Start-up Nation

“It’s unbelievable that, just a few years ago, we were designing something that no one wanted,” says Friedman, who is still based in Haifa but now leads development teams for Intel around the world. “Now we’re doing processors that should carry most of Intel’s revenue—we can’t screw up.”

What began as an isolated outpost an ocean away had become Intel’s lifeline. As Doug Freedman, an analyst for American Technology Research, put it, the Israeli team “saved the company.” Had midlevel developers in the Haifa plant not challenged their corporate superiors, Intel’s global position today would be much diminished.

Intel Israel’s search for a way around the power wall also produced another dividend. We don’t think of computers as using a lot of electricity—we leave them on all the time—but, collectively, they do. Intel’s ecotechnology executive, John Skinner, calculated the amount of power that Intel’s chips would have used if the company had kept developing them in the same way, rather than making the “right turn” toward the Israeli team’s low-power design: a saving of 20 terawatt hours of electricity over a two-and-a-half-year period. That’s the amount of power it would take to run over 22 million 100-watt bulbs for an entire year, twenty-four hours a day, seven days a week. Skinner noted, “We calculated about a $2 billion savings in electricity costs. . . . It’s equivalent to a small number of coal-fired power plants or taking a few million cars off the road. . . . We’re very proud that we are dramatically reducing the carbon dioxide footprint of our own company.”¹⁶

The significance of the Intel Israel story is not, however, just that the team in Haifa came up with a revolutionary solution that turned the company around. A good idea alone could not have carried the day against a seemingly intransigent management team. There had to be willingness to take on higher authorities, rather than simply following directives from the top. Where does this impudence come from?

Dadi Perlmutter recalls the shock of an American colleague when he witnessed Israeli corporate culture for the first time. “When we all emerged [from our meeting], red faced after shouting, he asked me what was wrong. I told him, ‘Nothing. We reached some good conclusions.’ ”

That kind of heated debate is anathema in other business cultures, but for Israelis it’s often seen as the best way to sort through a problem. “If you can get past the initial bruise to the ego,” one American investor in Israeli start- ups told us, “it’s immensely liberating. You rarely see people talk behind anybody’s back in Israeli companies. You always know where you stand with everyone. It does cut back on the time wasted on bullshit.”

Perlmutter later moved to Santa Clara and became Intel’s executive vice president in charge of mobile computing. His division produces nearly half of the company’s revenues. He says, “When I go back to Israel, it’s like going back to the old culture of Intel. It’s easier in a country where politeness gets less of a premium.”

The cultural differences between Israel and the United States are actually so great that Intel started running “cross-cultural seminars” to bridge them. “After living in the U.S. for five years, I can say that the interesting thing about Israelis is the culture. Israelis do not have a very disciplined culture. From the age of zero we are educated to challenge the obvious, ask questions, debate everything, innovate,” says Mooly Eden, who ran these seminars.

As a result, he adds, “it’s more complicated to manage five Israelis than fifty Americans because [the Israelis] will challenge you all the time—starting with ‘Why are you my manager; why am I not your manager?’ ”¹⁷

CHAPTER 2

Battlefield Entrepreneurs

The Israeli tank commander who has fought in one of the Syrian wars is the best engineering executive in the world. The tank commanders are operationally the best, and they are extremely detail oriented. This is based on twenty years of experience—working with them and observing them.

—ERIC SCHMIDT

ON OCTOBER 6, 1973, as the entire nation was shut down for the holiest day of the Jewish year, the armies of Egypt and Syria launched the Yom Kippur War with a massive surprise attack. Within hours, Egyptian forces breached Israel’s defensive line along the Suez Canal. Egyptian infantry had already overrun the tank emplacements to which Israeli armored forces were supposed to race in case of attack, and hundreds of enemy tanks were moving forward behind this initial thrust.

It was just six years after Israel’s greatest military victory, the Six-Day War, an improbable campaign that captured the imagination of the entire world. Just before that war, in 1967, it looked like the nineteen-year-old Jewish state would be crushed by Arab armies poised to invade on every front. Then, in six days of battle, Israel simultaneously defeated the Egyptian, Jordanian, and Syrian forces and expanded its borders by taking the Golan Heights from Syria, the West Bank