Sunday, January 17, 2010

Book Review: Start-Up Nation: The Story of Israel's Economic Miracle by Dan Senor and Saul Singer

In his recent editorial, The Tel Aviv Cluster, David Brooks of the New York Times cites Start-Up Nation: The Story of the Israel's Economic Miracle when he describes the innovation cluster of technology that has developed in Israel. Having just finished reading Start-Up Nation, I'm not surprised to read about it in the New York Times. Like the other books released by Hatchette Book Group's Twelve, Start-Up Nation stays with you long after closed its covers.

Start-up Nation: The Story of Israel's Economic MiracleThe blurb:
Start-Up Nation addresses the trillion-dollar question: How is it that Israel - a country of 7.1 million people, only sixty years old, surrounded by enemies, in a constant state of war since its founding, with no natural resources - produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, Korea, Canada, and the United Kingdom? Drawing on examples from the country's foremost inventors and investors, geopolitical experts Dan Senor and Saul Singer describe how Israel's adversity-driven culture fosters a unique combination of innovative and entrepreneurial intensity.

As the authors argue, Israel is not just a country but a comprehensive state of mind. Whereas Americans emphasize decorum and exhaustive preparation, Israelis put chutzpah first. "When an Israeli entrepreneur has a business idea, he will start it that week," one analyst put it. At the geopolitical level, Senor and Singer dig in deeper to show why Israel's policies on immigration, R&D, and military service have been key factors in the country's rise - providing insight into why Israel has more companies on the NASDAQ than those from all of Europe, Korea, Singapore, China, and India combined.

So much has been written about the Middle East, but surprisingly little is understood about the story and strategy behind Israel's economic growth. As Start-Up Nation shows, there are lessons in Israel's example that apply not only to other nations, but also to individuals seeking to build a thriving organization. As the U.S. economy seeks to reboot its can-do spirit, there's never been a better time to look at this remarkable and resilient nation for some impressing, surprising clues.

Dan Senor and Saul Singer's Start-Up Nation: The Story of Israel's Economic Miracle is well researched and a fascinating read. The book is divided into four main parts:
  • The Little Nation That Could
  • Seeding a Culture of Innovation
  • Beginnings
  • Country with a Motive
In The Little Nation That Could we learn PayPal's Scott Thompson's first impressions of a young Shvat Shaked, whose young company, Fraud Sciences, developed the most up-to-date solution to the problem of online payment scams, credit card fraud, and electronic identity theft. As we read about Fraud Sciences, its founders Shvat Shaked and Saar Wilf, their approach to problem solving and the impressions of the top executives of PayPal, Ebay and Benchmark Capital, it becomes clear that the story of technological innovations and start-up ventures in Israel is deep and unique.

I was struck by story after story that traced technological and scientific innovations to Israeli dedication, chutzpah, a culture of debate/argument and the lack of a hierarchy. One of the earliest investors in Israel was Intel, and the company credits its Israeli team with the "right turn" in thinking that led to innovations in Intel's microprocessor and the development of its Core 2 Duo chips.

In Seeding A Culture of Innovation Senor and Singer suggest that the Israeli Defense Forces (IDF) and its elite branches have helped to develop leadership, skills, and social networks: "While it's difficult to get into the top Israeli universities, the nation's equivalent of Yale, Harvard, and Princeton are the IDF's elite units. The unit in which an applicant served tells prospective employers what kind of selection process he or she navigated, what skills and relevant experience he or she may already possess." Senor and Singer describe the elite and intensive Talpiot program - its development, what it entails, its strengths, and the accomplishments of its graduates. The relative openness, importance placed on devolving authority and giving greater responsibility to lower ranks has played a significant role in developing effective and confident leaders; this has benefited Israel as a nation and as a leader in technology.

I found Seeding A Culture of Innovation fascinating. The comparisons that Senor and Singer make between the nation states of Israel and Singapore and the IDF and the US military were particularly insightful.

Beginnings covers the history of Israel's economy and the effects of government policies. The chapter is full of inspiring and impressive successes. There are examples of "the Israeli's penchant for taking problems-like the lack of water-and turning them into assets the fields of desert agriculture, drip irrigation, and desalination." Senor and Singer write about (1) Simcha Blass and his development of drip irrigation and the creation of Netafim, the global drip irrigation company and (2) about Kibbutz Mashabbe Sade in the Negev Desert where a salt water well was used for farming warm water fish like tilapia and sea bass.

In Beginnings Senor and Singer also discuss how factors like the waves of immigration, particularly skilled immigrants from the former USSR, have contributed to Israel's continued growth and development. Similarly the Jewish diaspora and "brain circulation" have played significant roles in enabling Israel and its industries to develop and flourish. While countries like my homeland suffer from the "brain drain," Senor and Singer describe brain circulation as "the phenomenon when talented people leave, settle down abroad, and then return to their home country and yet are not fully 'lost" to either place." Through example after example, Senor and Singer demonstrate how Israel has benefited from a deep diaspora network.

The stories in Start-Up Nation demonstrate a determination, tenacity and dedication that is impressive and inspiring. In the chapter The Buffett Effect, Senor and Singer share how investors like Warren Buffett have chosen to invest in Israel regardless of the violence in Israel and the many risks. Senor and Singer suggest that Warren Buffett does not discount the catastrophic risk in Israel but that Buffett does not consider the factory or the R&D facilities to be the value of his company's investment in Israel. Instead, Senor and Singer write that when Buffett bought into the company Iscar, Buffett considered the talent of the employees and management, the international base of customers and the brand to be Iscar's value. Even with the factories destroyed, Iscar, Warren Buffett's investment, would not suffer catastrophic risk.

The final section of Start-Up Nation, Country with a Motive, describes the start of Israel's defense industry, how in the medical devices and biotech sectors companies have been successful creating innovative "mashups" and "economic clusters." The concept of a cluster was developed by Michael Porter and is understood to mean "a unique model for economic development because it's based on 'geographic concentrations' of interconnected institutions - businesses, governmental agencies, universities-in a specific field." We're familiar with these economic clusters: the financial cluster in Wall Street and the biotech cluster in Boston. Citing Michael Porter, Senor and Singer emphasize the benefit that comes from "the intense concentration of people working in and talking about the same industry provides companies with better access to employees, suppliers, and specialized information. A cluster does not exist only in the workplace; it is a part of the fabric of daily life, involving interaction among peers at the local coffee shop, when picking kids up from school, and at church. Community connections become industry connections and vice versa." Israel has been successful in creating technology, biotech and medical device clusters. The development of these clusters is in sharp contrast with the absence of similar organic or self-sustaining clusters in Dubai despite the massive investments in money and talent of Dubai, Inc.

In Start-Up Nation, Dan Senor and Saul Singer give us a well researched and fascinating insight into Israel's economic miracle. It should be recommended reading for students, teachers, and implementers of public policy and economic policy.

ISBN-10: 044654146X - hardcover $26.99
Publisher: Twelve (November 4, 2009), 320 pages.
Review copy provided by the publisher.

About the Authors, courtesy of the publisher:
Dan Senor, adjunct senior fellow for Middle Est studies at the Council on Foreign Relations, has long been involved in policy, politics, and business in the Middle East. As a senior foreign policy adviser to the U.S. government, he was one of the longest-serving civilian officials in Iraq, for which he was awarded the highest civilian honor by the Pentagon. Senor's analytical pieces are frequently published by the Wall Street Journal; he has also written for the New York Times, the Washington Post, the Weekly Standard, and Time. He also advises a global investment fund. Mr. Senor lives in New York City with his wife and two sons.

Saul Singer is a columnist and former editorial page editor at the Jerusalem Post and the author of Confronting Jihad: Israels Struggle and the World After 9/11. He has written for the Wall Street Journal, Commentary, Moment, the New Leader, bitterlemons (an Israeli/Palestinian e-zine), and the Washington Post's international blog, PostGlobal. Before moving to Israel, he served as an adviser in the U.S. Congress. Mr. Singer lives in Jerusalem with his wife and three daughters.

Learn more about Start-Up Nation, Dan Senor and Saul Singer at the Start-Up Nation website at

Thank you so much to Anna and Hatchette Book Group for this review opportunity!

1 comment:

  1. Very interesting topic, thanks for your refreshing review!