Start-up Nation

are increasingly noting a phenomenon they call “brain circulation,” whereby talented people leave, settle down abroad, and then return to their home countries, and yet are not fully “lost” to either place. As Richard Devane writes in a study issued by the World Bank, “China, India, and Israel enjoyed investment or technology booms over the past decade, and these booms are linked . . . by expatriate leadership in all three countries.”⁷

AnnaLee Saxenian is an economic geographer at U.C. Berkeley and author of The New Argonauts. “Like the Greeks who sailed with Jason in search of the Golden Fleece,” Saxenian writes, “the new Argonauts [are] foreign-born, technically skilled entrepreneurs who travel back and forth between Silicon Valley and their home countries.” She points out that the growing tech sectors in China, India, Taiwan, and Israel—particularly the last two countries—have emerged as “important global centers of innovation” whose output “exceeded that of larger and wealthier nations like Germany and France.” She contends that the pioneers of these profound transformations are people who “marinated in the Silicon Valley culture and learned it. This really began in the late ’80s for the Israelis and Taiwanese, and not until the late ’90s or even the beginning of the ’00s for the Indians and Chinese.”⁸

Michael Laor at Cisco and Dov Frohman at Intel were classic new Argonauts. Even while gaining knowledge and status within their major international companies, they always intended to return to Israel. When they did, they not only became catalysts for Israel’s technological development but founded Israeli operations that provided critical breakthroughs for the companies they worked for.

The new Argonaut, or “brain circulation,” model of Israelis going abroad and returning to Israel is one important part of the innovation ecosystem linking Israel and the Diaspora. Another Diaspora network is a non-Israeli Jewish Diaspora.

Israel owes much of its success to a deep Diaspora network that other countries, from Ireland to India and China, have also developed. Yet the non-Israeli Jewish Diaspora ties are not automatic, nor are they the key catalysts to the development of the tech sector in Israel. In fact, whereas China’s Diaspora is the source of 70 percent of foreign direct investment (FDI) into China and India’s Diaspora did much to help build its homeland’s high-tech infrastructure when the country’s economy and legal system were both underdeveloped, Israel’s experience has been different. The vast majority of American Jewish investors historically would not touch the Israeli economy. It was not until much later, when Israel became more successful, that many Diaspora Jews started looking at Israel as a place to do business, not just as a draw for their sympathy and philanthropy.

So it has required creativity for Israel to learn how to use its Diaspora community in order to catalyze its economy. The tradition of Israelis’ tapping into a very small but passionate subset of the Jewish Diaspora to help build the state has its roots in institutions like Israel’s start-up air force.

The fantasy of an Israeli aircraft industry took shape on a bumpy flight over the North Pole in 1951, inside what was to become the first aircraft in Israel’s new national airline. The conversation was between a pair of opposites: Shimon Peres, the erudite future president of Israel, who in 1951 was the chief arms buyer for the new Jewish state, and Al Schwimmer, a swashbuckling American aviation engineer from Los Angeles, whose pals included Howard Hughes and Kirk Kerkorian. Schwimmer’s first name was Adolph, but against the backdrop of World War II, he’d opted for Al.⁹

Peres and Schwimmer were on one of their many flights over the Arctic tundra in used planes purchased for Israel’s fledgling air force. Flying over the North Pole was dangerous, but they took the risk because the route was shorter—no small consideration when piloting planes that were falling apart.

Al Schwimmer was a raconteur who’d been captivated by the airline business in its earliest days, when flying machines were an exotic novelty. He was working for TWA when the United States entered World War II and the entire airline was drafted into the war effort. Though not officially in the U.S. Air Force, Schwimmer and his fellow fliers were given military ranks and uniforms and spent the war ferrying troops, equipment, and the occasional movie star all over the world.

During the war, Schwimmer’s identity as a Jew meant little to him and had almost no influence on his thinking or way of life. But seeing a liberated concentration camp and the newsreel footage of countless bodies and speaking with Jewish refugees in Europe trying to reach Palestine transformed him. Almost overnight, Schwimmer became a committed Zionist.

When he heard that the British in Palestine were turning back ships full of European Jewish refugees, Schwimmer came up with what he was convinced was a better way: fly over the British navy patrols and smuggle the Jews in by landing them at hidden airfields. He tracked down Ben-Gurion’s secret emissary in New York and pitched him the idea. For months, the representative of the Haganah, the main underground Jewish army in Palestine, sat on the idea. But when it became clear that the British would soon withdraw and a full-scale Arab-Jewish war over Israel’s independence would ensue, the Haganah contacted Schwimmer.

By this time they had an even more urgent need than smuggling refugees: building an air force. The Haganah did not have a