Start-up Nation Read Online Free Page B

winner Robert Solow, technological innovation is the ultimate source of productivity
     and growth. 22 It’s the only proven way for economies to consistently get ahead—especially innovation born by start-up companies. Recent
     Census Bureau data show that most of the net employment gains in the United States between 1980 and 2005 came from firms younger
     than five years old. Without start-ups, the average annual net employment growth rate would actually have been negative. Economist
     Carl Schramm, president of the Kauffman Foundation, which analyzes entrepreneurial economics, told us that “for the United
     States to survive and continue its economic leadership in the world, we must see entrepreneurship as our central comparative
     advantage. Nothing else can give us the necessary leverage.” 23
    It is true that there are many models of entrepreneurship, including microentrepreneurship (the launching of household businesses)
     and the establishment of small companies that fill a niche and never grow beyond it. But Israel specializes in high-growth
     entrepreneurship—start-ups that wind up transforming entire global industries. High-growth entrepreneurship is distinct in
     that it uses specialized talent—from engineers and scientists to business managers and marketers—to commercialize a radically
     innovative idea.
    This is not to suggest that Israelis are immune from the universally high failure rate of start-ups. But Israeli culture and
     regulations reflect a unique attitude to failure, one that has managed to repeatedly bring failed entrepreneurs back into
     the system to constructively use their experience to try again, rather than leave them permanently stigmatized and marginalized.
    As a recent report by the Monitor Group, a global management consulting firm, described it, “When [entrepreneurs] succeed,
     they revolutionize markets. When they fail, they still [keep] incumbents under constant competitive pressure and thus stimulate
     progress.” And the Monitor study shows that entrepreneurship is the main engine for economies to “evolve and regenerate.” 24
    The question has become, as a
BusinessWeek
cover put it, “Can America Invent Its Way Back?” 25 The magazine observed that “beneath the gloom, economists and business leaders across the political spectrum are slowly coming
     to an agreement: Innovation is the best—and maybe the only—way the U.S. can get out of its economic hole.”
    In a world seeking the key to innovation, Israel is a natural place to look. The West needs innovation; Israel’s got it. Understanding
     where this entrepreneurial energy comes from, where it’s going, how to sustain it, and how other countries can learn from
     the quintessential start-up nation is a critical task for our times.

CHAPTER 1
Persistence
    Four guys are standing on a street corner . . .
    an American, a Russian, a Chinese man, and an Israeli. . . .
    A reporter comes up to the group and says to them:
    “Excuse me. . . . What’s your opinion on the meat shortage?”
    The American says: What’s a shortage?
    The Russian says: What’s meat?
    The Chinese man says: What’s an opinion?
    The Israeli says: What’s “Excuse me”?
    —M IKE L EIGH ,
Two Thousand Years
    S COTT T HOMPSON LOOKED AT HIS WATCH. 1 He was running behind. He had a long list of to-dos to complete by the end of the week, and it was already Thursday. Thompson
     is a busy guy. As president and former chief technology officer of PayPal, the largest Internet payment system in the world,
     he runs the Web’s alternative to checks and credit cards. But he’d promised to give twenty minutes to a kid who claimed to
     have a solution to the problem of online payment scams, credit card fraud, and electronic identity theft.
    Shvat Shaked did not have the brashness of an entrepreneur, which was just as well, since most start-ups, Thompson knew, didn’t
     go anywhere. He did not look like he had the moxie of even a typical PayPal junior