What is in that falafel over there?
Something’s got success brewing in the veins of a whole crop of successful new entrepreneurs out of Israel. Signs of it? There’s last summer’s news that Google paid $1.1 billion for the cutesy mapping-and-traffic app Waze. There’s the Israeli-Canadian team that just won the Global Startup Challenge. There’s the rise of Israeli venture firms , from Tel Aviv to Palo Alto . There’s even an incubator just for Israeli entrepreneurs in the Valley. And there’s the 52 percent spike in demand for Web developers that Israel — and its $243 billion economy — saw in 2013.
Move aside, MIT, Stanford and Y Combinator — even IIT and Tsinghua. Turns out the best entrepreneurial incubator in the world might actually be created via conscription … the Israeli Defense Forces.
A little out there? Not so much.
Without being reductionist, Israeli and non-Israeli entrepreneurs alike will tell you, Israelis have had a historical knack for business — even since the days when manufacturing ruled. But along with a thriving export and manufacturing business, Israel now sees a budding startup and consumer-facing product industry. One guess, posited in the 2009 book Startup Nation by authors Dan Senor and Saul Singer, is the chutzpah explanation: Maybe there’s just something about the Israeli people and their scrappy survivors’ anything-is-possible mentality that makes the startup boom in their backyard anything but surprising.
Still, it’s got to be more than that.
Small country, big money
There’s about “one degree of separation” between people in the country of 8 million, says Yaron Galai, CEO of New York-based media company Outbrain.
“There’s definitely a great entrepreneurial spirit … and one success story means a lot. When people heard I had sold one company, they think, ’I can do this.’” (Galai sold his previous company to AOL for $363 million.)
Plus, the military is a powerful networking tool. Especially when it’s mandatory.
Compared with the U.S., where less than 1 percent of the population serves in the military, or even India, where only around 3 percent join the military, Israel’s defense-tech pipeline is pumping. And delivering all the obvious byproducts: loyalty; a tough-as-nails attitude, instilled at a young age; a strong network of alumni; and future partnerships aplenty.
“You see a lot of founding teams coming out of the same army unit,” says Galai. In fact, Galai and his co-founder met during their younger days, in the navy.
Data mine early and often
Think what you will about the Israel Defense Forces, but from a skills standpoint, it’s hard to find a better training ground than a war room. Forget hackathons: If you can code and decrypt with the fate of a nation dripping from your sweaty pores, you’ll barely have to wipe your brow in a job interview.
And, after all, the IDF hopped on the data train well before the rest of us: and those same skills they use to gather the data to track down al-Qaida? That’s now what savvy new Israeli entrepreneurs are using to tell you what to read online, what clothes to buy, what your tastes should be.
One Israeli success story is New York-based Adam Singolda, CEO of content-distribution company Taboola (one of those data-driven companies). He’s soon to become an American citizen, but only after having spent six years in an intelligence unit of the IDF.
“The Israeli Army is unique because it actually has an ‘HR function,’” Singolda said. “The whole concept of recruiting is very advanced.”
Which might sound counterintuitive in a country where everyone ends up in the military anyway — but there’s enormous competition leading up to the moment when teenagers are assigned to their specific unit. So from the very beginning, future CEOs are groomed and grown through a process that could make the Harvard admissions department shudder. And proving yourself early means proving yourself often thereafter — it’s a habit that’s tough to break.
But getting accepted into the high-pressure units like intelligence mean being among the most impressive scientific or mathematical minds in the country.
Perhaps the bar is a little easier to reach in a nation where state-funded schools (with strong math programs) are the norm, and where you can “major” in engineering (much like Asian schools) as a teenager. Picture then, if you will, a bigger, more driven pool of STEM-savvy talent coming through the Israeli system earlier than their peer countries — and emerging army-strong to put their finely honed skills to use.
No room for tears: A new kind of educational disruption
To hear Singolda describe what he values in a new hire is to hear the new mantra of tech culture — and perhaps the next wave of mainstream corporate hiring culture.
“For me, experience is a much more important part of thinking about hiring than education.”
Sure, that’s not exactly new thinking. But contrast it to the last wave of engineers to power the tech boom: IIT-trained Indian immigrants and Stanford stop-outs. Previously, universities offered smart, hungry students a kind of cushy (often Ivy-clad) home to try things out. And sure, the University of Tel Aviv is well and good, but Singolda, Galai and others swear their military time — rather than classroom time — mattered much more: the army was a better incubator and a better network driver. It’s how they grew up.
“It’s our college,” Galai said.
Certainly, the new emphasis on experience over education isn’t arising just thanks to Israelis or even Asian immigrants; indeed, it’s been bubbling for years in tech circles. But it’s one way the rise of Israeli business minds could be pushing their industry in new directions.
What’s ahead could be less obvious. Immigrants have a habit of influencing corporate culture in subtle ways. Once they’re so ubiquitous as to not be oddities anymore, their previously peculiar penchants become mainstream. Take the Polish and Irish influence on manufacturing to, more recently, the Indian impact on the tech boom (you can find tandoori chicken in any big tech company’s cafeteria, after all).
So what might be the fruits of this latest incarnation of globalization? Not just challah in the boardroom.
Why you should care
Because tech’s next big hitters are coming straight from the Promised Land — and they could change the global tech market, from wallets to culture.