I arrived in Israel 36 hours ago. I’m still in Tel Aviv, where I had a fireside chat yesterday with Patricia Lahy-Engel of the Israel Innovation Authority (with the support of French Tech Israel). Today I’m travelling to Jerusalem, where I’ll spend the next 48 hours.
So far it’s been a great series of meetings, all made easy by the incredible support of several friends: Emmanuel Bismuth, an expert in digital marketing, who’s the architect of my travelling here to talk about Hedge; Léa Evrard, The Family’s General Counsel, who’s travelling with me and makes a real difference as she used to live in Tel Aviv a few years back; Nicolas de Mascarel, Gregory Edberg, and Saul Klein, who made great introductions to local players; and Mégane Dreyfuss, one of The Family’s former employees who then co-founded the Developers Institute here.
By the way, there’s still time to register to attend the fireside chat I’ll be having in Jerusalem tomorrow with Ben Wiener, the managing partner of the Jerusalem-based Jumpspeed Ventures. In the previous issue of this newsletter I wrongly said that the event would be on November 21 (today), but in fact it’s November 22 (tomorrow). You can find more information and register here: Off the Record w/ Ben Wiener: Hosting Nicolas Colin of The Family. I expect the discussion to cover not only Hedge but also the resurgent Jerusalem startup ecosystem, which Ben and others are currently building to catch up with Tel Aviv and turn Israel into even more of an entrepreneurial powerhouse.
The original startup nation
I think the best way to understand startups in Israel is to remember that it’s always been a country at war. You wouldn’t think that while wandering the crowded streets in Tel Aviv. But obviously if you know your history (including recent history), you know that war has become a permanent state here—with a deep impact on the building of institutions, law enforcement, the population’s mindset, allocation of capital, and the direction that the government imposes on innovation.
Leaving aside many political and moral questions, we've seen time and again, as often stated by my friend Bill Janeway, that being at war is a precondition for a nation to embrace innovation over efficiency. When you’re at peace, you can afford to tighten the bolts, optimize operations, and go through thorough cost-benefit analyses. But when it’s about winning the war, nothing of that sort matters. The stakes are beating the enemy at any price. And in that context, you can embrace the processes of innovation—which, as Bill once stated, “move through trial and error, and error and error”.
It’s no wonder why Silicon Valley was born out of an effort at winning the Cold War, and then the most radical advances in innovation were achieved by governments implementing what Mariana Mazzucato calls mission thinking—whether Richard Nixon’s “War on Cancer” or countries such as Singapore, Taiwan, South Korea, and then China battling their own wars against under-development. To learn more about how important actual or virtual warfare is to the processes of innovation, I urge you to read Bill’s book Doing Capitalism in the Innovation Economy (now in its second edition). You can also get a headstart by watching this video of Bill and I (just published!) on stage at The Family in Paris back in May.
More specifically on Israel, the book Startup Nation by Dan Senor and Saul Singer is a masterpiece. I read it four years ago and was particularly impressed by the chapter on the government program Yozma ("Initiative" in Hebrew), founded in 1993, which marked a turning point for the local ecosystem. Initially endowed with $100 million, this financing vehicle operated by the state aimed to develop local venture capital by pulling US venture capital firms into Israel. The value proposition for those firms was attractive: the Israeli government would co-invest with them through various mechanisms, but they would be able to keep most of the upside.
The goal of Yozma was threefold: educate Israeli investors, by associating them with seasoned American VCs within specialized funds; make up for the lack of local capital by creating a self-sustaining ecosystem; and make it easier to find buyers abroad (particularly in the US) for Israeli startups, so as to reward local entrepreneurs with successful exits and generate liquidity within the ecosystem. Today, Yozma has been turned over to the private sector and the Israeli ecosystem, which enjoys a very strong bond with Silicon Valley, is self-sustaining.
I’ve long been wondering why other governments, including that of France, didn’t replicate such a straightforward approach (invite seasoned US venture capitalists to settle locally and lift everyone up). I look forward to learning more about Yozma’s aftermath later today, as I’ll be meeting Patricia Lahy-Engel again (of the Israel Innovation Authority) and then Amir Mizroch and Jeremie Kletzkine at Startup Nation Central, an organization founded by Saul Singer, one of Startup Nation’s authors, to connect the Israeli ecosystem to the world.
What about next year?
I’ll be sharing more on my findings in Israel in next week’s issue. In the meantime, I thought I’d give you a heads up on where I plan to travel next year. After all, you may know people in some of those places and spot opportunities for me to do book talks and interesting meetings:
🇮🇹 I’ll be in Italy the week of January 21, by invitation of my friend Raffaele Russo and Fabrizio Pagani, a former chief of staff to the Italian Ministry of Finance. The idea is to talk about Hedge both in Rome and Milan and then explore the entrepreneurial community in the Veneto.
🇪🇸 I should spend 1-2 days in Barcelona at the end of January. My old friend Cyril Piquemal is France’s consul general there and has invited me to present Hedge as part of a festival organized by the Institut Culturel.
🇨🇿 I’ll be in Prague to deliver a speech at the Digital Czech Republic 2019 conference: the dates are February 7-8 ( the same time when the rest of The Family will be on tour there!).
🇺🇸 I’ll spend the week of February 25 in the US, but on the East Coast this time. The idea is to talk about Hedge in Washington, DC and New York. Let me know if you have useful contacts!
🇸🇬 I’ll be in Singapore on March 13-19. The occasion is to attend bilateral meetings between economists and government officials of France and Singapore. But I intend to meet many more people as Singapore seems like a fascinating place when it comes to technology and innovation.
🇵🇱 I’ve been invited as a guest speaker at the 7th edition of the European Executive Forum 2019 in Warsaw: it’ll be on April 4 and I’d also like to meet people in the local ecosystem.
🇺🇸 Then the week of April 8 I’ll be back in the Bay Area to attend a gathering at Stanford’s CASBS, and complete the meetings I couldn’t fit in when I was there two weeks ago.
🇨🇳Finally, there should be a trip to China sometime in May, by invitation of the Institut Français, to discuss the Entrepreneurial Age in front of various audiences in Shenzhen, Beijing, and Wuhan.
I expanded a of this newsletter, which discussed the concept of the multitude, into an article published by the Global Peter Drucker Forum. It examines the problem with analyzing our current transition in terms of waves of technology (web-based applications, cloud computing, smartphone, artificial intelligence, crypto). What I constantly advocate is that those waves are all about one thing: empowering individuals with more computing and more networks. You can read more here: Fixing Today’s Economy Is About Humans, Not Technology.
I also published an article in Forbes about Brexit. My view is contrarian: while everyone, including in the tech world, is freaking out about Brexit, I really don’t think that it will make a big difference for startups, both in the UK and on the continent. Back in February 2016 (that is, four months before the referendum), I offered a more nuanced view on the topic. Then right after the referendum I published a long-form piece to insist on Brexit as just another signal of the current transition. Now, after Theresa May’s having signed a draft agreement with the European Union, I’m sticking to my guns of Brexit not being that big a deal for startups. Read more here: Europeans Startups Don’t Really Care About Brexit.
Let me conclude by reminding you to buy a copy of Hedge, whether for you or for a friend–because it was written to reflect precisely on this paradigm shift that is frightening and engaging at the same time. It’s on sale worldwide on every Amazon website: 🇺🇸US, 🇬🇧UK, 🇫🇷FR, 🇩🇪DE, 🇮🇹IT, 🇪🇸ES.
Warm regards (from Tel Aviv, Israel),