Pages

Israel’s hightech gimmick – everybody wants a piece

6 November 2012
No comments
Categories: Business, Israel, Jerusalem

Steve Ballmer, the CEO of Microsoft, was asked yesterday afternoon in Tel Aviv if Israel is a second Silicon Valley. He responded that you cannot replicate the valley, “but the second hottest place for start ups is Tel Aviv….In Israel there is an incredible amount of innovation….”

Ballmer’s visit has been posted all over the local press. He brought Xbox 360 to Israel. He launched a strategic partnership with the government. Ballmer stressed that Israel has “the highest number of Microsoft workers per capita of any place on earth.” And this videolink shows, Microsoft’s r&d centre in Israel is no stranger to entrepreneurship and new technologies, which end up on the global markets.

Ballmer issued a plethora of positive quotes about Israel, which were probably posted straight to twitter. And it is not just that Siemens, IBM, Intel et al also have a large tech presence in Israel.  By the way, last week EMC announced that it did not want to be left out of the picture.

The point is that at any given month, you will discover several Israeli start ups that have just raised more money for some new whizz software or hardware. To take some of this week’s findings, digital marketing software developer Kenshoo Ltd. has secured $12 million. And mobile internet company Saguna Networks Ltd. has raised $3 million in a financing round led by an international communications equipment supplier.

Back in the mid 1980s, Israel began to abandon an economy based on tariffs and the public sector. While elements of centralisation remain, there is no doubt that the Holy Land has witnessed a modern day commercial miracle. The proof of this is by judging how many other countries are now trying to copy the same act.

Portugal has signed a cooperation agreement with Jerusalem over Cleantech. The President of Bulgaria was in Israel last month to set up the groundwork for a similar arrangement.  The Foreign Ministry has launched a joint project with the China Association for Science and Technology. And the UK’s ambassador in Tel Aviv has already promoted several hub initiatives during his stay. In fact one of my clients has been invited to a networking invent tomorrow, hosted by the Brisih embassy.

Does the hightech gimmick work? Israel is set to achieve growth in 2012 and again in 2013 of around 3%. Not many in the OECD can claim such a statistic.

Election economics in Israel (2)

3 October 2012
2 Comments
Categories: Business, Israel, Jerusalem

It is  nearly a month since I raised the hypothesis that a general election campaign could herald an unexpected benefit to Israel’s economy. Simply put, the law of the land will force the government to enact a temporary budget for early 2013. As this must be based on the 2012 budget, opportunities for unnecessary spending will be limited.

A month later, an amazingly long time in Israeli politics, and itis near certain that the country is heading for an election around February 2013. Ostensibly, the issue is that the Prime Minister, Netanyahu, and his Defense Minister, Barak, have fallen out with each other. Maybe. Theirs was always a love of convenience.

It could be argued that Netanyahu wants to pull the country behind him, as he has to reach crucial decisions over Iran. Very Churchill-like, but not very convincing.

The truth is that Netanyahu’s problem has been around for months and his elastoplast of spin is failing to cover up a bigger and bigger wound. The government has a major hole in its finances. The only way to grab control of the debt is to attack the very issues that are sensitive to his coalition partners. To be specific:

  • Barak, a former commander-in-chief, wants to add billions to his defense budget. Meanwhile, the treasury is demanding a cut of up to 4 billion shekels or US$1 billion.
  • The ultra-orthodox parties, known as a large family sector, are fanatical defenders of the high child benefits. Netanyahu has always been seen as their patron. However, now the  treasury is looking to cut around 20% or 2 billion shekels of these handouts
  • Without explaining here the historical irony, the core in the party of Netanyahu’s central committee, comes from the public sector. The treasury is hoping to cut wages and jobs by 4 billion shekels.

If you have not got it, there are two issues. First, Netanyahu probably does not have enough Parliamentary support for a tough budget. Second, rather than make the challenging economic decisions now, Netanyahu is playing politics with the one aspect of his political life where he has achieved outstanding success; finance and commerce. He is doing what he does best – nothing, delaying, putting off the inevitable and thus hoping something will come up that will allow him to get beyond the electoral process, while risking economic failure.

Today’s newspapers show that exports to Europe dropped 21% in July – August 2013 compared to 2012. VAT may have to go up 1% in January 2013, in addition to last month’s increase. Unemployment is on the rise. An editorial in the Jerusalem Post newspaper correctly argues that:

The downside of calling early elections is that  there will be no new fiscal budget prepared for the first months of 2013.  Instead, the 2012 budget will remain in effect without the necessary adjustments  made for population growth and inflation. And none of the pressing economic  issues will be addressed. A proper 2013 budget will probably not be in place  until May or June.

True, but there is also an upside. Similar to the previous elections after the global crisis in 2008, the government in Jerusalem will find it very difficult to spend its way to election victory. Yes, the existing budgetary gaps will remain, but they should not become more exaggerated through additional fiscal negligence. How the experts at the Bank of Israel will respond to this irresponsibility will be interesting to observe.

Branding – being noticed: The Jerusalem Formula

5 September 2012
2 Comments
Categories: Business, Israel, Jerusalem

“How do I generate a word-of-mouth” campaign” is the question that I am often asked. As a business mentor, you are expected to be able to conjure up some magic formula; straight out of your pocket, mixed with a couple of flash phrases re twitter or facebook, and wrapped with an encouraging smile that implies how easy it all is.

It can be, certainly. If you are a large company, you have extensive resources to create really clever campaigns. This video clip for Carlton beer in Australia went viral before it was even shown on TV. However, over 90% of businesses in the world barely have 1oo somethings of local currency to spend on advertising in any one year. And it was this very issue that the Jerusalem Business Networking Forum addressed last night.

Around 170 people registered to learn how to expand your network and to take part in “speed dating sessions”. For now, I want to concentrate on the three speakers; Itay Paz, Naomi Elbinger and Nurit Agamy, all experts in how enabling people to ‘get their message across’. Taking the key point from each one, I formulated a very powerful package for those wishing to be noticed and to be talked about.

Stage One:

The title of Itay’s talk said it all: Stand up or stand out. He asked for a volunteer, who was instructed to pick randomly sonebody the volunteer himself would like to meet. Subconciously, the person chose an individual sitting not too far away. Itay then asked for the audience to stand up. The same request was made. A different individual was picked out, who again was situated near the volunteer.

At this point Itay asked his listeners a very simple question. Why had nobody bothered to stand on a chair in order to be seen better? After all, the people at the back had no chance. To rephrase: what is that bit extra that you are prepared to do in order to separate you from your competitors?

Stage Two:

Naomi commented on people’s elevator pitch, that 15 second introductory blurb about yourself that you can whip out just as you are about to start a short ride in the lift with the person you most want to meet. Only, Naomi described this as an “elevator peach”. Make it juicy enough for the listener to like and also to crave for more. And how phrase your fruity words?

Well Naomi provides a template: If you Mr or Mrs Listener have a business that suffers from XXXXX, then I provide YYYY of a service that will guide your sales or production or workflow to an improvement of 1000% in 5 years. The point is to ensure that the listener asks you to continue speaking for longer than a quarter of one minute.

Stage Three:

Nurit said something that was simple and made complete sense. “Brand yourself before others brand you”. Take control of your environment so that everyone knows who you are, even before you arrive at your destination. After all, in these days of social media, many of us should not to be relying on a business card. (For the record, she has none printed up.)

Bottom line: If you want people to talk about yourself and your product, you have to work hard to earn that right. You have to ensure that you are one step ahead of the crowd. You cannot hide behind technology or catchy buzz words, hoping for the best.

And by way of a giveaway, here’s a great blog, which gives three further examples of how some of the larger companies have been adjusting their approach to branding in 2012.

Israel tech takeaways – where Cisco leads….

22 June 2012
No comments
Categories: Business, Israel, Jerusalem

Earlier this week, I wrote how I am bewildered how Israel, a nation of less than 8 million people, continues to hold such an important position in the global tech revolution of the past two decades. 

I listed five stories that I had come across in the past few days. However, I did not realise that I was only just scratching the top of a very large iceberg. The comments of John Chambers, CEO of Cisco and visiting Jerusalem this week, put this into perspective.

There are a lot of opportunities here. It’s the second country, after the US, in terms of start-ups and entrepreneurship. There are companies here that do not grow enough, and what we do is to bring these companies into the Cisco family and grow their activity. I don’t think that there is a better time to invest here, in partnerships, venture capital and help our partners expand.

Chambers is specifically looking for partnerships between Jews and non-Jews. And where he leads, others are right behind him. CA from California has committed itself to setting up an innovation centre with Tel Aviv University. “The new center will focus on enterprise computer infrastructure management and cyber security. CA did not disclose details about the planned investment in the center, but it will reportedly total several million dollars.”

 And for specific successes of the week, let’s start with Flash Networks from Herzylia, just north of Tel Aviv. The company was named co-winner of the prestigious Global Telecoms Business Innovation Award for Mobile Content and Services Innovation.

Second, LucidLogix is reported to be providing support to millions of global game users via its partnership with Intel on motherboards.

Third, Orad Hi-Tec offers video servers, which are cheap and effective solutions for all the video cassettes stored in TV station warehouses. It is exceeding helpful when TV stations need quick and ready access to old sporting tapes. Bottom line is that the company has become Israel’s main rep at the 2012 European Football Championships, as several large organisations like the BBC use their services.

A country of 8 million people? A country surrounded by geopolitical issues? A government that can barely run the fire brigade? Israel’s youthful private sector has found a method to get around these restrictions.

Can Israel’s economy weather the Euro crisis?

3 June 2012
2 Comments
Categories: Business, Israel, Jerusalem

Proctor & Gamble believe that Israel is a premier “start up nation”. After all, “Israel is the biggest destination for global venture capital per capita“. In parallel, the recent discovery of commercial gas reserves means that :

Israel could meet its own electricity needs in the future and possibly become a net exporter to a gas-thirsty region. This would bring economic and political benefits as well as regional clout at a time when Israel’s regional standing is more uncertain than it has been for decades.

Israel’s economy is due to grow at around 3% in 2012. Unemployment is still falling, for now. Tourism figures continue to soar. All is rosy. And yet…..

The mandarins in the Bank of Israel and the Finance Ministry, who sit less than half a mile away from each other in Jerusalem, have known for over a year that they cannot ignore the fallout from Greece, Spain et al. While Israel’s banking exposure to these countries has always been minimal, around a third of the country’s trade involves the Euro zone and the UK.

For some analysts the credit crunch has already arrived. Yes, the Bank of Israel is demanding higher capital adequacy ratios. some of my clients are finding bank managers less receptive than in the past.

And today’s newspapers are full of rumours of higher VAT and corporation tax to be imposed as early as mid 2012. This will be combined with cuts in budgets of the public sector.

On the one hand this is not an encouraging scenario. However, there are two takeaways that should give the local decision makers a lot of hope.

First, if Europe does try to infect her neighbours with its cold, then Israel can face the attack from a position of strength. Second, by taking preparatory measures now to ensure that the Euro problem can we weathered, Israel will be able to use its new raw materials to generate greater economic wealth in the future.

Quack technology from Israel

1 June 2012
No comments
Categories: Business, Israel, Jerusalem

Israel has gained a deserved reputation as the “silicon valley of the Middle East”. Just how much Israeli innovation now enters the homes of peoples around the globe is not possible to assess precisely.

That said, the list of commercial breakthroughs reported just this week ensures that with this knowhow, the world is better off. Here are five examples.

Let’s start with a very simple idea; bringing a pop-up educational book for pre-school kids to the TV  screen. Nickelodeon has purchased over 50 episodes of “Quick, Quack, Duck”, conceived by a small team of graphic artists just outside Tel Aviv. It should be no surprise that one of Jerusalem’s largest hightech incubators is new media centric.

Facebook’s pounce for Face.com, valued at close to US$100m, has been twittered to bits. What many have missed is that Shutterfly, a leading internet personal publishing service, has acquired Photoccino from Haifa for around US$20m. As the press release notes, the synergy between the companies will allow customers “to more efficiently organize and select the best photos from their ever-increasing archives so they can quickly and easily create photo books, calendars, cards, and photo gifts.”

Richard Branson is never one to miss an opportunity. He is partnering Strauss, arguably Israel’s largest food conglomerate. Together, they intend to sell water purifiers to the domestic market, initially in the UK. This is an environmentally friendly solution for making cups of tea or handing out cold drinks.

And we cannot ignore the cosmetics market. ICG ventures has barely 15 fulltime members of staff, with an HQ in Tel Aviv and offices in Shanghai and in New York. For all that, since starting out in 2005, the company has sold over 5 million units globally of its compact cosmetic units. With annual sales of around US$25m and boasting Sephora as a leading client, many more women are going to benefit from their products over the next few years.

Life Sciences, Israel, Biotech – what’s the link?

30 May 2012
No comments
Categories: Business, Israel, Jerusalem

Three headlines from Israel’s financial press in the past week: –

There are plenty more stories like that out there. Bottom line, the Israeli life science and biotech industry is thriving, consistently achieving medical and commercial breakthroughs.

It should be no surprise that the annual Biomed conference, which took place last week in Tel Aviv was quite awesome. By taking a rather arbitrary measure of noise and buzz, it was way up on the previous year. And the reasons speak for themselves.

  1. Israel prides itself with over 700 active companies in the field, 6th in the Euro league
  2. Israel ranks second globally in bio-pharma patents per caipta.
  3. Teva, Jerusalem, is the 15th largest pharma in the world and largest generic manufacturer.
  4. The country is a pioneer and leader in cell therapy.
  5. Aside from Burrill, Clal and Orbimed have major new investment funds in the pipeline.

 I am personally acquainted with a story of one senior overseas exec, who visited the Holy Land for the first time during Biomed. To paraphrase what he said: you can read all you want about Israel being a start up nation and being the Silicon Valley of the Middle East. However, when you actually see the activity unfold before your eyes, you know that you have to engage hands-on.

Why Jerusalem is attracting heavy biomed attention

25 May 2012
No comments
Categories: Business, Israel, Jerusalem

Burrill & Company is arguably the largest biotech investment fund in the world. The recent announcement of a new Israel-centric fund, which is to be based in Jerusalem, has caught the attention of many.

It is not just that the fund will be capitalised at over US$200 million. As one exec from a major American biotech company said this week on visiting Israel for the first time: “I just had no idea what existed out here.”.

Burrill has raised over US$1.4 billion in the past 14 years. Its teams reviews over 100 business plans in an average month, of which barely 1% make it through to investment stage. Today, the emphasis is on the 3P concept in medicine; personalised, predictive and preventative.

Yet for all that, why Jerusalem?

The answer was “revealed” last night at a meeting of the Jerusalem Business Networking Forum (JBNF). Graciously hosted by the Jerusalem municipality in the council chamber, participants heard from two keynote speakers; Mayor Nir Barkat and Jeffrey Miller, who is a special advisor to the Burrill fund.

Barkat was ably backed by other council members (Naomi Tsur and Yitzik Pindrus) and the biz dev teams of Chen Levin and Avi Salman from the Jerusalem Development Authority. As they explained, Jerusalem has barely 800,000 residents. Its main industry has often been tourism, already 44% in 2012 despite the European recession. This holy City most represents the geopolitical problems of the country.

And yet, it is the home of Teva, one of the largest manufacturer of generic drugs in the world. It boasts five leading academic campuses. There are over 130 known biotech companies in the region. Walk into the tiny labs of Hadassah and you can almost literally see IP being created before your eyes.

And that’s what Burrill himself has long recognised. As Miller was ably to tell his audience,  setting up the fund was a natural fit for Burrill. Simply look at Intel with its massive r&d plant in north Jerusalem and one can see what talent the city contains. While the politicians and the world media are focused on front page headlines, local citizens of all backgrounds are looking to change the world as I write.

It is almost 2,000 years since cartographers regularly placed Jerusalem at the centre of their maps. Maybe they were predicting something that the Burrills of our era have learnt to recognise. Who will be next to join them?

Jerusalem Syndrome 2012

18 May 2012
No comments
Categories: Israel, Jerusalem

There is a Mosque, Church and Synagogue all under the same roof. It sounds like the opening line of a politically incorrect joke. In fact, it is a description of the building, where the tomb of the biblical prophet, Samuel, is located.

The site, known locally as Nebi Samuel, can be found just outside north Jerusalem. Nearby are a few homes belonging to people of the three faiths. The tourist kiosk is run by a moslem under supervised by a well-known rabbi from Bnei Barak. The Israeli army used to have a small base on the premises – the highest point in the Jerusalem area – but it was removed some time back.

Down the road in Givon, so to speak, archeologists believe that the “Ark” was rested by the Children of Israel, as they approached from Jericho. More recently, the building of the tomb,  has witnessed battles in 1948 and 1967. When I visted there last month, a large busload of pilgrims pulled up.

Welcome to Jerusalem 2012.

For thousands of years, Jerusalem has attracted them all. It was the crusaders who first made Nebi Samuel a holy place. Simon Sebag’s Montefiore, a biography of Jerusalem, eloquently describes how Roman princesses, wandering Jews, and more recently refugees from Sudan, all have seen Jerusalem as a haven, a place they must be.

Look up the Jerusalem Syndrome on the internet, and there are those who try to explain it as a medical phenomenon. Something mystical seems to enter the soul and draws people forth. There are even a few rabbis, who insist that their followers must ask for permission before leaving the holy city.

As for me, Jerusalem Syndrome is also the name of a cultural festival taking place this week in the heart of the city. Music, raconteurs, farmers’ fair, arts and crafts – it was a great atmosphere wandering around the back streets late last night. Carefree and open to all.

This coming Sunday, Israel officially commemorates the reunification of Jerusalem during the 1967 war. Be it in Nebi Samuel or in the heart of the city centre, the city will be packed with all-comers. That is a something to be proud of and to celebrate. This is a syndrome that can be a role model for others to copy around the world.

Is there a DNA to the successful entrepreneur? A holy case study

27 April 2012
No comments
Categories: Business, Israel, Jerusalem

The internet is plastered with items on how to be a “successful entrepreneur”.

After a brief thought, it is a bit of a silly statement. What categorises somebody a success?

  • That they survive?
  • That they generate a certain level of sales within a year or five years?
  • That they become a chain of outlets?
  • That they commence operations outside their home territory?

When I talk to many people just starting out, they rarely have such a defined vision. They are merely looking to get past the next financial crisis.

This week, my eye caught two interesting articles, which gave a perspective on how to judge success. The background is that Israel has just celebrated its 64th birthday and the country’s press is full of “well done” type items.

The first piece asked each of ten well known local personalities to name a person, whom they most respected, mainly for their contributions to commerce. The final list was ten people or heads of companies, who had taken a long hard road to establish themselves. Fairly obvious stuff.

What impressed me far more was a report from the holy city of Jerusalem. Six separate businesses were identified, where each one had been founded by somebody under the age of thirty years old: –

  • a gym
  • real estate school
  • an internet site to connect parents with private teachers
  • a specialist packaging operation
  • an event planner
  • a baby products distributor

That is a varied list. The owners come from all parts of society. Some had already been working. Some had a degree. Some had a small amount of private capital to start with. Yet there is no single obvious common denominator.

Let’s go back to what I wrote about Ronen Nimni, who by the age of 15 had worked out that he possessed something “extra” in the commercial world. 35 years later, he has progressed from selling pictures door-to-door and now owns several restaurant chains in Israel. Not too much formal education in Nimni’s story.

The point being that Nimni understood that he had a talent and went out to discover a way how to exploit it. He believed in himself. And that same theme comes out in the story of the people above. 

This week, I had my second meeting with the owner of a new pizza parlour, also a man still in his 20s and resident in Jerusalem. He has a clear vision for his business and he wants to take it to a chain of a few premises within 3-5 years. That is his target, because he does not feel that he has the ability to go further.

I urged my pizzaman not to let his brain to be the restriction on his talents. The mental process should be the methodology which creates an outlet for our human skills and thus towards new achievements.

Why do Israelis get so hung up about their Independence Day?

26 April 2012
1 Comment
Categories: Israel, Jerusalem

Israelis are often seen as emotional humans. Like the indigenous fruit to the country, sabra, they may be soft and sweet inside, but outwardly they can be very prickly.

Just look at events in Israel during the Spring. Today, Thursday, the nation is celebrating 64 years of its independence. Only yesterday, it was Memorial Day to commercorate those that had fallen in the wars since 1948. And last week the country honoured Holocaust Day in the name of the six million who perished during World War Two.

There are many ways to connect all the events. For example, as one local rabbi observed, the numbers killed in the wars is now close to 24,000, which is approximately how many were gassed each day in Auschwitz. With all those mixed and raw emotions running lose and in such a tight period of time, who would not become a tough overwrought?

Even so, the problem remains how to explain the importance of Independence to non-Israelis. Naturally, you can recall stories of wars and of persecutions from the past. You can point out the existential threats, like Iran, of the present. However, these are negative in context.

You can refer to the spin of Israel being the only country in the Middle East, where the Christian community is growing in size. Where else can a woman become a Prime Minister or head of the Supreme Court? And how many other countries that have gained independence since 1948 have then remained so pluralistic and democratic, and that is despite the on-going geopolitical issues?

But again, while these make for great explanations, there is something more basic in the works. It is the rare, fundamental and engaging beauty of the country, a transformation that is unique to Israel and makes the country a pleasure to live in. 

How to describe it? Let’s start with 21C, a great website, which shows Israel “beyond the conflicts”. Be it hightech or swimwear or special integration techniques, Israel seems to offer it. But still, I am looking for something more.

I somewhat found the answer in a small but growing blog called “the Real Jerusalem Streets“. In many ways, the blog is describing ordinary life in yet another city in the world. However, it is not just the site’s great photography that brings matters home to you through your screen. The reader is offered an opportunity to reach out at the buzz going in the country, the very hype which makes this such a wonderfully varied and dynamic place for all to live in.

It’s the noise, the creativity, the dynamism, the building of the proverbial next step. That is why Israelis love their Independence Day and also want the rest of the world to have a little share in their moment of joy.

Angels, investments and miracles – take 2

7 April 2012
No comments
Categories: Business, Israel, Jerusalem

A couple of weeks back, I wrote about Israel’s new “Angel law” to promote investment in seed-stage companies by private individuals. Great idea, although the launch seems to be full of bureaucratic bugs, reminiscent of a computer programme that should not have passed quality control.

Interestingly enough, Paul Green, an IIB colleague, has just blogged about a similar proposal from the UK. On the surface, it fortunately appears to avoid many of the tangles, which the mandarins of Jerusalem have seen fit to insert.

That said, you have to wonder just why Israel needs such a law. IVC is a resource centre, located just outside Tel Aviv, and records much of Israel’s high-tech activity. It’s March newsletter reveals a phenomenal array of investment news. Just listing a few items at random: –

  • Video advertising management and optimization technology company HIRO Media has announced that it has closed a $5 million funding round.
  • Dragonplay Ltd. has raised $14 million in its first financing round led by Accel Partners, and joined Founder Collective and Entrée Capital.
  • Android apps ad company StartApp Ltd. has raised a further $4.3 million from Ascent Partners and Cedar Fun.
  • Mobile website developer DudaMobile Ltd. has raised $6 million from Pitango Venture Capital.

All very positive and encouraging, and the newsletter is much longer and more detailed. However, you cannot ignore the fact that there is a need for an angel law. There is still a lot of innovative commercial activity taking place in the Holy Land, which is not being matched by the money available in private pockets – and I myself can vouch for several stunning projects deprived of resources.

The Israeli Ministries of Finance and Industry should be congratulated for taking a proactive approach in trying to bring the two sides together. However, they have yet to appreciate the benefits of the boring style of the Brits.

That is to say that as the civil servants try to control all aspects of commerce and then demand that profits are only achieved in set or limited ways, the results are liable to be very disappointing. There will be more chat and printed legislative paper rather than cheques being transferred between bank accounts. In the end, the Israeli companies cited above are in danger of being the exceptions to the rule.

1 start up – $10m sales – 1billion valuation: Possible?

4 April 2012
No comments
Categories: Business, Israel, Jerusalem

Most people have never heard of Mobileye, a Jerusalem company specializing in Advanced driver Assisted Systems, yet some forecasts predict a value of more than one billion dollars for it, marking yet another stunning Israeli success story.

Thus wrote one of Israel’s leading economic newspapers this week, “The Calcalist“.

Mobileye appears to be living the dream of many an entrepreneur. It was started back in 1998 by a relatively unknown Jerusalem university professor, Amnon Sha’ashua. Although the r&d section of the company is located in a hightech zone relatively nearby, many of the 200 employees can be found in offices overseas; Holland, Cyprus, Japan and the USA.

What’s so special? Well Mobileye has a developed a system that will assist drivers in avoiding car crashes. It’s Advanced Warning System (AWS) has already allowed the company to lock in future contracts with an impressive list of manufacturing giants: Peugeot, Citroen, BMW, Volvo, GM, Ford, Honda and several more.

The immediate financial figures do not make for impressive reading. Sales of around barely US$10m for a quarter. Negative financial cash flow in 2012. However, 2013 onwards should see healthy bonuses and dividends for all concerned.

Mobileye will probably need a further round of investment to secure a global marketing platform. That consideration immediately raises the question of company valuation. For the moment, depending on who you ask, the estimates vary. That said, one quote comfortably tops the US$1 billion mark.

That must be a very cool feeling for a specific enterprising university lecturer.

Start-ups and society; Jerusalem’s investor case study

23 March 2012
No comments
Categories: Business, Israel, Jerusalem

The incubator model for creating growth in young companies is simple and can be very effective.

Build a hub of similar companies. Take a large chunk of equity. Provide them with logistical and financial support. Then sell them off a.s.a.p. for as much as possible.  Get a few deals wrong along the way, but when it goes right, you hit the jackpot. Simple!

Israel has over 20 incubators, one of the first country’s to pioneer the idea. Many were initially set up via a government initiative, although they have since been privatised. One of the more successful one is JVP, Jerusalem Venture Partners, which occupies premises that formally belonged to the mint of the central bank. (Ironic?)

JVP was originally set up by Dr Erel Margalit around 20 years ago. He had previously worked for the legendary mayor of Jerusalem, Teddy Kollek, driving high tech and conferences into a city whose main export up to that point in time had been religion .

Margalit tells a fascinating story, beginning with an initial daunting overdraft. Banks practically laughed when he asked for support for his “new children” that would create software codes or other intagibles not in known established curriculae.

Today, JVP’s website relates of companies like Chromatis, Precise, Cogent and others, whose positions have been valued at over US$1 billion. JVP considers itself a media center, where there is a heavy emphasis on young companies, usually providing content. A simple example are their start-ups in the field of animation, who are currently in discussions with Hollywood studios.

What makes JVC different from other incubators is its vision and its value system. As Margalit stated this week: “The new master is the individual…..To meet the individual, you need creativity”. And Margalit does that on two separate yet connected levels.

First, JVP looks for a long-term relationship with its clients. While many entrepreneurs are often looking for a quick exit to get some money back for their efforts, Margalit’s team keeps to a broader picture. Experience dictates that the big profits are located that bit further down the commercial road – to be attained and realised with patience and continuous evolvement.

Second, and in parallel, Maragalit looks at the community. For example, JVP invests in schools – religious and secular, Jewish and non-Jewish – specifically targeting early teenagers on the edge. JVP has sunk resources into the performing arts. And just for variety, the incubator is involved in programmes for community leadership. The link? Again, it is all about promoting individual development and initiative.

The point being that a successful incubator cannot exist in a social vacuum. When will others learn?

POSTSCRIPT: This week, the Bank of Israel published figures that for the first decade of this century, the income of the average Israeli household rose by 10%. GDP person rose by 12%. However, the income of the poorest households only climbed 4%. Now what would Dr Margalit have to say about that?

Angels, investments, and a holy land of “financial miracles”?

18 March 2012
2 Comments
Categories: Business, Israel, Jerusalem

Angel investors are viewed as private individuals who look for financial opportunities, often in high-tech startups. And for the past two decades, the Israeli economy has seen spectacular growth, particularly as a result of its role in the fourth industrial revolution of telecoms.

So has the phrase “the Holy Land” taken on a new commercial meaning? Would it not be plain boring for entrepreneurs if all they had to do was to lift a rod or raise a hand? Even in Israel, an angels do not just appear, offering a million or two in cash.

Cute thought. However, Israel’s Ministry of Finance in Jerusalem in partnership with the Office of the Chief Scientist have come up with a more modern solution to financing new outfits, be they in biotech, new media or cleantech. Conveniently nicknamed “the Angel Law”, the aim is to encourage local investors to put their money early into companies at “seed stage”.

The tax break was recently outlined by David Krisman, KPMG Jerusalem, at a recent meeting of the Jerusalem Business Networking Forum. To put it simply, when an Israeli taxpayer invests up to around US$1.3 m per Israeli R&D company, they will be entitled to a deduction from taxable income, which can be spread out over 3 years.

The new regulations have only recently come into play. Investors, accountants and lawyers are already  crying “oi vay”, as the bureaucrats have wrapped the regulations in…well red tape and double talk. Simple, it ain’t for now.

That said, in an epoch when countries are looking for innovative ways to put money back into their economies, this is definitely a different and positive approach. A miracle it may not be, be it certainly kindles hope for enterprising new companies, creating employment opportunities and creating new wealth.

A Kenyan, Italian and Hungarian in Jerusalem

17 March 2012
No comments
Categories: Jerusalem

My youngest son took part in the 2012 Jerusalem marathon. OK, so he only completed the 10km route, as opposed to the full 42.2 km, but he did it.

This year’s race was billed as “Breathtaking”. Official blurb refers to “the race of nations”.

All I can tell you is that I braved the rain and strong winds to go and cheer on my son at the finish line. It was fascinating to see the people who had come from all over the world to take part. Italy seemed to have a several representatives. I heard Hungary’s name being called out. And of course, Israel has a large number of people these days, who were born in Ethiopia, and they were amongst the leading packs.

The winner hails from Kenya. The time of 2 hours and 19 minutes may not have been close to a world record. There again, Jerusalem is known to be built on 7 hills, and the runners came face to face with several of them as they jogged around the Old City, ending up near the Kenesset, Israel’s Parliament. 

Jews have a phrase – “Next Year in Jerusalem”. I am sure that the 2013 Jerusalem Marathon will be even better.

5 economic highlights from Israel

20 January 2012
2 Comments
Categories: Business, Israel, Jerusalem

Is there another Israel? As befits its knickname, is there an Israel full of promising ideas and hopes?

Mid January 2012, and the news out of the Holy Land may read like the normal cheerless doom in the international media; Iran’s nuclear threat, the EU complaining that Israel abusing Palestinians, and an increasing focus on the negative issues raised by ultra-orthodox Jews.

So here are 5 economic and social items that you may not have heard about, and yet many  of these stories are literally changing the habits of millions around the world.

Take Any. DO, and Israeli start up which was recently voted the best Android app of 2011 by Techcrunch. Writing as a business mentor who is frequently confronted by clients that cannot mange their own time, I consider this a brilliantly simple solution. The company has a one page website, but the number of downloads breached the million mark a long time back.

Now have a look at what GM is developing in Israel. Imagine that the windows of the passengers seats could be used as a note pad! It’s fun time. Kids will never scream again “when are we there?”…except for the one in the middle, who cannot reach one of the screens. The link clicks to an amazing video.

Kodak International is facing massive financial difficulties. Kodak in Israel does not expect (officially) to fire anybody nor reduce its activities. While this may be partial wishful thinking, this line of thought reflects the key strengths of the domestic hightech industry; an excellent workforce that produices quality products.

This week, I attended a lecture from Moty Hazan, the CEO of Jerusalem’s Development Authority. Now it is no secret that the terrorism of the previous decade hit hard the commercial growth of this special city. Today, despite the global downturn, Jerusalem benefits from record levels of tourism – around 3m visitors a year, destined to peak at 10m within another 5 years – and a dozen international conferences, when there where none during the violence.

And despite the dire economic news from Europe, Israel’s economy is still performing relatively well. Unemployment has fallen to a record low of 5.5%, although it will definitely pick up in 2012. Apple is to open a new r&d centre in the country. Frutarom in Haifa, one of the world’s leading manufacturers of food additives, has just purchased its 17th company in five years. etc etc

Israel’s economic growth for 2012 is expected to be around 3%. Not too many in the OECD can boast about that sort of stat.

Reflections on art in Jerusalem

13 January 2012
5 Comments
Categories: Business, Israel, Jerusalem

Jerusalem in 2012 is associated with many themes – religious conundrums, geopolitical tribulations and even the wonders of hightech. Locked away, out of the sight of the reach of global or social media is a wonderful story waiting to be told – the success of local artists.

It is nearly 200 years ago that the lithographs of David Roberts were first available for the world to see and admire. He was able to describe by use delicate features the simple world of Jerusalem in the middle of the Nineteenth Century.

In many ways, “Reflections“, an exhibition of how four Israeli artists view their world, is an extension of Robert’s work. The contributions are all from females, and each delineates their own way of viewing the very complex society in today’s Israel. 

The characters of Ruth Keusch cleverly take on near Picasso proportions, often too sad for my taste. Estee Kreisman paintings could occupy a whole wall in many a person’s lounge. Combining photoshop and painting techniques, her pictures are divided up into rectangles, with each one in itself describing an action – amazingly brilliant. And Ruth Gresser has delicately taken scenes from private yet enchanted views in different cities and has brought them to life.

I admit to a previous bias, but my favourite is Shoshana Meerkin. Shoshi took up professional painting almost by chance over two decades ago. As she has explained, what excites her is to look at a door or a window of an old house, and then to bring out through colours and shadows what she interprets as the history of the place. The result is often a fascinating picture that keeps you searching through it for more information. You walk away with a smile on your face.

The opening evening of the exhibition was fun. It represented just another tiny yet important element of what the real Jerusalem of 2012 is all about.

So you are networking without a USP, and……

23 December 2011
No comments
Categories: Business, Israel, Jerusalem

This time last week, I started up a new mentoring contract with a small family manufacturing enterprise. The owner has a decade of experience, knows what he wants to do next, but is majorly lacking in sales. How can I help?

“So what do you do,” I asked. And his response can best be described as a confused silence. When I pushed for a reason why people should buy from him as opposed to anyone else, I realised that I was causing some real anguish.

A few days later, I was reminded about this episode at the latest meeting of the Jerusalem Business Networking Forum. Over 70 people gathered together for a frantic 2 hours of speed networking. To clarify, the participants were given two minutes to speak to each other / swop business cards and then to move on to the next person.

For some in the room, this was a natural act. For others, the first few dialogues were very difficult. How could they get across a simple message about who they are, what they are trying to do and what help they require?

This is where the USP phrase comes in. As Chris Markham describes in an excellent and clear summary:

A unique selling point is a unique aspect or unique combination of aspects of your business that appeals directly to your potential market………..Without a unique selling point (or proposition) your business is terminally ill.

Obvious? Maybe. but then you have to create that platform, which is a process in itself. And worse, you have make sure that it matches your vision for your business.

This is not just more 21st century newsspeak, clever marketing terminology that has no real meaning. When we look around ourselves at any successful operation – local retail outlet or large corporation – what drives is a comprehensive knowledge of what they have to offer.

Going back to the JBNF event: By way of follow up, several people have reported that the networking has led to clear commercial opportunities for them. And if there is a common link to these successful members, it is probably that they have a defined direction for their businesses.

Something there for our small family manufacturing business to consider.

Did the OECD get it right about Israel?

18 December 2011
4 Comments
Categories: Business, Israel, Jerusalem

Less than two weeks ago, the OECD commented about the Israeli economy:

Israel’s economy passed through the 2008-09 global downturn in relatively good shape but is now suffering alongside others from the continuing effects of the renewed global crisis, and geopolitical tensions have increased. Annualised quarter-on-quarter real GDP growth was 4.7% in the first quarter but had slowed to 3.4% by the third quarter. Much of the slowdown came …. as world trade slowed significantly. The November 2011 OECD Economic Outlook 90 has real GDP growth at 4.7% in 2011 but less than 3% in 2012. 

Compared to most of the rest of the OECD, this is pretty good stuff. However, a downturn is a downturn. Even Australia will feel the germs of Europe’s financial flu.

Now let’s look at some of the positive things in the economy of the Holy Land. Two issues stand out. First, as noted by the OECD, the country has maintained a solid performance in fiscal governance. This will help the Governor of the Bank of Israel if and when he will need to fiddle with interest rates to promote recovery.

Second, Israel is about to become an exporter of energy, specifically gas. When this happens sometime in the next two years, Israel’s economy will begin to take on a very different set of growth stats.

So, what’s the gimmick? How does an economy of only 7.7 million people and surrounded by mega geopolitical problems constantly manage to reinvent itself?

I was reviewing a lecture on utube by Assaf Luxembourg of the Ministry Of Finance. Looking at Israel since the early 1990s, he made two excellent observations. 

  • It is not just that Israel has become a “start up nation”, where hightech plays a big role. Luxembourg’s analysis of Israel’s exports reveals how the country has successfully molded old and new industrial sectors. 
  • In parallel, Israel has done this while absorbing hundreds of thousands of new immigrants, particularly from the former Soviet Union. That means that the GDP per person has continued to move forward.

Bottom line: Israel may not be an economic elixir, but its financial mandarins are developing a model which many others may wish to emulate. And that is why the OECD has not reduced its predictions for Israel to levels associated with most leading European countries.

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