Dr. Michael Goffman, senior lecturer in finance and director of the doctoral program at Hebrew University Business School, says the impact AI will have on the global economy cannot be overstated. “The whole economy is going to undergo a major transformation,” he says. “It can be relatively smooth and controlled, or it can be very destructive.”
Goffman, a native of Bishkek, Kyrgyzstan, who made aliyah at the age of 16, is known for his extensive research on AI as a driver of long-term economic growth and the key elements of successful AI startups.
The potential for AI to transform society is both exciting and daunting, he explains. “AI will greatly improve productivity in all areas. If you tell young people today that not too long ago people were writing software code for the Linux kernel by hand, they won’t understand how tasks that can now be automatically performed by AI were once done by hand.”
Additionally, Goffman said, AI is being used to discover drugs, automate corporate research and development, and advance academic research. We can also customize products to suit individual user preferences, from one-size-fits-all models to mass customization.
A further advantage of AI is accessibility. For example, he notes that people who cannot physically see a doctor could use an AI consultant for their medical needs. “It can potentially save lives,” he points out.
What are the risks of AI? Goffman says that while apocalyptic fears about AI taking over the world may be a bit exaggerated, there are some near-term risks, including the possibility that low-level jobs will be eliminated by companies using AI agents to do their jobs.
Additionally, AI can pose a cybersecurity threat. In the past, hackers had to be well-trained to break into a system, but now even unskilled hackers can do so using AI tools. “The bottom line is that the opportunities are great, but the risks are also great.”
While some may try to compare historical changes such as the AI revolution and the industrial revolution, comparing events from vastly different eras is often difficult and incomplete. “The risk with AI is that we don’t even know what the risks are,” Goffman says. “And every time you use this kind of technology, you say, ‘How can we manage this risk if we don’t know what we need to manage?'”
It’s hard to imagine a more promising time in history for people with a vision, a strong desire to succeed, and a willingness to work hard.
Goffman examines systemic risk after the 2008 financial crisis, which caused a major recession in the United States, and says the most pertinent lesson to be learned from that period is that while most people, including financial experts, assume the next crisis will be the same as the last, it usually isn’t. This lesson can be applied to potential AI problems.
“At the time, I was studying for my PhD at the University of Chicago, which is considered one of the world’s best in finance. I was amazed to see the world’s best professors, such as Nobel laureates, finding themselves in a situation unprepared for what was happening. The goal now is for researchers and policy makers to think ahead. AI risks are a good example. We don’t know how it will play out, but it’s better to be prepared.”
One of Goffman’s most important AI responsibilities at Hebrew University is as co-founder of the New Jerusalem Research Center for AI at the organization, which is part of the Business School. Located on the school’s Mount Scopus campus, the research center has received seed funding from Google and is focused on bringing AI to organizations such as nonprofits, for-profits, universities, and government to enable safe and efficient deployment. Goffman said the center is looking for additional sponsor companies to partner with on AI-related efforts.
“We felt there was a gap, not only in Israel but globally. Our goal was to establish a center in Jerusalem as a gravitational pull to address these issues. We said we wanted to build this as a corporate-related program and allow companies to access and support this research. That way, we not only do first-class research in terms of publications, but we can have a practical impact on organizations in Israel and around the world.”
Goffman explains that one of the center’s goals is to ensure that companies in the AI era know how to manage risk and seize opportunities to increase productivity.
“This is a challenge that will require significant collaboration between universities and the public sector to make it interdisciplinary. Our vision is to create opportunities, conferences and grants that will enable researchers to first base their research on data and understand how we can respond to this convergence of AI and economics, and how to make safe meetings less dangerous and destructive, and more constructive, while preserving opportunity.”
How can AI shape the future of innovation in Israel over the next decade? First, universities need to be proactive and provide students with the platform they need to foster entrepreneurship, Goffman says. Second, you should provide opportunities for students to create prototypes and actively develop them with instructor guidance. Second, incubator programs can help you develop your ideas further.
“If we build the right pipeline, we can give our students a real path to test, develop, and even fail their AI-driven ideas and startups during their three, four, or five years at university. I believe that in such an environment, the Hebrew University of Jerusalem could not only remain among the top universities outside the United States for producing unicorn founders, but could potentially become one of the world’s leading universities.”
“That’s why we see the investment required by academic institutions for entrepreneurship-focused courses as relatively small compared to the potentially huge impact. The startups these students launch in almost every industry imaginable can be transformative.” If universities across the country adopt this approach and equip their students with the right entrepreneurial tools, Israel, already known as the ‘startup nation’ and one of the world’s leaders in innovation, could reach a whole new level.”
In fact, Goffman explains, companies and institutions need to prepare for the transition to AI in several ways. “If you don’t invest and take action, you’re going to have problems. You need to do your research, you need to see what your competitors are doing, you need to look into Open AI, Anthropic, Google. And you need to be aware of the risks.”
The next thing you need to do is develop a vision for using AI, he says. “You need to know what your company and industry will look like in a world of cheap, efficient, and disruptive AI.”
Goffman says that once companies have made the investment and developed their vision, they need to carefully estimate how much to invest in AI. If you underinvest, you risk falling behind. Investing too much too soon can make investors nervous.
Just like hiring consultants to stay on top of new technology, training employees to take advantage of AI capabilities is also essential. In short, he says, “We need to stay on top of things. And in some ways, we need to reinvent the wheel.”
One of the key benefits of AI is that it lowers barriers to entry, Goffman explains. For example, AI tools can generate high-quality code, making prototyping much easier and less costly. “Previously, we needed a large seed investment to generate revenue. But now with AI agents, we can get a much higher valuation when we first raise money, which means we have less to give to the company. We can review and prototype many ideas at the same time.”
Goffman then points to a key student question: “If AI can do anything, what is my added value?” In response, he says humans bring two important components to projects that AI cannot provide. The first is vision. “You need the ability to think abstractly and imagine how you see the world and what products you want to make. AI doesn’t have the ability to have that kind of imagination or vision.”
The second quality needed is will, or in his words, “the desire to do something. And if you have imagination and will, AI will give you a break.” He added that would-be inventors and students should not think they don’t have to work hard because AI will be there for them. “As an entrepreneur, you’re going to work much harder now because opportunities are everywhere. There’s more to test, more to do, and it’s going to be a lot of work.”
Despite the risks and potential pitfalls of AI, Goffman remains optimistic. “It’s hard to imagine a more promising time in history for people with a vision, a strong desire to succeed, and a willingness to work hard.”
This article was written in collaboration with Canadian Friends of Hebrew University.
