Start-Up Nation
Start-Up Nation

Start-Up Nation


Dan Senor and Saul Singer

Full Title

Start-Up Nation

Last Highlighted
May 20, 2013 11:56 PM (CDT)
Last Synced
June 8, 2023 1:13 PM (CDT)

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Israeli culture and regulations reflect a unique attitude to failure, one that has managed to repeatedly bring failed entrepreneurs back into the system to constructively use their experience to try again, rather than leave them permanently stigmatized and marginalized.

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So long as the risk was taken intelligently, and not recklessly, there is something to be learned. As Harvard Business School professor Loren Gary says, it is critical to distinguish between “a well-planned experiment and a roulette wheel.”

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Frohman had long tried to cultivate a culture of disagreement and debate at Intel Israel, and he had hoped this ethos would infect Santa Clara. “The goal of a leader,” he said, “should be to maximize resistance—in the sense of encouraging disagreement and dissent.

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As a result, he adds, “it’s more complicated to manage five Israelis than fifty Americans because [the Israelis] will challenge you all the time—starting with ‘Why are you my manager; why am I not your manager?’ ”17

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Because Israel was forced to export to faraway markets, Israeli entrepreneurs developed an aversion to large, readily identifiable manufactured goods with high shipping costs, and an attraction to small, anonymous components and software.

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Talpiot, a unit that combines technological training with exposure to all the top commando units’ operations?

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In Israel, about one year before reaching draft age, all seventeen-year-old males and females are called to report to IDF recruiting centers for an initial one-day screening that includes aptitude and psychological exams, interviews, and a medical evaluation.

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The twenty top-ranking soldiers for each unit immediately begin the twenty-month training period. Those who complete the training together remain as a team throughout their regular and reserve service.

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Talpiot has the distinction of being both the most selective unit and the one that subjects its soldiers to the longest training course in the IDF—forty-one months, which is longer than the entire service of most soldiers.

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The idea is to give them an overview of all the major IDF branches so that they understand both the technology and military needs—and especially the connection between them.

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This is achieved by handing them mission after mission, with minimal guidance. Some assignments are as mundane as organizing a conference for their fellow cadets, which requires coordinating the speakers, facilities, transportation, and food. Others are as complicated as penetrating a telecommunications network of a live terrorist cell.

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The Talpiot program as a whole is under Mafat, the IDF’s internal research and development arm, which is parallel to America’s DARPA (the Defense Advanced Research Projects Agency). Mafat has the coveted and sensitive job of assigning each Talpion to a specific unit in the IDF for their next six years of regular service.

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Talpions may represent the elite of the elite in the Israeli military, but the underlying strategy behind the program’s development—to provide broad and deep training in order to produce innovative, adaptive problem solving—is evident throughout much of the military and seems to be part of the Israeli ethos: to teach people how to be very good at a lot of things, rather than excellent at one thing.

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The notion that one should accumulate credentials before launching a venture simply does not exist. This is actually good in business. Too much time can only teach you what can go wrong, not what could be transformative.”5

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The military is also much better than college for inculcating young leaders with a sense of what he calls social range: “The people you are serving with come from all walks of life; the military is this great purely merit-based institution in our society.

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Every soldier who completes his regular service is obligated to serve for short stints every year, until the age of thirty-three.

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“If you want to know how we teach improvisation, just look at Apollo. What Gene Kranz did at NASA—which American historians hold up as model leadership—is an example of what’s expected from many Israeli commanders in the battlefield.”

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Connected to this Apollo culture, certainly in Nava Swersky Sofer’s estimation, is a can-do, responsible attitude that Israelis refer to as rosh gadol. In the Israeli army, soldiers are divided into those who think with a rosh gadol—literally, a “big head”—and those who operate with a rosh katan, or “little head.”

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And each day ends with a grueling session whereby everyone in the unit—of all ranks—sits down to deconstruct the day, no matter what else is happening on the battlefield or around the world. “The debrief is as important as the drill or live battle,” he told us.

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operation is treated like laboratory work “to be examined and reexamined, and reexamined again, open to new information, and subjected to rich—and heated—debate. That’s how we are trained.”12

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Nobody learns from someone who is being defensive.”

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Rather, the effect of the debriefing system is that pilots learn that mistakes are acceptable, provided they are used as opportunities to improve individual and group performance.

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The new was not always better than the old, but the flow of fresh ideas at least prevented the ossification of the military mind, which is so often the ultimate penalty of victory and the cause of future defeat.”13

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In other words, Israel suffered from a lack of organization and a lack of improvisation.

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for predictability. This, at least in principle, is not the Israeli way.

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A bitzu’ist is someone who just gets things done.

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penchant for taking problems—like the lack of water—and turning them into assets—in this case, by becoming leaders in the fields of desert agriculture, drip irrigation, and desalination.

Note: what are our similar problems?

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According to Israeli economist Yakir Plessner, once the government saturated the economy with big infrastructure spending, only entrepreneurs could be counted on to

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drive growth; only they could find “the niches of relative advantage.”

Note: want to learn more about this topic. gov early entrep later

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Immigrants are not averse to starting over. They are, by definition, risk takers. A nation of immigrants is a nation of entrepreneurs. —GIDI GRINSTEIN

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They called it Mofet, a Hebrew acronym of the words for “mathematics,” “physics,” and “culture” that also means “excellence.” The Russian offshoot was such a success that it was eventually merged with the original school, which became Shevach-Mofet.

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Israeli citizenship becomes effective on the day of arrival, no matter what the language spoken by the immigrant, and there are no tests at all.

Note: essentoals

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Against this backdrop, the Israeli government has made the chief mission of the Ministry of Immigrant Absorption the integration of immigrants into society.

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By responding to the threat this way, Wertheimer and others have transformed the very dangers that may make Israel seem risky into evidence of Israel’s inviolable assets—the same assets that attracted Buffett, Google, Microsoft, and so many others in the first place.

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Israeli grit

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Frohman did what every Israeli manager does during or in advance of war: he drew up contingency plans for the “standard” war scenario, in which employees would be called up for reserve duty.

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What would the enthusiast need in his back pocket? I understand your skepticism. I saw the news, too. But let’s not forget that Intel was producing the 386 chip—one of Intel’s most important microchips—in Israel during the Gulf War, and the Israelis never missed a beat. They stayed on schedule. They were not late… not even once… not even when missiles were falling on them.

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davka, an untranslatable Hebrew word that means “despite” with a “rub their nose in it” twist. As if to say, “The more they attack us, the more we will succeed.”

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role of the venture capitalist is not simply to provide cash. It’s mentoring, plus introductions to a network of other investors, prospective acquirers, and new customers and partners,

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Created from $110 million put up by the U.S. and Israeli governments, the Binational Industrial Research and Development (BIRD) Foundation created an endowment to support U.S.-Israeli joint business ventures. BIRD gave modest grants of $500,000 to $1 million, infused over two to three years, and would recoup funds through small royalties earned from successful projects.

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Mlavsky called BIRD a kind of “dating service,” because he and his team played matchmaker between an Israeli company with a technology and an American company that could market and distribute the product in the United States. Not only that, but this matchmaker would subsidize the cost of the date.

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The Yozma program initially offered an almost one-and-a-half-to-one match. If the Israeli partners could raise $12 million to invest in new Israeli technologies, the government would give the fund $8 million. There was a line around the corner. So the government raised the bar. It required VC firms to raise $16 million in order to get the government’s $8 million.

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The ten Yozma funds created between 1992 and 1997 raised just over $200 million with the help of government funding. Those funds were bought out or privatized within five years, and today they manage nearly $3 billion of capital and support hundreds of new Israeli companies. The results were clear. As Erel Margalit put it, “Venture capital was the match that sparked the fire.”15

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Because of Netanyahu’s financial-sector reforms, it also became legal for investment managers to charge performance fees. Keinan didn’t waste any time; he founded KCPS, Israel’s first full-spectrum financial-asset-management firm, in Tel Aviv and New York. “The moment I read the draft law of Bibi’s reforms, my wheels started turning,” Keinan said. “It was clear that this truly could liberate our non-high-tech economy.”

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Israel had its own Sputnik moment, ten years after America’s. On the eve of the 1967 Six-Day War, Charles de Gaulle taught Israel an invaluable lesson about the price of dependence.