Start-up Nation: The Story of Israel’s Economic miracle

Israel, a developed country in western Asia, has many lessons to teach to the world. A
country with a population of 7.41 Million has, half as compared to New Delhi, built on
technology & innovation has proven the world its mettle. This book, as the name suggests, is
about the economic miracle of this country, fondly called as “start-up nation”. A country
always in a tussle with its neighbouring countries is one of the most technologically
advanced nations in the world & it owes the same to the culture which breeds the highest
density of start-ups in the world (one for every 1844 Israelis). It has the highest companies
listed on the NASDAQ just after china & more than the whole European continent combined.
Also, in the United Nations’ Human Development index Israel stand at 18 th position with HDI
value at 0.89. The International monetary fund has ranked Israel at 23rd position in the world
by its per capita GDP of $42,800. These figures are comparable with highly advanced &
prosperous nations like USA, & Scandinavian countries.
So, in the summary of the book through various anecdotes presented in the book, we would
like to highlight the crucial factors that had a vital role in the development of this 70-year-old
young country & some of the managerial lesson which we can learn as a future manager.

1. Compulsory Military Training:

Israel has a compulsory military service for all the citizens once they turn 18. It's three
years for the men & 2 years for the women. This is owing to the fact that it's a very small
nation & always in war with its neighbours which keeps them on their toes. The Israel
Defence Force (IDF) also has a very unique, anti-hierarchical structure, which results in
very few levels of middle and upper management. The result of this is, very young
soldiers barely out of their teens serve on the front lines of the battle with minimal
guidance from superiors. The IDF places a very strong emphasis on soldiers taking
personal responsibility. This leads to soldiers having to solve problems on their own on
the front lines of battle, under incredible pressure, in the very intense real-world, life-and-
death situations. As a result, IDF soldiers get a more mature perspective on life at a
younger age. The IDF is deliberately understaffed at senior levels. It means that there
are fewer senior officers to issue commands. Fewer senior officials mean more individual
initiative at the lower ranks.

Innovation comes from having a unique perspective. Perspective comes from

knowledge. Knowledge comes from a wide variety of experiences during a long life. In
Israel, young people get experience, knowledge, perspective, and maturity at a much
younger age, because the Israeli society jams so many transformative experiences into
its people when they're barely out of high school. By the time they get to college, their
heads are in a different place than their counterparts.

2. Entrepreneurship:

This is one thing which is in the blood of the Israelis. As they have limited resources, the
only option they are left with is to utilise the maximum out of the available & technology
has been their best friend since then. The best example is the drip irrigation system
which Israel has exported to the entire world. Necessity is the mother of all inventions will
be the apt adage for Israel. And this spirit of entrepreneurship takes it root from the
culture they have been living in. They never shy away from the failing & believe in failing
fast learning quick.
An example given in the book talks about a start-up named “Better place” explains their
neck for doing over the obvious. Shai Agassi, the founder of Better Place, had very early
realised our over-dependence on the Oil. So, by his start-up, he tried to break the status
quo by collaborating the Nissan Renault to produce more than 50,000 electric vehicles.
Now we may ask what did he plan differently? He realised that the significant cost which
inhibits anybody from buying the EV is the initial cost, so he came up with the idea that
the buyer would just have to pay for the car & not the battery, which constitutes a larger
portion of the cost of EV. And the price would be recovered from the buyer through
monthly instalments something similar to what we pay now for our petroleum fuel. And to
attract the buyers, the car was designed in such a way that the discharged battery can
be replaced in 2 minutes with a fully charged one at the multiple charging stations which
will also be developed by the same company. Israel was the perfect place for the
company to experiment because of the small size of the country so that one can reach
from one end to another in a single battery.

When an Israeli man wants to date a woman, he cheerfully asks her out that same night.
He does not wait, mulling over his chances of rejection. When an Israeli entrepreneur
has a business idea, he will start it that week. He does not wait to mull over his chances
of failure. The notion that one should accumulate all his credentials before launching a
venture simply does not exist in Israeli culture. They believe that too much time
procrastinating can only teach you what can go wrong, not what could be transformative.
Failing is not seen there something as a failure but a stepping for something big &
successful.

3. Chutzpah:
A very strong trait in Israeli culture behind the start-up nation’s success is Israeli
‘Chutzpah’ which means extreme self-confidence or audacity. It helps Israelis keep their
strong resilience, and assures them that they are good people, they are smart people,
they are honest people, and they do the right thing even when everyone around them is
not. That chutzpah will not let Israel’s enemies get her down. That chutzpah accounts for
much of Israel’s success against all odds. A joke, as described in the book, is self-
explanatory to explain their attitude towards things:

Four guys are standing on a street corner,

an American, a Russian, a Chinese man, and an Israeli.
A reporter comes up to the group and says to them:
“Excuse me, What’s your opinion on the meat shortage?”
The American says: What’s a shortage?
The Russian says: What’s meat?
The Chinese man says: What’s an opinion?
The Israeli says: What’s “Excuse me”?

They are also discouraged from being overly compliant and instead are taught to speak
up and question authority if they have serious doubts about decisions made by senior.
They are audacious enough to cross-question their leader/manager if they don’t deem
him/her capable enough to lead the team or give the orders. This provides them with a
perfect combination to do the best in whatever they do and not what their senior expects
good out of them & this is the culture how they have been born & brought up in. So, it’s
not just talent, but tenacity, insatiable questioning of authority, determined informality,
unique attitude toward failure, teamwork, mission, risk and cross-disciplinary creativity
 4. Technology & Development:
Despite being in such a grim situation in the middle east, Israel has been successful in
presenting itself as a technologically advanced nation. The emergence of Israel’s high-
tech sector put the small country’s economy on track. Specializing in computer hardware
and software, medical technologies, pharmaceuticals, defence equipment, drip irrigation
technology or wastewater recycling technology, Israel’s technology sector became world-
renowned for its innovation. During the beginning of the century be it Flash drives,
cardiac stents, camera-pills, providing the fraud security to biggies like PayPal & eBay,
or completely revolutionizing the Intel processors, these are only a few of Israeli-bred
innovations that have emerged in the last few decades. All these take root in their culture
of innovation, having an eye for details & thinking a step ahead of their competitors by
providing a future-ready solution. This is best explained with a practical example where a
new start-up “Fraud Science” shocked the CTO of PayPal in detecting the frauds in the
transactions carried out online. When the young boy from Israel approached the for
presenting his idea, the CTO doesn’t look him seriously & handed him over the 100,000-
past transaction of the PayPal to analyse & detect the fraud.
The CTO thought this would might take him months to do, but he was surprised when he
received an email in the next two days saying that they are done analysing the data. He
couldn’t believe that what took them weeks to verify it with their results and that too by
the highly professional team of PhDs, this team of young Israelis could do it in few days
with 17 Percent better results. On being asked how did they do it, he simply said: Our
idea is simple. We believe that the world is divided between good people and bad
people, and the trick to beating fraud is to distinguish between them on the Web. Good
people leave traces of themselves on the Internet—digital footprints—because they have
nothing to hide. Bad people don’t, because they try to hide themselves. All we do is look
for footprints”. And he further goes on to explain, when being asked where he learned
this, he said “Hunting down terrorists” when he was serving the military. On analysis, the
CTO realised that the idea of what they were talking about was at least five years ahead
of PayPal in the effectiveness.

So, learning for us here is that we need to be updated about the latest happenings & try
to think one step ahead to stay relevant & valuable in the future.

5. Where order meet the chaos:

Israel has been involved in more than half a dozen wars in the last three decades, trying
to destroy its peace & harmony. Especially during the tech bubble in 2000, Israel
suffered one of its worst periods of terrorist attacks and fought a second Lebanese war;
and yet, its share of the global venture capital market did not drop— in fact, it doubled,
from 15 per cent to 31 per cent. Adversities & Challenges have pushed them further to
perform better & excel in whatever they do. It seems that Israel has inoculated itself
against security threats to its economy & in turn, have helped/forced them to modify their
warfare techniques technically. Their population is so small that unlike other countries
everybody is supposed to serve as a reserved force & this kind of acts as a reunion from
some of the brightest minds of the world. When one has seen & played with life & death
during such wars, usual problems seem much simple & naive to them providing them
with a better understanding & a different angle of the problem which nobody else can.

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