JULY 2016 / NO. 2
TAGS: EU, SILICON WADI, ECB, FED, EUROPE, SILICON VALLEY, NEW YORK STOCK EXCHANGE, NASDAQ, AVNER BARNEA

The EU is in slow-motion, but what about Silicon Wadi?

“Skyscrapers are inherently speculative and confirm the easy availability of debt. Building the tallest building is a perfect example of overconfidence and irrational exuberance. It’s an early indicator of a bubble”
This statement demonstrates a potential problem. One example is that of the European Central Bank (ECB), with their new headquarters in Frankfurt, financed with even more debt in a financial world led by overconfidence and exuberance. The eurozone has been in a slow-motion crisis for some 7-8 and no one seems to be in charge: neither Draghi, Merkel, Tusk, Juncker or anyone else. The ECB doesn’t stand for anything but improvisation. While the US FED prints “In God We Trust” on US dollars, the ECB might as well print “kick the can down the road” on the euro. Europeans simply react to events as they happen and hope that things don’t get worse. European citizens are devoted to their holidays, their cars and their smartphones and are not prepared to make sacrifices necessary to stop destructive forces such as Putin, IS, the Iranian ayatollahs, or Erdogan, who all look primarily at achieving their own ambitions.
The military protection provided by the US has further weakened the European immune system. It seems that Europeans have chosen to live in a state of helplessness: their biggest disaster, namely Brexit, occurred on 23rd June, 2016.

What can we learn from a small start-up country?

In April 2016, I was lecturing in Tel Aviv. Israel is in a constant fight for survival and has been extremely successful with numerous start-ups. According to the March 2016 issue of Fortune Magazine, Silicon Valley has lost its ‘magic’ since 2000, while Israel’s Silicon Wadi is enjoying huge success. Why is this? It is because of the unique combination of three drivers: young people often start their own companies after their compulsory military service (1), close connections between the business and academic worlds (2), and the well-developed local defense-industry (3). In the last 20-30 years this has resulted in there being 130 Israeli listed companies on the New York Stock Exchange, and a further 74 Israeli companies listed on Nasdaq. The 74 Nasdaq listings are more than all the listings of companies from Western Europe, Taiwan, Japan and South Korea together.
Together with my friend Dr. Avner Barnea in Israel, I have written an article about this start-up phenomenon. One reason was that in the Netherlands, the government initiated “Start-up Fest Europe”, but only used presenters and business cases from Silicon Valley, relying on the usual business examples of Apple, Airbnb, Uber, Booking.com, Alphabet and others. For this reason, we stated: “The Dutch government chose the wrong direction, and should change course from West to East”.
“Only executives who are flexible enough to adapt strategy to changes in competitive circumstances can effectively manage resources during competitive operations”, Sun Tzu
Dont miss out on our Intelligence Briefings. Subscribe to these free Intelligence Briefings by clicking HERE.
If you like to read our previously published Intelligence Briefings, please click here.