Israel High Tech News

dsc0092.jpgInside Wix's design studio in Tel Aviv. Ben Fox Rubin/CNET

Abrahami met with me last month in his bright fifth-floor office, where he arranged a stuffed-animal cow, a baby doll in a bowtie and suspenders smoking a pipe, and other knickknacks around a large window overlooking the Mediterranean Sea. There's a whiteboard on the wall filled with an indecipherable mess of colorfully drawn charts and numbers.

The 44-year-old serial entrepreneur, who speaks in a commanding baritone, said more Israeli founders want to follow the lead of Wix and Mobileye by staying independent and going bigger.

"They can see it's possible" Abrahami said. "And it's a lot more exciting to see that it is possible."

Gett's development center in Tel Aviv became so crowded the startup set up new digs nearby. Ben Fox Rubin/CNET

Across town the development-center offices of Gett, a fast-growing startup offering a driver-hailing app that competes with Uber, teemed with activity. The entrance hosted a large meeting at which staff discussed the latest passenger stats. Around the corner, developers were tweaking code and ironing out new features, while others played ping-pong on a nearby porch.

"It's too small, " finance chief Tal Brener said of the offices, which became so full that Gett renovated a new space nearby to accommodate its expanding staff. "Everything is gone in less than a month."

Analysts and venture capitalists see Israel's pipeline of startups as especially strong now. They see 20 to 50 firms with the potential to go public in the next five years, though many will still opt to be acquired.

"It requires great entrepreneurs, capital and patience, " said Arnon Dinur, a partner at Israeli venture capital firm 83North. "We're at a time when all these three things are coming together."

It still isn't easy

Omer Kaplan, co-founder and Deputy CEO of IronSource, told me his app analytics company had been approached about a buyout several times over the last five years. The founders refused them all, betting the company's future was better if it stayed independent.

IronSource Deputy CEO Omer Kaplan expects that more Israeli startups will seek to stay independent. Ben Fox Rubin/CNET

"It's something relatively recent, " Kaplan said of the growing desire for tech companies to go it alone. "You see entrepreneurs in Israel saying out loud, 'We really want to create something huge here.'"

Kaplan's company is now one of Israel's biggest startups with more than 550 employees.

Of course, there are plenty of reasons for entrepreneurs to sell when they get the chance. About half the country's startups don't make it to their fourth birthday and just four of 100 local startups are big enough to be deemed successful, according to the Israeli startup-focused IVC Research Center.

On top of that, the structure of the Israeli economy, which is dominated by a handful of big, government-backed businesses, skews against smaller companies. So do a high cost of living and Israel's distance from the US, its primary market. Entrepreneurs also complain about government regulations - like tight restrictions on bringing in overseas talent - which they say stifle growth.

"The issues are well identified, " said Avi Hasson, chief scientist for the Israeli Ministry of Economy and a former venture capitalist, who noted that many of the larger Israeli tech firms weren't even around five years ago. "We're addressing them."

What did you build?

Before I went to Israel, I met with Itai Tsiddon at a cafe near my Manhattan office. The 30-year-old law grad came to New York in 2013 to help expand Lightricks, a 3-year-old Jerusalem startup he co-founded that develops photo-editing apps.

Porch ping-pong at Gett's development center. Ben Fox Rubin/CNET

The 30-person company's two apps quickly became hits, with Facetune - which lets users brush up their photos with the swipe of a finger - routinely in the top 10 paid apps on Apple's iPhone App Store in the US, according to research firm App Annie.

The founders of Lightricks are looking to Wix and Mobileye for inspiration. Tsiddon wants the company to grow enough to build a suite of creative apps for smartphones, potentially going head to head with Adobe, the top dog in photo-editing software.

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Q&A

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How many Americans feel that Israel is a high tech empire?

I'd have to agree more with Alan than Adam, mainly because there aren't many Israeli tech companies that are big consumer brands in the US. This is mostly based on personal experience and not anything quantifiable, but my guess is the average American has no idea about the stats that Adam gave. Aside from people who follow international tech and/or business trends, most Americans likely don't hear about Israeli tech companies and haven't heard of, say, Checkpoint Software. Most Americans likely think Asian countries like Japan, Korea, and China/Taiwan are much bigger tech centers, simp…


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