Startup Nation: 5 Lessons from Israel at #MPC15

By Amanda Lewan on May 28th, 2015 / Comments

Author and Geopolitical expert Dan Senor took the stage at this year’s Mackinac Policy Conference to share some profound insights into how Israel became a nation for innovation.

How did Israel become one of the most dense and dynamic entrepreneurial and innovative states? Senor says what makes the Israeli story so interesting and relevant is that it happened in one of the most improbable places in the planet to transform into a startup nation.

Israel is a tiny country with about 8 million people.  A 100 year order has being collapsing. Yet today Israel attracts two and half times more VC investments that the U.S., and 30 times more than Europe. Israel is ranked number two in recent surveys by Deloitte is a place to do business.

“If you are a technology company today and you matter you are opening and R&D center in Israel,” said Senor, citing Apple, Facebook and other tech giants who have a presence there. “We had five IPOs right in the middle of the Gaza war. The market has managed to separate the political risk from the businesses there.”

Senor believes Israel excels at is not just the ideas but it’s the capacity to turn it into an enterprise. How has entrepreneurship accelerated here? Here are 5 lessons we can takeaway from Senor insights into Israel’s as a Startup Nation.

  • The government can play a leading role with funding. Israel built something called The Yozma program. The Israeli government recognized there was tremendous tech talent, but not tremendous business talent. They needed to build companies that could export around the world, but were isolated based on location. Technology offered that option. They needed to commercialize it. So they launched the Yozma program and created a partnership program for any experienced VC to partner with any local VC. They loaned money to the enterprise which then invested in local startups. If they made a return, they paid back the Yozma program.
  • Support and openness for immigration can grow entrepreneurship. As capital began to grow so did the attraction for entrepreneurs, and many were moving in from out of the country. “Many of the entrepreneurs were migrating to Israel, and we argue that immigrants are the ultimate entrepreneur,” said Senor. Israel assimilated and immigrated a large portion of their population.
  • Early experience with the IDF services helped talent learn to lead. Most residents graduate high school and go straight into the IDF service. When they finish service they then go to university. Joining the IDF gives youth critical leadership early on. According to Senor, they know what it means to lead, to manage, and to have enormous responsibility which is all great preparation for starting and running a company.  Both technical talent and leadership talent is cultivated.
  • Embracing a culture of failure helps create serial entrepreneurs. In Israel if you fail, you quickly need to figure out what was wrong and go build another company. Failure is learning what went wrong and no VC wants to back a first time entrepreneur. They look for those who have been through it before, failed and learned a ton, and are ready for the next business. “I’m not encouraging failure. It’s an attitude. There’s no stigma associated. It’s a sign of growth and maturity,” Senor said. “There’s a tremendous tolerance for failure in Israel. There are tremendous serial entrepreneurs.”
  • The whole country is a startup. How can we foster a sense of building in a nation? As Senor points out, the country was built from scratch. Entrepreneurs have the opportunity to also contribute to something greater. Is there not a similar buzz right now about Detroit? The feeling that entrepreneurs can contribute to a “rebuilding” of a city almost as a startup?

Hopefully Michigan can takeaway some of these fascinating aspects when looking to spur innovation and new business development.

*We’re reporting this week from the Blue Cross Blue Shield Blogger Zone at the Mackinac Policy Conference. Follow along tweets and stories with the hashtag #MPC15, and let us know questions or conversations you’re interested in most.

About the Author

Amanda Lewan

Amanda Lewan

Editor @michipreneur. Co-founder Bamboo Detroit. Follow me @Amanda_Jenn. I love telling the story of entrepreneurs and innovators.