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The Magic of Israel’s Success – Inbal Arieli

The Magic of Israel’s Success – Inbal Arieli

Real Talk: The Charles Mizrahi Show podcast

The Magic of Israel’s Success – Inbal Arieli

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It’s a world leader in tech entrepreneurship and has the highest concentration of start-ups per capita … But how did Israel become a hub of rapid innovation? CEO and tech entrepreneur Inbal Arieli says it starts during childhood. She sits down with host Charles Mizrahi to explore how Israel’s unique way of raising children creates independent thinkers and fearless innovators.

Topics Discussed:

  • An Introduction to Inbal Arieli (00:00:00)
  • The Magic of Israel’s Success (00:04:12)
  • From Playground to Tech (00:07:02)
  • The Jewish Holiday of Teamwork (00:18:31)
  • Israeli Entrepreneurs (00:25:45)
  • Unit 8200 (00:31:32)
  • Thinking Differently and Embracing Failure (00:36:13)
  • The Value of Diversity (00:41:59)
  • Israel’s Lunar Mission (00:47:13)

Guest Bio:

Inbal Arieli is an entrepreneur, investor, and author. She earned her MBA from Tel Aviv University and served in the Israel Defense Forces’ elite intelligence corps — Unit 8200. Arieli has since served in various executive roles in Israel’s tech sector and is the founder and CEO of Synthesis, a global leadership assessment firm.

Arieli has been named one of the 100 most influential people in Israeli tech and one of the top 100 tech business women speakers in the world. Her latest book (below) explores why Israel is a leader in innovation.

Resources Mentioned:

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Read Transcript

INBAL ARIELI: Less Israelis solved correctly the math challenge. In math there is one answer at the end. So less of them solved it correctly. But from those who did solve it correctly, there were over ten times more ways of solving the problem than the Singaporean ones.

 

CHARLES MIZRAHI: My guest today is Inbal Arieli. Inbal served as lieutenant in Unit 8200, the Israel Defense Forces Elite Intelligence Corps. Unit 8200 has turned out thousands of tech savvy entrepreneurs that went on to found their own tech companies or to occupy leading positions in established ones. She’s also the author of Chutzpah: Why Israel Is a Hub of Innovation Entrepreneurship. Despite being a tiny country, Israel has the highest concentration of start-ups per capita in the world. Dubbed “Silicon Wadi,” Israel ranks third in the World Economic Forum’s innovation rating. I recently sat down with Inbal and we talked about what led to these remarkable achievements and what secrets do Israeli tech entrepreneurs know that others can learn?

 

CHARLES MIZRAHI: Inbal, thanks so much for being on the show. I was looking forward to it since we spoke last week and really excited to have you here.

 

INBAL ARIELI: Same here, and thanks for inviting me.

 

CHARLES MIZRAHI: Okay. So there’s been so much over the past couple of years, I think since the book Startup Nation, which showed Israel as a technological marvel in terms of its entrepreneurship, its place in ranking in the world, in terms of innovation. I think you had in your book there’s one startup for every 2,000 people, or something to that effect.

 

INBAL ARIELI: Even more than that, yes.

 

CHARLES MIZRAHI: Even more than that, okay. So your book is written from a totally different perspective. Your book is called Chutzpah: Why Israel Is a Hub of Innovation and Entrepreneurship. So before we go forward, what does chutzpah mean?

 

INBAL ARIELI: So it depends who you ask. If you ask an American or someone who is actually an outsider looking into Israel, chutzpah would mean audacity and daring and being proactive and creative. If you ask an Israeli, chutzpah — so slightly differently pronounced. Chutzpah for us Israelis is actually rudeness. So the word has two different meanings, but I actually think there’s something in common. And that is that if you take the mindset of chutzpah and put it on the right tracks, it’s a very positive attribute actually.

 

CHARLES MIZRAHI: Excellent. So your book starts from a different premise. You basically say it’s nothing to do with the water or the air of Israel. I think it’s the number one country, or second, with the most companies on the Nasdaq stock exchange? Was it number one?

 

INBAL ARIELI: Number three. U.S. is number one. China is number two. Israel is number three.

 

CHARLES MIZRAHI: Okay. And after China a lot of them were de-listed, so probably Israel’s number one now. So you went … and before I even go on, you’re an entrepreneur yourself and also a tech innovator, right? So could you give me a little brief background? I think you were in Unit 8200, right?

 

INBAL ARIELI: So in my military service, I served in 8200 — the equivalent of the NSA in Israel. And later on started my professional career in the tech ecosystem in Israel, for the first decade of my career as a general counsel. So I’m a lawyer by practice, but again in the tech ecosystem. And then for the second-plus decade of my career, over 15 years above my legal practice, as an entrepreneur myself and as an investor also.

 

CHARLES MIZRAHI: Okay. So you’re pretty invested in the tech world of Israel. So you went and said: “Alright, what is it about Israel that has so much innovation?” The number one place, I think number one, where there’s the most startup capital going into, is that right? I remember you had a whole bunch of things in there. The second most companies on Nasdaq after the United States, tremendous innovation from a country with very, very little resources in a terrible neighborhood of the world. What’s the magic sauce? So you went ahead and you said the magic sauce is the children and how they’re raised. Is that more or less what you came up with?

 

INBAL ARIELI: Yes. Yes, indeed. So from an insider’s perspective, I would say, yes, the military plays a very important role in our lives here in Israel — in terms of innovation and in terms of access to technology and in terms of development of leadership skills. Correct. However, it’s not something that starts at the age of 18, just like that, when we join the military. My thesis is that we actually join the military at 18 — military or a gap year or social service, by the way, all different frameworks that exist in Israel. But we join them at the age of 18, equipped already with a unique toolbox or unique muscles that we have developed throughout our entire childhood in Israel. And then when we reach these frameworks at 18, there’s just even more stage to showcase and use these soft skills. But it’s something that we’ve actually fostered from a very, very young age.

 

CHARLES MIZRAHI: So the foundation is built while the kids are in nursery school or the way they’re raised. And by the time they get to be 18 and go to military service or to public service or whatever it might be, they already have the framework to go ahead and take the next step — which is be an entrepreneur or be a tech innovator and not be afraid to fail. Is that right?

 

INBAL ARIELI: Exactly. Yes.

 

CHARLES MIZRAHI: Okay. Pretty novel. So let’s take a step back. And I read your book over the weekend — really great stuff, really quick read folks, by the way. And a lot of good stories, a lot of good points and facts of technological innovation as well as entrepreneurs who founded huge companies from all the principles that you mentioned. So kids — four, five years old — are in the playground and there’s a sliding pond. You grew up, I believe, in Belgium. Is that right?

 

INBAL ARIELI: Belgium and Switzerland.

 

CHARLES MIZRAHI: Belgium and Switzerland, okay. So you have the perspective of being raised as European and as a mother of three boys — how you raised your kids and how you saw people around you raise kids. So just tell me about — as you brought up in the book — the sliding pond. How is that a major difference in the way Israelis look at a sliding pond for their kids and other people in other countries?

 

INBAL ARIELI: Sure. And you’ve actually touched upon the nuance here. It’s actually not the kids that are different at that age. It’s how the adults and how the environment is actually treating those children. So when I was four, we moved from Israel. I’m born and raised here to an Israeli family, but we did travel when I was young and at the age of four we moved to Geneva. And my first childhood memories are from the International School of Geneva. And some of them really relate to the first days at school, of the kindergarten teacher onboarding me at school because I did not speak the language — not French, neither English, only Hebrew. So I needed help. And she onboarded me, taking me by the hand, literally by the hand, and showing me everything.

 

INBAL ARIELI: One of my first childhood memories was of the slide — which obviously as an Israeli kid or any kid around the world, we all know exactly what to do when we see a ladder and slide. It’s the same structure all over the world. And she took me by the hand and guided me — or instructed me — with hand gestures on how to use that structure — which, again, I was familiar with. There was a kid in front of me. I waited behind the kid. She asked me to stop, to pause until the kid climbed the ladder. Then it was my turn. I understood. I climbed up the ladder. The kid in front of me sat, went down the slide. I did the same. Fun, childish experience that any kid knows.

 

CHARLES MIZRAHI: So there was a structure to how to go on the slide. There were rules and regulations — which make all the sense. Kid on the bottom, you don’t want to kill the kid on the bottom by sliding down too quick, the kid’s on the thing. You want to only go down. Order. Not a problem.

 

INBAL ARIELI: Not a problem. I like to think of it like classical music — there is a rhythm to it, there is a tempo to it, which makes a lot of sense. The best practice is you climb up the ladder, you wait, you sit, you go down the slide, you slide — and in a rhythm. Now, if you’ll go to an Israeli playground with the exact same structure of the slide, again, assuming that talent is spread all over the world equally and that children at the age of two, three, four, they possess the same natural human behaviors. What’s different is how society, how the environment, the teachers, babysitters, their parents, signs at a playground, how the entire environment is actually influencing them.

 

INBAL ARIELI: And if you go to an Israeli playground, well first, the signs tell a very different story than signs of playgrounds in other countries around the world. And signs are a great way of learning about societies because they’re actually setting the expectations of a society. In an Israeli playground, you’ll see very few restrictions on the signs at a playground. Very few. And what you’ll see is chaos or — the way we say it in Hebrew — “balagan.” There will be kids running all over. One will be jumping, the other will be standing just in the middle of the slide, waiting for other kids to bump into her. And a third would be climbing up the slide on their tummy. And very rarely will you ever see an adult interfering and guiding or instructing the children on how to use the slide. So this is a small micro example, but it actually demonstrates the difference from a very, very young age in the environment’s influence on children and how you can actually, from a young age, either foster or strengthen or weaken some behaviors that are very natural — curiosity and proactivity of children and even resolving conflicts among children.

 

CHARLES MIZRAHI: So let me ask you this. So the kids going on the slide and the parents, the adults, teacher, whatever it is, not interfering. And you’re right, you have the kid who is standing in the middle. You have the kid swinging off the side. It all looks like total chaos. How does this translate into creating a mindset of innovation, entrepreneurship, technological advancements, all of these things? Just observing that, how did you come to that conclusion?

 

INBAL ARIELI: So the example of the playground and of the slide, again, is a microcosm where soft skills and in my opinion — and not just mine, but also the World Economic Forum’s Skills for the Future list. Not connected to Israel, but actually globally, those are defined as the skills that we humanity will need the most in the future or even already today. And these are all skills that are very difficult to be taught. They need to be practiced.

 

CHARLES MIZRAHI: So what are these skills? Tell me what these skills are.

 

INBAL ARIELI: So, for example, emotional intelligence. If you keep telling children, if you keep providing children with guidelines they need to do to put less effort into resolving conflicts by themselves. Now, yes, in an Israeli typical playground, you’ll see kids running all over. And there will be a lot of confronting points because it’s not well ordered, but very rarely will you see kids struggling with each other. They will resolve it between them. Actually, the more the adults will interfere, the more chances that it will end differently. But if you just let them resolve it, they will find a way of resolving it. Not necessarily the way we want to, not necessarily the order we have in mind. So emotional intelligence is one thing.

 

INBAL ARIELI: And actually working in a team, but not because someone is telling you that it’s important to work in a group or to act all right for a child. But actually, because this is the natural thing to do. When you want to play, the natural thing to do is to try and engage or be engaged by others into a play. So that’s one thing … Or exploration and curiosity. If we said that in Switzerland, my kindergarten teacher introduced me to the best practice, that’s the way of doing it. If I’m not introducing my children to a best practice, they will figure out by themselves the best practices. Not necessarily one, but few. Eventually, they will learn that with a certain rhythm it makes more sense and it’s more pleasant even to them. It’s not necessarily the rhythm or the tempo that I had in mind. So it’s more like if you want a jazz improv session rather than classical music that has very strict rules to it.

 

CHARLES MIZRAHI: How does this apply to starting a tech company, for example?

 

INBAL ARIELI: So all of these soft skills, critical thinking, by questioning by reassessing assumptions, by definition not following the rules because there are rules, but actually trying to understand them before you just follow them. And teamwork, like we said. So leadership versus management. Not being afraid of making mistakes. An entrepreneur, by definition, has very, very low chances of success. Most entrepreneurs don’t succeed. Most innovators don’t succeed. And yet they’re still trying because they have this inner drive. The more you are capable of accepting failures or uncertainty, the more chances you will be willing to take risks. Entrepreneurship is about taking risks. Innovation is about taking risks. So these are just few examples from the childhood that you can then translate into these soft skills in the workforce that are so critical.

 

CHARLES MIZRAHI: Right. And so these kids, four or five years old, are getting this mindset reinforced from a very early age in school as well, because the teachers are already hands off as well. Resolve it on your own. And they learn to work as a unit and they learn not to be fearful of making a mistake or doing it differently. In fact, differently is encouraged.

 

INBAL ARIELI: Differently is cool. Differently means you are thinking. Differently means you have an opinion. And you could ask, how does it resonate, being different and having your own opinion? But we just said working on a team. Right. And so one of my favorite chapters in the book is called “In Hebrew, There Is an ‘I’ in ‘We’.” ‘I’ and ‘we’ are actually grammatically from the same root. It’s really the plural of ‘I,’ but the meaning is much deeper than that. It means that within a ‘we,’ within a team, there are actually different ‘I’s — different individuals that each hold a different opinion, and they don’t have to fully meld and converge into a cohesive team in order to operate as a team. Actually, the opposite. The more diverse the team is, the more opinions we have on the team, the more trust. It needs to sit on trust. The dynamics are a dynamics of trust. Then the richer the potential solution or outcome is. And this is what diversity is all about that we’re really trying to achieve. And today there are studies that show how diversity actually increases ROI and increases success of metrics in business. It’s exactly that.

 

CHARLES MIZRAHI: So originality is encouraged. In Japan, the saying was “it’s the nail that sticks out, that gets hammered in.” So here, everybody wants to be a nail because they want to find something different and it’s encouraged. And we’ll give a couple more examples in a second of developing this mindset early on about originality, about diversity, about coming up with your own ideas. And I think one of the things which got me was the sense of there is no one way to do something. There are different avenues. So I think the sliding pond example was great — you could have a kid swinging off the ladder, another kid walking up backwards, another kid … doesn’t matter. There’s no one right way.

 

INBAL ARIELI: Exactly. And in the context of innovation — technological or other — but in the context of innovation, that’s gold. Because what you want is actually to bring people that have different perspectives that are looking at the same problem from different directions. There’s no one answer to begin with, it’s actually an exploration exercise in finding solutions and answers that we may have not thought about from the beginning. So in the context of innovation and in the context of entrepreneurship — two different elements — this proactive-ness is really valuable.

 

CHARLES MIZRAHI: Right. So one example you give is a Jewish holiday — Lag B’Omer — which is a day where Israelis and Jews celebrate with making bonfires in commemoration of an event that took place a couple of thousand years ago. And you wrote about how that is really a microcosm of how a tech company — or any company — works in Israel in terms of the teamwork, the gathering, the hands off. Could you walk us through that?

 

INBAL ARIELI: Definitely. So Lag B’Omer is, I think, one of the favorite holidays for children in Israel. It’s only one evening, but actually for children in Israel, the preparation for a Lag B’Omer, they start three weeks before — around Passover, after Passover vacation. Because what’s happening … so on the eve of Lag B’Omer, we light bonfires. Now, I will say that the past two years have been somehow different, not just because of COVID, but also gradually because of environmental issues of lighting bonfires and, of course, the pollution that it creates. So there have been some shifts in how this holiday celebrated in Israel with an attempt to consolidate bonfires. But generally speaking, and for any Israeli who grew up in Israel, you would ask them, what’s the custom of Lag B’Omer? Or describe Lag B’Omer for me, and they will have the same experience living south or north, in a city or in a kibbutz. The same exact experience.

 

INBAL ARIELI: And that is of a project, a real project from A to Z, which is initiated, led and executed by 9, 10, 11, 12-year-old kids — from its initiation of collecting the tranches of wood. Now, for those of you who know Israel, in Israel, there’s no Walmart or Target where you can go and buy a box of tranches of wood for the fire, because we don’t heat with wood here. So it’s not something you can actually easily find. Where do we find wood in Israel, or trenches of wood? In only one place: in construction sites which we have all over. So those kids would wander the streets of Haifa or Tel Aviv or the moshavim or the kibbutzim of Israel and would go literally enter construction sites — daylight, very dangerous, they’re not supposed to do that. They would go inside and they will find wood and collect them.

 

INBAL ARIELI: Now, how do they carry them? Because they’re heavy and these are young kids. So what they do is they go first to the supermarkets, put a five shekels coin — which is the equivalent of a quarter in terms of size. They will take a supermarket cart and for the next ten days, week or so, that supermarket cart would be their means of transportation.

 

CHARLES MIZRAHI: Their wheelbarrow.

 

INBAL ARIELI: Yes, exactly. But it’s happening daylight and they’re not stealing it. Everyone sees them and that’s the custom.

 

CHARLES MIZRAHI: It’s totally accepted by the supermarket owners. They know that they’re going to get their wagons back, and the construction site … It’s not hooliganism.

 

INBAL ARIELI: Exactly. It’s just reality, yes. And what you’ll see is, they always do it in teams, in groups. That’s one thing. Second thing, it’s really a project. It’s just like starting a company or any project that we know because it has planning and resources and even marketing intelligence or business intelligence because they’re thinking of other groups. Where are their competitors from other classes lighting their bonfire? Where should they? And then they’re managing the resources and everything they’ve collected and they’re managing the shifts, who will be guarding the spot and when. And they’re buying food and they’re buying marshmallows and other things, until really the climax of the event, which is lighting the bonfire itself. But the most fun part of this project is actually not just the bonfire, it’s the entire preparation of the bonfire. And during these two weeks, it’s something that the kids are doing by themselves.

 

CHARLES MIZRAHI: Right. And what I found interesting that you wrote about, the parents in these situations have a standoff approach. And they’re not interfering. The kids do this all on their own. And at the end of the bonfire, the supermarket carts get a return. They get their five shekels back, life goes on. And the parents weren’t involved. And talk about fire … In America, if a kid walks outside without sunscreen, they might get arrested. Some schoolteacher might call on them. So that’s not the case here. It’s a pretty laissez faire type of approach.

 

INBAL ARIELI: Yes. It’s a laissez faire type of approach. It’s not a neglecting type of approach. So there’s a nuance there. It’s not “I don’t care what they’re doing.” I care. But I’m giving them the distance and the freedom. And I trust, more than anything, I do trust their common sense. And children, by the way, at any age — respectively to their development — but at any age, they can be somehow reliable and trustable and responsible if you just let them. If you don’t let them manifest their capabilities and you do everything for them and you helicopter their entire activities from A to Z throughout the day, and you schedule playdates for them instead of letting them ask you to join, but you’re the one who’s managing their schedule … They have very little room to actually develop these skills. They are capable.

 

CHARLES MIZRAHI: You brought up some examples in your book of entrepreneurs, technology especially, who have built huge businesses, and they mentioned some of these things. Just give us a couple of examples of those.

 

INBAL ARIELI: Yes, definitely. So one of my favorites is actually the story of Micha Kaufman — one of the co-founders and the CEO of Fiverr — which is a very successful gig economy professional services platform, mostly in the U.S. And Micha tells his story on how he, even a little later than then these early ages of nine and ten, how he was born in a kibbutz. But then his family actually moved into Haifa and his childhood memories from junior high are less from the actual work at school, but actually everything that happened after school. And he gives some very interesting anecdotes on what he used to do and the risks he used to take. But not just risks as a teenager, but also the involvement of his parents in that, and how he was inspired by his father’s work, by being an active part — an active partner, I would say — in seeing his father’s career. So maybe that’s another message: By sharing more with our children or by sharing more with our colleagues, with our peers, with our employees, with our teams, we can actually engage with them in a more optimal way.

 

CHARLES MIZRAHI: For example, most people don’t know that the memory stick was invented in Israel.

 

INBAL ARIELI: Right, the USB flash drive.

 

CHARLES MIZRAHI: Th USB flash drive, and it’s a multigenerational project, if you will — grandfather, father, son. And that really is a good microcosm of everything that you mentioned. Do you want to share that with us?

 

INBAL ARIELI: So the story of Dov Moran — who is known as the inventor of the USB flash drive — is a fascinating story. And I’ll let the readers — hopefully my readers — to complete also his personal story on how he grew with his grandfather and the strong connection that existed between these two. But an interesting thing to tell here through the story is … M-Systems — his company — was a huge success. After 17 or so years, the company was sold actually to SanDisk at a multi-billion dollar transaction — which back in the days in Israel in 2006 was one of the largest in the ecosystem. And immediately thereafter, Dov decided to start a new company. Now, imagine, a huge success, well known, and his next venture was naturally a huge promise. I had the privilege to actually join Dov on the founding team of his next project.

 

CHARLES MIZRAHI: Before you go any further. This is like a layup. Here’s a guy who’s an amazing innovator, technological genius, creates the flash drive — the memory stick — which is still amazing to me. And sells it for, I think, 1.6 Billion dollars or so to the SanDisk. And then you say: “All right, perfect, I’m going to partner with this guy. I’m going to be on his next great company. I want to have a front row seat.” And you get a front row seat, right?

 

INBAL ARIELI: Yes.

 

CHARLES MIZRAHI: Okay.

 

INBAL ARIELI: The interesting question, of course, is not why I wanted to partner with him, it’s actually the opposite at that time. Because we are speaking late 2006, early 2007. And a side anecdote, Dov Moran still today has a very unique approach to talent and to identifying potential within talent — not necessarily in their domain of expertise.

 

CHARLES MIZRAHI: How did he find you?

 

INBAL ARIELI: So he was introduced to me by a joint friend — a colleague from the ecosystem — and Dov then invited me to a meeting. It was not an interview. He didn’t have any position or spec or a list of requirements. He didn’t even start the new company. He just invited me, by the way, like he does every Friday for the past, I don’t know, 20 plus years. He holds meetings that are not in the core of his business. And that’s also mentioned in the book, it’s fascinating this approach to talent. So he invited me to a meeting and we just had a conversation just like you and I had about a lot of things. And at the end of the conversation, he said: “Listen, Inbal, I’m planning on starting this new company, and I’d really like you to be on the founding team, on the establishing team of the company. Now, I’m not 100% sure exactly what your position will be…” Because back then I was still a lawyer, general counsel … “But I want you on the team.”

 

CHARLES MIZRAHI: So you’re leaving out one thing which I mention in the beginning, you were part of Unit 8200, and there were many technological geniuses who left 8200 — former officers — who went on to be CEOs and create huge companies. And they’re highly in demand because of all of the soft skills as well as the hard skills that they have. So being part of that was a good calling card. He knew who he was meeting before he even got in the room.

 

INBAL ARIELI: Definitely. And although Dov is not from 8200…

 

CHARLES MIZRAHI: Yes, but you are. So he knew that.

 

INBAL ARIELI: Correct. But here’s what I want to say. Actually, the R&D team at Modu — which we built — was based essentially on 8200 vets — veterans that came out of the unit actually even as teams, because they really knew how to work together and we had to grow the company very fast. But you know what? I’ll connect everything together, actually. So we started the company in 2007 with this huge promise. Three years, the company raised $120 million within eight months, which again back in the time was incredible.

 

CHARLES MIZRAHI: It’s a lot of money.

 

INBAL ARIELI: A lot of money very quickly, just because of the promise of the former of success that Dov had. But in 2010, the company closed and it was actually a failure. So the company Modu failed, with its 300 employees, lost all the $120 million within a period of three years. Huge failure — with, by the way, an entire R&D based on the most talented 8200 grads that you can imagine. Okay, what now? So actually something very interesting happened. For most of the people that were involved in this adventure, instead of saying: “Okay, I learned my lesson. I’m not taking risks, this doesn’t make sense. I’ll work. I’m super talented. There is a lot of demand in Israel for people just like myself and like others. I’ll go work for for Google or for Intel or for Apple. For all these multinationals — over 400 of them that have R&D offices in Israel.” No, that’s not what happened.

 

INBAL ARIELI: Actually, out of Modu — out of this failure — 30 plus startups were established, not on the technology of Modu. The technology was actually sold to Google. It was kind of an explosion of parts of talent that actually decided that the entrepreneurial path is the right path for them. And inspired by Dov, started their own companies, some of which are extremely successful today.

 

CHARLES MIZRAHI: Right. I think what I found so interesting about that when I was reading your book, was that the entrepreneur — the person who was involved in this project — didn’t consider themselves as a failure. And I think you point out that’s extremely important. I didn’t personally fail, the business failed or the idea failed. I’m not a failure. The business failed. All right. We’ll figure it out somewhere else. And they went ahead and they picked up and start another business.

 

INBAL ARIELI: Correct. And again, it’s not out of not taking accountability or responsibility. It’s not that. It’s not shifting the responsibility to someone else or to external conditions. It’s actually saying the fact that we failed as a group, the fact that this company failed, the business failed, does not mean that personally, each and every one of us is a failure. It means that we’ve failed in different understandings — in our responsiveness to the market, in understanding some elements, maybe in the R&D and in so many things. But it does not mean that I personally failed and I cannot do anything else. Because otherwise it’s very difficult to stand up again and restart.

 

CHARLES MIZRAHI: Yeah, and this comes from the whole culture, as you mentioned — from being kids. I think you mentioned a study that, I think it was Singapore, their kids had much higher math scores or ranked much higher in math than the Israeli kids. But, here was the difference … Go ahead, tell me that difference.

 

INBAL ARIELI: So generally when you look at the scores — PISA scores — of Israeli schools, and they’re rated at the age of 15, Israel doesn’t do that well at all. And this specific study was comparing 15-year-old math students in junior high, same level of math understanding, same problems. The Singapore kids did much better in terms of more children getting to the correct results.

 

CHARLES MIZRAHI: More right answers.

 

INBAL ARIELI: More right answers. However, most of them — almost all of them — reached the answer the way they were taught. So there was again, going back, there was a best practice. There was a way of solving that math problem. And they did it the way they were taught. Less Israelis solved correctly the math challenge. In math, there is one answer at the end. So less of them solved it correctly. But from those who did solve it correctly, there were over ten times more ways of solving the problem than the Singaporean one. So less of them reached the accurate final answer, but those who did, did it in so many different ways — which demonstrates that they were not taught one way and excellence at the end of that way. So there’s one way. If you follow the way, you’re solving the problem. They were taught how to think, how to approach, which takes more practice, which takes more maturity in math also.

 

CHARLES MIZRAHI: It takes more creativity, more originality. It requires thinking. It’s not rote.

 

INBAL ARIELI: It requires thinking. And it takes more practice in the sense that for 14 and 15-year-old children takes more practice to eventually achieve both a very high level in math and also a very creative level. But we’re starting with the creativity. We’re starting with not telling them exactly how to solve it. We letting them solve it in different ways. And actually, like you said at the beginning, it’s very encouraged.

 

CHARLES MIZRAHI: You know, in the United States, there are so many who lament the fact that the United States doesn’t rank that high in STEM, in sciences and engineering. But then again, so many Americans have won Nobel Prizes. Technological innovation comes from the United States, it’s the leader — Apple, Google, Microsoft, Facebook. They all started here. Because it’s not the right answer. Because you can find who gets the right answer. Anyone can figure that one out, right? You could hire people to do that. But looking at a problem or looking at a service or looking at a product and saying: “Think different.” You know, like Steve Jobs, and create a whole new way of doing things. That’s the magic. And I think that the way it’s measured, they’re measuring it the wrong way. It’s not how many people get the right answer, it’s how many people or how many companies come up with a new way to do something. And in our society, we prize success and pooh-pooh failure. And in America, in terms of technological innovation, entrepreneurs who failed are sought after by venture capitalists more, because they’ve been through the process. So I want that guy or girl.

 

INBAL ARIELI: Yes, I think it’s the same in Israel. And I think that eventually you want both. You want also those who know how to follow the rules and just answer the right answers. And you also want those who are disruptors and think completely differently and don’t know the answers, don’t start with knowing the answers. Looking at the future, looking at how the world is evolving, looking at the rapid changes that we’re all experiencing, I think the balance … what we are experiencing is a change in balance between those two groups. If in the past we needed more of those hard skills … When I started my career, my CV looked a specific way to answer the requirements. It was mostly based on hard skill, knowledge, past experience. Today, CVs look completely different, definitely the tech world — in Israel and elsewhere. Companies like LinkedIn and Google have already admitted that some of their past requirements — prerequisites — are no longer relevant.

 

CHARLES MIZRAHI: Right, college is not a requisite.

 

INBAL ARIELI: For example.

 

CHARLES MIZRAHI: Yeah. I was reading the other day that — I think he was at Yale, I forgot where it was — the head of the computer science department said: “If I hired kids, I wouldn’t want them to have a degree in computer sciences. I want the one who was coding since he’s four years old and came up with his own way.” And it’s not shocking. Anyone who’s paid a zillion dollars to go to college has seen the results. When they get into the workforce, they realize you’re starting at ground zero. You know, all of that education didn’t teach you what you needed to learn. And here comes that guy who didn’t have all that education but was doing it since they were seven years old on a Commodore 64.

 

INBAL ARIELI: So, yes, it’s exactly that. And eventually the secret is in the blood. The secret is that there is no one right answer or one formula that fits all countries, organizations or all teams.

 

CHARLES MIZRAHI: But in certain cultures, it works better. It’s more homogeneous, where Israel — which most people don’t know — is really a melting pot, that’s not even the word for it. I think there are people from Israel, Jews throughout the world. I think you have over 100 something countries. You can literally walk down one street in Jerusalem and bump into 30 or 40 people who represent 50 different countries.

 

INBAL ARIELI: Right. A little like in the U.S., by the way, in that sense — well in some communities in the U.S. — where you have people who originally came from different backgrounds and actually in terms of culture or values, specific ones, they don’t have a lot in common. Okay. My personal story is a typical Israeli story. My father immigrated from Egypt. My mother immigrated from Poland. They met at university here in Israel. Honestly, they have as individuals a lot in common in their cuisine, in the way they celebrated — not just the general customs of Jewish holidays. But how it’s actually done, how their families were actually built internally, they were very different. They came from very different backgrounds. They did have this one thing that connected them was in the early fifties, coming to Israel and building, being part of something and building a state.

 

CHARLES MIZRAHI: Being immigrants and coming to a country where every individual’s worth was prized as forming a collective. Where we have a common goal.

 

INBAL ARIELI: Exactly. I think that you mentioned the term “melting pot” — which David Ben-Gurion actually brought into the conversation. And he used to say: “The Israeli military is a melting pot of the Israeli society.” My, actually, interpretation to that is somehow different. I think that today or in the past decades, it’s no longer a melting pot. We’re not trying to melt people into one standard, one Israeli characteristic. It’s actually understanding that there are different people, just like we said, with different preferences and different backgrounds. And that is what creates the magic — them having different voices and different perspectives.

 

CHARLES MIZRAHI: I think you brought it up in the book, but I saw an updated study which showed that 43% of CEOs in the Fortune 500 are the children of — or themselves — immigrants. So that is a staggering statistic.

 

INBAL ARIELI: Correct, because immigrants all over the world are pockets of entrepreneurship. Because the immigration step is actually entrepreneurship.

 

CHARLES MIZRAHI: It involves risk…

 

INBAL ARIELI: Moving from one place to the other, restarting all over again. And what you can see in neighborhoods of immigrants throughout the world or communities would be typically small, medium businesses that they start — some micro businesses and micro entrepreneurship. But there’s always starting something new out of that decision to move. And this is why immigrants are so successful across the world in thinking big and not being afraid of taking risks. They’ve already taken risks, they’re used to taking risks.

 

CHARLES MIZRAHI: Any immigrant who comes to a new country already comes there with … not being reckless, but on paper, it really doesn’t make that much sense. They’re coming here. They don’t know the language. They might not know the language. They don’t have money, they don’t have resources. But they make that leap anyway in the anticipation or he ultimate goal of having a better life. And they’ll do anything towards that mean and work as a collective with their family, in a business working together, so the next generation could have it better.

 

CHARLES MIZRAHI: And we see it here in Brooklyn where I grew up. There used to be virtually on every corner a Chinese laundry run by immigrants who came from China. And they used to do shirts, you know, Chinese laundry used to do the shirts. And you had the whole family working. And I grew up with one guy in our neighborhood, Roy, and he had to work there. He was on our corner. He had to work. And afterwards he could play ball, go to school, whatever it is. Roy and the rest of his siblings, there’s no more Chinese laundries. Because those kids went to Harvard and Yale and became scientists and doctors and entrepreneurs. And by the second generation, it was history. And it was that experience of there’s no such thing as failure, it’s just another way we’ll figure out how to make it work. And when you have that mindset, there are no limitations.

 

INBAL ARIELI: Exactly. And in Israel, it’s within a very short time frame. An entire state that evolves.

 

CHARLES MIZRAHI: Yeah, it’s also that. Recently, I remember I think was a year or two years ago, when the Israeli team took the Google challenge to land … What was it?

 

INBAL ARIELI: X Prize, landing Beresheet.

 

CHARLES MIZRAHI: Yeah. Tell us about that.

 

INBAL ARIELI: Sure. So that’s actually a fascinating story. So three young tech enthusiasts that have — actually only one of them at the beginning had something to do in terms of interest in space. But the other two, not at all.

 

CHARLES MIZRAHI: Right. By the way, let me just interrupt you. This was a challenge put out by Google for what is it? $1 million?

 

INBAL ARIELI: So the challenge was to land a … Google announced a challenge to launch and land a small space vehicle that would take a selfie on the moon. And the price was actually supposed to be, I think, $1 million or maybe a little more than that.

 

INBAL ARIELI: And of course, so they heard about that. And just driven by the challenge, they said: “Okay, this sounds super interesting. We want to take part in that.” By the way, this story is told in the introduction to the book because it’s really a fascinating Israeli chutzpadik story. So many, many applications and many teams and groups started this challenge. I think over 100 at the beginning. And eventually, as the year progressed, all of the teams gradually started closing these projects, because it didn’t make any sense. Because obviously landing a small vehicle on the moon costs much more than $1 million. And it doesn’t make sense, economically, this project. But for these three guys, they realized … So when they decided on a night where they had drinks and had fun together to answer this, to address this challenge, and they started engaging with people and connecting and bringing more and more people at the beginning voluntarily to be part of this project.

 

INBAL ARIELI: But then they realized something very interesting — that the goal actually for them is not to land this space vehicle on the moon and take a selfie. They realized throughout the process of the first two years that it’s about creating a project in Israel that would fascinate young children — to be exposed to space technologies and new space. And the challenge was only a means to that. So they’ve raised philanthropy and they’ve raised the help of the Israeli Air Force industries, which are world experts in satellites and space. And gradually, this project actually evolved. Still, it was the lowest budget for eventually a space vehicle that was launched. Beresheet was the last team that actually made it in the challenge. The space vehicle was launched through the orbit and everything. And the spacecraft actually did not land because while landing, I think 4 seconds or 5 seconds above the surface of the moon, it exploded.

 

CHARLES MIZRAHI: Right, it’s just amazing. It came within 490 feet —150 meters — of landing. But it was traveling too quickly, so they couldn’t slow it down. It crashed.

 

INBAL ARIELI: And it crashed.

 

CHARLES MIZRAHI: But what I found so amazing is, I think it was the president of Israel, who was watching at the time said: “All right, we’ll try again.”

 

INBAL ARIELI: Immediately, that evening. Rivlin was then the president. He watched it with a group of children, speaking of children. And on that evening, he said: “Okay. We’re not stopping you. We’ll have Beresheet 2.” Sure enough, the philanthropist also agreed to donate more money. And we’re now in the midst of Beresheet 2 — which now has nothing to do with the Google Prize.

 

CHARLES MIZRAHI: Right. It’s just amazing. And also what I find so interesting — just on a side note here — is that Beresheet 2, which will launch in 2024, includes collaboration with United Arab Emirates as one of the seven countries that are expressing interest.

 

INBAL ARIELI: That’s a result of the Abraham Accords. Who would imagine, right?

 

CHARLES MIZRAHI: Just amazing.

 

INBAL ARIELI: Ten years ago, when Beresheet 1 started, that there would be such a fruitful collaboration between the space agency of the UAE and Israel.

 

CHARLES MIZRAHI: All right, Inbal, I could speak to you for the next 5 hours, so we’re going to cut this here. And I just want to tell you, thank you so much. I really enjoyed this. Folks, the name of the book is Chutzpah: Why Israel Is a Hub of Innovation and Entrepreneurship.

 

INBAL ARIELI: There it is. By Harper Collins, by the way.

 

CHARLES MIZRAHI: Get it on Amazon. It’s pretty simple. Good. And you also have a website.

 

INBAL ARIELI: Yes. So Chutzpah Center is my website where I share my approach. I’ll be launching a Chutzpah 101 online crash course very soon, which is aimed for young professionals. So stay tuned. And yes, please follow me.

 

CHARLES MIZRAHI: Outstanding.

 

INBAL ARIELI: On all social media, of course. Inbal Arieli, just like my name.

 

CHARLES MIZRAHI: We’ll put it down in the description. But folks, really great stuff. And what I like about it also, it was so innovative how you came up with a totally different angle — that Startup Nation and other books looked at a whole different set of factors. And you as a mother looked and said: “No, it’s the way we raise our kids.” I have a daughter who lives in Israel, she’s an Israeli mother. And I see the way she’s raising my grandchildren. And it’s exactly what you’re saying. When they come here, it’s like I try to put rules and regulations. The kids are looking like you’re crazy. I do what I want. I say, in my house you follow my rules, but they don’t really do that.

 

INBAL ARIELI: Well, next time you’ll remember me.

 

CHARLES MIZRAHI: Inbal, thank you so much and all the success to you.

 

INBAL ARIELI: Thank you very much, Charles. Great speaking to you. Thank you very much.

CHARLES MIZRAHI: Thanks for listening to this episode of The Charles Mizrahi Show. If you’re a new listener, welcome! If you’ve been listening for a while, we’re glad to have you back. Either way, we’d love to know what you think of the show. Please leave a review if you listen on Apple Podcasts. Reviews make it easier for others to find the show. You can also see the video of the interview on The Charles Mizrahi Show channel on YouTube.

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