“Throughout Israel, brains and energy are ubiquitous” — Warren E. Buffett, 2007
This blog post is a ~thousand words “elevator pitch” on Technology, Chutzpah and Innovation in Israel (a.k.a. The Silicon Wadi)
The best book I have read on this topic is Start-up Nation — The Story of Israel’s Economic Miracle (by Dan Senor and Saul Singer)
Start-up Nation addresses the trillion dollar question: How is it that Israel — a country of 7.1 million (smaller than New Jersey), only 60 years old, literally surrounded by enemies, in a constant state of war since its founding, with no natural resources, managed to produces:
- More start-up companies than large, peaceful and stable nations like Japan, China, India, Korea, Canada, and the UK
- Most VC investments per capita in the world — Twice as much venture capital investment as the US and thirty times more than Europe
- More tech-oriented NASDAQ companies than any country besides the US, more than all of Europe, India and China combined
- Leads the world in medical device patents, and is a strong global player in cleantech and biotech
- Economy barely hit by global economic crisis
- The quality of Israel’s own scientific research institutions is ranked 3rd in the world by the WEF (+4 Nobel prizes in the past 6 years)
a.k.a. How do we kick ass with such little feet?
“It’s no exaggeration to say that the kind of innovation going on in Israel is critical to the future of the technology business . . . For Microsoft, having an R&D center in Israel has been a great experience . . . The quality of people here is fantastic.”
— Bill Gates, Chairman and Chief Software architect of Microsoft (2005)
Start-up Nation observations
- Israel is not just a country, but a comprehensive state of mind. Where Americans emphasize decorum and exhaustive prep, Israelis put chutzpah over charm (see below)
- Israeli immigration and assimilation policies bring and support a highly motivated, diversified pool of talent into the country; “Immigrants are not averse to starting over. They are, by definition, risk takers. A nation of immigrants is a nation of entrepreneurs.” — Gidi Grinstein
- The fostering and facilitating role of the Israeli Government — Israel spends more as a percentage of our economy on R&D than any other country in the world and knows how to make that money relevant to startups.
- Israel actively cultivates a culture of entrepreneurship and leadership in the military. Teenagers are not only given the responsibility to make life-saving decisions, constantly practice improvisation, typically with little data, but to question authority regularly in doing so.
- The Israeli economy respects and knows how to integrate the unique talents and “chutzpah” developed by soldiers in the military.
- Hyper- networking, everybody are connected to everybody; “The social graph is very simple here. Everybody knows everybody” — Yossi Vardi
- “The two real fathers of Israeli hi-tech are the Arab boycott and Charles de Gaulle, because they forced on us the need to go and develop an industry” — Yossi Vardi
“There are projects for which it won’t matter if tens of thousands of engineers work on it or if a group of 100 engineers with a range of talents do all the work. Israel has such groups.”
— Clifford Meltzer, Cisco Systems Senior VP Network Management Technology Group
The Good, Bad and Ugly of the Israeli Chutzpah (a.k.a. Where is the catch? or Aptitude vs. Attitude ;)
“Doubt and argument — this is a syndrome of the Jewish civilization and this is a syndrome of today’s Israel” — Amos Oz
Chutzpah is hard to define… Leo Rosten defines Chutzpah as “gall, brazen nerve, effrontery, incredible ‘guts,’ presumption plus arrogance such as no other word and no other language can do justice to”. In this sense, chutzpah expresses both strong disapproval and a grudging admiration
Outsider would see chutzpah everywhere in Israel: in the way university students speak with their professors, employees challenge their bosses, sergeants question their generals, and clerks second-guess government ministers.
When the Intel Corporation began building its Israeli teams in the 70′s, the Americans found Israeli chutzpah so jarring that Intel started running “cross-cultural seminars on Israeliness.” Intel-Israel’s Mooly Eden, who ran the seminars, said that “from the age of zero we are educated to challenge the obvious, ask questions, debate everything, innovate.” as a result, he adds, “it’s more complicated to manage five Israelis than 50 Americans because [the Israelis] will challenge you all the time — starting with ‘Why are you my manager; why am I not your manager?’”
When Paypal — the internet payments giant — bought Israeli start-up FraudSciences in 2007, Paypal president Scott Thompson went to Tel Aviv to meet with the FraudSciences team. He told us about his first meeting with the staff: “Every question was penetrating. I actually started to get nervous up there. I’d never before heard so many unconventional observations — one after the other. Junior employees had no inhibition about challenging how we had been doing things for years. I’d never seen this kind of completely unvarnished, un-intimidated, and undistracted attitude. I found myself thinking, “who works for whom here? Did we just buy FraudSciences, or did they buy us?”
To Israelis, this is the normal mode of being. Somewhere along the way — either at home, in school, or in the army — they learn that assertiveness is the norm, reticence something that risks your being left behind.
“What drives us is the desire to improve and excel, as well as the desire to build things by ourselves” — Check Point Founder, Chairman & CEO, Gil Shwed
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