Start up Nation: Army Exemptions for Who?

I flew today on a small plane from Los Angeles to San Jose. A young man sat in the cramped seat next to me and it turned out he was on his way up to interview at a large internet company in Silicon Valley for a software engineering position. After asking me a series of questions in a southern drawl about Silicon Valley, he asked me where I lived. When I told him Israel, he began speaking to me in perfect Hebrew (This time without the Southern drawl).

I asked him about his Hebrew. He told me his father was sent to the US by Scitex 20 years ago when this young man was only 3. He goes back to Israel every few years to visit his grandparents including a few months ago; he went on a Birthright trip and loves Israel. Now, he is graduating a premier US Technology University in the summer and is interviewing for jobs. I asked him why he was not contemplating plying his engineering skills in Israel instead of Silicon Valley. He retorted, "The army will take me right away. And after 5 years in university I need to start working."

I was restless after this comment. Really restless. As a kid growing up in America, I never contemplated the Israeli Army and I was not drafted upon Aliya but it would have been tough to stare that down, not having been groomed for it as a kid. Yet, this young talent was resisting taking his Zionism to Israel because of the Army. This became more absurd when I thought about the fact that tens of thousands of young haredi avreichim, "studying" in kollels, are exempted from the army and are dependents of society and our tax dollars. Here was a talented young man who wanted to be a net contributor to jobs, taxes and the economy but was deterred by the Army's "threat" to draft him. (Do not misunderstand this as a call for exemptions. Quite the contrary, I believe every Israeli should serve and wish that I had been taken. But, you will agree that the paradox here is absurd.)

He did not move abroad (yerida) of choice. He was 3! His parents took him and he was not dodging the Army. We should be bending over backwards to encourage young adults, children of Israelis with family ties to Israel, to come back and we should drop barriers to bring them back to Israel. We need this talent. And, there are more like him among the children of the hundreds of thousands of Israelis who moved abroad as well as young talented Jews the world over. If we can accomodate the politicians who demand exemptions for those who then end up with "stipends", I hope we can find the visionary politicians who will chase and accomodate those talented young people who will create jobs and keep Start Up Nation kicking.

Restarting the Start Up Nation

I had breakfast this week with one of my heroes, Saul Singer, who, along with Dan Senor, authored the best selling book on Israel's entrepreneurial culture, StartUp Nation. Saul and Dan, singlehandedly (or, shall I say, two-handedly) changed Israel's branding globally, framing Israel as a unique, fertile environment for entrepreneurship and breakthrough cross-disciplinary discoveries. Decades of impotent government ministers, bureaucrats and stillborn government branding initiatives that cost hundreds of millions did not accomplish what one book did: change Israel's branding and inspire millions. I have already tweeted that the Prime Minister of Lithuania mentioned in a meeting that I attended that his favorite book was "Start Up Nation." The book is in multiple reprintings in the USA, Korea, China and is even being published in Arabic.

Saul and I discussed his book, his learnings and interactions since the publishing of the book and my 3 part Humus Manifesto, brainstorming over a good Israeli breakfast (no Humus) on what should be next for the Start Up nation. He got me thinking about why the book was so successful and how we could leverage that to propel Israel forward and prove doubters like The Economist wrong.

The reason "Start Up Nation resonates is because it is authentic. It is not spin. It is real. Israel and Jews are good at innovation. It goes back actually almost 4000 years when the Jews "started up" as a nation, introducing monotheism to the world and then publishing the most successful book of all time, the Bible. We introduced moral and ethical codes in the Ten Commandments and the Torah. Over the years, there have been other great Jewish innovators and then we started a country 62 years ago against all odds like a great start up and we have been innovating in agriculture, technology, military (covert and otherwise) ever since. We are a start up people that has been forced to start over many times against all odds and it is inbred at this point in our nature. We are less good at scaling up, to the frustration of many including myself. As a keen commenter on a Wall Street Journal article pointed out, Jews started up this great religion but Jesus took it in a different direction entirely and harnessed the Roman Empire to scale it up. So we are the people of the Book and the idea and we are crucible for innovation and cross disciplinary innovators. That is our authentic calling. If that is the case, and all start ups need to focus, then maybe that startup focus is our next step.

The country should launch the Start Up Nation Institute. Israel should invite and generously fund the greatest scientific minds and innovators (read entrepreneurs) from all over the world in exciting and important fields such as biotech, agriculture, cloud computing, water technology, software and mobile devices. We should sit them together with our brilliant Israeli technologists and hutzpa-filled entrepreneurs in an open and beautiful setting for a number of years and give them access to university resources and simply let them germinate ideas that will solve the worlds' challenges from the same place that gave humanity the Bible and the Judeo Christian ethic. With enough smart and innovative people there (and Saul and Dan's insight), great companies and start ups will emerge. Don't put structure around. Israel should just seek the greatest minds from all over the world to come and bounce and test ideas off each other in Start Up Nation. It will inspire the brightest Jewish minds from all over the world to come and given the high quality of life in Israel, it will likely attract American, Chinese, Indian and Singaporean talent as well. All of those brains and skills from abroad can help us scale up when these ideas reach escape velocity. This will not be, as Chief Economic Advisor to the Prime Minister Professor Eugene Kandell (Hebrew) says, a short term project, but it will be both a powerful branding exercise and fertile ground for great entrepreneurs. And, that concentration of brain power will give us economic advantage for the future, focused on what we are best at, Starting Up! A Billion dollar investment in the world's greatest start up to ideate the innovations of the future should be what Start Up Nation is all about!

All Betters: A Review of Umair Haque's "New Capitalist Manifesto"

I have been an avid reader of Umair Haque's blog (@umairh) for a while. I enjoy reading Umair for his witty rants and unflinching ability to call out tough problems and chart a different path. He is repetitive in the way the prophets were, calling out and confronting misdeeds over and over again because fundamentally the root causes never went away. Want some fries with that?

So as soon as Umair's book went on sale for the Kindle, I bought it and read the New Capitalist Manifesto in a week (it would have taken me less but the eight kids don't offer a lot of time for pleasure reading). I thought it also would be interesting to compare and contrast it with Matt Ridley's fascinating "The Rational Optimist" which I read before it.

Despite the fact that I always read Umair's blog, the Manifesto is still a must read. "The New Capitalist Manifesto" puts all of Umair's posts and rants into a coherent argument and blueprint. If you never read Umair's blog, run out now and get the book, read it and internalize it. Here is why:

1. This is not a book about economics. It is a book about life and meaning. A better, sounder economy and business is the outcome of greater meaning and explosive passion according to Haque and he is right. Therefore, it is a book about why we should get out of bed in the morning and seek to make the world a better place and not how we make another buck.

Over the last two weeks, I made presentations about entrepreneurship at two universities in Israel. In my powerpoint, I shared a somewhat blasphemous slide (below) showing the Bible (תנ"ך) alongside The Tanaitic Ethics of Our Fathers, alongside The New Capitalist Manifesto. I showed the slide because I think Umair's book is a reminder of the exhortation of the prophet Isaiah to take care of widows and orphans while earning an honest living and the sayings of the great Rabbis of 2000 years ago that "A good name is better than good oil."

2. The New Capitalist Manifesto implores us not to think about ourselves as the homo-economicus. It asks us and our political and business leaders to think about the interconnected world as one giant economic being. In fact, not only the living world but the inanimate world of resources. Not only the living and inanimate world that exists today but the unborn future worlds. This is a tall order, but as Umair points out in the book, not accounting for our children and grandchildren and the world of resources has a significantly negative impact on our own economic success. We can no longer borrow from the future, or leverage the planet or other, poorer, countries or communities to finance and power economic growth. Nor should we. We need to make tough decisions today to build better business, better relations and a better world.

Here is one of the money quotes: "Developing nations' growth comes to depend on overconsumption in developed nations, and developed nations' growth comes to depend on lending by developing nations. Yet that game of musical chairs..." This is not sustainable.

3. Umair's focus on value cycles is game-changing. It means that as a seller or marketer of goods and services, your responsibility does not end when the customer has taken possession. We need to think of the consequences of the products we sell after they have left our shelves (virtual or otherwise) and think of their impact on customers, the planet and others. This requires rethinking a lot of business learnings but more importantly opens the door to create disruptive advantage for those who master it. Umair calls these outputs "Betters" which he defines as "bundles of products and services that make a difference to people, communities and society by having a tangible, meaningful, enduring positive impact on them." In short, a real reason to get out of bed.

4. Umair has put his finger on a change in the social zeitgeist of the 21st century that I believe is not apparent to most leaders: Most people are fed up with mediocrity, fungability and money as a pursuit. I do not know whether it is the coldness of the computer screen that we all spend more time in front of, or the general decline in meaningful debate and leadership that seems to afflict the world today, or the unrelenting onslaught of shallow advertising and media. Whatever the reason, people are fed up. They look for employment today that has more meaning than money and they distrust leaders who are not authentic. Today's wired citizens of the world do not want fuzzy explanations. They want the straight scoop and they want leaders, business and political, who will make hard decisions and pay the personal price. We can tell fuzzy BS when we see it in business products and politics. This was not true 10 years ago but it is now. We know that Nokia's phones are not as good as Apple's. You feel it and touch it and read about it and no marketing in the world will affect that. As Umair writes, "advertising is all about achieving awareness, and we no longer need awareness. We need to become part of people's lives." We knew that Obama made no changes when he came to Washington. No spin would help. And we know that bailing out the banks instead of finding a better path forward for finance was kicking the can down the road. We know it so please do not fool yourselves. Umair gets this better than anyone and has now turned it into a business roadmap. Authenticity is critical for 21st century businesses so you better dig down deep and see if you have it now. If not, save your shareholders and get out the way because the New Capitalist Train is coming down the pike and Umair is its prophet.

The New Capitalist Manifesto will challenge your thinking whether you are thinking of starting a business or rethinking Walmart or Nike, one of Umair's shining examples (yes...Walmart and Nike). Entrepreneurs starting business should not be looking at optimizations, driving 1/10% out of advertising efficiency through ad arbitrage. Their mission statement should include the vision for their business and how this changes the world. As an example, when I think about what Seeking Alpha (Benchmark portfolio company) does, it is not that Seeking Alpha is a "better" financial media model. Rather, Seeking Alpha is fundamentally democratizing the world of financial information and tools and leveling that playing field. That is awesome and inspirational, befitting a new world of capitalism that Umair describes. If you have not figured it out, I highly recommend the book and hope that more companies, investments and startups follow its recipes for better business and a better world.

Will The Press and the Politicians Kill Israel's Economic Stability?

I woke up this morning to two articles in the Hebrew press lambasting Governor of the Bank of Israel, Stanley Fischer's monetary policy. Both Calcalist and Themarker attacked Fischer for buying over $50 Billion in foreign currency over the last year. The basic underlying claim is that, given the dollar's decline and the discrepancy in interest rates between the shekel and the dollar, the paper losses on this currency trade were too much for the economy to handle. They both further claim that since the dollar continues to decline against the shekel, the markets are clearly overwhelming Fischer and proving him wrong.

I am not an economist, but As I have written about Fischer's policy in the past, I think that both papers miss the mark. Fischer's strategy has been clear to me from day one. He understands that Israel's economy is an export economy and that businesses could not absorb a sudden and dramatic increase in the Shekel's value. This is especially true in Israel, where the dollar has been the de-facto currency for 60 years. So what Fischer has essentially done is the let the shekel rise slowly so that exporters and businesses could adjust their budgets and hiring practices to prepare for a world of a stronger shekel. I am certain that had Fischer not intervened, the Shekel:Dollar exchange rate would be below 3 shekels to each dollar already and the export economy would have been decimated. Fischer's choice of weapons, surprise purchases of dollars on the open market had an additional target: currency speculators. He did not want them playing in the Shekel and radicalizing the moves in the currency so he kept them guessing. Fischer has been absolutely instrumental in keeping Israeli exports somewhat affordable despite discoveries of gas and a real estate market attracting all sorts of buyers which pushes the Shekel ever stronger.

This all makes today's announcement of an agreement to increase the minimum wage all the more surprising and, frankly, stupid. I am all for paying employees suitable wages. However, the Shekel's rise is not a question of if but how much. That is making our exports more expensive as we speak. Raising the minimum wage will simply further raise the costs of our exports and make Israel less competitive. It is just plain stupid and the timing could not be worse, unless of course you are a politician planning on running for office in the next 12 months and trying to buy votes while mortgaging our future national competitiveness. Please stop kicking the can down the road.

This is all raising the bar for our high tech economy as well. We need to create absolutely awesome products and services that the market will pay a premium for because the cost of doing business here has just gotten much more expensive. In the next decade, awesomeness will win and we need to aspire for business and societal greatness. Oh Dear government, please stop passing the Humus.