Start-up Nation

About an hour and a half into our meeting with President Peres, we ran out of time. His next scheduled appointment had arrived, and we prepared to say our good-byes. But as we stood to do so, he paused for a moment and said, “Why don’t you come back in half an hour and we can continue?” So we did, and he previewed what his message would be for Israel’s entrepreneurs and policymakers in the coming years: “Leave the old industries. There are going to be five new industries. Tremendous—new forms of energy, water, biotechnology, teaching devices—there’s a shortage of teachers—and homeland security to defend against terrorism.” Nanotechnology research, for which Peres has also been instrumental in establishing funding, he predicted, would cut across all of these new industries and others as well.

We don’t know whether Peres has picked the right industries, but that’s not the point. At eighty-five, he still has the chutzpah to think up and advocate new industries. As they do in Israeli society (and have throughout Israel’s history), the pioneering and innovative impulses merge into one. At the heart of this combined impulse is an instinctive understanding that the challenge facing every developed country in the twenty-first century is to become an idea factory, which includes both generating ideas at home and taking advantage of ideas generated elsewhere. Israel is one of the world’s foremost idea factories, and provides clues for the meta-ideas of the future. Making innovation happen is a collaborative process on many levels, from the team, to the company, to the country, to the world. While many countries have mastered the process at the level of large companies, few have done so at the riskiest and most dynamic level of the process, the innovation-based start-up. Accordingly, while Israel has much to learn from the world, the world has much to learn from Israel. In both directions, the most careful thing, as Peres told us, is to dare.

Acknowledgments

This book began as a long discussion between the two of us in April 2001, when Dan brought to Israel a group of twenty-eight Harvard Business School classmates. The purpose was to explore Israel’s economy, politics, and history. It was at a time of vast business opportunity in Israel but also, with the collapse of the peace process, of escalating insecurity.

Almost none of the students had any previous ties to Israel—in fact only three were Jewish. They came from a range of countries: the United Kingdom, the United States, Canada, Spain, Italy, Portugal, and India. At the end of the week, many were asking the same question: Where did all this innovation and entrepreneurship come from?

We realized that we did not have an answer.

Over the years since then, Saul would write Jerusalem Post editorials about the Israeli economy and Dan would come to Israel almost every other quarter to invest in start-ups and visit family. As Dan would meet with an impressive Israeli entrepreneur or Saul would highlight one, our curiosity grew.

We assumed there must be some book that explained what made the start-up scene so vibrant and seemingly impervious to the security situation. There wasn’t. So we decided to write one.

We are indebted to many people who have helped us along the way. The greatest compliment we can pay to Jonathan Karp, the founder and force behind Twelve, is that he is a true innovator in the book world. Publishing only twelve books each year, he is the quintessential undiversified investor. Jon taught us many things, most important among them was to do less arguing and more storytelling.

With energy and creativity, Cary Goldstein thought through who might be interested in this book and how to reach them. Colin Shepherd was meticulous in every phase of the book’s production and persistent as the deadline reminder. Dorothea Halliday was abundantly patient in the copyediting phase. Laura Lee Timko, Anne Twomey, Tom Whatley, and Giraud Lorber—also all part of Twelve’s team—were a huge help to us.

It was never a dull moment working with Ed Victor, our agent. In promoting our proposal, as with everything he does, Ed was chock-full of chutzpah. Don Epstein and Arnie Hermann were trusted advisers, too.