Start Up.
Describing Israel as a start-up nation is more than appropriate because of the tremendous achievement the Country has recorded as regards Start-ups in its little over 60 years of existence. It produces more start-up companies than larger more stable and peaceful countries like United Kingdom, Japan, Canada, India, China and Korea. Israel has more companies on the NASDAQ than the whole of Europe, Singapore, China, Korea, Japan and India combined. This is a huge feat considering Israel has a population of just 7.1 million people, has no natural resources and is usually engaged in hostilities with its neighbours.
The book Start-up nation by Dan Senor and Saul Singer unravels the secret of how Israel came to achieve all these. It is the story of Israel’s economic miracle.
Start ups are small companies with radical ideas in a specific area of interest that end up revolutionising whole sectors of global industries. They use specialised talent from engineers to business managers, marketers and scientists to commercialise a radically innovative idea. These small companies, because of the potency of their ideas, are acquired by larger companies in the sector for huge sums of money. The larger companies are revolutionised because of the ideas brought in by these start-ups.
For example, Fraud Sciences was a company that specialised in eliminating online payment scams, credit card fraud and identity theft. Pay Pal is the largest internet payment system in the world. Pay Pal offered $79 million for Fraud Sciences which was declined because they knew what their company was worth and how Pay Pal’s services would be revolutionised upon acquiring Fraud Sciences. In the end, Pay Pal bought Fraud sciences for $169 million. It was swallowed, as all start ups are, by Pay Pal and indeed proved to be a necessary ingredient in taking Pay Pal’s services to a higher level principally by boosting the confidence of existing and potential customers.
Chutzpah plays a huge role in Israel’s success story. Chutzpah means guts or nerve. It is a can-do sprit which is associated with Israelis. It is chutzpah that makes a Sergeant challenge a General. It is chutzpah that makes university students challenge professors. This, though strange in some cultures, is encouraged in Israeli life. Chutzpah also accounts for why Israelis do not believe in time wasting. As an analyst put it, “when an Israeli entrepreneur has a business idea, he will start it that week”.
After conceiving an idea, what next? Whatever help an entrepreneur needs will be afforded him from persons that rank highest in office or in business circles no matter how busy they are notwithstanding that the person whose help is needed does not know the entrepreneur. Once the idea is good, that is enough. It is patriotism that makes people drop whatever they are doing to see that a good idea does not go to waste.
In start-up nation, we also see how compulsory training in the IDF (Israel Defence Forces) is a huge factor. What then, is the relationship between military training and start ups?
In the military, one is forced to take life changing decisions often without given time to think about the consequences. This is a common feature present in both the military and business. However, Israel is not the only country that imposes conscription into the military on its citizens. Other countries like Singapore and North Korea do the same but theirs has not translated into the proliferation of start-up companies. In the book, we see that a combination of things have set Israel military training apart from other kinds of military training.
Chutzpah, which is present in the Israeli Defence Forces and absent in other defence forces is the first distinction. Chutzpah helps create an environment in which hierarchy in the IDF is not paid much attention. Officers can call their superiors by their first names. When a Sergeant comes with a good suggestion a General takes it without any fuss. If a General is wrong, a Sergeant will correct him. Every officer knows he has something to bring to the table and would be listened to and his suggestion implemented, if good. This is missing in other defence forces.
Young officers are also entrusted with huge responsibilies which they are expected to carry out without guidance from senior officers. This sharpens their skills and creates invention and innovation.
The size of the IDF necessitates entrusting junior officers with responsibilities their counterparts in other parts of the world are not entrusted with. This, research has shown, has definately translated into success in boardrooms and science laboratories.
Students that stand out in high school due to their exceptional leadership skills, outstanding results in sciences or both are snapped up by one of IDF’s elite units which provides intensive training and on the job experience. These two factors combined with the ones earlier exhibited in school make these elite units a breeding ground for future inventors and entrepreneurs.
The above are the roles military training play in the success of start-ups in Israel.
Funding is always a problem associated with business ideas everywhere in the world. For this reason, the Israeli Government set up special funds entrepreneurs could tap into and drive their ideas to fruition. Secondly, oftentimes funds alone do not automatically solve the problem as these companies, after they have been set up, need to be marketed to potential buyers mostly outside the shores of the Middle East (because of the hostility between Israel and its neighbours). To solve this problem, BIRD was introduced as an intermediary between Israeli companies and marketers and distributors in different parts of the world. The services of the foreign marketers and distributors are subsidised by BIRD.
The above are some reasons why Israel is the economic miracle it is today.
However, there are still some challenges the country faces. One may immediately ask, if so many companies are bought at their infancy and integrated into larger ones, the problem of nurturing companies and sustaining them could be present. This, together with inability to market products was identified in the book as one of the challenges confronting the country.
Security continues to be a major concern for companies considering setting up in Israel and sustenance of existing ones due to the hostilities the country is usually engaged in.
The book reveals some surprising clues that not only other countries can copy to build thriving economies, but will also prove helpful to individuals seeking to build thriving businesses. The narration, even while dealing with technical and boring stuff like computers and micro chips, is interesting with real life experiences and is done in such a way as to keep the reader wanting to know more.
The optimism present throughout the book about Israel’s ability and infallibility can best be described as excessive. While facts presented in the book speak for themselves, the role United States and other allies of Israel have played over the years by backing the country up and providing every necessary support ranging from grants to policies and military equipment, to discerning eyes that have followed the progress of Israel so far was not given prominence in the success story of Israel.
Both authors are journalists and have both held positions in the U.S government. Dan Senor wrote for papers like New York Times and Time and was a senior foreign policy adviser to the U.S government.
Saul Singer has written for Wall Street Journal and Jerusalem Post. He served as an adviser in the U.S congress.
Hussaina Gambo is QMarkMag’s weekly book reviewer /researcher – writing in on his opinion on books on every subject.
Loading ...
