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Israel’s economy doing well, and here’s why

31 January 2018
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Exports jumped 6% in 2017. Inflation hovers at around 1%. Unemployment remains low at under 5%. GDP growth pushes 3% or more. These are great overall indicators for the Israeli economy.

It is not too difficult to find stories of good news about what is happening in Israel vis-a-vis commerce and industry. For example, last week Prime Minister Netanyahu met with Chairman of the Board of Mitsubishi Corporation, Ken Kobayashi at Davos. According to the press release afterwards:

Israel is a major player on Mitsubishi’s map and added that they are now starting to consider investments in cyber and other areas. He noted that he intends to send a delegation to Israel soon in order to evaluate possibilities for investment and cooperation.

Looking at investments, 2017 was an excellent year. The US$5.2 billion figure represents a 9% upturn on 2016. Interestingly, Israeli venture capital was at its highest level since 2013.

Specific sectors are recording some spectacular growth.  “420 Israel-based cybersecurity companies raised $815 million in 2017, up 28% from 2016.” In the medical arena, 13 of the most significant breakthroughs of 2017 were based in Israel, as reported by Tom Gross.

However, what I find most encouraging is the continuing development of the Jerusalem economy and how it strives to become more pluralistic. Labs/02, a startup incubator operated by Jerusalem-based equity crowdfunding company OurCrowd Management Ltd., plans to invest in around 100 early stage startups.

More significantly for me is how more and more Arabs are gradually integrating into the greater economic basin of the capital city. According to Bloomberg, this is one of the prime reasons why there was relative calm in the Jerusalem following President Trump’s recent declaration on the Middle East. While everything may not be perfect as yet, salary gaps are narrowing.

It is this acceptance and transparency that is at the heart of the success of the concept of the start-up nation. Unfortunately, and in contrast, American diplomats were violently chased away yesterday from a meeting held at the Bethlehem Chamber of Commerce.

Once Israel’s neighbours learn mutual acceptance and embrace it in full, then peoples of all backgrounds will be the direct beneficiaries.

The Palestinian economy’s core problem

26 January 2018
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinian Society, Palestinians

The Palestinian economy has never been large. Advocates of the cause of the Palestinian Authority (PA) have ritually blamed Israeli occupation for the financial woes of the people of the streets of Gaza and Ramallah. The threatened sanctions of the USA this month now force us to confirm the facts hidden behind the rhetoric.

There are two issues that cannot be disputed. The Palestinian economy is tiny compared to that of Israel. Exports in July 2017 were valued at a paltry US$8.1m, primarily to Jordan. And the continuing the struggle with Israel, especially through the use of terror from Gaza, understandably enforces the government of Jerusalem to restrict movement from the Palestinian territories.

Statistically, the economy is contracting again. GDP growth in 2017 was down slightly at 3%, and a further slow down is expected in 2018. There are few positives. West Bank residents have finally been allowed to receive 3G internet services in recent weeks. And overseas aid still plays a primary role is supporting key services. To take just one instance, The British Parliament reported in October 2017 that it funds “around 25,000 young Palestinians to get an education, provides up to 3,700 immunisations for children, and around 185,000 medical consultations annually.”

Therefore, it can only be assumed that if the USA is to cut at least US$100 million of aid to the Palestinians, that will be a significant blow for its social services. What is disturbing is how you have the feeling that the Palestinian economy could be managed so much more effectively and efficiently.

The World Bank long ago confirmed that under Israeli supervision the Palestinian GDP grew annually in real terms by 5.5% even beyond the Oslo Accords. That achievement is long forgotten. And corruption has long been endemic in Palestinian politics has closely documented in previous years by the Funding for Peace Coalition.

The evidence indicates that the pattern of poor financial leadership in Palestinian society has continued up to today:

  1. In 2017 alone, despite their meager funds, the PA under President Abbas paid out over US$350 to Palestinians convicted of crimes of violence against Israelis. The sums vary according to the amount of death caused.
  2. Earlier this month, Israeli customs officials:discovered the largest ever consignment – including thousands of items – of military clothing including vests for holding military equipment. Also seized were thousands of pairs of special military boots and winter jackets in camouflage colors. The Gazan importer of the consignment, which originated in China, was due to receive it via the Kerem Shalom crossing.

    Presumably, Hamas had paid for the goods.

  3. At the same time, we have learned that due to a power struggle between the PA and Hamas, people in Gaza are being forced to pay taxes. This will include the imposition of 17% VAT.
  4. And of course, there is the near-farcical news item earlier this week that “even as the Palestinian Authority faces major funding cuts from the US, it has purchased a new luxurious $50 million private jet to be used by President Mahmoud Abbas.”

I would love to read a serious analysis of how much the Palestinian economy could grow by over 10 years if (a) the struggle against Israel was political rather than a military conflict, and if (b) transparency and accountability could be truly applied.

Time management: Finding the value in procrastination

19 January 2018
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Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

An article in Inc.Com reminds us all of the well-known lesson from the billionaire Warren Buffet. He can buy almost everything, but he cannot buy time. As Buffet explains, you do not have to have a full and crammed diary in order to be successful.

I believe there is a deeper message here. When I talk about time management, as a business coach and mentor, I am faced with a misconnect. On the one hand, there are those people who are busy , but not with what they should be doing. That is procrastination at its best. And then there are those business owners who are fully occupied, working on the tasks they have set themselves, yet still cannot produce results.

I have met all of these characters this week in my office in Jerusalem. Whenever faced with this topic of time management, my approach is consistent. First, I have noticed how many people these days have abandoned the concept of the old-fashioned diary. At best they use an app of sorts on their phone.

Let me be clear, for most of my clients, it is evident that a diary on the phone rarely works out successfully. And even if tasks are included along with appointments, they are almost never time-framed. That is a major mistake. scheduling a phone call or creating  report is the same as having a meeting with yourself!

Second, almost invariably the uncompleted tasks revolve around the issue of money. It is as if the previous generation have educated them that asking for money, billing clients, achieving a positive cash flow are all considered poor qualities in a person.

For example, one of my clients told me that she has always aspired to be a person of modest means. Excellent, I responded. However, she could not explain why this attitude does not allow her to have extra money to spend on hobbies, on children or in the next stage of his business.

Silence! I had hit the raw nerve.

For whatever reason associated with the past, procrastination occurs when we cannot appreciate the full “value” of what we are trying to achieve. Recognise that truth and you will find that the bottom line in your business will start to improve rapidly.

Israel’s economy: growing and changing for the better

14 January 2018
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Categories: Afternoon Tea in Jerusalem, Business, Israel

A series of stats published a week ago revealed just how successful the Israel economy has become.

  • Inflation has run at less than 0.5% p.a. for the past four years.
  • In a country of over 8 million people, there are 3.4 million vehicles on the road.
  • Incoming and outgoing tourism has never been so strong.

And so the list goes on. From a historical perspective, the numbers are even more stunning. Below is a set of data available from the Start Up Nation Facebook page:

No automatic alt text available.

Israel’s GDP per person is measured at US$40,000. By way of comparison, the numbers for Britain and Germany are US$41,000 and US$42,000 respectively. To emphasise how the economic map has changed, the proposed budget for 2019 reveals that the biggest taker of resources will be the Ministry of Education and the not the defense sector.

So where is the “proverbial” but” in all of this glory? First, the statistical survey also pointed out that 13 senior current or prior politicians and civil servants  are now under investigation by the police for various forms of corruption. That includes the Prime Minister and some of his closest aides. In parallel, it has been the case for many years that within the OECD community Israel has some of the greatest levels of disparity between the haves and have nots. Concerning!

Coincidence it may be, but this week also saw the leak of a video showing the son of the Prime Minister at a strip club. The film was taken surreptitiously by his chauffeur, who is paid for by the state. He was chaperoned by a body guard, also provided at the expense of the taxpayer. The haves and the have nots.

The initial impressive stats do not lie. However, the reason why more people are not benefitting from this additional growth is all too apparent and very disturbing to see. Time for a change.

The art of setting up a new business: Making the impossible possible

12 January 2018
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Over the next few weeks, I have been asked to give several talks in the Jerusalem area on the theme of setting up a new business. And as I have put together the presentations, one strong central theme comes through. Can you make the impossible possible?

Psychologists teach us that starting anything new is not easy. However much you plan ahead – market strategy, cash flow, team recruitment, et al – a new enterprise is full of unknowns. One single unforeseen event, such as an unexpected change in government policy or a new local competitor, and all that prior effort could be seen as irrelevant. Time to give up?

Well, not necessarily. This is when we are all required to recall the theory of “the second wind”. Yes it really does exist. Coined by William James and described in fascinating terms by Maria Popova, we can learn how to transcend our perceived limits.

Compared with what we ought to be, we are only half awake… We are making use of only a small part of our possible mental and physical resources.

There is a sporting equivalent. Matthew Syed, writing this week in the Times of London, discussed how we can become so much stronger, almost ironically, at the moment when adversity is striking us (literally?) in the face. Arguably like a new commercial enterprise, Syed states that:

When you walk into an arena, you are naked. If you have weaknesses, they are likely to be exposed. If your resolve is lacking steel, it is likely to fray just when you need it most.

Syed goes on to cite specific cases of sporting heroes who initially dived, such as Andy Murray who was humiliated by Roger Federer at Wimbledon in 2012. And Michael Jordan made a video of his defeats, so that he could succeed even faster.

As a business coach and mentor, I am often called in by those, whose ventures are struggling in their initial stages. I find that very often, they know what needs to be done to alter course towards achievement, but they lack that extra layer of confidence. I would suspect that some call this resilience. And that is where an outside voice can show them that they have what it takes.

However, they have to learn to dig oh so deep to find it. That is the point when they stop allowing the seemingly impossible to get in their way and when the business begins to thrive.

Setting yourself a goal for the new year

5 January 2018
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

The first week of 2018 has been a challenging one for my clients. Several of those who have braved to venture into my office in Jerusalem have been forced to come up with some specific targets for the coming twelve months….and then create an action plan to reach the goal. Not so simple as it sounds.

While this is a fairly common strategy for us business mentors and coaches, I was prompted into enforcing this line approach by two very different items that came my way recently. First, Dr. Robert Brooks wrote a fascinating piece, arguing that it is never too late to set ourselves challenges. Although he did not say so, I could add this is something we should be able to apply as managers and business owners.

And then I was privileged to watch an mazing documentary entitled “Impossible Dreamers”. It revealed how pensioners in the USA, right into their 90s, wake up every morning to run, walk, or swim competitively. They seek to break records every time they hit their sporting arena.

Back in my office, I have offered these inspiring stories to my clients. Set a target. If the target is too timid, I encourage them to raise it significantly. No excuses permitted.

What is interesting to observe is the frequent push back that I receive. It is a sense of panic, almost as if they have been “instructed” or conditioned never to go beyond what others had once defined as acceptable. Yes, you could have once cast me in that category as well.

A typical objection is the ‘what if’ statement. What if I reach that extra level of sales, then this, that and the other bad thing will happen. Of course they might be right, but I explain to them that those problems can be solved downstream, not today. Either you stay where you are with low sales and thus poor profits but relative safety – the proverbial comfort zone, or you can move upwards. CHOOSE!

To be practical, let me suggest the following four steps. First, identify what income you really want to take out of your business. Second, calculate those sales that are required to drive that income. Third, create the resource model – staff, hours, advertising, etc – that will deliver your target. If the business model is sound, investing in additional equipment or whatever should not be a problem.

Finally….do not be put off by the challenges involved. Only you are the one who can define the meaning of the word “possible”. May 2018 be a year of success, health and happiness for you and those around you.

What Lorde revealed about the Israeli economy

4 January 2018
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Last week, Lorde, a talented singer from New Zealand, cancelled a trip to Israel, fearing it would be seen as an act that supports the actions of the Israeli government against Palestinians. In an ironical twist, she actually ended up highlighting just how open Israeli society is.

Lorde’s justification of her decision, encouraged by BDS – the campaign which supports a boycott of Israel – is filled with hypocrisy. For example, she is still committed to travelling to Russia, whose leader has sent war planes to massacre thousands in Syria. In fact think about it. Can you imagine artists of any kind refusing to perform in …well let’s say France, because of that country’s policies in parts of Africa? And what about the UK or the USA or……? Hypocrisy!

At the same time that Lorde was speaking out, it emerged that the Israeli economy had grown by 3% in 2017. This achievement lies in parallel with the OECD average for the period. Estimates for 2018 expect a slightly improved result.

Nothing specifically remarkable in that, except when you begin to look at two of the key growth sectors. I shall start with exports, which shot up 5% in the year and topped the significant mark of US$100 billion. Two interesting facts emerged from an analysis of the figures. Israeli companies have made a massive return to the European scene, an area where BDS is historically strong. Second, of that US$100 billion, 3.5% includes items sent to the Palestinian territories.

In other words, the very people that Lorde feels she is helping are doing the opposite to her. They are sticking with the old adage that peace is usually achieved when two sides find a way to cooperate.

The other sector, which I wish to highlight is tourism. 2017 was another boom year for the industry with over 3.6 million overseas visitors to Israel. Over 50% as ever were not Jewish, and nearly 60% were first-time visitors. That is a lot of people not just rejecting the calls of BDS, but then also then sharing their stories back home afterwards. Just as pertinent is the fact that around 200,000 locals are employed directly by the industry, a relative large proportion of whom are not Jewish.

Less than three decades ago, Israel economy was relatively insular, protected by tariffs. Today, it is a start-up success, whose model is copied by France, the UK and others. Artists from all over the world continue to perform in the country, happily and openly, including the group Queen, Bryan Adams, Culture Club. Lorde’s misguided gesture only emphasised these positives, while ensuring that she remains bound up in an argument of hatred.

As Israel’s economy enters 2018, what next?

29 December 2017
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Categories: Afternoon Tea in Jerusalem, Business, Israel

Professor Leo Leiderman is the chief economist at Israel’s largest bank, Hapoalim, and has held senior positions at Deutsche Bank, The Bank of Israel and elsewhere. So when he says that the Israeli economy is starting off 2018 in its best position since 2006, that is a statement worth listening to.

Leiderman was speaking at a conference earlier this week in Israel.  And the core stats speak for themselves. The OECD has already predicted that growth will remain steady and bullish for the next two years at over 3%. This is due to the impact of new gas reserves and low unemployment. The ‘start up” sector remains strong. Exits in 2017 were worth more than double the 2016 at US$7.4 billion, and these numbers do not include Intel’s purchase of Mobileye for US$15.3 billion nor Mitsubishi picking up NeuroDerm for US$1.1 billion. And key commercial sectors like tourism are bubbling away with record numbers.

So is there a catch? It is interesting that 2017 was a year when many big Israeli financial moguls were sent packing. The most glaring story is the demise of Teva, previously the country’s largest private company. The greed and misjudgment of the board brought the conglomerate humiliation. In turn, this has led to a new CEO implementing a draconian rescue plan. It is evident that a new generation of business leaders is emerging, such as Nati Saidoff: quieter, less demonstrative, whose ambitions do not require (for now) bank loans that cannot be repaid.

That is positive.

What about the housing market. While inflation is barely recognizable, the price of accommodation is still rising by around 5% per annum. The population continues to grow. Not enough land is released by the government, which continues to benefit from huge taxation on real estate transactions. New couples just cannot afford to buy. Liederman is vocally concerned.

However, the most crucial factor for me is where all the new wealth is going. Israel has one of the highest levels in the OECD of discrepancy in between the best and worst off. Now, weigh that fact against the corruption issues encroaching on the current government, the Prime Minister and senior civil servants. Only this week, it was claimed that the PM’s wife, Sara Netanyahu, insisted on receiving expensive gifts from tycoons such as Arnon Milchin.

There is something inherently imbalanced in the way the rulers are looking after (or not) those under them. There is a feeling of the few rich people getting richer, while the rest………

Is that far fetched? Just consider the vested interests. Here are just three examples. The workers at the ports and airports that enforce restrictive practices, as their wages remain high (for the most). Fruit and vegetables from abroad are heavily taxed, even at times of year when the items are not available in the Holy Land, thanks to the farmers’ lobby. And car importers, Unilever and many companies are allowed to maintain monopolies so that others cannot compete, ensuring their prices remain unchallenged.

Where is the government on all of these issues? I am not sure. I am subjected to a vast amount of information about potential corruption, but I see so little reported about new genuine reforms on behalf of the man in the street. That is what really worries me (and Liederman) about the economy in the Holy Land in 2018.

Is Netanyahu guilty, of the Teva syndrome?

25 December 2017
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Israel’s Prime Minister is currently under police investigation in at least four different cases. In parallel, Teva, until recently the largest company in the Holy Land, has seen its power melt away in a sea of corporate debt. Although there is no substantial connection, the two subjects are connected, unfortunately.

Let me start with the Parliamentary scope. In recent years, several Israeli politicians, including a former Prime Minister and a President, have landed up in prison. Now the fact that the serving PM, Benjamin Netanyahu, has been questioned may be seen as the new norm. His party’s rating in the polls has barely dropped, for now.

Bibi, as the PM is known, claims innocence on all counts. And there are still no recommendations to press charges, to date, even if he has been visited several times by the police. In no order of preference, it is claimed that:

  • he received favours from a local press baron.
  • he received favours from people of wealth, possibly in return for legislative support.
  • his lawyer and other confidants ensured a submarine was bought from Germany, when it may not have been needed and this then resulted in substantial commissions paid out.
  • a friend was able to run Bezeq, the national telephone company, while he remained as acting Minister of Communications.

In addition, his Likud party has pushed through, although not always succeeded, a welter of legislation that is heavily biased towards key sectors of the electorate. And that sectorial effort had been led until two weeks ago by another confidant, David Biton, who himself is now being investigated for possible financial misdemeanours in his home city of Rishon Lezion.

I have no idea if Bibi is or is not guilty. At the very least, he seems to be surrounded by advisors, who have evidently slipped over the line of what is acceptable in public governance. In my view, that is equally unacceptable . This demands his immediate acknowledgement of responsibility, which has yet to be admitted.

Teva is (was?) the largest generic pharmaceutical company in the world. It grew from modest beginnings. It was to hit on a wonder drug called Copaxone and made a fortune from it. Based solidly in the Tel Aviv and Jerusalem areas, most of its workers and profits are located overseas. Shares in Teva were considered “shares in the State”. You could not go wrong!

When no replacement was found for Copaxone, the directors decided to expand through acquisition. After several successes, they approved the takeover of Allergan for over US$40 billion, and thus draining most of its US$5 billion reserves.

That debt has proved too much to bear. The company is to lay off 25% of its workforce, which will include the closure of two flagship factories in Jerusalem.

And who are the directors? A small group of leading industrialists, who have grown up together in the business world, many of whom have no experience of the pharmaceutical industry. They are the ones who made rash decisions, impacting on the lives of thousands of relatively poorly paid workers, while they received payment for their services way above the average wage. And this privileged group will apparently face no payback for their recklessness.

My point is as follows. Both those elite politicians and those secretive leaders of finance felt that they were so elite and secretive that they had the right to do what they want, and that they could not be touched. Ironically, in an electronic age when we have heard of news before it is made, they all simply felt they could “get away with it”.

Greed, avarice, lack of care – call it what you want, it is generation of leaders that have simply misunderstood what leadership really means. Alternatively, they knew but power corrupted their decision making. They all need to go – both lots of them – and go now.

Small businesses in Israel: How many and just who succeeds?

14 December 2017
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

It is an accepted fact that in most countries, small and medium sized enterprises (SMEs) make up over 95% of the economy. Israel is no exception to that rule. What makes Israel a case study to analyse is many a successful high-tech starts up has emerged from this grouping.

Just recently there have been several articles on the subject in the Hebrew press. I have pulled the numbers together and they reveal much.

According to CofaceBdi, of the 0.5million enterprises in the Holy Land, 51.5% are self employed or 1-person companies. A further 172,000 have up to four employees. Barely, 3,582 employ over 100 people.

To show how emphatic is the role of the small operation in the economy, 110,625 set ups have annual revenues of under 100,000 nis (almost $30,000). By way of comparison, the average wage is about 9,000 nis per month.

There are probably two key areas where small businesses suffer. The first is the level of bureaucracy and / or paperwork. Here the banks have made big improvements in recent years. And last week, the government announced that receiving a business license should become an issue of weeks rather than 12 or more months.

The second issue concerns local taxes. Most municipal authorities fix rates without any due consideration for SMEs. They are seen as fair game rather than a way to generate life into a suburb. For example, a business may have to pay for a sign outside their shop, fire license for the premise, and even a security tax. And if you are a food outlet, you have to add in the costs of supervision from “both” the Ministry of Health and the local rabbinate. There is even a by-law, still enforced, not allowing to prepare dough and bake on the same premises.

It is worth considering that Israel is a country of immigration. Many entrepreneurs were born overseas. Thus they have a problem with both the language and also a lack of understanding of the local corporate culture of mentality. This will be especially true in centres such as Jerusalem, where the sector of business mentors and coaches is rightly prevalent.

A positive note was struck by a report from the department for small businesses within the Ministry of Economics. In 2016, there was a 28% increase in the number of SMEs reporting an increase in profits. Just as significant, there was a 2.6% increase in the total number of businesses, an encouraging indication of the future growth expected in Israel’s economy.

Do you have a goal for your business?

10 December 2017
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

In recent weeks, I have come across an interesting pattern with some of my clients. They do not seem to have a set goal, a financial target. When challenged, they even show resistance to the idea. As a business coach and mentor, I have been intrigued to find out why.

First, let me take a step back. The Facebook page of Goalcast often throws up some inspiring videos. A classic example is the boy who stuttered, grew up, left England for Los Angeles without a penny, and is now a billionaire singer by the name of Ed Sheeran.

However, the caption that captured my imagination is “I said yes, when I wanted to say no“. The video clip refers to story of a lady who has been physically abused.  What intrigued me is how I see her catch phrase inscribed – so to speak – on the faces of many of the people I meet. As I listen to them speak, whether in the comfort of their own businesses or challenged in the presence of my Jerusalem office, I see them holding back.

These are people with all kinds of backgrounds: educated or otherwise, experienced or less so, financially literate or not. What links them is a fear to set tough yet attainable monetary goals. And the key one here is a revenue target.

For example, assume you want sales to grow by 10% in the next year. In order to achieve that you have to identify potential new customers. This requires resources – time, manpower, materials. Creating that effort requires dedication, teamwork, extra coordination. And so the chain of events unfolds, as you commit yourself to the target. You begin to “own” it.

And hidden in the back of the minds of many a person is that nagging phrase “what if I do not succeed”? (One client twisted it and asked what would happen if they over-achieved?)

As I explain, there are at least three outcomes:

A) The organisation stagnates. At least you tried something.

B) You reach say 6% instead of the full 10%. That is still progress to be proud of.

C) Nothing much is sustained, but new and bigger opportunities emerge.

Given that set of potential opportunities, there should be no problem for a CEO to agree to the challenge. So why the push back? Reasons vary. What I am finding is that there can be a mismatch between intended vision and true commitment. Thus, the CEO never really intends to follow through, because they “just do not want to be there”.

To prove the point, I can relate to one young client, whom I met this morning. I told them about this posting that I was preparing. He had been asking me to set him stiff targets, because it fits directly with what he wants to do. “Yes”. He is up for it!

Business is burning brightly in Jerusalem

7 December 2017
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

President Trump’s statement over Jerusalem seems to have caused those European and Arab countries, who are seen as friendly towards Israel, to shiver in their diplomatic pants. And the near-jerk reaction has been to take out their frustrations on the politicians in the Holy Land.

All Trump said was that Jerusalem is the capital of Israel. No change there. He went out of his way to say that he is not fixing the final borders. Why so many countries have a problem with that goes towards the heart of the Arab-Israel conflict. Why they have reacted coldly to Israel, when this is at the first level an internal American issue, is also beyond me.

However, I am more interested in how this will impact on commercial links between trading partners? For example, I was supposed to moderate this morning a networking session, hosting a delegation from New York. The overseas participants were officially warned by the State Department not to leave their 5 star hotel.

Somehow, I think that all countries concerned are far too interlinked to go round boycotting each other. Just look at recent economic news emerging from Israel.

Amazon

It is barely two weeks ago that Amazon announced that it is to open a large warehouse in Israel. This is on top of other investments in Israel, such as the purchase of Annapurna Labs in 2015 for US$360 million. Yesterday, the Hebrew newspaper “Yediot” described details of Amazon’s collaboration with the Swedish company Assa Abloy, the key supplier of products for the Amazon Key project. In order to meet Amazon’s specifications, Assa Abloy established an r&d project with Multilock in Israel, which has resulted in a sophisticated smart lock for the home.

Israeli gas exports to Europe

Yesterday in Jerusalem, the Israeli government approved the laying of a subterranean gas line. It will stretch along 2,100 km and cost around US$7 billion, with financing led by the European Bank. The aim is to take the natural gas from Israeli’s newly discovered fields into Cyprus, Greece and eventually Italy. From there, it can reach the rest of mainland Europe.

European cars in Israel

Just looking around the streets of Israel, you can see how people are gradually shifting towards cars of greater complexity and value. To date this year, 165 Porsches have been sold, along with 21 Aston Martins and 9 Ferraris. Not much compared to other countries, but a massive revolution for the desert nation. Joining in from 2018, Bentleys – German owned and British made – will be seen on the streets of Jerusalem and Tel Aviv.

Clearly Trump’s words are not going trading between Israel and the rest of the world. If any recent political angst has resulted in a commercial shift, I did observe a comment this week that European banks have reduced their exposure to the British market by 20% since the Brexit vote. Can Israel also be blamed for that?

UK-Israel trade continues to march on – here’s how

24 November 2017
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Categories: Afternoon Tea in Jerusalem, Business, Israel

The malicious philanderings of Foreign Office mandarins and the odious way in which parts of the British press handled the resignation of Priti Patel only partially managed to hide the fact the UK-Israel trade relations keep surging ahead.

The core of these growing commercial ties lies in the fact that “more than 300 Israeli companies operate in Britain, with 28 firms listed on the London Stock Exchange worth almost £11 billion.” In fact, Prime Minister Netanyahu was invited to open the trading of the London Stock Exchange earlier this month.

This week’s 35 strong delegation of British business people to Israel is just a further extension of how strongly the two countries are linked to each other. It is estimated that they met 41 entrepreneurs in just 72 hours. Not surprisingly, the UK-Israel Tech Hub is one of those vital elements driving innovation in the British Isles in the past few years.

Also this week, news was revealed of two significant contracts between Israeli companies and the UK. You could say that in spite of those diplomats in the Foreign Office, Britain is to purchase the Sky Sabre System from the Holy Land. The £78 million is designed to protect the strategic Falkland Islands against missile attacks.

And in a different area of commerce, Windward is a Tel Aviv based start up, whose original investors included former CIA director David Petraeus and Dan Senor, coauthor with Saul Singer of “Startup Nation. The company tracks all movements on the high seas of ships. It has signed an agreement with Lloyds of London to create an algorithm predicting levels of danger and suspicious maritime activity. In effect, most of Britian’s sea trade – in fact the vast majority of the world’s maritime trade – will be assessed commercially by a set of Israeli software engineers.

In decades gone past, there was a discussion as to whether Israel was more dependent on the UK in the bilateral relations. Today, the commercial friendship is evidently based on parity. The hateful and spiteful arguments of a few journalists, politicians and BDS supporters have failed to dent this progress.

Evaluating success in business mentoring

20 November 2017
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Categories: Afternoon Tea in Jerusalem, Business, Jerusalem

In theory, it should be relatively easy to discern the level of success in business mentoring or coaching. Sales – or some other key performance indicator (KPI,) such as production – has improved. However, what happens in a case when the client has not achieved the results originally dreamed about? Has the effort boiled down to a resounding failure?

I have several clients based in the Jerusalem area, who are classic one or two-person businesses. They are the boss, the chief of sales and also clean the floors. They are desperate to up the tempo of sales, but are still spending half their work days putting out irrelevant fires – which are frequently ordinary domestic problems.

Dena is a typical example. She came to me with the idea of exploring how to set up a new service enterprise. She certainly had solid background knowledge. Explaining her pitch to others would not be a problem.

However, circumstances have combined to foil Dena at the set up stage. To be blunt, all the initial targets have been missed, mainly as a string of personal issues that have forced Dena into unforeseen and time-consuming activities. The debts have mounted. Sales have remained minimal.

So has Dena failed? Is there any hope left?

Admittedly, Dena has not succeeded, but that does not mean she has failed. Certainly, much of the initial set up is in place, ready for a launch at a future opportunity.

There is something more. Regular readers will be aware that I encourage my clients to develop hobbies in parallel to their new commercial challenges. I usually look for a physical response like running. Dena, though, took to poetry, a former passion of hers.

I asked Dena to come up with two new poems. She wrote four, and now cannot stop writing. Today, she read out two of them to me. On completion, she then did something that I had not seen her do in all of our prior sessions. Dena laughed, out loud, almost embarrassed by her own triumph.

Shortly afterwards, Dena left the room. She strutted out with a nervous confidence, determined to find that new level of success.

AT&T choose Israel, again

18 November 2017
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Categories: Afternoon Tea in Jerusalem, Business, Israel

AT&T have been operating in Israel for over ten years. “The center functions like a startup incubator generating solutions for AT&T”. It is typical of many of the other leading multinational high-tech companies like Apple, which have established a bullish presence in the Holy Land.

There are over 350 overseas conglomerates in Israel. One estimate states that they are responsible for over 52% of all r&d in the country. And still they keep on coming. Just looking at the closing headlines of Thursday’s financial paper “Globes”: –

  • Daimler have opened a r&d centre in Tel Aviv.
  • Samsung have launched a cybersecurity division for car industry.
  • The purchase of Argus by Continental is discussed.

Evidently, the start up nation continues to live the dream. And that has to be one of the reasons why the Israeli economy grew by 4.1% in the third quarter of 2017.

Reaching back to AT&T, I read a short interview with Melissa Arnoldi, one of the company’s senior VPs, who has a determining role in technology development. She has just finished a site visit and was asked “why Israel”. To translate from the Hebrew text:

I have never seen such an r&d culture as in Israel. I am not just referring to the incredible skills and not just the determination. What is particularly impressive is the attitude of ‘nothing is impossible’. Here in Israel, you face up to a challenge, take a chance, create a solution and resolve the issue. Israel is our model for innovation.

The golden delicious Apple of Israeli hightech

17 November 2017
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Categories: Afternoon Tea in Jerusalem, Business, Israel

Jonny Srouji is one of those characters that proves how high-tech is open to all. An Israeli, Christian, via Intel and IBM, he has made his way up the ladder to become Apple’s senior vice president of Hardware Technologies. In an interview last week, he gave a fascinating summary, detailing why and how Israel is so important to Apple’s future plans.

For example, Srouji is very proud of Apple’s A-11 Bionic chip. It’s CPU and graphics are the core of the wow part of the iPhone8. And that is not all. Israeli tech is powering the Apple Watch, and the storage component in every Apple device. As Srouji said:

The (Apple) team in Israel is a key part of the overall engineering team in the U.S. and other areas of the world – wherever we have our R&D. The things they do are key to any device we ship, to all devices.

The interview notes that Apple has been associated with Israel since 2011, currently employing around 900 techies. Much of this growth has been fostered via acquisitions such as Annobit Technologies. Srouji implied that more are being considered.

It is important to state that Apple is only following where companies like Intel had led the way. And in the current climate of female empowerment, the chip manufacturer has just announced that it intends to recruit hundreds more women software engineers for its plant in Kiryat Gat, southern Israel. According to information in the Hebrew press, barely 30% of positions in high-tech are filled by women. And when it comes to management, that ratio drops to 19%.

Who will be next? Dieter Zetsche, chairman of automaker Daimler A.G., opened the company’s r&d centre in Tel Aviv this week. This will be the company’s base to design user interfaces for its vehicles and biometric authentication for navigation. They are the fifth global automotive manufacturer to take such a step.

The one big generic mistake when starting a business

10 November 2017
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Next week, I am onboarding in Jerusalem a new client, as their business mentor and coach. My role as ever will be to identify core problem areas that they have missed and then to help them to learn new skills. As ever, I will base my initial work around the questions:

What is the question that you do not wish a business mentor to ask you,……and why?

This particular company was only recently set up. Initial sales are coming in. However, there are a string of inconsistencies. These include no cash flow planning, lack of clear strategy, poor communication with contractors and much more.

Ironically, this subject relates to a talk I am preparing – 10 mistakes a CEO makes when starting out. I will not only refer to the above issues, I will also consider procrastination, the ability to choose the correct staff, and time management. These and other challenges impact directly on accurate decision-making, which is so critical in those early stages when you cannot afford mistakes.

However, if there is one core mistake that I see repeated by so many CEOs from the outset it is that they try to do things by themselves, and then do not have a plan. For reasons of pride or maybe they are too embarrassed to ask or possibly becasue they do not know any better, they seek to act (and rule) on their own. If they would just open their eyes, that should never be the case.

The fact is that any commercial organisation is dependent on a bank, accountant, suppliers and more. Further, few of us are experts in all of these fields. And when you factor in additional demands of each individual set up, this creates pressure on the CEO. If they cannot manage, what is the solution?

First, a business mentor (or consultant) guides you through those initial stages, challenging you to ask the right questions and to seek out alternatives. They provide a strong and valuable shoulder to lean on. Second, build yourself an explicit business plan, which can validate your business model.

I admit that this sounds self-promoting, but just consider my new prospect. Just as a result of our phone conversations, they have already begun to set up new controls and take a different approach to a core service provider. These moves will significantly improve the running of operations.

There is nothing wrong in asking for help in business, even if you are a CEO, and especially when you at the beginning of your commercial dream. Actually, it is oh-so the right thing to do.

Reviewing Israel’s hightech economy, November 2017

9 November 2017
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Having been away from my desk for much of the past two weeks, it has been an interesting experience taking a peak out at how the Israeli economy has been performing. The bottom line is that despite the enforced rudderless approach of Prime Minister Netanyahu, the numbers are still looking healthy. How and why?

Primarily, tax collections continue to be way ahead of expected levels. This is enabling the government to hand back around 15 billion shekels through reduced corporation and individual taxation, without impacting on the deficit. Foreign currency reserves continue to improve, while the levels of car imports – an indicative sign of consumer confidence – remain high. The customary issues of non-involvement of the ultra-orthodox Haredim in the workforce and also sectorial restrictive practices remain as unwanted abnormalities, but still the economy grows.

It is the high-tech sector that is leading the growth. Multinational car manufacturers such as Toyota and Seat are continuing to source their latest techs in the Holy Land. Start-ups are raising much larger sums that ever before. And Corephotonics is even suing Apple for alleged infringement over its lens tech.

The story of the week for me belongs to Compass. It has raised US$100m, effectively doubling its valuation to  to around US$1.8 billion. Founded in 20,13 by Dr. Uri Alon and Robert Rifkin, the company now employs around 3,000 people in Israel and in the USA. In a nutshell, Compass provides a tech platform to enhance the buying and selling of real estate, a product that has been around for thousands of years.

The message here is clear. The Prime Minister has not created an impression on the economy, but entrepreneurs are not waiting for him to emerge from the welter of police investigations. In parallel, the Finance Minister seems inhibited by the weightings of coalition policy, but there is no reliance on significant change. For me, local innovation is overriding the meanderings of the typical Israeli politician in Jerusalem.

Palestinian economy; and the good news is…….

6 November 2017
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem, Palestinians

The World Bank’s latest report on the Palestinian economy points describes 2% growth rate in Gaza, trying to support an unemployment rate of over 40%. Clearly this is unsustainable. What can be done?

The recent moves of reconciliation between Hamas and  the Palestinian Authority (PA) offer some hope. According to Doron Peskin from Concordmena, The agreement should lead to an extra US$165 m of support from the UAE. This will be in addition to the current annual payments of:

  • US$140 m from Iran
  • US$120m from the PA, primarily for salaries and electricity
  • US$100m from Qatar
  • US$50m from Turkey

Tax revenues are rarely revealed but Hamas leaders clearly find a way to finance their own lavish life styles, assumedly from willing local contributions.

Clearly all of these amounts are fickle. For example, the UAE contribution is apparently dependent on former Gaza bully and aspiring successor to President Abbas, Mohammed Dahlan, being handed some level of power in the territory. So, what other revenue sources can emerge?

One possibility is the extraction of the estimated 32 billion cubic meters of national gas just off its coast line. There are rumours that an agreement has been signed with a Greek developer and a contractor called CCC. However, concrete details remain sketchy.

A second source of relief could come from “impact investing“. For example:

A project to produce tablets for schoolchildren and their parents, a company that reduces the need for pesticides, an IT development centre in a crisis-ridden location and a bond to fight type 2 diabetes….They are all cited by investors and entrepreneurs as examples of impact investments in Israel and the Palestinian territories.

Yet again, the question remains if political stability will allow enough such entrepreneurs to come forth? There are already reports of the PA arresting Hamas representatives.

Another angle could be a hoped for relaxation of central control of the Palestinian economy. One small indication of change is entrance of a second mobile provider in Gaza. The hope is that prices will drop, service will improve, and thus improved corporate taxation will allow the exchequer to benefit.

The reality is that Gaza needs open borders with its neighbours. This is unlikely to happen so long as Hamas considers Israel to be a pariah state and wages war against it. This policy was most clearly indicated last week, when the Israeli army destroyed a tunnel from Gaza. Those Palestinian soldiers killed had crossed the border, underground. (It should also be noted that it takes considerable investment and raw materials to construct such tunnels.)

The unfortunate bottom line is that the Palestinian leaderships can always blame Israel for their woes. With a willing international community and a supportive set of UN institutions, this stance absolves them from any form of responsibility. Hoorah!

And meanwhile most people in Gaza will continue to be dependent on handouts.

Coaching and leadership – the workplace and at home

3 November 2017
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

In a brilliant article in the Harvard Business Review “turning potential into success“, the three authors succinctly detail why so many large companies fail to nurture a culture of leadership development.

The paper details eight levels of competence that an organisation may look for in a potential leader, the importance of each variable depending on the type of business in question. Crucially, each variable is then measured against four additional factors: curiosity, determination, engagement and insight.

With this information, the paper discusses how to turn potential leaders into the true drivers of their companies. As they note from one survey, only 13% of executives have confidence in their own rising leaders.

I suppose the reasons for this are many. They can include:

  • lack of training
  • lack of ability in the top levels to perceive the talent just underneath them
  • a desire to maintain power – to keep control of the existing hierarchy

A fourth factor is what I call ‘the benevolent dictator’ syndrome. That is when a ruler – a.k.a. a top executive – is dominant. He or she believes that only they can do things properly, and that includes most tasks. Assignments have to be carried out their way, as it is for the best, at least according to their logic. They cannot let go. They have to be involved in all aspects.

This is a process I see so often during my mentoring and coaching in Jerusalem, Israel. Yes, sometimes the same top CEOs do possess genuine and multiple skills for running a corporate. However, their overall outlook stifles, if not crushes, innovation. An employee will cease to question, as their motivation has been destroyed.

And the ironic result? Quite often more work and confusion is created. The dictator fails to appreciate all the angles of the project, and there is nobody to update them.

What so many of us fail to appreciate is that we often become that proverbial dictator back in our own homes. For me though there is a subtle difference. Up to 6.00pm, clock out time, the pain can be measured in the lack of growth in the corporate’s bottom line. In your own house, the fall out can be heartbreaking.

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