constitute catastrophic risk?” we asked her.
Buffett’s view, she told us, is that if Iscar’s facilities are bombed, it can go build another plant. The plant does not represent the value of the company. It is the talent of the employees and management, the international base of loyal customers, and the brand that constitute Iscar’s value. So missiles, even if they can destroy factories, do not, in Buffett’s eyes, represent catastrophic risk.
During the 2006 Lebanon war, just two months after Buffett acquired Iscar, 4,228 missiles landed in Israel’s north.6 Located less than eight miles from the Lebanese border, Iscar was a prime target for rocket fire.
Eitan Wertheimer, chairman of Iscar, who’d made the sale to Buffett, told us that he called his new boss on the first day of the war. “Our sole concern was for the welfare of our people, since wrecked machines and shattered windows can always be replaced,” Wertheimer recalled of his conversation with Buffett. “ ‘But I am not sure that you understand our mind-set,’ I told him. ‘We’re going to carry on with half the workforce, but we will ensure that all the customers get their orders on time or even earlier.”7
One rocket did slam into Tefen Industrial Park, which was founded by the Wertheimer family and centered around Iscar, and a slew of rockets landed nearby. And though, during the war, many workers did temporarily relocate, with their families, to the southern part of the country, Iscar’s customers would never have known it. “It took us a brief time to adjust, but we didn’t miss a single shipment,” Wertheimer said. “For our customers around the world, there was no war.”
By responding to the threat this way, Wertheimer and others have transformed the very dangers that may make Israel seem risky into evidence of Israel’s inviolable assets—the same assets that attracted Buffett, Google, Microsoft, and so many others in the first place.
Few illustrate Israeli grit better than Dov Frohman, who was born in Amsterdam just months before the onset of World War II. As the Nazis’ grip on Holland tightened, his parents decided to hide Dov with the Van Tilborgh family, devout Christian farmers they found through the Dutch underground. Dov was only three years old when he arrived at their farmhouse in the Dutch countryside, but he remembers having to cover his dark hair with a hat, since the rest of his adopted family was blond. When the Germans periodically searched the house, he would hide under a bed, in a cellar, or in the woods with his adopted brothers. Years later, Dov learned that his father died at Auschwitz; he never knew for sure where his mother was murdered.8
After the war, Frohman’s aunt, who had escaped to Palestine in the 1930s, tracked down Frohman’s Dutch family and convinced them to put him in a Jewish orphanage, so that he could emigrate to Palestine. In 1949, ten-year-old Dov landed in the brand-new State of Israel.
In 1963, as Dov Frohman was about to graduate from the Technion (Israel Institute of Technology), he decided to pursue graduate studies in the United States in order to “bring a new field of technical expertise back to Israel.” He was admitted to MIT but instead went to the University of California at Berkeley, which offered him a stipend. It was a fortuitous choice.
While still a graduate student, Frohman was hired by Andy Grove to work at Fairchild Semiconductor. A few years later, Grove joined Gordon Moore and Robert Noyce to found Intel. Frohman became one of the new start-up’s first employees. He quickly made his mark by inventing what would become one of Intel’s most legendary and profitable products, a new kind of reprogrammable memory chip. Then, with a senior management position within reach, Frohman announced that he was leaving Intel to teach electrical engineering in Ghana. In his words, he was “looking for adventure, personal freedom, and self- development”—another “person of the Book.”
Colleagues at Intel thought Frohman was crazy to leave just as the company was about to go public and shower its employees with lucrative stock options. But Frohman knew what he wanted: to start an enterprise, not just work for one. He also knew that if he stayed on the management track he might never be able to return to Israel, where he had a revolutionary idea for the local economy: he wanted Israel to become a leader in the chip design industry.
By 1973, the time to realize his idea had arrived. Intel was facing an acute shortage of engineers. Frohman returned to Intel, pitched the idea of an Israeli design center to Grove, and quickly organized an exploratory mission to Israel. Delayed by the Yom Kippur War, the Intel team arrived in Israel in April 1974 and quickly hired five engineers for its new design center in Haifa. Intel had never before established a major research and development center in a foreign country. “At the end of the day, we are in the R&D business. We could not risk the company’s future by putting our core mission and operations overseas—out of our control,” recalled one former Intel employee from California. “Israel was the first place we did that. A lot of people thought we were nuts.”9
The Israel team began with an investment of $300,000 and five full-time employees. But it would become
