← What's Your Number?
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- [00:00]
Michael Eisenberg
Foreign.
- [00:04]
Michal Avram
You are listening to an art media podcast. So, Jonathan, what's your number this week?
- [00:11]
Yonatan Ediri
My number is $100 million. This is the annual rate of revenue of a very cool company called Top gum. It's a 25 year old company that was started by a mini market operator born in Dimona in Israel, which is one of the fastest growing companies in Israel today. They make gummy bears that are actually supplemental food and vitamins. They doubled their market cap. They're now a 1.5 billion shekel company and are one of the biggest drivers of the growth in the Israeli stock exchange this year. So I love this story. I love the reporting of 100 million in top line revenue per year for this kind of company. Kudos to the founders, to the CEO. One of my favorite companies in Israel these days.
- [00:53]
Michal Avram
Okay, that is different. I love it. I, I'm sticking to more of our status quo. My number, $9 billion Israeli cybersecurity company Sierra's reported valuation, that's up from 6 billion in May, which was a doubling in valuation in just six months from the the valuation before that one. It's been reported that this new $400 million funding round is being led by Blackstone and again will raise CyberSecurity companies valuation to 9 billion. I'm going with yours as the winner here though. It's, it's just so gummy bears. That just makes me happy automatically.
- [01:33]
Yonatan Ediri
So we're in agreement.
- [01:42]
Michal Avram
All right. It is close to noon here in Palo alto.
- [01:45]
Yonatan Ediri
It is 9:00pm Here in Israel, Jonathan.
- [01:49]
Michal Avram
Here in the U.S. as you know, things are really, really slowing down as they always do this year. I want to get just super quick thoughts on New Year's and kind of what you're hopeful about, what you're not hopeful about maybe. Or we could just keep it to optimistic because we have an incredible interview to get to. Love speaking to Michael Eisenberg. We'll get to more of that later. I will say just on my end real quick, I had a really funny slash, kind of disturbing weekend because we went up to San Francisco. I'm in Palo Alto, which is just, you know, 45 minutes drive south of the city. For anybody in the Bay Area listening, you've probably heard about this. There was a massive power outage in San Francisco. Waymo cars did not know what to do with themselves. And it was, you know, kind of funny but also disturbing because this is such a high tech city. This is where OpenAI and anthropic and, you know, so much happens and is being developed and There was something very ominous about seeing a city just kind of brought to its knees like that. You know, luckily, you know, it's not terrorism. It's not everything's getting resolved, but it was a little bit disconcerting. So that was, that's kind of top of mind for me as I'm getting into, you know, 2026 vibes. But what about you?
- [03:04]
Yonatan Ediri
Yeah. By the way, this was a big deal in Spain a few months ago, if you remember. Same thing, like when. And it took longer to recover. Well, look, honestly, I think we've been talking about this over the last few weeks since the release of the living hostages mainly. The dynamic here has been very positive. It's been going on for quite a while. I think things are on the up. The rejuvenation of thought and vision for Israel is incredible. And I'm super excited to talk to Michael. I think his piece, you know, a vision for a trillion dollar economy that's more or less doubling the Israeli economy within a decade is inspiring and it is reflective of what you're seeing in Israel. And it's a very, I would say infectious, in a good way. Right. Infectious optimism. And I'm part of that. I believe in that. So, yeah, I'm overall excited and as usual, optimistic.
- [03:51]
Michal Avram
Good. I'll put my pessimism to the side and forget about the blackout here in the Bay Area. You just said a few things about Michael that are really critical here. One of which is the importance of someone who can really clearly articulate a vision. Right. We need that. We really need that today. I know you do a lot of that as well. And Michael did this through a piece. He's a prolific writer. He recently wrote a piece in Sapir titled Building Israel's trillion dollar Economy, all about how Israel can and must double its GDP over the next 10 years. Last week's episode was very kind of back looking, grading the Israeli 2025 economy. This week we're looking to the future and we will talk to Michael about a bunch of things related to his piece, which is not just about high tech growth, although that's a necessary part of reaching this goal. But a lot more went into it. Before we get to that, let's get to our latest update on the Windex, the last one for the year. This is the what's your number index that tracks the performance of publicly traded Israeli based or founded companies. Okay, Yonatan, last update of the year. How is it looking?
- [04:58]
Yonatan Ediri
So are you ready for the numbers? Because these ones are annual, what's called Year to date. YTDS ready. Windex is up 20.78%. The S&P is at 15.77. That is almost 5% below the windex. The Nasdaq is also below the Windex at let's say, almost 1%. 20.1 compared to 20.8. So I think, you know, we have proven numerically and empirically that Israeli founders, whether they are in America or elsewhere, and they choose to IPO in New York, outperform the two most important indices, that is the S&P 500 and NASDAQ. So, you know, we'll ask our team to add some sound effects to this declaration. I will announce my retirement of our podcast at this point, I don't think.
- [05:45]
Michal Avram
You know, not yet. No.
- [05:47]
Yonatan Ediri
Best performers of significance of the right market cap lemonade with 125% more than doubling this year. LBIT, which we discussed doubling this year. Nova measurements with the whole AI rise, you know, highly correlated with Nvidia and so on, 64% kind of itching on the $10 billion market cap. And we didn't really notice. This was a slow climb on a weekly basis, but steady. Teva is now a $35 billion company. It went up 24.5% this year. Our giant Palo Alto Networks, which is responsible for, you know, big share of the Windex market cap, is up 2.7% on an annualized basis. Checkpoint a modest 1.3. I think that the cyber companies did not see as exciting year as the AI or other companies saw this year. And the one sort of negative is that our win babies, the what's your number index babies, that's Etoro and Via really didn't perform well on an annualized basis following their ipo. So the IPO weeks were, I'd say positive. But then Both eToro and via eToro losing almost half of its market cap, 46% in the red and via 32.74%. And you know, there are a couple of companies being challenged by AI. That is Wall street is at least getting shaky. These were the two market leaders in Israel, founders trailblazers. It's Monday.com and wix.com, monday losing 35% on the year and WIX cut in half. And so I hope that 2026, we're going to see these companies climbing into where they need to be. They are critical employers in Israel. They are inspiring companies both weeks and Monday with incredible entrepreneurs who are still at it. The founders are still at the helm adapting and growing. So I'm a big believer in those companies. I believe we'll see them bouncing back and leveraging AI in the service of their growth as much as Lemonade did this year. So that sort of wraps up Windex for the year.
- [07:50]
Michal Avram
Should we do this California style? And everybody gets a participation award.
- [07:56]
Yonatan Ediri
Even WIX and eToro.
- [07:57]
Michal Avram
Even Wix. Okay. We're happy to have them all in the mix. Today we are speaking with friend of the show investor Michael Eisenberg about how Israel can and must double its GDP over the next 10 years. The subject of a recent piece he wrote in Sapil. Michael, welcome back to what's yous Number?
- [08:21]
Michael Eisenberg
Mital and Yonatan, thanks for having me back. I guess I couldn't have upset too many people the last time, but at least this time I'm not sitting in a mall recording this.
- [08:30]
Michal Avram
Yes, very much an upgrade. Your recent piece again was just really, really interesting and we thought it was a perfect way to end 2025 and kind of look into the both near end and far future for the Israel. So let's start with this question. This is the way you started your piece in Sapir, this striking paradox that exists, which we've talked about quite often on the podcast of the last two years. Israel's stock market hitting all time highs in the midst of a multi front war. So start there. What does this resilience tell us about the existing strengths of the Israeli economy and how did it shape sort of your thesis here?
- [09:11]
Michael Eisenberg
So first of all, ready back I think it was in November 2023, I wrote a piece about the resilience of Israeli entrepreneurs in the Israeli economy and society. This actually builds on a piece I wrote years ago called Optimism and resilience, which are like the core characteristics of Israel and the core characteristics of entrepreneurs, particularly startup entrepreneurs. And I suggested then that this was going to be okay. I'll give a caveat to that as we get further into the show and that Israelis would double down on their efforts. And you saw incredible things. I mean we saw 15 to 20% of every company almost going to reserve duty, certainly across our portfolio in our own venture capital fund and people pitching in and covering. We saw people doing board meetings and investor pitches from, you know, bomb shelters. We saw on the 30th day of October 7th, I signed a deal to invest 20 plus million dollars into a company called Dream. The CEO was on reserve duty. We signed it on the Gaza border. And I think these are all indications of just an incredibly resilient economy and country. But more importantly, this is like at a high level. What a friend of mine and friend of Yonatans, Dima Domsky, has taken to calling a national security entrepreneur. This doesn't just mean people engage in like defense or defense tech. These are people who believe patriotically that part of my duty when my brothers and sisters are at war is also to help build the economy. And I think that spirit caught Israel. And at the same time we had a record year of M and A in the country, Wiz obviously acquired by Google being the biggest one, and this incredibly resilient Tel Aviv stock market. And I think when everyone decides to unstick the wagon from the mud and try pushing it forward and do ever greater things, you do it there. I think the other thing that's happened is the bar has gotten higher. Hey, if my friends are going off to battle in Gaza and Lebanon, I got to raise my bar. What I'm doing is the home front. And whether it's called producing taxes or jobs or innovation, I got to do better. And then the last thing, and you've heard me say this before, we had the greatest hackathon ever in history of humanity happen in this war. We brought people from decades of experience to brand new young people together to hack real time problems using the most advanced technology on planet Earth and doing real problem solving. Sprinkle this with a little of the AI accelerant in the world and poof, or boom, it's working.
- [11:22]
Michal Avram
Make it sound so easy because I.
- [11:25]
Michael Eisenberg
Don'T do the work, I just spread the money. Is guys like Jonathan and you know, and Ron Gura and Roe Adler and my Walter, they're doing the hard work, they always give them money.
- [11:34]
Yonatan Ediri
The thing I picked up from the piece, beyond the nuance on how to get there and so on, is providing the vector, putting that sort of marker out there, the target that's achievable, that is ambitious but attainable. And so I think our role as leadership, you as an investor and you do a lot more than investing, is to also keep this kind of, you know, a clean horizon out there. Can you take us back through the process of writing the piece before? What drove you to write this piece and why trillion? Why not two? Why not 800 billion? Like what's the sort of. Because you're putting a target there that's been missing in the Israeli discourse.
- [12:12]
Michael Eisenberg
First of all, Bret Stephens asks you to write a piece, you just say yes. That's kind of, look, I'm going to try to find a diplomatic way to say this. There is a shortage of vision Right now in the world generally. You've said this many times, Jonathan. We are in a particularly chaotic period with a lot changing in front of our eyes. I'm in the middle of writing our Olive annual letter, which I do every year. And I keep coming back to four themes, which is war is back, everybody's arming itself to the teeth. The geopolitical world is changing. AI Democratic governments can't get their act together. They're a mess everywhere. And the social welfare state is collapsing globally. Israel is actually in the best shape on that front by a long shot. I think we need to start talking about what does the world look like a decade from now. And the reason is we're in for a very messy decade. And I met with somebody yesterday, a young fellow, he says, you know, for the first time in my life, I feel like I'm not sure what the world's going to be like tomorrow. I think October 7th played a large role in that. I think the return of wars played a large role in that. And I think the lack of leadership. And I think leadership, what it does in general is it posits achievable but ambitious goals. And so I've spoken about, you've heard me speak about this before. Israel is a regional superpower. That is a plausible, achievable but ambitious goal. A trillion dollar economy requires about 7 plus percent growth a year. That is ambitious. The Asian tigers grew at that rate in the era of the Asian tigers. Israel is not growing at that rate right now. It's a stretch goal within a decade. Other people have talked about 20 years. I think that is too long a time horizon. And then the last part of, is when you set the goal, it's a forcing function in and of itself. We gotta get a lot of crap done right in order to get to that trillion dollars in a decade. And that includes streamlining our bureaucracy. That includes getting our debt spending under control or spending it. You know, if we're gonna increase the national debt load, it must be invested in growth. If it's not investing in growth instead invested in welfare, we, we're never going to hit the trillion dollars in a decade. There's no chance in hell. It means we need to embrace our regional partners because we got to get trade up in the region. It means we got to get the IMEC built, we got to get the train tracks that need to be rebuilt for imec. We need to get the trucking connections. It's got to get built and it's got to get built fast. Otherwise you don't hit the goal. And so a trillion dollars in a decade, when you work it backwards, implies the annual growth rate. If we fall behind on it, the short term, we're going to have to do a lot more fast pedaling in order to catch up. So, you know, that's why I think in general we need to be setting goals like that.
- [14:41]
Michal Avram
I think the crux of it is also that this is direct quote from the piece, by the way. We'll put the link in the show notes to, for those who haven't read it, but this is the quote. The growth drivers that produced the startup nation over the past three decades basically won't work to achieve this next goal as you've outlined it. So maybe I'm putting the cart before the horse here a little bit. We keep going back to wagon analogies. I don't know why, but explain to us what, what those. Before we get to the hurdles, the challenges, what can those growth drivers be as you see them?
- [15:10]
Michael Eisenberg
Yeah, maybe I'll change the metaphor for a second, please. Okay, we got, we gotta get from the Horson buggy model that we've been talking about for the last 10 minutes to the full self driving mode model of Elon Musk's Teslas. You think about the car metaphor. We got the, you know, manual shift gears and then we got the automatics. We got to get the full self driving mode. Which means if I'm an entrepreneur of any kind, this needs to be easy. Okay. If I want to come set up a hedge fund and this is one of the growth drivers. How do we create a financial services industry in Israel where people set up their hedge funds in Tel Aviv and not in London. They set em up in Tel Aviv and not in Dubai, which by the way is accelerating rapidly. The Emirates are doing just an incredible job of attracting talent and capital by getting into full self driving mode. There was just, it was a picture today on Twitter of Elon Musk doing full self driving mode FSD in the Emirates. Right. With one of the leaders, I think it was the son of mbz. That's a metaphor for a welcoming economy that says, okay, turn up, it's going to work. We're not there yet. Okay. And we need to get there for things that require bureaucracy, such as energy. It's got to move a lot faster for imec that requires bureaucracy. We got to be able to lay those tracks yesterday to build the trucking routes that go via Jordan and Saudi Arabia yesterday. Okay, Same thing is true with finance. We gotta get the tax Rates down and we gotta get the regulatory environment to be permissive right now it's a pain in the neck. Now this is all being worked on, it's not fast enough and we have to get it to full self driving mode. It cannot take a decade to approve a new airport by the way.
- [16:42]
Michal Avram
It's been two decades and three commissions as you state in the, in the.
- [16:46]
Michael Eisenberg
Piece, cannot take a decade to bring new power online. It's not okay. So the goal together with the prescriptions basically say the following. We are in a global war for talent and capital. If we want to be a trillion dollar economy and it means to be the friendliest place on planet earth to come, be an entrepreneur, a steward of capital or somebody who wants to build something. Now we're not going to be able to build everything, but we got a lot of advantages. While everyone was sleeping a week and a half ago, my good friend Jacob Helberg, he hosted something called Pax silica and it's an agreement that everyone signed upon and Israel which now has a national AI directorate headed by Lt. Gen. Erez Oskal, another incredible human being who was there to sign unpacksilica. Israel is one of five or six countries in the world and Yonatan and I spoke about this extensively, that's got like full stack for the semiconductor supply chain and we need to take advantage of that and become this irreplaceable, totally strategic hub for AI supply chain and AI development and semiconductor manufacturing which we also have in Israel as a partner to the U. S led PAC silica initiative. But we need to be the senior partner there because there's only five or six countries in the world. Japan, Korea, the United States, China, Taiwan and Israel, okay? They've got the full stack and we are a US ally and we also sit on a key trade route. Right? You know, whether it's imac or what comes through the red sea or we're in a pretty out to Europe, we're a pretty critical place so we gotta lock that in, make this super easy to do and get the politicking out of the way so that we can grow this economy. Because look, our enemies are not going away. You know, Jonathan talks about this all the time. Turkey is a serious adversary. That is not bashful. I mean they called prime minister Netanyahu Hitler, Erdogan did okay, they claim Israel committed a genocide in Gaza. They're very expansionist, very Islamist and they're on their way. You know, Yontas pointed this out as well. They found $20 billion or so worth of oil off of the coast of Somalia. They have ambitions and they view us as an adversary. I don't know what we did to deserve that, but nonetheless, we got to move faster. We cannot have this bureaucracy. The operating system of the 20th century government will not succeed today. It won't. Sovereign companies will run it over because they're running at AI clock speed. Okay? Sovereign individuals will run it over because they're running at AI clock speed. Sovereign algorithms by companies will run it over, running at AI clock speed. Israel cannot afford to have, you know, Mapai, Socialist Central Party, the Likud clock speed. When all this is going on. We just, we just can't. It won't work.
- [19:19]
Michal Avram
Let me ask a question to both of you here. It's not even an elephant in the room because I think you both address it in different ways, but the political willpower to bring about these kinds of reforms that you're talking about. Michael, where does that willpower come from? Who else is pushing for it? I know the two of you do, but we've been talking about it for so long. What needs to happen?
- [19:40]
Michael Eisenberg
Look, I think Prime Minister Netanyahu in 2003, when he was the finance minister, unleashed what effectively was the capitalist revolution in Israel. He did all the right things and got a lot done in a short period of time. So we know this can be done. Yonatan's better suited than me to talk about this. He's talked about it a lot. What happened when Peres had to come save the economy in the 80s and then finance minister, I believe Peres later prime minister and President Peres. So he should relate to that. This is a question only, a focus and willpower and candidly capable enough people. Israel has a lot of capable bureaucrats. You know how we know that? We know that because we have bomb shelters in our homes, what is called the mamad in Hebrew. We know that because we're best in the world in water recycling and in water desalination and water preservation. So we have some capable bureaucrats, but we need some technology enabled business people, I think, to really influence this. We have the greatest civilians on planet earth and the most motivated civilians on planet earth. And what we saw since the war is civilians take a lot of control and have developed a lot of solutions over the last two years for critical problems, you know, from under equipped soldiers to Gaza on the day after, to economic solutions to AI Directorate and a bunch of other things. And so civilian pressure and civilian activism is critical for make this happen faster.
- [20:57]
Yonatan Ediri
I will say though, that if you look at it from a comparative point of view, like if you read the Draghi report on European competitiveness, which is a dire, you know, indictment of how Europe has lost its competitiveness. And if you kind of put yourself in the seat of leaders in Europe and some other, you know, kind of big countries in the Western Hemisphere, in Israel, all you got to do from a government perspective is move fast and kind of unlock, you know, remove the lid because the pot is bubbling. In other countries in the world, you remove the lid and nothing happens. Right? The thing I'm concerned about, and that's what I'm dedicating sort of, you know, my years to, is that we already have a big enough group that benefits from the status quo. That's what I'm worried about, right? It's too big at this point. It's across media, it's across industries, across government. So the thing that I'm worried about, and I think what we need to crack, is that I think I'm seeing good signs. The Israeli Labor Union group is now starting to open up. So I think two layers here. One is what Michael's talking about, the sort of, you know, lift the lid. And from that perspective, I'm super excited because it's bubbling. I'm not worried. We're in the best situation out there in the Western Hemisphere. But that thickening layer of people who enjoy the status quo is a risk and has to be dealt with.
- [22:15]
Michael Eisenberg
By the way, for over a decade, I've been writing about the terrible benchmark called the oecd. The last thing I want Israel compared to is. Actually, that's not true. The last thing I want Israel compared to is Europe, because that is a low, low, low, low bar for what it takes to be a competitive economy. I mean, those guys know how to regulate their own way out of competitive existence. And so I want to make sure that we're setting the bar high so that we aspire to that. You know, you had said to me, Michal, before we came on a little bit about Hanukkah. So I make one observation that I heard when I was 21 from Rabbi Michael Rosenzweig, and I think it's really an important one. So. And for this, we got to get into a little Jewish minutia. So today, everyone knows you like the menorah, and it's, you know, 1, 2, 3, 4, 5, 6, 7, 8. But the core commandment, the core of mitzvah is actually only to light one candle on every night. The original way they kept the holiday was One candle every night, this lighting, one for every day of Hanukkah is called the best of the best. What's called in Hebrew, Mahadrin, Mina Mahadrin. Rabbi Rosenzweig asked a very simple question. Why on Hanukkah, of all holidays, do we have the best of the best? And his suggestion was that what the Hellenists wanted at the time was institutionalized mediocrity. And therefore, the antidote to institutionalized mediocrity is that we do the best of the best on Hanukkah. I think our aspiration needs to be to be the best of the best. Israel cannot afford institutionalized mediocrity. Maybe other places have the strategic depth for that. We do not. And so therefore, Hanukkah, which, by the way, is probably the most celebrated holiday in Israel. And it's not an accident. It's because the aspiration to be the best of the best, whether people understand it or not. And I think that insight. We gotta strive to be the best of the best in all these things and, like, unleash all the human creativity and problem solving that exists here for economic growth, for defending ourselves, for, by the way, providing safety for the Jewish people who are under attack right now. We cannot settle for institutionalized mediocrity. And so if you are mediocre, get the hell out of the way.
- [24:14]
Michal Avram
I'm going to use that institutionalized mediocrity line on my kids and see if it helps.
- [24:20]
Michael Eisenberg
My mom, who Yonatan's met. Okay. Used to pray to have mediocre children, and it always bothered me, but she said that the line between excellent and super and crazy was very, very thin. And it used to bother me, but in the end, I think she's right, by the way. As a parent to kids, you should pray for mediocre children. As a country, we cannot afford this.
- [24:43]
Michal Avram
I'm still going to use it on my kids, but thank you for that. All right, Shooting high. I'm getting, like. Right, that little threshold before crazy. That's what I'm aiming for. All right, so Jonathan and Michael, you both brought this up, this notion of who is benefiting from the status quo. And I want to ask about the demographic question, which you also get into in the piece. You know, there is this incredibly robust population growth that Israel enjoys. The annual rate is around 2%, which you point out in the piece that has some obvious economic advantages. But you also say in your essay that these benefits depend on whether society's newest members will contribute to the continued growth of the economy. Or merely feed off of an ever more burdened welfare state. What proposals do you have there? This is something obviously it's been very, very top of mind for a very long time, but is coming to a head, I think. So talk to us about what you have in mind there.
- [25:35]
Michael Eisenberg
Yeah. In a book I wrote about 20 months ago called we the Heroic Israelis, I suggested a new framing for how we think about this problem which I called the the median Israeli. Instead of talking about averages or poverty lines, the state can only invest in the median Israeli. We know who the median Israeli is, roughly. Okay, it's a husband and wife, by the way. They have like three to four kids, not, not one or two kids like in most places. They are somewhere on the traditional to religious spectrum pretty broadly. Both spouses have served in some form of national service or military and they're a two income household for the most part. Well, we know what this person looks like. He's not complicated in this country. And the argument I make in the book is that Israel, where this is a very defined group, and by the way, it's 80% Jewish, so it's reasonably homogeneous with a defined minority population, needs to invest in the core population. The welfare state needs to be for those who serve the country. The country should serve those who serve it. At the beginning of kind of the draft law debate that's been going on here, I authored a piece with member of Knesset Moshe Saada from the Likud Party which said if you serve you get, if you don't serve, you don't get mean. The welfare state, except for like very, very basic things like basic health care, etc. Needs to only serve the population that serves it. And by the way, I think this should be a model for Europe as well because part of what's happened over the last 20 plus years, 25 years of progressivism, is the fringes have taken a larger share of the pieces. That has both eroded the cultural character of many countries and eroded the basic economic pyramid that every country depends upon to keep the welfare state alive, what it can provide. And so we are actually disenfranchising from a financial and investment perspective the core citizens that every country depends upon and Israel in particular. So what Israel needs to do is get off the fringes kick. Okay, say we're going to invest the welfare state. Investment, investment, investment, not spending, investment, investment, investment goes to this core serving population. You want a piece of it, Come join. You don't want a piece of it, sorry, you can get basic healthcare, that's it.
- [27:48]
Yonatan Ediri
There's a good place to look at. You see the difference between the German and the French attitudes towards updating the welfare state. You saw France, with six prime ministers in 30 plus months fighting over, you know, mainly sort of a status quo. You saw the new German chancellor, who we've been following on the show for quite a while, pass a budget last month where part of the core tenets of the budget, by the way, at risk of dissolving his coalition. So paying a political price over a long period of time with a dramatic, really fundamental shift to the welfare system of Germany in many ways along the lines, Michael, of you don't just get it unconditionally anymore. There are certain areas, there's certain criteria you have to meet in order to be eligible for welfare. That's beyond the basics. I wish for the German Chancellor to succeed over the next three years in solidifying that budget and for this not to crack under political pressure from the right or left. But I think the UK is going to go through that. But this is a broad phenomenon and I think in Israel, with a strong demographic growth, you know, the tech industry and so on, there's a lot more to work with in driving this change.
- [28:58]
Michal Avram
It's surprising, actually. We haven't talked that much about tech, but talk to us a little bit more about the role that AI can play not just in, you know, as we talked before, you mentioned kind of the being, you know, one of very few smaller countries that can play a pivotal role here, but also can AI play a role in bureaucracy, in, you know, being moving faster as a government, you know, in other areas as well as.
- [29:24]
Michael Eisenberg
So a few things. Number one, I think I wrote in the article, I don't remember the number exactly, but I think we can lose 25% of the cost of our bureaucracy because of AI. I see my companies that we're losing 30, 40% of our cost. I see no reason the government can't lose 25% of the cost basis. That would be dramatic, by the way. That's like looking at 50, 60, 70, 80 billion shekels of cost to the taxpayer from government spending and maybe more. The reason maybe more is if you can spend up approval processes, the turns on the capital will get faster and so the cost of capital and building, cost of living can go down. And that's, I think, super one super meaningful area. The second thing is I think the following Israelis, just in general, someone's saying to me, Israelis are much better at math than they are at writing.
- [30:08]
Michal Avram
I'm in the minority, apparently.
- [30:11]
Michael Eisenberg
Yeah, it's interesting. I hadn't thought of it that way. And the point was that they're very good at problem solving. And I think one of the things you're going to see happen, particularly with the new AI directorate, it is going to be a very problem solving, focused initiative. And I think there's going to be a lot of room for cooperation with other countries on solving certain horizontal problems that everyone's going through. Like how do I teach fourth grade math better? Right. Can I teach people to organize their thoughts and write better and let them progress at their own pace? A million things like that. And then the third element that I think is critical, which relates to the cost of government, but is not only as things get more efficient, what we got to do is get the cost of living down. One of the big afflictions of Israel is the cost of living. Some of this definitely relates to what Yalanta was talking about earlier, which is that there's too many of these groups content with the status quo because they kind of strangled parts of the government or parts of the regulation that doesn't like competition and that drives the cost of living up. They benefit from the status quo. And I'm hoping that AI1 exposes that. And I think we can use it also to kind of find places that we don't have enough competition and introduce competition to lower the cost of living. I think there's another 10 ideas like that.
- [31:15]
Yonatan Ediri
There's a dynamic we need to address over the next decade of defense spending and of production. And I think this begs the question of is this a growth industry or is it not? Right. Because this would require a lot of capital expenditure to build, you know, facilities and so on. Whether or not America and Israel have the alliance they have right now in terms of the long term reliability on production lines, is this something you would expect Israel to be able to also diplomatically address? That could be an alliance with Germany or an alliance with India or other countries that have the production capacity. Or would you expect that to happen on Israeli soil and actually be a driver of growth and productivity? I think that's a big question as the budget discussions go. Anywhere from 95 billion shekels a year to 150 billion shekels a year.
- [32:06]
Michael Eisenberg
Yeah, I think the answer is e, all of the above. So, as you know, I'm invested in these categories and number one, I expect us to see more autonomous factories. I, in fact, in one of my companies is working on a fully autonomous factory with Schneider Electric. And that is a way both to keep Costs down. And to make it doable in Israel, we just don't have that much labor. That's point one. Number two, these things are shrinking. You're able to get kind of more. More bang for the square kilometer. And Israel definitely needs to invest in some domestic production, by the way, not to get the whole thing done, but to create leverage on partners, to be able to do more together with partners. We need to move from a mindset of we rely on the United States too much. That's one end of the spectrum. The other end of the spectrum is autarky. And instead, we need to get to a strategic leverage. And so we have to produce enough of the most important things so that we have leverage on other people and other countries, and so that we have enough to serve, let's call it basic needs of our most important defense needs or beyond basic needs. And then we need to search for multiple partners. And they could be India, Germany. I'm still a big fan of the United States. And the reason now is the time is President Trump is an absolutely unique leader with a unique cabinet of people.
- [33:14]
Yonatan Ediri
Yep.
- [33:15]
Michael Eisenberg
And if we're going to make changes, this is the time to really engage in a partnership with the United States and allies to make this work. And these next two to three years, in my opinion, maybe this next 12 months are like the most crucial time to set the stage for the next couple of decades of Israel. We gotta be in the room reframing supply chains around the most critical components around AI, reframing the defense supply chain and where we go forward from here and thinking about what are the other vectors, whether it's India or Germany or other places where we can gain strategic advantage. And I think, by the way, at the same time, it's absolutely critical to figure out how we expand the Abraham Accords. That's been just a tremendous blessing.
- [33:56]
Yonatan Ediri
You know, you reminded me of President Peris an affinity to nanotechnology. So he was once asked in the 92nd why event in New York, what drives your fascination with nanotechnology? And he said, Frankly, I met Mr. Richard Feynman once, and he told me something very smart. There are two ways to be big. Either you have to expand your territory, or if everything becomes smaller, you're actually becoming bigger. So if we master the nano domain, we are getting bigger without taking anybody's land. So it was a. You were talking about things becoming smaller, and it invoked that great conversation there. But I think there is something to the miniaturization and the automation. I have a couple of folks who Came back from sort of my Swiss type activity in sort of real world industry. Came back from factories in China, blown away 24, 7, almost type activity with robots, dark factories, very little H Vac cost, very low electricity cost. You don't have to feed people. These are functioning platforms, by the way.
- [34:57]
Michael Eisenberg
People don't fully understand that what you just mentioned right now is a compounding effect, or has a compounding effect. You get more capital, efficient, which enables you to invest more in factories like this. And because the robots themselves take feedback from the environment, they get smarter, faster, because they have real world interactions. What's very different about this era, this AI robotic era, is that the interactions with the real world, the more of them you get, the faster you get them, the more you get compounding advantage much faster. And so we gotta get there fast. We cannot be slow.
- [35:29]
Michal Avram
I think that sense of urgency all around which you both just alluded to is a good segue to our last question for you, Michael. And then we'll, we will release you. But you end your piece with a call to action of sorts to Jews in the Diaspora. And I'm wondering if you can just share that with us. And again, we'll put the link in the show notes so people can read it. People who haven't read it can read it. But give us a little bit of a glimpse into what that call to action is and why it's so critical right now.
- [35:57]
Michael Eisenberg
Maybe I'll take 60 seconds and tell my own story of moving to Israel. So When I was 19, I was in my second year in a yeshiva in Israel and the Gulf War broke out. You know, for three or so months, we spent 40 nights or so running into what they called sealed rooms at the time. When I think back on it, it's pretty hilarious that we called like masking tape on a door post a sealed room. But it's fine. And anyway, at the end of the war, I find myself in a room with Rabbi Yehuda Mital, later, by the way, a minister and Prime Minister Peres government after the murder of Yitzhak Rabin. He at the time was the head of the yeshiva. And I asked him, like it was a really a question of a yeshiva. Young yeshiva guy said, you know, is there a bigger commandment to settle the land of Israel for someone who comes and lives in an unpopulated place, whatever the Negev, the Galilee, or someone to move to Jerusalem and Tel Aviv would have the same fulfillment of the commandment. And by the way, I was not planning on making aliyah at the time. And he looked at me and he said, your question is nonsense, complete and utter nonsense. What you need to do is move to Israel and set up a factory to employ 10,000 people so that they can earn an honest and decent living. Like my jaw dropped. I've been in Jewish education, religious education my whole life. No rabbi ever talking about the economy. And I was like, wow. So I decided to make aliyah and see if I can employ 10,000 people. That's the truth. And it kind of deeper insight to it is when we are building a home, an aspirational home, a future home for the Jewish people, we need a growing economy. We need people to have a place to earn an honest and decent living. It is actually the fuel that drives everything. And the second part of it is, unfortunately, and I say this by the way, a week and a half after the horrific tragedy in Bondi beach, for hundreds or thousands of years, Jews have not fled before antisemitism came. They've not moved proactively. The one thing that gets Jewish people to move is economic opportunity. And so Israel, in order to be a magnet for Jews, needs to have a growing economy with increasing opportunities so that people can come here. This is a point I made in my book the Vanishing Jew ten years ago. We must be a magnet now. At the same time, our people who have means and capability and talent, these sovereign individuals who can literally go anywhere in the world, should want to for their children and their grandchildren, my children and grandchildren. And the future of our people, our wonderful people that's made it thousands of years, should want to bring their talents not to south beach as Lebron James did, but to the beach in Tel Aviv on the shores of the Mediterranean. Because together we can actually not just create 10,000 jobs, we can create 10 million higher paying jobs. We can create a trillion dollar economy that attracts more and more people. And that economy that attracts those people can also be a blessing for the people in this region. And Lord knows they need a blessing. And so my call is, come be a builder. This is a project that is still in its early phases. A line I used on stage is moving to Israel today is like coming to America in the 1850s. Okay? There's couple of hundred years of incredible spiritual, cultural and economic growth ahead of us. And I'll add one last thing. It's also related to Hanukkah. What people don't know about Hanukkah because we like candles is Hanukkah is celebrated not because of the cruise of oil that they found it's celebrated because. And my monitor says this black on White, Chapter 3, Law 1 in the Laws of Hanukkah. Because sovereignty returned to the people of Israel for more than 200 years. That's why we celebrate Hanukkah, because of sovereignty. I'll tell you something else. The other thing that happened was a religious revival, so to speak. The religion changed in the time of the Hasmoneans. They didn't fight on Shabbat. They didn't fight on Shabbat, they got slaughtered. If that sounds reminiscent of the 7th of October, even though today we believe in self defense, then they didn't believe Jews could defend themselves on Shabbat and they changed the Jewish law. There was religious renaissance to enable people to fight on Shabbat. Okay. By the way, it's in The Book of Maccabees 1, I think, Chapter 25, if my memory serves me correctly. Okay. And we need to commit ourselves following October 7th and in the spirit of Hanukkah, to Jewish sovereignty, to a growing economy and prosperity so that it attracts Jews to the world. And so they come and build it here. Because this is where and to a renaissance for our people that is spiritual and cultural. All the great books we have today, the Talmud, Tanakh, the Bible was canonized in this period. The Mishnah started. The members of the great assembly. This is the greatest period of Jewish cultural and religious revival ever in our history. And that's an opportunity we have today. And so I call on everybody, don't wait for Bondi Beach. Now, Bondi beach didn't happen. And Albo over there and Piggy Wong really should rot in hell, but at the same time, come be a builder of the future of our people in Israel.
- [40:41]
Michal Avram
Well, amen to all of that. And I want to say I'm probably speaking on behalf of a lot of people here. I really, really am grateful for the fact that you not only met, but wildly surpassed your mother' expectations. So thank you. Thank you so much, Michael. Such a pleasure talking to you always.
- [41:00]
Michael Eisenberg
Thank you. Thank you both. Bye, Mi. Bye.
- [41:03]
Yonatan Ediri
Thanks, Michael.
- [41:03]
Michal Avram
Bye. I so enjoyed that conversation with Michael. I knew we would. The piece was fantastic. It's always a pleasure speaking with him. You know, if we wanted to start off the year with optimism, I'm sold.
- [41:21]
Yonatan Ediri
For me, the most profound element in the piece, and I think it was reflected well in the interviews that Michael is basically saying, look, what worked thus far is not going to work going forward. And that's a very hard thing to be able to say. Right. Like when you look at Ben GURION, March to November 1947, the most important realization he had, without which I wouldn't have been born, Israel wouldn't have been born, is that the 30 years and the principles that got Israel to the point that the UK gave up on the mandate, right? The fact that the UK was the center of its geopolitical posture, the fact that its social contract was a certain kind and that its narrative was a certain kind, these three are simply not going to deliver the state of Israel because the UK is no longer the important global player, dominant player. The contract is not going to work, and the narrative is not going to work. And he goes through this, what's called the Ben Gurion Seminar of how do I define the goals? How do I define the structures that ultimately brought about the state of Israel? So it's very rare for leaders to be able to go out there and say, hey, we had a great run. The principles that drove it have expired. Let's move on. Absent of a crisis, I think Israel, at least from an economic perspective, does not suffer from a crisis. So being able to dream forward with new principles is a hallmark of Michael, and it's a hallmark, I think, of sort of the energy that's budding in Israel. We need to see that this year being an election year doesn't, you know, kind of ruin this positive dynamic and that we do realize this new vision.
- [42:53]
Michal Avram
I think what you said about the absence of an economic crisis is really key here because it would be too easy to just be complacent because there are things that work. We have seen the resilience of the Israeli economy over the last couple of years, but there are so many dangers and risks and challenges, current and ahead, and a lot of uncertainties. You know, everything we just spoke about this kind of realignment globally and some of the, you know, the ways that democracies are being tested right now, including in Israel, including in the United States. And I think another element here, beyond the optimism and setting a clear vision, is the fact that he is very realistic. And I thought it was a very real conversation about a lot of those risks. Going back full circle here to my comment earlier on San Francisco just kind of shutting down all of a sudden. You know, I think the reason it's so disturbing is it's like, it's that fragility and that feeling of like, oh, this, you know, beacon of technological advancement, progress, all of that can just, you know, it's like, is it a house of cards? And it's not, of course. And by the way, Tesla autopilot, Teslas were doing just fine, apparently.
- [44:00]
Yonatan Ediri
Yeah, that's what I realized. Yeah. We have to jump from Michael to North Eastby.
- [44:05]
Michal Avram
Now, bear with me here. We always begin the show with the numbers of the week. We're ending with the words of the week. And yes, as you said, this time it's a little bit different. So this is from a recent speech Noah Tishby, actor, author, activist, I think we all know her, gave recently in Calgary. And these particular lines from the speech caught my eye. We don't know what the world is going to look like 500 years from now or a thousand years from now. We don't know what borders are going to look like, what countries are going to look like, what humanity is going to look like. We have no idea. But if there's one thing that we know for sure and that is even a thousand years from now, Jewish women are going to be lighting Shabbat candles. We know that. I think Michael touched on this too. And I think it's, you know, for me at least, maybe because I am a Jewish woman. Sorry to. You have plenty of roles in Judaism, Yonatan, but there's something so comforting in that as we look to the future with optimism, but also with a lot of uncertainty and a bit of fear.
- [45:07]
Yonatan Ediri
You know, one of my favorite Israeli artists is Maya Riel. God bless his soul. And he has this famous song that we've gone through Pharaoh. We shall overcome this one as well. So, you know, we overcame Pharaoh. We'll overcome whatever comes our way. And yeah, look, happy holidays, Merry Christmas to those who are listening. And yeah, let's hope and work for a great 2026.
- [45:31]
Michal Avram
All right, that is it for today's show. Thank you for tuning in to Arch Media's what's your number? We hope you found it interesting and if you did, please be sure to like subscrib rate review. You know the drill. Most importantly, please share it with others who you think will find it interesting. And if you want to make suggestions or share your feedback, please reach out to us at what's your Number? @arc media.org.
- [45:58]
Yonatan Ediri
What's your number? Is an arc Media podcast. Arc media's executive producer is Adam James Levine, already our production manager. We welcome our new production manager. That's Brittney Cohen. Sound and video editing is by Liquid Audio. Our theme music is by Midnight Generation. I'm Yonatanediri.
- [46:17]
Michal Avram
And I'm Michal Avram. See you back here next year.
- [46:19]
Yonatan Ediri
Last time in 2025.
- [46:21]
Michael Eisenberg
Yeah.
- [46:22]
Yonatan Ediri
See you guys next year.
- [46:28]
Michal Avram
This podcast offers general business and economic information and is not a comprehensive summary for investment decisions. It does not recommend or solicit any investment strategy or security.