Book Club: Start-Up Nation

Welcome to the Book Club where I will be doing short reviews and book digests of some of the more interesting pieces I am currently reading.


“Four guys are standing on a street corner…

An American, a Russian, A Chinese man, and an Israeli…

A reporter comes up to the group and says to them:

“Excuse me… What’s your opinion on the meat shortage?”

The American says: What’s a shortage?

The Russian says: What’s meat?

The Chinese man says: What’s an opinion?

The Israeli says: What’s “excuse me“?

Mike Leigh, Two Thousand Years

On a recent trip to Israel I grabbed a copy of the Start-up Nation: The Story of Israel’s Economic Miracle 2009 by Dan Senor and Saul Singer. During my trip I was fascinated by the entrepreneurial culture and the achievements of this young and small country in the Middle East so I wanted to learn more on how did they exactly do it. Well, this book explains you exactly that going into detail of what it took from the country’s inception to its position as one of the best business hubs in the world. A book about innovation and entrepreneurship and how one small country in the Middle East came about embodying both. The book is filled with examples of dealing with hardships and the inventiveness of the Jewish people paired with descriptions of the cultural aspects that were amalgamated to create its current unique business environment. For example, when the country was started in 1948, the situation was so bad that everything was rationed with coupons for books, one egg a week, long lines and the average standard of living for Israelis was comparable to that in the Americas in the 1800s. From this, the economy was pushed up over a period of 60 years managing to grow fiftyfold. Although, this doesn’t only comes down to business and technology, but in general, dealing with challenges that life might throw at you.

Stereotyping Jews as smart and business savvy is not enough in explaining the inventiveness of the nation. Its way of approaching problems of any kind and solving them is what contributes to a large extent to their progress throughout the last few decades. Israelis are not immune to the universally high rate of failure of the start-ups rather their culture of teamwork and acceptance of failure encourages them to try out more and more new things moving them forward. The land of Israel is a monotheistic melting pot of languages, cultures, education & history. Judaism is the only religion bringing people together instead of separating them apart.

One of the main factors that have driven Israelis and their country is the need for strong Military. In a strategic position in the center of the Middle East, a Jewish state surrounded by Arab states which have great disparities in culture and religion has made it crucial for Israel to maintain sovereignty through strong national security. The military industry is one of the biggest industries in Israel and it its main technological driver. The military and defense industry is constantly spinning off companies to the civilian sector and acting as an impetus for growth in the country. Israelis who are part of the IDF (Israeli Defence Forces) create solutions for very complex problems as part of their daily tasks. Imagine 20-year olds that got trained for 2 years in the Army going through the latest technological installations, life-threatening situation, learning to take responsibility for peoples lives and getting out as a mature person who has seen a lot despite his age. Apart from the life skills learned in the military the technological skills play a crucial part in many Israeli entrepreneurs’ roadmap to success. Taking an example from the Book, two companies in the cybersecurity space have been created by graduates of the elite Unit 8200. Unit 8200 is the equivalent of the NSA (National Security Agency) in the USA. The First company Fraud Sciences present an example of how military technology for finding terrorists was implemented in the public sector for finding fraud and thieves. One has to understand the Israeli mentality. When you have been developing technology to find terrorists – when lots of innocent lives hang in balance – then finding thieves is pretty simple.

In a country where future- near distant is always in question. Every moment has a strategic importance. A sense of constant urgency sparks imminent action. For example, if an Israeli man wants to date a woman he asks her out that night. If an Israeli entrepreneur has a business idea, he will start it this week. As the mayor of Tel Aviv states “yes, there is rockets up north, rockets down south, only more reasons to enjoy life even more.

This statement embodies the insatiable drive to succeed despite war, missile and terrorist attacks. A couple of typical Hebrew words best describe this kind of thinking in the face of danger. “Dauka” form Hebrew means despite in this context the move the more they attack us, the more we want to succeed. The “Chutzpah” mentality – from Yiddish meaning effrontery, incredible guts. A frankness that some may find unpleasant while others find refreshing and honest is also seen throughout the country’s military, schools and business. These representative concepts from Jewish culture also add on to another aspect that greatly improves their entrepreneurial culture. Meritocracy.

Hierarchy and rank get overtaken by meritocracy and argumentativeness.  While the military structure invites anti-hierarchically forcing to responsibility and performance-oriented culture. The Meritocracy culture is one where a person is recognized and advanced in proportion to their knowledge, talent, accomplishments, and abilities. The everyday jargon is one based on argumentativeness and questioning. The argumentativeness is also based on the Talmud. An incessant urge to interpret, evaluate and judge teachings in one’s own way and personal view. One where starkly describe the Israeli way.

As young people leave the military and join the business ranks with both hard and soft skill sets that can rival most Western Universities, going through the compulsory military service can be seen as equivalent if not better education in many aspects. Israelis moving to the technology sector are affected by another aspect that drives them in this direction as well. As the Israeli Venture Capitalist Orna Berry says – “High-tech telecommunications became a national sport to help us fight against the claustrophobia that is life in a small country surrounded by enemies.”

The environment in which Israeli entrepreneurs thrive is one where they benefit from stable institutions and the rule of law existent within a democracy. At the same time the doubt and argumentative non-hierarchical culture of proximity, informality, and overlapping ethos work. The tight proximity of universities, large companies, start-ups, infrastructure, talents, funding, regulation and the most important aspect is the culture that connects it all.

The Israeli concept of “Rash Gadol” – thinking and critical reassessment, undergirded by a doctrine of experimentation – is descriptive of the way problems are looked at and worked on. As Professor Samuel Applebaum states “It was not simple to convince people that growing fish in the desert makes sense.” This statement is a demonstration of the out of the box thinking and implementation of concepts that might be deemed as impossible by many. Another way that Israelis view their situation and the country they live in is represented by the statement “We are doing the best we can with what God has given us.

The final aspect that I believe is very important and can be extracted from this books is that inherently Israel is a country of immigrants. The immigration ethos of people moving into Israel from around the world embracing uncertainty and leaving it all is at the forefront of the entrepreneurial spirit of the country. Only in Israel, the founders of the country had the drive to start up a modern first-world country in the region from which their ancestors had been exiled 2000 years ago. It is also stated in the Israeli constitution “As a Jewish homeland open to the immigration of Jews from all over the world.” 

Structure

The book is divided into four main parts. Part I The Little Nation That could has two chapters called Persistence and the Battlefield Entrepreneurs. These chapters deal with overviewing the dire situation of the country with its beginning in economic and military aspects. The depiction of the hardships that the Israeli had to deal with and the fact that from day one the whole country was in danger of annihilation created its technology and military oriented impetus that drove growth and created urgency.

The second Part called Seeding Culture of Innovation deals with the single most important factor in the technological development and progress of the country – it’s culture. Going over the notions of the “Book” and the people of the book and the fact that the educational system of the country offers a perfect environment for scholars and talent to flourish.

Part III Beginnings looks at the political aspects and policies that were implemented throughout the lifespan of the country that gave an enormous boost to its economy. In addition, it looks at the way the Venture capital structure and governmental policies encouraging its development.

In this part of the book, there are some really interesting examples of how the Aviation Industry of the country was started by Shimon Peres with some incredible stunts, how businessmen and investor Warren Buffett and Bill Gates invested in the country as well as the way Intel became a major player in the economy.

Part IV Country with a Motive overlooks the most recent events in terms of International Relations and the Middle Eastern region and how it affects the Israeli Economy and Technology Scene. In addition, there is a very interesting analysis of the Arab culture and the many barriers that impose on itself impeding its technological advancement and entrepreneurial spirit.

Main Takeaways:

  • Competitive pressure stimulates progress.
  • The meritocratic culture makes for a more efficient and fast-moving economical and business machine.
  • Life is what you make of it.” – Israeli saying.
  • Adversity, like the necessity, breeds inventiveness. In other words, “Necessity breeds innovation.
  • History is not written, History is created.” – David Ben Gurion (the equivalent of George Washington to Israel. Founding Father and mastermind of the start-up nation.)
  • Immigration is a crucial impetus for economic growth and bringing new people with a drive to succeed.

A country where past & future are in such a close proximity. A country where technological advancement and 2000 years of history intertwined between nations and religions cannot be found in any other place in the world. Ancient, religions, archaeological digs and political war conflict mark the land in contrast to Skyscrapers, Technology companies, and beaches.

The biggest start-up in the world is the State of Israel.

 

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