Afternoon Tea in Jerusalem Blog

In addition to my work as a business coach, one of my interests is blogging about life in Israel. This is a country full of contrasts – over eight million citizens living in an area the size of Wales. You can see snow and the lowest place on the globe in the same day. Although surrounded by geopolitical extremes, Israel has achieved a decade of high economic growth. My work brings me in contact with an array of new companies, exciting technologies and dynamic characters. Sitting back with a relaxing cup of strong tea (with milk), you realise just how much there is to appreciate in the Holyland. Large or small operations, private sector or non profit, my clients provide experiences from which others can learn and benefit.

A few years back, a highly experienced businessman was visiting Israel. When faced with a request  from his audience for a change in policy, his response indicated that he would try but was sceptical if it could work out. At which point, somebody jumped in and reminded the traveller that he was currently sitting in the country of miracles.

This week, Israel celebrates her 64th birthday party. Born in 1948, the only country to be created by the UN and the promptly invaded by some of its members, Israel has long moved on for being noted for Jaffa oranges and religious tourist sites.

A utube clip released this week shows Israel’s contribution to hightech, the arts, the world community and more.  USB plug ins, Intel chips, desalinsation plant tech, Soda Stream, top TV soap operas – they are all featured in the four minute show.

And since the making of the film? It was announced that XtremIO’s flash array tech is likely to be bought by EMC. Objet’s 3D print technology, based south of Tel Aviv, is about to become part of an American conglomerate. So it goes on.

I was struck by an item in today’s “Calcalist” (translation – Economist) newspaper. It featured 8 Israeli companies. Mostly unknown twelve months back, today they are generating tens if not hundreds of millions of dollars in revenue annually in the field of “toolbars”. Yup toolbars, the thing that annoys many of us on our computers.

The leader of the pack is Conduit, which J.P. Morgan recently valued at well over US1 billion. The explanation on their own website is very simple – their tech helps to drive traffic to the website of their clients and thus generate extra revenues. Sort of important, no?

iMesh had sales of US$70 million last year, basically taking over where Napset et al failed. Sweet IM has its “smileys”. After Download, Volonet, Iron Source, Dealply and others are not far behind, all with their main offices in Israel. The revenues generated are simply large and growing geometrically.

Where to next? Who knows what another 64 years will bring, as the word “impossible” is challenged and redefined in Israel on a near daily basis. 

 

In my work as a business mentor, two seemingly contradictory themes repeat themselves.

I often come across the 30+ person, who has a solid university degree but just cannot build their own business. In parallel, there are plenty of people, who have never attended an academy of higher learning, yet end up with a lot of cash in the bank accounts.

Two famous examples of what I mean? We all know that Mark Zuckerberg of Facebook fame was a genius and ended up at Harvard. In comparison, the late Steve Jobs dropped out of university after a semester, but later gave a talk at Stanford on how he succeedd by “learning to join the dots of life”.

In Israel, there is a well-known chain of coffee bars called “Cafe Cafe”. It’s 50 year old owner, Ronen Nimni, was looking after 4 car parks in Tel Aviv by the time he was 18 years old. Within a decade, he was a well-known figure as the owner of several dance clubs. But then his business imploded.

When the banks “called in Nimni for a chat”, he simply worked  til the late hours in the one restaurant he still possessed, even sweeping the floors himself. Another 14 years on,  he has converted that “one” into around 120 additional branches, has brought several other chains, is looking at exporting one of his eatery concepts and is…..

Well, it gets breathless to continue listing the achievements of Ronen, who left school and home at 16. He had the great luck, skill and fortune to recognise his true abilities at an early age: he can make decisions quickly and choose the correct people to help him.

Ronen is no isolated case. Yesterday, I met with an owner of a small retail chain. He too could not sit down to write an essay if you paid him. 

In the opposite “corner”, I was speaking recently to a lady, also from Tel Aviv. She has a fine middle class upbringing, including a strong bachelor’s degree. However, her business ain’t working out. It is difficult to discuss the cash flow, because it is fairly stagnant.

When I asked her, who she could call to start off a new set of clientelle, she had no answer. An hour later of some pushing and mentoring from me, she had booked four meetings. As the session progressed, she protested that business was hard, difficult. Nobody had warned her.

The point is that going to university can help, help a great deal. It will encourage you to ask questions, challenge assumptions, teach you principles in your field. However, and this is the dark secret, many people still need help to go beyond that.

Some take that help by allowing themselves to be employed by others, learning from their experiences, and then setting up for themselves. Others, like my female customer, just assume that it will flow. They fail to think what they can really provide and how to do it.

And that simple statement – what you can do, realising your core values, and how in detail to supply the service – needs to be brought out of each and every one of us. It is not simple to understand and can be very trying to implement.

I was asked this week if I could suggest ideas to revitalise a couple of networking groups that had fallen on hard times. This is a polite of saying that members were no longer turning up to the events.

As a mentor, you often encourage people to “get out there and mingle”. But how? And what is the point of networking, if you are just looking for a vital lead when everyone else is probably doing the same?

Here’s the rub. To summarise a talk from social media expert, Don Crowther, when you put yourself in front of others, virtually or physically, you are often “tested” or examined on three keys issues. You have to show that you are: –

  • Knowledgeable – provide sound content
  • Reliable
  • Trustworthy

More often than not, a successful member of a networking group shows these attributes by giving of themselves. They are not overtly looking to be rewarded for their presence. They are not seeking to receive, but to contribute and to help.

Back to the failing networking groups, the remaining rumps analysed their downturns. What was obvious was that the members had been turning up, mainly to latch on to an immediate and direct benefit. “OK, who was going to give me a lead?” was the unwritten motto of a session.

And the result? A triumph for “much said and little achieved”.

I should declare that I am a regular at one of these groups. In parallel, I should admit that I was initially guilty of the crimes listed above. For the record, I have now suggested that we move the meetings to an alternative location each month.

Postscript: The next set of meetings will be held “off-site”, where people will be  forced to mingle with each other and to interact. There goes our comfort zone, but that is what networking is all about.

Israel’s economy is slowing down? Have grown at over 5%  for the 18 months to June 2011, the figures for the second half of 2011 are stuck at 3.5%.

Thus reveals official stats this week. But let’s be honest, many in the OECD would settle for even 2%. So here are a few brief takeaways that elaborate why Israel has not dipped into recession along with some of its competitors.

1) Within twelve months, Israel will become a producer of gas, probably even an exporter. This will significantly alter the country’s revenue structure and balance of payments. The change will near end the dependency on the troublesome gas supplies from Egypt.  

2) Impressive high tech deals continue to set headlines in the press. This week, Objet, 3D printer developers from south of Tel Aviv and near bankrupt a few years back, created a US$1.4 billion partnership with Stratasys.

3) Brainsway is just one of several biotech companies leading the Tel Aviv stock exchange higher. Tucked away in an industrial zone in north Jerusalem, the company is pioneering drug development for sufferers of depression.

Ed Mlavsky is one of the founders of Israel’s high tech revolution. In an interview with the “Times” of London, he repeated his maantra about the elitism of hightech.

So while the IMF and Israeli technocrats may differ as to whether growth in 2012 will hit the 3% mark in the Holy Land, one thing is clear. The UK and others in Europe have a lot to learn from Israel’s economy, which continues to perform well.

  • In April 2002, the British media led its European counterparts with sweeping criticisms on Israel’s policy in Jenin, even though far more Israelis were killed than Palestinians. 
  • Ten years later, European student activists tried to “break into Israel“, denouncing Jerusalem’s policies on Palestinians, while ignoring the dozens being slaughtered every month by the Assad regime in Syria.
  • 35 leading British performers have objected to an invitation of an Israeli theatre to perform in London. The protest cites Israel’s policy of “exclusiveness”, although it ignores the proposed Palestinian constitution, which will not allow Jews to live in the new country.
  • Gunter Grass, Germany’ nobel prize laureate, has just launched a stinging attack on Israel in general, specifically targeting the Prime Minister.

Let me try to examine through European eyes why the issue of Israel is so “repellent” to many.

One young Portuguese blogger, Romeu Monteiro, commented that he was taught to loath Israel with the help and through the actions of Palestinian suicide bombers.

“How desperate must someone be to kill themselves like this? How could the Jews go from being oppressed to oppressors? Have they not learned the lessons of History?” I grew up loving the Jewish people but hating Israel.

It was only when Monteiro placed a series of facts against the spin that he realised that balance was missing. After all, how can you possibly justify suicide bombings, which should really be described as an act of homicide.

Nicky Larkin, well-known Irish photographer and film maker, takes a different angle. Writing last week in Ireland’s Independent newspaper, he starts out by saying: “I used to hate Israel. I used to think the Left was always right. Not any more. Now I loathe Palestinian terrorists. Now I see why Israel has to be hard. Now I see the Left can be Right — as in right-wing.”

What happened to Larkin? Like our Portuguese commentator, he found “40 Shades of Grey”. While Israel needs to rethink some of its policies, the supposed Palestinian non-violence proved to be the opposite. He had been taught to hate something that did not exist, and his moral teacher was not practicisng what it preached.

As a side note, it is interesting to observe what happened this week between a group of European student protesters and a unit of the Israeli army. A senior officer was caught by a Palestinian camera operator violently attacking one of the students.

Wrong? Quite possibly. But within 24 hours, pictures had appeared on Facebook showing the “non-violent protesters” in another light. One was seen punching a different officer. A second member of the group possessed a knife. Sic?

Over the past century or so, the left has led many of the key changes in European society, values that we rightly hold precious today. Yet, in the 1930s, the German left originally backed Hitler. For years, the left supported blindly anything that the Soviet Union charged them to do. How often do you hear of thrid world countries supporting the verbal assualt on Israel, while ignoring state actions in Zimbabwe or China or North Korea?

When the Guardian, the New York Times, university academics et al invoke their curses at Israel, the rhetoric of hate reminds of the phrase the “defense of the indefensible”. George Orwell coined it, roughly three years before 1984 was published.

And maybe that is what the Larkins of this world are asking us to remember.

So after all the changes in the Middle East in the past year or so, regimes collapsing etc, two factors remain as a constant: there are some very rich oil fiefdoms and Israel is an anathema for most of the region’s rulers.

This morning, I read a series of short articles on various economies in the Middle East.

  • Iran may be reaping in the rewards (for now) of soaring world oil prices, but it suffers from 21% inflation and rising. 
  • Egypt’s economy has collapsed and tourism has disappeared. The period of uncertainty leading up to the presidential race will not help.
  • Turkey may be seen by some as a new finance centre, but rising inflation, unequal distribution of wealth and a growing government debt can no longer be hidden from most analysts.
  • As for Syria, the Assad regime is again proving why arms have consistently been a larger priority than alms for decades.

One interesting exception from this trend is Jordan, whose “government is attempting a difficult balancing act, working to boost economic growth while imposing a series of austerity measures intended to curb public spending and debt levels. These measures may prove unpopular with many in the electorate but should serve to strengthen the economy in the longer term.”

Of the five Middle East countries cited here, guess which has neither intrinsic oil wealth nor a central policy of denigrating Israel? And as for Israel’s economy itself, the latest IMF report made several key recommendations, but noted how growth in the difficult year of 2012 will still reach nearly 3%.

You are left wondering why the supporters of Arab Springs do not want to pick up the key lessons from these facts. How long will their supporters suffer from economic want?

Last month, bloggers noted that Intel had declared its intentions to build a hightech empire in Israel. “Today Intel Israel is at the core of the global company, with a central role in developing new products like Sandy Bridge and the Ivy Bridge,” observes the firm’s Israeli chief, Maxine Fassberg. Bottom line; after the U.S., China, India, its Israel. Intel invests more in Israel than in Europe.

Not bad for a country the size of Wales with under 8m people and surrounded by geopolitical uncertainty. But is Intel the proverbial exception that proves the rule?

Enter Microsoft:

Microsoft is launching the first startup accelerator* in the company’s history in an effort to encourage more entrepreneurs to build their cloud-based applications using Windows Azure. The program will take place at the Microsoft Israel Research and Development Center, and is a part of the Israel R&D Center’s outreach program Think Next as well as the Microsoft BizSpark program for startups.

Zack Weisfeld, Sr. Director of Strategy and Business Development at Microsoft’s Israel Development Center gave a very simple explanation for his company’s high profile in the Jerusalem and two other locations. There are 4,900 startups and it has the third largest V.C. spending in the world after Silicon Valley and New England. No brainer.

Siemens, GE, GM, IBM and more have all secured a large r&d presence, many concentrated north of Tel Aviv. Broadcom takes a slightly different approach. It has strategic policy of buying successful Israeli start ups. Of the ten purchases, six were snapped up since December 2009. The estimated total investment value  is around US$1.6 billion, and it appears safe to assume that more is on the way.

Shlomo Markel, Broadcom’s VP who handles the company’s M&A operations, is very clear about what motivates their acquisitions. Wealth creation is the name of the game – either extra profits or the opportunity for an exit. Either way, Markel is looking to up the company’s share value.

As someone coined the phrase; modern day commercial miracles in the Holy Land.

At the end of March 2012, the IMF delivered its annual report on the Israeli economy. There were probably two key takeaways: –

  • The economy would grow by 2.8%, less than official Israeli forecasts but still better than many other countries in the OECD.
  • The Israeli government needed to take more immediate and stronger action to involve the orthodox and Arab communities in the economy before they became an intolerable drain on resources.

If you were to rely to the official comments of Prime Minister Netanyahu, who has previously served as Finance Minister, everything would seem rosy. In a interview last week, he observed: –

…we are the only country in the world that was given a higher credit rating in the last year.

Growth is nearly at 5 percent. Unemployment is dropping to its lowest levels in decades, this at a time when the jobless rate in other countries is soaring. There are countries whose unemployment rates for young people reach 5%. Poverty in Israel has been decreasing for years, according to the indices of the Central Bureau of Statistics.

There are far-reaching changes taking place here. We managed to halt the rise in housing prices and to reverse this trend altogether. We managed to enact a policy which grants free education to all children from the age of three, we slashed customs in order to ease the cost of living. These are significant achievements, all at a time of global economic instability.

Significant? Yes. But after all his job is to talk the spin. So that is why I read with interest the comments of Stanley Fischer, one of the leaders in the global financial community and Governor of the Bank of Israel.

As quoted in Hebrew, Fischer’s immediate cause of concern has little to do with social protest or the parallel squeeze on the middle classes – albeit that they must be addressed. Fischer was quite adamant that Israel’s immediate economic problems lie in the bulging defense budget, caused by new threats from Gaza, Lebanon and Iran. With over US$1.5 billion not budgeted, new taxes are called for, today.

As Fischer had stated a few days earlier: “The economy is in good shape, but not great shape.” New taxes with a possible election looming soon? No wonder Netanyahu took his interview in a different direction.

For all that, both Fischer and the IMF agree that given sound economic maintenance, the Israeli economy will be looking at around 4% growth in 2013.

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.

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.

Last week, I posed the question, who needs a business mentor? A recent blog on “The Lean Marketer” took this one stage further. Assuming that you have a chance to meet a mentor, what should you say to them?

The blog tackled the subject from the point of view of an entrepreneur. Seven tips are listed, including honing your pitch and turning up to a session with a goal in mind. I have tweeted the article, but my experience leads me to a different conclusion.

When I sit down with a person for the first time or maybe just listen to them over the phone, I never know what to expect. The range of stories is vast and is still growing. The most intriguing are those who ask me what I do, and how, and why can I help people. And then they launch into a history of their successes, implying that they may call me back.

My point is that anybody who starts a professional conversation with a business mentor – never mind age, commercial background, stage of development, whatever – is by definition admitting / close to admitting that they have an issue that needs to be resolved………and they cannot do it by themselves.

Now that is difficult for many people to own up to, like those who may call back again. Many of us grow up with the “belief” that when we solve problems by ourselves, we are a stronger and better person. Well, that ain’t necessarily so. 

If you are stuck, tell somebody – ie, a mentor – preferably as soon as you meet them. Explain why you feel that you have hit a wall. Let the mentor help you explore if that is true and how to on to greener pastures. It could be a recipe for a fruitful romance.

The Easter and the Passover festivals are about to hit the Holy Land, as the economy of 2012 seems to be bumbling along.

  • Tourism in February was already 6% up on 2011, and an open-skies agreement has just been signed with Europe.
  • The economy as a whole is scheduled to grow by 3.1%, a fine stat considering the general global outlook.
  • The Economist magazine has just surmised that Israel’s leading banks have reasonable core capital levels, and these are being ramped up further yet.   
  • Gas and oil exploration continues to show positive results, and the additional  expected tax revenues should be significant.

So what’s the catch? In a word, “inequality“. It is not just that the rich are getting richer, as Israel’s GDP consistently outperforms most others in the OECD. The poor miss out time and again, as they are held back by several factors all coming together: –

  • Tax reforms not invoked, as promised
  • De-facto monopolies (and thus high prices) in the food sector, where the less well off spend much of their budget.
  • Stringent controls on the importing of fruit of vegetables, again resulting in high prices
  • Regulation in the housing market, forcing up the price of land and rented accommodation.

2011 was a year of social protest in Israel. Hundreds of thousands took to the streets. Some changes were made. However, it is questionable if they are just a start or a final result. Politicians are using new catch phrases to appeal to the voters, but it is doubtful if they can convert words into actions.

Sooner or later, Israel’s new wealth of the past two decades must find a path to the third estate. It is time to tackle these complex social divisions, while the problem is still manageable.

Chat with any entrepreneur, just as they are about to launch into an explanation of their whiz technology, and you will get the same response. “I will just take ten minutes to explain the basics of my revolutionary tech, which I invented whilst studying for my doctorate. I will refer to only 10 long words that do not appear in the Oxford English Dictionary.”

To the dumb investor, the story ends up sounding like goobledygook. English? The presenter might have used Vietnamese.

But is that person, who is holding on to the money, really that dumb? Just because he or she does not understand turbines or internet connections or chemicals, remember that they often possess another asset. Their speciality is to spot a product or service, suitable for commercialisation, and a team that can support that drive. 

However, if the entrepreneur retains the language of a university textbook (from east Asia), their investor will cut the conversation short and return to playing poker on his iPhone. So how to avoid the trap?

A recent blog by from 3Sixty tackled this very point. Their three-point approach can be summed up as: –

Think of your data or technical information as a blank canvas. You need to paint a slightly different painting for each audience. You need to ensure that it’s relevant to each audience and that you answer the question – why is this audience interested in this information, what does it mean to them and what do I want them to do as a result of experiencing this presentation.

Simple? I am not so sure. I have seen some clients adjust rapidly, while others repeatedly prefer to whip out their 30 slide presentation at any opportunity, which is often inappropriate.

One techy, who was supreme at “dummying-it-down” was the late Steve Jobs. His biographer, Walter Isaacson, argues that:

…. the real lessons from Steve Jobs have to be drawn from looking at what he actually accomplished. ……. (Jobs) said it was Apple the company. Making an enduring company, he said, was both far harder and more important than making a great product. How did he do it?

Well, Isaacson gives a detailed response to hiw own question. And I will add one further consideration. Surely, one aspect has to be that Jobs made his products appealing and obvious to even the greatest of non-techies, including this writer.

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?

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.

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.

The Palestinian economy may still dwarf in size compared to its Israeli neighbour. It still looks to the international community – particularly the World Bank and the EU – for taxpayers handouts. That said, times are a changing.

1. Exports

The security situation has finally eased enough for Israel to enable trade to recommence between Gaza and the West Bank. On 6 March, after negotiations with the World Food Programme (WFP), 13 lorry loads of date bars from Gaza were transferred to the West Bank, the first such transfer since 2007.

2. Business Development Loans

Thousands of young Palestinians will receive access to financial loans to support their new businesses through a United Nations-backed initiative, which seeks to stimulate the creation of new jobs. The “Mubadarati” loan programme will be carried out by the UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) in collaboration with Silatech, a social enterprise company that focuses on creating opportunities for youth in the Arab world.

3. Energy

On a slightly negative note, one problem which continues to plague the Palestinian economy is the lack of continuous energy in Gaza, most of which is supplied via Egypt. Ismail Haniyeh, the Hamas Prime Minister in Gaza, has been quoted as blaming his friends in Cairo. Although a temporary solution has been found, it looks as if factories will be operating on a shortened working week for sometime to come.

4. Israeli involvement – Healthcare

While Palestinians and Israelis are not known for being the best of friends, in the medical sphere the story is often different. Palestinian journalist, Abu Khaled Toameh reported this week that the Palestinian Health Minister, Fathi Abu Mughli, organised a tour of Ramallah by an Israeli team of professionals – although the visit was cut short after strong local protests.

This is no new phenomenon. Israel has consistently proved its willingness to cooperate in the medical arena. Official stats show that in December 2011 and again in January 2012, around 1,400 humanitarian permits were issued to allow Palestinian patients and accompanying relatives into Israel. Back in May 2011, the Sheba hospital near Tel Aviv had supported a project to enable 1,000 Palestinians in the Tulkarm area to receive hearing aids.

Just how large are economies in the Middle East? The World Factbook puts the Palestinian GDP per person at US$2,800. Israel’s figure is over US$31,000. The countries of Qatar, UAE and Saudi Arabia leave everyone way behind.

Yet you have to wonder if these kingdoms invest in their Palestinian friends as Israel does.

First Quality is not a well known company like Boeing or Siemens. That said, since its establishment 21 years ago, it has become a manufacturing giant on the American (and now Chinese) scene, whose private labels can be found in homes in over 50 countries around the world.

Go to the website of First Quality and you will find a company actively looking for the next new product leader in the fields of wellbeing, agriculture, renewable energy and more. And for all this mega performance, the company, essentially founded by a trio of brothers, has set up an innovation centre in little Israel.

The centre is led by Noam Yarimi, who this week gave an excellent talk to the Jerusalem Business Networking Forum. Present were members from a wide range of activities; biomed, wind energy, manufacturing and more. Yarimi left with a bag of business cards and a lot of homework. His bosses had made a wise choice in setting up in this part of the Middle East.

Less than 12 hours after the meeting, I opened the business pages of the Israeli press. If anyone thought that First Quality was a freak consideration, they would be very wrong.

Item 1: E-bay is opening up a new r&d centre in Israel and has just started to recruit for tens of new positions. This is after the Californian giant has purchased three indigenous start ups including The Gifts Project.

Item 2: General Electric has completed the purchase of Check-Cap Ltd, a colon cancer imaging capsule developer. Within two years, it is hoped that colonoscopies will take on a different feel. Say no more!

Item 3: ECI, one of Israel’s telecom giants, is to be bought out by Russian atomic energy giant, Rosatom Nuclear Energy State Corporation. The size of the deal is reported to be between US$2.5 – 5 billion.Not bad for a company that last changed hands in 2007 for “only” US$1.7 billion.

Item 4: InMobi, which has barely 50 workers and was set up just in 2005 for the bulgong mobile ad industry, is being handed over to a company from Singapoer for US$350 million. The original owners had put in around US$54 million.

2012 may not be a great year for the world economy. Israel’s growth may not reach 4 or 5% as in previous years. However, the commercial fizz and buzz in the Holy Land is there for all to see.

Israeli society is full of tensions. Never mind the Palestinian issue. You have religious divides. You have divides within the various religions. The role of women is under constant challenge. Two dominant sectors of the population, Arab and Haredi, are known for their large families and thus the problems that they incur. And so the list goes on.

The case studies of 7.7 million people can fill a libraries of sociology and psychology.

And yet? And yet for all the challenges, you have to remember the multiple successes that serve as a lesson for all. Here’s one very simple example.

This week, I was invited to a graduation ceremony for a young man. No – not at his university. He had just completed an arduous basic training course in the Israeli army. Roughly 25 gentlemen in the prime of their lives have been groomed to defend the country against various threats, which even the best Hollywood film cannot portray.

This military unit, hardened yet still untested,  is a cocktail of Israel. Very religious Jews and a member of the Druse community. At least two of Ethiopian origin and a few Russians. Those with good school records and those whose parents are still bearing the scars of poor report cards. Poor and better off. etc etc etc.

It was an amazing ceremony. Listening to soldiers – only yesterday they were horrible teenagers – describe their achievements to date was impressive. I was especially struck by the stories of how they operate together despite (or because of?) their varied backgrounds. It is difficult to know who to praise more, the training corps or the staff who pulled the unit together.

So what? Journalists, local and from overseas, are never shy at criticising what happens in Israel. To seek the divide is not just a national or international sport, it is just so very easy to do. However, sometimes the real stories, the stories that truly reflect society are right in front of us. We just need to ask ourselves the right questions in order to find and admire them.

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.

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