Thursday, August 2, 2012

Dan Senor's 'Start-Up' Hustle

The following just went up on Open Zion, a featured section of The Daily Beast, where I contribute a regular column. 

Dan Senor, profiled in today’s Times, has become a foreign policy celebrity, at least in circles where celebrity trumps foreign policy. Senor found himself (almost by default) the spokesman for the American plenipotentiary in Iraq, Paul Bremer, whose inept decisions, including disbanding the regular army, were vividly exposed in various books and in Charles Ferguson’s film, “No End In Sight.” The rest is history. And as Hitchens used to say, America is the only country in the world where when someone says, “You’re history,” they’re insulting you.

Senor’s intellectual bona fides were established by his having “co-authored” a book with Saul Singer. In a nutshell, what drives most Israeli entrepreneurs crazy when they hear people like Senor rhapsodize about Israel's economy is the use of its (provisional) success to manage Israel's brand abroad, implicitly defending Bibi Netanyahu's status quo. Presumably, Israel’s military and entrepreneurial culture leads to technology, technology to a pulling away from neighbors—both economically and in terms of "freedom"—a pulling away that should be respected, emulated, and defended by Israel's friends (you know, Americans).

There is, of course, some truth to the connection between Israel's technology and the experience of serving in the IDF. It’s not just the celebrated 8200 information technology/intelligence unit. If a tank crew can keep a tank up and running 24/7, they can keep almost any capital equipment wrapped in envelopes of software up and running 24/7. I wrote about Israel’s high tech prospects at length in HBR back in 1991.

But, on the whole, Senor and the neocons who lap him up get things essentially backwards. What advanced Israel's technology and management in the 1990s was the process of globalization that came in the wake of Oslo. For high tech actually depends on intimate relationships with global customers, whose problems you solve by adapting technologies you would otherwise not be able to develop. Lose the global relationships and the technologies wither. Moreover, Israel's army was good training for some things, but Israelis have had much more to learn from the business culture of global corporations than teach.

Political isolation, then, will mean economic implosion: already, friends in venture capital firms report that activity is about a third of what it was when Start-up Nation was written. Peace is a precondition for continued growth, as are massive investments in Israel's foundering educational system, which the defense budget suffocates. And growth must come fast, since Israel's inequalities and levels of participation in the workforce are truly disquieting. Netanyahu’s new taxes, which take effect this month, are meant to preempt a debt crisis that could look as bad as Greece if real estate implodes and some of our oligarch families take their banks down with them. But I digress.

If Start-up Nation has a hero, it is Dov Frohman, the founder of Intel-Israel. When I was writing The Hebrew Republic, I asked Dov, who is a friend, if we cannot depend on the world coming to us for our technology? His answer was not polite:

"This is bullshit. Bullshit. Investors will not come to us in a big way unless there is political stability. Personal and economic stability, or the hope of stability—a process. In the global economy, you don’t only need Jewish investors, you need global investors. Investment is not colored with sentiment, and looks at the overall situation. What Bibi says is demagoguery. He’s done some of the right things which in a healthy environment would have been pretty good. But before these policies can have an impact, we’ll have more violence. In this environment, big companies do OK, and little independents do very badly.”

But what about all the investment we have seen, even the uptick in the stock-market?

“There is a lot of financial type of investment but little production type of investment—there are investments which can be taken out at will. And in the meantime, we are losing our reputation as a place for global companies to pioneer. It’s hard to restart the engine; five years of no investment, means ten years of paying the price for no investment. And then what will make our entrepreneurs want to stay in Israel—if they don’t have quality of life? There is continuous movement of people, they will want to stay elsewhere. More and more, companies can consult locally and can consult abroad; having more foreign companies here is still important, though in the long-run we are going to have start-ups with problems here like everywhere else. But the really critical thing is keeping our people here. I don’t need to do a poll to know that 50 percent of the young people would go.”


Potter said...

Mention to anyone, including Jews who have never been there, that I was going to Israel, and the reaction was, in one form or another, "is it safe?" One woman I ran into, who was sending her daughter courtesy of the birthright program, was very anxious about it. It was those Arabs she was afraid of.

Reading an article in the current Forward about an international Dance Festival in Karmiel ( a festival that seemed wonderful) and again the subject came up vis a vis the visiting dance troupes who would perform who also had this concern.

So why wouldn't business interests in a knee jerk response or after careful consideration also give pause to possible plans? Better to import Israeli's here.

But as this "status quo" goes on, I don't think we have seen anything yet. And some in Israel then will wonder, as our young friend in Israel said in a moment of truth, " in the future we will look back and say how did we let this happen?"

Alan said...

the goal of Zionism was not and is not to "modernise Judaism". The goal of Zionism is to ABOLISH "judaism" (which didn't even EXIST in the form we think of it, until after the failure of the Bar Kochba Rebellion) and to re-establish a Hebrew Shilton. Which happened, and is ongoing. American "Jews" are not part of the picture and have zero influence. People who are registered to vote in Israel have influence. The only other thing which will help build a Hebreww Republic.... is to build up the Hebrew-speaking community. If you guys want to do something real, stop eating bagels and go teach a kindergarden class at Harlem Hebrew Charter School.

If you REALLY want to help build a Hebrew Republic.... learn to build. At this very moment, we need Hebrew welders in the natural gas platforms of Israel's maritime Exclusive Economic Zone.

So enough with the literary jerking-off; go to welding school.