Freezing cold in late January in Jerusalem. The threat of snow is in the air. And nearly 50 of the world’s biggest leaders have descended on the city in order to honour the 75th anniversary of the liberation of Auschwitz Concentration Camp.

As traffic snarls up to ensure clear passage for the celebs, all around them a major economic transformation is in process. The Jerusalem economy is emerging from its slumbers, previously branded as a city for religious tourists – Jewish or otherwise – and civil servants. Jerusalem is moving towards Palo Alto, so to speak.

Mobileye may be a one-off story, the proverbial commercial unicorn rising out of the holy city, but it does represent the start of something new. It was purchased for over US$15 billion dollars by Intel. It had planned a 30 floor high HQ in Jerusalem.  It has since decided “to amend the NIS 950 million ($274 million) plan for a more modest group of five buildings, each nine stories high…”

About five kilometers away are the offices of Our Crowd. Their rapid rise to success as arguably the most successful global investment crowd funding platform has ironically paralleled the rise to fame of Mobileye. Next month, they will hold their annual event in Jerusalem.

Their press release today points out that: –

OurCrowd reports that 32 of the startups presenting at the past four summits had an exit or IPO within 12 months. The 2019 OurCrowd Summit featured 7 startups that later exited, including:

Beyond Meat: Biggest IPO in a decade, May 2019
Magisto: Acquired by Vimeo for $100 million, April 2019
Wave: acquired in June 2019 by H&R Block
Prior years’ Summit featured many startups that later exited, including:

Jump Bikes 2018, acquired by Uber two months later
Briefcam 2018, acquired by Canon six months later
Invertex 2017, acquired by Nike three months later
Mobileye 2017, acquired by Intel for $15.3 billion two months later
Crosswise 2016, acquired by Oracle three months later
Replay 2016, acquired by Intel two months later

Oded Barel of the Jerusalem Development Authority has also listed some of the investment highlights of 2019, featuring local corporates on the go. For example:

  • 🦄 Lightricks raised $135M and became a unicorn. If that wasn’t enough, it also won both Apple’s and Google’s best app of 2019 awards.
  • 👁️ Orcam’s MyEye has been selected as one of Time Magazine’s best innovations.
  • 🏡 Hometalk raised $15M to expand their DIY content platform.
    🧠 CNVRG raised $8M to expand to NYC and help enterprises adopt machine-learning.
  • 🚗 C2A raised $6.5M to develop its end-to-end cybersecurity platform for cars.
  • 🏥 Pepticom raised $5M to accelerate drug-discovery using AI.
  • 🍣 Bitemojo won the UNWTO global competition for gastronomy tourism startups.
  • 👋 Mellanox, Via, Taboola and Vayyar have all announced they are opening R&D activity in Jerusalem. Welcome, fellas.

Gathering together stats from various reports, there are around 41,000 business enterprises in Jerusalem. Nearly 4,000 new ones opened up in 2018, although a further 3,000 closed down. Interestingly, both this rate of growth and the relatively low turnover is better than the national average. One reason for this is clearly the strong presence of NPOs like MATI, which promotes Biz Dev amongst some of the weaker parts of the local community.

What next? Ask the 50 world leaders visiting us this week. They may have been here to discuss the Holocaust. I can assure that business and trade were also close to the top of the private agendas.

Israel’s third general election within 12 months will take place on March 2nd. Everyone knows that political uncertainty is rarely good for a sophisticated economy. So how has the country managed to ride this wave of political intrigue?

It would seem that the Israeli economy grew at a rate of 3.3% in 2019, pretty good compared to other countries. And as for trade, at a time when China and the USA are threatening global instability: –

Figures for Israel’s trade and capital flow show an increase in the surplus, which supports further strengthening of the shekel against foreign currencies. Israel had a $9.8 billion trade surplus in 2019, compared with a $4 billion surplus in 2018. The balance of payments current account had a $14.8 billion surplus in 2019, compared with a $9.5 billion surplus in 2018.

Incoming tourism increased yet again in 2019, this time by 10%. Start ups raised a record US$350 million in December 2019 alone. And global companies like Tesla continue to set up offices in the Holy Land.

So where is the proverbial “but”?

Let’s look at those start ups. “5,313 new startups were founded in Israel between 2011 and 2018, but 2,387, or 45%, closed or froze their operations by 2018. In total, 4,363 startup companies were active in Israel in 2018, a 6% drop from 2017”. Hmmm.

Now let’s consider the budget deficit, which the government has sworn blindly for over a year is under control. The gap has already mushroomed to nearly 4.0% of GDP, way above all targets. New taxation is almost a given, when a government if eventually formed in the early summer.

And this budgetary hole is rarely a good sign, just when unemployment rates are beginning to turn upwards, admittedly from a low figure of less than 4%. In other words, the glory of numbers showing a strong economy is really not that genuine.

Roughly 18 months ago, the then governor of the Bank of Israel, Carmit Flug, took the hint and decided not to seek re-election. She had advocated that the fiscal policy of the Minister of Finance was irresponsible. She bitterly opposed the moves to reduce taxes. However, she was to lose the battle.

Is it any wonder that the head of Israel’s Tax Authority is currently looking for ways to raise taxes? First up on the list is the imposition of VAT on fruit and vegetables, a direct hit on the poorer sections of society. However, this decision will not be made until after March 2nd, thus protecting the government’s core base voting community.

Hmmm.

Today is 25th December 2019. It is Christmas. In Israel, this special Christian holiday has become politicised over the years. President Abbas is always seen attending a service in Bethlehem. The PR team at the City Hall in Jerusalem ensure that all the press knows how many free Xmas trees have been handed out.

To summarise one wag on Facebook today, Jesus could not have been a Palestinian, because the term was only coined 200 years after he died.

Israeli spokespersons have pointed out for a few years now that And please note that the largest section of those numbers are affiliated with the churches of East Europe.

The British-born journalist, Matthew Kalman, has cited numbers from Israel’s Central Bureau of Statistics.

There are 177,000 Christians living in Israel at Christmas 2019, 2% of the population. Their number grew by 1.5% in 2018, compared to 2% the previous year. Among the 855 Israeli Christian couples that married in 2017, the average age of the groom was 30.1 years old, while the average age of the bride was 26.0. The average number of children aged under 17 in Christian families is 1.87, compared to 2.37 for Jewish families and 2.77 for Muslim families.

As for me, I am spending the season in Australia. I have been wished Happy Hanukah by Christians, and I have wished so many others Happy Christmas. So, as they say here down-under, I wish all my readers “happy holidays”.

Israel is to hold its third general election within 12 months in March 2020. Does this political impasse have an significant impact on the economy?

Remember: Israel has always had a coalition government. Yet somehow, parties have found a way to come together. This time, there is a secondary elephant in the room – the investigations into corruption surrounding the Prime Minister and now his indictment on three separate accounts. Benjamin Netanyahu has made no secret that his best line of defense lies in clinging to power.

Thus, the political impasse did not start on the day of the first general election this Spring. It began in the run up to that vote, commencing in the Autumn of 2018. And it is likely to continue through to the early summer of 2020, as the vested parties will seek to outmaneuver each other in the expected coalition talks.

In other words, we are talking of an almost two year period, when the economy (and other policy issues) have received no central direction!

Does this really matter? After all, the economy is holding up.

Against all that cheer, there is a very worrying undercurrent. As one journalist calculated:

The price tag for the next election is NIS 3.8 billion and the cumulative cost for all three national ballots is an estimated NIS 10 billion – enough to raise old-age stipends for one million pensioners in need.

Meaningless assumptions? One leading national charity has stated that:

Government policy tools directed at the issue are generally limited and insufficient to diminish the problem substantially, to which has been added stagnation in government and political instability because of the two elections a short time apart in 2019, leading to the loss of an entire year in the ability to deal with prevention and reduction of poverty and rescue from it.

It is known that:

  1. The national deficit is growing, as the government has no mandate to lower spending nor to raise taxes.
  2. New opportunities to attract overseas investors are going begging, as they require government approval.
  3. I was told by one pensioner that his drugs and tablets are in short supply, and he has heard of other cases.
  4. Specific stipends, such as for soldiers without parents, have run out of money.
  5. Start ups, relying on government funding, have been laying off workers, as there has been ‘no legal process’ to grant the transfer of funds.
  6. And………….

In other words, at the micro level, the immaturity of Israel’s politicians is beginning to hurt. But who cares?

The political uncertainty only impacts on the electorate but not those who consider themselves wise enough to make the laws.

 

I was listening to a wickedly funny yet pertinent and amazing post yesterday from Geoff Burch.  To cut to the chase, he asks why there are so many cold callers annoying people in their homes with set scripts that are usually irrelevant, if not insulting.

Hold that thought, and link it to a blog written by executive business coach and mentor, Tim Jackson. He ponders why most of us are so prone to distractions. As he bluntly puts it, it is our own responsibility to identify those issues and remove them, pronto.

I have lost track of how many people over the years have asked me if they should open an office or continue working from home. After all, it can cost a lot of money to fit out additional premises and pay the rent. Well, no argument there.

Maybe there is a deeper, hidden concern. If you take up on extra facilities, your are going to have to be more responsible for your work. You will be forced to go out and find extra clients in order to pay off the extra (“and wasteful”?) expenses. Hmmm!

Personally, it took me ages to come to a decision that I needed an office. I was getting by. I had learnt to deal with the distractions – most of them – in the home environment. I could meet people in quiet – or semi quiet – at coffee shops.

I then dilly-dallied, as I struggled to find the right area of Jerusalem to set up shop. Far too slowly, I realised that the all neighbourhoods had lousy parking and lousy traffic problems. Comparison was not easy. So, I chose the industrial park closest to where I lived.

And today?

Since moving, and also after getting used to the change, my productivity has increased by 10s of percentage points. It is difficult to pin point precisely why or how. However, I know of other freelancers who have had similar results.

The point is as follows. Before moving, the trader is so rooted in how much extra the change will cost them that they minimize the potential benefits. And yes, those costs are important to understand. Far more vital is the uplift. We forget that we are seeking to become more professional, and that is how others will see us. And that should result in lots of lovely extra revenue, way above the additional expenses.

So what was your original question?

A post on LinkedIn from Geoff Burch referred to an a car repair job. Seemingly because he is a TV personality, the service was not insured. To summarise Burch’s thoughts, so much for customer care. After all, “happy customers make money”. (HCMM)

It reminded me of the time 30 years ago, when I had to go to the head Peugeot dealership in Jerusalem. They were incredibly rude. I complained to head office in France. The guys in Jerusalem were forced to apologise, but asked why I had not tried to resolve the issue locally in the first place. Er, um…. Meanwhile, I have not bought Peugeot again. Remember HCMM.

Have times changed? Last week, I ordered a new mobile phone via a website. I compared prices, delivery schedules etc between shops and decided on the retail chain called GoMobile.

Shortly afterwards, a rep of GoMobile called me up. “We just want to verify some details”. Oh yes, I think to myself. You know that it’s a trap, because he did not verify the model. Bottom line: The kit did not come with an original Samsung charger, but another make. If I am prepared to part with a small fortune, I can receive that and an extra year’s guarantee.

What the…? Why can’t they just put it in the package in the first place? Why the deception, from my perspective? To be fair, as was pointed out to me, this issue was clearly written on the website. But who takes in all the info, dotted all over the screen?

The rep was insistent and would not take no for an answer. So rather than trying to interrupt him, I let the guy waffle away. Finally, I was able to say no. I then told him that I would honour my order, but I think GoMobile is shooting itself in the foot. “What do you mean?” he asked.

“Because next time, I will not consider GoMobile as my first choice.” Suddenly, the rep was speechless. HCMM.

And if you think that is bad enough, try using Netvision as your e-mail server. That inbox receives about 30 spam entries a day from ladies suggesting various ‘services’. They all have the same content. However, Netvision will block this rubbish, if I just pay them around US$5 per month.

I have to ask myself: Why can’t Netvision just provide this service in an effort to provide excellent standards? Why are their customers subjected to this nonsense?

My three stories relate to incidents with Israeli services. However, I am sure that the world over is full of such incidents, daily.

When discussed as per above, it seems so obvious what suppliers should be doing. So why is it that so many fail? More importantly, what can you do to improve your service to your customers, right now?

Israel held its second general election almost a month ago, and there is no sign of a government in formation.

Incumbent Prime Minister Netanyahu has a reputation of being a winner, usually. It seemed he had won back in April, only for one of his expected coalition partners (Yisrael Beiteinu) effectively to ditch him. Back to the electorate in September and he has actually ended up with a slightly worse set of cards to play with.

Today, he is a wounded race horse. The biggest evidence for this are those individuals, such as Gidon Sa’ar and Nir Barkat, in his own Likud party, who are beginning to announce that they are prepared to replace Netanyahu – of course, only if and when he resigns.

The same is true overseas. Assumedly one of his biggest fans, President Trump, has failed to do anything about recent Iranian aggression towards Saudi Arabia. Then last week, the Americans withdrew military protection from their Kurdish allies in northern Syria. Both items have sent shudders throughout the Israeli security services. (I remind you that one of Netanyahu’s key election posters included a photo of himself and his chum Trump, smiling together).

For good measure, Netanyahu’s supposedly close relations with President Putin are also being tested this weak. So far, Netanyahu’s words are having little impact.

Everyone knows that Netanyahu is facing legal accusations on at least three separate issues, involving bribery and the perverting of the course of justice. Many argue that the proverbial elephant in the room for both elections was Netanyahu’s desire to remain as Prime Minister for as long as possible. The law for removing a PM, if and when he has been formally charged, is unclear. It seems that technically he can stay where he is.

And what does this impasse mean for the average Israeli?

  1. The Bank of Israel has already issued a strong warning regarding the budget deficit, which has been out of control for nearly a year. Painful cuts are urged.
  2. The Bank of Israel has also reduced its estimates for economic growth in 2020 by a full half of one per cent to 3.0%.
  3. Reforms and incentives are held up. I have a client that wishes to apply for a government grant, which will help their company invest in new machinery. This will create employment and thus fulfill new export orders. The grant programme ran out a few months ago, and can only be extended when the Kenesset (Parliament) begins to work again. Meanwhile……
  4. Everyone accepts that the budget for the Ministry of Defense is large, relatively and absolutely. Including American support, it stands at 72.9 billion shekels (almost US$21 billion). Of this, 7.9 billion shekels (11%) is handed out in pensions. By way of comparison, the Ministry of Education is appropriated 6 billion shekels and the Ministry of Welfare 9.5 billion shekels annually. Disproportionate?
  5. As for the Ministry of Health, if you do not live in the key population centres, hospital services are simply poor. Pardon the pun, but I am sick and tired of seeing pictures of patients waiting in beds in hospital corridors. Unacceptable!

Aside from Netanyahu, there are at least three other politicians from the outgoing government awaiting for the Ministry of Justice to decide if they should be prosecuted. One of them includes the Minister of Health, Ya’akov Litzman, The Israeli political system is unwell, and most patients are demanding a new doctor be placed in charge.

Two Israeli Unicorns and both leading viral content distribution companies, Taboola.com Ltd. and Outbrain Inc., have agreed to combine forces.

Taboola was founded in 2007, has 1,400 employees and has raised over US$160 in a decade. Outbrain: founded 2006, 800 workers, and has raised US$150. Having spent years snipping at each other, they are now seeking to combine forces to take on Google. All change.

But most companies are not that global. Whatever the financial headlines, business is dominated by SMEs – individuals or small groups of people struggling daily to hit their targets in their own local neighbourhoods.

I recently was called in to three such operations in the Jerusalem area.

The first one was a relatively simple affair. The owner wanted to sell. I was asked if he was making the correct decision. Given the state of his business, his private situation and the offers received, the answer was a clear yes.

The good news was that here was a person that was prepared to put aside all his established thought processes, look beyond the jungle of clashing thoughts, and realise what needed to be done. Mega kudos points.

In the second scenario, I appreciated that the founder needed help, but that they could not be told out right what to do. So, I created a time line as to what would or would not happen, depending on their actions, carefully choosing a specific date months in advance.

I cannot say that the process was smooth. The initial meetings were accompanied by much resistance and the old-fashioned weapon of choice, ‘procrastination’. However, three months into the battle and we have a clear path forward and a completely new face to the marketing strategy. Quite literally, it is as if the CEO has discsovered a new language, judging by the way they are talking.

In case study number three, the story is more complex. Shortage of space forces me to narrow down the bare facts. This is a person, who is so caring that they will do anything for anyone. And this is the constant excuse why they cannot help themselves, because others need their attention.

The business model, such as it is, is truly weak, Nothing will change that pattern until they are able to comprehend that the damage they incur on themselves will eventually impact on those that they love.

We are taught that change is often seen as a threat. As a business coach and mentor, almost every week I try to show CEOs how in fact change can be such a fun, if not invigorating, challenge. Otherwise, we end up like approximately 80% of the Fortune 500 companies from  about 50 years ago – they are no longer around.

 

 

Stop screwing yourself over” is an excellent Ted Talk by Mel Robbins. One of her key points is that when we are asked how we are doing, we often reply “fine”, and with the flattest of intonations. In effect, we are lying to ourselves.

Self employed, just starting out in a company, or C-Class executive, we all look for something meaningful to do at work and with our lives. Earlier this week, I read an item from somebody who today is a practicing Jew. His article traces his past from Woodstock and the heavy culture of the late 1960s to his life in Jerusalem today.

Finding out the true definition of ‘fine’ was a slow and sometimes very painful story. He learnt that what he had valued as a golden lifestyle was simply worthless. He needed to change all ways up.

Trying to answer the question “what is it that we actually do?” often appears so simple, yet it is rarely so straightforward to answer. When discussing this topic with CEOs, I tend to rephrase the conundrum:

“What is it that you are selling”?

The answer is not a service nor a product nor a piece of entertainment. As Ray Kroc of McDonalds was soon to realise, he was offering a family experience. He did this by pricing out chips and sugared drinks to his clientele.

Yesterday, I spent some time pitching to a new potential client. They are seeking help to raise funds for a new social project. They described their achievements to date in glowing terms.

Then came my turn to play business coach and mentor. They could not even begin to respond when I questioned what would make the financial contributor “fine” if they are to be associated with such an effort.

So, be honest. How are you doing today……..and why? More importantly, what do you need to change in order to answer with a smile in your voice.

 

 

Israel’s second general election for 2019 is scheduled for 17th September. What we know is that:

  • It is about which key politician can more successfully ‘dirty down’ their prime opponent in the eyes of the public.
  • Policies are rarely mentioned by anyone.
  • The PM, Benjamin (Bibi) Netanyahu is fighting for his personal freedom.
  • The result is too close to predict.

Historically, Israeli elections are determined by the question: Which party is seen as the most resolute to resolve the country’s military and diplomatic issues? This is a direct contra to many Western electorates, who are more connected to economic and social policies.

Ostensibly, over the economy, Bibi is seen as having an advantage. He is perceived as having been a great Minister of Finance at the beginning of the millennium, leading the country out of a small recession. Today, the Israeli currency, the shekel, is considered a safe global bet. And despite a concern over a growing budget deficit, Israel’s credit rating remains unchanged.

So where are the “buts”?

Let’s start with that same budget gap, which is growing, sharply. At nearly 4% and rising, you cannot ignore it. The only reason that harsh cuts have not been forced through in the public is because it is election time. They will have to be put off until October or later.

Meanwhile, economic growth is slowing down to around 1.5%. This has been reflected in the unemployment figures, which have risen unexpectedly to 4.1%. Awkward for anybody in power to admit.

And as for the structural anomalies, they exist everywhere. The government has neither the strength nor the interest to haul them in. To take a simple example, look at the olive oil industry.

With some irony, despite history and geographic location, Israel imports much of its olive oil. These imports, like many other food imports are heavily regulated via tariffs. Earlier this year, the tariffs were relaxed. Local manufacturers were forced to drop their prices.

I do not believe that any worker was laid off due to this price war. And now that the tariffs are about to be reinstated? Simple, the local manufacturers can raise their prices. And does the government care?

By the time prices of olive oil will start to climb again, the election will be over.

Two months ago, the Times of Israel wrote a positive summary of the Israeli economy.

Unemployment in Israel is at around 4%, inflation is at the lower edge of the nation’s target of 1% to 3%, and the increase in gross domestic product (GDP) in 2018 was 3.3% , still higher than the average growth in 2018 for OECD nations — the world’s richest — forecast to be 2.37%……The economy has not faced a recession in the last 15 years, and GDP in dollar terms has increased by over 55% since 2010. …….GDP per capita in Israel was $40,270 in 2017, up from just $1,229 in the 1960s, and is now “firmly in line with high income nations,”……..

To ram the point home, GDP for Q119 has just been revised upwards to 5%. Egypt and Israel are contemplating joint liquid oil exports from the Sinai desert. The shekel is considered a solid performer on global currency markets. What could be wrong?

Well for a start, the government’s budget is spiraling out of control, 3.8% of GDP and seemingly rising. The cost of living is relatively high and getting higher, thus ensuring the continued extremes in wealth variations between rich and poor. Strikes in the public sector – teachers, diplomats – are looming up ahead. And the voice of the Minister of Finance is not to be heard.

And then we come to that minor nuisance of the general election on 17th September. The point is that the Prime Minister, Netanyahu, is completely engrossed in ensuring that he secures yet tenure – and thus, he assumes, multiplying his chances of avoiding trials for embezzlement etc,

Almost daily,  we hear Netanyahu’s complaints about opposition politicians. We rarely hear about new policies on social and economic matters. For example, labour productivity remains weak and thus reflects on the economy’s ability to rejuvenate itself. For all the positive stats, poverty effects around 25% of the Israeli population. Traffic jams clog the 3 major cities. The high-tech industry cannot fill thousands of places. And the food sector is so regulated and protected that prices to the consumer continue to be bloated.

The pain is there for all to see and most citizens to feel. And meanwhile, the interim government is holidaying on the beach, while plotting how to stay in power come September 17th. I ask that you keep the noise down and not disturb them so that they can enjoy their well deserved break from work.

 

So here’s the deal.

Trump says to the Palestinians: “I will get you peace and a homeland. The route starts at a conference in Bahrain, where I will deliver to you a US$50 billion economic package.”

President Abbas – in his mid 80s, last elected nearly 20 years ago and now for funding the Munich athletes massacre – responds with a ‘no way’. In fact, he even arrests a businessman from Hebron, who attended in a private capacity.

It is not clear what will be the outcome of the conference, where neither the Israeli nor the Palestinian governments were in attendance. Israel scored a few cheap PR points by claiming it was prepared to go along with the concept. However, with more elections coming up in Israel and also the midterms in the USA, further progress will probably be limited for the next few months.

And yet, Israel seemingly does get quite a bit out of ‘these silent changes’.

First, we know that the Bahrainis welcomed Israel pretty openly. Interviews were awarded to journalists from the Holy Land. An isolated moment? No, because second, Israel’s Foreign Minister, Yisrael Katz, popped up at a conference on climate in the United Arab Emirates.

Do not kid yourselves! Trade between Israel and the Arab block is taking another move forward. There are no official numbers, but they must be in the billions, bilaterally. So much for BDS.

And as for the conference itself? I do not believe that individual Israelis sat around politely and interested parties from Saudi Arabia, Egypt, UAE, et al also sat around politely without talking to each other and without discussing some numbers. The Palestinian issue may hold back full disclosure between the parties but their are rumours of tech deals and more.

A shame for all nations and their economies that President Abbas prefers antagonism and hatred to some definitive initial steps towards mutual recognition.

 

 

Not far from the central bus station in Jerusalem is a run down building that was once a well known powerhouse in the national economy. The current owners are demanding a lot of money for anyone to renovate it and then rent it. Equally significantly, the site owns about 20 parking places.

Let me clarify: Each space is worth about 700 nis a month, close to US$200. Jerusalem is a city that suffers from daily traffic jams. A light railway is being constructed right through several of the main congestion points. And several major public buildings are also going up, often in the same areas.

To add to the picture, the parking problem in the high-tech centres is a bad joke. You can now begin to appreciate that the aforementioned property is even more valuable than ever.

The issue was highlighted in a recent article. It is estimated that “highteckies” are highly mobile people – around 20% swop positions each year. One common reason is that side benefits, which include easy drives to work and parking facilities, are better elsewhere.

Jerusalem is no longer a city, where the key jobs are in the civil service or in tourism. The city today hosts 485 high-tech enterprises, including 300 start ups. Other stats: –

  • 144 are in the sciences or biotech.
  • 31 starts ups were added to the list since the beginning of 2018.
  • There are 19 r&d centres
  • The city hosts 22 venture capital groups.

The growth of Jerusalem’s economy has been amazing. And there is seemingly no end to the progress. For example, earlier this week Jerusalem launched an accelerator programme for ultra-Orthodox (Haredi) entrepreneurs looking to establish startup companies. Although comprising around 11% of the population, barely 1% of such people are engaged in the high-tech world.

At the same time, we saw New York Governor, Cuomo, touring high-tech successes in Israel’s capital city. Clearly the man and his team feel that this is something that his ‘small’ city can learn from.

Jerusalem’s high-tech sector needs to be serviced. (BTW, the new train service from Tel Aviv was launched recently, but with technical faults and delays galore). There is no doubt that much of the construction is much needed, but you cannot but feel that the central planners have got their coordination and timing wrong.

 

 

To cut a long story very short, Israel’s Prime Minister called for a general election in the winter of last year. It was held in April 2019, and his coalition partners won a majority. However, Mr Netanyahu has been unable to secure agreement amongst his buddies, and so is going back to the electorate…… on 17th September 2019.

As one person asked: If it takes the UK with tens of millions of voters and 650 constituencies only three weeks to prepare for an election, why on earth does it require the ‘start-up nation’ with four million voters five months? No answer. But just think how much extra money can be wasted in PR campaigns over that period, …..mostly funded by the taxpayer!

It is estimated that the direct cost of the election is around US$130 million. That makes for disappointing reading at a time when the country does not have a Minister of Finance and when the budget deficit has been lurching out of control for the past six months. The problem is that no real fix is in site before the winter, which means that the remedy will eventually be even more painful…..not that the present government will admit that to an electorate.

But there are other hidden costs.

After the elections in April, the 120 members of the Israeli Parliament, the Kenesset, were sworn in.

By the time the next election rolls around on September 17, Knesset Member Osnat Mark of the ruling Likud Party will have served in the Knesset for 10 months without performing any of the duties of a lawmaker. Nevertheless, she will receive a monthly salary of 43,000 shekels ($11,850), as well as a budget for aides and advisers.

Nice work if you can get it.

Moving on, let us recall why that first election was called earlier than required by law. The consensus in the press was that Mr. Netanyahu was seeking to delay the process of the four legal investigations against him. And by all accounts the main subject of discussions when trying to form a new government just now – a process which failed and resulted in those additional elections – was how to create a law that would weaken the prosecution’s cases against Netanyahu.

Add up the value of the charges against Netanyahu, and we are talking about billions of shekels.

Finally, let me turn my attention to the ultra-orthodox community, whose political parties see themselves as natural coalition partners of Netanyahu. They currently constitute about 16.5% of the populace, a figure expected to rise to 20% over the next decade.

However, 98% of 18 year olds from the community graduate without a proper education. Thus, when they do eventually enter the workforce, they are underqualified.

Actually, I should state “if” they work, because nearly 50% of ultra-religious men between the ages of 25 and 64 are estimated not to be a part of the working population. In order words, when Netanyahu agrees to the demands of his rabbinical partners, he is encouraging a form of enforced poverty.

Statistics indicate that 53% of the ultra orthodox live under the poverty line, as opposed to 9% for the rest of the population.

What the heck? Unemployment is at an all time low. The economy continues to grow in real terms. Loads of top musicians are turning up to play open air concerts this summer. So why should we care about a few squandered billions of dollars, if the Israeli government does not want us to think about them?

 

 

Today is Jerusalem Day. 52 years ago, Jerusalem was liberated. For the first time in decades, Jews could freely pray at the Western Wall. Inhabitants could roam around the city without being shot at by Jordanian soldiers.

There are many heart-rendering photos from that day. Three soldiers looking up at the Wailing Wall. The sound of the shofar, the ram’s horn, being blown. Moshe Dayan, he with the eye patch, strutting with senior officers through the gates of the Old City of Jerusalem.

Today, nearly a million people live around Jerusalem. Its biotech industry is servicing millions globally. Intel sunk over US$15 billion to buy a local start up called MobilEye. And in terms of religion, everyone gets to do what they want.

However, going back 5 decades, what happened next? After the fighting ceased, we know that the soldiers were moved out towards the Hebron district, but then what?

The story of one rabbi, Shlomo Goren, encapsulates it all. It was recalled by Rabbi Ari Kahn, and I copy his words in full below. However, as I read it, I had to wonder, what has changed between now and then? Why has the hatred replaced the sweets that were offered in that moving episode of history?

You will chase away your enemies, and they will fall before your sword. Five of you will be able to chase away a hundred, and a hundred of you will defeat ten thousand, as your enemies fall before your sword. (Leviticus 26:7,8)

While the words of the biblical verse might once have sounded like hyperbole, in the coming days we will once again mark the anniversary of the Six-Day War. In 1967 – in the range of memory of many who are reading these words – the experiment called the State of Israel faced an existential threat, as a multi-front war threatened to annihilate the nation that dwelled in Zion.

The God of Israel was not silent, in a miracle of biblical proportions, the foreign armies were suddenly and decisively defeated. The Egyptian air force was neutralized within the first minutes of the war, and the great personal sacrifice Eli Cohen, Israel’s “man in Damascus,”helped defeat the enemy forces in the North.

Jerusalem was reunited, and the Temple Mount was returned to Jewish hands. This, too, came at a heavy price, paid with the lives of our young, valiant soldiers who gave their lives to defend West Jerusalem and to blaze the path to liberate East Jerusalem.

The iconic image of the young paratroopers standing at the Western wall is seared in our collective consciousness. Many of us have also seen pictures of the Chief Rabbi of the Army, Rav Shlomo Goren, who blew the shofar,recited a blessing of thanks and joy, and remembered the fallen in an awe-inspiring prayer at Western Wall.

What many do not remember is that on the following day, Rav Goren did something even more remarkable: He liberated the city of Hebron. Two people – Rav Goren and his driver – vanquished the 40,000 hostile Arabs living in the City of the Patriarchs. Only two people – with the help of God.

 

Adam Eliyahu Berkowitz also tells the story of Rabbi Goren’s account of that day.

“Many know the story of Rabbi Shlomo Goren arriving at the Western Wall flanked by IDF troops in the 1967 Six Day War on the 28th of Iyyar in the Hebrew calendar.
The moment, captured in an iconic photo, shows the rabbi holding a Torah scroll and blowing a shofar at the Western Wall surrounded by young soldiers. But few people know the even more astounding story of what happened the day after that photo was taken and how Rabbi Goren single-handedly conquered the holy city of Hebron and the Cave of the Patriarchs, known as the Machpelah Cave.

The war was still raging after the Old City of Jerusalem was conquered by the IDF. Directly after the emotional scene at the Western Wall, Rabbi Goren, a general and the Chief Rabbi of the Israeli army, proceeded to join the forces gathered in the recently recaptured Gush Etzion. The troops were waiting for the morning when they would push on to battle the Jordanian Legion in Hebron.

Rabbi Goren addressed the troops, telling them of the enormous significance of Hebron to the Jews. He lay down to sleep surrounded by Israeli soldiers, telling them to wake him in time to leave for the battle the next day. However, when he awoke a few hours later, he was alone. The troops had moved on without him. He quickly woke up his driver and they set out to catch up with the Israeli forces.

Alone, they drove the short distance into Hebron and were greeted by flags of surrender, white sheets hanging from every window and rooftop. The rabbi didn’t see any Israeli soldiers and assumed they had already conquered the entire city. What the rabbi didn’t know was that he had arrived before the troops. The army had taken a longer route in order to surround the city before entering it. As he drove toward the Cave of the Patriarchs, he was the only Jew, certainly the only Jewish soldier, in a city of 40,000 Arabs.

When Rabbi Goren arrived at the large iron doors of the Cave of the Patriarchs, he found them locked. Rabbi Goren shot at them with his Uzi machine gun, trying unsuccessfully to open the doors which had been locked to Jews for 700 years. The bullet holes are still there and can be seen by anyone visiting the site today.

The doors did not open, so he backed his jeep up and attached chains to the doors, pulling them open. Rabbi Goren entered the Machpela, blew the shofar as he had done the day before at the Kotel, set up the Torah scroll, and began to pray.

The Mufti of Hebron sent a messenger to ask Rabbi Goren, as a general of the Israeli army, to accept his surrender. He refused, sending back the answer, ”This place, the Machpelah Cave, is a place of prayer and peace. Surrender elsewhere.”

The first Israeli troops in Hebron were shocked to find an Israeli flag flying from the roof of the Machpelah. The next day, the rabbi received an urgent message from his officer, the Israeli Chief of Staff, Moshe Dayan. He ordered Rabbi Goren to take down the flag, remove the Torah from the premises and to order anyone entering to remove their shoes because the site was a mosque.

Rabbi Goren sent a message back in response: “The Torah is holy – it stays. The flag means to me what it means to you. If you want to remove it, you may, but I will not.”

Occasionally, I have mentioned the amazing buzz over the past few years created JLM BioCity. There is a wealth of ideas and innovation coming out of that team, yet in the relatively tiny city of Jerusalem, is world class. But what of the other sectors?

Earlier this week, I received a briefing of what else is happening around the city. I was stunned by the range of activity. What follows is a summary of that same bulletin published by the umbrella organisation, called JNext.

The weekly report starts off with a comment on the role of designers and ‘design mindset’ in general, became much more significant and crucial for tech companies to grow and succeed. They believe Jerusalem can and should become the place ‘Where Tech Meets Design’ and we are happy to invite you to the flagship conference of the ‘Tech Meets Design’ initiative as part of the annual Jerusalem Design Week.

A. THIS IS BIG. Jerusalem was ranked by Startup Genome as Israel’s leading life-science cluster in Israel and one of the top-10 life-science ecosystems worldwide. The city was also ranked as one of the top-20 global ecosystems for Artificial Intelligence companies. Check out the full report and the Jerusalem page on the Startup Genome website. 🏆

B. Ben Wiener of Jumpspeed Ventures, the fund the invests only in Jerusalem based or born startups, announces its new fund, injecting more capital into the capital city. Ben is awesome, everyone loves him, including us. 💸

C. Bitemojo, the most delicious startup in the world (and one of Ben’s portfolio companies), has won the Global Gastronomy Startup Competition of the World Tourism Organization out of 300 startups from across the globe. If you haven’t tried it yet, Bitemojo is a culinary experience of self-guided food tours with nothing but your smartphone. Check out recent interviews with their co-founder, Michael Weiss on the WTO website and on TheMarker. Yummy 😋

D. Genetika+ (another one of Ben’s portfolio companies..) was featured in JPost’s ‘Companies that Make the World a Better Place’ section. Genetika+ is developing a personalized medical testing tool to better treat depression by helping physicians find the best drug therapy for their patients.

E. The Hebrew University hosts a Canna-Tech conference to promote more collaborations between the academy and industry in one of the world’s hottest trends. The Hebrew University is one of the leading institutions globally with expertise in Cannabis-related research and patents. ☘️(**the closest to a cannabis emoji..)

F. From a heavy metal band to a gaming company. Capricia, a Jerusalem-based gaming studio is about to release its first game. Check out the interview with the creators on Geektime 🎸

G. Mellanox, one of Israel’s biggest success stories (recently acquired by Nvidia) are in the process of starting an R&D activity in Jerusalem. They are looking for an excellent SW Team Leader manager to join 5 Years experience in C and Linux and at least 2 years of experience in leading SW teams is a must.

H. Taboola, one of the world’s leading content discovery platforms are in the process of setting up an R&D site in Jerusalem. They are looking for Algorithms Engineering team leader and SW team leader (JAVA) to lead the site.

Jerusalem has around one million inhabitants. Over half is compiled of two large conservative sectors; the ultra-orthodox Jews and the Arabs. And despite that natural restriction, which can limit industrial growth, the city is as vibrant as ever in the high-tech world.

A few years ago, I was acting as the business mentor for a biotech company that had entered the Mass Challenge incubator in Jerusalem. Alongside them were a couple of people developing an app for the culinary tourist market. And today?

The biotech entrepreneur is still pushing ahead. Bitemojo has just won an international gastronomy competition (UNWTO). Is this one tiny step to becoming another Israeli high-tech success?

Every now and again, there are journalistic gripes that Israel does not produce enough commercial Unicorns. Well, I was recently wading through the updated stats of Israel’s success as a start up nation. What is impressive how the numbers seem to keep growing, almost exponentially.

Just look at the base of Israel’s ecosystem. For example, Comverse, which hit troubles and was sold off in 2016, saw 299 of its employees set up 386 start ups. ICQ, the founder of ‘chat technology’ and sold for US$400 million to AQL had 42% of its staff create 66 enterprises. Anobit, Intel’s first Israeli purchase, fostered an additional 11 businesses.

Another aspect of the high-tech industry is its impact on the lesser developed elements of the working population. Roughly 160,000 people are employed in high-tech, and there are about another 10,000 unfilled positions. Back in 2010, maybe 3,500 came from the ultraorthodox sector. That number had close to trebled by the end of last year.

Not only does this ensure that two conflicting parts of society are able to meet each other in the workplace. Significantly, many of these observant workers are female. Their work hours are frequently adjusted to match their domestic demands, often allowing husbands to study all day in religious seminaries.

Overall, women compromise around a quarter of the Israeli high-tech sub economy. Since 1995, at least 24 ladies have led exits of US$ 30 million or more. At the top of the list is Dalia Prashkar, who sold to BMC for US$650.

The Non-Jewish population is also beginning to make its mark. 24% of the overall population, barely 8% work in high-tech. Intel, CISCO and others had taken major steps to change the balance. And there is now a government sponsored high-tech incubator in the Arab city of Nazareth.

What next? Fivver, Waze, Wix have all succeeded on the global stage. ReWalk is helping paraplegics move about. Mobileye, started out to prove to Toyota that a solitary camera could protect a car from accidents. The company was sold to Intel for US$15.3 billion last year. It has already seen a unicorn spun off from it.

So what will we be saying about Bitemojo in five years, or maybe  we will only have to wait twelve months?

True story:

Yesterday, a guy turned up 44 minutes late for a one-off 60 minute business coaching session in Jerusalem. He had taken the wrong bus and was thus badly delayed.

He asked to reschedule. I took one look at him and made an immediate, potentially cruel, assessment. I denied his very legitimate request.

Over the next 3 minutes, I coached him into delivering short targeted elevator pitches that he was not used to uttering. he became empowered. I then asked him why he had requested a one-off session. Over the following 10 minutes, I shared with him a series of bespoke pieces of advice, all the time encouraging him to share more information about his commercial issues.

16 minutes later (and another three for good measure), he walked out of the room confused, shaken and delighted. My assessment had been correct. He had been too protected for too long. It was time for a shake up.

To be blunt: It was time to show him that he is allowed to announce what he is trying to achieve and how this will make his community a better place.

The nightmare of the wrong bus journey had been eradicated (almost) and replaced with hope. That delay had (bizarrely) given his 60 minute meeting an added dimension and purpose.

Jay Shetty’s latest video focuses on this very point. For most of us, a delay is a hardship or even a punishment. Actually, it is often an opportunity for us – to think deep, to appraise and to assess, and then to change.

I look forward to seeing my client in a couple of weeks to see what has happened. And yourself….?

 

Easter, Passover, almost Ramadan….the main religions seem to be in shut down mode. And yet the economic meanderings of Jerusalem, Israel, suggest otherwise.

Netanyahu won the general election less than two weeks ago. How he builds his coalition will be interesting. It is clear that he wants to try to keep the Finance Portfolio in the hands of his own Likud party, but how that that will eventuate remains unclear.

What is a given is that despite the strength of the economy, there are many structural changes that remain firmly on the table and ignoring them is a regressive act. For example, it is now accepted that the value of real estate in Israel is on the rise, despite the previous government’s flagship programme on the issue. Much needs to be done, and soon.

Following up on that theme:

The high exposure to credit for construction and real estate, together with mortgages, constitutes almost half of the banking sector’s credit portfolio. It continues to be an important risk for the banking system. There is a risk in the event of a renewed upheaval in the housing market equilibrium…

The Bank of Israel has been warning about this for months, but the ruling politicians and their mandarins have preferred to ignore the warnings. In fact the Governor’s tenure was not renewed. Whoever inherits the Ministry of Finance will be required by the money markets to act, and do so in real time.

Looming in the background is President Trump’s deal of the century, which is slower being leaked. As one journalist observed:

If you break it down, the Trump plan amounts to calling on the Palestinians to accept quasi-economic autonomy, with a US administration giving them monetary support and raising money for them from countries in the region – the “Arab NATO”: Egypt, Saudi Arabia, Jordan, and the Arab Persian Gulf states.

And meanwhile, the Israeli Ministry of Foreign Affairs, still dominated by the PM himself, has found a clever way to encourage countries to move their embassies to Jerusalem. First step – open up a large bureau for joint financial cooperation.

For example, since the visit of the Brazilian President to Israel last month, there are discussions to open a trade mission in the capital. In a similar posture, Hungary and also Australia are looking to create diplomatic offices in Jerusalem, based initially around boosting trade with the Holy Land.

Despite it snowing on the Golan Heights this week, the commercial story around the city is heating up.  I hope that the Prime Minister’s personal issues do not effect his efforts to move forward on all fronts.

 

 

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