The Unstoppable Startup By Uri Adoni Book Summary

The Unstoppable Startup, Mastering Israel’s Secret Rules of Chutzpah By Uri Adoni

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Entrepreneurship isn’t for the weak-hearted. Tech startup entrepreneurs face challenges over funding and convincing investors their ideas work. Israel, a country of just under eight million people, leads the world in high-tech startups. Only the United States and China have more companies on the NASDAQ than Israel has. Venture capitalist Uri Adoni cites the cultural trait of chutzpah as the main reason for Israel’s startup success. A Yiddish word, “chutzpah” means having the nerve to speak your mind and to believe in yourself despite obstacles. Adoni portrays startups that could have failed without a touch of chutzpah and explains how you can develop yours and use it to succeed.

Take-Aways

• Startup entrepreneurs need a healthy dose of chutzpah.
• Startups hatch bright ideas or find new ways of doing something better.
• Follow six chutzpah rules.
• 1. Swim against the tide of conventional wisdom.
• 2. Make a dent in your market or create a new one.
• 3. There is always something new under the sun.
• 4. Earn your stripes by anticipating a need.
• 5. Rules are made to be broken.
• 6. Talk is cheap; show what you’ve got.
• Mission impossible? There’s no such thing.
• Most entrepreneurs encounter failure on the road to startup success.
• You need the right conditions to create a tech ecosystem.

The Unstoppable Startup Book Summary

Startup entrepreneurs need a healthy dose of chutzpah.

Many factors contribute to Israel’s leadership in high-tech entrepreneurship: A supportive government, an educated populace, compulsory military service and top educational institutions. Israelis have an abundance of chutzpah, a personality trait with positive and negative aspects, but a foundational quality of extraordinary organizations and entrepreneurs. However, Israelis haven’t cornered the market on chutzpah; you can develop and teach it.

For startup founders, chutzpah means ignoring conventional wisdom and long odds. For example, in 2015, Liran Tancman sold his cyber-security company, CyActive, to PayPal for between $60 million and $80 million. His revolutionary idea involved preventing cyberattacks from viruses that didn’t even exist yet. Tancman had the chutzpah to pursue his belief that computer viruses mimic biological viruses: as they spread, mutate and adapt, they maneuver around defensive barriers.

“Evolutionary algorithms have been around for years, but no one ever thought of applying them to computer viruses.”

CyActive applied algorithms to forecast thousands of methods hackers might utilize to bypass security measures and to predict a malware worm’s future strains. CyActive used a 2008 sample from the dangerous Poison Ivy Trojan malware and simulated five years of transformation. The algorithm accurately predicted several Poison Ivy variations that surfaced between 2012 and 2013.

Startups hatch bright ideas or find new ways of doing something better.

Tech startup investors aren’t necessarily looking for radical advancements. They might seek to create a new presence in the market or make something easier or cheaper. Investors consider a startup’s potential for going public, merging or being acquired. They want to sell their holdings at a profit.

“Not every innovative idea is a startup, but behind every good startup there’s an innovative idea.”

Successfully developing a product or a technology doesn’t guarantee success. Startups often crash because they can’t get into a market or fail to create a feasible business model. Generally, startups either succeed or they vanish.

Follow six chutzpah rules.

Entrepreneurs refuse to accept the status quo. They believe they can find better solutions. The two college guys who started Google, for example, had the chutzpah to believe their search engine was superior to any other. 

Traditional businesses use familiar, tested models, so proper execution usually ensures some measure of success. Startups have no such template and, therefore, take on more risk. Use the six rules of Chutzpah to navigate this fraught terrain: 

1. Swim against the tide of conventional wisdom.

Dr. Danny Gold, creator of Israel’s Iron Dome defense system, had the chutzpah to challenge conventional wisdom about missile defense. Before the Iron Dome, Israel faced danger from thousands of Qassam rockets fired from the Gaza Strip. In the summer of 2006, 44 civilians died after Hezbollah fired roughly 4,000 missiles into northern Israel from Lebanon. Each rocket sent a million Israelis scurrying to bomb shelters. Israel knew it needed to act, but the idea of missiles that could intercept other missiles in flight sounded like science fiction.

“The Iron Dome flew in the face of deeply held assumptions about what missile defense can and cannot do, about its costs and capabilities.”

In 2004, Israel formed a group to explore its missile defense alternatives. Gold thought about â€œintercepting and destroying” missiles, but worried about funding such a farfetched idea. Still, he refused to drop it. In 2005, he solicited proposals from the world’s top defense companies, but not one of the 14 he received proved sufficient. Gold’s group created their own design and sought private investors in case the government didn’t provide funding.

No one had ever attempted a defense system designed to protect a city with a six- to 10-mile radius. The system had to intercept, not just deflect, enemy missiles. To avoid wasting an intercepting missile, Iron Dome had to detect non-threatening missiles that were defective or headed to open areas.

“In 2012, Dr. Gold won The Israel Defense Prize for the same project he was criticized for three years before.”

Gold’s team worked on the project without government support. Funding finally came though two years later, though the US financial support Gold expected didn’t materialize after an American team questioned the project’s feasibility. In 2009, when the Iron Dome demonstrated its effectiveness, the American team came back, saw that the system worked and approved funding.

2. Make a dent in your market – or create a new market.

Startups must offer better solutions in an established market or create and lead a new one. In 2003, for example, Jerusalem Venture Partners (JVP) pinpointed an innovative opportunity in business intelligence (BI), a sector with two dominant firms. At the time, complex, time-eating BI studies analyzed raw corporate data to find more effective processes and reported only to top-level management.

“(Qliktech) had the chutzpah to believe that business intelligence projects should be simpler, cost less, and reach more people.”

Through its research, JVP discovered Qlik Technologies (Qliktech), a Swedish firm handling easier, cheaper and more accessible BI projects. After a visit, JVP invested in the company. In helping Qliktech grow from a small firm to a global force, JVP paired it with an American venture partner. Qliktech moved its headquarters to the United States and began an impressive upward scale.

3. There is always something new under the sun.

Startup entrepreneurs always seek new ways to disrupt the market. They see possibilities everywhere, but they aren’t foolhardy. They carefully assess each market to anticipate what might be in demand.

“Entrepreneurs are part futurists and part prophets; they are constantly foreseeing ‘new somethings under the sun’.”

Entrepreneurs go against the grain. When companies began storing data in the cloud, popular belief suggested big organizations would regard the cloud as insufficiently secure. The founders of Navajo, a cloud cybersecurity firm, disagreed, and they were right. Within a couple of years, big corporations embraced the cloud and demonstrated that Navajo offered workable, efficient security solutions. Salesforce eventually acquired Navajo; today’s multi-billion-dollar cloud cybersecurity market confirms its prescience regarding future demand.

4. Earn your stripes by anticipating a need.

Eyal Gura, a noted Israeli entrepreneur, exemplifies how you can disrupt an industry by creating a need and introducing a solution. He recognized the medical industry’s lack of sufficient radiologists in the face of growing global demand for imagining services. Gura co-founded Zebra Medical Imaging, which applies algorithms to show computers how to read images more accurately than humans can read them. These diagnoses help healthcare providers understand patient risks, identify and predict diseases, and manage preventative care.

“Large companies definitely do have the funds and the manpower to innovate on a large scale. But they rarely deploy them.”

In 2016, Zebra introduced new algorithms to help forecast and prevent heart attacks and other cardiovascular issues. The same year, Zebra and Israeli Clalit Health Services unveiled algorithms that detect osteoporosis by calculating bone density from CT scans used for other purposes. In 2018-2019, the US FDA granted three clearances for Zebra products. The company also signed a deal with India’s largest healthcare provider.

5. Rules are made to be broken.

A business typically doesn’t give its product away – unless a chutzpah-driven entrepreneur is in charge. Take Waze, for example. The popular traffic navigation app is an Israeli startup founded in 2008. Google acquired it five years later for $1.15 billion. When co-founder Ehud Shabtai conceived of adding Waze to a GPS, map companies objected, insisting that consumers pay for it, as they paid for GPS. Shabtai and co-founder Uri Levine realized that the solution – building their own map – required “tracking user actions.” They understood they had to offer their service for free to obtain data on the scale they required. Investors didn’t care for the concept, believing drivers wouldn’t share their locations due to privacy concerns. They didn’t understand Waze’s value and doubted people would download the app. But Levine and Shabtai had the chutzpah to press on.

“It took us a long time to raise funds. We went fundraising and investors disliked the idea, thought it was crazy.”

Chutzpah also drove three young Israeli engineers who decided six weeks before the December 31, 2010 application deadline to compete in Google’s $20 million Lunar X Prize contest to send a robotic spacecraft to the moon. Since they lacked the required $50,000 deposit or a spacecraft blueprint, their venture – SpaceIL – seemed unlikely to make the deadline. Working furiously, it collected needed funds, incorporated as a non-profit and wired its application in to Google on the final day.

“SpaceIL was committed to using the potential prize money to promote science and scientific education in Israel.”

Eight years and roughly $100 million later, SpaceIL launched its rocket on February 22, 2019 with an April 11 moon landing scheduled for TV broadcast. Problems occurred when the lander was roughly eight miles above the moon’s surface. Though the lander crashed, SpaceIL accomplished its goal of reaching the moon.

6. Talk is cheap; show what you’ve got.

It’s not enough for a startup entrepreneur to discuss grand plans and intentions of market or industry domination. You must demonstrate your novel product or service’s uniqueness and adaptability. TIPA, an Israeli manufacturer of biodegradable plastic packaging, for example, invited consumers into its lab to examine its packaging materials. To convince people to abandon conventional plastic wrap, TIPA emphasized how much cleaner the world would be if everyone used biodegradable products.

“TIPA needed to not just show the materials it invented, but also to prove the value its packaging brought to brands.”

Companies that demonstrate social responsibility and honesty are more likely to grow. A British company using TIPA products tripled its initial order as customers responded to TIPA’s mission. Supermarkets that initially rejected TIPA in favor of their conventional packaging eventually embraced TIPA.

Mission impossible? There’s no such thing.

Because military service is mandatory in Israel, its citizens understand the importance of completing a mission. Unexpected issues always arise. You must adjust and achieve your goal. Apply that attitude to your startup. For example, team members may have to work extra unpaid hours to accomplish their mission.

“There are results, and there are excuses. (Israel Defense Forces saying) â€

Chutzpah won’t help unless you plan properly. Startup leaders must define tasks and responsibilities as they form an operational strategy. Entrepreneurs must improvise, explore every option and persevere.

Most entrepreneurs encounter failure on the road to startup success.

Considering the grim statistics, it’s a wonder anyone takes the startup plunge. But passion – often irrational passion – drives entrepreneurs.Most startups fail. Fully 75% of “venture-backed startups” falter, according to a Harvard Business School study. 

“You really have to fall in love with the idea, and simply not listen to what people are telling you. â€ (Waze entrepreneur Uri Levine)

The top 10 reasons startups fail are lack of market demand, lack of cash, a flawed team, tough rivals, expense or pricing problems, no user appeal, bad business model, weak promotion, faulty customer service or mistimed goods or services.

You need the right conditions to create a tech ecosystem.

Delegations from other countries regularly visit Israel to learn to duplicate its entrepreneurial ecosystem.

“Management by missions means that the organization is forced to define its priorities, objectives, and the means to achieve them.”

Reaching that level takes time and commitment, and requires these “pillars”:

• Talent – Even in tech, talented people don’t have to be engineers or scientists. They might have marketing or security backgrounds.
• “Cross stage funding” â€“ Startups need a variety of funding sources to focus on innovation, customer acquisition and market share. You need money at every development stage.
• “Presence of large corporations and multinational enterprises” â€“ Apple and Intel are among the some 300 international corporations in Israel. They seek access to talent and innovative firms.
• Government help â€“ The government’s investment indicates its level of commitment to tech. Governments that will benefit from startups’ success should share their financial risks.

About the Author

Uri Adoni, a former partner at Jerusalem Venture Partners Media Labs, has more than 20 years experience in the high-tech industry.

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