The Startup Nation’s startup government

The tech takeover of Israel’s government is a signal to the rest of the country’s entrepreneurial community to step up and lead. Tech has long been the engine of Israel’s economy, now it must become driver and navigator

With the formation of Israel’s new government, we are witnessing the coming of age of Israel’s entrepreneurial class as its members assume the leadership of the country.

The high-tech economy has been powering Israel’s economic growth for some time. Israel was rebranded as startup nation thanks to the 2009 book of that name by Saul Singer and Dan Senor. High tech now defines the country.

Every Israeli knows what an exit is. The phrase has become a meme in commercials, comedy sketches and artworks. Israeli popular culture is peppered with high-tech buzzwords. A judge on the Hebrew MasterChef hails a cooking workaround as “a great idea for a startup.”

Israel’s elite used to graduate from military service and transition into politics. From Moshe Dayan through Yitzhak Rabin, Ariel Sharon, Ehud Barak, Ami Ayalon, Shaul Mofaz and Moshe Yaalon, Israel’s senior generals barely paused for breath before swapping their uniforms for parliamentary seats.

The new generation of leaders is taking a post-army detour into high tech. Prime Minister Naftali Bennett enjoyed a successful career as a high-tech entrepreneur before plunging into politics. (Full disclosure: I was the seed investor in Bennett’s first company, Cyota, more than 20 years ago through Israel Seed). Recently retired Mossad chief Yossi Cohen makes no secret of his political ambitions but first will head the new Israel office of SoftBank. President Yitzhak Herzog is an angel investor and prominent legal adviser to high-tech companies through the law firm founded by his father, the late President Chaim Herzog, another distinguished military commander.

Former Prime Minister Ehud Barak entered high-tech investing after he resigned as prime minister in 2001, returning to the cabinet in 2007. Nir Barkat made his fortune in tech investing before entering politics via the Jerusalem municipality and then the Knesset parliament. Erel Margalit interrupted his tech investing career to run for the Knesset, where he served for four years until 2017 before returning to JVP. Izhar Shay was a serial high-tech entrepreneur before he entered politics, ultimately becoming science and technology minister. In March, he returned to the tech world and joined a venture capital firm, Disruptive AI. Yair Shamir and Chemi Peres, both sons of former prime ministers who in earlier generations might have been expected to follow their fathers into politics, have headed major venture funds.

It is too early to say whether this startup government of Israel’s startup nation will succeed, but it is clear that it represents a generational change in which the torchbearers of Israel’s tech economy are moving into positions of leadership and having a major impact.

This could be very good news for the country. This new crop of leaders are innovators, perfectly primed to address the urgent challenges of upgrading and modernizing multiple sectors of Israel’s economy and public services. They are precisely the right people to tackle looming crises in infrastructure, education, housing and healthcare. They have the modern mindset required to grapple with burning issues of equality, inclusion and social justice.

Israeli innovators are renowned for getting more done with less. Our startup economy is known for its frugality, efficiency and lack of waste. On the other hand, our entrepreneurs are often afflicted by short-term vision and lack of long-term planning. They break rules, cut corners and improvise – for both good and bad.

But they are also team leaders and partners – skills instilled by Israel’s buoyant youth groups and universal military training. Bennett’s longtime partnership with party colleague Ayelet Shaked is the bedrock on which the current government coalition is constructed. The unusual makeup of the new government will rely on trust, partnership and a willingness to compromise. The fact that it spans such a broad range of ideologies and beliefs is both a challenge and a strength. If it can survive, it will have to address the technical, economic and development issues on which all its members can agree, and leave to one side the ideological and religious disputes that have split the country so deeply in recent years.

In addition to providing this new leadership cohort, the tech ecosystem is creating wealth for unprecedented numbers of Israelis, and generating new models of social and philanthropic development. When Ironsource went public on Nasdaq in June, it minted 230 new dollar millionaires among its staff. Tmura , which takes donations in the form of early-stage shares in Israeli startups and then cashes them in when the company exits, has distributed some 80 million shekels ($24 million) to deserving causes in the past 20 years.

In From Class to Nation in 1933, David Ben-Gurion, Israel’s first prime minister and its pre-state prophet, exhorted the laborers of the Zionist movement to seize the leadership of the future Jewish State and shoulder the burden of building the emerging country. The time has come for today’s entrepreneurs to step up and transform themselves From Ecosystem to Nation and shoulder the burden of spreading the benefits of innovation for everyone. The tech takeover of Israel’s government is a signal to the rest of the country’s entrepreneurial community to step up and lead. Tech has long been the engine of Israel’s economy, now it must become driver and navigator.

The journey will not be easy. Israeli schoolchildren are among the lowest performers from developed countries – even excluding the sections of the population that do not learn the core curriculum measured by international tests. Its workers produce less per capita than other OECD nations when measured by GDP per hour worked and the country still has too many people living below the poverty line. Our globally-admired health system receives too little funding from the government.

With a population growing at more than double the pace of other developed countries, as Prof. Dan Ben David notes , the pressure on Israel’s schools, hospitals, transportation, housing, food supplies and water resources will only increase.

Those involved in Israel’s tech revolution must ensure that the benefits of Israel’s technological miracle are enjoyed beyond a small bubble of entrepreneurs and investors. Not all of us can be prime minister or serve in the government, but everyone in the tech sector has a responsibility to use this energy and growth to help convey all Israelis toward a more prosperous future.