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Surveying Israeli high-tech, June 2016: 4 weddings and a funeral

30 June 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel

I wrote last week that “Israel is no longer number the only country in the game of start up nations”. After another eventful seven days for the Israeli economy, I can only confirm that statement. For all the good news, for all the new partnerships being formed with overseas investors, there is something very worrying just under the surface.

Let’s start with four pieces of positive soundbites.

A) Last week, I attended the launch ceremony of the Mass Challenge in Jerusalem. Nearly 50 start ups from differing sectors will be housed together in an incubator for about 12 weeks. Mentors and investors will be brought in to visit and to encourage.

Similarly, a new US$100 m biotech fund has just been launched to invest in Israeli pharma and medical kits. And a US15 million agritech incubator has been set up by a group of local and overseas investors. Really vibrant stuff!

B) Cisco has made another yet another purchase in Israel. Cloudlock was started in 2007 in Tel Aviv and has grown to 150 workers. To date, US$38 million had been invested in its efforts to promote security via the cloud. Jon Chambers has announced that he has agreed to a valuation of US$293 to include it in the Cisco empire.

C) MIS is located near Nazereth and makes dental implants, not a very sexy subject to many a folk. However, its 420 workers caught the eye of the NASDAQ company DENTSPLY, which has laid out US$375 m in cash for its sales base in over 50 countries.

D) And in a more general note, the good word on Israeli Fintech continues to seep out. According to KPMG, around about US$ 5.7 billion has been invested globally into the sector in the first half of 2016. Roughly 12% of that can be attributed to Israeli tech. Impressive.

But, and there is a but, the future remains grey. A recent OECD survey of 34 countries ranked Israel as 28th and 29th respectively, when it comes to reading and maths. Japan was placed first. What can of base is that for the next generation of entrepreneurs?

Something needs to change, and fast, when considering the future competitive strengths of the ‘start up nation’.

 

Israel’s worrying economy: Anyone in government listening?

23 June 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel

Unemployment is way under 6% in Israel. Chinese venture capital is surging into the Holy Land. Some would argue that Israel is bucking a global trend as foreign investment continues to flood in:

……during the first 10 days of June, a total of $237 million were invested, mostly by foreign investors. The first 10 days of May saw investments totaling $28 million, with $327 million invested during the entire month of May. The sum for the first half of 2016 is approaching $2 billion.

But, and there is a big “but” as I have mentioned several times  since the beginning of the year. There is also an increasing surge of worrying signs that the economy is not just slowing down. It is losing its competitive global edge.

For example, the rate of growth for the first quarter of 2016 stood at a paltry 1.3%. An index used by the Bank of Israel, which combines leading economic indicators, progressed by an insignificant 0.13% in May.

The Chief Scientist, Avi Hasson, spelt it out very bluntly this week. Hightech in Israel is struggling, both in order to find the correct resources and in competing with other countries – which have successfully improved on the ‘Israeli formula’.

  • If in 2002, the government invested almost 0.8% of the GDP in high-tech, that stat has dropped to under 0.6%.
  • The country already lacks thousands of engineers.
  • That employment hole is not likely to be filled soon, as currently less than 10% of students apply for a science degree. (In 2004, the proportion was 13%).
  • Both the Bloomberg and WIPO Global Innovation Index show Israel dropping down the ladder by six or seven places over the last year.

If there is a message in all of this info, it is that something major is not right. As Bloomberg itself noted: “Israel’s long-held status as a hotbed of tech innovation is under threat….”. The government seems less interested, tax incentives are no longer competitive and new regulations are piling up.

Google’s chief, Eric Schmidt, and Cisco boss, Jon Chambers, have echoed similar comments in recent weeks. Israel is no longer number the only country in the game of start up nations.

In itself, none of this worries me. Text books are full of economic cycles. Britain led the industrial revolution, based on steam, only to be overtaken by Germany and the USA. Yet today, the UK is still arguably the world’s fifth largest economy. It learned to adapt.

What does concern me, big time, is that for all these warning signs, the Israeli government has not taken one major policy stand on the issue. The mandarins and the politicians in Jerusalem appear either incompetent and / or uncaring as to what will happen to the future of our economy.

Unexpected Israel – Unexpected Jerusalem

15 June 2016
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Categories: Afternoon Tea in Jerusalem, Israel, Jerusalem, Palestinians

People who live in Israel often have a problem explaining the ‘true Israel’ to outsiders. They are encouraged to believe by international media that the modern-day Holy Land is engulfed in violence 24/7, while the locals are rude and abrasive.

Moving rapidly away from this over simplification, Ruth Corman has released a beautiful book entitled “Unexpected Israel”, which rightly highlights unusual individuals or the peculiar characteristics of groups in Israel. Together, the sum of the parts is what makes Israel so wonderful and thrilling.

The book reflects close to 90 anecdotes, descriptions or just cameos, all enriched by some excellent photography. For example: What is so unique about playing ‘matkot’ on the beach at Tel Aviv? Alternatively, Corman gives deserved space to the amazing fauna and birds that have entered and conquered the country over the centuries. And she then describes the numerous types of pilgrimages that swamp the country throughout any given year.

It is this last point that truly struck me. So many of her observations seem to focus on people outside Judaism. On reflection, this is a triumph for the pluralism inherent in most Israelis.

However, as  a blogger who tries to find the ‘unusual’ in Jerusalem, I must quickly acknowledge that this is where Corman excels.

  • Tsegue-Mariam, the Ethiopian nun, who escaped fascist and Marxist torture in order to play the piano in the Holy city.
  • Elia Kahvedjian, an Armenian, who survived Ottoman persecution and set up a thriving photography business in central Jerusalem
  • Those many worshippers who write notes of hope and prayer, leaving them in the cracks in the Western Wall.
  • Hassadna, a musical school that strives for excellence, while deliberately looking out for the physically and financially distressed children who want to learn.

Unexpected, but this is only a partial list. That said, my favourite story refers to Dr, Yossi Leshem, who realised that more fighter planes are lost through “clashes with migrating birds” than through enemy action. His solution was to create a fleet of aerial drones to report about the movement of birds.

Leshem’s scheme is so successful that it is supported by Palestinian ornithologists. Jordan and Turkey have incorporated his techniques. And he is in the process of setting a system that will bring together countries along the whole of the African Rift Valley.

Without fuss, Leshem along with countless other Israelis have found a way to breach the established rules of hatred in the Middle East. But you will not read about these stories in the established media.

Israel is a country that never ceases to surprise, and Jerusalem remains at the core of this adventure. It is a duty of Ruth Corman and her others to reveal yet more ‘secrets’ of this small country.

Still searching for Israel’s economy – a sad truth

13 June 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel

Despite the attempts of the cleverest government spin doctors, the Israeli economy is drifting. Worse, nobody seems to be doing too much about it. Last week brought new evidence to that effect.

On the positive side, external investment continues to arrive into selected sectors. Since the so-called BDS – boycott Israel campaign commenced in 2005, FDI has actually tripled. Orbimed, the world’s largest medical VC, has just raised over US$300 million to invest in the Holy Land. Resources are even making their way in to the Arab sector.

As if to prove the point, a competition was held last week featuring former soldiers in the elite 8200 unit. They have initiated start ups like Intensix – handling big data for medical institutions during emergencies – and Sensory Treat, which helps children with special needs. The winners received some healthy handouts. The fact is that on the back of these successes, the average wage in Israel continues to climb steadily.

But, and here is a ‘big but’, “two thirds of Israel’s population employed in the workforce receive below the average national wage”. As I have described before, Israel is a country of two economies.

It is five years since the ‘cottage cheese revolution’, where hundreds of thousands of people protested against the high and rising prices of basic goods, such as cottage cheese and vegetables. The government promised action. Committees were set up. Talk was everywhere. And today?

However since 2011, the cost of a 3.5 room flat in Tel Aviv has climbed from 2.4 million shekels (US$ 0.65 million) to about 3 million shekels. It is estimated that whereas previously it took 130  monthly payments to put down a deposit on a flat, that stat has gone moved onwards to 150 payments. Younger couples, the core of the new middle class, are being squeezed out of the housing market. Meanwhile, vested interests continue to block reforms in the banking and vegetables sectors, also a major negative impact on the middle classes.

Where to now? The Israeli government has yet to make a move. There again, we have been waiting for something serious economic policy to emerge for at least two years. And patience is not a commodity known to be available in quantity in the Middle East.

Innovators and mentors – a very cool twist to note

10 June 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

A client of mine in Jerusalem has just been accepted to an accelerator. Earlier this week, I was discussing with her what kind of business mentor or coach she would like to receive from the set up.

Her response was straight to the point. To summarise: obviously somebody who knows a great deal about her area of commerce and has similar experiences to share. Right? And she expected my immediate approval.

I disagreed. Knowing better than to give an example of my experiences, I referred to David Clutterbuck’s book “Everyone needs a mentor“. In what could be an example of what he describes as ‘reverse mentoring’, Clutterbuck described a situation where golf and tennis coaches swopped professions.

The result was incredible. Although not proficient in the respective sports, the coaches were able to identify new weaknesses that the ‘regular’ trainers had not spotted or handled. The players were delighted.

I have to admit that the face of my client remained skeptical. However, with some ironic timing, I came across a new blog from the Harvard Business Review on how Cisco has successfully encouraged innovation in recent years.  Stephen Monterde, Director of Corporate Development at Cisco Systems, explained that: –

At Cisco, we are learning to answer these questions – responding to technological challenges – through three initiatives designed to broaden our knowledge base by bringing multiple perspectives together: embracing diversity within our walls; reaching out across industries; and building partnerships with former (and current) competitors.

To summarise a fascinatingarticle, what this multinational achieves is the creation of a ‘sandpit’ of human resources, ensuring that new ideas are exposed to the views of all departments. It is this diversity, that deliberately crosses boundaries, that drives Cisco’s constantly evolving commercial successes.

And if Cisco employees can listen to others ‘outside the comfort zone’, I think there is a lesson here for all of us.

Jerusalem to Tel Aviv: How the anger shifted

9 June 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem, Palestinians

If I normally write about business in Israel and primarily in Jerusalem, the events of last night force me to discuss what happened in Tel Aviv.

Two young Palestinians, dressed up very elegantly, ordered coffee at the popular Max Brenner restaurant in the trendy Sarona market complex in central Tel Aviv. Nothing wrong in that, except that once they had calmly finished their drinks, they slew at point blank range four fellow customers. The security camera captured the massacre.

Since the Autumn of last year, Israel, and particularly Jerusalem, has been the subject of a number of horrendous terrorist incidents. They typically involved random stabbings of innocent civilians.

However, the attack in Tel Aviv has created a new atmosphere, one that has captured the viewpoint of just about all Israelis, whatever their political or religious take. After the anguish, a feeling of deep, deep, deep anger has rushed to the surface. So what was different about last night?

  1. As the video graphically depicts, the attack was cold blooded, just like recent events in Paris and in Brussels.
  2. Despite the comparisons to events in Europe, the BBC, CNN and many others have not been able to call the slaughter a terrorist incident. Somehow, when it comes to Israel, the country is judged differently to 199 other countries around the globe. That stinks of something very putrid.
  3. The attack took place in Max Brenner boutique chocolate restaurant. This chain has many branches overseas and has often been the target of calls to boycott Israeli products. With a very bitter taste of irony, the protest posters include an image of a menacing Israeli soldier, carrying a machine gun……………horrifically similar to the one used by the Palestinians in the attack. Such hypocrisy.
  4. Once the incident ended, the injured were taken to hospital and treated on the basis of ‘most serious come first’. And that included one of the terrorists. Pictures available on the net clearly show the man being treated by a team of Jews and Arabs, despite the carnage the patient had caused barely an hour beforehand. Yes, Israeli medical treatment does not discriminate, but then you have to ask why no Jews are treated in Palestinian hospitals.
  5. Meanwhile, condemnations have come in from the Secretary General of the UN, Prime Minister Cameron and others. Staff from the Australian embassy in Tel Aviv visited Sarona this morning in support of the families who have suffered. And yet….

And yet…..in Gaza and in the West Bank, sweets were handed out in celebration of the killings. One of the largest groups in the PLO described the incident as a “natural response“! Hamas praised it and President Abbas has remained silent.

It sickens. It hurts. It is gut-wrenching. However, for me this is not the cause of my anger.

What truly annoys me is that in another day or in another week, the EU and Obama and others will put this ‘shooting spree’ to one side and call on Israel to make compromises towards peace. As in the past, predictably no such demands or pressure will be asked of the Palestinians.

Remember Paris? Recall Brussels airport? Did the politicians in Europe respond by offering the assailants boxes of chocolates (from Max Brenner, sic?). Israel is treated differently. That is morally repugnant, and this attitude represents a threat to my family.

So I will not apologise for standing up and shouting, very very loudly: I refuse to accept it. Terror needs to be fought, not appeased. World diplomats really must think again, before the attacks spread beyond the capitals of Paris and Belgium.

Small businesses and using digital media – 2 quick and practical tips

7 June 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

It is a subject that comes up very quickly in discussions with new clients. As a business mentor and coach, how can I advise small businesses in their approach towards digital media? Should they create their website by themselves? How much should they invest in SEO and key words? And how……..the questions roll off the tongue.

Just this morning, I met up with a new business, which had created its own site. It was clearly in need of improvements.

I have no intention of trying to cover all of these subjects in one blog. However, yesterday I moderated a session of the Jerusalem Business Networking Forum. The session was dedicated to ideas that ‘take marketing to the next level’. Two speakers, Avi Maderer and Charlie Kalech, gave some awesome presentations that unlocked some of the secrets of digital media.

Avi was quick to point out that you need to deliver and keep delivering quality and relevant content. In order to do this, you need a ‘clear perspective of your niche community’. Otherwise, you will be wasting your time, creating materials for the wrong people, who simply may not look at the information. (And especially for small enterprises, they lack time and resources. So this is a double blow).

In some ways, what is described here is a pretty obvious message. Yet you will be surprised how often I come across people, who ignore these guidelines.

Charlie delved more into the specifics. Google has ensured that SEO and key words are becoming increasingly old-hat. This kind of approach is less likely to drive new customers your way.

Instead, a small business should concentrate on the “intent” of the potential customer. What questions do people ask, when they go to Google? Who are the ‘people in authority’ in your field, and what are they looking for? Dig into these issues and you can start to create some great and directed content.

How much time and money should a small business invest in digital media? Again, the answer is too complex for one blog. That said, from my experience, those CEOs who bother to take the effort to get it right tend to end up with a big fillip in their sales.

Israel’s economy: Anybody at the top care to help?

3 June 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

One of the main reasons that I started this blog was to highlight to many others what the Israeli economy has to offer the global market. By contrast, over the past 12 months, I have been increasingly forced into a position of shouting “Help, danger ahead!”.

Earlier this week, one of the country’s leading financial journalists found himself in a similar position. Sever Plocker laid it out from the top:

  • In the first four months of the year, exports have fallen 22%
  • They had already started tapering off late in 2015
  • Hightech exports, a key factor for years in determining Israel’s growth, are 32% lighter.

You can add in to that property prices are still rising, and are forecast to continue their upward spiral in 2016. It is hardly surprising that the OECD has lowered its forecast for 2016 from 3.2% to 2.5%.

In itself, these patterns are disappointing. What is disastrous is the lack of response to the problems.

  1. The Prime Minister is determined to create a 24 month rolling budget, even though the relevance of such a move is unbelievably cloudy.
  2. The Minister of Finance, Moshe Kahlon, is trying to reform  the procedures to import food, which would lower basic prices. However, a coalition of vested interest groups are holding up the changes.
  3. The development of the offshore gas fields is stuck in the courts.
  4. And………..well, there does not seem to be a lot to report on.

You see just because you announce a new economic policy to help business, the effects take time to work their way through the system. Meantime, the current trends are able to play themselves out without restraint.

Bottom line: If the OECD has already slashed is forecast by a near 1% in just a few months, how bad will thing be for the Israeli economy by the end of the year? Where Bibi fiddles, simply nothing seems to be burning with desire.

3 reasons why the Gaza economy is suffering, but….

26 May 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

As I have stated on more than one occasion, the Palestinian economy could and deserves to be so much stronger. Yet, in the words of that great political American commentator, Britney Spears, it is a case of “oops, I have done it again“.

Here is what I mean: –

  1. It turns out that Hamas continues to use its resources to invest in a creating a war economy to fight Israel.Weapons are still smuggled into Israel, diverting investments away from social needs.
  2. Israel has just started to allow concrete imports back into Gaza, despite the fear that it will used to build more offensive  tunnels rather than new homes, as conceded by the UN. And while the tunnel economy continues to thrive, Hamas has managed to bulldoze away some of the last vestiges of Christian history in Gaza.
  3. And then there is the question of financial aid …or taxes? We know that the Palestinian economy receives 70% of its funding from overseas. And we know that much of the UNRWA budget is neither transparent nor accountable. But given all that, why does Hamas still need to impose higher taxes on those very people who should be benefitting from such large handouts from Western taxpayers?

Samir Abu Mudallala, an economics professor at Al-Azhar University, echoed Ajala’s assessment. In a March 19 statement to Kofia Press, Mudallala said, “Forcing new taxes on the Gaza Strip is a form of economic piracy and may worsen the current economic situation. It will also deepen the people’s scourges and increase poverty rates and food insecurity.”

Gazans deserve better. It is time for donors to face the truth.

Looking for Israel’s economy – May 2016

25 May 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel

It has been a notably busy week for Israel’s Prime Minister, as he stitches together yet another coalition government. And while this predictable political farce is played out in Jerusalem, the economy is taking yet another hit.

I wrote last week that “proactive government financial initiatives are sorely lacking“. We now know that there has been a 55% increase in requests for bankruptcy proceedings over the past three years. To summarise a report from Bloomberg, Israel seems to be “catching up at falling behind“. Not very complementary.

You can blame the global economy. Others shout that the shekel is considerably over valued. All very true to some extent. However you spin it, even Moody’s is hinting that it may be time to lower Israel’s credit rating.

The below-par growth outcomes add uncertainty to the authorities’ 2.8% growth assumption and in turn the 2.9% of GDP fiscal deficit target for this year. In turn, a worse fiscal outcome would imperil the continued improvement in the government’s debt metrics.

And that could mean that it will be more expensive for the Finance Ministry in Jerusalem to raise money on the world’s financial markets. That impacts on everyone. Ouch!

So, quarterly growth for early 2016 came in at 0.8%. Exports slightly decreased in the same period. Production has dropped off by over 10%, even though unemployment at 4.9% has not seen such a low level since 1983. And the housing market, one of the core bench-markers for Finance Minister Moshe Kahlon, has seen prices rises of 8% – double the rate of the previous 12 months.

And what is the Prime Minister Netanyahu doing about all of this? The financial newspaper Globes believes that he is avoiding core financial issues. Ha’aretz newspaper sees the successes of the past going up in smoke, while the Emperor is fiddling around. Not very encouraging.

The cheerful news for the Prime Minister is that with the new coalition deal, his job is safe for the new few months if not next few years. As for the rest of us………….

Reporting the Palestinian economy – some good news

19 May 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinian Society, Palestinians

Reporting accurately on the Palestinian economy has never been easy. If you look carefully at the documents of the World Bank or the IMF, they often contain statements that data collected from Ramallah and Gaza is not of the most reliable standards. That said, various news items more recently have given the outside world a better understanding as to how revenues are used by the Palestinian Authority and by Hamas.

Why is this important for outsiders? Because according to the OECD, approximately 70% of Palestinian expenditure comes from overseas aid. And the overwhelming majority of that aid comes from the generosity of Western taxpayers, who in turn are suffering from their own economic uncertainties.

The OECD estimates that the Palestinians receive around US$2.5 billion in direct aid annually. Ostensibly, the USA is the largest single donor, but much of UNRWA’s support comes from the pockets of European citizens. 49% of the total sums are designated for ‘other social infrastructure’, whatever that may mean. (BTW, total annual contributions to global aid peak above $130 billion. Thus, per capita, the Palestinians receive a very healthy share of the total pool).

And where specially does this money end up? Here are four quick case studies:

  1. A few weeks ago, I discussed how in spite of the checks in place, monies from the UK and from the EU seep through to political prisoners and terrorists. Coblogger Arnold Roth has expanded on this theme. He believes that “the perpetually financially strapped PA spent $144 million paying salaries” in 2014 alone.  Thus, using the 70% factor, donors (including British taxpayers) paid about US$100m towards helping these ‘deserving people’.
  2. On a similar note, the Palestinian commentator Khaled Abu Toameh observed this week that “The Palestinian Authority has used international funds to build prisons and detention centers in the West Bank where torture has become the norm.” He outlines how the Independent Palestinian Commission for Human Rights (ICHR) has received 782 complaints concerning torture and similar abuses. Again, the money to maintain this state of affairs primarily came from overseas.
  3. Moving away from direct political issues, even culture is not immune to the misuse of funds. The New York Times revealed that a spanking new museum in Ramallah was opened on the basis of a US$24m budget. This is to be a great celebration of Palestinian history and art. However, due to internal wrangling, there is not one exhibit for inspection. So, I am forced to ask, where did the budget disappear to and how was it accounted for in front of the donors?
  4. And there is UNRWA, where the EU is proud to show off its contribution. VP Mogherini announced on 4th April:

Since 2000, EU has provided over EUR 1.6 billion to UNRWA out of the European Neighbourhood Instrument (ENI) allocation for Palestine. The bulk of EU aid for UNRWA, EUR 82 million per year for the period 2014-2016, has gone to finance its General Fund (or  Programme Budget)………On top of this, there are ad hoc temporary projects financed via other instruments. Humanitarian funding to UNRWA amounted to EUR 5 million both in 2015 and 2016 (of which, EUR 4 million for shelter assistance in Gaza)……….

Well that is clear. However, less than a month later, we learnt of an event that took place at the UNRWA refugee camp in Aida, near Bethlehem. This celebrated a violent attack on Israeli buses a few days previously. And it would appear that this abuse of funds is not one isolated party.

I could list other items. For example, Hamas has returned to building offensive tunnels to fight Israel. Such an operation can only be carried out by syphoning off raw materials meant for the reconstruction of the area.

If there is good news it is that more and more of this misuse of Western generosity is being reported. However, sadly, Western governments, the EU and others are failing to take serious action. Meanwhile, the instigators of the verbal and military war against Israel grow richer.

Give aid by all means, but make sure you can check where it is going in a transparent and accountable manner. Otherwise, send it to those who do not just need it but will…………..actually receive it.

Netanyahu prepares to say goodbye to his economic achievements

17 May 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

The success of the Israeli economy is well documented. The GDP of the Holy Land has more than doubled since the beginning of the millennium. And for much of that time, Binyamin Netanyahu has either been Minister of Finance or the Prime Minister.

For at least a year, I have been warning that this achievement is going to become a dream of the past, unless politicians wake up. However, with current coalition politics determined by a majority of one vote, proactive government financial initiatives have been sorely lacking.

This week, we learnt that:

On top of this gloom, it was revealed that leading domestic companies  such as Check Point and Teva have benefitted from billions of shekels in tax rebates. All legal, but the announcement comes at a time when the Finance Ministry is threatening that the public will have to put up with more cutbacks in key social ministries.

The only clear visual response from Netanyahu so far is that he is demanding a budget based on a 24 month, and not a 12 month, cycle. He faces opposition from the Minister of Finance and the Bank of Israel. However, there is no clear structure to suggest what the move could achieve, but this is what the Prime Minister has set is eyes on.

Are there any bright spots? Well, the economy of the start up nation is beginning to reach the Arab sector. And The Calcalist newspaper was still able to identity 50 leading Israel start ups to watch in 2016.  But more than that……..?

What next? Who knows? Even the proposed in flow of cash from new offshore gas reserves has slowed down.

And where is Netanyahu? Telling off his generals in public, trying to create new political coalitions, or arguing with American presidents. That is no way to run a largish and successful economy.

Israel’s economy Spring 2016: The good, bad and ugly.

11 May 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel

The recent news emerging from the Israeli economy is quite mixed.

Superficially, all seems well. Fitch has affirmed Israel’s grade A credit rating, mainly as a result of the strong fiscal picture and excellent tax collection performance. On the high-tech front, overseas investors are very prominent. For example, HP is launching a new group to seek relevant start-ups for partnerships. Part of that focus will include the Holy Land. Similarly, the CEO of Oracle, Safra Katz, has publicly announced that her company will be seeking more Israeli acquisitions.

Very promising. However, there is a very gloomy side to the picture. It is dangerous to rely on one-off stats, although the 22% drop in exports for the first four months of the year is a major concern. What worries me more is the way politicians are driving the economy without due notice of the warnings of others.

The most prominent issue is the bizarre desire of the Prime Minister, Benjamin Netanyahu, to secure a budget for a 24 month period. For the record, there is a barely another country in the world that does not keep to a 12 month planning period. In fact that rule generally applies to commercial companies as well.

The world economy is considered unstable. Thus, long term planning is problematic. On a micro level, Israel is constantly embroiled in military fights with neighbours – another reason why accurate forecasting can be erratic. In fact, other than allowing for an strengthened government coalition, there is no obvious need for a two year budget. This seems to be a policy which has been created to bolster short term political interests rather than the future growth of the economy.

And what have a nasty smell to it are the continuing and developing strengths of vested interest groups. The national lottery – Mifal Hapayis – has seen a near doubling in contributions from the public over the past year. However, handouts have remained at a similar level, while salaries have left up. Additionally, more and more Israeli names are coming to the fore in the Panama papers, which somewhat explains why the middle class is forced to pay more and more taxes. And those government ministers with the ear of the Prime Minister seem to be ending up with sweeping 1984-type powers of the directive. Nothing illegal, but you have to look hard to find ‘good governance’.

Yes, the Israeli economy is steady. My business mentoring clients with retail outlets feel that sales are on the up. And yet, underneath something smells wrong. The signs are worrying to say the least.

The mobililty in Israel’s mobile high-tech scene

9 May 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel

Via is the latest in a lengthening string of Israeli mobile services that are changing the way we move around cities, or further. Operating primarily in the New York City and Chicago regions, the application enables tens of thousands of passengers each day to share their ride with others heading the same way.

And this is why the start-up has just raised a mere US$100m in funding. Not bad for a four year old outfit!

Truth be known, Via is merely following on from other successful Israeli firms, who have found a niche in the field of transportation. For example: –

  • Waze is a highly practical application that allows even the most inept driver to plan a route, discovering traffic jams and police traps in advance. The company is backed by a billion dollar investment from Google.
  • Moovit enables its customers to calculate which is the best form of public transport to use. The company value is assumed to be around US$0.5billion.
  • Gett, the major competitor to Uber, is now valued at about US2 billion.

And so the list goes  on, even extending to international sea freight.

Barely four months ago, top analysts were predicting that one of the key trends in 2016 would be the onset “of more investment in sharing economy companies to reduce the environmental footprint of various industries”. Any guesses at this stage how Israeli start ups are preparing for 2017?

3 things a business coach can learn from British sport

5 May 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

It has been a crazy and somewhat successful few weeks for British sport. And amongst all the fuss, TV reporting and ticker-tape, when you look closely enough, there have been some big take-aways for those involved in business coaching or mentoring.

I live near Jerusalem, Israel, which is thousands of miles away from the action. And yet, I have seen clear deliverables that I can pass on to my commercial clients as their coach.

For example, you can barely find a snooker club in Israel. On Monday night, in the wonderful Yorkshire city of Sheffield, Mark Selby beat Ding Hanjui in the final of the world snooker championship. For Selby, heralding from nearby Leicester, this was his second such triumph. Years ago, his parents did not have enough money to help him learn the craft.

Ding was born in China. He has been living in Sheffield since he was a teenager. Sheffield has been hosting the finals for years and will continue to do so for another decade at least. In other words, the Ding family had internalized from an early stage where their ‘target audience’ is located. They then deliberately targeted the region in order to be near the money. LESSON NUMBER ONE.

A few hours previous to his triumph, Selby’s home football club, Leicester City, secured the English Premiership title. Never an easy achievement, these players were 5000 – 1 rank outsiders at the beginning of the season. What was their secret to success?

There have been many analyses. Several have pointed to the qualities of their manager, Claudio Ranieri, which just seemed to fit the moment. I looked at their squad. On paper, they are shambolic load of misfits, which you may find in lower leagues – a kind of Dad’s army outfit. They had no obvious-looking international stars.

However, they played and fought together as a team, which is what any business owner or manager needs to understand. You cannot do it all by yourself. LESSON NUMBER TWO.

And then there is the English cricket team. For all their glorious history, in the one day format of the game, the squad was considered a joke on the international circuit. However, with a new coach and a slight tinkering of the team members over six months, England oh-so-very nearly became world champions in April in India.

One of the key changes the coach had introduced was to allow players to express their natural talents more freely. In other words, they had been selected not only because of their skill-set. They had a natural belief in themselves, which had been too stifled in the past. It was time to release that strength.

Creativity is important on a playing field and as well as in a commercial environment. LESSON NUMBER THREE.

The beauty of all this for me? I have given myself the perfect excuse not to do any more business mentoring, but to go and watch some more sport. Will some people call that an excuse to procrastinate?

5 Unexpected tips that help improve our business lives

1 May 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Last week, I was annoyed by the blog “10 daily habits that will radically improve your life“. Full of interesting ideas, I found most of them slightly irrelevant.

And this prompted the question: What is it that we should be doing to improve our commercial lives – usually something incredibly obvious and practical – but we feel we do not need to have time for it?

First, let me refer to the original article. Amongst the topics, it referred to wearing better clothing, reading more often and moving house. It also encouraged people to write. From my standpoint, none of this is bad advice. However, I feel my work as a business mentor in the Jerusalem area allows me to offer more direct and useful tips. Within in a few minutes, I had come up with about 12 counter points, and here are my leading five: –

  1. Create a balanced diet. So many people that I meet from across the globe try to cheat the system, claiming they rarely have time for breakfast, let alone lunch. Let me be blunt. Your body is an engine. If you do not feed it quality oil, it will become tired and start polluting the surrounding environment. You will not function effectively with your colleagues, and eventually clunk out.
  2. Develop a hobby. We all concentrate so much on our immediate work surroundings, devoting beyond 12 hours a day, that we leave little time for our own pleasures. Time and again, I have shown clients that by pursuing an outside activity – sport, charity, theatre, etc – you not only feel of more value. Incredibly you introduce additional skills that can be taken back into your place of work.
  3. Choose something from your wish list and go for it. A couple of years ago, I wrote out a short wish list of things that I would love to do. It is multi-purpose, cutting across themes, continents and groups of people who know me. More than just putting it down on paper, I have started slowly to implement the ideas. Life now has added zest,  and that new motivation finds its way into the office space.
  4. Set a time in the day to check your emails and another time for Facebook and digital chit-chat. I suggest the morning and the evening respectively. Such a policy will save you potentially hours every day. And you will not miss out on too much. Life will continue, just as it has done for tens of thousands of years previously.
  5. Learn to smile more. The effect can be stunning. You will encourage others to be more proactive on your behalf. Check it out today.

Have a great week at work!

UK taxpayers’ contributions to Palestinians – more about the true beneficiaries

28 April 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinian Society, Palestinians

My post earlier this week about “UK taxpayers’ contributions to the Palestinians – Who benefits? ” has proven to be very timely.

For example, I noted that the UK government struggles to fund joint cooperation programmes between Israeli and Palestinian groups. I was encouraged to read a news release yesterday from the House of Commons, which confirmed that:

As many as 25 Conservative MPs and Lord Polak CBE have written a joint-letter to the Secretary of State for International Development, Rt. Hon. Justine Greening MP, calling on her Department to consider Israeli NGO Save A Child’s Heart (SACH) for funding support.

The MPs write: “Having seen the work of SACH at the Wolfson Medical Centre first-hand, we believe that further UK Government involvement in this laudable charity would be extremely worthwhile”.

Over 50% of the 4000 children who have received life-saving heart surgery from SACH live in Gaza and the West Bank, with the rest coming from across the developing world. The charity also trains physicians and nurses from these countries, providing them with in-depth postgraduate training.

At a time, when the Daily Mail newspaper and others have highlighted the loose way overseas aid is distributed, supporting SACH could only improve the lives of thousands. More importantly, it will allow Palestinian children and their parents to see how Israel need not be seen as an evil enemy.

However, as I asked in my original piece, why is the UK government not seen to be fully transparent and accountable in its funding of Palestinians? And I stress: The issue is not if the Palestinians deserve assistance, but who receives it. The repeated stories of corruption are numerous. And there is no doubt that Palestinian terrorists and their families benefit from overseas aid.

On the latter subject, Palestinian Media Watch has just released a 15 page report, detailing how both the Palestinian Authority (PA) and the Palestinian Liberation Organisation (PLO) have repeatedly hidden the truth from Western governments. Bluntly speaking, both the PA and the PLO subvert the generosity of Western taxpayers. Millions end up with those who have carried out acts of violence against ordinary civilians!

This has to stop. And one way to do that is to ensure that all UK overseas aid is fully scrutinized. And that includes knowing who the independent auditors are and what is their mode of operandi. Otherwise, the unworthy will get richer. More people will be harmed or worse. And British taxpayers will end up throwing away yet more money.

UK taxpayers’ contributions to the Palestinians – Who benefits?

26 April 2016
3 Comments
Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

As declared this year in the British Parliament on February 9th:

The Department for International Development (DfID) provided £349 million in support of Palestinian development from 2011-15 and will provide a further £72 million in 2015-16, of which up to £25.5 million will be provided to the Palestinian Authority. This year, UK aid will support 36,000 children in primary education and support 270 enterprises to improve their annual sales or productivity.

What is the equivalent of such sums for the British taxpayer? Well a £349 million injection would wipe off the debts of the NHS trusts in England. Very useful, if you could get hold of it.

On 30th March, it was further announced that:

As part of this support, between 2011 and 2015, DFID provided over £3 million to the Facility for New Market Development Programme and Palestinian Market Development Programme, which has helped businesses expand into new markets and products, and supported the creation of over 2800 new jobs. DFID also provided £2 million to the UN Relief and Works Agency’s which supported the creation of over 45,000 short-term jobs for Palestinians in Gaza who have been affected by movement and access restrictions.

In this case, the numbers do not appear to be consistent. Could £3 million over 4 years really help to create 2,800 jobs? That works out at about £1,000 pounds per job. Maybe. However, £2 million to support 45,000 short term jobs? That is £45 per position. No way!

So what is the fascination with the UK and its apparent need to give to the Palestinians in such generous and unlimited quantities?

Yes, there is deep poverty in parts of the West Bank and in Gaza. It is generally accepted that until that the economic despair is resolved, it remains a potential cause for renewed conflict with Israel. And some believe that it is the duty of Europeans to redress the imbalance caused by America’s massive military aid to Israel.

Even if that baseline remains unchallenged, there are two questions that dominate the debate about the size of the contributions just described. (And these sums do not include support for NGOs and the massive funding via the EU). First, the Palestinians have consistently received what has previously been described by the World Bank as “the largest amount of money per capita in the history of foreign aid”. So why do they keep demanding so much more? Second, where does the money go? Who benefits?

It is the latter issue that has so concerned me over the years. For example, the recent scandal of the ‘Panama papers’ revealed cited at least two Palestinians, who you would have hoped would not appear.

  • The son of President Abbas, Tareq, and his “holding company worth more than $1 million in the British Virgin Islands”.
  • Muhamed Mustafa, former deputy PM and now head of the powerful Palestine Investment Fund.

A smell of possible kleptocracy? Ironically, around the same time of the leaking of the Panama documents, the Daily Mail newspaper released an expose, which detailed how UK taxation was funding Palestinian terrorists. The item was so intense that it drew an official government response. In fact, much of the denial was forced to focus on the issue of the Palestinians.

Since then, there have been several questions in both of the Houses of Parliament as to what steps Her Majesty’s Government “are taking to ensure that UK aid to Palestine is not given, directly or indirectly, to the families of suicide bombers or to convicted prisoners.” And the answer is often that:

UK aid to the Palestinian Authority (PA) is subject to rigorous scrutiny, with safeguards in place to ensure its being used for proper development purposes. Our financial assistance to the PA is used to pay the salaries of civil servant and pensioners. Our support is provided through a multi-donor trust fund administered by the World Bank, which carries out close monitoring of PA expenditure. Only named civil servants from a pre-approved EU list are eligible, and the vetting process ensures that our funds do not benefit terrorist groups. The process is subject to independent auditing.

But no lists are provided. The independent auditor is not revealed. Even the EU auditors determined back in December 2013 that its own ‘independent’ system by the name of Pegase “needed to be strengthened”.

Significantly, on April 15th, the government conceded that “UK officials meet regularly with the (Palestinian) Ministry of Finance and consistently lobby it at the highest levels on whether prisoner payments can be made more transparent and affordable.” George Orwell would feel vindicated with this double talk.

But what is staggering is that these so-called Palestinian civil servants undoubtedly include the full gamut of the Palestinian security sector – police, the army, Presidential Guard and a vast array of secret forces. All have been linked to terror in the past. And many are on the pay role of Hamas in Gaza, whose is persona non grata throughout Europe, America and elsewhere. In other words, the UK is supporting the very people who are destroying the purpose of what the funds are set aside for – peace and a better society for all.

Where could the funds go instead? Well there is no point in directing them towards UNRWA. Nominally part of the UN, this is probably the largest charity in the world, yet it has no external audit. Words such as transparency and accountability are seemingly irrelevant to its operations.

Disturbingly, on February 10th, there was an admission that there is no direct UK funding of joint Israeli-Palestinian programmes. However, through the Conflict Stability and Security Fund (CSSF), the UK provides a meager £40,000 for the ‘Youth Creating Peace On/Line’ project which encourages educational cooperation between Palestinians and Israelis.

So how about investing resources in key infrastructure projects? And then I hit on this report, albeit from the European Union in Brussels on April 21st.

The Palestinian Authority (PA) awarded in 1999 a 25-year exploration license for the marine area off the Gaza Strip (called Gaza Marine) to a consortium of the BG Group (British multinational oil and gas company) for 90% and the Consolidated Contractors Company (CCC) for 10%. The BG Group, which discovered the Gaza Marine field about 36 kilometres offshore in 2000, has recently merged with Shell. The field has not been developed to date.

And there you have it. In the blue corner, Israel develops its offshore gas resources, thus strengthening its financial base. In the red corner, Hamas ignores a ‘brave new world and cries ‘poverty’. In turn, it receives billions in international handouts and thus develops its ‘tunnel economy’. This fosters exports in the form of terrorists sent to attack Israeli civilians.

Arnold Roth is a well-known blogger on the theme of financial transparency. He has been invited to speak at Parliaments around the globe. He wrote recently that it is an outrage that no professional resources have been devoted to discovering where all this money has disappeared to. And he continues:

The Europeans and the Brits can say what they like about everything being checked and no possible room for malfeasance. But that’s not what the PA says to its own people. The message from the Abbas insiders for internal consumption is that, as bankrupt as their regime is, there will always be money for those “heroic” Palestinian Arab convicted slaughterers of children and of Holocaust survivors.

In that light, you have to ask if the thousand or so tunnel diggers are also considered civil servants as per the list held by the UK government. Similarly, if Hamas is able to devote resources to renewing its tunnel war against Israel, why is the UN surprised that around 75,000 houses in Gaza have yet to be rebuilt? Maybe the leaders of Hamas should direct some of their profits from the foreign currency monopoly or real estate transactions towards helping their own citizens?

And if they did? Hundred of thousands of Palestinians would be better off. And decent taxpayers in the UK might be able to receive greater benefit from their own monies that they have gainfully earned yet have been asked to part with for the ‘greater international good’.

An effective tip to improve your sales, and pretty quickly

25 April 2016
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Sales, sales, sales. We all want more sales, and right now.

Yesterday, I described a creative and easy-to-implement solution, utilising Facebook. This time, I want to resort to basics.

First, let me quote Lee Frederiksen, a frequent blogger on organizational strategy.

There are essentially two kinds of growth–organic and inorganic. The former is built on a complex blend of expertise, experience, reputation, capability and visibility. The latter is a little more straightforward and based on cash, liabilities, and assets.

When describing sales through organic growth, he refers to five core strategies:

  • Research your clients
  • Focus on a niche
  • Develop strong differentiators (my favourite)
  • Balance out traditional and digital marketing
  • Make your expertise available

This is all very valuable. I urge you to read the blog in full. However, there is a downside to this approach.

My experience as a business coach reveals that many people become bogged down with technical discussions about how and what to do. They never move on to the “doing” itself. To be specific, they hold back from trying to make a deal. The objections to this are varied and usually revolve around a “what if”question. “What if such and such goes wrong?”

The subconscious thought process is that if there is a danger of not achieving a target, that can be considered failure. Failure is bad. Therefore, we should not do anything. In fact, it is better to remain where we are today with lowish sales than to risk moving ahead. Ouch!

Time and again, my role has been to “jolt” or to “shove” clients out from behind their computers and onto the ‘frightening’ streets of the market place. In the past two months alone, I have motivated several companies into abandoning internal discussions, while leaving their words for motivating potential customers.

“Just go out there and look for them, assertively” was the philosophy. It may not be stuff of text books for an MBA course, but it did work handsomely. There has been an impressive shift in the numbers in the bank account.

Care to try it yourself?

 

A practical Facebook tip for all small business owners

24 April 2016
1 Comment
Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Here is a conundrum that often comes up, when I meet with owners of small and medium sized enterprises (SMEs). How can I make my digital media campaign more effective, when I can barely afford to invest in google ads etc?

I am the business coach. I am supposed to mentor them through their crisis. And while many of my clients are based in the Jerusalem area, I know this is a generic problem that goes beyond Israeli SMEs.

In fact, help is not so far away. Facebook promotional efforts are often based around placing clever photos or videos on your page. Alternatively, you are encouraged to find other like sites and to place your content there. However, this is way too passive.

An interesting article about the company U.S. Cotton reveals an open secret. In order to brand their new line called “Swisspers”, the firm asked clients to send in selfies of themselves “naked in bed”. That is to say, the product is about makeup removal, and the picture had to show yourself without makeup, just before you go to sleep.

The campaign went viral. Even celebs sent in some photos. Excellent from the point of view of the company. What was clever was that U.S. Cotton had encouraged people to be pro active. They had made Facebook page something others wanted to be a part of and to “improve”.

Here is another example. A tourist attraction in Israel asked visitors to post unusual pictures of their experience. A panel would judge the best entries, who were to receive a prize. What is so great about this campaign is that every person who entered the competition is automatically letting their other Facebook friends know where they have been and why.

Free and direct advertising. There is nothing better! And again, this is making Facebook proactive.

The bottom line here is that companies who own a Facebook page still have to create their own content. However, Facebook is all about the community. So, involve as many people as you can in composing that information, thus making it interesting and exciting for countless others.

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