Start-up Nation

Peres seemed to see technology everywhere, and long before Israelis themselves thought in such terms. This may have been one of the reasons Ben-Gurion backed Peres so strongly; the “Old Man” was also fascinated by technology, he told us. “Ben-Gurion thought the future was science. He would always say that in the army it’s not enough to be up to date; you have to be up to tomorrow,” Peres recalled.

So Ben-Gurion and Peres became a technological tag team. Peres and American swashbuckler Al Schwimmer started dreaming up an aeronautics industry while flying over the Arctic in 1951. But when they got back to Israel, they were met with stiff opposition. “We can’t even make bicycles,” ministers told Peres, in days in which a nascent bicycle industry was indeed failing, refugees were continuing to flood into the country, and basic foodstuffs were still being rationed. But with Ben-Gurion’s backing, Peres was able to prevail.

Later on, Peres’s idea of starting a nuclear industry was similarly written off. It was seen as too ambitious, even by Israeli scientists in the field. The finance minister, who believed that the Israeli economy should focus on textile exports, told Peres, “It’s very good you came to me. I shall make sure you won’t get a penny.” So with typical disregard for the rules, Ben-Gurion and Peres somehow funded the project off-budget and Peres went around the established scientists, turning instead to students at the Technion, some of whom he sent to France for training.

The result was the nuclear reactor near Dimona, which has operated since the early 1960s without mishap and has reportedly made Israel a nuclear power. As of 2005, Israel was the world’s tenth-largest producer of nuclear patents.¹

But Peres didn’t stop there. As deputy minister of defense, he pumped money into defense R&D, to the dismay of the military leadership, which, perhaps understandably, was more concerned about chronic shortages of weapons, training, and manpower.

Today, Israel leads the world in the percentage of its GDP that goes to research and development, creating both a technological edge critical to national security and a civilian tech sector that is the main engine of the economy. The key, however, is the way the entrepreneurial nation building Peres embodies has morphed into a national condition of entrepreneurship.

This transformation was not easy, planned, or foreseen. It came later than Israelis would have liked—there was a “lost decade” of low growth and hyperinflation between the founders’ era of high growth and the current era of high tech. But it came, and a thread runs through the founders’ time of draining swamps and growing oranges to today’s era of start-ups and chip designers.

Today’s entrepreneurs feel the tug of this thread. While the founders’ milieu was socialist and frowned on profit, now “there’s a legitimate way to make a profit because you’re inventing something,” says Erel Margalit, one of Israel’s top entrepreneurs. “You’re not just trading in goods, or you’re not just a finance person. You are doing something for humanity. You are inventing a new drug or a new chip. You feel like a falah [“farmer” in Arabic], a farmer of high tech. You dress down. You’re with your buddies from the army unit. You talk about a way of life—not necessarily about how much money you’re going to make, though it’s obviously also about that.” For Margalit, innovation and technology are the twenty-first-century version of going back to the land. “The new pioneering, Zionist narrative is about creating things,” he says.

Indeed, what makes the current Israeli blend so powerful is that it is a mashup of the founders’ patriotism, drive, and constant consciousness of scarcity and adversity and the curiosity and restlessness that have deep roots in Israeli and Jewish history. “The greatest contribution of the Jewish people in history is dissatisfaction,” Peres explained. “That’s poor for politics but good for science.

“All the time you want to change and change,” Peres said, speaking of both the Jewish and the Israeli condition. Echoing what we heard from almost every IDF officer we interviewed, Peres said, “Every technology that arrives in Israel from America, it comes to the army and in five minutes, they change it.” But the same thing goes on outside the IDF—an insatiable need to tinker, invent, and challenge.

This theme can be traced to the very idea of Israel’s founding. The modern state’s founders—or national entrepreneurs—were building what might be called the first “start-up nation” in history.