Customer Reviews

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

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There is a growing literature which speaks of the distinctiveness of Israel and its unique contribution to global culture. I think most recently of George Gilder's outstanding 'The Israel Test'. No doubt one impulse for the creation of such books has been the worldwide campaign to delegitimize Israel, as prelude to physically destroying it. Thus the very pro- Israel books come in a way as contributions to the justification of the Jewish state, and as defense of it. What is of course distressing about this, and the need for paeans to Israeli exceptionality is the fact that Israel is the only country in the world which is required to 'justify' its existence in this way.
In any case this present book focuses on Israel's scientific and even more technological achievements. It speaks about the Israeli reaction to the Arab boycott, and the special situation of 'confinement' Israelis feel at not having normal access to neighboring countries. Israel is a very small country physically and thus many have a certain claustrophobic sense , especially those youngsters who have served in the Army. After the Army many young people adventurously use their new - found freedom.
Two forms of this are the trekking Israelis do throughout distant regions of the world, with special emphasis on South America, and the India- Nepal region, and the 'tech-ing' Israelis do in creating start-ups at a rate all out of proportion to their numbers in the world. Israelis have hooked into high- tech communications and rode on the wave of a world economy which is increasingly electronic.
The start- ups too come in part because of an encouraging government policy, which devotes a high proportion of funds to research. But they also come because Israelis are a people continually forced to find non- conventional answers to very difficult and unusual problems.
For any supporter of Israel, and I assume that this is the real audience of this book, this book will be a real pleasure. It will provide yet more evidence of how one small state manages to make real contributions to the global economy, and the scientific and technological progress of mankind.

This is an enjoyable read that highlights how Israel has come to become such a leader in high tech startups. It is quick, light reading that explores the historical and cultural aspects that lead so many Israelis to pursue entrepreneurship.

In Israel, it seems, there is a culture that embraces the questioning of authority, a flat hierarchical structure across society, and risk seeking behavior. For those who have traveled to Israel, these notions will not be unfamiliar to you. Furthermore, the book explores how the contacts made during mandatory army service serve as valuable social networking tools later on.

The book was exactly was I was hoping for. It is written for the layperson, and did not read like an academic journal. While most books about Israel focus on its conflict with the Palestinians, this book only brought up politics and conflict as it pertained to the subject at hand, and didn't editorialize in the process. Furthermore, the multitude of stories and vignettes made it a engaging read that held my interest for the time I sat reading it.

As a serial entrepreneur, VC and angel investor, and teacher of entrepreneurship for many years, I am enthralled by "Startup Nation". It is a fascinating story of how Israel has succeeded disproportionately to its size and certainly to its geographic situation. It teaches valuable and unique lessons about region building and industry building. The principles of the country that stimulate individual entrepreneurial behavior in the military, in agriculture, and especially in high technology are lessons for all. I have shared the book with several leaders of industry and finance who have seen it as a remarkably interesting read.
Congratulations to the authors.

Edward Roberts
Professor of Management of Technology, MIT Sloan School of Management
Founder and Chair, MIT Entrepreneurship Center

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.

Beyond Clusters: Review of Dan Senor & Saul Singer, Start-Up Nation: The Story of Israel's Economic Miracle (Twelve, 2009).
Ari Applbaum
December 2009

I wrote my first business plan in high school. The two-page plan (perhaps an overstatement) was promptly filed and forgotten instead of pitched to investors. The concept of offering free internet access to attract an audience for highly targeted advertising was later "stolen" by California-based NetZero, a company once valued at three billion dollars. This type of Chutzpa, a teenager's audacity to think he could reinvent the way people connect to the Internet, is not uncommon in Israel.

But why? Why does Israel produce "more start-up companies than large, peaceful and stable nations like Japan, China, India, Korea, Canada and the United Kingdom?" Why is it that "after the United States, Israel has more companies listed on the NASDAQ than any other country in the world?" These are the questions Dan Senor and Saul Singer set out to answer in their short and intriguing book.

Senor and Singer begin by asserting that the answer "it's simple - Jews are smart, so it's no surprise that Israel is innovative" will not suffice as it "obscures more than it reveals". Instead they offer a thesis based on the Cluster Theory of Harvard Business School professor Michael Porter. Porter's clusters are "geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field,(1)" in Israel's case, high-tech. The closeness and interconnectedness of such institutions help foster innovation and economic growth. The authors demonstrate throughout the book how Israel serves as a cluster, if not The Cluster, of high-tech. The three main players that form this cluster, in addition to the business sector, are the Israeli government, universities, and military.

The government encourages immigration and investment in research and development. The investment is both ample (per capita, Israel spends more than any other country on civilian R&D) and smart. The authors cite for example a 16-year old, government-funding program which incentivized investors and effectively gave birth to the country's startup boom in the 1990s.

Israeli universities are world-class scientific research centers which create scientists who naturally find a home in the business sector. In 1959, with the creation of Yeda - the Weizmann Institute of Science's technology transfer company - Israeli academic institutions pioneered the practice of commercializing academic discoveries. This is a particular strength of Israeli universities today.

The unique element in the cluster might be the military. Senor and Singer explore the IDF's significant role in producing innovation. Elite intelligence and technology units train many of the next generation's entrepreneurs. Combat units empower Israelis to make split-second decisions and both assume awesome responsibilities and challenge -rather than blindly obey - their superiors. Compulsory military service is where future business relationships are made and reserve duty is where they are maintained. CEOs don't turn up their noses but seek out veterans and value their experience. The authors survey the birth of Israel Aerospace Industries (IAI) as a case study highlighting the security industry's role as a growth engine for other industries, and how security technologies often migrate into the high-tech industry.

This cross-pollination between government, academia, military and the business sector greatly contributes to Israeli innovation. But the heart and soul of the cluster is Israeli society. The interconnectedness between these institutions works primarily because of Israel's small size and close-knit society. Israeli startup veteran Yossi Vardi's statement that "everybody knows everybody" in Israel is a cliché but not without some truth. But there's more to it than size.

"The greatest contribution of the Jewish people in history is dissatisfaction," Shimon Peres tells the authors. "That's poor for politics but good for science." Peres notes that when a new shipment of the latest technologies arrives from the U.S, within five minutes Israelis are taking it apart and trying to improve. This is true throughout Israeli society. Israelis are constantly inventing and reinventing, thinking and rethinking, trying to improve themselves and everything around them. Additionally, Israelis are not afraid to fail, and most possess the right balance of personal ambition and an individualistic drive with a spirit of collaboration and sense of community. These are all critical success factors for a healthy startup culture.

Try as they may to steer clear from the "Jews are smart" theory, Senor and Singer end up recognizing that the unique conditions of Israel as a Jewish State and Israelis' unique sense of purpose that results are the core of Israel's success as a startup nation. The personal and professional journeys of Israelis Shai Agassi and David Frohman are prime examples. Had Shai Agassi stayed in California, he would have likely been appointed the next CEO of SAP, one of the most lucrative and sought-after jobs in Information Technology. But Agassi, whose story is told in great detail in the book's introduction, decided to help free Israel and the world from oil dependency. An ardent Zionist, he launched Project Better Place, the most ambitious electric vehicle project in history, and chose Israel for his pilot site.

David Frohman helped build Intel from the ground up in California. The obvious career choice for him was to stay put and benefit from Intel's growth and success, yet Frohman returned in 1974 to the Jewish State to realize the then improbable vision of turning Israel into a world leader in chip design. During the 1991 Gulf War, with missiles falling on Israeli population centers, Intel instructed Frohman to "do whatever you must do." Why did Frohman keep Intel's plants open? And why would Intel employees choose to continue showing up to work, as the authors note, "the more brazen the attacks, the larger the turnout?" Senor and Singer answer in a single word - davka, a unique Hebrew word loosely translated as to spite'. Israelis possess a sense of purpose that drives them to thrive davka in the face of security threats and adversity.

After 242 pages of an easy and enjoyable read, one realizes that the answer to the authors' question was hiding in the book's title all along. Israel does not just produce startups, it is a startup. Israel is a young, entrepreneurially spirited, small yet fast-growing, fast-paced, nimble, impatient, risk-taking, anti-hierarchical, creative and - perhaps most importantly - successful startup. If Zionism was a daring two-page business plan (with Herzl as a starry-eyed entrepreneur knocking relentlessly on doors of European venture capitalists), then Israel is its equally unimaginable successful outcome. Today, "The new pioneering Zionist narrative is about creating things," entrepreneur Erel Margalit tells the authors. Startups are not grown in a vacuum; they need the right breeding grounds, an incubator, if you will. And what better country to serve as a startup incubator than a country that is a startup? Therein lies the author's main revelation.

Senor, a former Deputy White House Press Secretary, and Singer, a Jerusalem Post writer, and are first and foremost excellent storytellers. What makes the book a must-read are the dozens of anecdotes and case studies. The authors' two comprehensive rolodexes translate into more than 100 top-quality interviews. They spoke with senior Israeli officials such as Prime Minister Benjamin Netanyahu and President Shimon Peres, met with chief executives at Google, Cisco and Intel, and interviewed military experts, Jewish historians, and some of the key figures in Israel's venture capital and high-tech scene, including Erel Margalit, Chemi Peres, Yossi Vardi, Jon Medved and many others. The outcome is fascinating. The authors' access to industry experts also brings to light lesser known tales, such as the account of a power struggle between Intel Haifa and Intel Santa Clara, which may be the highlight of the book. Senor and Singer unveil a 2003 drama, little known outside the semiconductor industry, in which Intel Haifa managed to save the company and perhaps the entire industry from an almost certain downfall by thinking out of the box and using Israeli chutzpa to relentlessly force senior executives into a paradigm shift.

It is not clear who the target audience is for this book. First and foremost, the authors hope it will become the ultimate playbook for CEOs, a compilation of lessons American executives can learn from Israelis about innovation. Senor and Singer quote HBS Professor Jon Kao, who says that the United States is "rapidly becoming the fat, complacent, Detroit of nations." The authors repeatedly state that America has much to learn from Israeli innovation but struggle to find exportable lessons and end up focusing mostly on what is unique to Israel. Consequently, their recommendations seem forced and not completely hashed out. They derive from the Israeli experience, for example, that mandatory service - either in the military or in some sort of national service - could help foster innovation. But what would this system look like? How would this affect the deeply-rooted capitalist ethos of American society? These questions remain unanswered. Perhaps the book is meant for business students. It is certainly not academic, but Senor's HBS background and investing involvement are apparent through the use of business jargon and academic theories. It is not implausible that a chapter would be used by professors in the field of business innovation, but more than that is unlikely. Most seriously, the authors touch upon but do not offer an adequate explanation of how to take startups to the next level and create larger, viable corporations that thrive over time. Israel may have the same problems.

The book clearly tries to appeal to Zionist audiences. The Jewish authors are unabashedly Zionist and are clearly ideologically motivated. Singer dedicates the book to his brother, an officer in the IDF who was killed in Lebanon. Senor dedicates the book to his father who helped start the Weizmann Institute's pioneering solar energy research program. While the authors need not completely distance themselves from the subject matter in such a book, at times it reads like a Ministry of Foreign Affairs or an "Invest in Israel Hasbarah" (Israel advocacy) book. Their juxtaposition of Israel with Gulf States is helpful in highlighting why growth without civil liberties, creativity, and an engaged population cannot build a cluster of high-tech innovation. But the authors seemed to have too much fun with the analogy, as if to say "look what Israel can do and its Arab neighbors cannot." As a Hasbarah piece, it is indeed the long-lost, mature, sophisticated and beefy cousin of the Israel21Cs and "Israel invented the Cell Phone" burgeoning positive messaging resources, but that's the problem: by definition it isn't a Hasbarah project.

The average business student might enjoy the book as light reading, but it is not likely to be assigned as an academic textbook. CEOs might read it to learn lessons from the stories told, but it falls short of becoming "a playbook for every CEO." There is too much technological jargon for non-techies and at the same time it is probably too journalistic for industry insiders. And for those interested in innovation outside the Jewish/pro-Israel community, the book's Zionist focus might be too hard hitting.

It is impossible to understand Israel as a startup nation without examining the many components that make it so. While there is something for everyone in the book - academic, businessperson, Zionist, technologist and story lover, it is the possibly rare reader who combines all of the above who would take greatest pleasure in the book. That may imply a narrow readership - although I can think of at least one now-post high school business plan writing Israel advocate who thinks it's a must read. There may also be seven million other potential readers, Israeli entrepreneurs who fuse many interests to form an entrepreneurial spirit. But if the authors are right in asserting that all those interested in innovation could stand to benefit from following Israel's entrepreneurial model, this book may be a good place to start.

i Harvard Business School - Institute for Strategy and Competitiveness Web Site - [...].

This book showed me another side to the whole middle east story. It's not just wars and terrorism. There are vibrant, creative, and entrepreneurial activities going on that more people should be aware of.
Also, a great read for anyone thinking about creating a new business.

I am not Jewish. But this book is staggering in its exposure of the continuing injustice which has been the lot of the Jewish people for the last several centuries, the terrible cost of ideologically imposed myopia with accompanying bad political, economic and military policies.

Using vignettes from economic success stories, the book documents the performance of a people who have outperformed every other nation in building an economy and creating jobs and prosperity for citizens the majority of whom were evicted penniless from their own countries while the Arab nations around them have imposed vicious trade blockades, blizzarded them with rockets and sponsored worldwide campaigns about the injustice of lands seized by Israel in an unprovoked attack to obliterate it. It documents an extraordinary litany of obstacles Israel has overcome to achieve this remarkable economic record and still outperform much less disadvantaged economies many-fold.

The book is adequate with the facts. Numbers of patents granted to Israel vs other nations, number of new companies listed on stock exchanges, numbers of new jobs created, total dollars exported per capita, etc. are irrefutable. There are useful comparisons to other countries with proactive economic development such as Singapore, Korea, and UAE.

The book, however, is not a polemic or intended to embarrass anyone, any government, religion or ideology. The authors' purpose is to identify why and how Israel has been able to achieve such literally unbelievable economic results (if you do not follow Israel closely, you will be amazed by what you learn in this book), particularly in light of the USA's current economic issues and performance in job creation. The authors' conclusions are threaded throughout the work and provide ideas for public and private policy makers; but I finished wishing they had pulled their observations together for application outside Israel although that might have taken the authors too far from the fact and objectivity which characterize the book.

I think I am an optimist; but in the end the book left me pretty melancholy about us human beings. Here is a sliver of a country with "the only receding desert", creating millions of jobs in impossible situations, integrating and employing disparate refugees from more than 100 countries at a pace and success rate unapproachable anywhere else, creating more patents and technological innovation than anywhere else in the world. The US has a problem with immigration from Latin America and the loss of jobs and a poorly performing economy. Israel's neighbors, i.e. most of the countries of the Middle East, have the same problems with very poor results, if any results at all. Is the world looking to this economic petri dish with admiration and curiosity? No, seemingly most Muslims wants their obliteration. No, the rest of the world is apparently happy to use whatever they succeed at if it can do so without offending Arab nations. No, the US Congress and President seem bent on a course in the USA's current economic difficulties similar to the book's description of what had to be undone in Israel to achieve its current economic success. Why can't we learn from Israel? Why can't the Arab nations adopt and use the leanings of these people of the same if not similar ancestry and the same God? Why can't our politicians look to countries with and without economic success for their policies? Do religion and party trump history, logic, and statistics? The book doesn't go there.

If we are to have a peaceful world, all nations will have to learn how to create and/or sustain economies which provide satisfying jobs for their citizens. This book should be in the library of anyone curious about the formula to achieve that.

This book is written without unnecessary jargon in a clear simple style. So even though I am no expert in finance I was still able to both enjoy the material and learn a great deal.

I do think that the authors missed one of the factors that led to the "start up miracle" and that is the repeal of various odious taxes: we moved to Israel 20 years ago and watched the transformation here take place. When we arrived with our IBM clone computer (using the Intel 8088 chip),that my husband actually assembled from parts, Israel taxed us 100% of the price - about 1000$ !! These absurd taxes on all high tech, which at the time was considered unnecessary luxury, stifled innovation in technology. The high tech miracle in Israel could not have started with out those taxes being repealed which they finally were in 1989 or 1990. For a completely different view of the land of Israel visit my website.

At the outset it must be said that the title of the book is a bit misleading. This book is not about Israel's economy, nor is it really about Israel's high technology industry. In my opinion, this book is more about the Israeli mentality and culture.

In this book, Dan Senor and Saul Singer explore the reasons behind the Israeli creativity, which has manifested itself in various achievements in various fields. Without getting into too much detail, Dan Senor and Saul Singer boiled down the reasons for Israel's creativity to a few factors:

1. "Chutzpah" (audacity)- the lack of respect for authority and the "Chutzpah" to make your voice heard when you think you're right. In other words, the attitude of "I know how to it better than anyone else even if I just graduated and my boss has a Ph.D. and he's 20 years older than I am", or the fact that a young solider has no problem to tell his commander that he's doing it all wrong.

2. The Army- almost every Israeli, when s/he reaches the age of eighteen, joins the army. Dan Senor and Saul Singer argue that the amount of responsibility that these young people face is incredible and it helps these young people face the real world once they get released from the army. Another quality that the authors contribute to the army service is the fact that a lot of combat soldiers (but not only) develop the skill of improvisation (an important skill for every combat solider), which is also nurtured, to some degree, by the top generals.

3. Immigration- in short, the constant arrival of immigrants to Israel, who are highly motivated to succeeis always good for the economy, especially when these people are highly educated such as the Russian Jews.

4. The culture acceptance of failure, and therefore, people are not afraid of starting new businesses due to the fear of failing.

There are a few more factors, but these are the important ones. By reading this book you will get valuable insights into the Israeli culture and mentality. It will enrich your knowledge about Israel in general. Highly recommended.

This is a well written, informative and inspiring book. I read it in a day and a half... could not put it down. Then spent dinner on the second day telling my family all about it.

A naturally good read for anyone who loves Israel and wants the best for it. But also a good and informative read for anyone who has questions about the disparity in living standard in the region and comes to the with an unbiased mind - unlike one of the former reviewers. Remember Israel is the only country in the region with absolutely no oil; they have done all of this with their minds alone.