A Brief History Of The Startup Nation

Israel Aircraft Industries Lavi Fighter Jet

Copyright: Bukvoed

No matter where you go these days, from Halifax in Nova Scotia to Hong Kong in China, everybody knows that Israel is the Startup Nation, a small country that has the world’s highest density of venture capital funded high-technology startups per capita and one that even in absolute terms punches orders of magnitude above its weight. Israel’s hi-tech success is one of the main bragging points of Israeli PM Benjamin Netanyahu and arguably its foremost strategic asset, second only to its alleged nuclear arsenal. Israel is highly effective in wielding its technological prowess as both offensive and defensive weapon. Not only does this prowess allow the Israel Defense Force to be significantly less dependent on foreign military materiel than other regional powers, most of the weaponry that Israel purchases from other countries, primarily the United States, undergo significant homemade modifications, improvements, and adjustments that are based on Israel’s battlefield experience and specific needs. Israel’s military and civilian technologies and know-how are used in diplomatic charm offensives with less developed countries, primarily in Africa and to defend against non-military and diplomatic attacks such as the notorious BDS movement. After all, it is difficult and costly to divest from or boycott companies that are the leaders in their fields without whose products your smartphone or your fancy guided missile would be nothing but fancy paperweights.

But how did Israel go from a backwater with a population of just over half a million in 1948 to a technology powerhouse with a population of nine million in seven decades? The answer lies in a combination of many factors, all with one common denominator – survival. Contrary to anti-Semitic propaganda, Israel was never handed anything on a silver platter; every penny of foreign investment, every seed technology was bought at full retail with blood and treasure and endless ingenuity, sometimes not without moral compromise. From the earliest days of the Zionist movement in the late 19th century, the pre-independence “yeshuv” (settlement), as the Jewish community in the Land of Israel was called prior to 1948, invested invaluable resources that could have easily been spent elsewhere such as security and basic welfare, on higher education. Major Israeli universities such as the Hebrew University in Jerusalem and my alma mater, the Israel Institute of Technology, the Technion, were all established decades before Israel gained its independence. So was my other alma mater, the Reali Hebrew School in Haifa, still Israel’s premier K through 12 private school. This foundation of academic excellence and achievement allowed the yeshuv and later the State of Israel to quickly absorb technologies bought or stolen abroad. Two great examples of this are the nuclear plant in Dimona, where, according to foreign sources Israeli nuclear arsenal has been developed and the Israeli-made multipurpose fighter jet of the early 1970’s the Kfir.

Recognizing that the only way to guarantee the survival of Israel and by extension of the Jewish people was the acquisition of a credible nuclear deterrent, Israel leveraged its pre-1967 friendly ties with De Gaul’s France to acquire a small French nuclear research reactor. A typical Middle Eastern country in the mold of Iraq, Iran, or Syria, with their backward academia and shortage of highly trained technical personnel, would have taken many decades to develop from this seed technology a full suite of deliverable nuclear weapons. Israel (allegedly) did it in five years. When the same France, appalled that the little Jewish state acted above its “station” and annihilated three major Arab armies in six days, in the process liberating its historical capital of Jerusalem and its ancestral homelands of Judea and Samaria as well as occupying the strategically invaluable Golan Heights and Sinai Peninsula, decided to halt its military support of Israel cold turkey, Israel was not left bereft of choices. Lacking (as of yet) support from the United States, Israel had the technical know-how to quickly recreate the advanced French Mirage fighters that it possessed from before the Six Day war. The resulting fighter jet, the Kfir, was superior to the Mirage and served the Israeli Air Force with distinction alongside the newly acquired American A4 Skyhawks and F4 Fantoms.

The Israeli military victory under the toughest of circumstances, some self-inflicted, others externally imposed in the 1973 Yom Kippur War, demonstrated to the Arabs once and for all that an all out military victory over Israel was simply not possible. This gave rise to the brutal terror tactics of the so-called Palestinian Liberation Organization (PLO) and its multitude of spawn. The hijackings, hostage taking raids, and terror attacks on international Jewish and Israeli institutions, required a symmetrical response to this asymmetrical warfare. Thus the Israeli elite commando units were born and with them an entire culture that placed excellence in the service of achieving results that would appear utterly impossible to anyone else a reality. The iconic 1976 raid on the Entebbe airport by Sayeret Matkal, Israel’s premier land commando unit, in which Yoni Netanyahu, the commanding officer of both the unit and the operation lost his life will forever remain the sine qua non of all daring commando raids. But the effects of this commando culture proved to be far more widespread than just the military and security theaters. The ruthless culture of success at all costs, of extreme, though not reckless risk taking, of preparedness to accept the risk of catastrophic failure that no other military unit would even consider, the boundless commitment to training and planning for the mission to the exclusion of everything else proved to be exactly what the startup culture of the dotcom era needed. Fresh out of the toughest leadership programs that ever existed on Planet Earth, the Israeli commando units, young Israeli men were natural hi-tech entrepreneurs ready to build on Israel’s excellent academia and their connections with those of their ranks who chose political and corporate careers as the fields in which to leverage their commando mindsets.

Instead of a virtuous circle, Israel, when it comes to high-tech entrepreneurship has a virtuous tornado; it grabs those who are willing and able to participate in its high risk high reward culture and raises them to the heights of multi-billion dollar exits. Like all tornadoes, this one too, leaves behind a debris field of broken dreams and crushed egos and a crowd of onlookers who know that they simply don’t have what it takes to play the game. Israel’s hi-tech success has a dark side; large and growing income disparities and runaway costs of real estate and living in general that make the lives of those Israelis who cannot or don’t want to participate in this game extremely difficult. Is the price worth it? The answer must be yes. It is because of Israel’s technological and entrepreneurial prowess that it is now finally truly independent. Oh and by the way, when next time the US forces Israel to abandon a key development like it did with its second self-developed fighter jet, the Lavi in 1988, it had better consider that the “blueprints” will be in China the next morning, helping it build its next generation of fighters capable of taking on anything made in America.

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