Israel and Palestine: A Future Startup Society

Don’t argue, build. That is the motto Startup Societies Foundation’s philosophy. A startup society is a small experimental form of government, and the justification behind that idea is that we need to experiment more with how we organize ourselves as societies, and that people organize themselves best at a decentralized, local level.

The Israelis and Palestinians have been arguing (or rather, warring) since 1948, when the State of Israel was founded. Essentially, both peoples make cultural and historical claims to the same territory, while the British and French had also made mutually incompatible promises of territory and independence to both parties. Since then, Israel and Palestine have been in a constant state of conflict which, while fluctuating in intensity, has never been resolved.

Behind the conflict there are real lives, communities, and cultures. A friend of mine cycled through Palestine last Easter and had recalled to me the incredible generosity of the people. On a trip to Tel Aviv to volunteer at d10e’s Conference on Decentralization in June I was pleasantly surprised by the hospitality and genuine affection shown by our Israeli hosts. But my hopes of being able to visit Jerusalem, one of the world’s holiest and most fought-over cities, calmly and serenely on a day trip were swiftly dashed. The tension in the hot air was palpable, the military presence visible, the mixture of prayers inescapable. Entry into the Al-Aqsa mosque was barred to tourists and the taxi drivers were hungry as we’d come during Ramadan, the traditional Islamic fast. I observed, spoke to strangers, watched the news and read the tourist leaflets… yet left more confused than I had been when arrived. What I had only read about in school textbooks I had now experienced for myself. The Holy Land is an incredibly complex place facing complex social problems.   

However, both Israel and Palestine have seen a new trend emerge in the twenty-first century. Israel has been proclaimed the ‘Startup Nation’ and more recent entrepreneurial and tech efforts in Palestine are beginning to transform their economy as well. But where have these trends come from, how might they change the societies in which they are based, and what might the longer-term implications be? I began my research in the naïve hope that I might be able to suggest a remedy: a startup society, a microstate, into which Palestinians and Israelis fed up with political stagnation and full of the desire to live together in peace might be able to move. Having read significantly more into the issue I’ve still barely touched on the complexities that doing so would involve. It seems impossible.

Israel is home to over 5,000 startups, and is ranked second only to Silicon Valley in tech innovation. It has more high-tech startups and a larger venture capital industry per capita than any other country in the world. It’s not hugely surprising, then, that it was dubbed the ‘’Startup Nation’’ by Dan Senor and Saul Singer in 2009 in their eponymous book. They pose the question ‘How is it that Israel, just 60 years old and with a population of 7.1 million, and in a situation of ongoing war, has emerged as a model of entrepreneurship?’ Although their work has often been criticized for its blatant patriotism, their analysis and that of others has suggested that, essentially, the Israeli military is at the core of their startup success.

The role of the military in Israeli society is no simple matter in itself, but given the permanent state of conflict Israel exists in, the instability of the region, the rejection of Israeli sovereignty its various neighbors and the fact that Hamas, the ruling power in the Gaza Strip, has openly proclaimed their intention to eliminate them, it is safe to say that the importance of the Israeli military in their society is not unwarranted. 

Israel has also been the recipient of significant foreign support and financial aid, in large part thanks to its close alliance and cooperation with the United States.

Senor and Singer discard the arguments of ethnic or religious exceptionalism, rather emphasizing two key factors to Israel’s success in the field of startups: the importance of the mandatory military service and the culture of the Israeli Defense Forces (IDF). Singer points out that military service in Israel provides a third phase of life, in-between school and work, in which adolescents learn mission focus and leadership, skills important to any business, as well as building up a network of contacts and potential startup cofounders and colleagues.[1] Unlike other militaries which tend to be held together by strong hierarchical systems and discipline, the IDF requires youths to question the decisions of their superiors, and promotes creative problem solving. Furthermore, the military is where many young people first gain access to modern technology, learn how it works and how to use it.[2] Worthy of particular mention is Unit 8200, the cybersecurity and intelligence team, which Forbes argues is essential to understanding the startup nation.[3]  Clandestine until less than 15 years ago, it elects the youth from all over the country based on raw intelligence, analytical capabilities and potential, and gives them rigorous training. Israeli ministry officer and head of innovation and brand management, Ran Natanzon has said that

The mentality in the unit is like in a startup, and those who graduate enter the world of entrepreneurship at a relatively young age with hands-on experience of solving and managing the most complicated sophisticated projects worth millions of dollars."[4]

While nobody has yet disclosed its numbers, estimates suggest that the unit has 50,000 individuals assigned to it, all trained and authorized to deploy the best technology, often in life-or-death situations, with very little guidance.[5] Richard Behar explains how one unit member’s task was to break into computers of a country hostile to Israel. [6]  He had to figure out how to get into the computers, crack the encryption, and access the computer power needed to decrypt the data. His solution was ingenious: he hacked into the computers of two other hostile countries, hijacked their processing power, and used it to gain the data held by the first target. All from Tel Aviv. The operative in question, Avishai Abrahami, went on to cofound a highly successful cloud-based Web-development platforms, called Wix.[7] He claims to know over 100 others former Unit 8200 operatives who also built successful startups.

Numerous other factors have also been attributed to Israeli startup culture: a sense of dissatisfaction with the current state of affairs, and a lack of natural resources (even water) which has driven its citizens to constant problem solving, innovation and resourcefulness.[8] The country is essentially comprised entirely of immigrants, (9 out of 10 Jewish Israelis today are immigrants or descendants of immigrants the first or second generation) who, starting from nothing and therefore with nothing to lose, are by definition considered risk-takers and go-getters. Yusuf Mansur, an economist, emphasizes the role of foreign aid and private funding in allowing a strong defense force and continued immigration. He also highlights the discriminatory Israeli policies against its Arab citizens with regards their education and employment opportunities and rights, rather than their exclusion from military service, as key reasons for their lack of involvement in startups.[9]

But could the Israeli tech startup culture, whose competence and culture is facilitated and nurtured by the military, possibly lay the foundations for future peace? It makes for a curious conundrum.

Israel is not a fortress in a desert of tech entrepreneurial activity.[10] Although not yet comparable, in the past five years the Palestinian tech sector too has flourished, now employing about 8,500 people, up from 5,000 in 2011, and accounts for over 6% of the Palestinian GDP (which is only $2,000 per capita however).[11]

This is essentially the result of quietly determined business-driven dialogues which have begun to occur between Israel and Palestine since 2011.[12] Much of the time, these are led by American or other foreign corporations, such as Cisco, which brought together almost 100 Israeli tech experts and Palestinian entrepreneurs between 2011 and 2013. [13] Various American tech giants now are beginning to work across the border, and now even Israeli tech companies are beginning to establish relationships.[14] Hewlett Packard has researchers based on the West Bank and Microsoft Israel has Ramallah-based Palestinian engineers on its payroll.[15] Intel’s actions are more definitive: it is working specifically to improve the Palestinian IT sector.[16]  Google has brought Israelis and Palestians together for conferences and networking in Tel Aviv.[17] While in the past, trade between the West Bank and Israel has been limited to goods, Israelis and Palestinians are becoming business partners and coworkers in startups that are sparking a transformation in the Palestinian economy, even if only in the West Bank.[18]

The business strategy of these tech management firms is to utilize this untapped resource of intelligent, driven Palestinian youth in order to spread Israel’s startup success across the infamous border. And it really is an untapped resource: ten different colleges on the West Bank produce 2000 engineering and computer graduates a year, yet the tech sector only employs 4,500 in total, driving many to entrepreneurship out of necessity.[19] For the Palestinians, it is an opportunity out of their economy’s dependence on foreign aid, which is both highly normalized and largely ineffectual, as it maintains a cycle of dependence rather than sustainable economic empowerment. For many, choosing to cooperate and learn from their Israeli neighbors is part of a long-term strategy towards a strong Palestinian economy which they believe will give their country greater leverage in future peace negotiations. In Behar’s Forbes article, Saed Nashef, cofounder of Sadra Ventures, the first venture fund in the Palestinian territories, says ‘there is more than one form of resistance. And one way is to be stronger economically.’ Yadin Kaufmann, of Foreign Affairs, also suggests the benefits, stating

 “Should the Palestinians, helped by Israel and the United States, succeed in building a technology ecosystem that powers Palestinians economic growth, they will reduce their reliance on foreign aid, improve the lives of millions of people, and help lay the groundwork for lasting peace.[20]

The idea that a stronger Palestinian economy based on collaboration with Israel is a recipe for lasting peace turns out to be more controversial than these anecdotes may show. A Palestinian’s opportunity to collaborate with Israelis creates personal turmoil, as Israelis are largely seen as the occupiers and the enemy. Yet in order to succeed economically, Palestinians need investment and training from Israeli tech and business communities. Nashef points out,

There is strong sentiment that anything you do today with Israelis that does not involve an attempt or a process that is targeted towards the political side of the conflict resolution is viewed as normalization, which is really kind of the taboo word.

It therefore puts Palestinians who want to collaborate in a very difficult situation: if a Palestinian’s partner is an Israeli Jew, the Palestinian becomes a ‘’normalizer’’ to many of his neighbors.

Behar has observed that Palestinians, Israelis, and foreign corporations see the meaning behind business collaboration very differently. Palestinians see business as a complement to a political solution. But the Americans and Israelis think that business relations in themselves will become stepping stones to an agreement.[21]

Indeed, he discovered first-hand what a highly sensitive topic this was, as his article Peace Through Profits? was met with vigorous criticism from both sides, which he addressed in a follow-up article Why So Many Palestinian High-Tech Entrepreneurs Hate My Forbes Cover Story. One Palestinian CEO stated “Things have been taken completely out of their natural context here. I'm not happy with the politicization of our company. We did not sign up for this. We are a tech startup, not some political party."[22] Essentially, he was criticized for putting Palestinian entrepreneurs in a difficult position, as Netanyahu, Israel’s Prime Minister, talks about economic peace, and many fear that this might be his substitute for a political solution. Furthermore, seeking Palestinian economic development in collaboration with Israel damages a different, non-violent effort at peace in the West Bank, where many Palestinians are urging international companies and consumers to boycott Israeli products until Israel might change their policies. Palestinian-Israeli economic collaboration works fundamentally against this.  Daoud Kuttab, a Palestinian journalist, concludes,

At the end of the day, people have to decide as a collective society what their strategy is to independence. One can argue that these things [tech collaborations] create the human element that’s necessary to give the talks an impetus. Or if the community as a whole feels they need to sacrifice the possibility of even developing or growing [economically] so as to speed up the independence, it’s a legitimate position too.” [23]

So, it seems that the motto of Startup Societies Foundation ‘’don’t argue, build’’ is not without its limitations in politically sensitive regions. In Israel and Palestine, the process of building is inextricably linked with politics, making it impossible to do anything without thinking about the political ramifications of one’s actions. The suggestion of a startup society there, therefore, perhaps cannot not be controversial.

However, there are Palestinians and Israelis who want to get along, collaborate and live in peace with one another. It is the political situation which prevents that. But what if these people were to decide to build their own city, a microstate, on a piece of land democratically designated for the purpose (by both Palestinians and Israelis), whose core principles included equal rights for all – in citizenship, before the law, in education and economic opportunities?  Those who wanted to live in harmony could simply move there. The startup society could use democratic politics to decide how the core functions of their microstate would work. The evolution of cryptocurrencies and the decentralized economy are rapidly expanding options which might soon allow financial independence from the Israeli shekel. It is difficult to doubt that either population lacks in resourcefulness, creativity and determination in the face of a challenge.

In terms of infrastructure, there is some evidence that the creation of a city out of nothing is possible. The city of Rawabi was founded by Bashar Masri, a Palestinian-American businessman, with the ambition of creating a Palestinian tech hub second only to Silicon Valley. It seems to have succeeded as the first Palestinians moved there in May 2015. However, it is not without its economic, infrastructural and political issues; it is over budget, two years behind schedule, suffers from continuing water scarcity and has therefore not gained the trust of either prospective buyers or many of those who initially committed to living within its borders.[24] Only 700 apartments have been sold, and only 400 of them completed and handed to their new owners. There are ongoing security issues as well: heightened security at Israeli checkpoints in the West Bank has not only hindered trade but has also scared off potential house buyers, fearful that an escalation of violence could lead to their total isolation. Not a single tech company except one of Masri’s, has committed to opening an office there.[25] It has proven a testament to infrastructural success, but also living proof of the sway that politics has on even a powerful businessman’s capacity to build. Indeed, even business decisions he has made are, by nature of the situation, political. Having called the city a statement of defiance against Israeli occupation, the construction of it was almost entirely dependent on business deals with Israeli companies. Understandable, perhaps, for the lack of alternatives yet still seemingly hypocritical. Ensuring access to water was another politically negotiation and remains an ongoing issue. Like it or not, from its beginnings and into the future, the success of this particular city is will be dependent on negotiations with Israel.

What can we conclude from all of this? A startup society of Israelis and Palestinians would not be easy. Many might say it is impossible. But perhaps there is hope to be drawn from the comments on Rawabi of Ohio-born Palestinian consultant, Sam Bahour. He thinks not that the idea is fundamentally flawed, but rather than it is before it’s time.[26] If there will come a time for a Palestinian Silicon Valley, perhaps there will come a time for an Israeli-Palestinian microstate: a living proof of humanity’s capacity to build peace through enterprise out of conflict. Experimentation will teach us many lessons and successful cooperation will create a desire for more experimentation. In preparation, the Israeli-Palestinian tech collaboration could prove a herald of things to come and a beacon of hope.

Let them build. Together.

[1] Ibid.

[2] CGTN AMERICA, ‘Israel becomes high-tech startup nation’, Youtube, 2014, (accessed online HTTPS://WWW.YOUTUBE.COM/WATCH?V=O9TTQWSKHAW, 19/77/17). 

[3] Menonl, Jaya, ‘How Israel turned itself into a startup nation’, The Times of India, 2017, (accessed online  HTTP://TIMESOFINDIA.INDIATIMES.COM/TREND-TRACKING/HOW-ISRAEL-BECAME-STARTUP-NATION/ARTICLESHOW/57465402.CMS, 19/7/17).

[4] Ibid. 

[5] Behar, Richard, ‘Inside Israel’s Secret Startup Machine’, Forbes, 2016, (accessed online HTTPS://WWW.FORBES.COM/SITES/RICHARDBEHAR/2016/05/11/INSIDE-ISRAELS-SECRET-STARTUP-MACHINE/#1076DB711A51, 19/7/17). 

[6] Ibid.

[7] Ibid. 

[8] Seal, Daniel, ‘Lessons to be Learnt From “Israel – the Start-Up Nation,” HUFFPOST UK, 2012, (accessed online HTTP://WWW.HUFFINGTONPOST.CO.UK/DANIEL-SEAL/ISRAEL-STARTUP-ENTREPRENEURS_B_1265578.HTML 19/7/17).

[9] Farrell, Maureen, ‘Israel As incubator’, archive.is, 2009, (accessed online HTTP://ARCHIVE.IS/OL9JX, 19/7/17). 

[10] Behar, Richard, ‘Peace Through profits? Inside The Secret Tech Ventures That Are Reshaping The Israeli-Arab-Palestinian World’, Forbes, 2013, (accessed online  HTTPS://WWW.FORBES.COM/SITES/RICHARDBEHAR/2013/07/24/PEACE-THROUGH-PROFITS-A-PRIVATE-SECTOR-DETENTE-IS-DRAWING-ISRAELIS-PALESTINIANS-CLOSER/#754C91643614, 19/7/17). 

[11] Kaufmann, Yadin, ‘Start-Up Palestine’, Foreign Affairs, 2017, (accessed online  HTTPS://WWW.FOREIGNAFFAIRS.COM/ARTICLES/ISRAEL/2017-06-13/START-PALESTINE, 19/7/17). 

[12] Behar, Richard, ‘Peace Through profits? Inside The Secret Tech Ventures That Are Reshaping The Israeli-Arab-Palestinian World’, Forbes, 2013, (accessed online  HTTPS://WWW.FORBES.COM/SITES/RICHARDBEHAR/2013/07/24/PEACE-THROUGH-PROFITS-A-PRIVATE-SECTOR-DETENTE-IS-DRAWING-ISRAELIS-PALESTINIANS-CLOSER/#754C91643614, 19/7/17). 

[13] Ibid. 

[14] Ibid. 

[15] Ibid. 

[16] Ibid. 

[17] Ibid. 

[18] Ibid. 

[19] Ibid. 

[20] Kaufmann, Yadin, ‘Start-Up Palestine’, Foreign Affairs, 2017, (accessed online  HTTPS://WWW.FOREIGNAFFAIRS.COM/ARTICLES/ISRAEL/2017-06-13/START-PALESTINE, 19/7/17). 

[21] Ibid.

[22] Behar, ‘Why So Many Palestinian High-Tech Entrepreneurs Hate My FORBES Cover Story’, Forbes, 2013, (accessed online  HTTPS://WWW.FORBES.COM/SITES/RICHARDBEHAR/2013/08/28/WHY-SO-MANY-PALESTINIAN-HIGH-TECH-ENTREPRENEURS-HATE-MY-FORBES-COVER-STORY/6/#1341B8A54B25, 19/7/17).

[23] Ibid.

[24] Reguly, Eric, ‘Rawabi: A city of dreams for hopeful Palestinians’, The Globe and Mail, 2017, (accessed online HTTPS://WWW.THEGLOBEANDMAIL.COM/NEWS/WORLD/RAWABI-TAKE-A-LOOK-INSIDE-THE-CITY-OF-PALESTINIANSDREAMS/ARTICLE29287005/, 19/7/17).

[25] Ibid.

[26] Ibid.

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