Start-up Nation—A New Book About Israel’s Economic Miracle

Oksana Forostyna

We discuss a new book entitled Start-up Nation: The Story of Israel’s Economic Miracle, recently issued in Ukraine by Yakaboo Publishing. An interview with Oksana Forostyna.

Oksana Forostyna: This is a book about the story of Israel’s economic miracle. How Israel was transformed from a poor, exhausted country into what is probably the most innovative economy in the world and a very economically successful country. Incidentally, Israel is one of a handful of countries that was not affected by the  financial crisis of 2008. These countries even saw slight growth while every other country was declining and experiencing an apocalypse. But they were functioning, and things were very good.

Іryna Slavinska: We’ll talk about this in detail a bit later, when we get to the components of this economic miracle. But for now, let’s talk a bit about the authors.

Оksana Forostyna: They are Dan Senor and Saul Singer. These two authors have a mixed background of business journalism and consulting work for the U.S. government. Saul Singer worked in the United States as an advisor. Their book was published in 2009 by the Council on Foreign Relations. Although it is not an academic work, it is based on colossal experience and research not only on business but also government circles.

Іryna Slavinska: In order to complete this introductory section, we have to say a few words about the publisher. Previously, Oksana Forostyna visited the studios of Hromadske Radio, where she presented her new books as the founder and head of the young publishing house TAO, which from the very beginning specialized in works on business in the finest sense of this word. But things have changed, and TAO has begun collaborating with the online bookstore Yakaboo.

Оksana Forostyna: A new publishing house called Yakaboo Publishing has been created. It has two founders: the large online store Yakaboo and little me. That is, earlier I worked as a private entrepreneur; TAO is a trademark. We created a new company. I know that Yakaboo had long been dreaming about its own publishing house, and it’s finally happened.

Іryna Slavinska: This is also proof of how a start-up, if a publisher can be called a start-up in the first place, can grow through partnership. But let’s go back to the book Start-up Nation, which is about Israel’s economic miracle. I would like to run through the general, basic theses of this book. When we talk about the start-up nation, in what sense is the word “start-up” being used? Are we talking about innovations on the leading edge of a technological avant-garde, or is start-up a metaphor for some new, more or less independent, more or less small projects?

Оksana Forostyna: Well, ever since this book appeared in English in 2009, even I have noticed this kind of tradition, at least in the press. “Start-up nation” is used as a synonym for Israel. That is, just like Britain is referred to as “foggy Albion,” Israel is called the “start-up nation.” The number of start-ups that keep cropping up in this small country is truly and absolutely incredible. Obviously, not all of them survive, but in fact very many do. Most do, and these are mainly technological start-ups. If we’re talking about context, then these are mostly high-tech start-ups; not only informational but also biotechnological ones. I think that a lot of people know that medicine is very strong in Israel, as well as agriculture. Well, Israel is a desert. That is why agriculture in Israel is mostly science, not digging. In other words, it is very scientific.

Іryna Slavinska: Yes, if we are talking about the progress of medicine and high-tech medicine in Israel, then I can invite our listeners to listen to our іnterview with Anna Zharova , who is the co-head of the volunteer movement Israeli Friends of Ukraine. One project that they created and carried out is an exchange between Ukrainian and Israeli doctors. Let’s continue our conversation about Start-up Nation, a book that was published in 2009 and which was just translated into Ukrainian. Since then, seven years have passed. If we look at Israel today, what changes do we see?

Оksana Forostyna: Well, one of the authors, Saul Singer, and I actually talked about this from the very beginning. We corresponded. Some cases, some examples that he cited are definitely obsolete. For example, in the first edition, the English-language edition of the book, he cites the example of a very flexible start-up called Better Place, which, unfortunately, has gone bankrupt since then. But the authors wrote a foreword especially for the Ukrainian edition. They did a survey of what has changed during this period. That is, they were absolutely aware that some things had to be updated. In fact, we updated some of the text together. For example, we updated statistics. So this Ukrainian book is not identical to either the 2009 or 2011 editions.

Іryna Slavinska: This reminds me of when I read the book Lean In by Sheryl Sandberg, which was also produced by Oksana Forostyna when she was a representative of Krytyka Publishers. As far as I remember, no matter what country it has been published in, Sheryl Sandberg’s book is filled with objective national statistics, so that male and female readers can “try on” the story and not read about the Martian adventures of top managers from Silicon Valley in the US. Is there also a Ukrainian context present in Start-up Nation, or in the footnotes, or in some parallels?

Оksana Forostyna: It is present, in fact, in the foreword, because the foreword was written in late 2015. It was written especially for Ukraine, for the Ukrainian edition. I’m not even sure whether there was one in the other translations—there have been thirty translations. Whether there were some local forewords. At least, I didn’t come across any mention of them.

Іryna Slavinska: From reading this book, do  you have a favorite case, a favorite start-up that impressed you the most?

Оksana Forostyna: I don’t think that this is the case, but I made several discoveries. For example, before I read this book I thought that the Jewish word “chutzpah” meant a kind of audacity bordering on boorishness; giving someone the elbow; contempt for authority; very disruptive qualities truly on the border of some kind of audacity and gall. I thought that it had an exclusively negative connotation. But it turns out that in Israel chutzpah also has a positive dimension. That is, it can sometimes even be a compliment, when you so believe in your idea, your position, your start-up, that you go ahead despite whatever people think, regardless of authorities, regardless of whatever status is out there. And this is exactly one of those secrets, one of these components of this unique entrepreneurial culture.

Іryna Slavinska: I would like to devote our further conversation to the topic of possible exchanges and possible interesting lessons that can be taken from this. But let’s begin with the Israeli context: a start-up nation and the success of new, highly intellectual projects that continue to operate, or they go bankrupt and give rise to new projects. What is the secret of success? Are there special circumstances for paying taxes, for registering a business? Perhaps there several such components. Let’s take a closer look at them.

Оksana Forostyna: What we in Ukraine often view either as a justification that nothing in our country turns out or it turns out differently, or we see it as an obstacle that has to be overcome heroically, the Israelis regard as advantages; the opposite. For example, there is a widespread belief in our country that there is no consensus. Where you have two Ukrainians, you get three hetmans. Or, if we all walked in formation, then everything would be fine. But in Israel there is an absolutely different approach: They believe that their very ancient tradition of quarreling, discussing for a long time, to the point of utter exhaustion, is the opposite, that it fosters productivity and better solutions. That is, the fact that they argue about every detail is absolutely not a problem. On the contrary, they consider this an advantage. The second thing is what they call a very short power distance. They call even their national leaders by nicknames. That is, in their country, politicians, in fact, every politician, has his own familiar nickname. They have a very elitist culture. When a boss makes his subordinate coffee, this is an absolutely normal situation. And this openness to criticism, openness to discussing one’s mistakes, reflects a tolerant, calm attitude to setbacks. In other words, if there is a bankruptcy, some kind of setback, or something has happened, then that person does not become a pariah. This is not considered something to be ashamed of.

Іryna Slavinska: This is perhaps what sets it apart from the American business culture, where a setback in reputation in the form of bankruptcy is not the easiest experience.

Оksana Forostyna: In the U.S. this may also depend on the industry. There may also be a tolerant attitude in this start-up industry. This it is not so much conservative as financial, for example. And I think that in our context, the Ukrainian one, Israel’s experience is very important, where there is an integration of the army culture with business culture. In fact, that which is practical. All active Israelis have the experience of having served in the army. The absolute majority does military service there. And this is not a single time after school, they return to these studies regularly. It is clear that these social hierarchies are changing there. That is, the president of a company can go on guard duty, as they say, together with his subordinate, and they are comrades in arms. The country is small, and that is why there are very strong social connections in their country, and there is none of that fear of status. There are none of these insurmountable hierarchies. Social mobility works completely differently. Well, not to mention that experience acquired in the army later works in business. That is, young people who have acquired very good training either in the sphere of information technology or in the sphere of medicine, some engineering knowledge in the army straight out of school, they later are actually a very valuable resource for business.

Іryna Slavinska: The army is generally a very interesting metaphor, and I am convinced that in mass consciousness it can anticipate the development of the idea of a kind of drill, of very serious requirements for discipline. Is this present in the Israeli business structure? That army and business hierarchies do not coincide is obvious, and this truly can work very well as a bond for better trust within society. In turn, to what extent does corporate culture anticipate workaholism, some kind of very strict discipline, working for more than eight hours a day—all these things?

Оksana Forostyna: Yes and no. On the one hand, there is something that is not so much relaxation but rather a different approach to hierarchy. And this is due not least of all to the fact that there were really very few people, especially at the beginning. When people were just arriving in the newly formed state, they were issued weapons almost immediately, and they went to war, sometimes even without any kind of special training. That is why the ability to make decisions independently, without waiting for some kind of go-ahead from the bosses, especially in extreme conditions, when it is a matter of life and death, could not have failed to be reflected in the business culture. In other words, after so many years this habit of taking on responsibility has become a component. And that’s why there are completely different hierarchies. There are very many interesting accounts of how the American army is now adopting this experience, in relations among the military and how soldiers are demobilized later. How they find themselves in civilian life. Again, there are very many interesting cases where former army pilots are creating some unbelievable technological start-ups, how they are actually transferring this ability of theirs to solve problems, for which you are seemingly not ready, to business. There is none of this corporate narrowmindedness that says I am not responsible for this, that’s it, goodbye. I think that here it is not a question of some kind of workaholism, even though it does exist. It simply has an absolutely different dimension.

Again, the book offers very interesting examples of how Israeli companies carried on working in extreme conditions. When, for example, attacks were taking place and they were attending a business meeting wearing gas masks. Or production is not moved, despite the fact that bombs are falling. They still manage to make deliveries by the deadline. This is not workaholism for the sake of workaholism, but some kind of ability to overcome obstacles, even such extreme ones. And not when they are simply tired, for the sake of having the company survive, and not simply survive but prove that despite a supposedly absolutely unattractive investment climate it can compete with countries that are much more peaceful.

Іryna Slavinska: In your opinion, what valuable lessons can Ukrainian business or Ukrainian entrepreneurs, if one can speak in such a personalized way, learn from reading Start-up Nation?

Оksana Forostyna: Well, first of all, that the state of being under constant threat is not an obstacle. By the way, our guests talked about this at the launch. The book was launched literally a few days ago, and we had a discussion with three people who, one way or another, are very knowledgeable about the investment community and the start-up community. Andrii Kolodiuk, who is the co-head of the Ukrainian Venture Capital and Private Equity Association, was saying that on the very day that [the Battle of] Ilovaisk took place, he was speaking with investors and he asked whether they would be reviewing their decisions, and they said no, we have been investing in Israel for so many years, and it’s all good. That is, even though some kind of peace is not a shining prospect in the near future, this absolutely does not mean that we have to abandon the search for investments. In other words, what we see as an obstacle may be a kind of additional motivation.

Іryna Slavinska: What about personal traits? Does an “ideal, Israeli-style businessman” exist?

Оksana Forostyna: Oh, there’s a very funny passage [in the book]. I think it’s a quote from someone. If an Israeli likes a girl, he doesn’t wait. He asks her out for a date the very same day, and if he has a business idea, again he doesn’t wait. He begins to implement it right away or to look around for money for it. I think this is also connected to this sense of being under threat. Because you cannot be sure that tomorrow will be the same kind of day, relaxed, and there is absolutely no telling how all this will end. We don’t know when life will end. That is why I think that this particular stimulus to live life quickly also works like yeast in the Israeli culture.

This program was made possible by the support of the non-profit organization Ukrainian Jewish Encounter.

Originally appeared in Ukrainian (Hromadske Radio podcast) here.

Translated from the Ukrainian by Marta D. Olynyk
Edited by Peter Bejger