What Houston can learn from the Israeli model to boost entrepreneurship

While Houston is not a Silicon Valley, or even an Austin, it has come a long way in cultivating a small but vibrant entrepreneurial scene in the last decade. But there's always room for improvement, and we might be able to learn some lessons from Israel, of all places. First, there is this conclusion from an Economist article on the mostly-sad story of government strategies for cultivating entrepreneurship:

The country that has led the world in promoting entrepreneurship has also done the most to plug itself into global markets. The Israeli government’s venture-capital fund, which was founded in 1992 with $100m of public money, was designed to attract foreign venture capital and, just as importantly, expertise. The government let foreigners decide what to invest in, and then stumped up a hefty share of the money required. Foreign venture capital poured into the country, high-tech companies boomed, domestic venture capitalists learned from their foreign counterparts and the government felt able to sell off the fund after just five years.

Last year Israel, a country of just over 7m people, attracted as much venture capital as France and Germany combined. Israel has more start-ups per head than any other country (a total of 3,850, or one for every 1,844 Israelis), and more companies listed on the NASDAQ exchange, a hub for fledgling technology firms, than China and India combined. It may not have the same comforting ring as “the Swedish model” or “the polder model”, but when it comes to promoting entrepreneurship, “the Israeli model” is the one to emulate.

What's Israel's 'secret sauce'? This book review from Newsweek lays it out:

How does Israel—with fewer people than the state of New Jersey, no natural resources, and hostile nations all around—produce more tech companies listed on the NASDAQ than all of Europe, Japan, South Korea, India, and China combined? How does Israel attract, per person, 30 times as much venture capital as Europe and more than twice the flow to American companies? How does it produce, for its size, the most cutting-edge technology startups in the world?

There are many components to the answer, but one of the most central and surprising is the Israeli military's role in breaking down hierarchies and—serendipitously—becoming a boot camp for new tech entrepreneurs.

While students in other countries are preoccupied with deciding which college to attend, Israeli high-school seniors are readying themselves for military service—three years for men, two for women—and jockeying to be chosen by elite units in the Israeli military, known as the Israel Defense Forces, or IDF.

I goes on to detail the elements of the military culture there that carry over into the entrepreneurial world: innovation, improvisation, flat, anti-hierarchical, informal, flexible, multi-disciplinary, diversity, challenging, meritocratic, and intense 'crucible leadership experiences' to forge deep social bonds and networks that are later leveraged to create startups.

Now obviously Houston (or Texas or the U.S.) won't be instituting mandatory military service anytime soon. But could we form a local civilian corps of high school and pre-college youth to create a similar environment, focused on tough social problems and charitable work. If we modeled the corps on Israel's military culture, and made sure to craft the experience to be very attractive to college admissions departments, there's a lot of potential here to attract youth, work on some of the city's toughest problems, and cultivate a generation of entrepreneurs to add economic vibrancy to our city for decades to come. Oh, and we could match them up with older philanthropists and retirees to provide both funding and mentorship.

Combine that with new sources of local venture capital, and we could really turbocharge the local startup scene. I'd love to hear your thoughts on how we might structure such a corps and the problems it might work on in the comments.

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Houston's Already Successful

I wouldn't worry about Houston.

While every econ dev authority across the country is now creating its me too energy technology story, Houston's is already in place. And not just oil & gas. You've got two major wind farm developers plus a lot of energy finance experts.

Houston's already got a far more interesting economy than other fast growing cities like Atlanta, Dallas, or Charlotte.

I would love to have Houston's economy here in the DC area. After a brief stint of innovation in the 90s and early 2000s, we've reverted back to government and government contracting ways, it's depressing and disturbing.

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mandatory military service?

Comparing the Mandatory IDF service, and social/charitable service, seems like comparing Dick Cheney to The Dali Llama, because they both use oxygen, and are bipedal.