From ‘start-up nation’ to ‘Middlestand nation’

History works in interesting ways. Seventy years after the end of the Holocaust and fifty years after the establishment of diplomatic relations between Germany and Israel, a German historian who studies ancient Jewish communities has helped the two countries find synergies in their business cultures. The Jerusalem College of Technology and the Fulda University of Applied Sciences have now partnered to research two successful, but different very different, entrepreneurial styles: Israel’s start-up nation” and Germany’s “Middlestand enterprise model.”

In Israel’s “start-up nation” landscape, an entrepreneur will launch a company, and eventually there will be an “exit” — sometimes a particularly lucrative one, like Google’s $1.3 billion purchase of Waze or better yet, Intel’s $15.3 billion acquisition of Mobileye. The start-up’s headquarters will then likely move overseas. The problem for “start-up nation” is that the venture maintains some R&D presence in Israel, but loses much of its original identity as an Israeli company.

In Germany’s “Middlestand” environment, many family businesses are small-to-medium enterprises. These businesses often lack the creative, bold, defiant spirit — the “chutzpah” — that Israeli start-ups are known for. German ventures can scale, but they struggle to innovate.

So, how can Israeli and German entrepreneurs learn from each other?

That was precisely the subject of a presentation I gave in 2017to students at Germany’s Fulda University of Applied Sciences as part of Jerusalem College of Technology’s (JCT)academic partnership with that school. The partnership is the brainchild of German historian Dr. Michael Imhof, author of the book “Jews in Germany and 1,000 Years of Judaism in Fulda” as well as the initiator of connections between Fulda University and multiple colleges in Israel.

As part of his research into Fulda’s Jewish history — including interviews with Holocaust survivors and their descendants from Australia, South America, France, the U.S., and Israel — Imhof met Michael Cahn, grandson of the last chief rabbi of Fulda. Cahn lived in Jerusalemand was a friend of Prof. Ze’evLev, JCT’s founder and the namesake of its Machon Lev campus. While Lev died in 2004, I first met Imhof and Cahn in 2013 during a meeting at JCT that aimed to foster German-Israeli collaboration.

Imhof connected me with a professor at Fulda University, and we began collaborating as part of my research on entrepreneurship. Together, we continue to research and publish research papers,

and through Imhof’s initiative, Fulda University of Applied Sciences offers JCT two full scholarships for our students to attend their summer exchange program.

Fast forward to 2017 and there I was, lecturing to Dr. Stephan Golla’s management class at Fulda University about the factors that drive Israel to be an entrepreneurial nation — beginning with the Jewish state’s desire to innovate in order to meet the country’s pressing needs in areas like defense, agriculture, and water.

I explained that aside from the details behind how venture capital investment, R&D, and other factors have propelled Israel’s rise as a global innovator, what it often comes down to is the more intangible factor of the Israeli spirit: the willingness to challenge status quo and the social acceptance of failure.

At the same time, I acknowledged that even success presents challenges, including the challenges confronting Israel in the wake of its entrepreneurial success: how to implement equitable distribution of the wealth which innovation has created, and the need to maintain the high level of innovation required to sustain the Israeli economic model.

The primary message was that indeed, Germany and Israel should learn from each other’s experiences regarding best practices in entrepreneurship — but they do not necessarily need to transform their approaches to innovation in order to solve their problems. They just need to complement each other’s strengths through increased collaboration. We see the fruits of German-Israeli collaboration in both the public and private sectors, including Germany’s Continental AG buying the Israeli cybersecurity firm Argus, the establishment of Hessian Israeli Partnership Accelerator for Cybersecurity (HIPA), and the partnership between JCT and Fulda University.

Moving forward, the modern-day miracle of German-Israeli relations should serve as a continued impetus for the start-up nation and the Middlestand nation as they work together to forge a prosperous shared future that is driven by entrepreneurship and innovation.

About the Author
Dr. Brian Polin is a senior lecturer at Jerusalem College of Technology, teaching graduate and undergraduate courses in management, strategy, and industrial engineering.