Start-up Nation

“We already had a number of struggles inside the company over the transfer of strategic technologies and critical products to the Israeli operation,” recalled Frohman. “I was convinced that if we had to interrupt production, even for a brief period of time, we would pay a serious price over the long term.” Frohman had expended time and political capital to persuade Intel’s management to put the future of the company in the hands of an overseas outpost, a dream of his since he’d first left Intel. And it was this outpost that was about to find itself on the receiving end of Scud missiles.

But Frohman had another—surprisingly far greater—concern: “I kept thinking about the survival of Israel’s . . . still small high-tech economy.” The key stumbling block to further investment in Israel was the lingering impression of geopolitical instability in the region. If Intel couldn’t operate in an emergency situation, then any confidence that multinationals, investors, or the markets had in Israel’s stability would instantly crumble.

Frohman had spent enough time abroad to be familiar with the rap against investing in Israel. Almost every day a bad headline about Israel ricocheted around the world: another terrorist attack . . . another provocation on its border . . . more bloodshed. Intifada. Violence, terror, war. It was the only narrative people knew.

He believed that both Israel and its economy needed a counternarrative. As the January 15 deadline approached, he became fixated on an imaginary boardroom debate—taking place somewhere in the United States—between an executive who was enthusiastic about investing in Israel and a cautious board that thought he was reckless. What would the enthusiast need in his back pocket? I understand your skepticism. I saw the news, too. But let’s not forget that Intel was producing the 386 chip—one of Intel’s most important microchips—in Israel during the Gulf War, and the Israelis never missed a beat. They stayed on schedule. They were not late . . . not even once . . . not even when missiles were falling on them.

On January 17, Frohman informed his employees of his unilateral decision to keep Intel Israel open during the war, in defiance of government orders, but on a voluntary basis: no worker would be punished for not showing up.

At 2:00 a.m. on January 18, Frohman, like most Israelis, was awoken by air-raid sirens. He and his family quickly put on their gas masks and sealed themselves into their home’s safe room. When the all clear sounded, they learned that eight missiles had struck Tel Aviv and Haifa—near Intel’s main R&D facility—but they had not been armed with chemical warheads. More missiles were expected in the days ahead. Whether Saddam would arm future Scuds with chemical capabilities was still unclear.

At 3:30 a.m., when Frohman arrived at the plant with his gas mask, he went straight to the clean room—the heart of the chip factory, where, to maintain a dust-free environment, technicians worked in sealed suits that made them look like astronauts. Work there had already resumed. He was told that when the sirens had sounded earlier, the employees had gone to a sealed room in the plant, but after quick calls home, they had returned to their work stations. When the first postattack morning shift began, Frohman expected to see—best-case scenario—half of the shift; 75 percent showed up. Following a second Iraqi missile attack the next night, turnout at Intel’s Haifa design center increased to 80 percent. The more brazen the attacks, the larger the turnout. Welcome to Israel’s “new normal.”

The executives in Intel’s Santa Clara headquarters could not get their heads around this. During a conference call with Santa Clara two days later, air-raid sirens went off again. The Israeli team members asked for a moment to relocate, put on their gas masks, and continued the call from their sealed room. A group of Intel workers even set up a wartime kindergarten on the premises, since schools were still closed and if employees wanted to be part of Frohman’s defiant mission, they had no choice but to bring their children to work. On top of their regular jobs, the workers volunteered to serve shifts on kindergarten duty.

The legacy of Frohman’s commitment is still seen in the decisions of new multinational companies to set up critical operations in Israel. And some of these facilities, such as Google’s, were being built around the time of the 2006 Lebanon war.

The explanation for this concerns more than just engineering talent. It is also a matter of less tangible factors, such as a drive to succeed that is both personal and national. Israelis have a term for this: davka, an untranslatable Hebrew word that means “despite” with a “rub their nose in it” twist. As if to say, “The more they attack us, the more we will succeed.”

As Eitan Wertheimer told Warren Buffett at the start of the 2006 Lebanon war, “We’re going to determine which side has won this war by ramping up factory production to an all-time high, while the missiles are falling on us.”¹⁰ Israelis, by making their economy and their business reputation both a matter of national pride and a measure of national steadfastness, have created for foreign investors a confidence in Israel’s ability to honor, or even surpass, its commitments. Thanks to Dov Frohman, Eitan Wertheimer, and many others, the question of catastrophic risk, for investors and multinationals looking to do business in Israel, is virtually irrelevant.