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November 14 2012

An innovation agenda to help people win the race against the machines

If the country is going to have a serious conversation about innovation, unemployment and job creation, we must talk about our race against the machines. For centuries, we’ve been automating people out of jobs. Today’s combination of big data, automation and artificial intelligence, however, looks like something new, from self-driving cars to e-discovery software to “robojournalism” to financial advisors to medical diagnostics. Last year, venture capitalist Marc Andreessen wrote that “software is eating the world.”

Computers and distributed systems are now demonstrating skills in the real world that we once thought would always be the domain of human beings. “That’s just not the case any more,” said MIT research professor Andrew McAfee, in an interview earlier this year at the Strata Conference in Santa Clara, Calif.:

McAfee and his research partner, MIT economics professor Erik Brynjolfsson, remain fundamentally optimistic about the effect of the digital revolution on the world economy. But the drivers of joblessness that they explore in their book, Race Against The Machine, deserved to have had more discussion in this year’s political campaign. Given the tepid labor market recovery in the United States and a rebound that has stayed flat, the Obama administration, given an opportunity for a second term, should pull some new policy levers.

What could — or should — the new administration do? On Tuesday, I had the pleasure of speaking at a panel at the Center for Technology Innovation at the Brookings Institute to talk about what a “First 100 Days Innovation Agenda” might look like for the new administration. (Full disclosure: earlier this year, I was paid to moderate a workshop that discussed this issue and contributed to the paper on building an innovation economy that was published this week.) The event was live streamed and should be available on-demand in the future.

In the meantime, below are recommendations from the paper and from professors McAfee and Brynjolfsson, followed by the suggestions I made during the forum, drawing from my conversations with people around the United States on this topic over the past two years.

Ideas from Brookings

Quoted below is the executive summary of the recommendations from the Brookings Center for Technology Innovation. The paper itself goes into more detail on each one.

  • We need better metrics for measuring worker productivity in the 21st century economy. Past approaches based on worker hours or total employees in relation to Gross Domestic Product (GDP) ignore the transformational nature of digital technology.
  • We should encourage entrepreneurship by expanding Small Business Administration credit for start ups, adding entrepreneurial skills to school curricula, and making changes in immigration policy that encourage entrepreneurs to come to America.
  • We need governments that learn to innovate and collaborate, and develop new approaches to service delivery, transparency, and participation. This includes placing more data online and employing data analytical tools, social media, mobile technology, and search results that improve decision-making.
  • We should strengthen infrastructure by investing in broadband, data centers, and mobile cell towers, and improving access to spectrum for wireless applications.
  • We should protect vital digital assets by updating the Federal Information Security Management Act and developing procedures for monitoring threats to critical infrastructure.
  • We need to improve knowledge transmission through faster adoption of digital textbooks, more widespread use of creative commons licenses for instructional materials developed with taxpayer dollars, and policy changes that speed education innovation.
  • We need to increase technology transfer and the commercialization of knowledge from universities and federal laboratories so that public and private investments translate into jobs and economic activity as well as better health, security, and well-being.
  • We should harmonize cross-border laws to promote global innovation and freedom of expression.

Recommendations from McAfee and Brynjolfsson

“Everything I’ve learned during and after Race Against the Machine has left me incredibly optimistic in all important areas except one,” wrote McAfee in an email earlier this week.

“Digital technologies are increasing our productive capacity and ability to innovate, they’re bringing good things to our lives, and they will continue to do all of the above, probably at accelerating rates. As we wrote in the book, however, as technology races ahead, it is leaving a lot of workers behind. Computers and robots are acquiring human-like skills and abilities, which means that the ‘market share’ of people in the workforce — the areas where they are superior to machines — is going down, and will continue to do so. Dealing with this trend will be one of the main challenges, if not the greatest one, that we face over the next generation.”

What to do? “The cure-all to any economic woe is economic growth,” he said, in our previous interview at Strata. Even if that’s happening, McAfee emphasized, the cohort of mid- to lower-wage knowledge workers whose jobs stand to be automated is still going to be affected.

In response, he recommended that policy makers, schools and universities rethink current educational methods and system.

“We’re turning out industrial-era workers and industrial-era skills,” said McAfee. Instead of fact-based learning methods, he suggests focusing on developing the abilities of students to do problem definition, exploration and solving, working with machines.

“Reskilling and retraining are a big part of the answer,” he said. “We’re putting the wrong skills out there. Let’s rethink that. Let’s bring government, industry, and the educational institutions together and put together a curriculum that will actually deliver valuable skills out there.”

Brynjolfsson and McAfee made a list of 19 recommendations from Race Against The Machine that are worth considering, including: measuring performance in education, extending school hours, encouraging the immigration and retention of skilled workers, teaching entrepreneurship, investing in the country’s communications and transportation infrastructure, reforming the patent system and revisiting a host of tax subsidy and regulatory policies. While not all of these recommendations could be addressed in the first 100 days, they are all worth adding to the discussion about the choices ahead of the new administration and Congress.

My suggestions

Where do I sit? To unlock more innovation in the economy, the administration should consider:

  • Making evidence-based investments in science, technology, engineering and math (STEM) education and experiential learning programs, with measurements against which teaching methods are working and where. Continue to embrace the maker movement.
  • Focusing on skills matching between millions of open jobs and coordination with industry to determine the training needed to fill them and community colleges and grad programs to create curricula that are relevant.
  • Continuing to invest in basic research and development, particularly in biotechnology, nanotechnology, materials science and alternative energy.
  • Pushing through immigration reform that enables the best and brightest entrepreneurs and researchers to come to the United States to build businesses, study and to stay here after graduation. Make the political compromise to get that engine moving quickly. Simplify visa applications, in accordance with the digital government strategy, so that innovators can build better civic interfaces to provide expedited e-services.
  • Creating more access to early seed-stage capital for startups and small businesses. That means pushing the Security and Exchange Commission to finalize the crowdfunding rules from the JOBS Act.
  • Releasing more open government data from regulators and federal agencies, particularly high-value datasets that are in demand from startups. Catalyze the growing data economy by engaging entrepreneurs and venture capitalists — and respond to their feedback about quality, availability and standards. Collaborate with states and cities on creating open standards for urban data.
  • Putting more code, research and other intellectual property created with taxpayer dollars into the public domain.
  • Using the power of government procurement to encourage small business, once Project RFPEZ is completed.
  • Releasing more spectrum and creating incentives for “last mile” broadband access to enable more participants in the innovation economy.
  • Making libraries digital hubs for communities, enabling them to provide job training, broadband access, open data curation and even as maker spaces.

Your ideas?

When I asked for feedback online before the panel, Robert Bole, director of innovation for the U.S. Broadcasting Board of Governors, commented that the administration should make “block grants of digital services and open data to states.”

Additionally, suggested Bole, the administration should “expand Code for America and Presidential Innovation Fellows. Reform Federal Acquisition Regulations (FAR), adoption of RFP-EZ (and ilk). Reform of Universal Service fund for broadband infrastructure expansion. Improve libraries and schools to provide media literacy skills. Investment of career STEM at community colleges. Aggressive restructure & auction of spectrum (with smart public use requirements).”

After she commented during the Brookings forum, I asked Gwynne Kostin what the real issues are for innovation in the federal government. Kostin, who serves as the Director of the Digital Services Innovation Center in the Office of Citizen Services & Innovative Technologies at the U.S General Services Administration, responded by putting at least some of the onus on Congress:

Imagine, for a moment, that President Obama is up late in the White House in the next month and comes across this post when he’s reading his iPad.

What change(s), policy or other action would you recommend to him in these first 100 days? Would you support any of the items from the list above? Why? Or make other ones? If you have ideas, please add them below in the comments.

July 13 2011

What are the ideal conditions for tech startups?

When Thibauld Favre started talking about his startup at the reception following the first day of the eG8 Forum in Paris, he could have been any eager, bright young entrepreneur. He pitched the idea of a "Windows App Store" with great enthusiasm, noting that All My Apps already had more than 500,000 users, with a billion-plus potential Windows users to attract in the future. Favre said that the platform was in open beta and, with 15 employees, his startup was growing fast.

And then he said that his next step was to move to California to be closer to the ecosystem of developer networks and startups. When I asked Favre why he would leave France, which was offering generous subsidies for his fledgling tech company, his answer was straightforward: He wanted to tap into the culture of tech entrepreneurs in Silicon Valley.

During my trip to Paris for the eG8, the following concerns about the conditions for startups in France emerged in various discussions.

  • Lack of a mentorship culture — In Silicon Valley, established entrepreneurs mentor new ones.
  • A limited venture capital ecosystem — There's low tolerance for risk, or lack thereof, in investors. That concern goes for engineers as well, in terms of joining startups, big business, or government.
  • Hierarchical institutions — There's a resistance to the flattening effect of technology in enterprises and government. That culture can transfer to smaller concerns. (Think of "Gov 2.0 vs the beast of bureaucracy.)
  • Inability to fire people — When people don't perform as needed in startups, entrepreneurs have to bring in new talent or they'll lose to innovators in the market who can.
  • Low tolerance for flex time or casual attire — Talented software engineers have a global marketplace for their talents. Formal dress and rigid working hours are significant negatives.
  • Tax structure — Without being too specific about the codes in question, entrepreneurs said startup costs and red-tape were an issue.
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The Economist's briefing on Europe's tech entrepreneurs last year reflected these themes. There are young European technology companies in France, like Criteo, but from what I've heard there's a long way yet to go to attract more of them or catalyze their founding.

"I definitely agree with these arguments," said Internet entrepreneur Fabrice Grinda, founder of Aucland and co-CEO of OLX. Grinda was quite critical of the eG8 after its conclusion. "The inability to fire people and too much red tape are high on the list and can be addressed," he said. "A smaller domestic market and entrepreneurs looking only domestically is harder to address."

What do you think? Do you agree with this characterization of conditions in France? Do they exists elsewhere in Europe? If France could address these issues, would more venture capital move into the country and fund the technical talent coming out of its universities? Is there a universal set of conditions that a given city, state or country needs to meet in order to catalyze startup activity and job creation?

Please share your thoughts in the comments.

March 31 2011

Four short links: 31 March 2011

  1. Debt: The First 5,000 Years -- Throughout its 5000 year history, debt has always involved institutions - whether Mesopotamian sacred kingship, Mosaic jubilees, Sharia or Canon Law - that place controls on debt's potentially catastrophic social consequences. It is only in the current era, writes anthropologist David Graeber, that we have begun to see the creation of the first effective planetary administrative system largely in order to protect the interests of creditors. (via Tim O'Reilly)
  2. Know Your History -- where Google's +1 came from (answer: Apache project).
  3. MIT Autonomous Quadcopter -- MIT drone makes a map of a room in real time using an X Box Kinect and is able to navigate through it. All calculations performed on board the multicopter. Wow. (via Slashdot and Sara Winge)
  4. How Great Entrepreneurs Think -- leaving aside the sloppy open-mouth kisses to startups that "great entrepreneurs" implies, an interesting article comparing the mindsets of corporate execs with entrepreneurs. I'd love to read the full interviews and research paper. Sarasvathy explains that entrepreneurs' aversion to market research is symptomatic of a larger lesson they have learned: They do not believe in prediction of any kind. "If you give them data that has to do with the future, they just dismiss it," she says. "They don't believe the future is predictable...or they don't want to be in a space that is very predictable." [...] the careful forecast is the enemy of the fortuitous surprise. (via Sacha Judd)

March 14 2011

Four short links: 14 March 2011

  1. A History of the Future in 100 Objects (Kickstarter) -- blog+podcast+video+book project, to have future historians tell the story of our century in 100 objects. The BBC show that inspired it was brilliant, and I rather suspect this will be too. It's a clever way to tell a story of the future (his hardest problem will be creating a single coherent narrative for the 21st century). What are the 100 objects that future historians will use to sum up our century? 'Smart drugs' that change the way we think? A fragment from suitcase nuke detonated in Shanghai? A wedding ring between a human and an AI? The world's most expensive glass of water, returned from a private mission to an asteroid? (via RIG London weekly notes)
  2. Entrepreneurs Who Create Value vs Entrepreneurs Who Lock Up Value (Andy Kessler) -- distinguishes between "political entrepreneurs" who leverage their political power to own something and then overcharge or tax the crap out of the rest of us to use it vs "market entrepreneurs" who recognize the price-to-value gap and jump in. Ignoring legislation, they innovate, disintermediate, compete, stay up all night coding, and offer something better and cheaper until the market starts to shift. My attention was particularly caught by for every stroke of the pen, for every piece of legislation, for every paid-off congressman, there now exists a price umbrella that overvalues what he or any political entrepreneur is doing. (via Bryce Roberts)
  3. Harper-Collins Caps eBook Loans -- The publisher wants to sell libraries DRMed ebooks that will self-destruct after 26 loans. Public libraries have always served and continue to serve those people who can't access information on the purchase market. Jackass moves like these prevent libraries from serving those people in the future that we hope will come soon: the future where digital is default and print is premium. That premium may well be "the tentacles of soulless bottom-dwelling coprocephalic publishers can't digitally destroy your purchase". It's worth noting that O'Reilly offers DRM-free PDFs of the books they publish, including mine. Own what you buy lest it own you. (via BoingBoing and many astonished library sources)
  4. MAD Lib -- BSD-licensed open-source library for scalable in-database analytics. It provides data-parallel implementations of mathematical, statistical and machine learning methods for structured and unstructured data. (via Ted Leung)

February 15 2010

Innovation Lessons in "Start-Up Nation"

One might expect href=""Start-Up Nation: The Story
of Israel's Economic Miracle
to come from the pen of business
school or economics professors, but the biographies of authors Dan
Senor and Saul Singer reveal policy backgrounds. Both were advisors in
the U.S. Federal Government.

These backgrounds give a clue that Senor and Singer aim beyond
questions of how to be a successful entrepreneur or high-tech
executive. In fact, their book is a serious investigation of the
social, historical, and psychological traits that produce
extraordinarily creative people--and significantly, creative people
who can translate their cranial light-bulbs into technologies with the
potential to change the world.

The book has garnered a fair amount of news coverage, but still not as
much as it deserves, in my opinion. It took me only about three hours
to read, and I highly recommend it as a refreshing--but not
necessarily reassuring--perspective on a country that is profoundly
misunderstood and misrepresented by media outside its diminutive

In this blog I'll summarize the traits that that the authors find make
Israel a successful incubator for innovation, distinguishing between
traits that other countries can emulate and traits that seem uniquely
embedded in Israel's historical and geographic circumstances.
Finally, as I usually do in these book reviews, I'll lay out three
observations that came to my mind while following the authors'
argument: the importance of hard data, flipping axioms, and the
creative role government can play.

Israel's stunning performance in world markets is beyond argument. The
country lists more companies on NASDAQ than China, India, Japan, South
Korea, Singapore, and all the countries of Europe--combined! Venture
capital flows into the country. It's often noted that technically
trained Israelis emigrate, but less often reported that many of them
return and spectacularly exploit their international connections. And
because investment is based on technical progress instead of clever
financial book-keeping, Israel has weathered the current recession
with some decline in revenues but not a single bank failure.

Start-Up Nation claims to reveal the reasons behind the
success of this country that not so long ago was considered a victim
of quasi-socialist stagnation and crippling costs related to war and
violence. Some of the authors' observations have been made
before--such as the importance of forcing young people to take serious
responsibility in army service, and the value of accumulating highly
trained immigrants from Russia and other places--but these
observations have previously been oversimplified and leave out what
Senor and Singer consider crucial inputs. Start-Up Nation not
only tries to restore the proper balance and show traits from a more
productive perspective, but integrates them into a comprehensive
picture of a churning economy.

Traits that other countries can emulate

Although Israel has special advantages, some of the elements to which
Senor and Singer trace its innovativeness can theoretically be
achieved elsewhere. Briefly, these are:

  • A loyalty to the entire community that goes beyond personal success.
    The authors point out that, for all of Israelis' notorious
    fractiousness, they expend enormous effort helping total strangers.
    All of Israel is a single team, even a single family. (Obviously, this
    family feeling does not extend to non-Jews.) Israeli entrepreneurs who
    give talks abroad often play up the strengths of their country as well
    as their company.

  • A sense of dissatisfaction. To innovate, one must be convinced that
    things are not good enough the way they are now. For Israelis, this
    drive for change has both Biblical and more recent historical roots,
    but technology provides a new arena rewarding hopes for improvement.

  • A Do-It-Yourself approach to technology, which perhaps is one
    manifestation of the afore-mentioned innate dissatisfaction. The
    authors report that equipment purchased by the army is always being
    tinkered with. The same interest in taking things apart and
    jerry-rigging them extends throughout the culture.

  • A culture of challenging authority. The authors point out that this is
    a deep cultural value (and like many before them, trace it partly to
    the Jewish intellectual tradition), one that is particularly hard to
    foster in countries with controlling regimes.

  • A determination to succeed against all odds. Countries that get
    complacent and rest on their laurels--as most observers think North
    Americans are doing--eventually lose their privileged places. The
    authors highlight fascinating stories of Israelis keeping up
    production in the face of war, and of cheerfully taking on seemingly
    impossible challenges.

  • Interdisciplinary agility. Israelis tend to learn many skills--partly
    to survive in the armed forces--and to form companies closely linking
    people with different areas of expertise. In an age where many
    challenges require mashups between disciplines, this imparts a strong

  • A tolerance for failure. Like the Silicon Valley, Israel is a place
    where someone can start a company, manage it through bankruptcy, and
    then pick up to start another company. A single failure, the authors
    say, gives the entrepreneur a high chance of succeeding at the next
    venture. Even in the military, people are rewarded for tackling
    problems with creative intelligence--not so much for the ultimate
    success or failure of the attempt.

  • Providing young people with arenas to exert responsibility. In Israel,
    of course, this arena is its unusually unhierarchical armed forces
    (and people who don't do army service, such as Arabs and the
    ultra-orthodox, miss out on critical experiences). But other countries
    could find other ways to challenge youth in situations where taking
    charge is a must and where results really matter.

  • A fruitful mentoring relationship between venture capitalists and new
    entrepreneurs. Injecting money into new ventures (as so many
    countries do) is not enough; the managers must be guided through the
    shoals of financial, technical, and human resource challenges. Israel
    set up a unique program called href="">Yozma in 1993 to bring
    together all the necessary elements.

  • Government policies friendly to startups. Israel has a decidedly mixed
    history here. Even after making a historic turn away from government
    control and toward a free market, its environment is most helpful to
    computer and high-tech companies. There are certainly innovations in
    many other areas--notably agriculture--but the authors say these
    fields encounter hampering regulations.

  • A truly open-arms approach to immigrants, who bring not only fresh
    perspectives but a high tolerance for risk. Once again, of course,
    Israel's liberal attitude toward immigrants applies only to Jews (and
    a lot of haggling goes on around deciding who qualifies). Even for
    Jews, it can take a long time to assimilate waves of newcomers and
    turn them into productive employees. But countries that don't make it
    easy to set down roots suffer economically. Short-term foreign workers
    never form the sustainable innovative institutions that can be planted
    by truly committed immigrants.

Traits unique to Israel's history and geography

Israel also possesses unique traits that the Senor and Singer draw in
to explain its entrepreneurial success. No other culture has undergone
thousands of years of persecution culminating in genocide--nor should
that be a necessary price. But it's amazing how Israel has turned its
liabilities into assets, and these lessons can be inspirational for
people suffering in other parts of the world.

  • The country's regional isolation (boycotted by all its neighbors) and
    its small size has forced it to think internationally from the start.
    Israelis are also avid travelers, gathering up experiences that allow
    them to think creatively.

  • Demographic diversity is another trait that has many negative
    repercussions, but that the Israelis have also mined for its
    strengths. New ideas always seem less odd in a culture where one has
    to get along with different types of people.

  • A long intellectual tradition encourages a love of learning that
    extends to worldly accomplishments (although I have to point out that
    the same tradition contains many rabbis who railed against the study
    of mundane things); just as important, it encourages students to
    examine and re-examine every idea from new points of view--effectively
    making them ask constantly what would result if something obvious were
    not true. I will explore this intellectual attitude in the
    section Flipping axioms.

  • The tight-knit society leads to a situation where "everybody knows
    everybody" and one can easily find the right mix of staff for a new
    company. (I wonder whether this cliquishness extends far beyond the
    economically dominant ethnic group--the Ashkenazi Jews, who trace
    their ancestry to Northern and Western Europe.)

  • The constant existential threat posed by attacks and bombings call for
    hair-trigger creativity. It's worth noting here that the authors
    present Israel's response to war and terror in a consistently heroic
    light (along with recognition that they sometimes screw up). But the
    authors note that every engagement is followed by an assessment to
    determine what could have been done better.

  • The small size of the population (further reduced, as I noted earlier,
    by deferrals for the religious and for Arabs) forces each army recruit
    to take on responsibility right away.

The importance of hard data

At this point I will delve into some more subtle threads that I see
running through the book.

The first is the importance of accumulating evidence to build a case
for change. Two incidents from the book illustrate this nicely:

  • Israel's Intel facility, which invented the historic 8088 (and would
    later invent the Core 2 Duo) faced its biggest uphill battle when it
    approached its parent company to propose the principle behind the
    Centrino. Senor and Singer note that Israeli staff flew into Intel
    headquarters insistently to talk about the advantages of the new
    design--and seemed to deal with management resistance by increasing
    their own pressure. But it's important to note that they accumulated
    data to prove the superiority of the design. Mere persistence
    would probably not have carried the day.

  • An Israeli company called Fraud Sciences pitched a system for
    identifying untrustworthy customers and vendors to a manager at
    eBay. The manager was adamantly unwilling to believe that this tiny
    group of developers could do a better job than all of eBay's experts,
    and the founder of Fraud Sciences was not a good salesman. Luckily,
    eBay had a low-risk, low-cost way to test the start-up: eBay would
    give information about one hundred thousand customers to Fraud
    Sciences and compare their analyses to eBay's analyses as well as the
    subsequent history of those customers. Fraud Sciences passed the test
    with flying colors and ended up being bought by eBay. There was no way
    even the most determined cynic could argue with the facts.

We now see data-crunching brought right into the development process,
as with a process called "predictive drug development" practiced by
the Israeli company Compugen.

Flipping axioms

I mentioned before the oddly subversive style of the Jewish
intellectual tradition. I call it flipping an axiom: find the key
trait that holds back change--a trait that no one has challenged
before because it seems unassailably true--and ask "What would happen
if it were false?" This is a kind of non-Euclidean geometry of
thought. Two examples of this thinking at work in Israel include:

  • The Centrino project at Intel, mentioned in the previous section,
    required overturning a tautology accepted throughout a whole industry
    and customer base. The problem they were facing was that increases in
    chip speed led to increases in heat dissipation. Laptops with advanced
    processors could not be designed because the build-up of heat would
    destroy them.

    So the Israeli team asked: what if we sped up processing without
    increasing clock speed? To give an indication what a radical thought
    this was, consider that U.S. Intel management rejected the idea
    because they had build their entire marketing strategy around clock
    speed. Clock speed had become the universal measure for computer
    performance. The Israelis threw out the assumption, found a solution,
    and sold it to management--and the world.

  • Start-Up Nation begins appropriately enough with the
    well-known innovator Shai Agassi, who wants to create a network of
    battery replacement stations to support an infrastructure of electric
    cars. The basic elements of the plan had all been thought up by auto
    manufacturers already and rejected as unfeasible. But Agassi found a
    promising way to cut through the difficulties (although it has not had
    a chance to be tested yet in everyday use).

    The key to Agassi's thinking, as presented by the authors, was to
    assume that cars had to stop using fossil fuels. The world is
    running out of them. Agassi rejected other options such as hydrogen
    and hybrids, so he decided cars must be electric around the
    same time manufacturers decided they must use gasoline
    (although other options such as ethanol are also being explored).
    Taking electric cars as an axiom, Agassi found all the other
    propositions to make cars work.

The creative role government can play

I'll end by exploring the positive role of government in Israel.
Entrepreneurial government is just as important as entrepreneurial
business--but it must do different things. In this regard the Israeli
experience matches up somewhat with the positive role Nandan Nilekani
proposed in Imagining India, which I href="">reviewed
a few months ago.

In the early years, the Labor government kept a firm hand on the
economy. The authors suggest that this worked well in the Israel of
the 1950s and 1960s, an underdeveloped country needing obvious
infrastructure investments. When the country reached a higher level
calling for more complex economic relationships, the socialist bent
became dysfunctional. (Many economists have found similar trajectories
in the Soviet Union and Maoist China.) It was time to retract, so to
speak, to permit more creation.

The authors enthusiastically endorse the Chicago School shock
treatment carried out by the right-wing Likud government that took
over in the 1970s. They don't mention the troublesome income gap
created by this turn to the markets, but it does seem to have
unleashed the innovative capitalism that has made Israelis relatively
affluent for their part of the world, and an attractive location to
work for Jews as well as non-Jews from elsewhere.

The government doesn't make direct investments, but to some extent it
chooses winners--hooking them up to external investors--through the
Yozma program mentioned earlier.

Like all governments, Israel promotes R&D through the military.
But it provides on particularly interesting kind of government
incubator: Talpiot, an intensive multi-disciplinary training program
for promising young recruits.

Talpiot looks over the entire eligible high school population and
aggressively encourages applications from the people it believes will
make the most creative problem-solvers. It puts them through basic
training as well as a technical academic program, and assigns them
quickly to real-life problems. The training goes on for forty-one
months, and the recruits are required to stay in the military for six
more years.

Most Talpiot graduates leave the armed forces when their required six
years are up, and this is seen as a strike against the program by its
critics. But the authors point out that these highly trained, highly
practical experts go on to apply their skills in private industry, so
the government has effectively provided an elite corps for the

Israel certainly faces problems that technology and organizational
savvy cannot solve. But its political, economic, and cultural
successes have made it a model for other developing countries--none
more than the Arab nations, who are trying to emulate it in many ways.
Start-Up Nation is surprisingly broad and deep, for such a
short book. I'm persuaded that it has unraveled many of the mysteries
behind Israel's business success. And it does its best, in a very
uncertain world, to suggest how both Israel and other countries could
replicate that success.

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