Start-Up Nation I: The IDF

Doron, our classmate and instructor

We’re back from Israel after an intense week of classes, company visits, and group exercises. We connected the lessons of “Start-Up Nation” to the realities of the Israeli start-up ecosystem and learned even more about what makes these ventures so special. In each of the next three posts, we’ll explore an aspect of the book and its relevance in present day Israeli start-up culture. We’ll then connect those aspects to individual company visits. In our last post, we’ll examine the start-up nation as it stands today – a decade after the publishing of the original book – and hopefully make some informed predictions about what lies ahead.

The Israeli Defense Forces (IDF)

Featured prominently in the book, omnipresent in daily Israeli life, and mentioned at nearly every company visit – it would be impossible to discuss the start-up nation without discussing the IDF. Israel’s mandatory conscription (3 years for men, 2 years for women) is an incredibly formative experience for so many who will go on to become start-up founders.

In most of the world, an individual can travel through life without meaningfully engaging with people outside of their social strata. While of course minor interactions are inevitable, this is likely true when considering deep, sustained interactions over a period of time.

IDF units, however, select individuals on the bases of merit and ability – not family background. This meritocratic staffing system, combined with mandatory conscription, ultimately leads to a relative lack of social hierarchies – as are found elsewhere in the world.

This is furthered by the lack of hierarchy within the IDF. Young soldiers are given leadership positions early and are free to challenge the orders of their commanding officers. Israel realized early on that it could not afford to let its military get bogged down in unnecessary formalities and bureaucracy – so it simply did away with them. As a result, IDF soldiers aren’t trained to simply accept things as they are given – it’s paramount that ideas are tested, and alternatives considered.

As it turns out, this mental framework is quite useful when considering innovation in business. Inability to see past the status quo and formalized rules of society are some of the most common barriers to ideation in business. Israel didn’t set out to create super-innovators in business – rather, it has been a naturally occurring byproduct of the IDF.

Beyond flat hierarchies and a knack for innovation, the IDF also builds the mental toughness necessary to succeed as an entrepreneur. We got a taste of just how much mental toughness is required in the IDF – as we underwent an afternoon of training (edit: light training) with former officers. Running with stretchers on a hot Israeli beach is no easy task – and we weren’t even in uniform. We can only imagine what boot camp would actually feel like.

Running stretchers full of sandbags down the beach in Herzliya

SpacePharma and Zirra

Challenging the status quo can be simple or can really stretch your mind of what is possible. For the latter, two company visits stand out in particular.

Yossi Yamin at SpacePharma has a vision of democratizing access to space. More specifically, he aims to expand access to research and development opportunities in orbit for scientists in a variety of industry. As it turns out, the microgravity conditions of space can have curious and unexpected results in the fields of pharmaceuticals and biochemistry. SpacePharma provides a vehicle through which a multitude of compounds can be launched into space as one package – allowing the various compounds (and their respective researchers) to share the cost burden of accessing orbit.

Examining a model of the SpacePharma boxes sent into orbit

Moshit Yaffe of Zirra, on the other hand, has her eyes set on Wall Street. A lawyer and former investment banker, Moshit has led Zirra as it pioneers AI-driven data analysis of company data shared across the internet. Rather than relying on technical financial data, Zirra will scrape the web for press releases, job postings, and other text-based data sources that can be fed into an algorithm that ultimately renders a buy or sell judgement. Initial results indicate that Zirra is onto something, with a sample portfolio outperforming the S&P 500 over the past 2 years.

Next Time

In our next post, we’ll examine civilian life in Israel and the socio-cultural forces that help drive a successful community of ventures. Check back soon!

Casey Buckley is a 2020 MBA Candidate at Columbia Business School

Final Thoughts on Japan

Final Dinner in Kyoto:
For our final evening in Kyoto, our organizers were able to invite a Geisha over to our last dinner together. To provide context, foreigners can’t book Geishas for events (such as dinners). This was a big deal for all of us. The Geisha introduced herself, sang us a few songs for us and even taught us how to play a few games that date back eras. We ended the night with our usual photoshoot but, this time, included our new lovely Geisha friend.

Bonding and Nightlife:
With half the people on this trip being form the J-termers and the other representing Fall termers, the evenings presented the perfect opportunity to bond over sake and karaoke. From the clubs of Tokyo to the tiny pubs of Kyoto to the riverside hangouts in Kanazawa, we made the best of our evenings and met with so many locals who were kind enough to get to know us.

Final Thoughts on People and Culture:
Japan was unlike anywhere we had been to before. When I ask my Chazen buddies now about what they miss the most about the country, answers ranged from the clean streets to the kind locals to the exciting baseball games. Personally, I miss the level of respect that is deeply knitted into the Japanese culture. The way an airport worker bows to the bus filled with tourists as its leaving. The way special needs workers would lift themselves off their wheelchairs to bow to us and welcome us to their facility. It’s a different nature of respect. One that is more defined by action than words. And it positively affected us, individually and collectively, on a daily basis during out trip.

Georges Bassous is a 2020 MBA Candidate at Columbia Business School

Variety in Japan’s Professional Scene

The variety in the industries we were exposed to was a staple of this trip.

Shiseido, for example, is the fifth largest and most succesful luxury and cosmetics company. We visited Shiseido’s Global Innovation Center; which incubates a cosmetics museum as well as develops, tests and demonstrates innovative technology and products in the cosmetics sector. Given that the company’s CEO was supposed to meet with us but had last minute travel obligations, we got a personalized video message from the CEO and the Chief People Officer led the presentation on his behalf. We also received a cute parting gift from Shiseido which included some strong sunscreen; which provided to be quite valuable throughout this trip.

Omron, an industrial and robotics manufacturing conglomerate, was another interesting company visit. We specifically visited one of the company’s subsidiaries, one which only employs people with mental and physical disabilities. It was eye-opening and quite comforting to see how to facility, processes and tools were customized and designed in a manner that caters to the employees’ specialized needs.

We also got exposure to the startup scene in Tokyo; since we got to meet several startups involved in printing, logistics, education and blockchain / cryptocurrencies. Raksul for example, a Harvard Business Review case company, leverages underutilized printers using an online platform. Raksul is a unicorn and is known as the “Uber for Printers”. We were greeted by its founder and CEO, a previous management consultant, who described to us the best practices and pitfalls of launching a startup in Japan. He emphasized how the Japanese market offers Raksul unique advantages, as well as challenges, that would not be easily replicated in foreign markets. Additionally, we got a bonus presentation on the founder’s other venture, a sort-of “Uber for Trucks”, and what he foresees for the future of the startup scene in Japan. Given that a significant portion of one’s identity in Japan is tied to the company he / she is working for, this normally de-incentivizes young individuals from starting their own company. However, this trend is progressively shifting and we can therefore expect more superstar entrepreneurs stemming from Japan in the coming years.

Georges Bassous is a 2020 MBA Candidate at Columbia Business School

The Art of Purification and Subtraction

The Japanese believe in the art of purification; whereby an emphasis is placed on physical and mental cleanliness and emptiness. Another one of their core values is the art of subtraction; which constitutes the origins of modern-day minimalism and is quite focused on simple / practical design. The basis behind these values is that cognitive virtues, such as creativity and empathy, can be achieved (to the greatest extent) only in the absence of clutter and distractions. These values can be seen across Japan in practice, from the ultra-clean streets and public bathrooms to the neatly designed buildings and products.

Given that culture made up such an integral part of the Japanese business scene, checking out some of the landmarks in Japan was a must. We decided to visit the famous shrines and temples of Tokyo, Kanazawa and Kyoto. Although there were quite a few tourists and students around these majestic areas, we were still able to get our souvenirs and photoshoots in.

Our most memorable cultural highlight, however, was the mediation session we had at one of the most iconic buddhist temples in Kyoto. Our meditation session was led by an influential monk; who is very well known for his TED talk on meditation and his many lectures on mindfulness at some of the top U.S. schools (such as M.I.T and Stanford). He also showed us around the temple garden and explained to us the monks’ responsibilities as well as the theological bases behind their spiritual practices.

Georges Bassous is a 2020 MBA Candidate at Columbia Business School

Business & Pleasure in Japan

In Tokyo, one of the founders of the Teamlab design studios took us on a private tour of their HQ office and flagship museum. Every room in that museum was unique and left us in awe. At each stage of the tour, the co-founder explained to us his philosophy behind integrating technology with art as well as the company’s plans going forward. It was interesting for us to meet such an eccentric business person. He was homeless for most of his life and was working across the Middle-East to make ends meet. His views on life and his journey to-date took us off-guard but inspired us.

The CEO of SEGA greeted us at their HQ and involved a thoughtful discussion on the trends in the gaming industry as well as the challenges associated with launching the SONIC movie in partnership with Paramount. Following the event, we got to visit and try out the company’s Virtual Reality games alongside Berkeley Haas MBA students.

That evening, we gathered on a boat to have dinner and sing some karaoke. The captain had grown up in Hawaii and had an amazing voice. He kicked off the karaoke until we eventually decided to join him and, of course, take over the stage.

The next day in Tokyo, the CFO of the SoftBank group greeted us at their HQ offices. The discussion mostly focused on the group’s $100 Billion Vision Fund; which is larger than all of the VC funds in the U.S. combined. The CFO went over the most interesting and impactful startups in their fund portfolio, across a variety of industries, such as Uber and OYO.

The CBS alumni event took place at Japan’s most prestigious business school and one of our organizers’ alma mater. The event involved a presentation on Japanese culture and norms. This was followed by an alumni panel moderated by a Mckinsey & Co. partner and involving several CBS alumni who founded their own startups and VC funds. To finish off the evening on a high note, the CBS Japan alumni kindly took some time out of their busy schedules to get to know each and every one of us.

Georges Bassous is a 2020 MBA Candidate at Columbia Business School

A Closer Look at Start-up Nation: Prologue

The author’s copy of the text (feat. half a pad of mini post-its)

Fifty MBA students from Columbia and Interdisciplinary Center (IDC) Herzliya met up tonight in Tel Aviv to kick off a week-long intensive course, “A Closer Look at Start-up Nation”. Inspired by Dan Senor and Saul Singer’s 2009 book, “Start-up Nation: The Story of Israel’s Economic Miracle”, the 5-day course will introduce students to individuals from all areas of Israel’s innovation ecosystem – from start-ups and research and development (R&D) divisions of multinational firms to venture capitalists (VCs) and business-focused non-profits. We hope to take away valuable learnings about the genesis of Israel’s start-up culture, how to work with Israel’s high-tech industry, and – more broadly – how a cluster of factors can lead to innovation-rich geographies such as “Silicon Wadi” (the Israeli “Silicon Valley”).

Israel leads the world in per capita R&D spending – benefitting from both the R&D divisions of large multinationals such as Intel, Google, and Microsoft as well as a high concentration of start-ups. Outside Silicon Valley, Israel claims the top spot in per capita start-ups and is also the world leader in per capita VC investments. Not confined to early-stage ventures alone, Israel has more companies listed on Nasdaq than Korea, India, and Japan combined.

The book, for those who have not had the chance to read it, does a wonderful job of weaving together the aspects of Israel’s history and sociopolitical structures that contribute to this innovation-rich environment. As an example, the book explores the non-hierarchical nature of Israeli society and how a willingness to challenge the status quo leads to more innovative thought and design. Mandatory conscription in the Israeli Defense Forces (IDF) serves to enshrine egalitarianism as a societal value and instills a mission-driven culture amongst citizens. Lastly, on a cultural note, failure is not viewed as shameful but rather as an aspect of growth and development in life. While each of these conditions may be found in a number of societies, the book argues that it is the union of these factors that has allowed Israel to become the high-tech powerhouse it is today.

This blog will view the course through the lens of Senor and Singer’s text – providing updates on the latest decade of Israeli start-up development as well as supplementary learnings related to the themes found in the book. It is our hope that, through careful evaluation of this confluence of factors, we can identify the most crucial aspects necessary to build a culture of innovation – and what competitive advantage, if any, can persist for Israel’s high-tech sector in the long-run.

Casey Buckley is a 2020 MBA Candidate at Columbia Business School

Off we go to Tokyo

Between the formal pre-trip meetings, the sushi socials and the offline planning sessions, I’ve come to notice that all 40 Chazen participants have one thing in common: This is everyone’s first visit ever to Japan.

Avec son rouge éclatant et son allure de tour Eiffel, la tour de Tokyo est l'un des symboles de la capitale nippone

At this point, we don’t know what to expect. We’re aiming to cover three major regions – Tokyo, Kanazawa and Kyoto – in under 10 days. There are some amazing company visits lined up, such as a meeting with the CFO of the largest fund in the world “The SoftBank Vision Fund”. Additionally, this marks the Japan Chazen Trip’s 30th anniversary and the organizers are putting together some exceptional events to solidify this milestone, such as a private tour of Japan’s famous Virtual Reality studio “The Tokyo Teamlab”.

Quite a few of us are so impatient that we’re planning to be in Tokyo four days before the trip officially starts. We’ve already organized a dinner at the iconic “Robot Restaurant” and have six learning teams assigned to research each of the lined-up companies. It’s not everyday that MBA candidates get to personally meet the leadership teams of some of the most influential organizations in Japan and globally. As such, the purpose of the learning teams is to come up with questions that would drive the discussion forward and provide us with industry insights we would not normally get in the classroom.

On a final note, I authentically believe that this trip will foster new lifelong friendships. The 40 participants represent both first and second year, Fall and J-term, students and it seems that people are really excited to get to know each other going forward.

Georges Bassous is a 2020 MBA Candidate at Columbia Business School