I'm working for a thriving startup in a European country of 11 million people. We had 100% growth per year until we had basically everybody in our own country and then it got massively harder. If we had started in the USA, we would have reached that point being 30x bigger, making billions of dollars, and much better prepared to conquer foreign markets.

So maybe Israel is doing quite well, but I know from experience that it would also do massively better if it had the size of the USA.

Most of the super successful companies in Israel are either doing things for the state or working for American corporations (or the American government).

Yeah, in general any successful EU/Europe startups target the American market, because Americans are typically richer, and the market is huuuuuuuggggge (relative to European countries, at least).

Or you would have failed. Downside to a bigger market is more competition.

Most Israeli startups target the US anyway. The R&D center is in Israel while sales/marketing are in the US HQ.

As an Australian coming from a risk-averse culture like that in Europe, I would suggest that Israel differs in three ways. I observed these on an official Australian Ministerial trade mission to Israel.

1. The culture is risk taking, with failure an opportunity to try something else. There is no (or little) negative social or professional connotation with failure, unlike say Europe.

2. Thinking is global market first rather than local or regional market. The local market is tiny and there is no regional market.

3. Out-of-the box thinking is the norm and excellent. It’s in-the-box thinking that is problematic in Israel. In Europe the reverse is generally the case.

Israel is a bit special because of the strong military and economic ties it has with the US and the shared strategic goals in the region. Simply put, that Iron Dome we saw in action a few weeks ago involved a lot of US built hardware and support, lots of high tech stuff from Israeli companies also selling to the US, etc. There are many billions involved with that stuff. That means Israeli companies tend to be extremely well funded (with US and Israeli defense money) and produce many equally well funded spin offs. A lot of these startups bootstrap straight out of the IDF even.

Also, Israel has a large jewish community in the US involved with the financial sector that wields quite a bit of political power. And Israel uses English as a second language inside Israel, and is culturally closely aligned with the US.

Israeli companies having funding up the wazoo, especially those that have products with military/security applications.