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

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

Why Multinationals Look to Israel for Innovation

GIP Israel’s first full day of meetings focused on how three massive multinational corporations have tapped into Tel Aviv’s rich entrepreneurial ecosystem.

Konnekt is an open innovation campus that connects Volkswagen’s brands with start up talent around Israel. Its Director of Development, Hemdat Sagi, discussed the local surge in autonomous driving and mobility “game-changing technology”, along with her experience as a businesswoman in an industry that continues to struggle with gender representation.

Microsoft’s Reactor Tel Aviv follows a similar concept. Startup Success Manager Tor Tsuk sees herself as a tech matchmaker, pairing emerging Israeli companies with Microsoft’s vast network of partners.

Finally, the group visited The Bridge Builders – a commercialization program that helps Israeli entrepreneurs develop their startups, and subsequently connects them with the dozens of brands owned by Coca Cola, Turner, and Mercedes Benz. General Manager Gab Czertok’s advice to aspiring founders who want to differentiate themselves? “Learn to listen!”

Next stop, Jerusalem!

T-minus 24 Hours to Global Immersion Israel

🌎🌍🌏

Columbia Business School students have begun to arrive in Tel Aviv for the week-long Global Immersion Israel: Leadership and Innovation tour.

Led by Professor Todd Jick, Columbia MBA candidates from across the globe – including the United States, China, Philippines, India, Norway, Germany, Paraguay, and Brazil, among others – will spend the week meeting with Israeli business leaders and public officials.

Few economies can claim to have evolved more rapidly than Israel’s in the seventy years since it declared independence. From its modest socialist beginnings, Israel has solidified its place on the vanguard of technological innovation.

Earlier in the semester, guest lectures by Dan Senor (co-author of “Start-Up Nation”) and Seth Siegel (author of “Let There Be Water”) set the stage for what promises to be a week full of conversations about entrepreneurship, the role of government, and business as a form of diplomacy.

Final thoughts on Israel

Since coming back from our whirlwind adventure in Israel two weeks ago, I have gushed to my friends and classmates about Israel’s historic landmarks, hospitable people and the innovative and entrepreneurial spirit that beats throughout the country. I’ve developed a newfound appreciation for the incredible achievements that modern-day Israel has made in business – especially given the unique geopolitical challenges facing the country—as well as developed a deeper understanding of the cultural factors that have shaped Israel’s identity and in turn its business environment. Still, one week is not enough to fully map out the complexity of Israel’s history, economy or politics. These are some of the takeaways about Israel that struck me during the trip and the questions I want to continue to explore:

  • Startup nation to scaled up nation? Israel is well known for its plethora of tech startups and its strong engineering talent. However, we came across differing perspectives on whether Israel had the potential to develop startups into larger tech empires. During our trip, Intel announced it was buying autonomous driving technology firm Mobileye for $15 billion – a very successful exit for the Israeli company. While the book Startup Nation argues that the diversity of Israel’s people and mandatory military service has fostered a strong environment to build startups, can the country sustain continued growth in the tech sector? Furthermore, is the Israeli market big enough to bring startups to larger scale or is a sale to a non-Israeli company the optimal solution for Israeli startups to grow?
  • There is no one-size fits all solution to the conflict in the Middle East. What’s the next best option? Israel has very delicate relationships with its neighbors in the Middle East, many of which are in the midst of political turmoil and many of which do not support Israel’s existence. There are numerous issues underlying the conflict in the Middle East but there is no way to please all stakeholders. However, having open conversations across all countries in the region will be key to navigating the complex political environment and finding solutions that can tackle one issue at a time.
  • Israeli’s “survivor” attitude carries through into business. One of the things I appreciated the most about Israeli people is their optimistic and hopeful attitude, even in difficult times. Israelis truly are survivors and their determination to achieve the goals they set forth is an asset in the business world and something we as aspiring leaders should strive to embody.– Nathalie Tadena, CBS’18
    Chazen Israel Section B

Reflections from Israel

‘Have you heard of the routing app, Waze? It’s Israeli.’ my driver asked me, as I got in the car en route to the airport for my flight home.  I could see the app predicting my arrival at the airport at 6:14pm, a full three hours before my flight.  I loathed this seeming waste of time – a common phrase in my pre-CBS consulting career was ‘if you’ve never missed a flight, you’re getting to the airport to early’.  But, we had been warned about the Tel Aviv Airport Security, and after accidentally going to Newark airport instead of JFK on my way to Israel, I couldn’t risk another stressful airport experience.  I replied that No, I hadn’t heard of Waze and wondered if it was really that much better than Google Maps?

When my driver asked me how I had enjoyed his country, it was hard not to conceal my new found love for Israel. The food, the entrepreneurial spirit, the history… so many things flooded my mind.  But being back in the states and reflecting on my trip, my favorite aspect by far is the people.

The Israeli culture is rich with history, religious background, and stories of both oppression and hope.  And what I didn’t appreciate until my trip was the clear camaraderie that binds Israelis together.  Whether this is because the nation is relatively young, because of the history of what the Israeli people have been through, or because of something else, is unclear.  But the immediate closeness I witnessed time and again amongst Israelis was undeniable.

Over the course of the trip, we visited many companies. Three companies talked to us about the same recent sale of an Israeli start-up (Mobileye) to Intel for $15 Billiion.  Even my cab driver brought it up to me.  Most people spoke about the value of their army experience.  And everyone talked about being focused on continuous improvement and their own internal hope.

Coming from the states, a country that in so many ways is about diversity, it’s striking to see such a degree of similarity across Israelis. I look forward to my next (and hopefully soon!) trip to Israel to further uncover its culture.  And for the record, we pulled up to my gate at precisely 6:14.

Haley Smith, ’18 – Group A, #Israel #IsraelChazen

Shalom Israel!

0138682700d04e2f8a48d20839ab7700I can’t believe that my Chazen Israel trip has come to a close! As business school students, many of my classmates and I came into the trip expecting our itinerary to focus on Israel’s business environment. But to truly understand the nuances of a country’s economy, one must first understand the underlying history and culture. This week has been incredibly inspiring and I have learned so much not only from speaker presentations and formal tours but also from hearing about the personal experiences of our trip organizers and everyday Israelis we encountered on the street.

In just our last couple of days on the trip, we woke up early to watch the sunrise at the ancient desert fortress Masada, covered ourselves in mud and floated in the Dead Sea, visited an Air Force base where we learned about the influence of mandatory military service in Israeli culture and discussed the latest technological innovations in the healthcare space with Tom Ran of the Weizmann Institute of Science. There certainly has been no shortage of activities or learnings from this week.

Prior to this trip, I had heard and read much about Israel in the news and had long associated the country with ongoing conflict. Still, I had difficulty forming my own opinions on the geopolitical issues involving the country and knew I wanted to come to Israel to better understand why it was the subject of such divisive debates.

In reflecting with my Chazen group on all that we have done and learned this week, it became apparent that the Israel we experienced on the ground was very different and far more multi-faceted than the Israel we read about in the news. I have been pleasantly surprised by the warmth the Israelis have shown us as well as the level of passion and patriotism they show for their country. Many of my classmates remarked that this trip instilled in them a newfound appreciation of Israelis as survivors who always have hope even in the face of overwhelming challenges. In many cases, my classmates saw that many of the issues that Israel faced were similar to issues their own home countries have faced.

While my classmates and I can come away from this experience with a much richer knowledge of Israel as a country, our discussions this week only scratched the surface of the complexity of Israel’s roots and challenges. As future leaders, it’s important that we continue to push ourselves to learn more about the issues that make a market unique and find ways to draw connections between different cultures.

— Nathalie Tadena ’18