Friday, January 1, 2010

The START UP Nation

Book : START-UP NATION (The story of Israel’s Economic Miracle)
Authors : Dan Senor and Saul Singer

How do we get more out of people?.
Who can object to this? But it is a loaded question with industrial age thinking. Ironically, the management model encapsulated in this question virtually guarantees that company will never get the best out of its people. Vassals and conscripts may work very hard, but they do not do it willingly. This is a crucial difference when the prosperity depends on creativity and an enthusiastic workforce will consistently outperform a group which is merely industrious. Can you remember any instance when the assigned work brought more joy than the one which you choose to do?".

That was the management guru, Gary Hamel when he makes a passionate pitch that volition is better than assigned or forced or “draft” work. But, even he might have to change his mind seeing this country. Israel as a nation does know how to create lots of enthusiastic and ultra creative conscripts.

Let us quickly see how it does that.
Military service is compulsory and they have one of the toughest trainings. Entries in to elite programs like Air Force are even more demanding. The toughest being “Talpiot” which systematically garners the brightest of the bright and they go through longer and intense trainings. They invariably end up in creating some of the most promising startups to lift the industries in to the next plane of contributions. Real life battle hardened, intensely well trained on technology and strategy are ideal qualities for any company or startups and that is what this “draft” does to business.

This new book (released in November-2009) gives a good understanding of Israel as a nation from a startup stand point. It weaves quite a bit of perspectives in a story telling manner.
We will see two more stories, but before that, quick summary of key points.

1. Questioning status-quo approach is inculcated from childhood.
2. “Draft” training brings all strata of society folks to common ground and brings in a sense of identity and purpose in life very early. Many years of experience is compressed into handful of years.
3. Due to lack of resources, they are very resourceful. Runtime improvisations is something taken for granted.
4. Ownership of assignments is 100% - if not more (Example: Intel Israel case study )
5. Because of high interconnections, transparency is very high to the point of making a claim “everyone knows everyone” (being small, there is no place to run away).
6. Immigration as a policy is integrated at a constitutional level and processes & policies are geared toward enhancing the efficacy of it.
7. Israel seems to have a unique reserve system to address the military and safety needs of the country.
8. Inter disciplinary approaches are very common like Biology and Math, Rockets and Drug discovery and delivery.

Now two selected stories (because, I don’t want to rob the suspense of the remaining)

1. “Our Idea is quite simple. We believe the world is divided between good people and bad people and the trick to beating fraud is to distinguish between them on the web” – Imagine this elevator pitch to the e-bay Chief of operation who handles all the pay pal stuff - the largest internet payment service in the world. But, that is exactly what Shvat Shaked did. His small team developed an algorithm that detected fraud far more accurately than the much bigger team which e-bay had. Eventually, his company got acquired by e-bay. The story is fascinating.

2. The startup “Beta-O2” is working on bio-reactor for diabetes patients. Patients suffer from this disorder which causes their beta cells to cease the production of insulin. Transplanted beta cells would do but they need oxygen supply. Beta-O2's solution is to create micro eco system that has oxygen producing algae and a fiber optic light source. The beta cells consume oxygen and produce CO2 and algae do just the opposite thereby creating closed loop. The skin implantable reactor device can be replaced every year with a 15 minute outpatient procedure.

Some of the dialogues are very appealing. For example,
What do you think of hybrid cars?”.
A hybrid car is like mermaid; if you want a fish, you get a woman; if you want a woman, you get a fish”.

In this book, authors do ask a pertinent and a profound question “where is our Nokia?” – implying where are our big corporates. There is no explicit answer for that question. I think, it is very unlikely it would create a big corporation. I surmise it may be more out of conscious strategy and I see a lot of prudence in it. Centralized production may bring economy-of-scale, but I see the price of that as economy-in-innovation & economy-in-initiative - that may be a frightening prospect for Israel. Aside the culture “Why you are my boss and not the other way around” kind of attitude simply does not lend itself to building a corporate behemoth. May be, it is Shinkansen (Japan bullet train) approach – that is, there is no one big engine that pulls the train, but each coach has an engine “embedded” in to it. We all know it is one of the fastest and effective train system in the world since its inception. Add to that, any mammoth would have huge localized risk which is expensive to protect and oversee. Sum of parts would be always greater than the whole in this country.

Finally, the book contains so many inspiring stories on start up, if you are a cat-on-the-wall pondering about getting in to startup, this book can provide the final push in to the startup river.
Thanks for reading this far…..