Start-up Nation: The Story of Israel's Economic Miracle

Even though I am very far from being an Israeli fan, I sincerely enjoyed this book. OK, it is too much Israeli marketing&PR, but what can you say: it is legitimate. Despite the fact that I was intimidated until almost page 100 by authors' delving too much into the "goodness" of Israeli armed forces, and almost glorifying the neighbour-bashing Israeli army and air forces, I still kept reading the book which, in the end, turned out to be a very fruitful endeavour. This is a good book. It provides a very nice vision for those who are interested in economic development, industrial policy and especially innovation/entrepreneurship policy. There are invaluable hints regarding those topics, however much they are hidden in between the lines. Nevertheless, as I said, the tips are invaluable and very teaching. The main question I had in mind while reading the book was whether I could take home some of the experiences and lessons described in the book. Some definitely cannot be imported. They are those idiosyncratic things which are very much Israeli and Jewish-specific: - For example the role of Jewish diaspora and the resultant "connectedness" that came with it, - the geographical positioning of Israel, the 'culture' of Israeli jews, - war-related chance-based motivations, - reverse Jewish brain-drain en masse and - the never ending US-support of Israel (though, in the book, you hardly trace any mention of this tremendously important fact, which I believe, is a major bias of the book). There are, however, many other factors that you can take home regarding innovation and industrial policy, like: - The importance of talent & human resources, - critical roles of cross-training, of - venture capital financing, - multidisciplinary approach to business problems, - proximity of the elements of an ecosystem, - of sense of community membership for the success of business clusters, and - culture of risk-taking, failure-welcoming and 'chutzpah'. - Also very important is the book's verification of the positive and critical role of government intervention in a country's entrepreneurial push and economic development. Those are very valuable aspects of the book. Moreover, the book is also very enlightening for those people like me who have very little knowledge about Israel and never interested in learning about that country's inner workings. Because, while you read with a focus to find clues regarding innovation and entrepreneurial policy, you learn the history, predicaments and some aspects of the inner workings of Israel's economic system. This, I personally found very interesting; kind of buy one, get one free. In a nutshell, even though this is a deliberate 'marketing' effort for Israel, it is still a very valuable book for those interested in industrial, entrepreneurial and innovation policy. It is, however, not at all a guide for company-specific innovation policies and certainly NOT a business-related book.

Dan Senor and Saul Singer - Start-up Nation: The Story of Israel's Economic Miracle. How is it that Israel, population 7,500,000 has more companies listed on the NASDAQ than all of Europe, population 300,000,000? Can it be just explained away by their "Jewishness?" This is the question Senor and Singer set out to answer in their new book, Start-up Nation. Dan Senor is a policy advisor and political analyst, currently adjunct senior fellow for Middle East studies at the Council on Foreign Relations in New York. Saul Singer is a journalist living in Jerusalem. They approach this anecdotally, stitching together a explanation that includes the impact of the military, the role of the reserve structure, the collection of quality universities, the continuing influx of motivated and risk-embracing immigrants, and perversely, the constraint that Israeli companies cannot trade with any of the countries on its border. The role of the military on developing a specific culture of innovation and chutzpah is most interesting to me. There are two aspects that the authors emphasize. First, because of the threat to the nation, there is a zealous dedication to leadership mechanisms that work. This includes boisterous debate prior to decisions and robust and honest deconstructions of events after the fact. Members learn to respect competence, and have an irreverence for rank. The second important contribution is Israel's reserve structure. In effect, military organizations coming together annually to drill form egalitarian networks that would-be entrepreneurs tap in to. Another structural aspect of the Israeli military is it's relative understaffing of senior officers relative to junior officers: 1 to 5 in the U.S. Army; 1 to 9 in the IDF. This deliberately lean staffing results in junior officers being thrust into position where they must make key decisions early in their careers. They are tested and their judgment honed. I'm not Jewish but I can't help but think there's at least one more thing at play here, not reported by the authors. My experience is that trust significantly reduces transaction costs and speeds interaction. I wonder what the almost homogeneous Jewish population plays in allowing strangers to achieve high levels of trust rapidly, quickly achieving collaborative and common success. My name is David Marquet, from Practicum, Inc and we help our customers get everyone be a leader and avoid casting employees into follower roles. To continue the dialogue respond to [email protected] or follow our blog or follow us on twitter. @totheleadernyou.

“”””The two real fathers of Israeli hi-tech are the Arab boycott and Charles De Gaulle, because they forced on us the need to go and develop an industry.”””” -------Yossi Vardi, owner of dozens of Israeli startups. “Start-up Nation” is the story of Israel that you generally don’t hear about unless you are part of it. Israel is known for its religious history, its archaeology and its uncanny military prowess in the face of implacable enemies bent on destroying it. Most people still don’t even understand that Israel is only about the size of New Jersey, and yet, it continues to raise its aura in all matters earthly, intellectually, and now in business. Published in 2009, by “Twelve,” a subgroup of Hachette Books in New York City, its authors, Dan Senor and Saul Singer attempt to answer the question, how was Israel able to become the number one per capita start up nation in the world? The Washington Post’s official review probably put it best: “How can Israel—with only 7.1 million people, (book was published in 2009) no natural resources, enemies on every border, and in a constant state of war—produce more start-up companies than Japan, India, Korea, Canada, or the United Kingdom?” After dispelling the antiquated and somewhat chair squirming, dismissive, and slightly anti-Semitic notion that “Jews are just smart” they surround their thesis in Israel’s history and other factors not the least of which how it conducts its military, the soldiers who participate and then enter college and then into industry taking their knowledge of military experience with them. This in turn provides for a business climate of innovation and dedication that cannot be surpassed. The success of Israel’s army is literally taken from the battlefield to the business world. For example, Israeli scientists took the “electro optical device” that controls rockets to hit their precise targets and built a similar, but much smaller camera and placed it in a pill and when taken by a patient can transmit images looking for all kinds of anomalies inside the human body. There is another startup on an implantable bioreactor developed from military related projects which would replace a defective pancreas in diabetes patients. Complete with the needed oxygen to distribute beta cells in these patients to produce insulin. This invention greatly simplifies the treatment of this disease. It’s planted under the skin in a fifteen minute outpatient office procedure and replaced once a year. There are dozens of these examples throughout the book. In a tail wagging the dog scenario these innovations have had a remarkable influence on the Israeli government. Now realizing its potential, casting off the limits of socialist asphyxiation has given carte blanche to this new idea of free enterprise and business acumen, further freeing the nation to innovate and invent. From the beginning almost to 1948 Israel showed its sense of high tech adventure with the creation of Israel Aircraft Industries in the 1950s, Simcha Blass’s invention of drip irrigation in the 1960s, and Intel’s confidence in opening a subdivision in Israel in the 1970s which has proven today to be the biggest subsidiary of Intel in the world second only to the headquarters in Santa Clara, California. But the real explosion of Israel technology happened in the early 1990s with the technology boom. Venture capital set about through several innovative methods allowing Israeli companies to begin their start-up revolution. Even though Israel already had Intel and some other international successful high tech ventures, it was really these seeds of venture capital ideas that opened up Israel to a magnificent economic rise. Erel Margalit, one of Israel’s top managers of Israeli startups said about the era, “ Venture capital was the match that sparked the fire.” Until 2005 venture capital could only be utilized from foreign countries. With the founding of “Yozma” another innovative solution come up by finance ministry bureaucrats gave new impetus into Israel funding its own ventures partnering with other nations, rather than depending totally on them, the United States, France, China, Germany, etc. What has been created in Israel in the last two decades might be the single most active business caldron in modern history. Bibi Netanyahu as Finance Minister under Ariel Sharon in 2005 changed the face of the non hi tech investment world with reforming Israel’s finance laws. He “cut tax rates, transfer payments, public employee wages and four thousand government jobs.” At first this promoted labor strikes, but soon the nation began to pull out of its rut by shifting the government sponsor of lending money, one of the last socialist programs still stifling Israel’s economy, to the private sector which opened up whole new industries for Israel to engage in. Since this review is written seven years after publication and the advancement in both Israel’s high tech and now finance industry, it can only be assumed that what was written then is now obsolete. Israel has gone way beyond that now and has established itself as a world leader with these innovations. Other countries considered more advanced than them up to that time are now trying to emulate Israel’s methodology in start-up capacity. Although this book shows a different and refreshing side of the Jewish State and is an excellent read, it is not without criticism. For example, there is a difference between the audible version, narrated by Sean Pratt, and the written version. I read both. Sometimes in the audible it’s a slightly different wording. This is ok except sometimes it happens in quotes. For example, in the quotes in chapter 12 of the soft cover 2010 version, all the quotes attributed to Tal Keinen in the written form are mentioned in the audible book as Yuval Dotan. I’m not sure if this was an editorial mistake or just an oversight and corrected later for the audible version but a few of these mistakes exist in the manuscript. Quotes should be attended to more accurately. I haven’t checked later written editions to see if the corrections or disclaimers have been made. Another problem is that citations are well documented throughout the book but I was disappointed in that the book is dotted with certain assertions that carry no such citations. For example, on page 214 of the soft cover 2010 edition it says about education in the Arab world and the fact that there are far more qualified women teachers teaching girls than men teachers, teaching boys and this has led to “a gender gap in student performance among the most extreme in the world.” There should be a citation for this and not left to take the authors’ word for it. But, even with these problems the book is a must read if you want to understand all facets that make Israel go. It’s entrepreneurial spirit is one of the factors why Israel has not only survived but thrived in a hostile environment. The story of Israel’s climb from relative business obscurity to being one of the top countries with more successful businesses on all the world’s largest stock exchanges than any other nation is as engaging as any Israeli story about survival, military exploits, or ancient discoveries. It is just simply an amazing read. If you want to know more about Israel than just its politics I suggest you read this book. You will find an Israel which in the future can guide the world to further and further advancements, in computer, and biotechnology, medical devices, movie making, animation and social media technology etc. The list is endless. Do a search on the internet for Israeli inventions and innovations and you will see what I am talking about. Is this what is meant by the Talmudic command Tikkun Olam? (to spread goodness throughout the world). It just might be.

If you are related to the fields of entrepreneurship, development, innovation, or macro-economics I really recommend you to read the book "Israel: The Start-up Nation". The authors claim they have come up with the idea of writing this book, when in a Harvard Business School study-trip to Israel in the beginning of the millennium, they asked themselves how is that this tiny country, wedged among states with which it is unable to conduct trade (due to boycott of the Arab League), and with just over seven million people (and that has to support a defense budget that eats up to 8% of GDP, which is 4 times more the OECD average), attracts more capital from VCs that all of Europe combined... can create more tech-ventures than anywhere else in the world except for California, patents more IP in a month than Portugal or Greece (developed countries with more than 10 million people) throughout its entire economic history, has several Nobel prizes in its faculties and has the largest concentration of companies on the NASDAQ after the U.S. I will just give you a hint, that is to forget the theory of American special friendship, because the inter-state institutional friendship plays a very limited part of the game - further, other European countries receive far much more money that Israel receives in economic aid to development from the U.S. and are unable to play on the same field. It is an enjoyable read, that helps to debunk some myths about economic development - investing in a national pride project (in the Israeli case, the survival of the state) is more important, that investing in pure infra-structure (like highspeed trains and the likes) that end up having low to null return, specially when compared to the creation of wealthy market oriented tech economy.

Amazing story about how a small, young country of immigrants and asylum seekers became the military and techo giant that it is today. National service, high-tech education and existential threats put this country of 9 million Jews and Arabs (20% of population) on a future-driven path. It's response to the horrific killings and kidnappings by brainwashed Islamists on 7Oct23 proved the success of the economic miracle. Israelis pulled together and watched their military might and intelligence networks take down Hamas, Hezbolah and Iran So inspiring!

When I was a boy in Florida, I was 'buddied' with a Jewish kid named Schwartz, this was because I was a new 'out of stater' without prejudices towards Jews, and as students we had but one thing in common, and I am not Jewish! At the time Israel and the Jewish commuinty world-wide was still feeling sorry for itself and 'protected' everything about the Jewish world and Israel in particular, and Israel was then an international basketcase of a near Marxist Socialist European outpost with the nearest true friend 7000 miles away. This lasted until about the 1990's when a new attitude towards creativity and the support of sheer brainpower in a place with no other natural resources than its people. This new regime established by Bibi Netanyahu, transformed 5 million Jews into an international technical community without whose skills and crativity a whole range of common electronic and other hi-tech items, PCs, laptops, servers, and the software to make them run efficiently, medical equipment, and so on, would not be with us today. As a consequence, all PC's, laptops and servers ought to include "Israel Inside" as well as the more common logo. While the USA is trying to control business enterprise, Israel has accepted that this only stifles investment, jobs and the building of industrial power, and all based on an efficient Israeli version of the American chutzpah of the past, the willingness to try and probably fail, and then be forgiven for failing. This book is a fascinating read and should be accompanied by an equally fascinating read, "The Israel Test," as both show why the neighboring places surrounding Israel, with perpahps more than fifty times the population of Israel will still be wallowing in self pity,jealousy,and anger, simply because the Israelis can do things better than even the current USA! Perhaps more American politicans should read this book to see why a country with the population of Manhatten can outperform all individual Eurpopean countries, and Japan and China as well, in advancing technology to greater levels.

I believe there are many out there similar to myself that only understand Israel from the news either on wars, attacks or peace agreements. This book is a lovely insight into Israel’s sense of purpose that drives so many successful start-ups to be developed from this tiny nation. Yes prior to this book I have heard of ICQ and the mighty unit 8200 but not much else. The key take away from the book are their sense of purpose, mission driven and risk taking culture that enables so much innovation to be born from the country. Great read.

I found this book to be well-written and very informative on the subject of not just `how' Israel has come to be a great startup nation, by `why'. The Israeli's have proven once again that "necessity is the mother of invention." In May of 2010, I was able a 10-day tour of Israel, and was struck by the vitality and energy of the young nation. Everyone we met seemed quite serious about their jobs and busy about them. Not only that, but the people seemed very proud of all they had been able to accomplish in such a short time and under such difficult circumstances. Before reading the book, I had no idea that so many of our modern conveniences come from Israel, from optical devices to chipsets to agricultural/irrigation technology. Perhaps this is poor marketing on the part of the Israeli's, or maybe they're trying to let their products and innovations speak for themselves. One of the more interesting examples of innovation was near the beginning of the book, with the "Better Place" car company. The idea of utilizing battery-swapping stations rather than battery-charging stations solves a number of problems that has hampered the electric-car industry. I also noticed that Israel's entrepreneurial spirit has caused a steady shift away from the socialist roots of many of the settlers towards a more capitalist/free-market, mainly by necessity. The Israeli's have learned that startups and innovators flourish best under free markets, not burdensome regulations/mandates from the government. The Israeli trait of chutzpah was refreshing to read about, and it made me wonder how much better the USA would be if more Americans questioned more and put their skills and education towards practical problem-solving more. America has many of the same problems that Israel has, but Israel seems more determined to fix them rather than push them off onto someone else to solve. After reading the book, I have come to believe that it would greatly benefit the United States if we had a mandatory national service for 18-20 yr-olds and perhaps even a 'reserve' national service which gets everyone involved, perhaps for 2-3 weeks a year. Not only would this get more people involved in the task of governing the nation, it would push more private solutions into the public sector and force the government to be more efficient. Also, this policy would help reduce the size/power of the public unions and reduce the federal bureaucracy with many fewer permanent government employees. Due to their difficult circumstances, the Israeli's have a purpose and will to survive and prosper despite the odds against them -- to do what most said cannot be done. However, will their growing affluence dampen it in the coming years? I hope not. My Books: The Cell , The Time of Jacob's Trouble , Endeavor in Time