Why Israel is the start-up nation?

Why Israel is the start-up nation?

Why is Israel, a small nation a third the size of Tasmania with a population of nine million, known worldwide as the second Silicon Valley? Why does it have the highest number of start-ups in the world? Why do so many world-class innovations come from Israel? We are proud of our heritage and know that our upbringing in that war-torn nation shaped who we are, and instilled in us some unique traits that helped us get so far. So, here’s what we, as Israelis, think are the critical factors to entrepreneurial success.


a) Think big: Israel is tiny and is situated smack bang in the Middle East, which is not renowned for being one of the ‘best neighbourhoods’ in the world. Unlike many nations that rely on friendly borders and prosperous relationships with surrounding countries, Israel by necessity has always had to think bigger than most. For example, every business that we have ever built in Australia was a ‘.com.au’ business. In Israel this would be laughable, because from the outset, an Israeli entrepreneur would take a global approach and only consider building a .com business. This need to ‘think big’ encouraged innovation and entrepreneurial thinking.

b) Take education seriously: 24% of the Israeli labour force has a university degree, making them one of the most highly qualified and well-trained workforces in the world. For every 10,000 people you meet, there are 135 engineers with university degrees. The Israeli government take the education of its people seriously and spends a bigger percentage of its GDP on research and development than almost any other country. The L in Mazal (Learning) (read the book to find out about this very important concept!) pervades all aspects of Israeli life, including that of the government.

c) Invest in R & D: The Israeli government plays a decisive role in bringing Israel forward with its technological strength. They established the Office of Chief Scientists under the Ministry of Industry to support R&D activities and SMEs and offer a number of programmes that support business to expand their entrepreneurial capabilities.

d) Have military service: Military service is compulsory for all 18-year-olds and is one of the important sources of talent for Israeli innovation. The army takes the most brilliant youth with the best analytical capabilities, decision-making and team-work skills, and gives them unparalleled education and training. The results are amazing. A 21-year-old army graduate will leave the service with three years of high-level training in critical subjects such as cyber security that would place them well ahead of the most senior cyber specialists at Australia’s top banks.

The result?

This commitment to education, R and D and innovation attracts top tech talent from all over the world and incentivises the world’s most progressive companies to set up divisions in Israel so they can take advantage of this fertile ecosystem. Facebook, Intel, Cisco and eBay are just a few of the tech titans to have a presence and the list just keeps growing as word spreads that Israel is where world class innovation starts.

If you’d like to learn more about how Israel has become the start-up nation, we recommend the book of the same name, ‘The Start-up Nation’ by Dan Senor and Saul Singer. Or read ours, and get an even better lesson for how to succeed in building an great digital business.

Here are our 10 commandments for being a great ‘Ausraeli’ entrepreneur:

1. Think outside the box
2. Look beyond the framework and always go to the next level
3. Embrace responsibility
4. Keep taking risks, don’t be afraid to fail. Failure is seen as a motivational tool rather than an obstacle
5. Be open to constructive criticism – we don’t know it all
6. Persistence – the harder you work, the luckier you get
7. Be curious – never stop learning
8. Rely on your team, and treat them well!
9. Focus on execution, ideas are a dime a dozen
10. Break the rules
11. Bonus commandment: Trust your gut feeling