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November 4, 2009

5 Questions for Dan Senor

Posted: 10:16 PM ET

Dan Senor, Former spokesperson for U.S. led coalition forces in Iraq and current adjunct senior fellow for Middle East studies at the Council on Foreign Relations, answered “5 questions” about his new book, Start-Up Nation.  In it, he and co-author Saul Singer argue that the United States and other countries can look to Israel – with its small population of 7 million people – for answers on how to energize the economy.  According to Senor, despite being such a small, young country, Israel has more start-up businesses per capita than anywhere else in the world.  Below, Senor discusses why Israelis might have a head start over much of the world…

1.  LKL Blog: YOU SAY ISRAEL IS THE WORLD'S QUINTESSENTIAL START-UP NATION.  WHY?   senorbook00001

Dan Senor: It has the highest density of start-ups in the world.  There are more start-ups in Israel per capita than any country in the world.  There’s a start up in Israel for every 1,885 Israelis.  And their start ups are unique in the world for coming up with radical solutions to really complex problems.  And finally – the whole notion of the modern Israeli state is – in and of itself – a start up.  It’s less than 60 years old.  It was an idea by the founders of modern Israel to build a modern state and a modern economy with a modern biblical language or modern version of the biblical language in the country of their ancestors, or the territory of their ancestors – going back almost 3000 years.

So this whole notion of building this country, where they built it, how they build it and what they built is a start-up.  A quintessential start up.  It’s both a nation of start-ups and the whole notion of modern Israel is a start-up too.

2.  LKL Blog: WHAT MIGHT BE SURPRISING TO SOME PEOPLE IS THAT IT IS SUCH A YOUNG COUNTRY – RELATIVE TO THE UNITED STATES – AND DESPITE THE SECURITY SITUATION IN ISRAEL:  THE THREAT OF TERRORIST ATTACKS, WAR...YOU SAY INDUSTRY AND INNOVATION HAS THRIVED.

Dan Senor: What Israel does – they have a number of unique policies that we think are factors ranging from innovative immigration and assimilation policies - some 70 nationalities are represented in Israel.  They bring talented people from around the planet and welcome them.  Israeli politicians don't view immigration as a burden; they campaign for office talking about how many immigrants they're going to bring in.  And if they don't bring in a lot, they have failed.  There’s an innovative approach to research and development.  The country has the highest percentage of any country in the world, the highest percentage of its economy on civilian research and development.  And they have very innovative ways on how they spend that money. 

But I would say the most important factor is that Israel teaches its young people how to be entrepreneurs.  There’s enormous emphasis in the country to get to people when they're young and teach them about leadership orientation and teamwork and improvisation and what it means to make decisions with imperfect information. 

We spent a lot of time with the leaders of Google and Intel and eBay and all of these companies say – if you take the average 25-year-old Israeli, and put him or her up against their peers around the world, you can't compare them to an Israeli 25-year-old because by 25 they've been raised in a country that teaches leadership and entrepreneurialism at a young age.  It gives them this military experience so that they've actually had to lead and know what it means to manage a lot of people, manage lives and millions of dollars of equipment.  Then they go to university.  And by 25 they've accomplished all that. 

3.  LKL Blog: IN THE BOOK, YOU TALK TO PEOPLE WHO HAVE STARTED BUSINESSES THERE…AND ARE SOMEWHAT SHOCKED AT THE DIFFERENCE BETWEEN CORPORATE CULTURE IN ISRAEL AND SOMEWHERE LIKE THE UNITED STATES…

Dan Senor: Yes, we spoke to one of the senior executives of Intel....and they had to institute cross cultural seminars so that their Americans weren't put off by Israelis.  Because often many who do business in Israel from abroad tend to see Israelis as aggressive, as pushy, as highly opinionated, as highly disrespectful to hierarchy - and there's some truth to all of that.  The Israelis are taught also at a young age – and also in the military – to constantly probe, constantly challenge, constantly debate - even your bosses.  If you're questioning the confidence of your commander or questioning judgment, you should constantly challenge.  Don’t let rank get in the way of real debate and real discussion.  And many people in the west are put off by that. 

4.  LKL Blog: THE ISRAELI ECONOMY IS STILL RELATIVELY YOUNG COMPARED TO OTHER COUNTRIES LIKE THE UNITED STATES…HOW WILL THINGS CHANGE THERE OVER THE YEARS?

Dan Senor: We have a chapter in the book that deals with what we call the threat to the economic miracle.  It’s our look at what is going wrong.  And we think there are certain demographics in the country that are underperforming and not participating in the economy to the extent that they should.  So there are a number of reforms that should take place. 

We think obviously the prospect of Iran gaining a nuclear weapon would have implications for the economy.  Not that it would discourage westerners from investing in Israel or keeping operations open in Israel.  But as a concern that some of the talented Israelis would just leave.  There would be brain drain.   So those are the risks.

5.  LKL Blog: WHAT'S THE TAKE AWAY?  WHAT CAN THE U.S. LEARN FROM THIS MODEL, HOW THINGS ARE DONE IN ISRAEL?

Dan Senor: Over the last 5-10 years, our whole economy has been a real estate bubble.  It’s been driven by cheap debt.  Near-zero interest rates and inflated real estate prices.  It wasn't real economic growth – it was just that, a bubble.  Most economists will argue that you don't get sustained economic growth without gains in productivity.  And you won't get real gains in productivity without technological innovation.  You won't get technological innovation without small enterprises.  Most great innovations - even at the great companies - happen when the companies are small.  Think Google, think eBay.  Big break through innovations come when they are very small companies. 

We in the United States need to get back to our innovation roots.  Get back to our entrepreneurial roots.  And so we argue while there is a debate how our country can get back to its roots, Israel is the natural place to look.  And there are important lessons in Israel – ranging from innovation and research and development – but also national service.  Giving national service experience – perhaps between high school and university, between that key age – giving them that crucial leadership experience.  So that they are in that stage of life – they've had more perspective, they're more mature.  And when they come out of university, they not only have the education, but they’ve lead people and managed people and have had to deal with complicated decision making in a very real world sense.  And that will make them much bigger contributors to the nation’s economy. 

Finally, we in the United States need to figure out how to do a better job of integrating the men and women serving in our military overseas back into the economy when they come home.  We do a terrible job of it today.  Story after story after story of people coming back from incredible experiences overseas, who've developed leadership experience...and they come back to the US looking for a job, the corporate recruiter will listen patiently while the military vet is describing their experience and the recruiter says, “that's very interesting but have you ever had a ‘real’ job?”

We have no sense – our corporate leadership has a very limited sense for the value of the experience that one gets in the military.  And it's a real shame.  We need that talent in our economy and put it to work.  And we're not. 

You can read more about Senor’s book and about “Start-Up Nation” at www.startupnationbook.com

Editor’s note: Dan Senor is an adjunct senior fellow for Middle East Studies at the Council on Foreign Relations, was a senior foreign policy adviser to the U.S. government under President Bush and former spokesperson for the U.S. led Coalition forces in Iraq.  He has studied in Israel and also invests in a number of Israeli start-ups.  Senor is married to CNN’s Campbell Brown.

Filed under: 5 Questions • Larry King Live


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Dikla   November 8th, 2009 8:26 am ET

"Israeli politicians don't view immigration as a burden; they campaign for office talking about how many immigrants they're going to bring in. And if they don't bring in a lot, they have failed."
This is only partially true. Israel has a lot of immigration problems and no politician today will encourage bringing to Israel immigrants from undeveloped countries.


Nu'man El-Bakri   December 5th, 2009 6:37 pm ET

Netanyahu was right in saying that 9/11 was ' good news for Israel'.
It not only provided a golden opportunity for Israel to lump all Palestinians in the same league as Al-Qaeda but also gave the IDF a green light to turn the West Bank and Gaza into its own personal laboratory. Israel wasted no time reaping in the profits as it conducted its own reign of terror against a defenseless population. As Naomi Klein pointed out:

"After the dot-com bubble burst in 2000, Israel’s economy was devastated, facing its worst year since 1953. Then came 9/11, and suddenly new profit vistas opened up for any company that claimed it could spot terrorists in crowds, seal borders from attack and extract confessions from closed-mouthed prisoners."

Senor may choose to express his elation over Israel's military talent, but I hope many won't be seduced by it. This business model is not something to gloat over nor is it worth replicating, unless of course you're prepared to ignore the moral cost it has paid for its 'miracle’.


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