By Steve Kelman

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Israel: Start-up nation

 I was recently flying to Israel for some work chairing an external academic review of public policy programs at Israeli universities. While en route, I read a book called "Start-Up Nation: The Story of Israel's Economic Miracle," by Dan Senor and Saul Singer. It was published in 2009, and is currently the number-one book about Israel on

The book tells am amazing story about the enormously disproportionate role Israeli companies and talent have played in the world's high-tech industry. It started with the original development of instant messaging technology and Intel's Pentium chip, and includes a large number of more technical applications, especially in telecommunications.

This is a nation that is only about as big as New Jersey, with a smaller population (there are approximately 7.5 million Israelis). Yet it has produced the largest number of NASDAQ-listed companies of any country outside the U.S. -- not in proportion to its population, but in absolute numbers! Google CEO Eric Schmidt has stated that, after the U.S., the leading country in the world for entrepreneurs is Israel. Microsoft CEO Steve Ballmer has called Microsoft "an Israeli company as much as an American company."
The book asks what it is about Israeli culture that produces so many original ideas and start-ups. The first part of the basic answer is that Israeli culture emphasizes questioning and argument, in a very informal and non-hierarchical environment. It is okay to be brash in Israeli culture, while it might appear rude and be unwelcome in other societies. Israeli people accept, even relish, a clash of ideas and opinions.

The country is very informal -- people seldom wear jackets and ties, let alone suits, and every prominent Israeli has a publicly-used nickname (like "Bibi" for Prime Minister Binyamin Netanyahu) -- and the culture discourages "subordinates" from merely accepting what "superiors" do. (As the authors point out, the Israeli army has a very low ratio of senior officers to junior officers and soldiers, so people at the bottom need to take more initiative; furthermore, under the system of reserve duty on which the Israeli army depends, older reservists, often into their 40's, are regularly trained by young active-duty soldiers around 20 years old.) The result of all this, the book argues, is a culture primed for creativity and for initiative from the bottom.

The second part of the answer seems to be that the Israeli Army relentlessly seeks out smart young people for elite, very high-prestige units with strong technological components, trains them, puts them closely together for several years so they really get to know each other well, and then unleashes them for further education and private-sector business activity. There's more, but this will give a feel for what the authors argue. This system produces very smart people channeled into a forge where they get great technical training, solving practical problems, and a great network.
The book is fascinating, and it also prompts a fairly simple -- but I think important -- question: Can anyone possibly think that it is not a good thing for the world that this country exists? To go beyond that, isn't it a good thing for the world that this country, so under attack, be permitted to flourish?
PS: I saw an amazing story this morning on the website of Sweden's leading newspaper Dagens Nyheter, that the Swedish police are looking for information about accomplices to the Stockholm suicide bomber by examining his Facebook page. (I have a link to the story, but it is in Swedish.) Has any US media outlet taken this story up?

Posted on Dec 17, 2010 at 12:08 PM


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