Start-up Nation

The Council on Foreign Relations states in its publisher's blurb for the book that Start-up Nation addresses the question: "How is it that Israel—a country of 7.1 million people, only sixty years old, surrounded by enemies, in a constant state of war since its founding, with no natural resources—produces more start-up companies on a per capita basis than large, peaceful, and stable nations and regions like Japan, China, India, Korea, Canada, and all of Europe?"[5] The Economist notes that Israel now has more high-tech start-ups and a larger venture capital industry per capita than any other country in the world. The success of Israel's high-tech sector over the past two decades has attracted recent attention from business journalists and The Economist describes Start-up Nation as the most notable of a "growing pile" of books on the subject.[6]

In their attempt to explain Israel's success in this area, Senor and Singer discard "the argument from ethnic or religious exceptionalism, dismissing 'unitary Jewishness' or even individual talent as major reasons for Israel's high-tech success" and analyze two major factors that, in the authors' opinion, contribute most to Israel's economic growth. Those factors are mandatory military service and immigration.[5]

The authors argue that a major factor for Israel's economic growth can be found in the culture of the Israel Defense Forces, in which service is mandatory for most young Israelis. The authors believe that IDF service provides potential entrepreneurs with the opportunities to develop a wide array of skills and contacts. They also believe that IDF service provides experience exerting responsibility in a relatively un-hierarchical environment where creativity and intelligence are highly valued.[7] IDF soldiers "have minimal guidance from the top, and are expected to improvise, even if this means breaking some rules. If you're a junior officer, you call your higher-ups by their first names, and if you see them doing something wrong, you say so."[2] Neither ranks nor ages matter much "when taxi drivers can command millionaires and 23-year-olds can train their uncles," and "Israeli forces regularly vote to oust their unit leaders."[8]

The book also dwells at length on immigration and its role in Israel's economic growth: "Immigrants are not averse to start from scratch. They are by definition risk-takers. A nation of immigrants is a nation of entrepreneurs. From survivors of the Holocaust to Soviet refuseniks through the Ethiopian Jews, the State of Israel never ceased to be a land of immigration: 9 out of 10 Jewish Israelis today are immigrants or descendants of immigrants the first or second generation. This specific demographic, causing fragmentation of community that still continues in the country, is nevertheless a great incentive to try their luck, to take risks because immigrants have nothing to lose."[9]

Additional factors cited by the authors include a sense of dissatisfaction with the current state of affairs, a culture where individuals frequently tinker with technology, and government policies friendly to start-ups.[7]

Using stories and anecdotes, the book provides examples of Israel's technological and medical achievements, among them "the Israeli innovations that made possible Google Suggest, the list of suggestions that appear instantly in menu form as you type a search request, the capsule endoscopy, a miniature camera embedded in a pill so that 18 photos per second can be wirelessly and painlessly transmitted from gastrointestinal tracts."[10]

While the book describes Israel's many successes in technological innovation, it also attempts to address, in the words of one reviewer, why Israel still lacks its own Nokia, Samsung, or IBM. According to the book's authors, this is partly because Israeli startups tend to be bought up by large foreign companies and partly because Israeli business has thus far failed to develop the kind of mature management culture needed to run such companies.[11]

Senor and Singer interviewed over 100 people to write the book, among them leading Israeli venture investors including key players in Google, Intel, and Cisco; and historians, U.S. military leaders, and Israeli heads of state.[12] Their conclusion is that "while Israel has much to learn from the world, the world has much to learn from Israel."[13]

Dan Senor is a former foreign policy official in the United States government. He served as chief spokesmen for the Coalition Provisional Authority in Iraq and now advises venture capital firms. Saul Singer is a columnist and former editorial page editor for The Jerusalem Post.[2][14]

Journalists and policymakers in several countries have recommended Start-up Nation as a useful guide for promoting entrepreneurship. A review of the book in The Irish Times calls on Ireland to follow Israel's model.[22] Andrius Kubilius, the prime minister of Lithuania, has cited Start-up Nation as his favorite book.[23] Yrjö Ojasaar, managing partner of Solon Partners, an executive consulting and angel investor company in Estonia, says "there is much to be learned from the Israeli experience of venture capital incubation through building incentives for privatization."[24] CNN's Fareed Zakaria called Start-up Nation "a book every single Arab businessman, Arab bureaucrat, and Arab politician should read."[25] The book is cited as a handbook of "classic economics." It teaches small businesses "how effective a cohesive team can be, especially when that team places an emphasis on chutzpah first."[26]

Former Palestinian Prime Minister Salam Fayyad reportedly kept a copy of Start-up Nation on his desk as a source of inspiration for the West Bank's own burgeoning technology industry.[27]

• Economy of Israel
• Israeli inventions and discoveries
• Science and technology in Israel
• Silicon Wadi, the areas with a high concentration of high-technology companies in Israel
• List of Israeli companies quoted on the Nasdaq
• List of multinationals with research and development centres in Israel
• Venture capital in Israel

• Start-Up Nation Central, "an independent non-profit that builds bridges for Israeli innovation"