It's far from the markets and on the wrong side of trade barriers most startups serve (EU, NAFTA, etc). Other markets (including some pretty large countries) are completely inaccessible. Flying in and out is expensive and inconvenient. It's not a place people can arbitrarily migrate to so workforce is largely limited to locals. They speak a language and use a currency no one else does. It's not a financial hub, not even in the VC/startup niche. etc.
Then there is also the fact that the country is in a constant^ threat of existential war which means your employees are doing active reserve. Long term anxiety is real.
Of course there are the major positives that do make it work. I think that's an interesting point. Maybe the pluses get multiplied in a way that minuses don't in the case of startup hubs. That would imply that optimizing around the edges (eg living cost, CGT, typical "ease of business" measures) are not as important as complaints might suggest.
^By constant I mean that if you look at a 10-20 year horizon from any point in history, there is a substantial risk that conflict will affect your life as a citizen. Many Israelis hold foreign passport in case things go south.
I wonder what other places have this trait. University cities where smart people leave after university don't meet it.
Japan probably has the "lots of smart people want to be there" (the huge population of hacker type people worldwide who love Japanese culture), but either can't be there (due to a weird employment/immigration market), or the country itself is too difficult for a nexus of startupness to form.
Singapore and Dubai are awesome, but most of the expats I know in both places have a "want to make money for a few years then go home" view of the places.
SF, NYC, LA, Boulder seem like the most aspirational cities in the US. SLC for the Mormons. Maybe Portland?
If you want to know how Israel became the technology capital it is today, I thoroughly recommend Start-up Nation: The Story of Israel's Economic Miracle
Still, I'm very skeptical about ANY city here coming close to SV, mostly because of different mentality/tradition/culture across the ocean.
London in theory has everything going for it (ok, high cost of living, but so SV and NYC), but you don't hear so many success stories coming out of it.
The biggest drawback of Berlin would be the language, in my opinion.
Pretty much everyone in Berlin in the tech industry speaks at least good enough english. There are even some companies that use english exclusively.
(If I were the DE or Berlin governments, I'd make a huge focus of putting dual German/English signage all over in government and private life; everyone meaningful can speak English, but there are a bunch of places with German-only signage. In Frankfurt, there's the semi-absurd situation of English only signage, for stuff like Rental Car Return; due to the US military presence and international companies, there are probably more English-only renters than German-only renters.)
(I'm not sure what's gone wrong with Amsterdam. It had some great early successes, and some great universities, and hfh were about as awesome as ccc, if smaller, but people seem...not so risk-taking, and consensus focused?)
I'm not even sure you can make a cultural argument that makes sense about Amsterdam. There are so many foreigners there that the culture is <40% Dutch. A city where most residents decided to live there because of a fun urban environment is risk taking by some definition of the term. The only cultural argument I can think of is that it's quite euro-leftist, not very capitalistic.
You definitely would want to learn German for social reasons but it's absolutely not a prerequisite for moving there and being effective at most companies -- unlike, say, a top Japanese or Chinese company, or (from what I've been told) major French or Italian companies. In those places you might get away without good local language skills briefly if you're a specialist consultant, but it's going to make you pretty useless professionally otherwise, long term.
I suspect a reasonably intelligent English speaker could pick up enough German to be happy socially in months, based on my reasonably intelligent English-speaking friends who moved there without speaking German beforehand.
Its not a problem for the Germans, they like speaking English. I agree that it might be a problem for English speakers who irrationally decide that its a problem.