Call Me Back - with Dan Senor - Israel’s Third Founding Moment - with Yonatan Adiri & Michal Lev-Ram

Episode Date: April 28, 2025

Subscribe here to Ark Media’s new podcast 'What’s Your Number? - https://lnk.to/3AQhX5Watch Call me Back on YouTube: https://www.youtube.com/@CallMeBackPodcastArk Media on Instagram: https://www.instagram.com/arkmediaorgTo contact us, sign up for updates, and access transcripts, visit: https://arkmedia.org/Dan on X: https://x.com/dansenorDan on Instagram: https://www.instagram.com/dansenorToday we have a special announcement: Ark Media, which we created as a home for Call Me Back, is launching its second podcast: What’s Your Number? - a weekly show focusing on Israel’s economy through a global lens.Hosted by Michal Lev-Ram, an Israeli-born Silicon Valley-based tech journalist and contributing editor at Fortune, and Yonatan Adiri, an Israeli entrepreneur and former adviser to Shimon Peres, What’s Your Number? unpacks the latest developments in the Israeli economy. The podcast debuts this Thursday, May 1. Watch the trailer and subscribe here: https://lnk.to/3AQhX5This episode of Call Me Back is something of a hybrid between our show and a preview for What’s Your Number? It was our pleasure to sit down with our new hosts, Yonatan Adiri & Michal Lev-Ram, to discuss the historic transformation Israel has been undergoing since October 7th, 2023. Follow Michal on X: https://x.com/mlevramFollow Yonatan on X: https://x.com/yonatanadiriCREDITS:ILAN BENATAR - Producer & EditorMARTIN HUERGO - Sound EditorGABE SILVERSTEIN - ResearchYUVAL SEMO - Music Composer

If the theory is correct and political ideas and frameworks expire every 20, 30 years, it actually means that countries aren't born 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. Then 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 gonna 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 wanna 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'll sustain itself, how it'll 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 Levram, 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 long-time 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 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 Palo Alto. So that gives you a little indication of 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 can't really be a tech reporter without doing that. And of course, I've got my own interest and investment in the area and connection to the

area. But it really wasn't until after October 7th that I think things shifted in my perspective like it did for a lot of us. 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, you know, 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, Jonathan, 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 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 from Healthy IO, 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 getting back to making Israel the best place on earth. really with my kind of sleeves around the elbow, busy with getting back to making Israel

the best place on earth. And 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, state for the record,

that I have three children, which in the United States is like having four in Israel. 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. Okay, so I know Alon 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 gonna 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 gonna pop on and force myself as being a guest into your guys' conversation. But I wanna 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. Israel's been going through a transformational moment. We all use that term all the time. 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? 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. It 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 Don 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 the reforms the country was going through in education and otherwise were not gonna make the difference that the reformers thought they're gonna 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, there are three things that you gotta 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? You know, 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 are, well guess what? No India, no one's paying for that. Therefore, she goes through

and leads various aggressive market capitalists, if you will, you know, transformation of the UK. 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 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 wanna hug and they don't want this kind of person

kind of nudging them, right? Cause you know, the reform feels nice. And for three years, she ended up, you know, uh, defending her thought process, ultimately winning political power and transforming the UK. Okay. So I get that here in the seventies and I get Reagan in the eighties, many respects were 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 gonna 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, hey. Without due respect.

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 I'm going to regret my opening of this. Yeah, you are. Okay. But anyways, I'll do 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 Jonathan 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 surpassed China's. And interestingly, very bold move

also takes the largest bills, 500 and 1000 rupee banknotes out of circulation at the time. This accounted for more than 80% 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, you know, sees the need to diversify away from oil. This is a very hard thing to do. This, 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 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, 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 wars, 67 war.

We can't, it'll just, 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 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 is 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 is 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 the 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, 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, 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 Farhoud 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, 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, Michalak 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. 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 has the political 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 Democrats and Republicans coming together and saying, we're gonna populate a cabinet together. We're gonna, 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 realized

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 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 US. 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.

Be careful with the original Doge. Not that it's going to be back to blame the Jews. We're providing fodder. And 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, 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 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 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 is real 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 Three years, three, four years later it was clear, but in 85 it wasn't clear that the Soviet Union was gonna 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 that Yonatan is describing, and I think it had a searing, if you will, a searing impact on your own view of Israel and Israeli crises and Israeli history.

Can you tell us the story of that crisis in Israel in 85 from the perspective of a family that was directly hit by it? 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 was an engineer for Israel aircraft industries. He worked on the Lavi 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 Levy program was about building that base, building that capacity that suddenly Israel's gonna build its own fighter jet. 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 blood, sweat, and tears

into the project as a lot of other Israelis did. And this ultimately, you know, upon leaving Israel Aircraft Industries, he looked for a similar job and 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 Jonathan'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 Levy wound up ultimately populating parts of the, what was to become the Israeli tech ecosystem. Yeah, Gen 1. Gen 1, right. Also for the, 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 to this day, you day, 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 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 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 One of the Israeli startup companies that ended up in Wall Street and then kind of came back with capital, then came Gen Two. 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 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 gonna work and we're gonna have to make some tough decisions that are unpopular. Okay, so Yonatan, with that,

what do you think the similarities are between 47, 85 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 wanna, you know, it's deterred this, that, or the other,

and our mindset 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 7 should be, in my view, that point in time where we say, okay, no more lying, we can't just kind of lie to ourselves. We are looking at here, it's not some few and far apart elements, it is the expiration of the comprehensive political idea that Israel took with it over the last 30 years,

just to keep it very brief. 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 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, you know, 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 villan the jungle concept is dead. My perspective is the next idea, and going back to

what Dan, Michal, you mentioned 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 and Ethiopia at the southwest. Sort of kind of like in the Megilaoves there, 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.

And what's your number, but I think kill the villain, 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. 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. OK, so 1985, we talked about how painful that was from an economic perspective and how Israel's back was against the wall. We're not in that. You know, Jonathan, 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? I mean, Hala, 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 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 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. 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 how badly the submarine is doing. Or actually, I would argue that as of the last sovereign Jew to be so wealthy and so

strong in Jerusalem was King Solomon. The submarine is actually in very good shape. The second argument in Israel, the theory of what's wrong, and then you had Ari Shavit on the show, you've had some of Israel's top politicians over the last couple of months, is Bibi. 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. Until that realization is there that the political idea and framework have expired to an extent that we're looking at that 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 Milovin. Many of them are getting killed and they're looking at the Khareidim and saying you know where are you and so that forces or has the potential to force a resolution 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 trade-off. You're not looking at absolutes, you're looking at trade-offs. 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 in Arab, but also kind of mainstream Israelis.

Michali, we're making the point about the four kids. Totally 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 the macroeconomic dynamics. 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 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, in 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, before we wrap, I know you and Jonathan 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 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, you know, 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 WIS, huge success story, the biggest, but there are others of course, over time in the Israeli tech sector. And this is the next thing,

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, few years back say anecdotally, we are seeing signs of it. And earlier on, 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.

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 families. So is this a moment of brain circulation, or 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, 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 are a lot of tech leaders involved in those movements and They're still very unhappy. They're serving 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 from making their voice heard. Actually see that as a sign of engagement, involvement. I don't want to belittle that.

I think, Michal, 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 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 whiz and we've had another record, you know, 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, but I think you're right. There's a, there's a red alert there to keep an eye on. Before we wrap, and I have one more question for you, Jonathan, and then we will wrap. One thing, Micheal, that just the, another sector that I hope, what's your number you guys will look at,

but you know, I may have to get in under 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 now Israel in the Middle East or, you know, 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 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, 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 US 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 gonna 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, Jonathan, 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?

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 has now quoted from Megillah Tester 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. I'll quote 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 and answer certain questions. We'll add it to the notes. Can I give a shout out to my grandfather? Yeah, that's what I was thinking, what about parity here? Saba Yehuda, Zichrono Lebrecha. He had a Macaulay at Machane Yehuda, the market in Jerusalem. So we both, Yonatan and I, by the way,

we talk a lot about the American dream here. This is the Israeli dream. So we may not have created whiz, but you know, success stories nonetheless. Who knows, 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 go subscribe right now. Again, the instructions for how to do that are in the show notes. It will be a separate feed from Call Me Back. So you do have to subscribe separately. I'm excited for the first episode, guys. So are we. Thank you very much, Dan.

Thank you episode guys. So are we. Thank you very much Dan. Thank you guys. That's our show for today. If you or your organization are interested in sponsoring Call Me Back, we'd love to hear from you. You can reach us at callmebackatarkmedia.org. That's callmebackatarkmededia.org. That's CallMeBack at ArcMedia.org. If you found this episode valuable please share it with others who you think may appreciate it. Time and

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