Israel’s Third Founding Moment - with Yonatan Adiri & Michal Lev-Ram
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If the theory is correct and political ideas and frameworks expire every 20, 30 years, it actually means that countries aren't born, you know, one time by founding fathers. It is actually a work of generation. So you have founding fathers and mothers that give birth to a country or a society in a cohesive and coherent way. And you have a generation of sons and daughters. For us, this was 1985, right? The sons and daughters that refounded Israel. It was Israel's second founding, if you will,

And right now it's on us, right? It's on us, what we call the founding grandchildren. As we say in Pirkei Avot, you know, the work is never done and it's on you to always continue. And you should know you're not going to be the one finishing it. From that perspective, it's an ongoing work. And the rise of the founding grandchildren is, I think, the theme for Israel over the next five years.

It's 3 p.m. on Sunday, April 27th here in New York City. It's 10 p.m. on Sunday, April 27th in Israel as Israelis enter the most Israeli week of the year, marking its Memorial Day on Wednesday, followed by Independence Day on Thursday.

And as Israelis continue to follow the news about a massive explosion at Iran's most important port. That's a story we will be following closely, still learning details. And of course, on this podcast, we'll be getting into the implications in the days and weeks ahead. In case you haven't heard, ARK Media, which we created as a home for the Call Me Back podcast, is launching its second podcast, which is called What's Your Number?,

What's Your Number? focuses on Israel's economy through a global lens. We created this podcast because, well, if you want to understand where the country is headed, where Israel is headed, to paraphrase James Carville, it's the economy, stupid. Now, it's not just the economy, certainly for a country that's in the middle of fighting a multi-front war.

But it is an extremely important GPS to help you understand where the country is going, how it will sustain itself, how it will continue to defend itself, and how the Israeli people will continue to flourish.

So by the time I reach the end of this intro, I hope you'll follow the link in the show notes and subscribe to this new podcast. To be clear, it will be its own feed. What's Your Number will have its own podcast feed. So in order to subscribe, you got to subscribe to that feed, even if you only subscribe to Call Me Back. The first episode appropriately drops on Thursday, Israel's Independence Day.

On today's episode of Call Me Back, I will be speaking with Yonatan Adiri and Michal Lev Ram, the hosts of What's Your Number? to discuss whether Israel's current social political system is too broken to fix and needs to be transformed in order to meet the country's internal needs and adapt to a rapidly changing region and a rapidly changing world.

This conversation will not be typical of the conversations on What's Your Number? But Yonatan and Michal are both big thinkers about a big topic we've been focused on here on Call Me Back. So I wanted to use this opportunity to both introduce them to our listenership and also dive into this topic. So Yonatan, Michal, with that, thanks for being here. Thank you, Dan. Thanks for having me back.

All right. So before we dive into the big topic I wanted to get into on this episode of Call Me Back, I just want our audience to learn who you are. Now, Yonatan, you have been on this podcast before. Michal, you are a longtime listener from what I've been told. First time guest. Absolutely. So I wanted to first give folks an opportunity to hear about your respective backgrounds. Michal, I'll start with you. A word about you and your background.

and the new podcast. Sure. Well, for starters, I will say it is 12 p.m. in Palo Alto. So that gives you a little indication of... On April 27th. On April 27th. So yes, from Israel originally. Otherwise, I probably wouldn't be sitting here in Palo Alto with an unfortunate, unpronounceable name like Michal. But my family left Israel in the late 80s. Both my parents worked in tech. And so it's a very classic

Israeli Bay Area story, came here for two years for the tech industry. And, you know, here we are all these years later. I personally myself wasn't interested in working in technology. I always wanted to be a writer. So I became a journalist. And what I discovered is that while I didn't want to work in technology, I love covering the tech industry. I've reported on it and written about it.

for a long, long time, primarily at Fortune, where I'm still a contributing editor. I've written quite a bit about Israeli companies and Israeli founders, because, you know, you can't really be a tech reporter without doing that. And of course, I've got my own interest and, you know, investment in the area and connection to the area. But it really wasn't until after October 7th that I think

Things kind of shifted in my perspective like it did for a lot of us. And I really wanted to focus in on this question that gets us to the podcast, to the new podcast, What's Your Number?, which is really about the role that the current and future Israeli economy and its place in the global economy, which is still a thing, by the way, despite what you read in the news.

The role that that plays in the survival of the country, we are entering this new reality. We are entering a kind of reshaped Middle East. And so what role does Israel play there? And, you know, hopefully we'll get to focus on that a lot.

All right, Yonatan, our listeners, I think, know you from having been on the podcast before. But for folks who haven't heard from you before, tell us a little bit about your background. First of all, it's great to be back. And it's a great opportunity, as Michal said, to open up this new feed through What's Your Number, where we're going to focus on the Israeli economy and what matters most on a weekly basis. My background, I'm 43 years old, a father of four, married to Maureen, who made Aliyah here to Israel, to Tel Aviv about 15 years ago from Switzerland.

Spent the first decade plus of my career in the public service. In the last role, I had the huge privilege of serving under President Shimon Peres as his chief technology advisor. And then after a NASA-hosted training, went back

to serve also as his diplomatic advisor, an incredible opportunity, a great privilege to understand, you know, the behind the scenes of the Israeli geopolitical space when it comes to tech and diplomacy, and then spent the last decade in tech

being a member of the founding team at GetAround.com and then founding and CEOing up until about a year and a half ago, Health EIO, which was a global pioneer in AI and healthcare, the first to get an FDA clearance for AI and diagnostics.

I'd say over the last year and a half, back in public service, writ large, kind of broadly speaking, really with my kind of sleeves around the elbow, busy with, you know, getting back to making Israel the best place on earth. And, you know, really, what's your number? Is this part of that journey from my perspective? I will say, first of all, I was amused that Michal, who's also a parent, didn't let us know how many children she had. I didn't realize we were supposed to do that. So I

would like to say for state for the record that I have three children, which in the United States is like having four in Israel. So it was very Israeli, though, to start with the number of kids you have. In any event, we will include all that maybe if there's room in the bios of the podcast. OK, so I know Alana and I are very excited about the launch of What's Your Number? And I am also very excited to be listening religiously and not having to talk.

Not only do I think this is going to be a high quality, very engaging and fun podcast and actually very important for this period I think Israel is entering, but I will also enjoy having at least most of the time passive engagement with it. Although from time to time, I won't be able to resist and I'm going to pop on and force myself as being a guest into your guys' conversation. But I want to jump into today's conversation.

And Yonatan, before we talk about the transformations Israel has been going through, both in the past and the future,

Can you start by, and I know this is something you've been giving a lot of thought to, can you start by explaining what it means for a country to go through a transformational moment? We all use that term all the time. You know, Israel's been going through a transformational geopolitical period. The geopolitics of Israel are more transformed, and I actually believe, stronger, at least in the Middle East, than at any time in the country's history since the Six-Day War. But so people throw this term around. What does it mean for a country to go through one of these periods? Yeah.

I think that fundamentally what we need to understand is that political ideas, very much like other ideas, very much like consumer products, have an expiration date.

So a transformation period happens, I would say, every other decade, every kind of 20 to 30 years, whereby fundamentally the political idea has expired. Countries, societies have seen that time and time again. Margaret Thatcher and President Reagan in the late 70s, where it takes a while for a political system to differentiate between what may seem like

Things that are few and far apart could be inflation. It could be some geopolitical ruptures. And we always tend, you know, this has been researched heavily. Even Nobel Prizes have been awarded for Dan Kahneman and others who have discovered these biases whereby we have this confirmation bias. We always want to fit what we see in reality to the existing idea, business, political or otherwise.

transformative periods are when leaders understand and effectively communicate it also to the public that things are beyond fixing and therefore the country, the society must undergo a transformative period. I think a great example is Margaret Thatcher, who already in 1976, 1977, very effectively communicates in the UK as she's a member of parliament that

that the reforms the country was going through in education and otherwise were not going to make the difference that the reformers thought they're going to make because the fundamental issue with the UK is the expiration of the political framework. And she put it in different speeches, and if I kind of paraphrase it,

there are three things that you got to go back to in a transformative moment. One is what's the geopolitical stature, position, posture of the country, of the society. So Thatcher basically said, Hey guys,

The big issue is Great Britain is not going to be Great Britain anymore. And the best we're going to have in the late 70s is to be the best number two to the United States of America. This was a very like a massive fundamental rupture in how the UK saw itself, the political idea. The second story she brought forward was what's the nature of our socioeconomic contract? Is it still intact or has that also expired?

Thatcher effectively says the model we built, 1910, 1920, whereby us living on the island have a great public service for free, public products, because India is paying for it, because other colonies, well, guess what? No India, no one's paying for that. Therefore, she goes through and leads various aggressive market capitalists, if you will, transformation of the UK economy.

And the third piece is in a transformative period, the entirety of the updated political idea that she put forward was the big story. We're no longer the empire where the sun doesn't set. And she kind of put forward this idea of the UK as the empire of ideas, where the dawn of ideas from Liverpool and the Beatles all the way to, you know, the DNA and Oxford, Cambridge and so on and so forth. Now,

Dan, the thing is that when the leadership emerges that says outside what's called the overtone window, hey guys, you may think these things are few and far apart, but actually they're not. They actually indicate to us that it's the collapse of an entire expired political idea. You get scolded.

You introduce diatribe into the political context and then people just want to hug and they don't want this kind of person kind of nudging them. Right. Because, you know, the reform feels nice. And for three years she ended up, you know, defending her thought process, ultimately winning political power and transforming the UK. OK, so I get Thatcher in the 70s and I get Reagan in the 80s.

In many respects, we're a response, say, to the continuum of FDR to LBJ. That was like one big transformational moment. Are there other examples that you guys can think of? Michal, I don't know if there are any that come to mind in other countries. Yes, I'm going to jump in here with a few examples of leaders who are still alive, just in case for some of your younger listeners, you know, maybe this one. Hey.

You have not looked at the Call Me Back survey. That speaks to a very young, vibrant listenership. By the way, you'll also notice that when I said the number of children I have, I didn't say my age because I'm actually older than Jonathan. So there's that. I'm going to regret my opening of this episode. I can see that. Okay.

But anyways, all due respect to Thatcher and to Reagan, India and Saudi Arabia, which I know we'll get to a little bit more in depth later on. But both of those are great examples of leadership with, you know, undergoing and leading through some of these huge transformations, difficult transformations and paradigm shifts that Yonatan is talking about. So in the example of India, if you go back about a decade, Modi understood that he's going to have to make some very quick

and bold moves in order to compete with China. And he sees a couple of things, at least a couple of major hurdles, and that's both black market activities and corruption. And so he does a couple of things which were very ambitious and hard. One of those was rolling out the largest ID program, national ID program in the world. India, by the way, has a population nearing 1.5 billion. It's surpassed China's.

And interestingly, very bold move also takes the largest bills, 500 and 1000 rupee bank notes out of circulation. At the time, this accounted for more than 80 percent of currency in circulation in India. This was hugely unpopular back then. It really dented the growth for India. But fast forward to today and in just 10 years, GDP has doubled.

Not only because of this, obviously, population growth and all sorts of other factors have contributed to this as well. The other one, like I said, Saudi Arabia. I think we're very familiar with this one. And it's going to continue to be a hot topic on both of our podcasts. But Crown Prince, MBS.

sees the need to diversify away from oil. This is a very hard thing to do. The thing that comes to mind for me right away is Google for years saying it needs to diversify its revenue stream from search. Easier said than done, right? Still accounts for the vast majority of Google's revenue. But anyways...

back to MBS, he embarks on this insane amount of money that's flowing into all sorts of different sectors, tech and sports, tourism, you know, basically like anything that makes money under the sun. And that's the Vision 2030 program, of course, which is still in process. So, you know, we can't call it now, but an amazing, amazing, ambitious undertaking. And with MBS in particular, one Saudi official told me that

that when I asked him, this is post October 7th, if normalization was still on track with Israel, and he said there will absolutely be normalization. And I was struck by this because I thought, or I was curious as to whether or not October 7th and the heat around the Palestinian issue would upend the path to normalization. And this Saudi official said to me, he said, "Look, you need to understand, MBS has established these 2030 goals, as you said, that are the goals to reach the modernization of Saudi's economy.

We can't meet those goals if there are regional wars in the Middle East, big regional wars, like the '73 style war, '67 war. It could destabilize the region. So normalization with Israel is about many things, obviously dealing with Iran and dealing with Sunni extremism and co-innovating with Israel, but it's also about just trying to bring the temperature down in the region

Yonatan, when we spoke offline, you described October 7th as Israel's third transformational moment. So you're basically arguing Israel is in one of these moments. It is Israel's third transformational moment. And that was what I was most struck by. It's like, why third? What were numbers one and two? So I think, you know, as many things in Israel, they go back to the legendary David Ben-Gurion.

David Ben-Gurion, I think the most interesting period in his journey is November 30th, 1947, the day after Israel gets voted, Israel's independence gets voted in the UN General Assembly until the War of Independence. In that period, David Ben-Gurion understands that the political idea he put together in the 20s and 30s

has effectively expired or is about to expire as Israel's about to embark on its war of independence. The geopolitical posture, which was focused solely on the United Kingdom, right? That was the last 30 years, is about to expire because this is going to be what Ben-Gurion called the game of nations. So he understands the transformative period and puts in a new political idea from a geopolitical posture. It sort of pushes out

the almost religious focus on the UK and introduces what he calls a game of nations. Little did he know this would be later called the Cold War.

And when it comes to the national kind of contract, the socialist contract that he used to effectively communicate for the Olim, for the immigrants into Israel in the 20s, 30s, 40s, was about to, has effectively expired because you cannot promise people, you know, a life of socioeconomic growth when you're about to enter a pivotal war. My grandfather from Iraq died.

You know, always said I came to Israel because of a contract that was promised by Ben-Gurion saying this is where sovereign Jews will walk proudly with a yarmulke from their home to the synagogue. My grandfather was really traumatized by the Farhud in Iraq, and that's what he wanted. Most of his family were interested in socioeconomic benefits. They didn't come to Israel because that was not the contract Ben-Gurion reintroduced.

And I think the third piece, what was the big story? 1923 to 47, Ben-Gurion and the Yeshuv were offering people the story of negation of the diaspora. Come build a new Jew, a sovereign Jew.

I think, again, understanding where the war was going. Tom Segev just wrote an amazing book, A War at Any Cost, Milchama Bechol Mechir in Israel. Biography of Ben-Gurion. Yeah, in which basically what you understand, he kind of said, this doesn't work anymore. The new idea must be Zionism as an MVP, right? Minimum Valid Product, as we would say, Michal, like in the tech industry, right? There would be democratic constraints. We're not going to be the kind of most pure democracy come 1949. We're going to do whatever it takes.

to get this rolling and to bring about prosperity just in numbers. We are now 10x population than we were in 1949. We are 430x GDP. Wow. Something worked really well given where that went. Now, Dan, you were saying LBJ, right? So like FDR to LBJ, very similar timetables here. 1977,

Israel, you know, has the political kind of change. Menachem Begin comes into power. And instead of understanding that part of the reason he came to power was the expiration of the old political idea, kind of pushes the can down the road. 1985 is the second transformation of Israel. If you will, the second founding of Israel. We are at 400% inflation. We are at 140% debt to GDP.

75% of the Israeli economy was state-owned in 1985, right? We are four weeks away from bankruptcy. And so the unity government, I spent many, many hours with President Peres talking about that. He happened to be the prime minister at the time. Just for our listeners to understand, so a Likud-Labor jointly-led government, very rare. It happens from time to time in Israel's history, not the least of which is during the Six-Day War for national unity purposes. It would be like Israel.

Democrats and Republicans coming together and saying, we're going to populate a cabinet together. We're going to I mean, it's not a perfect comparison because it's not a parliamentary system, but it shows you how dire the situation must be for both parties to agree to do that. And it's a great point because they realize the hour was so critical four weeks away from bankruptcy, from default on the debt.

And so the answer that they came up with was a fork in the road, right? Either we go for, you know, like an IMF plan, some kind of reform, or we go back and recognize the fact that what we're looking at here is the expiration of the 1947 political idea.

The geopolitical posture has expired. The national contract has expired. And our kind of idea has expired. And they come up with new answers to those three. These three concepts that they put in place in 1985, right? They took out the game of nations as a geopolitical posture, put in the alliance with the U.S. This is 1985-86. Very clear who's going to win the Cold War. And Israel sort of bets big on the West, right? The second piece is massive privatization.

Israel reinvents itself as the most capitalist social democracy in the world. 20,000 state employees get fired in a number of weeks. The original doge was introduced in 1985. Without masks. Be careful with the original doge. Now it's going to be back to blame the Jews. You know, we're providing fodder. And, you know, the third piece there was permanent borders. The state of Israel after annihilating the Iraqi reactor, peace with Egypt.

had this idea that time has come for that. And that served Israel. That political concept, the framework,

had served Israel really well over the last 40 years since 1985, but it has effectively expired. I would say a good, some would say in the disengagement from Gaza, others would say around 2010, but we haven't seen that because the Israeli economic system and the society and the growth kind of kept us from seeing that. And so we interpreted everything that happened in Gaza and in the region as

as what you would call another round of hostilities. What happened in October 7th is a wake-up call, not just from a geopolitical perspective. It is the expiration date

of the comprehensive Israeli political idea that was introduced in 1985. Okay, so I want to come back to the October 7th to now and like how you're envisioning 2025 and 26 and these next couple years fitting into those comparable periods for the first two transformations. Before I do two things, one, just one historical nitpick. I agree with you that Israel made a strategic bet in the 80s to be on the U.S. side, although it really had been on the U.S. side well before that. And it was not

I mean, in 85, it wasn't clear. Three years, three, four years later, it was clear. But in 85, it wasn't clear that the Soviet Union was going to come tumbling down. And I think that was as much a bet on there was strategic interest, obviously, for Israel to be on the U.S. side, but also shared values, shared history. Michal, you, like many Israelis who lived in the 80s, your family was very directly impacted by this crisis of 1985.

Yeah.

Yeah, absolutely. So I will say in 85, I was five years old. So now you do know how old I am. So I don't remember. If I ask the questions just the right way. Absolutely. I mean, I think it's a critical piece here. But long story short, my dad died.

was an engineer for Israel Aircraft Industries. He worked on the Levi project, which probably a lot of your listeners will be familiar with, but was an Israeli, very expensive, very costly, but also a huge source of national pride program for Israel to design, to engineer, and to ultimately manufacture, to produce its own fighter jet.

My dad was at Israel Aircraft Industries from 74. He ultimately left in the mid 80s and he left because the program was very painful decision, very unpopular decision was cut. He kind of saw the writing on the wall. So he left before massive layoffs ensued. Just to provide some historical context, I'm actually obsessed with the Levy story. We had a chapter on it in Startup Nation.

Two things. One, Israel did not have – just to explain what a big deal it was that Israel pursued the Levy. It's actually very relevant today, meaning there's a big debate about whether or not Israel has an independent enough defense sector, industrial base to support a defense sector. If there's a debate about whether or not it does today, it certainly was a serious matter here 40 years ago.

that Israel did not. And so the L'Avi program was about building that base, right? Building that capacity that suddenly Israel is going to build its own fighter jet. It was, if it had been successful, and I understand that it wasn't, it was a huge development for Israel. Yeah, absolutely. I mean, my dad put his, you know, blood, sweat and tears into the project as a lot of other Israelis did. And this ultimately, you know, upon leaving Israel Aircraft Industries, you

He looked for a similar job in really the only place he knew he would find it and landed in Moffett Field in the Bay Area here, where he worked on simulation technology for a couple of NASA contractors. If not for that, you know, which ultimately you can debate good, bad. I mean, I'm certainly feel very blessed to be where I am today. But if not for that, I'd probably be Yonatan's neighbor in Tel Aviv right now. Yeah.

Well, but also, I mean, your family wound up in the Bay Area. A lot of Israeli, like, avionics engineers who were working on the Lavi wound up ultimately populating parts of what was to become the Israeli tech ecosystem. Yeah, Gen 1. Gen 1, right. Also, just for the historical record, it was canceled because of budget overruns, right? It just got so costly. I just want for our listeners to understand what actually, why it ended. And by the way, I should add, I asked my dad about this just recently, and he said,

To this day, you know, all these decades later, he says it was such a painful time and he really doesn't want to rehash, especially the politics that were so, you know, alive and toxic at the time. Because, again, these were massive cuts to really important programs, not just for security, but also a source of national pride. It was a very difficult time and very difficult circumstances. But I think Israel, you know, again, the GDP went 10x earlier.

since 1985, right? The privatization, this prepared Israel for the absorption of a million Russian Jews who came from the imploding Soviet Union just a number of years later. And you and Sol wrote about this and sort of how that kind of coalesced to create Gen 1 of the Israeli startup companies that ended up in Wall Street and then kind of came back with capital. Then came Gen 2.

I think the genesis for that was a very brave political administration to admit what we're looking at is not fixable. It is a transformative moment. And what we're looking at is the expiration of a political framework that worked really well for 30 years, but it's dead. And trying to bring it back to life is not going to work.

And we're going to have to make some tough decisions that are unpopular. Okay, so Yonatan, with that, what do you think the similarities are between 4785 and today? There's a beautiful point made by Hannah Arendt many years ago. She calls it the coercive power of truth, right? Like we can sit here and say, oh, Hamas doesn't want to, you know, it's deterred, this, that, and the other. And our mindset is,

would be totally offside with reality, at some point reality will do its thing and coerce itself on our mindset, right? On our paradigm. October 7th should be, in my view, that point in time where we say, okay, no more lying, right? We can't just kind of, you know, lie to ourselves. What we are looking at here is not some few and far apart elements. It is the expiration of the comprehensive, you know, political idea that Israel took with it over the last 30 years, just to keep it very brief, right?

I think the geopolitical posture that at the core of the Israeli geopolitical posture is a term coined by Ehud Barak, which I think has been detrimental and horrible for the Israeli national security over the last, I would say, 15 to 20 years. If it even was relevant at some point in time, which is the villain, the jungle, the idea that Israel is the villain, the jungle, it is the only democracy in the Middle East.

It is the forefront, the aircraft carrier of the Western values. It is not indigenous. That sort of is implied by that. Therefore, it builds walls, right? It builds fences, it disengages, and the sort of surrounding Middle Ages will figure themselves out over the next century or whatever. And we're just going to plow forward and keep the villa safe. That has died before October 7, but October 7 should be the signal that this villa in the jungle concept is dead already.

My perspective is the next idea, and going back to what, Dan, how do you mention about MBS and what's going on in the Middle East? Israel should see itself as indigenous. It should put in place a series of regional alliances that have India in its eastern flank as the core ally.

and Ethiopia at the Southwest, sort of kind of like in the Megillah of Esther, right? How do I push like from India to Ethiopia? There's a lot to unpack. We're not going to do it here. We're going to probably touch upon it from an economic angle at what's your number. But I think,

Kill the villain in the jungle. Understand that that's a bad posture. Adopt a vision for the Middle East. The second piece here is what's our national socioeconomic contract, right? So we were talking about the contract from 1985, heavy social democratic welfare state, but with very aggressive free market dynamics, right?

Dan, Michal, we all know the ultra-Orthodox weren't as big a society as they are today. The world is not the same world. This simply doesn't work anymore. I think the crisis of the welfare state or the social democracy in its European shape and form from like the 1990s is dead. We need to accept that and we need to basically bring forward an entirely new socioeconomic vision for Israel, a contract, if you will. All must go through a radical shift.

because they've all fundamentally expired. So, okay, sometimes when Jonathan talks, I have this image of him being like this balloon that's like floating in the air. You have all these incredible, well thought out, lofty ideas. And I'm like this little kid who's holding the string that's attached to the balloon and I'm like, pull on it every once in a while. Okay, so 1985, we talked about how painful that was from an economic perspective.

perspective and how Israel's back was against the wall. We're not in that. You know, Yonatan, you talk about the piggy bank, the $220 billion piggy bank that Israel is currently sitting on. And despite the war, despite the tragedies, and this is ongoing, of course, you know, the relative resilience of the economy. So how do you push for this in a real way, given all that?

Michal, I think you hit the nail on the head. That's the main question. That's what I'm busy with here in Israel, with colleagues, with friends and political movements and so on. Is it even possible to drive radical political shifts, right, to get the public to understand that what we're looking at is an expiration of a political idea before the calamity, economically speaking, on the daily level? I was naively thinking that.

on October 10th, 11th, when I started talking to Israeli politicians, people in the media, that everybody understands that what happened, this invasion...

in October 7th is that warning signal that we need to understand, recognize there's been an expiration of the entire political framework. And you're totally right. I think that hasn't been the case in Israel. So I think to keep it kind of simple, if you imagine, you know, countries competing geopolitically into sort of the deep ocean, right? It's dark, 200 submarines competing with each other. What determines which submarine wins? So

So three variables. It's the quality of the submarine itself, what it's made of, its radar, its missiles, its engines, the people down there. Then there's a variable number two. Who's the admiral, right? Who's at the bridge? Who's conducting the submarine? Those are the two key parts of the Israeli national conversation about what's wrong. Parts would say, oh, the submarine is shitty. The police is rotten, this and that and the other. And everybody has a theory about what's

how badly the submarine is doing, or actually, I would argue that, you know, as of, you know, the last sovereign Jew to have to be so wealthy and so strong in Jerusalem was King Solomon, right? The submarine is actually in very good shape. The second argument in Israel, the theory of sort of what's wrong, and Dan, you had Ari Shavit on the show, you've had some of Israel's top politicians over the last couple of months, is Bibi, right? It's about the admiral. Get him out of there, and then it's all going to work out.

My argument is it might be part of the submarine. It might be part related to the Admiral. It is fundamentally about the periscope. That's what's really broken in Israel right now. And I think that if the conversation shifts in that direction, then we can kind of start creating our own path into the future because evidently we had a government without Netanyahu. So we had

some more or less the same submarine without the Admiral. And we didn't really sail into different directions fundamentally. And until that realization is there, that the political idea and framework have expired to an extent that we're looking at through a periscope that's broken. I think that's a kind of step number one for the transformation, the third transformation of Israel.

If you come back to Michal's point about the, I guess to paraphrase Rahm Emanuel, you know, never let a good crisis go to waste, that there was this crisis in 85 that forced things. There are so many crises now, one of which, and you said it's not about the ultra-Orthodox, but I do think that if Israel is now in a world in which, well, it may not be, you know, the villa in the jungle, it is a country that will probably have to be in a position to not only deter threats, but remove them.

actively remove them which means being able to fight in multiple places on multiple fronts

often simultaneously, it calls for a much different army than existed in a much different military doctrine that existed through almost all of Israel's history. And it's only now changing given the length of this war and given the kind of resources, the kind of human resources that are being called upon to sustain this war effort. And that's where, say, the issue of the Haredim and their exclusion from military service comes into sharp relief before October 7th.

Yeah, you know, you talk to Israeli decision makers and planners, they'd say, yeah, this problem's a problem with them not serving, but it's manageable and we'll deal with it at some point. And then suddenly you have these fissures right now, even in the current Israeli government, where you have like the ministers from the national religious parties, regardless of what people think of them, a big part of their base is serving in the army or serving in Miluim. Many of them are getting killed and they're looking at the Haredim,

And saying, you know, where are you? And so that forces or has the potential to force a resolution and ultimately a massive reform effort. I don't know if it will. I may not be as optimistic as you are. But of course, these are the things that bring these issues into focus. No doubt. But let me just give you like 60 seconds of sort of maybe a different perspective. When you look at policy, right, it's always tradeoff. You're not looking at absolutes. You're looking at tradeoffs.

I visit a lot of European heads of state or ministers or stuff that I do on the business side or the investment side these weeks. What you're looking at Europe is zero birth. So it's either you have a problem with a very healthy, you know, the best in the OECD organic demographic growth that is in Israel, that in part is ultra orthodox and Arab, but also kind of mainstream Israelis. Michaly, you were making the point about the four kids. Totally right. Right. Right.

And there's a question of exactly as you put it, Dan, how do you make, how do you kind of create a modus vivendi, bring those people into the Israeli dream? Very tough challenge. But these people, as Netanyahu, as Minister of Finance, proved in 2003, are amenable to economic shifts. And if there's a strong political coalition over the next three to five years that drives the right incentives, I think it's doable. Whereas in Europe, with almost zero babies, I would much rather have the Israeli challenge, which I agree with you is a grave challenge.

But I'd much rather be in the seat in Jerusalem with that, as opposed to how do we convince people to give birth and manage, you know, the macroeconomic dynamics. You know, France is at 115% debt to GDP with heavy pensions. I mean, I would not kind of shift into zero or near zero growth. I would rather have the Israeli challenge alive.

of Arab and ultra-Orthodox birth rates, and how do you create a thriving society out of that? - I completely agree, and by the way, high fertility rates, high birth rates are a sign of optimism in one's country and one's society, and the fact that Israel

This is something Saul and I wrote about in our most recent book. We had a whole chapter on this, that the fact that Israel outperforms in this area tells you something going on about the attitude towards their country, not just in the ultra-Orthodox community, but across the religious spectrum. Secular Israelis are having lots of children. Michal, I want to, before we wrap, I know you and Yonatan will be getting into this more in What's Your Number?, but you've been covering the tech industry for two decades now.

Just briefly ticking off what you see as some of the threats and the opportunities for Israel's tech sector, because it's obviously what you guys will be covering quite intensively on What's Your Number? But it also relates to...

to this conversation because the vibrancy of Israel's tech sector is indispensable to the growth of Israel's economy. And as we've said, the growth of Israel's economy is indispensable to Israel's position in the region, in the world, and its continued success and flourishing. Yeah, absolutely. I mean, I think it's interesting because Yonatan is proposing this paradigm shift and as Israel is,

facing all these multiple crises. You know, we've got one of the largest, the biggest, most impactful technological transformations underway. And that, of course, is AI, what we're all talking about. I think that presents a real opportunity, a challenge, too, for Israel, of course. But we've had such dominance in cyber for so long. We talked about Wizz.

huge success story, the biggest, but there are others, of course, over time in the Israeli tech sector. And this is the next thing, you know, can Israel parlay that success, that dominance into AI? Clearly right now, the US and China are the leaders, they're duking it out. But there are other smaller countries that have the ability or the possibility, I guess, of becoming a viable

third option. And Israel is definitely one of those countries, could be one of those countries. That's huge. Another challenge that I would say, and this feeds into the challenge of becoming a major player on the AI side, is are we looking at a brain drain? Because that

is going to be really detrimental for the Israeli tech sector and ultimately the overall economy, of course, and the future of the country. We talked about all of the, you know, you just brought up the Haredi bill and everything that's going on internally.

this is having big effect. It's hard to know just how much at this point, because there's a lot of like anecdotal numbers. It is really hard to tell what the brain drain looks like. But I would say anecdotally, we are seeing signs of it. And earlier on a few years back, like during COVID, there were a lot of families, I knew Israeli families who were going back to Israel. The war happened, everything kind of came to the judicial reforms, you know, all this stuff. And

I'm kind of seeing the opposite now. You know, I know this is not a real scientific barometer here, but my kids' Jewish day school enrollment is up and it's mostly Israelis. So... The question is whether or not it's like past patterns, because it's not just during COVID, but even in periods before that where...

we wrote about this in Startup Nation that there was this concern even back then when we wrote the book about brain drain, but we argued that it was more brain circulation than brain drain, that Israelis leave Israel, they go to the Bay Area where you are, Michal, they work for a few years, they actually develop incredible experience working for large companies, which they wouldn't get

back then, at least work in Israel, and then they move back to Israel when they're, you know, to raise their family. So is this a moment of brain circulation? Are we really in a brain drain moment? Yeah, I think it's really hard to tell. And you know, the irony is that actually, the way it used to be is that if you raise money from, you know, one of the big VCs out here on Sand Hill Road, Kleiner Perkins, or Sequoia, or whomever, a prerequisite for that funding was that you as an Israeli founder had to relocate to Silicon Valley. That's actually

no longer the case and COVID played a big role in sort of the redistribution of tech hubs and tech power. It's different today. I think arguably, you know, yes, you still need to have a presence in Silicon Valley for sure, but you don't necessarily need to relocate. But I do think that what we're seeing, and again, it's anecdotal and who knows where things actually net out.

I do think there's an issue here. I do think it's growing and it is not, you know, all about October 7th at all. It predates that. If you look at who was really leading a lot of the powerful, most vocal, most kind of well-resourced movement against the judicial reform and some of the internal strife in Israel, there were a lot of tech leaders involved in those movements and they're still very unhappy.

They're still very unhappy and yet they're still very engaged, though. Yeah, and I think, you know, you can look at it the other way around, looking at where tech industries and older industries that were critical for growth in countries ended up actually siding with the status quo. I think it's a badge of honor for the Israeli tech industry for being active, for going out there, for making their voice heard. I actually see that as a sign of

engagement, involvement. I don't want to kind of belittle that. I think, Michal, I think you're totally right. It's a risk that we should keep our eye on. We're going to talk about that a lot over on What's Your Number and kind of try to decipher the data from time to time. I would say, though, that the overall sense is that the output is very strong. You were mentioning Wiz. We've had another record quarter in terms of capital raise again.

I don't want to say it's a parallel track, but I think the robust nature of the Israeli knowledge economy is proving itself once again. I'm very upbeat, but I think you're right. There's a red alert there to keep an eye on. Before we wrap, and I have one more question for you, Yonatan, and then we will wrap. One thing, Michal, just another sector that I hope, what's your number you guys will look at, but I may have to get in on my little boutique niche podcast, but it's the whole defense tech sector, which I think

After October 7th, you could basically point to two laboratories in the world that are the laboratories of the future of warfare, which is Ukraine and

and now Israel in the Middle East, or Israel on its various borders. And we're watching the future of warfare as it relates to AI, as it relates to drone warfare, as it relates, in Israel's case, to tunnel warfare. This is the future. Everyone's watching. I hear this from American officials and American planners and American investors. The future of warfare is playing out in Ukraine and Israel. In Israel, you have this ecosystem. There's some tech talent in Ukraine, but in Israel, you have this critical mass of,

of technologists who not only are technologists, but many of them have been called up to fight in the war. So they have this unbelievable experience of fusing their tech talent with their war fighting experience. And I think, you know, this organization, Startup Nation Central that has this tracker of startups by sector, some tracks, I think something north of 150 defense tech startups already in a country of six to 7,000 startups. And that's only growing.

And so that, I think, will be a big part of Israel's future tech story. And also, back to a previous part of our conversation, deepens Israel's relevance and indispensability globally. First of all, I agree, completely huge opportunities there for Israel. And we're starting to see glimmers of that, including VC money coming from the U.S. into Israel to defense tech startups.

This is all happening as Europe's undergoing, you know, the largest rearmament since World War II. So still TBD, where are those, you know, euros going to be going? Companies from which countries? Is it going to be more of a protectionist kind of strategy? And is it going to cutting edge technology? So a lot of questions. And will they be comfortable buying Israeli armaments? Absolutely. That's a big, big question. All right. Before we wrap, Yonatan, I've heard you speak of the need for the grandchildren of the founding fathers to become founders themselves.

which is relevant not only for the conversation we're having, it's especially relevant as we approach Israel's Independence Day. So can you tell me what you mean by that?

So I think if the theory is correct and political ideas and frameworks expire every 20, 30 years, it actually means that countries aren't born, you know, one time by founding fathers. It is actually a work of generation. So you have founding fathers and mothers that give birth to a country or a society in a cohesive and coherent way. And you have a generation of sons and daughters. For us, this was 1985, right? Right.

the sons and daughters that reformed, that kind of refounded Israel. It was Israel's second founding, if you will. And right now it's on us, right? It's on us, what we call the founding grandchildren. As we say in Pirkei Avot, you know, the sages say, you know, the work is never done and it's on you to always continue. And you should know you're not going to be the one finishing it. From that perspective, it's an ongoing work. And the rise of the founding grandchildren is, I think, the theme for Israel over the next five years.

Can I just say real quick that I found out here about a whole other side to Yonatan Adiri. Rabbi Yonatan, I should say, he is now quoted from Megilat Esther and Pirkei Avot. Well done. I'm looking forward to what's your number. Yeah, exactly. I'll quote from Numbers, the book of Numbers. Exactly, the book of Numbers.

Unquote from the book of Numbers. That's my contribution. By the way, not to pile on here, Michal, but I was also amused that Yonatan kind of managed to weave into a mid part of the conversation that his grandfather came to Israel from Iraq, therefore giving him another opportunity to revisit his bio, which he didn't get enough detail out in the front end. So if we want to explore Yonatan's family tree, we'll do that in answers to certain questions. In the notes. We'll add it to the notes. Show notes. Can I give a shout out to Michael?

grandfather yeah that's what I'm thinking what about parody here he had a makolet at the market in Jerusalem so we both Yonatan

Yonatan and I, by the way, you know, we talk about a lot about the American dream here. This is the Israeli dream. So we may not have created Wiz, but, you know, that's right. Success stories. Who knows? Life is long. All right. Michal and Yonatan, thank you for this conversation. And again, I am very much looking forward to What's Your Number? And I strongly encourage our listeners and subscribers to subscribe.

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