Does the Start-Up Nation brand need a rebrand? - with Yonatan Adiri and Yael Wissner Levy

Dan Senor

Over the past couple of years, Call Me Back has grown into something much bigger than we ever expected. A place for clarity, context and honest conversations at a time when those things can seem hard to find. That's what ARC Media is all about. Building a truly independent voice, which means no one shaping what we say or how we say it. To help support our rapidly expanding operations, we created Inside Call Me Back our members only feed. If Call Me Back has been meaningful to you and you want to be part of what we're building, I hope you'll join us. You can subscribe@ark media.org or through the link in the show Notes and to our insiders.

Host/Interviewer

Thank you.

Dan Senor

You are listening to an ARC Media podcast. It's a real politique analysis. It's like yes, Israel's unpopular, yes there's a lot of noise around Israel, but but we kind of need Israel. And I think that transcends that's in the tech scene, that's in capitals, in countries around the world that wanna make sure they have a good intelligence, strategic and military relationship with Israel. So it's less romantic, it's less quote unquote about shared values and it's more about what can we get out of this relationship, do we need it? The brand hasn't expired. For cold blooded strategic decision makers sitting at top companies or or sitting atop governments, I think with the quote unquote public, it's a different situation.

Host/Interviewer

It's 7:00pm on Thursday, July 2 in Israel. It's 12:00pm on Thursday, July 2 in New York City where we Americans are preparing to celebrate and honor the 250th anniversary of our nation's founding and independence. So much to honor and celebrate. It's also why we are taping this a few days early and bringing you one of the most popular episodes of one of our other ARC Media podcasts, what's yous Number? What's yous Number covers the outsized impact of Israeli companies on the world stage and the latest developments affecting Israel's own economy. It's co hosted by Yonatan Adiri, an Israeli entrepreneur and a former advisor to Shimon Peres and Yael Wisner Levy, chief Communications Officer at cybersecurity company Tenzai and a former speechwriter and journalist herself. Yonatan and Yael asked me to be their guest on their what's yous Number Podcast in a different capacity than when I host Call Me Back. They wanted me on in the capacity as co author of the book Startup Nation the Story of Israel's Economic Miracle, which I co wrote with Saul Singer over a decade and a half ago. Yael and Yonatan put me on the spot about whether Israel can still be considered a startup nation and if that brand and the reality behind it are

Dan Senor

in trouble, especially as it seems that

Host/Interviewer

the walls are closing in on Israel from just about every corner of the world.

Dan Senor

It was a spirited conversation, forcing me

Host/Interviewer

to ponder some issues and challenges facing Israel that I typically don't get to kick around in my other conversations on Call Me Back before this conversation, I want to say a few words about my friend Zaki Jamal from Tel Aviv, whose life was tragically cut short a few months ago. He was just 38 years old. A memorial service was held last week for him in New York City as he had many friends and investors around the world who could not be at his funeral in Israel. I got to know Zaki through his venture fund, where he backed some of Israel's most innovative startups and mentored promising Israeli entrepreneurs. Zaki was also civically engaged, working with organizations like ISRAAID around the world and also working locally on efforts to deepen Jewish Arab Israeli ties inside Israel. Zaki was in New York City when he suddenly died. During that visit, he sent me a white paper he had been working on titled Becoming Indispensable National Security, Interdependence and Israel's Next Economic Chapter. He wanted to meet to discuss the paper. We never did get together on that trip, but Zaki's paper was still in draft form. With this paper, as with everything he did, he was always building for Israel's future, thinking about Israel's future, brainstorming about Israel's future, believing in Israel's future, including literally right up to the day he died. We will link to that draft in the show notes, as my sister Wendy Singer, who was helping him with the paper, has since published it in the Times of Israel. We will also link to the memorial service for him. If you want a model for having impact, including through the private sector. Zaki's life was as impressive a model you will find. May his memory be for a blessing. Now, onto today's conversation.

Debra Pardes

I'm Debra Pardes, the host of Ark News Daily. What's happening in Israel and the Jewish world right now matters, but it can be hard to keep up, let alone make sense of it all. That's why we started Ark News Daily. Every weekday morning, I walk you through the most important news, give you the context you need, and let you know what to look out for next. I don't try to convince you of anything and I don't waste your time.

Host/Interviewer

Don't.

Debra Pardes

On most days I'll be in your ears for about 10 minutes or less. Then you can move on with your day. Hopefully a little bit smarter than before. Subscribe wherever you get your podcasts or follow the link in the show notes. I hope to see you tomorrow.

Yael Wisner Levi

Welcome to the new what's yous Number Podcast. I am Yael Wisner Levi.

Yonatan Adiri

I'm Yonatan Adiri. And we say new because over the past few weeks we've been rethinking the show and a big part of that came from you, our listeners.

Yael Wisner Levi

Right. So a couple of months ago we asked for your feedback. The response was incredible and one message came through very clearly. What you value most are the in depth conversations with business leaders, investors and decision makers from around the world. Those are conversations that help make sense of Israel's economic position on the global stage.

Yonatan Adiri

So basically, starting today, what's yous Number is becoming an interview driven podcast. Each episode will feature a major voice from business, finance, investment or policy and ask them how they see Israel's economy, its opportunities and its challenges.

Yael Wisner Levi

And because we are shifting away from a weekly news driven format, will now appear in your feed once a month with deeper, more focused conversations and with people you don't often hear speaking about Israel's economy. So basically our goal is to bring you fewer episodes but bigger conversations and

Yonatan Adiri

we keep the same theme music. So let's get started. It is Monday, June 15, 2pm Eastern, 9pm Israel. Prime Minister Netanyahu just adjourned his press conference. Supposedly there's a deal with Iran that's been signed. Prime Minister himself said that he is unaware of the final details of the deal. And so we will wait for the next 48 to 72 hours and then the 60 days to see where Israel stands with regards to the deal struck with Iran. Hormuz seems to be on its path to be opened.

Yael Wisner Levi

There's really so much to unpack here and I'm not going to even try to do so because by the time this episode is aired, there will be so many other things to talk about. But I will say, Yonatan, that in the few hours where this kind of news has been floating around, I haven't found one person, not from the left nor the right, that thinks this is a good deal, which is pretty shocking. I think there's a consensus that I haven't found one Israeli that wants to kind of come out and say this is good.

Yonatan Adiri

As the Prime Minister said just A few minutes ago. It's not yet a deal. It is what seems to be sort of a memorandum of understanding. So we'll have to wait and see.

Yael Wisner Levi

As this unfolds, let's dive into today's episode. In 2009, one book changed how the world talked about Israel. Startup Nation, written by Arc Media's very own Dan Senor and his co author Saul Singer, it gave the world a clean, compelling, apolitical story. A tiny country surrounded by enemies with no natural resources somehow became one of the most innovative economies on earth.

Yonatan Adiri

That story traveled. It opened boardrooms in Tokyo, Singapore, Berlin and New York. It was in my trolley as I traveled and built healthy IO. It made Israel and innovation almost synonymous in a way that no government campaign ever could. Fast forward to 2026, though. Israeli startups have raised $50.6 billion last year during a seven front war. Nvidia is hiring more people in Israel than in all of Europe's countries combined. The product, the actual tech ecosystem, is by any measure stronger than it ever was. Since Dan and Sol wrote the book, we've seen the Israeli ecosystem become really second only to the US and to areas in China.

Yael Wisner Levi

And interestingly enough, the brand Startup Nation is in trouble. In a 2024 study of the overall images of countries called the Nation Brands Index, Israel ranked dead last. And that's 2024. The phrase startup Nation, once a golden ticket, now lands differently in a lot of rooms, in a lot of circles. Some are very surprising. And the story of the Startup nation has now become a contested, complicated, in some places, toxic brand. So the ecosystem may be strong and it is empirically speaking, but the brand is not.

Yonatan Adiri

So today we're asking the question that we think matters most right now. Not how do we sell saves Startup Nation as a story, but what is the new story? And we're asking it at the most consequential technological moment since the Internet itself, the AI revolution.

Yael Wisner Levi

Well, Dan, Senor, after that, big intro. Welcome.

Dan Senor

Geez, quite a setup, guys. You told a great story. Dan, tell us why we're now screwed and what you're going to do about it.

Yael Wisner Levi

Exactly. I mean, you can back out.

Dan Senor

We're already taping. There's no backing out.

Yonatan Adiri

We can deep dive into today's conversation. Dan, you know, Startup Nation, as we all know, reframed Israel's identity for a global audience. And I would also dare to say for Israeli entrepreneurs, for over a decade, it was a battle cry, right? We raised money on the back of the story. We knew how to refer to other Israeli companies as a benchmark when it comes to Startup Nation. And the bet was that the world would accept a clean, apolitical story about the Israeli innovation. And that bet paid off for over 15 years. And as we said at the opening, empirically, it is one of the strongest, most resilient tech ecosystems in the world. To understand the impact of the book, how would you define what Israel's image was for the global audience when you guys sat to write Startup Nation?

Dan Senor

When we first thought about writing the book, we wrote it for two reasons. One, we felt that there was this slice of Israeli life that most of the world, including most of the Jewish world, I should add, know much about. If you asked people who'd spent time in Israel or people who hadn't spent time in Israel what their image was of Israel and Israelis, you would get some version of soldiers, Haredim, ultra Orthodox, or like the legacy of the founding kibbutz movement, you know, Israelis working in kibbutzim and moshav's, picking fruit, really. Actually, there was some interesting polling done about this a number of years ago, what people's image was of Israelis and. And for Saul and me, both through the work he was doing writing at the time, he was working as a journalist in Israel, and I had invested in a number of Israeli startups. We knew all these Israeli entrepreneurs that we had worked with or he had written about, and we thought they were some of the most extraordinary people in the world. You guys live and breathe this. You see it firsthand every day, and they're on par, if not in some cases more impressive than their peers around the world. And they are driving Israel's economy. All the growth, all the dynamism in Israel's economy was coming from this segment of the population. And as a percentage of Israel's labor force, it was much larger than those percentages of labor forces, of tech and labor forces around the world, including here in the United States. So it had an outsized impact in what was making Israel grow, what was making Israel so dynamic and nobody knew about it. And we would describe these, like Yale, you know, you mentioned some of these circumstances. It was so perplexing to people when we'd say, you know, Israel's the most important innovation economy in the world outside of Silicon Valley, in the least likely of places, surrounded by adversaries in a state of war since its founding. At the time, no access to natural resources, tiny little country, right size of the state of New Jersey. Like, you tell people this and then you'd rattle off the statistics, right? The highest density of startups in the world attracts more of global venture capital on a per capita basis than any country in the world. More Israeli companies at the time listed on NASDAQ than any country in the world outside of American companies. So we would tell people this, and they'd be like, they were stunned by this data. They were stunned by the improbability of this success story. They were surprised that there was this big ecosystem in Israel that they didn't know much about, this whole community. And then they'd start to say, like, how did Israel pull it off? And that's really what the book was about. The book was less describing what was happening and more about describing how Israel pulled it off and everything I just told you, Saul and I planned for. What we didn't plan for is that the book would be published. Because, as you know, when you write a book and you publish a book, the lead time is so considerable that you don't really know the world in which your book is going to land, what's going to be going on in the world. And the book landed as the shock of the global financial crisis was making waves all over the world, and many governments around the world, many business leaders around the world were looking for ways like what is the secret sauce? To get more innovation in their economies and therefore more productivity growth, rather than just relying on different kind of financial instruments and financial innovations. Every government, it seemed, every country, wanted their own Silicon Valley. And so they would say, well, how do we do it? And they would say, well, Silicon Valley has its unique set of circumstances. What's another place, say, Israel? Wait a minute. How did Israel, if Israel could pull this off, they're in the middle of a war zone. How did they build the Silicon Valley? So that, oddly, which we couldn't have anticipated, contributed to, I think, a big part of the fascination with the Israel startup nation story, which then resulted in it being published in over 30 languages. I'd like to think that us about our brilliant storytelling and our prose and all of that. I also think it was the timing. The timing was the world economies, economic and business leaders, policymakers around the world, especially around the west, were looking for ways to get some innovation juice into their economies and into their societies. And our book became a way to tell about one place that shouldn't have pulled it off and did, and what others could learn from it.

Yael Wisner Levi

So before the book came out, people had images of soldiers, kibbutzim, ultra orthodox, as you said. What are the images that people around the world think of now? When Israel comes out.

Dan Senor

So I think generally, unfortunately, given the degree to which Israel certainly post October 7th has been covered almost exclusively as a country at war, I think the press coverage has been unfair. But in terms of the way Israel is conducting this war, and I would also say I'm not surprised that most think of Israel as a country at war when it is the most covered war in the international media in our lifetimes. I mean, you can just go back throughout history. There's not another war that has been covered like the Israel Hamas war. Maybe the Vietnam war was intensely covered, but that was before TikTok and social media and satellite news channels and cable channels and kind of everyone having a broadcast center or a supercomputer in their pocket. So the intensity of the coverage means that any image people have of Israel is just going to get swamped, completely eclipsed, overwhelmed by the images of war. So I would be naive to suggest that for most people, especially casual observers, Israel is anything right now, tragically, than a country at war in a very unpopular war. Meaning the way Israel has been portrayed and how it's conducting its war is very unpopular. But it's almost like a Tale of two Cities, because at the same time, that image, I think, exists for most people, people around the world. We can categorize what most is for the global tech sector. Israel's image, I don't think, has ever been better. I mean, if you just see the degree to which many in the ecosystem internationally are doubling and tripling down on Israel. We couldn't have imagined this. We couldn't have imagined it in 2009 when we wrote the book. We couldn't have imagined it on October 6, 2023. And we certainly wouldn't have imagined it at any time over the last couple of years while Israel's been fighting this war, because there have been so many players around the world that were impressed with the Israeli tech ecosystem, but they were somewhat reticent to get involved. That reticence is gone. I mean, I can just walk you through some of the data and some of the examples. It is like the global tech economy has plugged their ears, covered their eyes about all the coverage of the war, and they've made a different decision, which is Israel was once the most important innovation economy in the world after Silicon Valley, and it still is. And it can do things that we, the global tech economy, would say we would have never imagined. When Startup Nation was written, meaning, as bullish as we were on Startup Nation, there were certain areas that even Saul and I didn't believe Israel would be able to prove the skeptics wrong. The skeptics have been proven wrong. So it's almost like two different worlds going. It's like a split screen. If you have the images, you would have a split screen would be the encampments, you know, on US college campuses excoriating Israel. That would be one split screen. And the other half of the split screen would be Silicon Valley investors who've never been to Israel before, paying obscene amounts of money to get plane tickets on LL so they can get to Israel and invest in the latest defense tech company.

Yonatan Adiri

This is something we've covered throughout the year at what's yous Number? Both with the what's yous Number index, the Windex that outperformed both S and P and NASDAQ in 2025 and also in 2026. Year to date it is outperforming S and P and Nasdaq. The what's your number index which is Israeli founded or Israeli based companies traded in New York. You've also seen 2025 being the record year of exits. So the, the peak war year was also that year and a couple weeks ago discussed the strength of the shekel. If there ever was an empirical evidence of inflows of foreign capital coming into the Israeli tech ecosystem, it is the shekel. At 285 shekels to dollar, this is the lowest as it ever were during the war.

Host/Interviewer

War.

Yonatan Adiri

So I think the empirical evidence is beyond reproach and to the critics and to the skeptics, they've been proven wrong. But then we'll talk about it later in the episode today there are some concerns as to how do you preserve that. What's the narrative that gets you there? What's the new battle cry that gets you through quantum, that gets you through AI, that gets you through material science, robotics, areas where Israel has great seeds. But it hasn't yet played a full hand like it has in cyber or defense tech.

Yael Wisner Levi

Add on to that that it's in those areas that Israel hasn't proven itself technologically yet. But even just from the very basic outlook on what's happening. Yonatan just said it. You just said it. Israel is technologically powerful, raised record numbers of capital, but it is politically burdened. And how do you cross that dichotomy between the tech system and ecosystem that is very strong and a very weak political brand.

Dan Senor

So I'm going to, at the risk of rattling off some data just. But I'm going to because I just jotted some numbers down that I think are important. So you know, this is, what's your number? I can't do that. And call me back, by the way, if I, if I start rattling off data like Elon starts like muting me.

Yonatan Adiri

So item on the part is the New York Knicks. So get ready, we want to get your numbers on that as well.

Dan Senor

Yeah, exactly. So I want to rattle off some numbers and then I'll get to your point. So when we wrote the book in 2009, we released the book, the rap against Israel, even after our book came out was, yeah, Israelis are good at startups, but they can't scale up, they can't build big companies that generate a lot of revenue. Okay, so when we wrote the book, I think there was like in terms of companies that had $100 million of revenue, companies with a billion dollars of revenue, like you're talking about like couple of companies, right? Check point, Mobileye, Waze in 2013 exited for a billion dollars, billion plus dollars. But there weren't companies that were generating ser. Okay, so today, you fast forward to today, there are at least 10 companies, Israeli companies that have over a billion dollars in revenue. There are over 50 companies that have over $100 million in revenue. There's like 70 to 80 unicorns in Israel, fourth largest in the world. So that's amazing. You think about it, it's like us, China, India and Israel. Israel by far on a per capita basis has the highest number of unicorns. The size of the exits. Now that was another rap that like, yeah, you know, Israel has interesting little startups, but then they exit really quickly and they never exited a meaningful number. They certainly don't grow to a meaningful number, therefore they don't exit a meaningful number. And as you guys know and have covered on what's your number? Companies like Wiz, Cyberark, I mean these are companies that, you know, 30 plus billion dollar exits each, oh by the way, in the middle of a war. So first of all, just like the scale of these companies, Israelis are building big companies, they are exiting at big valuations and along the way they are generating extraordinarily high, unprecedented for Israel revenues, growth capital, another rap against Israel. There's no growth capital in the ecosystem. It's all super early stage VC stuff. But you can never see like an Insight or a Blackstone or a General Atlantic or a Softbank the way you see at Menlo Park. And now as you know, you go to places like Sirona or you know, Rothschild, it looks like Menlo Park. I mean, take those four Examples, there's one of those now in Israel. And these offices of these global firms are investing billions of dollars at much later stages of the enterprise. So that's a whole new world. And then the size of the rounds. Ten years ago, if you look at all of the Israeli rounds, something like less than 10% of the rounds, you'd see around over $100 million today or last year, 40% of the rounds are over $100 million. So just the size of the rounds, the capital being deployed, the players that are getting involved in Israel at a serious institutional players, and then the size of the companies that are being built is a whole new world. And again, something we didn't cover in Startup Nation because it didn't exist. So to your question, so there's this population that's skeptical about Israel, but we agree that the global business leadership ecosystem, the tech economy, whatever you want to call it, has bought in on Israel. And in fact, as I said, double, triple, quadruple down. I guess the question is, why are they doubling and tripling and quadrupling down. They're doing so because they believe Israel is indispensable, because they believe there's innovation happening in certain sectors, not all sectors, but in certain sectors that make Israel as a partner, indispensable. And so these companies and investors are saying, we don't care that Israel's brand has been battered in the context of a war. We don't care that Israel is unpopular. We need Israel and Israeli innovation to grow and to thrive. And so we're willing to make big bets. It also helps that within the tech scene at many of these companies and many of these venture funds, the whole defense based, military based, security undergirding part of the economy was very unpopular. You guys have talked about the Project Maven catastrophe. I think it was in 2018 where Google employees staged a mutiny against Google because it was gonna do this deal with the Pentagon on this AI based defense target targeting capability and Google backed out of it. I think they backed out of Project Maven. That was the gestalt that was like the Zeitgeist in Silicon Valley. It was very hostile to strength, to power, to geopolitical power, to military power. I can't exactly diagnose why that has changed, but it has changed. And so today all the cool hot venture funds and multinational companies leave Israel out of it. They are zeroing in and backing big anything related to geopolitical power, military power, security opportunities. They're doing it in the US they're doing with the Pentagon. I mean, it is a hot sector. And so they look at Israel and say, well, if we're into this space, we ought to be doing stuff with Israel. And so Israel has benefited by, A, being excellent in this area and B, the change in mindset, I think, in many of these companies and many in the tech sector here in the US in terms of their. They no longer have this hostility to that sector.

Daniel Hartman

Hi, I'm Daniel Hartman, president of the Sholem Hartman Institute in Jerusalem. And I'm Yossi Klein Halevi, senior Fellow at the Sholem Hartman Institute. What's more important? To be feared by your enemies or morally true to yourself? Should Israel strive to be a nation among nations, or should it accept the fact that it is now a fortress apart? What do Israelis and Diaspora Jews owe each other? If you're Jewish or a friend, an ally, these questions have been gnawing at you these past few years. For some of you, like for us, these questions have been keeping you up at night. And for some they've been simmering in the background waiting for answers. But dilemmas don't always have clear answers. What they do deserve are honest and respectful debates. And as it happens, Yossia and I love to challenge each other to get to the bottom of things. We look at current events through a lens that speaks to us most deeply, a Jewish lens. So if today's Jewish dilemmas are on your mind, tune in to our conversation on For Heaven's Sake, a partnership between ARC Media and the Sholem Hartman Institute. You can find For Heaven's Sake on Apple, Spotify, YouTube, or wherever you get your podcast us. See you there.

Yonatan Adiri

So I think overall ideas for countries for companies have an expiration date. Right? The brand only works if there's an audience that is persuadable. Right. And if the people genuinely believe, I think also Startup Nation, as an entrepreneur built two companies out of Israel. We believe that we are the startup nation. It is a genuine call for battle. So the Fortune 500 CTO, that has to explain that this Israeli vendor called Wiz is now going to take control over their cyber protection or the European sovereign wealth fund or, you know, most recently also some Gulf state sovereign wealth funds investing in Israeli funds or directly in companies. Are these audiences recoverable or does Israel need a new audience perhaps in the East, Is it India or other places? What's your take on sort of where the next episode goes for the brand?

Dan Senor

I think Israel has such an uphill challenge right now in terms of its brand. And I don't believe that the startup Nation story ever would have been or could have been the antidot to this kind of challenge Israel is facing. And so I almost think it requires a little bit of a pivot in how we think about it. When I said a moment ago that Israeli innovation is viewed as indispensable to companies, ecosystems around the world, the tech community around the world, as you said, you guys said at the beginning, companies like Nvidia are making this massive investment in building out their capabilities inside Israel. As I said, it's about survival for them. And I think that is how more and more governments are going to view the relationship with Israel. We in the diaspora, I think you guys too in Israel to some degree have always hoped, fantasized, romanticized that people would fall in love with Israel because of the can do story about Israel, the shared values with Israel, a lonely democracy in a sea of theocratic and totalitarian states and the founding of Israel and the building of Israel had so much in parallel in common with the American story. He said it was like a romantic story. And I think now the story about Israel and by the way, I think Startup Nation fit in with that. I should add the can do Israeli entrepreneur that at a time that people also romanticized entrepreneurs here in the United States, there was a time when people here in the U.S. you know, loved the American tech story. Now people are like trying to blow up data centers. For example, when the CEO of Google, Sundar Pichai, just a couple days ago delivered the commencement address at Stanford University, there was a walkout of a large number of graduates in protest of Google. The whole tech economy, tech bros quote, unquote, have now become very uncool. At the same time, they're so indispensable to our economy. And I think that is how more and more people are gonna look at Israel. It's a real politic analysis. It's like, yes, Israel's unpopular, yes, there's a lot of noise around Israel, but we kind of need Israel. And I think that transcends that's in the tech scene, that's in capitals, in countries around the world that want to make sure they have a good intelligence, strategic and military relationship with Israel. So it's less romantic, it's less quote unquote about shared values and it's more about what can we get out of this relationship, do we need it?

Yonatan Adiri

I think you really hit the nail on the head. I think Israel's next tech story, much like, you know, we have our beautiful and wonderful Iron Dome, how does Israel become indispensable? We Call it Marx. Right. We had a conversation about that at the pod. Right. Materials science, AI, robotics, quantum space, and synthetic biology. Each of those offer Israel the ability to be indispensable and build a narrative around its indispensability. But I think that a certain degree, it's very imminent that very strong narratives expire. Right. They have a certain time limit. Is it fair to say? And I'm not sure it's right, sort of. That's how I think about the world right now, with my book that came out and by the way, became a bestseller last week, the best selling nonfiction book last week in Israel. Now, the notion of an imminent expiration of a narrative, do you agree with that?

Dan Senor

I get this all the time. This question, is the Startup Nation brand dashed?

Host/Interviewer

Is it over?

Dan Senor

I don't believe it's over. And I'm not just saying that because Saul and I coined the term so we feel perhaps irrationally loyal. We have a level of fidelity to the term that is otherwise belied by the facts. But I actually don't believe it expired for the following reason. What we were arguing in Startup Nation, and the reason I think the term resonated was because it was a double entendre. We were saying that Israel has the highest concentration of startups and entrepreneurs and all the dynamism we associate with that in the world. That was true. And the whole founding of the modern state of Israel was a startup. Everything we were describing in the book that Israeli entrepreneurs had, Israel's founders had, and Israel's founding generation had. So it was the whole country, the ethos of the country was that of a startup. And I think that that scrappiness, that willingness to just throw a hundred things against the wall to see which one sticks, that kind of being in a laboratory, that mindset still works for Israel, and I think you see it manifest itself in these unpredictable ways. For instance, the reaction we got, and this is going to be counterintuitive, but just bear with me. The reaction we got to Startup Nation 15, 16 years ago in terms of how people were very, like, moved by the story and impressed by it and wanted a piece of it, if you will. I saw the same reaction when, for instance, Israel did the pager attack against Hezbollah. Same reaction. People were like, wow, only Israelis could have pulled that off, right? By the way, I was getting that not only from cheerleaders for Israel in the Diaspora, I was getting that from friends of mine in the Gulf. I was getting that from officials in Qatar. I was hearing that from. I mean, some of These people have family members who are Sunni Muslims that were living in Syria and they hated Hezbollah, whatever. But there was a sense that only Israel could have pulled off an operation like that. So I do think that the brand of like the can do Israeli entrepreneur that can kind of figure any problem out, solve just about any problem, will kind of stick to it in this of trying to solve a problem. To the extent all that was wrapped up in Startup Nation and in the founding myth, if you will, or the founding story of Israel, I think that is still there. It's manifesting itself in different ways, but I think it's still there. The question is who's it there for? I think that's the real question. It's the brand hasn't expired for, you know, kind of cold blooded strategic decision makers sitting atop companies or sitting atop governments. I think with the quote unquote public, it's a different situation.

Yael Wisner Levi

So I hear you and I think I mainly agree. I would ask then, you know, the answer obviously isn't then a better PR campaign because you're saying those that you know are following in respect and know what Israel is worth have been and that's unwavering. But does that mean that we're kind of doomed, quote unquote, to be in this, you know, AI for war, defense tech and kind of that's where we shine forever. Is that our destiny?

Dan Senor

I Startup Nation Central has this, the Finder. That's where we track startups by sector. And I think before October 7th they were like, I don't have the numbers in front of me, but something like 160 defense tech startups registered by the Finder before October 7th. You guys would know better, but I think now the number is close to 400 defense tech startups.

Yonatan Adiri

Makes sense.

Dan Senor

Yeah, yeah. As you know, it's a very hot area. And at a time in which governments around the world, not just the United States, but NATO governments, they're ramping up their defense budget expenditures. They won't publicly say it, but quietly. They all want to buy in into this defense tech sector. They all want to buy into what Israel has been doing. And so I know it's like not what Israelis want to hear and I'm not saying it's the only area of growth, but I do think it is a big reason why governments around the world and different players around the world view Israel as indispensable. I mean, by the way, Yale, I want to say there are other areas like the whole food tech space which has gotten battered, but there are like Interesting things happening in that sector, specifically in Rehovot, where there are hundreds of startups in what we call food tech. I mean, it's sort of a loose term to cover a lot of things where all these biologists are leaving Weizman Institute and starting companies. I know for instance, various Gulf countries that are very worried about food security and they are very dependent obviously on the import of food. And they see the Israeli food tech sector as indispensable a sector for them, as many governments around the world see Israel's defense tech sector. And they are exploring all sorts of arrangements with different Israeli food tech startups. So it's not just war and cyber and drones and the AI underneath all of that. I know it makes a lot of Israelis uncomfortable. Are we just going to be the war fighting tech economy? I think there are other sectors that are doing well, but I think the biggest and hottest right now for the time being will be the defense tech sector. And I think that's okay when I say defense tech, including cyber in that.

Yonatan Adiri

But Dan, I think it doesn't have to be mutually exclusive. I think Israeli indispensability is critical. You recorded an episode, I think it was almost a year ago with Scott Galloway on the brand and on sort of how does that end up with the audacity that Israel had to go into the 12 day campaign about a year ago? I think almost to the day. I think that given time, the audacity, the Israel that defends itself and sort of how the Middle east would realign does the India, uae, Israel alliance strengthens and Israel wins this new friendship in the region, Azerbaijan, Greece, Cyprus and so on. The audacity that Israel had to reimagine redesign the Middle east in a different way. You know, I don't think it's mutually exclusive from the brand over the long term.

Dan Senor

You know, there was a time where there's this whole category of diplomats at the State Department, the US State Department called the Arabists.

Host/Interviewer

Right.

Dan Senor

And the Arabists at the State Department would basically argue to US Presidents that we need to place our bet with the Arab world, not with Israel. You may have this idealistic view of the founding of the state of Israel and the importance of the US partnering with the state of Israel as it grows. But it's a stupid bet if you do that, Mr. President, because the Arab world is what is indispensable to us for a whole variety of reasons. A just their sheer size in the region, both population and land mass, and then obviously their energy resource that made the relationship with The Arab world indispensable. That whole relationship I talked about is about to be reversed or inversed, which is now the bet. If you said to an American president, let me give you the attributes of America's allies around the world. Let me describe, let's do like a balance sheet based on what Israel offers the United States. There's no question to me that Israel is certainly a top five ally. I could make the case number one or number two. In other words, there's no other country that provides the US the security, arms and legs that Israel does in a critical region. The intelligence capabilities in a critical region. And as we're talking about the economic innovation partnership to their respective private economies. I mean, what other country delivers anything like that in so many realms? I actually think there's not a single one. But to make that argument, again, it makes people uncomfortable cuz it's very transactional. As opposed to saying to that same where that American politician's gonna respond by saying, yeah, but I've got people storming the streets at the town hall in my congressional district or on my presidential campaign when I'm in Iowa, New Hampshire, telling me I'm supporting genocide. And so. But I do think that is the world we're heading into.

Yonatan Adiri

By the way, the Pentagon said it very outspokenly in one of our Words of the Week episodes. The, the framing of Israel as a model ally in the Pentagon plan and you know, very explicitly explaining to its other allies. Here's what you can learn from the way Israel. Yeah.

Dan Senor

Be like Israel.

Host/Interviewer

Yeah.

Yonatan Adiri

In a very explicit way. Right. Which was not to be expected at that point.

Daniel Hartman

Yeah.

Yonatan Adiri

So I think, Yeah, I think it very much aligns with your, with your thought process here.

Dan Senor

Can I ask you guys something though, because you're closer to it. The question of, see, always the podcast host at heart. I'm going to hijack the microphone. Does the brand hold up because the startup nation economy isn't holding up? Yeah, you scratched that there. And I dutifully dodged the question. But I feel now some semblance of responsibility that we shouldn't totally dodge the question. And it's a question I don't have a great answer to because I hear so many different things. On the one hand, you have the CTO of Nvidia living in Israel. You know, because of Nvidia's acquisition of Mellanox, he stayed in Israel and he's what he's building in Israel and the investments Nvidia is making in Israel is extraordinary. So you see that and you think how Does Israel not have an AI story? And there are many other examples like that. On the other hand, there are plenty of people sounding the alarm in Israel that Israel does not have the data infrastructure. Israel does not have a AI foundational model. And there's real risk that the IDF is not keeping up on the AI front, which is where so much of Israel's tech talent comes out of. And if they aren't keeping up with the future of the tech ecosystem, then if Israel's economy is a tech ecosystem and it's not keeping up in the future of where the world is going, Israel's in big trouble.

Yael Wisner Levi

So I would just say add one more dichotomy to that which I don't think made your list, is that even if you peek out of this AI tech discourse, there's like real internal challenges that Israel is facing. We talk a lot about the double triple economy here in Israel. The, you know, the ultra orthodox and the rest of the working class. And then within the working class you have the tech people, which Yonatan and I are very much embedded in. But you know, we know we're in our bubble. We know that, you know, the rest of the country doesn't enjoy all of the fruits of that and we're, you know, on the just a few months away from elections and I don't even think tech and so forth is on the agenda. It is a bit here and there, we hear some leaders talking about it, but it's very far down on the list of things that are, you know, people are going to go to the ballots for.

Yonatan Adiri

I actually think there are some concerns. There is a conversation this week with the industry at the Minister of Finance to discuss their strong shekel and what that does. Part of it has to do with brain drain risk after the next election. So that's a big risk. I do think the government took a couple of great initiatives. For instance, General Lascal heading up a new government office called the National Artificial Intelligence Headquarters, which we featured on what's yous Number A few episodes back, is really gearing up to some serious action with a billion dollar budget allocated to it this year alone. This is now top of the agenda during the war, right? There has been very interesting use on the top layer. I agree with you Dan. No foundational model. The one thing I'm really worried about happened on Saturday and that is the weaponization of the foundational models. Like Claude, right? I was working on my Claude 5 super happy and I was like, ah, blocked. You're not an American citizen, don't get me started.

Dan Senor

I was. My, My wife was going crazy about this. That, like she was working on it.

Yonatan Adiri

Yeah.

Dan Senor

Some of her work was sitting on it and then it was just gone.

Yonatan Adiri

Israel's tech ecosystem is very exposed to that. Right. Non American employees of American companies could not use Claude Fable. Right.

Dan Senor

Right.

Yonatan Adiri

To me, America reached escape velocity, and those who are not on. On the good side cannot escape with it. That's a massive risk to the Israeli tech ecosystem and the startup nation, broadly speaking. And I hope that's not the case. I hope it gets sorted out. But if that turns out to be the case, that foundation models are going to be limited for national reasons and Israel is out of that garden. That's a pretty big deal for the tech ecosystem.

Dan Senor

And Israel is so behind on developing its own foundational model.

Yonatan Adiri

Yeah, yeah. There is now an MoU on developing also supercomputer in Azerbaijan, which I think is really a great idea for Israel broadening its villa in the jungle concept and opening up to India, uae, Azerbaijan, Somaliland. President is here today. Ethiopia, Greece, Cyprus. Being able to also deploy tech in the service of this diplomacy, as we're doing right now in Azerbaijan, is, I think, a step in the right direction. But I am concerned because the UAE is dealing with China and with the us. Egypt is dealing with both, Saudi is dealing with both, Qatar is dealing with both, but Israel can't. And so I hope this is not a turn that is indicative of where we're going in terms of access to the foundational models, the American elite foundational models.

Dan Senor

I mean, in terms of brain drain. And Elon and I often argue about brain drain. He thinks it's a big problem, especially after the last couple of years.

Yonatan Adiri

Not yet. Yeah, it's not there yet.

Dan Senor

Yeah, I don't think it's a big problem yet. But one area where I'm concerned about it. So Yael just mentioned tensions within Israeli society. Not everyone has access to the fruits of the tech economy that you do and your families and peers do. And then also there's this just frustration about people serving, you know, tour after tour of miluim. I mean, it's just endless. And there's a whole segment of the population that doesn't. And the unfairness of it, not to mention that segment is not contributing to the economy. So people have just, like, had it. And we hear that sense of like, they've had it, they're leaving again. I'm dubious that. That they've had it to the degree that they're gone and not coming Back. I think there's a long history of Israelis leaving for a couple of years and then coming back. It's what Saul and I talked about in Startup Nation. It's not so much brain drain, it's brain circulation. But back to this AI point, I have heard some very impressive young Israeli technologists who've come out of the most impressive units, you know, shimona mataim or Talpiot 81. I mean, you guys know all these units well. And they say the future is AI. That's where we want to be training and we can't do it in Israel. So we love Israel. They will say we want to build our lives in Israel. Yeah, we're annoyed that the Khaleedim aren't serving the army and we've been called back for tour after tour, but we'd still be willing to say they have a different gripe. Their gripe is, where do I train on a model? I can't do it in the country I want to live in. So I'm going to go to San Francisco. Yeah, and that's an area of brain drain, because talk about losing if that happens. The absolute best and the brightest, no doubt.

Yonatan Adiri

And Dan, if you are not just fresh out of the army, if you are 35, you just finished the mortgage on your apartment and your shekel is worth 25% more, you rent out your place here and you go to the US and you live in San Francisco, you do your AI, which is now nationalized. All elements point into that direction. I am very optimistic though, in that sense that the January forming of the government would see this as a major piece of how does it realign, Be it Netanyahu coalition or another coalition, I do not expect the next government to not address those issues. And if it won't, it won't last more than one year. And then there will be an end to end expiration of the political class that has dominated Israel in the last 20 years. I think this is one test they cannot fail. As you guys know, I'm personally committed to that. I'm doing a lot of work in that political field and I'm seeing that really taking shape. So I think the penalty for not dealing with that come January is going to be very, very aggressive towards the political class.

Yael Wisner Levi

All right, Dan, so here's now the trillion dollar question. Now that we have trillionaires walking among us, you coined Startup Nation, the term. So if you have to coin now a new phrase that replaces it, the one that a 25 year old engineer in Sao Paulo would find compelling in 2030. What is it? Wow.

Dan Senor

All right, Yale, I don't want you to think this is a cop out, what I'm about to say, okay? I would stick with Startup Nation because I mean, the only other characterization of reality is that the Startup Nation has matured. So it's scale up Nation, but I hate the term scale up nation. So in a world in which people around the world still root for the underdog, which I think is the case, Startup Nation is still an underdog versus maturation nation or scale up nation or whatever awful, very non romantic term I could come up with. Startup Nation still represents this scrappy problem solver taking risks to solve problems. And so I would stick to that. I think the challenge is almost out of the control of Startup Nation. And what I mean by that is there are events going on that are much larger than what is going on in Israel's innovation economy that are going to define Israel's brand. No matter what is going on in Israel's innovation economy or any other part of Israeli society, the global trends. Are people's reactions around the world fair or unfair to the current Prime Minister of Israel? Right. That he's a polarizing figure, or to the President of the United States who's a polarizing figure, who's generally viewed as having locked arms with Israel, which depending on how you feel about the president, that in and of itself has a polarizing effect. Daily news coverage of Israel, war fighting on multiple war fronts. There's nothing an average Israeli can do about that. There's nothing an Israeli entrepreneur can do about. These are macro trends, meaning who are the leaders of Israel, who are the leaders of the United States and their attitudes to Israel and the way that triggers people around the world and what is the general news flow around Israel? I think trying to overcome those forces is not about some branding campaign and it's not about some PR campaign. So stick with the one that brought you. Startup Nation has served Israel damn well. And I think in a world in which there's news flow and polarization that that average Israelis cannot do anything about, just stick to what has worked. And the reality is in terms of influential decision makers around the world, be it economic decision makers, military decision makers, or political decision makers, they have been betting on the Startup Nation and I

Yonatan Adiri

think they'll continue to sober optimism. There we go.

Dan Senor

All right, guys, enjoyed the conversation, enjoyed having an excuse to catch up with you and kind of think through some of these things that I've been thinking through on my own. And I'm Looking forward to the new format. I know we've been talking about some of the interviews you are lining up and let's just say they are very compelling and big gets in the world of guest bookings. So I look forward to listening to those interviews.

Yael Wisner Levi

We're excited.

Yonatan Adiri

Thanks Dan. Excited.

Yael Wisner Levi

Thanks Dan.

Yonatan Adiri

This was great. You know, new is great. These changes are, you know, they raise the expectations, they raise the bar. I'm looking forward to the next episode and we're still a bit in the fog of war here, so let's see how that turns out.

Yael Wisner Levi

Welcome and goodbye from our new format of what's your number? We'll see you soon.

Yonatan Adiri

This podcast offers general business and economic information and is not a comprehensive summary for investment decisions. It does not recommend or solicit any investment strategy or security.

Dan Senor

Hi, it's Dan Sinor. Israel is heading into one of its most consequential election and this time the whole world is watching closely. Hot takes and daily noise are pretty much guaranteed to populate your media diet. But as with any election, there's a deeper story about identity, religion, democracy, and what kind of country Israelis want to live in. That's why ARC Media launched Israel Votes, a special initiative across Call Me Back for Heaven's sake and Ark News Daily. You'll hear from the leading candidates shaping the race along with analysis and reporting from two of Israel's leading political analysts, ARC Media contributors Nadavael and Amit Segal. Join us for Israel Votes, your front row seat to the election that could define Israel's Future. Go to arkmedia.org votes to watch and listen. See you there.