Pages

Israel’s exports, defying the laws of economic gravity?

16 November 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel

If a country has just gone through a war and is engaged in a global economy in the midst of a downturn, then surely we can expect that its export performance will be gloomy? Not so Israel.

The latest financial stats from Jerusalem encouraged this newspaper headline: “Despite Gaza war, ……the Israel Export Institute reported a 4.5% increase in overseas sales…” Further, as the shekel has depreciated around 12% in recent months, exporters are experiencing a field day of growth.

As ever, Israel’s exports are dominated by three key sectors: cut diamonds, defense and high-tech. Industrial exports, excluding diamonds, were up nearly 15% in the last quarter, a significant improvement from the second quarter of 2014. Even more encouraging, there has been no  parallel rise in imports. Thus, Israel’s debt to the world has shrunk.

One interesting fact that has come to light is that ten companies now make up 50% of the country’s total exports. Less than a decade ago in 2007, that figure was barely 36%. A further analysis reveals two interesting comments:

A) In the same period, exports as a whole grew 34%. However, if you take out these same companies, the growth factor was a bare 55.

B) Six of the ten companies are “Israeli born”, such as Teva (pharma sector) and Raphael (defense). The other four are multinationals – Intel, HP, Philips and General Electric. For example, it is well-known that Intel’s past, current and next generation of chips were developed in the Holy Land, No wonder, the company is about to open up a fourth plant.

So Israel’s exports continue to move ahead, dragging the economy with it. And the rest of the world? Well, clearly despite the country’s detractors, it too is increasingly dependent on Israeli brawn power.

Integrating hightech into society: Israeli case study

14 November 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem
  • Fact No 1: Using commerce, specifically high-tech, to integrate diverse parts of society is nothing new.
  • Fact No 2: Israel has a successful high-tech / start up model.
  • Fact No 3: Israel is not short of social tensions – geopolitical strains, religious-secular divides to name but two.

So can Israel find innovative ways to integrate non-Jews, roughly 25% of society, into its powerful high-tech sector?

Now we know that Israeli high-tech is highly sought after. Just this week, Microsoft has plunged a further US$200m on investment into the Holy Land, purchasing the app Aorato. We also know that Intel, Siemens, and at least a further 250 international tech giants have R&D centres in the country. And it would be a fair bet that most of these places are staffed and run by Jews.

So how does the Start-up Nation ensure that all ethnic backgrounds can have a fair crack at this tempting road to new wealth?

Bloomberg recently posted an article describing the imperative need for Israel to go beyond established recruitment drives. There are simply not enough new engineers and software architects to fill the vacant positions.

Only one in five of Israeli Arabs with a computer science degree works in the field, and a new government program is trying to change that. As part of a push to add 300,000 jobs in the Israeli Arab sector by 2020, the Ministry of Economy has budgeted more than 40 million shekels ($10.5 million) over the next three years to integrate one of the country’s fastest-growing populations into its most promising industry.

A newspaper from Abu Dhabi (ironically?) picked up on this theme. The National discussed intervention and integration into Israeli high-tech by Muslims. Consider that less than a decade ago, there were estimated to be only 350 Arab engineers working in the sector.

Today of the 100,000 software developers in Israel 2,000 are Arabs. In Nazareth there are 600 Arab software developers when there had been only 40 in 2008, according to figures from Tsofen, a non-profit organisation whose mission is to promote the integration of Israel’s Arab citizens into the high-tech industry.

Nazareth is a city that has an incredibly challenging mix, comprising of Jewish, Christian and Muslim neighbourhoods, often intertwined. Despite periods of stress, be it this month or back in 2000, there are on-going successful attempts to provide services available for all. A classic example is a new centre to help abused children.

Similarly, the local business incubator has a healthy range of programmes to enhance integration. A recent ‘make-a-thon’ competition saw around 100 developers and programmers, both Arabs and Jews, work for 36 hours straight to develop apps and software.

Life is not perfect. I am aware that of one Israeli exporter was seeking this Autumn a contract with a potential client in a large Western economy. The CEO of the prospect demanded that the Israeli firm declare on its website its openness to full integration. Strangely, that same prospect does not have a similar policy on its own website. Nor does it seem to demand the same standards from suppliers in other countries.

And, what the prospect failed to admit is that his own country can also be accused of failing re integration……….as does 200 other countries.

What makes Israel unique in this instance is that few places in the world have to cope with the rich and numerous conflicting social issues, which originate both internally and externally. Jerusalem continues to look for new ways to rise to those demands for the benefit of all.

“Know your client” encourages the business mentor

12 November 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Several times over the past few days I have asked my own clients who they intend to target. What is the actual market? And the answers have tended to be very generic in tone: ‘people from abroad’, ‘those with money’, ‘youngsters’, etc.

And when I ask for a drill down or explanation of what each phrase means, I am greeted with a blank stare and a nervous or childish shrug of the shoulders. Because what has sounded commercially brilliant has not been thought through sufficiently.

For example, let us assume that you want to focus on those people, who are comfortably off. Interesting, but where are they located, physically? Can they be found on social media? What is the age group? Each answer will help to direct you towards formulating your eventual strategy.

These specifics are not necessarily easy for everyone to grab hold of. Not only that, they require validation. That means you will need to find a way to put your product or service in front of a group of potential clients and ask for their opinion.

For example, there is a story of a relatively new humous factory in Nazereth, whose first ton of mix was dumped on the tongues of ordinary (and hungry) tasters. I recently met up with a customer in Jerusalem who wanted to approach an overseas market. I forced him to consider which country, city, socio-economic grouping and much more. Within minutes, he began to appreciate why his advertising to date had not delivered the desired results.

Knowing your client is not a simple art to master. However, this does not allow you to ignore the issue. If you palm it off with sound-nice analyses, this lack of meaning will be converted into an eventual revenue stream that will leave your bank account lacking.

How the answer to Ebola probably lies in Jerusalem.

28 October 2014
No comments
Categories: Afternoon Tea in Jerusalem, Israel

Israel has a history of sending successful ‘medical SWAT’ teams to disaster zones. For example, it was the first country to set up a field surgery in Haiti. And now three teams are being dispatched from the Holy Land in order the fight the Ebola epidemic.

However, the Israeli contribution to combatting Ebola may turn out to be far more effective than just sending  aboard an airplane some top medics and a whole load of equipment

POINT ONE: Israel’s CollPlant has strong expertise in preparing vaccines from tobacco, which is seen as a key to the treatment to Ebola. They appear to be one of the few companies with an ability to mass produce an antidote, although the results of such drugs are still mixed.

POINT TWO: Argaman, based in Jerusalem, is manufacturing a set of fabrics that can used in hospitals: Sheets, clothing attire, socks, etc – by using Argaman products, infection rates have dropped by tens of percentage points in trials. At least one NGO operating in the Ebola region has approached the CEO of Argaman to consider how such products could protect their employees in the field.

POINT THREE: SYS Technologies near Haifa, Israel, has begun to send special sterile tents to Liberia and other countries in the region. The tents can be used as either field operating surgical units or sterile isolation areas. This latter issue is critical, when one considers that there is yet to be prescribed a comprehensive vaccine. So, it is essential to ensure that any person suspected of having the disease can be set aside effectively from the rest of the surrounding population and then monitored effectively.

If you follow Israel this week on CNN, BBC or SKY, the country comes across as a militaristic, uncaring society, determined to punish Palestinians. And yet there is an old phrase that ‘actions speak louder than words’. On the issue of Ebola, Israel is acting way beyond what any other Middle Eastern country is doing and even beyond what most fellow members of the OECD are providing. So why is the world so determined to silence these holy voices of hope and play to rhetoric of distrust?

How to succeed quickly in business

25 October 2014
1 Comment
Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

“How long will it take me to succeed in business”, I am frequently asked. And they quickly add the next line. “You are a business mentor. So you should know”.

Um, er, well… How do I start to explain that it depends on a million and one factors, not all of them in the control of the intrepid entrepreneur. What is the vision? Have you established who is the buying customer? What resources are required and what is available? Budget? Cash flow? Competition? Commercial environment? Location? And so the list goes on.

Now a mentor or coach should be able to provide structure to these issues. Yet just recently, I was invited to help with an alternative approach.

“Lean startup machine” is an exciting global organization that organises 3-day-long workshops that allow individuals to test in real-time just how successful their potential enterprise may become. Based on the catch line ‘fail fast, succeed faster’, participants are taught to identify the clientele, to test the concept by going out on to the street, and then to reconfirm previously accepted assumptions.

Last week, the holy city of Jerusalem hosted such an event, under the dynamic direction of Nadav Lankin. There were about 14 teams, who powered their way to creating solutions for the office, delegates to conferences, drivers wanting a place to park and many other situations. Days were long. The atmosphere was frequently absorbing. The mentors learnt, along with the participants.

Does such a rapid approach work for all? Absolutely not. There are those who just cannot react quickly. There are businesses, such as biotech, that need to be crafted. And others demand renovations. However, the lean machine concept does allow you to validate much quicker than conventional text books may have you think. For example?

Well, one of my clients has been evaluating a thrilling vision that combines production with education. He started to put together large budgets over a relatively long time span. Suddenly, one day, ‘he got it’. He walked in and said very proudly: “All I need to do is set up a limited manufacturing scheme and test if there is demand. If yes, then I can ask others to risk more capital”. Absolutely, and he is now urgently seeking a location and in order to launch within a month.

Another customer has been pondering for some time how to set up a specific service. But how, and will it triumph? Eventually, I encouraged him to turn to others who had succeeded in the same industry to find out if there is a specific model to follow. The advice was simple and fairly uniform: ‘Get out there and meet your customer. Do not sit around, building up meaningless strategies.’ this coming week should see some breakthroughs.

There is rarely a short route to success. Most have to graft towards growth. However, a lean approach can cut out much of the initial deliberations, which are sometimes simply a waste of time and resources.

The client said “I can’t” and the business mentor responded….

20 October 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel

Every month, I have the opportunity to meet dozens of people, each locked up in his or her own business environment. And it is amazing to hear how often  the phrase “I can’t” crops up.

There are many variations on a theme. I can’t or I don’t think I should go there or no way or – and this when I know that I have touched a very raw nerve – the client starts to complain about me to a higher authority.

I read today a blog describing phrases that Navy SEAL’s do not accept. Number one on the list is “I can’t do that”. According to the author, “if somebody had said this in the team , he would’ve found himself cold, wet and duct taped.” 

I am not a member of any army crack unit. So my approach as a business coach is somewhat different. For me, the “I can’t trigger” is usual a knee-jerk response. It relates back to something totally unrelated, maybe going years back. For example?

Well take a task as basic as ‘cold calling’. This requires a person to reach out by phone (usually) or even by email to others they do not know and then try to engage them in a commercial conversation. Nothing complex here. Yet many a person finds this daunting, even nerve-racking! They procrastinate and often simply never get round to the mission. In other words, they believe that they cannot…without even trying.

Why? Well the reasons can be many, including subconscious shouting in the ear from parents, still echoing after the years have gone by. The point is that the task led to an “I can’t” response.

There are many solutions, However, I want to point my readers in the direction of a quote attributed to David Ben Gurion. Starting off his career as farm labourer, he went on to become a charismatic Prime Minister of Israel, triumphantly and against the odds taking the country through two wars.

“Everything is impossible until somebody does it”.

US$1 billion or US$5.4 billion – what is worth more?

17 October 2014
2 Comments
Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

Last week, the international community pledged US$5.4 billion dollars in order to support the estimated 1.8 million people of Gaza in the aftermath of the war with Israel.

A humongous sum, one commentator has tried to give the dollars a sense of proportion. Michael Freund observed that the release of the Ebola plague has barely justified approximately US$1.0 billion of contributions. Millions of Syrians and other human refugee problems around the globe are also valued less highly.

It appears that while John Kerry is still looking for an extra US$200 million to combat Ebola, Qatar has committed US$1 billion to Gaza. Similarly, “the US pledged $212m (£132m) in new aid, while the United Arab Emirates and Turkey both committed $200m (£124m). European Union foreign policy chief Catherine Ashton said donations from member states would reach $568m (£353m).” etc , etc.

Let me clear, whether you blame the bombing of the Israeli air force or the fact that Hamas booby trapped streets of housing, at least 5% of Gaza residential buildings were destroyed. Hundreds of thousands require new housing. The issue is not the cause. At a time when Europe is facing another recession, the question is can the placements of the new donations be accounted for?

The original request from President Abbas was for a mere US$4.0 billion. However, historically donors, particularly from the Middle East, have rarely delivered in full. And as the Financial Times pointed out, a significant amount will seep out to the growing class of corrupt Gaza millionaires.

That stated, there are four key ways in which the sums can be transferred. And each methodology reveals a disturbing lack of transparency for the generous donors.

A) Palestinian Authority (PA). Except for brief periods under Prime Minister Fayyad, the PA has never declared fully their financial accounts. When I last checked the pages of the Palestinian Ministry of Finance, the links to the detailed statements would not open out. Furthermore, the PA does not govern Gaza, which is run by Hamas, a known supporter of ISIL.

B) UNRWA: Despite the name, this organisation is not supervised directly by the UN. And even though its annual budget breaches the one billion dollar level, it has no external and independent auditor! During the Israel-Hamas hostilities, UNRWA was forced to admit that its facilities are used by terrorists – exposing the abuse of Western taxpayers’ contributions.

C) NGOs: Increasingly since 2001, NGOs have become to be seen as a ‘kosher’ mechanism for transferring money to the Palestinians. While the aim here has been noble, several such charities have been exposed by NGO Monitor for operating in the political sphere rather than impacting on the lives of ordinary Palestinians. For example, monies transferred by the royal Swedish government are utilised to denigrate Israel, supposedly a friend of the monarchy, rather than to benefit Palestinian society.

D) PEGASE: Created by the European Union  in 2008, PEGASE seeks to ensure that Brussels’ support for Palestinians ends up at designated targets. Stephan Fule is the European Commissioner responsible for enlargement and neighbourhood policy. In response to a question from Lynn Boylan MEP, he reported last week how “Aid to Gaza is part of the overall package of cooperation with Palestine and no separate ‘accounting’ is kept. However, for the period 2007-2013, our estimate is that:”

1) For PEGASE, payments to beneficiaries in Gaza correspond to 1/3 of the allocations for civil servants and pensioners and 2/3 of the amount for Vulnerable Palestinian Families. The overall contributions for the 2007-2013 period amounts to circa EUR 1.5 billion

ii) In addition,

  • For UNRWA, aid to Gaza targets 1.2 million refugees representing 1/4 of the total refugees assisted by the Agency. The total EU contribution to UNRWA for the referred period has been around EUR 950 million;

 

  • Infrastructure projects amount to EUR 23 million and projects for the private sector to over EUR 30 million;

 

  • Humanitarian assistance amounted to over EUR 225 million, including 74 million to UNRWA

Note that the figures are “approximately”. So the EU admits that it has no ability to add up how much goes out to the Palestinians.

Note that “civil servants ….. and 2/3 of the amount for Vulnerable Palestinian Families” is ‘Newspeak’. for Hamas officials and families of convicted terrorist.

And thus note why it is not a surprise that in December of 2013, the European Court of Auditors could not substantiate that donations to the Palestinians had been used properly.

Bottom line: However much of the 5.4 billion is transferred, very considerably less will be received or felt by the average person in downtown Gaza City!

So what will make a difference to the lives of ordinary citizens in Gaza? And does Gaza really need US$5.4 billion, an amount bigger than the economies of over 50 countries?

Well, Israel has been criticised for operating a closed border with Gaza. Actually, it is the Egyptian side, which is sealed. Israel lets in hundreds of trucks of humanitarian supplies most days a week, even during a war. (By the way, it is Qatar has been financing these transports, and thus their above contributions are nothing new.)

Ban Ki-Moon, UN Secretary General, delivered a speech at the Cairo donors’ conference, claiming that the fault of the conflict in Gaza lay in Israel’s occupation. Yet, Israel separated itself from Gaza back in 2005. Everyone does agree upon is that the should be greater freedom of movement at the border crossings, and President Rivlin of Israel echoed this in an address to Ban.

What is the missing factor? For years, Hamas invested billions in building up a war machine against Israel. While never able to defeat Jerusalem, the dynamic and nimble infrastructure of tunnels and rockets threatened, maimed and killed. None of this investment created wealth, happiness and prosperity for its own people….except the oligarchy, as the Financial Times described. If Hamas was to think in terms of mutual peace, now that is a concept of near immeasurable value.

The world has yet to learn how to fund and to repeal the threat of Ebola, Islamic terror and many other problems. Regarding Gaza, US$5.4 billion appears to be a secure number for the peace of mind of global leaders. It allow them to believe that they can achieve a reduction in poverty. Meanwhile, the plague of Hamas remains free to build up its resistance.

How to describe business coaching

13 October 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel

“I look forward to my sessions with you. You jolt me forward.”

Thus uttered a client of mine a few months back. And while this may sound like showing off, it actually sums up much of what business coaching is all about.

The question often arises, even in social conversation – what is a business coach? A great business coach need not necessarily be an expert in his client’s field of commerce. However, he or she will possess the tools, character and experience to ask the right questions, probe away at those subjects that have been subconsciously ignored, and empower the client or team to move ahead independently.

Effective business mentoring generally treks over five steps. Personally, when I meet a new potential customer, I explain how I will encourage and how I will cajole them to:

1) Identify their vision. This involves setting out the vision within clear and understandable boundaries. What needs to be done by when and why.

2) Identify those issues that are preventing progress within the current environment

3) Verify that they are prepared to change, if required

4) Establish a road map towards growth, with a reasonable timeline

5) Confirm that they are able to follow up and reach out to their dreams and ultimate success.

This case study illustrates what I mean. I was asked to help prepare a loan application of a relatively significant amount. Nothing unusual, you may think. However, the client was a new immigrant to Israel, trying to copy a business model from overseas.

The questionnaire was a pain in the whatever – never mind that my client did not even understand the language. The bottom line was that the form was structured in a manner that it forced my client to think about what he was going to do, what resources he needed (in detail), why, how much, and how he was going to execute the strategy. And it proved my job to wheedle the info out of him.

Interestingly, at one stage, the client almost gave up and was prepared to throw in the towel. This was his way of saying that he was not prepared to change. As I put in the lure of extra money coming available, he saw otherwise.

All customers are different. Sectors of commerce have their own unique tendencies. We all react in unforeseen ways to pressure. that said, time and again, my mentoring resorts to this methodology and it has a high success rate…..which I hope is something for you to consider.

Israel’s economy – the saga of a scared Prime Minister

12 October 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel

Binyamin Netanyahu has been either the Finance Minister or Prime Minister in 9 of the years since 2003. During this time, even allowing for the global credit crisis, the economy has bounced along at around 4%, an excellent report by most standards.

However, forecasts for both 2014 and 2015 barely rise above 2%. And the budget for next year has been forced to cater for massive defense spending, while not allowing for any tax rises. This has meant a dangerous widening of the deficit. Add in the fact that Europe seems to be heading for a recession, it is unsurprising that few people have confidence in the numbers coming out of Israel’s finance ministry. It appears as if somebody is trying to draw a curtain on Netanyahu’s era of economic triumph.

The strategic and social demands on the government are undeniably heavy this time round. After the war with Gaza, the army needs to replenish its stocks. Response to the threats from Iran and from the northern border must to be financed, now. Communities in the south of the country have been promised vast improvements to the infrastructure. etc, etc.

In parallel, Israel still has to play to the rules of coalitions politics. Thus, Yair Lapid, the Minister of Finance, needs to find the means to support other ministers, who belong to his political party. The education ministry is one such prime candidate for extra sums.

Given all these pressures, is there any spare fat? Actually yes. It is one of those open secrets that not even the whole of the Mossad can cover up.

First, the government should stop protecting the distributors of agricultural produce. For decades, middle men have thrived. They are accustomed to raking in large mark ups, while imports are tariffed out of the market. Who suffers? The consumers, who nedlessly pay thousands of extra shekels every year.

Second, the government should stop protecting public sector corporations, such as the electricity company and the post office. Both are bitterly overstaffed, and the former even allows employees free unlimited power. The latter has seen a fifty percent drop in direct profit in the three years to 2013.

Third, the government should stop empowering …… civil servants. I have several clients, who want to start importing but are smothered out by red tape. I know of a class unique European winery that has sales throughout the continent, but cannot find a way through the paperwork of Israel’s Ministry of Health. Hand in a product for testing to the Institute of Standards and you have to wait an amazingly long 12 weeks. As for any potential manufacturer of food or drink, it is an accepted fact that you have to start production and then seek necessary approvals – in other words, you have to break the law in order to succeed!

With little new to talk about re the Palestinians or Iran, news in Israel has focused this month on the price of basic goods. Why is it cheaper to buy a loaf of bread in England and why can an Israeli-made yogurt (Milky) cost less when purchased in central Berlin?

It is simple. As the case studies above reveal, it is all about vested interests.

Vested interests keep the prices of distribution in Israel high, to the detriment of the consumer. However, these same groups are often the backbone of some the country’s top politicians. Don’t believe me? Look how the tentacles of the port at Ashdod -management and unions – infect the police and local commercial interests, as importers and exporters pay out excessive rates. And why has somebody only just woken up that one trade union official and now member of the Kenesset has been on on-going official leave for the past 15 years?

It is expected of politicians that they enter the profession in order to change what is wrong. This is doubly true of an experienced Prime Minister. In Netanyahu, the country has an officer in the service of the public, who understands economics and has a honest record to protect.

So let’s ask the question: Is Netanyahu too scared of or too beholden towards the various power blocks? Or is he just so cut off and removed from his electorate that he remains content just to slurp his own Milky, whatever it has cost his housekeeping (paid for by the electorate)? Actions not meaningless rhetoric are what are demanded Mr Prime Minister.

The ‘needs and musts’ of building a brand message

3 October 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel

The arena of “brand psychology” is taking on greater and greater importance, and not just in the world of commerce. The fact is that many people associate the concept of branding with cosmetics and foods and banks and well-known international labels. Actually, the subject impacts far wider, including service industries, country promotion, shops, and even individuals repairing tarnished reputations on the internet.

One of the leading global experts is Jonathan Gabay, who has just led a fascinating seminar in Cyprus. The theme very much tied into an article in Forbes by Susan Genelius:

Consumers build brands, not companies. This is a fundamental marketing truth that cannot be denied. Consumers give brands value by developing perceptions and expectations for those brands. Companies enhance the value by delivering consistent brand experiences that consumers can trust.

As the author highlights: Although something may appear to be “needed”, that does not mean the consumer “must” buy it.

This consideration very much applies to companies that I have been working with recently in Jerusalem. For example, one biotech start up has patented a bewildering tech that is set to save thousands of lives globally. However, the environment of the market place may see the company being forced back into its laboratory space. Hospitals will somehow carry on as before. The finances and politics may determine an outcome that ‘wow’ or ‘nice to have’ do not add up to must buy.

The biotech team are thus being forced to evaluate their pitch in order to raise funds. For all the validation of the technology and how it services a clearly identifiable need, how can they justify their brand so that it can be seen as a winner? What will convince the minds of investors, so that they ‘must’ come on board?

This is just one quick case study out of many. What is does is highlight a growing problem for the seller. In a world of sophistication and rapid exchange of information, how can providers convince others that their brand is simple, genuine and effective?

Mobile to cyber – Israel to China

2 October 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel

Fact number one: It is no secret that Israel is a world leader in developing mobile apps. The Holyland always has a stong presence at the annual Barcelona conference.

And just look at the news in recent weeks:

  • TechCrunch has reported that IronSource has raised US$85m to distribute software in the American and Chinese markets.
  • Intel’s Israeli r&d is leading the high-tech giant into the mobile arena.
  • The newest Arab incubator in Israel will focus on mobile tech

Handy, Sodyo, Quando are many of the start ups featured at the Mobile 2015 in Tel Aviv yesterday. CallVU, with its strong menu application, picked up yet another award. The list of noteworthies is very extensive.

Fact number two: Utilising the country’s expertise in defense solutions, Israel has quickly become an accepted force in the burgeoning cyber industry. A classic success story is CyberArk and its unique laser-focused solution to protect ‘privileged accounts’. Recently listed on NASDAQ, it is arguably causing more of a splash than Alibaba. The share price has more than doubled.

And while the Chinese interest in the Israeli economy is growing daily, I was wondering how these tech advances would impact on the demonstrators in Hong Kong. Israel is an open democracy, surrounded by existential threats. China, which runs Hong Kong, is a dictatorship hat threatens its neighbours.

A link was provided yesterday by Lacoon, an Israeli cyber company. It uncovered how protesters have been sent a virus via WhatsApp. Known as Xsser, this steals messages and locations. The source has been linked to, but as yet unconfirmed, Chinese authorities.

Last week, the Wall Street Journal exposed the rapidly rising level of Chinese investment in Israeli high-tech. Let us hope that these sums do not infringe on basic human freedoms, even in the investor’s own back yard.

Gaza economy: Money flowing but to whom

1 October 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

By the time that Hamas and Israel had become locked in hostilities this summer, the boom had long gone out of Gaza’s economy. After two strong years, 2013 saw a 1.5% reduction in growth.

The basic facts are depressing:

  • Egypt has sealed its border shut, with not a hint of the tons of humanitarian aid that comes in via Israel every week.
  • Cleaning workers in hospitals are on strike, indicative of labour problems in the dominant public sector.
  • Thousands of people are trying to flee to abroad, a dangerous process which starts with an investment of around US$2,000.

From what is known, civil servants in Gaza have not been paid for three months. Danny Rubinstein, a leading Israeli commentator, claims that the money has arrived in the account of Abu Mazen from his Qatari sponsors. However, the Palestinian president has only paid for those workers in Ramallah, from where he rules.

It does beg the question as to what has happened to the rest of the cash?

A second issue of concern is what will happen at the donors’ conference, which is due to meet in Cairo next week. In order to rehouse hundreds of thousands and to create new commercial projects, billions of dollars are sought. Assumedly, much verbal emphasis will be invested in blaming Israel for border restrictions.  I believe that the average Palestinian deserves an answer to a more important question: Who is going to ensure that these vast quantities of financial largesse will be monitored transparently, so that the bottom line is a better Gaza?

  1. Hamas cannot be trusted. Last week, it even resorted to robbing The Bank of Palestine in order to finance immediate needs.
  2. UNRWA’s neutrality has also been severely compromised. The recent war showed that Hamas has abused UNRWA schooling facilities, where the teaching unions have become politicised and the buildings were used for launching Kassam rockets against Israeli civilians.

It is appropriate to recall here that back in December 2013, the European Court of Auditors admitted that it cannot vouch for where all the billions of Euro dollars in aid have disappeared to over the years.

In a month when the world is waking up to ISIS, Russia is squeezing out Ukrainian liberty and China is poised to crush thousands of students in Hong Kong, who cares? So what if a few billions goes missing in yet another impoverished part of the Middle East. After all, last month 500 Palestinians were drowned and the world’s media barely let forth a polite cough.

Hamas officials have been noticeably quiet about this horrific tragedy. Meanwhile, they must have made a relative fortune from this new-found export in human traffic. And that is the point. Huge sums continue to flow around for a select elite in Gaza, but it is not the truth that is swept up in the wash.

The dream of Israel’s miracle economy is……

29 September 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel

It seems that the Israeli economy will only grow by 2% in 2014, and by not much more in 2015. That is way down on the customary 3-4% figures that the Holy land has witnessed for much of the past decade. And it barely covers the increase in population.

Gloomy stats seem to be everywhere. Unemployment has risen from 5.9% to 6.4% in the past year. Exports have stagnated. Interest rates are approaching zero. The budget deficit is set to bulge to 3.4% next year. About the only thing driving growth is private consumption, and that too is faltering.

Israel’s success, led by high-tech and entrepreneurship and immigration, appears to have come to a painful halt. Has the light gone out of the dream?

Well not quite. It is known that if you want to see how so-called financial experts view the future, look at stock market movements. So there must be a reason that the Tel Aviv Exchange has risen 23% over the past 12 months to a new high.

Well one reason is the ‘economic miracle of Israel’s gas fields’. These are set to be a major game changer, pumping hundreds of billions of dollars into the economy over the next few decades. The revenues are set to fund a transformation of the country’s infrastructure.

A second factor is that Israeli society appears to have an ‘inbuilt dynamic’ that allows the country to adapt rapidly to the next high-tech phase. From internet to bio to mobiles to nano to clean, and now on to cyber tech. For example, this year, Israeli companies have shown that they are leaders in the new sector.

A final point to consider is the recent war with Hamas in Gaza. Yes, the military is demanding six billion shekels to replace stocks. And businesses in the south of the country were reporting a 30-40% drop in sales during the usually busy summer months. However, Israel’s economy has a consistent history in bouncing back after campaigns. This can be seen in the first reports that indicate how consumer spending has leaped over the period of the Jewish New Year.

So the news for global financial analysts is the Israel’s economy may be growing at a slower pace than in the past and the current budget discussion amongst bickering politicians may look very professional to an outsider. However, the fundamentals of the economy are not just secure. Israel is preparing for the next wave of commercial growth.

Entrepreneurship, the challenge, the religion

21 September 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel

I will never forget looking at some photos of a neighbour of mine. She was being swung around in midair by a giant crane. The smile on her face showed that she was having the time of his life. Scary? She was sitting next to her young kids, who could not have had a bigger thrill.

I thought she was mad. I would (could?) never do that, especially as I have to protect my heritage, as somebody who grew up in the middle classes of staid London. As for my subject, she is a very successful serial entrepreneur in Israel.

And this episode is what sums up one of the few themes that link such people all over the world. They challenge the barriers of normality that have been established by others, who often did not know better.

As I type, I recall that I may have already mentioned this anecdote in a previous blog. In any event, I was reminded about it recently by a picture going round Facebook at the moment and which had already released been by National Geographic. Just looking at this link gives me the creeps, but for others it is a relish of going beyond the acceptable. A real cliff edge of a montage.

When I mentor people, I frequently face up to those clients who ask “what else can I do”. My task is to make them realise that what may appear to them to be impossible can actually be achieved. It is doable via a complete rethink.

This week, Jews around the world celebrate their New Year. As with similar festivities in other religions, this is an event that combines joy with an opportunity to ask for forgiveness. It is a celebration that also demands from us to examine our responsibilities and to think out new approaches.

This may sound cute, but this festival is when all adults have a chance to become entrepreneurs (in our communities). We can learn to understand our individual challenges in life but with a thrill and a smile.

A blip and also three high-fives for Israeli economy

17 September 2014
No comments
Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

It is now official. Israel’s economy is growing at its slowest rate for five years. A 1.5% boost for the second quarter 2014 has been seen as a poor return, when analysts had been predicting a report of around 2.5%.

Compared to much of the OCED, this growth level seems very reasonable. However, the stat barely covers the growth in population. It also includes the boost from the new wealth of off-shore energy resources, implying that other sectors are performing poorly. Israelis are used to benefitting form 4% annually returns. So, is it all doom and gloom?

Well the answer is no. Let me point out three high-tech successes in recent weeks that indicate why the economy is very likely to see better days in 2015.

  • The startup Fitterli, a service that provides an online virtual changing room for shoppers, was announced as the winner of the Intel Business Challenge Europe 2014.
  • ReWalk Robotics RWLK that manufactures motorized wearable robotic exoskeletons which are used to help those who are paralyzed  from the waist down regain mobilityday, saw their shares more than double in days, following an IPO in America.
  • Israeli cyber solutions are seen amongst the leaders in an increasingly dynamic global market.

It cannot be an accident that three of Israel’s universities – Jerusalem, Tel Aviv and Haifa – have been placed amongst the world’s top two hundred establishments. This is how Israel builds its future – based on a greater understanding of new cultures and ethics – and this is what these three high tech examples are portraying to the wider  international community.

 

Taking a bite out of Israeli hightech

10 September 2014
No comments
Categories: Afternoon Tea in Jerusalem, Blog, Business, Israel

So after much prelaunch hype and speculation, Apple’s new iphone and watch has hit the market. Lots of cool new features for the geeks to swoon over. But where did they all come from?

The bottom line is that outside America, Apple’s largest r&d centre is in Israel, operating in the Holy Land since 2011. In fact from the beginning of 2014, the operations have been ramped up even further with an additional 12,500 sq meters in Herzylia, just past north Tel Aviv. We are probably talking of around 800 employees in total.

The importance of Israel to Apple can be seen in so many different ways. Co-founder, Steve Wozniak, paid a high-profile visit to the country during the midst of the recent war with Gaza. A sales center has been opened up. And Apple CEO, Tim Cook, met up with Prime Minister back in March this year.

As for the latest round of Apple goodies for its global clientele, well the Israeli brain will be right there, on everyone’s mobile and now even sitting on their wrist.  How so? Well Haifa-born Israeli-Arab Johny Srouji is now VP of Hardware Technologies. And it is widely understood that the Ra’anana plant has supplied much communications tech in the watch.

It certainly seems that Israel tech will have a welcome place in the homes and offices of billions around the globe.

Time to take BDS and Israel’s economy to a new level?

5 September 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

The movement to boycott, divest and sanction (BDS) the Israeli economy has recorded several triumphs in recent weeks. Protesters have tried to block Israeli ships docking in America and halt British purchases of military equipment. However, the truth is that apart from isolated case studies, the noise has yet to convert into any tangible negative impact on the Israeli economy.

So is it possible to take BDS to a new level, even with some help from the Israelis themselves? Consider for one bizarre moment what would happen if Israel was to embrace BDS, either because global opinion forced it to do so or out of some sort of revenge.

Well, one of the first acts is that Israel would no longer be allowed to support the shekel ‘overseas’ in places like Gaza, where it is the official currency. I assume that Gaza’s banks would default immediately and the savings of two million people would be wiped out overnight.

Similarly, Israel could no longer sell gas to Jordan, where vast swathes of the population are connected to core Palestinian history. As the Financial Times put it, the US$15 billion deal with Israel is supposed to ease an energy crunch for the Hashemite kingdom, whose economy is already struggling. Well, imagine who might control Jordan if there was to be a power struggle?

Within the Holy Land, Israel would be forced to cease investing in Arab vicinities. For example, earlier this week, the Jerusalem Municipality announced approval for “a new development plan for the Arab al-Sawahra neighborhood that will help bridge gaps in eastern Jerusalem. This will include the construction of 2,200 residential units and the addition of public spaces for the benefit of residents.” This, promoting the incubator in Nazareth, providing the infrastructure for the new Palestinian city of Rawabi and a slurry of other on-going investments in the Arab sector would move straight to the rubbish heap.

Israeli compliance with BDS would also impact on the medical sector. For example, 11 of the world’s leading innovations in wound care have emerged from Israel in the past few years. This includes the first aid item that saved the life of Congresswoman Gabriel Giffords, after she had been shot. Under such new rules, these capabilities would not be available to those who demand boycott compliance. (Similarly, neither would a US$7 stick that would control the whole of a computer’s operating system.)

As an economist, I know that my ‘theory’ has little practical substance. However, I believe that by turning the story of BDS on its head, I have drawn out the maliciousness of its basic premise.

Promoters of Israeli advocacy are eloquent at pointing out how Israeli tech can be found in Intel computers, mobile phones, water purification plants, bank security and much more. In other words, Israeli brain power improves the lives of billions around the globe at any given moment.

The logic of this argument is that champions of BDS know that they cannot truly invoke a full global boycott. Therefore, BDS is aimed at something far more sinister, which commences at the denigration of the Jewish State, and sinks into further sinister hatred. As Mick Davis argued in the British newspaper, the Daily Telegraph, BDS is another form of anti-semitism, dressed up in politically-correct Newspeak to make it look, feel and sound acceptable.

And how do we know that? Because, as explained here, BDS will hurt those very people it is designed (purportedly) to help. Thus, overriding anything else, the true prime aim of BDS is evidently the elimination of the Jewish State.

Game up for the Israeli economy, or maybe….?

29 August 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel

Israel’s economy has recorded an average annual growth rate of about 4% since the trough of 2002. So this week’s announcement that GDP had dipped to 1.7% – which after allowing for population changes means zero change in reality – is a real shocker. The concern has led the Bank of Israel to slice unexpectedly its interest rate down to a historic low of 0.25%.

Many analysts are questioning if the bubble has burst.

The Economist has focused on the damage caused by a strong shekel and its impact on exports. The BBC has examined how the war with Gaza is devastated parts of Israel’s blossoming tourism sector. There was always going to be a tremendous strain juggling the demands on the 2015 budget,  as the Minister of Finance is refusing to raise taxes (for now).

As one commentator surmised, Israel’s economic star may be waning.

The pressures are immense. The military needs money to replenish its arsenal and pay for the 80,000 reservists called up. The army is developing sophisticated yet expensive technologies to detect invasive tunnels as well to counter the rocket threat of Hizbollah in Lebanon. Add in the threat from the Syrian border and Iran, you have billions to find for defense needs alone.

This is just one facet. The mandarins of the treasury must fathom out rapidly how to relieve small businesses, whose cash flow has been knocked by the war. And there remain outstanding structural issues such reforms of the ports and the Electricity Corporation. Very challenging times.

Challenging, but not doom nor despair. As mentioned above, the economy will face these onslaughts from a position of strength, following a decade of polished performance. For example, foreign currency reserves are at a record high. Israel’s high-tech sector still attracts the attention of overseas investors. And Israel’s new-found  gas reserves are starting to pull in a staggering amount of revenue, including from Egypt. Even the shekel has depreciated about 4% against the dollar in the past month.

What this adds up to is a problem for the politicians. Evidently, the Gaza war exacerbated the issues of an economy that was already beginning to slow down. In parallel, the Israeli economy continues to demonstrate the signs that key fundamentals remain secure and in place. It is for the Prime Minister and his relevant cabinet colleagues to show professional skill in handling the fine balancing act when allocating budgetary resources, rather than caving in to the pressures of the obvious selfish interest groups around them.

That is a whole new campaign in itself.

How to make a presentation – HELP!

28 August 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel

For all the wonderful programmes like power point and emaze, it is incredible how many of us still sit through really bad presentations. Internal end-of-year reviews, appeals to investors, business plans and more – time after time we flop at them.

Over the past two weeks in Israel, I have read through business proposals and been asked to comment on logo designs. Although submitted by experienced commercial operatives, the submissions have been wide of the mark.

Very few of us reach the heights of Steve Jobs. About a year ago, I read somewhere of a CEO of a Californian start-up. Along with several others, he had been summoned to pitch to investors. The candidate in front of him was going overtime, and he garnered from outside the room that there had been a lot of smooth talking. Our CEO began to panic. He felt that he was about to forget all his lines that he had been rehearsing for days.

When his turn came up, he was in such a state that he found that all he could do was to throw his prototype on the table with no explanation. Amazingly, the hosts took an interest in the unusual object, and started to discus the product amongst themselves. Mr. CEO walked out with a healthy promise of support, having never given a formal presentation.

With hindsight, our hero had tapped into a key rule. When preparing your presentation – otherwise known as a marketing document – check out your audience beforehand. What are they looking for? What do they want to hear and in what format.

What the CEO only appreciated afterwards was he was meeting a group of people, who did not want to be lectured to. Nor did they want to hear another talk about “unique product, with mega market size and best team since the World Cup”. They wanted to be allowed to think for their arrogant selves.

As a follow up to the previous point, this is the key reason why many advocate that presentations slides should contain the minimal amount of words. Cluttered slides turn into a passive form of lecturing. It also detracts away from what you, the speaker, need to add.

My second key rule is to remember who is in charge of the presentation – you! It is not the person who has invited you to turn up.

Now this may sound surprising, especially to those who are nervous before such occasions. However, consider that the audience want to listen to you. They are looking for somewhere to place their support. They are dependent on you providing the right kind of information.

You, the presenter, are the one in control and you can allow yourself to wear that responsibility with pride as you enter the room.

(For further tips, I point you to an excellent article featuring Donna Griffit)

 

Can Israel’s economy stomach the fight with Hamas?

24 August 2014
No comments
Categories: Afternoon Tea in Jerusalem, Business, Israel

Israel barely has eight million citizens. For nearly seven days, it is created a defensive strategy based on short, sharp wars, as it’s army is dependent on the manpower of reservists. So, how can it continue to support a war with Hamas that has been continuing for over a month?

The truth is that economic growth was already slowing down in the first half of 2014. The second quarter revealed GDP rising by only 1.7%, barely in line with population change. Import and export figures are also pointing towards a reduction of economic activity. Clients of mine in Jerusalem have been disclosing lower sales since the winter.

And then the war comes along. How will this impact on the economy?

“Israel’s central bank made comments to the effect that 0.5% may be shaved off the economic growth forecast for the year.” I read of an estimate that a billion or two shekels (say US$0.35 – 0.7b) could be lost in revenues to the government. Businesses in the south of the country near Gaza have reported a 40% downturn in activity. Maybe most importantly but lost amongst the number crunching, reservists will not be able to run, operate and service their own small enterprises.

So can we expect a further knock on the GDP figures? In the short term, absolutely. There again, many analysts have recalled that after previous such military operations in Gaza and in Lebanon over the past 15 years, the economy rebounded back very quickly and into much stronger positions. It is certainly fair to say for now that the economy has demonstrated resilience. Note that foreign direct investment from the likes of GoDaddy continues to turn up.

There is much empirical evidence why Israel’s economy is likely to be a key position for global investors after the guns have ceased shouting at Hamas leaders. “Many of Israel’s most amazing contributions to the world – from the DiskOnKey to the PillCam –result from its existential need for innovation in the military.”

And this conflict is no different. For example, until July 2014, the Iron Dome system against short range rockets had not sold one unit overseas. The interest has been so great in the past month that visiting defense officials have literally been able to watch it function in real-time. And consider the start-up eVigilio, whose 35 workers have developed an application that can warn entire populations about incoming threats within seconds. This can apply to Kassam missiles in Israel, as well as earthquakes in California or erupting volcanos in Iceland.

So where to now? During the fighting, an exciting conference took place 10 days ago in Jerusalem, often considered a backwater for innovation. The Jerusalem Business Networking Forum bestowed awards on outstanding Jerusalem-based startups Brainsway, Glide, Revelator, Freightos and Abe’s Market. The message is clear. The overall Israeli economy may dip briefly, but it will be back and better than before.
Client Feedback

"Michael transformed the way I think and approach working, and also how to monetize my social media and communal projects."

CEO of digital media company

"Michael helped my high tech company take off."

CEO of clean energy start up

"Michael has been an invaluable resource to me throughout all of the steps of starting up my business."

Art Studio owner

“Working with Michael Horesh is like having root canal treatment, marriage counselling and business coaching all rolled into one, successfully.”

CEO of digital media company
CEO of clean energy start up
Art Studio owner