do their work, said Almog; employees who live in town are able to bike to work, or take a special MESH shuttle (paid for by the organization itself) from the center of town. The atmosphere is serious yet convivial, and “Moshe Porat helps out all the start-ups here with advice, activities, connections, and a lot more. For us, MESH is an ideal place to start out,” Almog said, a comment that was echoed by other entrepreneurs who spoke about their experience.

Scene at the MESH facility (Photo credit: Courtesy)
Scene at the MESH facility (Photo credit: Courtesy)

Indeed, said Porat, “with all due modesty, MESH is engineering a tech revolution in this region, and it’s a shame the municipality is not on the same page. We have enormous human capital here in Modiin, but each day you see the entire city get up early in the morning, fight the traffic to go to Tel Aviv or Jerusalem, and do the same thing on the way home – wasting time in traffic instead of working close to home.”

If much older cities like Kfar Saba, Tel Aviv, and even Jerusalem could “rebrand” themselves as tech centers – all three actively try to attract start-ups and veteran tech companies, and the Tel Aviv municipality even has a specific department dedicated to bringing more tech companies into the city – why not Modiin?

“I am sure that the many tech workers who relocated here from Beit Shemesh, Jerusalem, and other cities – many of them from the English-speaking community as well – would appreciate it, as well,” said Porat, adding that he has made numerous attempts to work with the municipality on developing policies to bring more tech companies to town but has been rebuffed each time.

Contacted by The Times of Israel, a municipal spokesperson said that Modiin was planned and built “in the late 1980s and early 1990s, long before the high-tech era. The municipality helps all business owners in the city regardless of their field of work, and a recent poll shows that Modiin is one of the safest places in Israel to open a business, with one of the lowest rates of business failures in the first year. The last five years has seen a dramatic increase in the number of businesses and companies operating in the city, as non-residential property taxes rose from 17% to 34% of the total property tax revenues. When you add to that the fact that the property tax for businesses in the city is considered one of the lowest in the country it presents a clear image of a city that is good for business, and we expect that many more businesses will open in the city in the coming years.”

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