When I lived in Israel, I bought into one of my friend’s dreams — making Israel into the Switzerland of the Middle East. Why not clean up the country, make some order out of the chaos of life in the Jewish state, and persuade Israelis to be respectful and polite and stand in line without pushing, he would argue.
In my mind’s eye, I could see those Swiss flowerpots on every Jerusalem balcony, Israelis shouldering their brooms and sweeping their streets squeaky clean. What a seductive vision we shared.
Boy, were we wrong. The very things that we criticized and wanted to change — the aggressiveness of the people, the freedom to speak disrespectfully, even impolitely, to those in authority, the general lack of a hierarchical order — are some of the factors that have catapulted Israel to the No. 1 spot in the world in high-tech startups, the authors of the fascinating “Start-Up Nation: The Story of Israel’s Economic Miracle” persuasively argue.
The numbers are striking. High-tech companies are rushing to get an Israeli presence, the authors write. “Which may explain why, in addition to boasting the highest density of start-ups in the world (a total of 3,850 start-ups, one for every 1,844 Israelis), more Israeli companies are listed on the NASDAQ exchange than all companies from the entire European continent.”
The authors — Dan Senor, an adjunct senior policy fellow for Middle East studies at the Council on Foreign Relations, and Saul Singer, a columnist and former Jerusalem Post editorial page editor — quote an American technology executive as saying: “The best-kept secret is that [high-tech companies] live and die by the work of our Israeli teams … What we do in Israel is unlike what we do anywhere else in the world.”
And, incredibly, the Jewish state continues to attract investment capital even in times of war.
“Israel has managed to divorce the security threat from its economic growth opportunities,” Senor and Singer write. For example, Warren Buffet — historically wary of investing outside the U.S. — bought Iscar, an Israeli machine-tool company, for $4.5 billion in 2006, immediately before Israel began fighting Hezbollah in Lebanon.
Some of the book’s most fascinating narratives deal with stories about Israeli entrepreneurs — don’t miss Shai Agassi and his electric cars of Gavriel Iddan, a rocket scientist who adapted the miniaturization technology in missiles to develop a camera in a pill that would take pictures from inside the human body.
The authors’ attempts to explain why Israelis are so adept at innovation and entrepreneurship comprise the main part of the book. First, they conclude, there is the “classic cluster” — “the proximity of great universities, large companies, start-ups and the ecosystem that connects them — including everything from suppliers, an engineering talent pool, and venture capital.” This includes the role of the military’s research and development in which money “is pumped into cutting-edge systems and elite technological units,” and then the results slosh over into the civilian sector in terms of both the technology and trained people.
But that explanation is found wanting, as many other countries have good institutions and relatively large military spending — but not many high-tech startups.
“In addition to the institutional elements that make up the clusters … what’s missing in these other countries is a cultural core built on a rich stew of aggressiveness and team orientation, on isolation and connectedness, and on being small and aiming big,” Senor and Singer conclude.
That “cultural core” includes Israeli chutzpah and rudeness, which together encourage Israelis to challenge directly assumptions, orders and those above them in the organizational chart. In other words, the high-tech revolution and Israel are a match made in startup heaven. Those Swiss burghers don’t have a chance.
“Start-Up Nation: The Story of Israel’s Economic Miracle” by Dan Senor and Saul Singer (320 pages, Twelve, $26.99)