Review Of Start-Up Nation: The Story Of Israel's Economic Miracle
The story behind Israeli’s economic miracle is absolutely fascinating and I got the chance to read this book after the Learning Journey we had this year in Tel Aviv mainly because after a few weeks spent in Israel, I still did not understand what makes this country so special than all the other entrepreneurial countries in the world.
What’s behind this amazing story?
Well, to begin with, we all know that Israel is the fastest growing countries and has one of the most dynamic, entrepreneurial and innovation based economies in the world.
Every year it produces more startup companies than China, Japan, India and the United Kingdom and in the following lines of this essay I want to revel the secret sauce of this amazing country and present both the takeaways I got from the Learning Journey in TelAviv and how I connected the dots after reading this book.
My main question during the Learning Journey was: How did Israel pull this off in the least likely of places, surrounded by adversaries, in a state of war since its founding, with no access to natural resources and completely shut out from the region because of the Arab League boycott (no access to regional capital and regional markets).
I believe that what’s amazing about Israel is not just the startups, but the fact that they have large companies of scale who are leading in the tech industry and the fact that there are also other 2 ingredients that are necessary along aside the startups:
One is a lot of drive and determination and the other one is the willingness to take risks from an early age.
One of my main takeaways from the book was that Israel is composed of a really dynamic and diverse group of young people aiming to solve big problems in the world. Considering that their country is so small and therefore it cannot allow exponential business growth, their only chance in succeeding in entrepreneurship is to target the global market, especially the U.S.
During my learning journey, I had the chance to speak with a lot of young entrepreneurs and I was amazed to see that they only begin to work on a project/start-up if it can reach & help the lives of the people from U.S/Asia/Africa. Companies such as: Waze, Wix, Fiverr, Skype got started in Israel reaching the global market and billion dollar valuations within a few years after their launch.
Another confirmation of the success of having a global mindset came while attending the OurCrowd conference and seeing that their entire eco-system supports and encourages innovation & research. One of the speakers was the Minister of Innovation & Research and just as the author of the book points out several times, he said that there are 3 key ingredients of Israel’s Entrepreneurial Success:
- Talent
- Resources
- The Right Mindset
The first key ingredient unsurprisingly has its root in the educational system of the country. Having a series of top engineering universities will most likely increase the chances of that eco-system to produce a unicorn. Similarly to Silicon Valley and the innovation hub around the Stanford University, Tel Aviv has a lot of globally competitive schools such as: The Hebrew University of Jerusalem, Tel Aviv University or the Israel Institute of Technology.
However, having a bunch of smart youngsters is not enough to produce so many unicorns… which leads me to the second key ingredient which is: Resources.
Access to capital is crucial for an innovative country, therefore the Venture Capital system suits perfectly in this landscape of innovation. The more checks are written, the more venture capital firms pay attention to entrepreneurs. Not to mention that 4,5% of Israel’s total GDP is spent on Research and Development, placing the country on the second place in the world on this ranking.
The third key ingredient is related to the mindset of the people who live in Israel. Considering that the vast majority of new companies fail, starting one is a huge risk. People have developed a certain kind of personality that’s willing to fail multiple times and not give up or lower one’s self esteem. The authors of the book (Dan Senor and Saul Singer) mention at one point that Israelis have learned during school and army that being assertive is a good thing and it helps you not being left behind during your life. Israel requires everyone to be in the military services for a couple of years (3 years for men and 2 for women) and during the military school young people learn the key skills required in the workforce: how to work in teams and how to develop a healthy mindset that will allow growth inside the organisation.
I was attending a conference at Wix.com during the Learning Journey in Tel Aviv and I was amazed to see that people my age were dressed in military uniform and joined us during the conference after coming from the military training. Most of them were passionate about software development and I got the chance to speak with some of them, only to find out that their vision on life was completely different than what I was expecting(comparing them with my friends from Romania who joined the military school). All of the teenagers I spoked with, wanted to leave the military system after they're mandatory years passed, so that they can join or start their own tech companies, benefiting from all the learning they got during the school. My belief was that they spend their entire day shooting with the gun and doing military exercises, only to find out that most of the time they learn software development and they can choose what kind of tech vertical they want to study during the time they spend in school.
Having had the chance to meet so many Israeli entrepreneurs and connecting the dots with the takeaways from the book, I have realized that we can develop the same kind of “ingredients” in our company as well. We need to make sure that our team members are well educated and trained (they have to spend at least 1h/day learning something within our industry) and try to invest as much as we can in developing the right mindset within our company culture. We want our employees to be passionate about their work at Difrnt and really have an impact in the customers lives. Even though we are not a corporation and we don’t have thousands of employees, I think the culture is mainly dictated from the founders and it spreads in the entire organisation without acknowledging that.
In conclusion I believe that the book Start-up Nation explains the story behind Israeli’s economic miracle in a very practical and concise way, helping entrepreneurs understand the secret sauce of a successful eco-system. For me the main take-away was that I can use inside my own company some of the learnings from the book and try to target with our future entrepreneurial projects not only the Romanian market but the Global one. Our mission within the agency is to be able to build our own product in the next year, and I definitely got inspired by this book to start my new company with a new mindset, aiming to help customer all over the world, not just in my small country.
More than ever before, during a book reading, I believe this book has helped me dream again.
