Start-Up Nation analyzes Israel’s 'secret sauce'

Start-Up Nation analyzes Israel’s 'secret sauce'

By Karin Kloosterman
November 05, 2009

Israel's extraordinary high-tech successes result from a combination of military-inspired innovation and an immigrant's propensity for risk-taking, a new book concludes.

Photo courtesy of Ariel Jerozolimski

Israel is a model for nations seeking to boost their own innovative economic talent: Saul Singer, co-author of Start-Up Nation.

The book was sold-out even before its official release on November 4, says Saul Singer, author and columnist from Jerusalem. Singer co-wrote Start-Up Nation with Dan Senor, a prominent news analyst and businessman from New York. The two take a look at Israel's trillion dollar high-tech industry and the nation's improbable success - against all odds.

The most amazing thing about chronicling Israel's high-tech industry, Singer tells ISRAEL21c, is that no-one has done it before. In the book, he and Senor explore how a small country of only 7.1 million people - a nation in a constant state of war and with no natural resources - has carved out a lucrative niche for itself in high-tech on a par in scale and calibre with America's top companies.

Tom Brokaw from NBC News has praised the book, as has the president of eBay. When ISRAEL21c was interviewing Singer and Senor, the two were busy wrapping up an article on Start-Up Nation with Bloomberg News. This followed a very successful placement on the Meet the Press TV show in the US, where Senor was recently featured.

The authors contend that as they examine the world's most dynamic "start-up nation," their book is not only an exposé of historical and business facts, but portrays Israel as a model for individuals and nations seeking to build their own enterprises and boost their economic confidence.

Natural risk-takers and entrepreneurs

Why Israeli high-tech and why now? "We were interested in this topic," Singer tells ISRAEL21c. "What's going on in Israel - there is such an amazing amount of innovation and startups - and we started asking ourselves, there must be a book about this."

A wide search turned up only quasi-academic books, so the two decided to take up the challenge: "And what we tried to do is not just the lay-out - not just a profile of different companies, by sectors - we started to describe the extent of Israeli success. We knew it was strong, but we didn't know how strong."

The trickier part was teasing out the ingredients in "Israel's secret sauce," which Singer is more than happy to reveal: It's partly derived from the military of course, "but not just the parts that people have looked at."

It's also the result of 'spin-offs' of military R&D and the companies created by Israeli engineers who have passed through the special military tech program. More than that, however, the military in Israel "promotes innovation and entrepreneurship," says Singer, adding, "It's a country of immigrants who by nature are natural risk-takers and entrepreneurs."

And Senor adds that, "While there has been a burst of clean-tech ventures in Israel, most exciting to us are the companies and sectors that one would least likely expect in Israel - from a world-class digital animation studio in Jerusalem to a next-generation asset management industry in Tel Aviv."

"Israel itself is a start-up," Dan Senor, co author of Start-Up Nation.

Start-up by definition

Israel itself is a start-up, says Singer. While the book deals to some extent with elements of Jewish identity, it tends to focus more on exploring Israeli traits. But sometimes the two overlap: "It's very Israeli to be constantly questioning, arguing and not accepting, but challenging authority," says Singer. "Israelis are not worrying about hierarchy and ranks. All these things are Israeli traits, but some of them have Jewish antecedents.

"The Israeli emphasis on education is a Jewish trait and has also become an Israeli thing - Israel's universities were founded in the 1920s before the state was founded," he recounts.

To extract the most basic elements from the recipe, Israel has a perfect balance between innovation and entrepreneurship, and it is this balance between the two that make it very competitive with other "smart" countries like Finland, Singapore and Ireland.

Singer, who is also a policy analyst and a past advisor on Capitol Hill, worked hand-in-hand with Senor. Each brought a special skillset to the writing and researching of the book.

Looking to Israel to reboot innovation economies

Based in the US, Senor is an author and senior fellow for Middle East studies at the Council on Foreign Relations. He was a foreign policy adviser to the Bush Administration and one of the longest-serving civilians in Iraq. Awarded a prize by the Pentagon for his service, one of the more colorful stories told about him is that while serving in Iraq Senor slept on the floor of Saddam Hussein's palace and showered with bottled water.

A graduate of Canadian high school and business school, Senor is married to a prominent American TV personality and appears on Fox News as an analyst.

Why has no one written a book about Israeli high-tech before? "Israeli entrepreneurs have been too busy building their start-up companies and their start-up country to step back and piece together exactly how they pulled it off and - even more importantly - what others can learn from their experience," Senor tells ISRAEL21c.

"We thought that this was the right moment for this kind of book because western countries are desperately looking for ways to re-boot their own innovation economies. The world needs innovation; Israel's got it. There's no better time to look at the Israeli model."

As Israeli technology refugees choose their next steps, Senor believes they will grow towards a different mode of operation. "The next phase for Israel's economy is not just building start-ups that are quick to exit, but building self-contained, stand-alone institutions more in the mold of Teva."

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