Friday Reviews: Start-Up Nation by Dan Senor & Saul Singer

Start-Up NationStart-Up Nation

It’s a small nation surrounded by enemies and at war as often as not. And yet Israel continues to thrive. Start-Up Nation attempts to explain why. It does not look into the political ramifications of its military actions or its treatment of the Palestinian people.

Instead, it looks at a nation that, under normal circumstances, would be seen as too dangerous to sustain long-term investment. Instead, it is a major center of technology. What’s the secret? Floods of money from America and Europe? A constant state of war resulting in greater and greater technology?

Actually, it’s culture. Israel’s history as a republic is unique, fostering an entire nation of entrepreneurs. Every Israeli Jew, with few exceptions, serves in the military. And Israel’s military is, counter-intuitively, anti-hierarchical. Junior officers are encouraged to question their superiors. And because units continue to serve in the reserves until their members reach their forties, a natural network is built up. Because of this, everyone in Israel knows someone who can help implement a new idea. And in these new Israeli companies, the office politics so familiar in Europe and America (Why do you think there are so many versions of The Office?) don’t exist.

At the same time, Israel is not too far removed from its “pioneer” generations. Consider the rise of America as an industrial power. Much of nineteenth and twentieth century technology that gave rise to GM, IBM, and Microsoft came from a propensity to tinker. In Israel’s case, there was no choice. When the republic was founded in 1948, it had only what it could borrow, steal, or salvage to build its infrastructure and transportation. Now?

Israel, a small country the size of Delaware, rivals America, Britain, and Germany in the number of patents filed.

The reasons for its constant state of war are touched on here, but it’s tragic, since Israel has much to teach its neighbors. Egypt and, once ISIS is subdued, Iraq may be in the best position to implement some of Israel’s techniques for fostering innovation. However, as long as the old monarchies continue to cling to power, they will never allow their populations enough freedom or education to foster entrepreneurship. Of all the Arab nations, Dubai seems to have made the most progress.

There are threats, aside from Israel’s enemies, the author asserts. While Israel produces incredible talent, many Israelis go abroad to seek their fortune. Certain traditional sects of Jews do not serve in the military, and their numbers are growing. Likewise, Arab Israelis, a growing segment of the population, also do not serve in the military. While they get the same education as their Jewish counterparts, they lack the network most soldiers enter civilian life with. The result is a brain drain and a growing segment of the population that is not in the workforce. These, along with relations with their neighbors, are the challenges the world’s first “start-up” nation faces in the future.