In 2001, what started as a long discussion between Dan Senor, adjunct senior fellow for Middle East studies at the Council on Foreign Relations and Saul Singer, a columnist and former editorial editor at the Jerusalem Post, morphed into an excellent book, Start-Up Nation: The Story of Israel's Economic Miracle.
Senor had led a group of twenty-eight Harvard Business School classmates to Israel to explore Israel's economy, politics, and history. It was a time when there was considerable business opportunity in Israel but also, it was when the peace process collapsed and there was escalating insecurity. At the end of one week, many of the participants were asking, where did all of Israel's innovation and entrepreneurship come from? Senor and Singer didn't have an answer and furthermore when they tried to find some book explaining what made Israel's start-up scene so vibrant and seemingly impervious to the security situation, they came up empty-handed. Thus, they decided to write their own book that would try to answer what makes Israel so innovative and entrepreneurial?
Part of the answer to this amazing phenomenon, and as pointed out and exemplified in the book, is Israel's tight proximity of great institutions of higher learning, large companies, start-ups, and the ecosystem that connects them. The latter includes everything from suppliers, a fantastic pool of well-qualified engineers, and venture capital. In addition, and one very important element, is the important role of the military in molding future business leaders and innovators. It is the IDF that fosters a culture of chutzpah and critical, independent thinking that distinguishes the Israeli entrepreneur from their competitors. It is also the IDF's R&D funds that is pumped into the most sophisticated military hardware and software that eventually finds its way into the civilian economy, both in technologies and human resources.
Other factors include Israel's isolation or as one of its business leaders, Shai Agassi stated, by isolating Israel, its adversaries had actually created the perfect laboratory to test ideas. And when you look at the patents registered by Israel from 1980 to 2000 which numbered 7, 652 as compared to the combined total of 367 from Saudi Arabia, Egypt, Kuwait, United Arab Emirates, Syria and Jordan, you can't help being impressed. It is little wonder that technology companies and global investors such as Google, Cisco, Microsoft, Intel, eBay have entered the Israeli market discovering unique combinations of audacity, creativity and drive. As the authors mention, Israel has the highest density of start-ups in the world, “a total of 3,850 start-up, one for every 1,844 Israelis.” In addition, more Israeli companies are listed on the NASDAQ exchange than all companies from the entire European continent.
However, as Senor and Singer argue, all of the above does not fully explain Israel's success. What Israel also has 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.” This is something that is lacking with some of its competitors as Singapore or Korea. Quite interesting is that the original Israeli settlers were pioneers creating a country from nothing, whose milieu was socialist and profit was a dirty word. Today's Israeli entrepreneur is likewise a pioneer and their new narrative is about creating things for the world in a variety of fields-”You're not just trading in goods, or you're not just a finance person. You are doing something for humanity. You are inventing a new drug or chip.”
Apart from Israel's successes, the authors also explore why American innovation industries have not taken full advantage of the entrepreneurial talent of the U.S. military training and experience, why the Arab world is having difficulty in fostering entrepreneurship, and what are the challenges that Israel faces in maintaining its brilliant economic miracle.
Very often books of this nature digress into pages crammed with all kinds of graphs and statistics that, to put it bluntly, are just plain boring. However, Senor and Singer avoid this with an entertaining prose style, bolstered by meticulous research and many first hand interviews with people in the know.