Israel’s Secret Sauce: How To Become A Startup Nation (3/4)

(Photo © Unsplash)

How has Israel’s army influenced the creation of the world’s first Startup Nation? Manuel Sussholz, co-founder and Managing Director and of Sweetwood Capital, suggests that acting as “The Biggest Human Resource Agency” in Israel certainly has something to do with it.

It is impossible talk about the Israeli startup ecosystem without mentioning its military, the Israel Defense Forces (IDF). Since its creation in 1948, the State of Israel has had to deal with a wide range of military disputes and conflicts which has put it in a unique – and no doubt difficult – position.

“The army, the Israeli army had to be particularly creative and had to keep itself at the forefront of technological innovation for the past 50-60 years,” explains Manuel Sussholz, co-founder and Managing Director and of Sweetwood Capital.

One of the best ways of staying at the forefront of technological innovation and maintaining military power was, of course, continued investments in military technology. Until this day, Israel remains one of the countries with the highest military spending figures in the world. Having spent 5.6% (of their GDP), they were they second highest spenders in 2020 – second only to Saudi Arabia.

Hard And Soft Skills

Apart from high military spending, the IDF also has engages in diverse recruitment strategies. While compulsory military service may seem like an old-fashioned idea to people in the West, it certainly has its perks when it comes to building a highly skilled workforce.

By exposing young adults to cutting-edge military technology such as cyber, computer vision, encryption and drone technology, the IDF basically gives them a free crash course on some of the most important fields in the Israeli startup ecosystem.

“You can imagine that, young people having access to those technologies that they naturally then find themselves recreating those skill sets in the private sector,” says Manuel.

However, the military not only equips them with the hard skills to succeed in the private sector. Indeed, the rigorous discipline, team ethic and project management skills required in the military, teaches the recruits many important soft skills which are a true asset in the startup world.

The IDF also tries to lock-down emerging talent as early as possible. By organising hackathons for 16-year-olds, the IDF has devised a scheme which enables them to mentor the most promising talent before mandatory conscription at 18. While some countries host competitions which reward good looks, others host competitions which reward technical skill.

“I like to think of the fact that the army is basically the biggest human resource agency for the tech world in Israel, simply because it just nurtures these talents,” says Manuel Sussholz.

The IDF’s Startup Unit

The results of high military spending, mandatory conscription and targeted nurturing speak for themselves.

Some of the most well-known startups have their origins in the IDF, more specifically their cyberware division, Unit 8200. Viber, Wix and Waze – to mention but a few – all have their origins in this division.

The success of the IDF in nurturing talent creates important incentives for both recruits and the military. If you enter the army with the knowledge that alumni before you went on to create companies which were aquired by Google for more than $1 billion, discipline probably comes a bit easier.


To find out about the last, and most important, two ingredients of Israel’s ‘secret sauce’ click here:

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