Book Summary Start-Up Nation – The Story of Israel's Economic Miracle – By Dan Senor and Saul Singer
This book is about innovation and entrepreneurship. Israel has been successful despite of the pain the nation has endeared. They have thrived because their survival depends upon it. This book is a story that embodies tenacity, insatiable questioning of authority, and determined informality, with a unique attitude toward failure, teamwork, mission, risk and cross-disciplinary creativity.
Why is this important to me?
Have you ever used PayPal or a computer with an Intel processor in it? If yes, then those innovations came from Israel. Regardless of your political view, it is undeniable that the business innovation coming out of this small country is second to none around the world. The proof is in the amount of Venture capital that pours into the country. In 2007/2008, Israel received more venture funds per capita then all the other nations combined. Two main drivers of this innovation are:
1. Survival – Look at any map and you will see that Israel is surrounded by nations that want it destroyed. The citizens have learned to live and thrive in this environment through ingenuity and shear guts. Every male is required to go into the military thus they are battlefield tested entrepreneurs.
2. Questioning of Authority – this quality was surprising. If you have every watched Seinfeld or Curb Your Enthusiasm then you know what a pain in the ass the questioning of authority can cause. It can be downright annoying but the level of clarity created is proof of what gets accomplished. It is common in Israeli military for every soldier to question authority. This is in stark contrast to American Military. I am not saying one is better than the other but the level of questioning / arguing creates great solutions.
Start-up Nation is a great book and there are tons of excellent examples in it. For the sake of time, I will profile three innovations that came out of Israel.
1. Fraud Sciences – Shvat Shaked and his small team came up with a cool technology to identify computer fraud. The venture capital firm setup a meeting with PayPal now owned by eBay. The PayPal VP basically did not want to have the meeting because he figured his team was way ahead of any startup in terms of fraud detection and protection. Long story short, Shvat and his team had one simple idea. The world is divided by good people and bad people and these people leave digital footprints. The PayPal team did not believe it so they gave them test data to run against. They figured it would take Fraud Sciences 60 days to plow through it. Two days later, Shvat sent them an email with the results and their results were 17% better and took 95% less time then what PayPal could deliver. When they asked Shvat how he learned this skill, his response was that he had to hunt down terrorists in the military. eBay bought the company for $125 Million. They were at least 5 years ahead of PayPal.
2. Intel – Do you remember the chip race wars? All computers were measured by clock speed from megahertz to gigahertz. This caused one huge problem – HEAT. Basically the way computer chips used to work for speed was similar to your car transmission being stuck in first gear and you wanting to go full speed. The Israeli R&D group for Intel came up with a simple concept. Why not design chips like transmissions. The faster you go step them up from 1st to 5th gear. This change required the whole company to change its marketing message and direction. According to the Intel leadership, this innovation saved the company.
3. Mash ups – The multi-tasking nature and the combination of disparate technologies breads true innovation. In my own business, we combined Voice, Email, Chat and all communication types to be the first on the market to offer one platform for all communication archiving. This is a simple example of a mash up because other vendors just do one communication type. The innovations seen throughout the book are great examples of combining expertize from different areas to come up with a better mouse trap.
Battlefield Entrepreneurs – According to Eric Schmidt CEO of Google, “The Israeli tank commander who has fought in one of the Syrian wars is the best engineering executive in the world. The tank commanders are operationally the best, and they are extremely detail oriented. This is based on twenty years of experience – working with them and observing them.
Start-Up Nation is a must read for anybody interested in true innovation. The ideas in the book can help any entrepreneur grow their business. The balance between pain and incentives is seen throughout Israel’s history. Success for them is the only option.
I hope you have found this short summary useful. The key to any new idea is to work it into your daily routine until it becomes habit. Habits form in as little as 21 days. One thing you can take away from this book is the concept of the mash up. Mash ups are very strong. Are you familiar with Ray Charles or Kid Rock? Their music is all based on mash ups. Ray Charles combined R&B with Gospel which was revolutionary and controversial at the time. Use the mash up concept in your business to innovate.