Israeli Kibbutzism Contain Startling Businesses – and Drive the ‘Start-Up Nation’

The Israeli economy was booming in 2023. According to International Monetary Fund figures, total GDP had reached $664 billion, and per capita GDP hit $58,270 — the 13th highest in the world.

Hamas’ vicious attack on Israel changed that, as Reuters reported that after months of war, the Israeli economy contracted significantly during the fourth quarter of 2023. However, even with fighting continuing, we can hope for a strong economic rebound, as thousands of reservists return to their normal lives.

The Israeli technology sector accounts for the majority of Israel’s exports, so it was reassuring to see that Teva Pharmaceuticals, the largest generic drug company in the world, reported that the war has not affected manufacturing.

The approximately 270 kibbutzim in Israel comprise only a tiny fraction of the population, but account for 10 percent of industrial production. Kibbutzim in the south bore the brunt of the genocidal Hamas attack, and those in the north are coping with rocket attacks from Hezbollah. So I wondered how another Israeli technology company, this one based on a kibbutz, was making out.

Kibbutz Shamir, founded by Romanian Holocaust survivors in 1944, is located in Upper Galilee at the western edge of the Golan Heights. Shamir Optical began to manufacture eyeglass lenses in 1972, as part of the effort by kibbutzim to diversify from agriculture

Shamir began to manufacture progressive lenses in addition to its existing line of lenses in 1984, and this led to the company’s remarkable innovative success. (Full disclosure, I am a retired professor of Optometry and Vision Science.)

Progressive lenses have been around since the late 1950s and early 1960s. They are used to correct presbyopia, a universal human condition associated with aging, in which the lens inside the eye becomes less flexible and is unable to change shape to enable light rays from near objects, such as reading material, to focus on the retina.

The first bifocals, attributed to Benjamin Franklin, consisted of a split lens, with an upper half for distance vision and the lower half for near. However, in 1959, a French engineer, Bernard Maitenaz, working with a French company, Essilor, produced the first progressive lens, in which the prescription varies continuously and there is no bifocal line.

Progressive lenses have to undergo a process of continual redesign and improvement as the visual demands of modern society change. The ability of Shamir Optical to produce valuable algorithms to optimize the manufacture of progressive lenses led, in 2005, to the company being the first kibbutz enterprise listed on the NASDAQ exchange.

In 2011, when Essilor, the world’s largest producer of ophthalmic lenses, bought a 50 percent share of Shamir for $130 million, the company was delisted. Essilor purchased the remaining 50 percent in 2022 for an amount said to be hundreds of millions of dollars. Shamir Optical remains a separate brand, and research and development continues at Kibbutz Shamir. Today, the company, with 2,500 employees in Israel and abroad, operates 18 laboratories worldwide.

In a 2022 interview in The Jerusalem Post, Shamir’s CEO, Yagen Moshe, described how the COVID pandemic forced everyone to become more dependent on computers for communicating. He mentioned two innovations: a lens with an anti-reflective coating called “Expression,” designed to remove unwanted reflections during video calls, as well as the “Autograph Intelligence” lens, a progressive lens tailored to each patient’s visual needs.

However, an even more exciting innovation, announced in the midst of war with Hamas, concerns a lens designed to prevent myopia in children. In myopia, there is a mismatch between eye size and eye focus, and light rays that enter the eye focus in front of the retina. The prevalence of myopia is increasing rapidly. Today, more than 40 percent of Americans are myopic, and the numbers in Asian countries, such as China and South Korea can be as high as 90 percent.

Shamir Optical has developed a spectacle lens, the “Shamir Optimee,” where the optics of the outer zone of the lens differs from the center, resulting in myopic defocus at the outer (peripheral) retina. A study published in the American Journal of Ophthalmology showed that this lens significantly reduces myopia progression in young children. Shamir is not the only company making multifocal lenses for myopia control, but the company’s experience in producing progressive lenses gives it an advantage. Given worldwide concern for the myopia epidemic, this lens may end up as Shamir’s most important innovation.

After the United States, Israel is home to the largest number of start-up companies in the world. In fact, the Israeli kibbutz — a blend of Zionism and socialism — can be thought of as Israel’s first start-up.

In recent decades, the kibbutzim have transitioned from being solely agricultural, to also providing industrial goods and services. A majority of kibbutzim, including Shamir, have also shifted to embrace private ownership and differential salaries, while still trying to protect the ideology of equality as much as possible.

Shamir Optical is not the only kibbutz start-up success. There are many others, such as the drip irrigation system developed by the firm Netafim on Kibbutz Hatzerim, and Plasan, a company on Kibbutz Sasa, that produces armor vehicle protection. Nor is Shamir Optical the only enterprise associated with Kibbutz Shamir. The kibbutz, which has a population of about 900, also generates income from the production of toiletries and honey, as well as from tourism.

Far from being a relic of the past, the idealism, and sense of purpose that characterizes the traditional kibbutz still exists, and enables the kibbutzim of today to compete successfully in the development of new and innovative technologies. The example of Kibbutz Shamir suggests that the current war will not reduce the level of Israeli innovation.

Jacob Sivak, a Fellow of the Royal Society of Canada, is a retired professor, who taught at the University of Waterloo.