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Israeli Defense Force Reservists train in the Golan Heights (Photo courtesy of Reuters)
Despite being treasured for marveling landmarks and a rich legacy of power, Israel is often depicted as a severely war-stricken nation, grappling with a deep and pervasive history of sociopolitical struggle.
If you casually type Israel into a
Israel has the highest concentration of startups outside of Silicon Valley. Regarded as “Startup Nation”, Israel also boasts the most companies listed on the NASDAQ of any foreign nation. Fewer than 1% of startups in the United States manage to scale and expand, compared to 4% of new businesses in Israel. This success rate is, in large part, attributed to Israel's seamless relationship between mandatory military training and an evolving culture of independence that encourages a desire to disrupt existing industries and redefine the modern marketplace.
In Israel, when young men and women reach 18-years-old, they are required to enter into public service, which for many leads to military service. As millions in the United States are preparing to enter their first year of college, young people in Israel are preparing for their first year of combat. While formal education effectively expands individual perspectives of the world and equips people with the skills to master specific business segments, military training alternately instills several of the core competencies needed to mold transformative leaders. As a result, by the time Israeli men and women exit the service to enter the workforce, they're able to apply specialized studies to real-life scenarios that creates a competitive edge when starting a business.
As a key driver of Israel's startup movement, Logz.io is an open-source, log analytics software company, delivering collaborative data and real-time insights needed to help progressive businesses scale quickly and sustainably. Logz.io uses a multi-tier data-ingestion pipeline to securely process log data. After data is collected, the information is tagged to identify specific customers, then filtered and enriched with metadata for effectively targeting and engaging customers. These insights are then compiled and assigned to a dedicated storage, from which licensed users can search, aggregate, and customize analyses specific to their business objectives.
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Based in Tel Aviv, Israel and founded by decorated Israeli military veterans, Asaf Yigal and Tomer Levy, Logz.io has been instrumental in turning startup nation into scale up nation. As experienced entrepreneurs, Yigel and Levy leverage the practices and principles learned through Israeli military training, translating them into tangible insights and strategies used to guide forward-thinking founders.
I spoke with CEO and Co-Founder Tomer Levy about the vision behind the platform, the intersection of combat and commerce, what inspired their approach and the keys to successfully scaling businesses in the modern world.
What makes military training such an effective approach to training current and future business leaders?
Tomer Levy: When you are leading teams and groups in an ever-changing environment at the age of 18 or 19, and have to do things like solve complex problems independently, delegate authority, build strong trust between team members and even improvise, you gain valuable experience that shapes your way of thinking very early on. By the time people go to a university after the military, they already enter with “business” experience. As a result, the education they receive becomes more effective, because they are not simply learning theory alone, but are also reflecting on how the theory relates to their past experiences.
In many ways, most people can understand the connection between training military leaders and business leaders, but what specific aspects does your approach teach people about building and scaling a business?
Tomer Levy: The military teaches people how to grow and scale. In the Israeli military, I started as a single contributor, and a few months later, I was running a 24-hour, mission-critical operation that required multiple teams to work together, grow, and solve conflicts under pressure. I’m not sure there are many places you can have that profound experience at the age of 18. Though this experience is not directly business-related, it helps to shape a person’s leadership skills and thereby prepare him for future leadership roles.
Israel isn’t often recognized or credited for having a thriving startup culture – How do you describe the energy of entrepreneurship and its role in shaping your business?
Tomer Levy: The numbers show that the Israeli startup community continues to grow and thrive. I think there are several reasons: First, there are now more angels who can fund and nurture seed-level startups -- these people are mostly startup founders who were successful in the past and can now support the next generation of founders. There is also a growing group of executives who have gained experience in successful Israeli companies such as Waze, Wix, and Check Point -- where I used to work. These people are joining startups that want to scale and taking on business roles in marketing, business development and sales.
Today’s do-it-yourself economy empowers anyone to build a business, but few can grow and audience — How important is focusing on traction and scale vs. fundraising?
Tomer Levy: We’re obsessed with our users and what they do, think, and experience in their day-to-day work lives. Before we wrote the first line of code of our log analysis platform, we had already spoken with potential users at roughly 50 different companies to learn about their pain points and test our hypotheses with them. Early on, we started to put our thoughts online through blogs and social media discussions as well as run meetups that helped us get direct feedback from the community. By the time that had we released our beta product, we had already published many guides, tutorials, and opinion pieces that are based on what we have learned from the community, and we have gained a consistently growing audience as a result.
Fewer than 1% of startups in the United States achieve success while 4% of Israeli companies prove successful — What allows startups in Israel to see such a higher success rate?
Tomer Levy: For me, the most important thing that fuels the ecosystem is the culture of Israelis to question every little thing and not take anything for granted just because someone senior or more experienced said so. This culture has helped us to look at problems that people may think are too complicated to solve or would require too much effort and then tackle them head-on. In addition to that “chutzpah” attitude, the amount of available capital, the high number of phenomenal engineers, and everyone’s prior military experience are what collectively result in many successful startups in Israel.
What specific aspects of business development does this method of training emphasize and enhance the most?
Tomer Levy: First, it teaches accountability -- no one is untouchable. Following every operation or exercise, there is an inquiry in which the military asks what went right and what went wrong -- and why. People in positions, ranging from prime minister to defense minister; generals all the way down to unit commanders have had to resign following such inquiries. Successful startups need to act in a similar way -- being able to see what is working and what is not, then pivot as quickly as necessary.
Second, it shows people how to lead by example. In battle, Israeli commanders do not stay at the back and shout orders -- they are on the front lines with their soldiers. After all, an officer must be confident that his strategy is correct. More significantly, the Israeli military culture is designed to create such leaders. The IDF has a relatively lean command structure compared to those of other countries. The reason is that Israel is so small that a unit might not have time to receive instructions from headquarters before a life-and-death decision must be made. Therefore, the commander needs to be empowered to make the call when necessary. In doing so, he leads by example and inspires others to do the same. The ability to think and act quickly while inspiring a small team is critical in startup life.
Third, it encourages teamwork and collaboration. Compared to the western, individualist mindset, research shows that Jewish people -- especially in Israel -- have a more collective mindset. Traditional companies are obsessed with hierarchies and titles and statuses while Israeli startups are better described as a level, gigantic team. The Israeli military minimizes hierarchy, and so does the startup world. Micromanagement has no place in either. Everyone works together to get stuff done without worrying about who is who’s boss or who is “higher” than someone else.
How would you describe Israel's economic evolution and what can entrepreneurs take away from this progression?
Tomer Levy: Israel is moving from being the Startup Nation to the Scale-Up Nation. On the financing side, I think VCs, building on past success, now have more money to grow companies to become independent and successful. We feel it at Logz.io. Our VCs want to help us to become the market leader in the log analysis software space. With more available talent, seasoned entrepreneurs, and money to fuel long-term growth, Israel is now building a growing number of large independent technology companies. I think that in the coming years we’ll see this trend of successful, scaled-up companies growing even further.
As the economy continues to evolve and more entrepreneurs emerge — Do you see a huge migration of talent moving into Israel?
Tomer Levy: I think that Israel has a growing community of talent not only on the technology side, but also on the business side. However, the business center of gravity is still in the United States, and we see entrepreneurs and senior executives moving there to be closer to the market and set the business headquarters of the companies close to the customers. We’ve contemplated a lot about where to set up the base for Logz.io and decided to build build our business headquarters in Boston. It has lots of inside sales talent from companies such as Hubspot, Datadog, and Zerto.
How are the developments in Israel’s business culture and economy mirroring the progress happening on both a social and political scale in the country?
Tomer Levy: It’s important to remember that twenty percent of Israeli citizens are Arab Israelis, and investments in Arab Israeli-founded startups are often underreported. Here is one example: Nazareth, a northern Israeli city that is predominantly Christian and Arab, is the startup hub of the Arab world. There is an educational program there to nurture Israeli-Arab startups. Until today, the positive impact of the high-tech industry had been mostly limited to a few sectors. These changes are starting to spread the impact of the high-tech bloom to other sectors, and that is cultivating a great change.
