29 Sep 2011

[Egypreneur] Egypt, The Startup Nation 2.0

Have you ever heard of the “Startup Nation” term before? Probably we are all familiar with the “Nation” part of it 🙂 .. Still the “Startup” part can somehow be a new term to many, especially those who are not into business.

A “Startup”, as defined in Wikipedia, is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets. The term became internationally popular during the dot-com bubble that occurred roughly in the second nibble of the 90s ending around 2000. During this bubble a great number of dot-com companies were founded enriching what we call now the IT industry.

Although startup companies may come in any form, still the phrase “Startup Company” is often associated with high growth, and mostly technology-oriented companies. On the contrary, we have the “Established Business” term which we can use with companies like IBM, Intel, General Motors, etc. Successful startups are typically more scalable than an established business, in the sense that they can potentially grow rapidly with limited investment of capital, labor or land.

Back to our “Startup Nation” term, should we now understand it as the nation with the ‘largest’ number of startups or namely ‘successful’ startups? From my own personal point of view, unsuccessful startups are also successful in a way they contribute to the successful ones who learn from their failure. Still, the number of startups within a nation is insignificant until they positively contribute to the nation’s economy. But what about the “2.0” part that we missed all the way? Does it mean that there is already 1.0? The straight answer comes from DAN SENOR’s & SAUL SINGER’s book “Startup Nation: The story of Israel’s economic miracle”.

YES, Israel is the current Startup Nation or what we technologically version as Startup Nation 1.0. Being an Egyptian doesn’t make me disbelieve in this fact. The economy of Israel is a technologically advanced market economy, consisting of rapidly developing high-tech sector, mainly innovative startups, which is backed by a strong Venture Capital Industry. Israel is known for being a world leader in software, telecommunications and semiconducturs development industries. Amazingly, it’s also known for being relatively poor in natural, and probably human, resources that make up greatest nations. Israel depends on imports of coal, food, petroleum and the latest “Natural Gas” from our own beloved Egyptian Nation.

A huge effort was done to make Israel the current Startup Nation. This effort came from three main tributaries: Government, Entrepreneurs and Investors. The erudite, eighty three year old, two-time prime minister and Nobel Prize winner Shimon Perez along with the thirty nine year old smart geek, who is of an Iraqi origins, Shai Agassi make the best example of the cooperation between Israeli state government and Israeli entrepreneurs leading to the Startup Nation 1.0. Perez invited the CEO’s of the world’s five largest carmakers to let Shai pitch his electric car idea in front of them. Doesn’t it look odd to pitch an electric car idea in 2007? Electric cars were popular in the late-19th century and early 20th century, until advances in internal combustion engine technology and mass production of cheaper gasoline vehicles led to a decline in the use of electric drive vehicle. The idea of the electric car came back to the scene after the huge rise in oil prices during 2000’s. Shai decided to make a national project that allows Israel to be completely independent from neighbouring, enemy, oil and natural gas. The good news here is that his, most probably 5 minute, pitch managed to raise a fund of $200 million dollars, $130 million out of the total amount came from only one risk-taking Israeli investor who wanted to build a better Israeli state. This Shai’s pitch made his “Better Place” company the fifth-largest startup in the whole history. No brainer a state like this is the world’s Startup Nation given such persistent government, smart innovative entrepreneurs and risk-taking investors.

Israel’s military service is obligatory the same way it is in Egypt. Yet, the service is due after the completion of high school education; unlike in Egypt. I won’t spend much comparing our military service to Israel’s. I will let you do that by your own after telling you about one of Israel’s military service programs/units. “Talpiot” program has the distinction of being both the most selective unit and the one that subjects its soldiers to the longest training course in the Israeli Defence Forces (IDF)—fourty-one months. This is comparable to our military service training camp of 45 days (now probably shortened after #Jan25 revolution). Those who enter the program sign on for an extra six years in the military, so their minimum obligatory service is a total of nine years! What’s so good about this program that imprisons people for whole nine years!

Each year, the top 2% of Israeli high school students are asked to try out – two thousand students. Of these, only one in ten pass a battery of tests mainly in “Physics” and “Math”!! (Physics and Math as a qualification to the military service!!!!!). These two hundred students are then run through two days of intensive personality and aptitude testing (this reminds me of the screening tests of Police Academy in EgyptJ). Once admitted into the program, Talpiot cadets blaze through an accelerated university degree in math of physics while they are introduced to the technological needs of all IDF branches. The academic training they receive goes beyond what the typical university student would receive in Israel or anywhere else—they study more, in less time to get university degrees comparable to those obtained from MIT, Berkeley and Stanford. They also go through basic training with the paratroopers. The idea is to give them an overview of all the major IDF branches so that they understand both the technology and military needs – and specially the connection between them. The Talpiot program as a whole is under Mafat, the IDF’s internal research and development arm, which is parallel to America’s DARPA (can we call the Arab Organization for Industrialization “AOI”, the Egyptian Army arm for R&D???). Mafat has the coveted and sensitive job of assigning each Talpiot cadet (Talpion) to a specific unit in the IDF for their next six years of regular service.

Talpiot training is optimized to maintain the IDF’s technological edge, the same combination of leadership experience and technical knowledge is ideal for creating new companies. Although the program has produced only about 650 graduates since founded after the historical defeat against Egypt in 6th of October war, they have become some of Israel’s top academics and founders of the state’s most successful companies. NICE systems, the global corporation behind call-monitoring systems used by 85 of the Forbes 100 companies, was founded by a team of Talpions. So was Campugen, a leader in human-gnome decoding and drug development. Many of the Israeli technology companies traded on the NASDAQ were either founded by a Talpion or have alumni situated in key roles. We need to know that, after the United States, Israel has more companies listed on the NASDAQ than any other country in the world, including India, China, Korea, Singapore and Ireland.

More stories can be narrated about how Israel became the current Startup Nation. Still, this is not the end. They will do more to sustain their success and grow their illegal state. But where are we? What is our reaction towards that? Should we even have a reaction?

Yes, we have to have a reaction. We successfully moved one step forward towards being an independent nation. We made a peaceful successful revolution against dictatorship that inspired even our enemies. We should continue to build a great nation. I, personally, believe that “Economy Comes First”. We should have a national dream, not like Turkey’s, not like Malaysia’s, not like Korea’s, not even like the United States’ or Israel’s. We should have our own model that, once again, redirects the history towards this part of the world called Egypt. We should be the Startup Nation 2.0 in less than 10 years. Israel could have muscles but lacks both the spirit and belief behind to achieve victory. We have the true belief and divine spirit and all we want now is to work out our muscles.