Start-Up Nation summary

One reason for Israel’s entrepreneurial achievements can be found in its people’s mentality. Israeli people live in, and are framed by, a culture of rebelliousness, informality and assertiveness.

In 2008, PayPal bought the Israeli start-up Fraud Sciences – a company offering solutions to online payment scams. Scott Thompson, president of PayPal at the time, stated that the demeanor of the Fraud Sciences employees during his first meeting made quite an impression on him. The employees were unintimidated and openly challenged Paypal’s methods for detecting fraud.

Because every Israeli has to serve in the army for a minimum of two years, their military is an integral part of society. It’s also where much of the country’s creative energy comes from, so it acts as an incubator for high-tech start-ups.

In Israel, all 17-year-olds must report to military recruiting centers for screenings that include psychological testing and medical evaluation. Those who do particularly well in the screening are offered training in the military elite units – the highest of which is the Talpiot unit.

Israel’s economic history is marked by two significant leaps. The first came during 1948 to 1970, and the second is still happening today, having started in 1990. During these leaps, Israel was transformed from a less-developed country into a trailblazing hub of innovation.

The collective communities known as kibbutzim were at the core of Israel’s first great economic leap. Kibbutzim were created as agricultural settlements devoted to abolishing private property and forming an egalitarian community. They were both hyper-collective and hyper-democratic, and through them technological breakthroughs were made.

Imagine being able to have anything you want for dinner, from Yemeni cuisine, to Russian specialities, to Mediterranean dishes. This is a reality in Israel, which is home to over 70 nationalities and cultures due to large influxes of immigrants.

Immigration has also boosted the Israeli economy in other ways.

Israel is surrounded by political adversaries on every border and is in a constant state of conflict. This may seem harmful to the Israeli economy, but these geopolitical circumstances have actually been advantageous in the long run.

Israel has managed to turn its political isolation into an economy built on knowledge and innovation.

The Israeli start-up scene may seem fairly established, but it began just over a decade ago. So what if Israel’s economic success was simply a fluke resulting from random events? In order to ensure its ongoing strength, Israel’s economy will likely have to overcome several challenges.

One of these challenges could well be that Israel’s economy gets too dependent on venture capital.