
How Did Israel Become “Start-Up Nation”? - donohoe
http://www.freakonomics.com/2009/12/04/how-did-israel-become-start-up-nation/
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bayleo
"...attract[s] more venture capital dollars per person than any country — 2.5
times the U.S., 30 times Europe, 80 times India, and 300 times China."

Guh, could we stop it already with the country-level statistics? Per capita or
not, you can't just go comparing a largely urban nation of 7.1 million people
with massive nation-states like the US, EU, India & China which have huge
rural/agrarian areas. How do you think this would read if he had compared it
to the venture dollars per capita for the 7.15 million people living in the
bay area?

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olihb
Exactly. These phenomena are notoriously non-linear.

IMHO, the best way to calculate a good index is to model (usually log-
transformed) the relationship between the venture capital dollars and the
population (or overall investment, number of degree awarded by year, money
invested in R&D, etc.), then take the ratio between the expected value and
observed value. The resulting index is less sensible to scale issues.

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begemot
There is an index that tries to measure innovation called the Global
Innovation Index
([http://en.wikipedia.org/wiki/Global_Innovation_Index_%28INSE...](http://en.wikipedia.org/wiki/Global_Innovation_Index_%28INSEAD%29)),
interestingly Israel comes in at 14th, you'd think they would be number one if
this article is to be believed.

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chacham15
By that same logic, you would say that Israel innovates more than the US since
it appears below Israel on that list.

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begemot
What logic? What are you talking about? The US is above Israel on every sub-
index. Besides it is obvious that it is relative to population because in
absolute terms the US would far outstrip any competitors.

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Zakharov
At least without the context of the book, the bit about military service seems
like a post facto justification. Had Israel not developed a significant tech
sector, I would not be surprised to hear compulsory military service given as
a reason for that.

"Compulsory military service teaches young Israelis that they should follow
orders instead of thinking for themselves. It promotes a narrow and aggressive
world view that sees everything in black and white, friend or enemy, right or
wrong. It takes Israelis out of the commercial world at just the time where
they are their most innovative.", etc.

Compulsory military service could help the tech sector, or harm it, or not
affect it. By considering only the evidence supporting the claim that military
service helps, the article leaves open an unknown amount of counter-evidence.

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yangtheman
Israel and Korea share many things in common. Yet, Israel has become one of
the hottest country for startups. The author attributes the success to
leadership and technology training in military. I'd say the biggest reason is
immigrants.

It's just like mutation and evolution. I truly believe growth in homogeneous
society will be severely limited. When you mix different ideas and
perspectives together, you get stronger outcome.

Good for them!

~~~
Tsagadai
So why the comparison to Korea? Korea has very restrictive immigration
policies which prevent almost anyone from gaining actual permanent residency
(citizenship is almost impossible for "non-Koreans"). Israel has very liberal
immigration and easy access to citizenship. Israel is democratic and has been
mostly free since its founding whereas Korea has had a few dictatorships (and
serious military crackdowns on civilian freedom).

The main reason Korea isn't a startup hub is capital. Korean banks are
incredibly conservative, they won't even lend money for cars or mortgages to
most people. Capital is centralized and mainly allocated to existing projects
or proven corporate models. Venture capital is non existent. Israel is the
opposite of that with lots of investment and decentralized capital. In short,
Israel has risk seeking investors, Korea doesn't.

When no one takes even low to moderate risks with money there cannot be a
startup boom.

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burgerbrain
I've been under the impression that Israel only has liberal immigration for
certain demographics. Is this not the case?

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bmunro
I would say it is the case.

<http://en.wikipedia.org/wiki/Law_of_Return> \- Allows almost any Jew or
relative of a Jew to migrate to Israel and quickly gain citizenship.

[http://en.wikipedia.org/wiki/Citizenship_and_Entry_into_Isra...](http://en.wikipedia.org/wiki/Citizenship_and_Entry_into_Israel_Law)
\- prevents residents of Iran, Afghanistan, Lebanon, Libya, Sudan, Syria,
Iraq, Pakistan, Yemen and areas governed by the Palestinian Authority from
automatically gaining residency and citizenship through family reunion and
marriage.

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azernik
A lot of people seem to be distracted by the emphasis on the military - keep
in mind that the authors predicate that causation on the specific culture of
the Israeli military.

In the book, they compare Israel to other countries with universal, long-term
conscription (such as South Korea and Singapore) which, while economically
very successful, have not had start-up success. They ascribe this to the fact
that the IDF in particular and Israeli society in general tend to disregard
hierarchy and encourage challenges to authority.

If the army's culture were different, its effects on the Israeli start-up
scene would likely not be positive.

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godDLL
I've done 7 months of consequences for disregard for authority before getting
kicked out. You shouldn't say these things about the IDF, as in my and many
hundreds of young men I've met in the reformatories experience they aren't
true.

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rhizome
mleh, begging the question. the article is just a book review and interview
with the authors.

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jackfoxy
Kudos for using _begging the question_ correctly, rather than the popular
usage as another way of saying _raising the question_.

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wtvanhest
I have heard statistics but do not have a source that the university system in
isreal is better positioned to perform tech transfer. The US schools are more
focused on research reports where as Israeli schools are more focused on
selling and building technology.

This is evidenced by the type of start up out of Israel which is patent style
tech over social, web tech.

There are US schools pushing to potentially reward professors not just for
research but also selling technology.

~~~
JerusaEnt
The reason that Israeli schools and American schools differ, stem from the
fact that originally, Israel needed fast results.

in 1948, Israel started getting boat loads of Jewish immigrants (a lot of them
just out of the holocaust and uneducated). Additionally they were at war and
trying to build a country fast. So instead of going for liberal arts and such,
the college education is much more direct and to the point. So after 3-4
years, these people can go out and help the new county.

This is also seen in the fact that majors are picked in High School also, to
further pinpoint what you are going to do for the society, and then get it
done.

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vishaldpatel
The weather and the women had nothing to do with it. Nothing at all.

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geogra4
If that's the case why aren't Miami or San Diego big tech startup hotspots?

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shingen
Uhm, what?

The entire modern biotech lab was practically founded in San Diego. Qualcomm
was founded there.

It might as well be Biotech Valley. There are over 400 relevant biotech
companies located there.

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felipemnoa
So I guess cold weather attracts Financial Institutions/MBAs? I guess that
explains NYC? /sarcasm

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krmmalik
I've read that book, and i can say for sure, its a very worthy read indeed.
There are some serious eye openers in there that just cant be covered in a
blog post or executive summary.

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jacques_chester
Countries with small populations are likely to have higher variance than
countries with large populations.

We often look at the most "successful" small countries and try to deduce
causal effects, when it could just as easily be simply that they're small.

Israel's success with 7 million citizens hasn't been compared with the success
of Tajikistan, Serbia, Papua New Guinea ...

~~~
vbtemp
Countries with smaller populations would naturally exhibit a larger variance
than larger countries that would tend to clump toward the middle. However, no
one would say it's just the luck of the draw that papua new guinea is a
undeveloped backwater and sitzerland is the center of global banking. With
Papua New Guinea for example, I'd imagine that a history of colonial
exploitation and lack of contact with the outside world resulted in its
present circumstance. Switzerland's tight cultural and economic integration
with the rest of europe while staying politically neutral probably greatly
contributed to it's current situation.

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zeynalov
What did I just read?! Some facts:

\- How can you compare venture money per capita with China, India, US etc.?!
What kind of logic is this?!

\- Yes it's true that they got more venture capitals than other countries, but
why? Because hey made kick-ass startups?! Where are these startups? They got
because of Jews living outside of Israel invest too much money there. This
doesn't mean that they are a startup nation. For example Kuwait invests
thousand times more than Israel on national startups but this doesn't mean
that they are genius.

\- Actually they get daily aid of 8-10 million dollar from only US an Germany.
Do you call this aid venture capital?!

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azernik
For an economy that produces $217 Billion annually, $3 Billion annual military
aid is chump change - especially when 75% of that aid is composed of credits
that must be spent on American products. So the actual fiscal stimulus from
the US amounts to a grand total of about $600 million per year, or about .27%
of GDP (no, that decimal point is not a typo)

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johnwall
what are the successful startups in Israel?

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yuvadam
tl;dr; 2009.

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gnu8
Apartheid doesn't seem to slow them down.

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alttab
This is also ignoring the fact that Israel basically owns the US Government
with their sympathetic policies and billions of dollars we send them every
year.

The article makes it seem like Israelis have balls and that's why they are
successful. While its true they have balls, Israel wouldn't even EXIST if it
wasn't for US foreign policy.

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siculars
And half the technology you and I use everyday would not EXIST if there was no
Israel. If you like, you could think of Israel as a global R&D facility.

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begemot
> half the technology you and I use everyday would not EXIST if there was no
> Israel.

Could you back this up?

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olh
I am sure not "half" and not "would not exist". This article gives a good tldr
of Israel:
[http://en.wikipedia.org/wiki/Science_and_technology_in_Israe...](http://en.wikipedia.org/wiki/Science_and_technology_in_Israel#Computer_engineering)

