02/20/2013 01:15 pm ET Updated Apr 22, 2013

A Tiny Country Transforms the World With Tech

Situated in the middle of the world's most volatile region stands an oasis of technology that impacts practically everyone on the globe. Israel, affectionately known as Silicon Wadi, has become the second most important technology center in the world. In the most unlikely of scenarios, a tiny country that has been existentially threatened since its formation 65 years ago has become the "startup nation" responsible for helping move mankind forward with technology and science.

The confluence of factors that led to Israel's success story are numerous and unique. For one, Israelis have lived under constant threat from hostile neighbors since day one -- which has created an ability for individuals and the society-at-large to cope with pressure and to creatively solve extraordinarily difficult problems.

Furthermore, Israel has lacked in natural resources (until recently, significant natural gas and oil resources have been located deep in the ground), which has forced the country to capitalize on its greatest resource: brain power, as the country's 89-year-old president Shimon Peres likes to say.

In perhaps the greatest "lemons to lemonade" story of the last century, the Jewish people gathered its shattered pieces after near Nazi annihilation, reestablished sovereignty in its ancient homeland, built a thriving democratic state, and with highly limited resources, learned to innovate and create extraordinary technologies-in a wide variety of fields including mobile, biotech, green-tech, and enterprise and consumer web.

The list is long, but some of Israel's most notable contributions to technology include: the development of the cell phone at the Israeli branch of Motorola, the design of most Windows NT and XP operating systems (developed by Microsoft-Israel), the Pentium MMX Chip technology and the Pentium-4 microprocessor (designed by Intel in Israel) and the first instant messenger (later acquired by AOL).

But the heartbeat of Israel's tech scene lies within the country's 3,000-plus startups. Israel has the most startup companies in the world per capita, and the second most in absolute terms. On the NASDAQ, Israel has more companies listed than that of Europe, China and India combined (it's ranked number one in relative terms and number three in absolute).

The question is -- how the heck did Israel do it?

"There is something special about Israelis. You have people that are able to bridge gaps. There is a combination of intelligence and the need to constantly build stuff," said Joey Simhon in an interview. Simhon, like many Israelis, is young, entrepreneurial and driven to affect change. His startup, -- which was founded along with Rami Kasterstein and Ami Ben-David -- is seeking to reinvent how mobile users interact with apps and their phones in general. The well-funded Tel Aviv-based company is going to be launching a new product within the next few months which will "allow smartphones to form themselves based on what the user needs at the moment, rather than remaining static," said Simhon.

Aside from exciting plans for, which recently announced a distribution partnership with Mozilla and raised $25 million in venture capital, Simhon says the Israeli tech scene is going strong, and that some of the hottest arenas include big data, games, consumer web, mobile and media.

Yossi Vardi, a renowned Israeli tech entrepreneur and investor who is widely regarded as the father of Israel's startup community, believes that a cultural phenomenon has developed in which Israeli youth aspire from a young age to form startups and create innovative technologies. "They view this as the epitome of success in Israeli society," said Vardi in a phone interview.

Vardi explained to me that Google, Intel and other major tech companies' R&D presences in Israel -- alongside great research universities, scientific foundations and the government's interest to promote tech -- have all contributed to Israel's success story. He energetically asserted that "in the next five to 10 years, there will be more players, more startups" and that tech will continue to grow and improve in the country.

When asked what the hottest niches are in Israel, Vardi said mobile tech, ad-related tech and analytics are among the burgeoning arenas. Vardi thinks Israel has just reached the tip of the iceberg in terms of its potential to advance science and technology. "There are an endless amount of startups, a great science foundation, resources for entrepreneurs and a positive cultural view towards tech," he said.

The tech phenomenon in Israel is actually pulling great entrepreneurs and investors to the country from around the globe. Ben Enosh, Yoni Silberberg and David Markowitz, for example, immigrated from the United States to Israel and co-founded startup PLYmedia in 2006. The company is a trading platform for publishers, offering "a range of services focused on monetization and localization of media for content owners, advertisers and publishers," according to the startup's website.

PLYmedia, which is headquartered in Tel Aviv, has increased revenue 150 percent year-over-year and currently has 40 employees and over $5 million raised in venture capital. Enosh, who has clearly found success in the Israeli startup community (before PLYmedia he co-founded cyber security company Cyota, which was sold for $145 million several years ago), says that for him living and working in Israel is a mission. He says that in Israel there is a sense of community, responsibility for one another, and a deep desire to better the country and build it up -- since it itself, as a young nation, is in the startup phase.

One thing that entrepreneurs, investors and enthusiasts in Israel seem to have in common is a desire to be successful, but on a deeper level, a need to improve life quality and affect change throughout the world with technology. As the country's tech sector continues to grow and improve, we should keep our eyes on Israel. Many of the world's most exciting innovations to come will undoubtedly emerge out of the "startup nation."