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clear that this disparate
     group could form a functioning country at all, let alone one that would excel at—of all things—teamwork and innovation.
    Indeed, Israel’s secret seems to lie in something more than just the talent of individuals. There are lots of places with
     talented people, certainly with many times the number of engineers that Israel has to offer. Singaporean students, for example,
     lead the world in science and mathematics test scores. Multinationals have set up shop in places like India and Ireland, too.
     “But we don’t set up our mission critical work in those countries,” an American executive from eBay told us. “Google, Cisco,
     Microsoft, Intel, eBay . . . the list goes on. The best-kept secret is that we all live and die by the work of our Israeli
     teams. It’s much more than just outsourcing call centers to India or setting up IT services in Ireland. What we do in Israel
     is unlike what we do anywhere else in the world.” 19
    Another commonly cited factor in Israel’s success is the country’s military and defense industry, which has produced successful
     spin-off companies. This is part of the answer, but it does not explain why other countries that have conscription and large
     militaries do not see a similar impact on their private sectors. Pointing to the military just shifts the question: What is
     it about the Israeli military that seems to foster entrepreneurship? And even with the influence of the military, why is it
     that defense, counterterrorism, and homeland security companies today represent less than 5 percent of Israel’s gross domestic
     product?
    The answer, we contend, must be broader and deeper. It must lie in the stories of individual entrepreneurs like Shai Agassi,
     which are emblematic of the state itself. As we will show, it is a story not just of talent but of tenacity, of insatiable
     questioning of authority, of determined informality, combined with a unique attitude toward failure, teamwork, mission, risk,
     and cross-disciplinary creativity. Israel is replete with such stories. But Israelis themselves have been too busy building
     their start-ups to step back and try to stitch together how it happened and what others—governments, large companies, and
     start-up entrepreneurs—can learn from their experience.
    It would be hard to imagine a time when understanding the story of Israel’s economic miracle could be more relevant. While
     the United States continues to be rated the world’s most competitive economy, there is a widespread sense that something fundamental
     has gone wrong.
    Even before the global financial crisis that began in 2008, observers of the innovation race were sounding alarms. “India
     and China are a tsunami about to overwhelm us,” predicted Stanford Research Institute’s Curtis Carlson. He forecasts that
     America’s information technology, service, and medical-devices industries are about to be lost, costing “millions of jobs
     . . . like in the 1980s when the Japanese surged ahead.” The only way out, says Carlson, is “to learn the tools of innovation”
     and forge entirely new, knowledge-based industries in energy, biotechnology, and other science-based sectors. 20
    “We are rapidly becoming the fat, complacent Detroit of nations,” says former Harvard Business School professor John Kao.
     “We are . . . milking aging cows on the verge of going dry . . . [and] losing our collective sense of purpose along with our
     fire, ambition, and determination to achieve.” 21
    The economic downturn has only sharpened the focus on innovation. The financial crisis, after all, was triggered by the collapse
     of real estate prices, which had been inflated by reckless bank lending and cheap credit. In other words, global prosperity
     had rested on a speculative bubble, not on the productivity increases that economists agree are the foundation of sustainable
     economic growth.
    According to the pioneering work of Nobel Prize