Start-up Nation (32 page)

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.

As a rare truly independent research institution in its field, the Council on Foreign Relations is a special place. It is
an honor for Dan to have a home there. Richard Haass, CFR’s president, was immediately intrigued by the idea of a book on
the Israeli economy. He contributed important insights and helped us draft expertise from CFR’s diverse scholars and members.
We are also specifically grateful to CFR’s Isobel Coleman, author of the forthcoming book
Paradise Beneath Her Feet: Women and Reform in the Middle East
(Random House), for sharing her observations with us. Gary Samore, formerly of CFR, provided guidance early on. Jim Lindsay,
CFR’s director of studies, made several important suggestions on improving the manuscript. The
CFR
staff is among the most professional of any organization we’ve dealt with in the private, academic, or public sectors; we
would like to specifically thank Janine Hill for all her patient assistance, and Lisa Shields and her communications team.

Part of our book was written in the eclectic Van Leer Institute in Jerusalem, which made an invaluable contribution by hosting
Saul as a library fellow. Our thanks to director Gabriel Motzkin and librarians Yaffa Weingarten and Paul Maurer for all their
gracious assistance.

We are deeply indebted to our industrious and creative team of research assistants: Michal Lewin-Epstein was our lead researcher
at the Council on Foreign Relations; Dani Gilbert spent a summer at
CFR
with us and then continued doing part-time research while at the London School of Economics; Joshua Kram joined our team
for a stint after serving as an adviser to Hillary Clinton’s presidential campaign; Talia Gordis brought her own experience
in
IDF
intelligence, and Ian Mitch and Anton Ornstein also helped at
CFR
as we began the project.

A number of people we interviewed, as well as one of our researchers, came from Arab countries. We respect their request for
anonymity, since association with this book could prevent them from working in the Arab world; and we are grateful for their
contributions.

With speed and deftness, our friend Judy Heiblum of Sterling Lord Literistic—and a Unit 8200 alumnus—made important suggestions
on the structure of the manuscript.

We thank all the friends and family who read the manuscript; your sharp and candid feedback sent us back to the drawing board.
We are especially grateful to Dan Allen, Stephen Backer, Max Boot, Paul Bremer, Reed Dickens, Shane Dolgin, Jonathan Ehrlich,
Annette Furst, Mark Gerson, Henry Gomez, Alan Isenberg, Terry Kassel, Roger Marrero, Roman Martinez, Jim Miller, Josh Opperer,
Matt Rees, Helen Senor, Suzanne and Max Singer, Andrew Vogel, and Pete Wehner, who read the manuscript from cover to cover
under considerable time pressure.

Dale and Bill Fairbanks (Dan’s in-laws) provided a quiet writing refuge in their art studio in Pensacola, Florida, keeping
him well fed, highly caffeinated, and intensely focused for a long stretch leading up to the publisher’s deadline.

A group of Dan’s friends and business partners were extremely patient as this book was being written. Devon Archer, Dan Burrell,
David Fife, Chris Heinz, and Jenny Stein deserve special thanks. Paul Singer, while never directly interviewed for this book,
has been a teacher about macroeconomics without even realizing it. His very strong views about innovation economics impacted
our thinking about the context for this book in the postcrash global economy.

We interviewed over one hundred people for this book, and wish to thank all of them for their time and wisdom. In particular,
Hall of Fame Israeli venture investors Eli Barkat, Yigal Erlich, Yadin Kaufmann, Erel Margalit, Jon Medved, Chemi Peres, and
Yossi Vardi have been living and telling the Start-up Nation story from long before we got involved; they were our guides.
Jon Medved, in particular, was pitching the Israeli economy to the world before it was on anyone’s map. Other extremely busy
people who spent a lot of time with us in multiple interviews were Shai Agassi, Tal Keinan, and Scott Thompson. Isaac “Yitz”
Applbaum and Alan Feld went out of their way to put themselves “on call” for us. Professor Shira Wolovsky Weiss helped us
early on, as did Ken Pucker.

A number of U.S. companies have a strong presence in Israel and truly “get” the Start-up Nation. Current and former leaders
from three in particular opened their doors to us in Israel and in Silicon Valley and provided lots of access: thank you to
Google’s Eric Schmidt, David Krane, Yossi Mattias, Andrew McLaughlin, and Yoelle Maarek; Intel’s Shmuel Eden and David Perlmutter;
and Cisco’s Michael Laor and Yoav Samet.

Leon Wieseltier provided us with wise counsel on the relationship between Jewish history and the modern Israeli ethos.

Stuart Anderson, a former colleague of Dan’s from the Senate Subcommittee on Immigration, has always been a source of rich
analysis on immigration reform. He shared important research on the subject for this book.

We are grateful to the president of Israel, Shimon Peres, who gave us half a day in his office. He not only gave us his unique
perspective as a central player throughout the entire span of Israel’s history, but is still, at age eighty-five, in high
office and busy working to launch whole new industries. We would also like to thank the prime minister of Israel, Benjamin
Netanyahu, for spending a lot of time with us during a hectic period for him in 2008.

As we compared the Israeli and American experiences, a number of U.S. military leaders helped us think through the contrasts.
In particular, we would like to thank Generals John Abizaid (ret.), Jack Keane (ret.), Mark Kimmitt (ret.), David Petraeus,
H. R. McMaster, and Jim Newbold (ret.).

Our wives, Campbell Brown (Dan) and Wendy Singer (Saul), have been an integral part of our daily conversation about this book
since we began writing it, and bore the brunt of the frenzied weeks before each deadline.

Campbell gave birth to the Senors’ first son, Eli, two weeks before we started writing the proposal, and to their second,
Asher, just before we submitted the final manuscript, all as she held down the family fort during a chaotic time. Wendy scooped
up the Singer girls—Noa, Tamar, and Yarden—for week-long trips to give Saul space before deadlines. The Singer girls added
to our excitement as they lapped up stories of the latest Israeli inventions with enthusiasm.

This book relied heavily on Campbell’s and Wendy’s criticisms and advice, and could not have been completed without their
virtuoso feats of multitasking. For that, and for so much more, we dedicate it to them.

We have also dedicated this book to Jim Senor (Dan’s father) and Alex Singer (Saul’s brother).

Jim worked in Iran helping to organize the Jewish community, and later for the Weizmann Institute of Science, where he drafted
resources for its pioneering solar energy program. Just months before the 1985 ground-breaking for the field of mirrors—now
still active as a research facility—Jim passed away.

On September 15, 1987, his twenty-fifth birthday,
IDF
Lieutenant Alex Singer was flown by helicopter into Lebanon to intercept terrorists bound for Israel; he was killed while
trying to rescue his downed company commander. Many who never knew him have since been inspired by the joy and passion of
his life as seen in
Alex: Building a Life
, the book of his letters, journals, and art.

Jim’s and Alex’s work is part of this story. We missed their guidance, and sharing their amazement at what the Start-up Nation
has become.

1
. The information in this passage is largely drawn from an interview with Shimon Peres, president of Israel, December 2008;
and interviews with Shai Agassi, founder and
CEO
of Better Place, March 2008 and March 2009.

2
. Shai Agassi’s blog, “Tom Friedman’s Column,” July 26, 2008,
http://shaiagassi.typepad.com/
.

3
. The information about Better Place is largely drawn from interviews with Shai Agassi.

4
. Daniel Roth, “Driven: Shai Agassi’s Audacious Plan to Put Electric Cars on the Road,”
Wired,
vol. 16, no. 9 (August 18, 2008).

5
. Haim Handwerker, “U.S. Entrepreneur Makes Aliyah Seeking ‘Next Big Invention,’ ”
Haaretz,
August 28, 2008.

6
. Israel Venture Capital Research Center,
www.ivc-online.com
.

7
. Authors’ calculations based on venture capital data from Dow Jones, VentureSource.

8
. Dow Jones, VentureSource.

9
. Donna Rosenthal,
The Israelis: Ordinary People in an Extraordinary Land
(New York: Free Press, 2005), p. 111.

10
. Standard of living comparative data from
www.gapminder.com
.

11
. Mark Twain,
The Innocents Abroad: or, The New Pilgrims’ Progress
(Hartford: American Publishing Company, 1870), p. 488.

12
. Interviews with Gidi Grinstein, founder and president, Reut Institute, May and August 2008.

13
. Interview with Eric Schmidt, chairman and CEO, Google, June 2009; Maayan Cohen and Reuters, “Microsoft
CEO
, in Herzliya: Our Company Almost as Israeli as American,”
Haaretz
, May 21, 2008.

14
. “The Global 2000,”
Forbes.com
, March 29, 2007;
http://www.forbes.com/lists/2007/18/biz_07forbes2000_The-Global-2000_Ind Name.html
;
and “Recent International Mergers and Acquisitions,”
http://www.investinisrael.gov.il/NR/exeres/F0FA7315-4D4A-4FD CA2FA-AE5BF294B3C2.htm
;
and Augusto Lopez-Claros and Irene Mia, “Israel: Factors in the Emergence of an
ICT
Powerhouse,”
http://www.investinisrael.gov.il/NR/rdonlyres/61BD95A0-898B-4F48-A795-5886 B1C4F08C/0/israelcompleteweb.pdf
,
p. 8. Among the top fifty software and technology companies of the two thousand largest public companies listed on Forbes,
almost half have acquired Israeli companies or have opened an R&D center in Israel.

15
. Paul Smith, senior vice president of Philips Medical, quoted in Invest in Israel, “Life Sciences in Israel: Inspiration, Invention,
Innovation” (Israel Ministry of Industry, Trade and Labor, Investment Promotion Center, 2006).

16
. Interviews with Gary Shainberg, vice president for technology and innovation, British Telecom, May and August 2008.

17
. Interview with Jessica Schell, vice president,
NBC
Universal, Inc., April and June 2008.

18
. David McWilliams, “We’re All Israelis Now,” April 25, 2004,
http://www.davidmcwilliams.ie/2004/04/25/were-all-israelis-now
.

19
. Background interview with senior eBay executive.

20
. Curtis R. Carlson,
CEO
of Stanford Research Institute International, in “We Are All Innovators Now,”
Economist Intelligence Unit
, October 17, 2007.

21
. John Kao,
Innovation Nation: How America Is Losing Its Innovation Edge, Why It Matters and What We Can Do to Get It Back
(New York: Free Press, 2007), p. 3.

22
. Robert M. Solow, “Growth Theory and After,” Nobel Prize lecture, December 8, 1987,
http://nobelprize.org/nobel_prizes/economics/laureates/1987/solow-lecture.html
.

23
. Interview with Carl Schramm, president of the Kauffman Foundation, March 2009.

24
.
Paths to Prosperity: Promoting Entrepreneurship in the Twenty-first Century
, Monitor Company, January 2009.

25
. Michael Mandel, “Can America Invent Its Way Back?”
BusinessWeek
, September 11, 2008.

1
. Information in the following section is taken from interviews with Scott Thompson, president, PayPal, October 2008 and January
2009; Meg Whitman, former president and
CEO
of eBay, September 2008; and Eli Barkat, chairman and cofounder,
BRM
Group, and seed investor in Fraud Sciences, January 2009.

2
. Leo Rosten,
The Joys of Yiddish
(New York: McGraw-Hill, 1968), p. 5.

3
. Loren Gary, “The Right Kind of Failure,”
Harvard Management Update
, January 1, 2002.

4
. Background interview with Israeli Air Force trainer, May 2008.

5
. Paul Gompers, Anna Kovner, Josh Lerner, and David S. Scharfstein, “Skill vs. Luck in Entrepreneurship and Venture Capital:
Evidence from Serial Entrepreneurs,” working paper 12592, National Bureau of Economic Research, October 2006,
http://imio.haas.berkley.edu/williamsonseminar/scharfstein041207.pdf
.