All over Israel, young men (Israel's geeks, like everyone else's, are overwhelmingly men) are trying to do the same thing - take some code and make it come alive. What they all have in common, aside from their aspirations, is the army. To learn just how powerful a role the Israel Defense Force plays in cultivating this little country's technological prowess, you needn't talk to generals or politicians or chief executives. Go to suburban Tel Aviv, where I visit some friends whose precocious 13-year-old is obsessed with mathematics, physics, computers and, of course, the Internet. At the kitchen table, talking about school, his mother says quietly: "The army has a file on him."

Few in Israel are surprised by this. Almost everyone, men and women, serves in the military after high school, but if you show promise, the IDF has heard about you long before you turn 18, the age of conscription. Through the school system, it identifies young talent early, and if you have an aptitude for science, it will offer some attractive options when the time comes. If you're really good, you'll find yourself working with cutting-edge technologies instead of lugging a rifle around in the desert.

Ori Hadar, president of R U Sure, one of Vardi's favorite Internet startups, is a good example. He's a former member of Mamram, the IDF's elite computer corps, which requires six years of service, double the normal commitment. Hadar and others say there are Mamram alumni all over the computer industry in Israel. But it's not just Mamram.

One night, Vardi and I decide to visit another of his companies, CTI2. We are on the way back from a U.S. Embassy reception for Florida Gov. Jeb Bush, where Vardi, in another setback for Israeli public health, has sampled the fried fois gras with quince. Sure enough, when we arrive at CTI2, the usual motley collection of casually dressed young men is hard at work. One of them, Benny Matityahu, tells me that "most of the guys were in intelligence in the army." He and his friends tick off several other companies started by former intelligence men. The intelligence service, like Mamram, is an elite whose members are prized in the world of business. Yigal Erlich, of VC firm Yozma Group, says with a grin that this makes due diligence really easy. You simply ask about the founders' military experience, and if the answer is A-2000 (one of the most elite units), due diligence is complete.

The IDF is also not your typical army. There's relatively little saluting beyond basic training, and in established units troops sometimes address their commanders by first name. Orders are meant to be obeyed, but individual initiative is emphasized. The result, according to Israelis involved in technology-oriented businesses, is a corps of young people who are more mature, more self-reliant and vastly more experienced than they would be otherwise. Alumni of an elite IDF unit, says Erlich, "know how to develop a project, how to work under pressure."

What they don't necessarily know is the U.S. market. As a result, once Israeli Internet ventures get past the earliest startup stage, they often establish offices in San Francisco or New York, both to be closer to the action and to acquire the gloss of cultural awareness that the U.S. market requires - and that is difficult to muster from the Middle East. "As an Israeli, you're not aware of this until you spend a couple of years outside of Israel," says R U Sure's Hadar.

Israel's balmy climate can remind you of California, but after that the similarities end. People in the Holy Land smoke cigarettes, serve in the military and obsess over politics. Customer service ranges from desultory to rude, and marketing is primitive by American standards. "Typography and design in Israel is horrible," observes Elan Dekel, founder of Earthnoise, a video-oriented Web site that has a partner in San Francisco.

Inevitably, the Internet will change much of this. But how much? Where will it all end? And how far will Israel move away from the ideal of the Jewish state?