During the 1990s and early 2000s, Israelis were considered gurus in technology, research, and innovation. While the dot-com boom infused the offices of San Francisco with color, creativity, hope, and foosball tables, Israelis were hard at work in a fairly strict environment creating and developing digital infrastructure, inventing new approaches to network security, and leading the field in hardware-oriented projects.
There was a myth that Israelis were not very good at creating consumer-facing products. Notwithstanding their creation of ICQ, Israelis were known as engineers and researchers who did well within the confines of a lab but not so well when reaching out to end consumers. Over the last couple of years, though, the high-tech industry in Israel has gone through dramatic changes.
Previously, many Israeli startups had hired or outsourced their marketing efforts to the US or Europe, while keeping the R&D departments in Israel. However following the dot-com bust of 2000, and given the recent economic downturn, companies in Israel can no longer rely on off-shore offices and expensive staff. Moreover, more and more local companies are feeling confident and even excelling in handling their own marketing, sales, business development, media outreach, and content.
The stars of the Israeli tech scene were once companies like Comverse and Amdocs. Now, we're seeing an influx of great Web 2.0 media and social startups, such as:
- FoxyTunes, the Firefox plugin that allows users to control iTunes directly from their browser, and which was acquired by Yahoo for a reported $30 million;
- MyHeritage , the world's largest family network, which has already documented over 330 million family members and is reportedly bringing in some of the highest revenue of any Israeli Web startup;
- Kaltura, an open-source platform for the creation and consumption of rich-media Web applications, whose clients include Wikipedia, Universal Studios, Coca-Cola, and Pepsi.
So, what's in store for Israel's startup world?
Israel succeeds by blending the old with the new. The country will continue to exploit its innate talent for research and development and continue to make inroads with social media applications, all the while sticking to intensive, customer-driven products.
A few Israeli newborns to keep your eyes on:
- SimilarWeb, an intelligent add-on that sits in your browser and provides easy access to websites with similar content;
- Boxee, a cross-platform freeware media center with social networking features and a 10-foot user interface design for the living-room TV;
- CamSpace, a new interface for computer games that uses innovative computer vision technology that allows everyone with a webcam to play games Wii-style;
- Vetrina's, a virtual window-shopping platform that transforms the online shopping experience.
The glue holding this generation of Israeli startups together is that while the companies are now all consumer- and media-related, they have a more technological edge than can be found in companies elsewhere. You can take the engineers out of the lab, but you can't take the lab out of the engineers.
Guest author Ayelet Noff is one of Israel's most renowned bloggers. She is also the founder and CEO of Blonde 2.0, a full consultancy firm whose mission is to help brands understand how to use social media tools (social networks, the blogosphere, and social software) effectively in order to carry their messages across the globe.
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Hi there
the URL for Boxee is boxee.tv, not boxee.com
I worked with one of those "star" companies once. Their software is about the worst I've ever encountered.
So far as I could see, their "innate talents" extended no further than extremely aggressive negotiation, at all levels.
Let's hope the new Israeli companies don't blend that aspect of the old into their services.
i am surprised by the selection of startup mentioned above. Except myheritage maybe and boxee the rest are more of less loosers.
Where is Conduit, Seeking Alpha, Gigya, Kontera, Eyeblaster, Oberon, Ads market, Dotomi...
Not mentioning that consumer related stuff has been in israel for some time: metacafe, incredimail, hotbar,...and the HUGE direct to consumer gambling industry (888, playtech, empire,...)
The writer of this post does not seem to know so well the israeli scene
Israel is a hub of technological innovation and a very rich country with a highly educated population. However, Israel is also a country that occupies another people and has been repeatedly accused of serious violations of human rights and war crimes. So far, Israel has refused to listen to reason and has refused demands to end the occupation and restore the human rights of Palestinians.
Palestinian civil society has called on international civil society to join Palestinians in putting non-violent pressure on Israel until Israel changes its ways.
Such pressure can take many forms: e.g. Refuse invitations to Israeli tech conferences. Don't invest in their startups.
Why do we do this? Palestinians are equal human beings, but they are prevented from engaging in the same kinds of activities that Israelis regularly engage in. Israelis can enter and leave their country, attend University and raise money from investors with confidence their work won't be crushed by tanks. Palestinians are not free to enter and leave their country. They sometimes have a hard time attending universities outside their occupied territory, and if they do, they may never see their families again for years. Palestinians are also a very highly educated population with very strong technological capacities, but how do they get investments for their great tech ideas?
Boycott and divestment can equalize this inequality, and YOU can participate.
The Palestinian Campaign for the Academic and Cultural Boycott of Israel (PACBI.ORG) and the Boycott, Divestment and Sanctions Movement (BDSMOVEMENT.NET) are where you can learn more about the reasoning and tactics of boycott, divestment and sanctions.
in response to the "eran s": "The writer of this post does not seem to know so well the Israeli scene" ,
First of all, I don't know who appointed you as the judge of who's a loser and who isn't. I personally think that the mentioned companies are great.
Other than that, if you would've read the article's title before commenting, you would have seen that the article is talking about Web 2.0 companies in Israel while many of those you mentioned in your comment are non-relevant (i.e. 888, Playtech, Ads market, Dotomi, Empire, etc...).
Next time you feel the urge to blast others, make sure you get your facts right!
Sometimes it's better to shut up and look stupid than to speak up and prove you are!!!
what makes you judge of what is web 2.0 (a dead concept by the way if you read this blog)?
As always Ayelet AKA Blonde 2.0 is giving us a well written story, I really enjoyed reading it.
Most of the startups you've listed are somewhat less successful ( except Boxee.tv ).
The top Israeli startups IMO :
Jajah, Fring, Innovid, Face.com, Gigya, Oberon Media, adsmarket, Fixya...
In response to Benjamin's tripe, I'd say most Israelis consider his retrograde jihadis as foreign occupiers of Judea. And just as these islamo imperialists were driven back from Spain and Southern Europe, so too in Israel.
Thanks Ayelet for mentioning us.
Surely there are a lot of successful start-ups originating in Israel, we're happy to be among them, even though we are pretty international by now!
Hope everybody has checked out MyHeritage.com with his relatives:
Share photos with your family, tag them with the help of our face recognition system, organise family events and obviously build your tree and research family history.
And with your relatives helping to collect birthdays and anniversaries, you'll never forget aunty's birthday again!
Mario /MyHeritage
@Benjamin
I'm from Portugal. The land where I was born was once occupied by islamists. My ancestors took it back.
Israelis are doing the same.
I see no reason why most of the commentators here minimizing the immense contribution of Israel to Hi-Tech software and hardware developments and products. some of the innovations emerging from this tiny country are mind-blowing. A great example is Given Imaging's PillCam, a disposable pill-sized camera that is encased in a capsule and used to diagnose stomach disorders after being swallowed. Other Israeli developments have caused revolutions in their industries. Voice over Internet Protocol (VoIP) software, pioneered in Israel in the 1990s, has enabled tens of millions of consumers to carry out free telephone calls over the Internet. In addition, VoIP has had a major impact on telecom operators, many of which are converting their systems to transport voice calls via IP. In all, the list of highly influential innovations by Israeli companies is long and includes Internet security, voicemail, ICQ instant messaging and the disk-on-key, the flash memory device that has replaced the floppy disk as a method for saving computer files.
Although exciting technology is important, what also attracts VCs to Israel is the possibility of a successful exit. Israel has more companies listed on Nasdaq than any other country outside North America, and between 2004-7, Israeli firms raised $2.3B in IPOs on exchanges around the world. Moreover, the market capitalizations of many listed businesses have become considerable. Check Point Software Technologies, which pioneered Internet security, is listed on Nasdaq at a value of $4.1B, while Nice Systems, a leading supplier of digital recording systems, is worth $1.3B on the same exchange. Amdocs, a major developer of telecom billing software, has a market cap of $3.5B on the New York Stock Exchange.
In addition, many firms have been acquired in high-profile transactions, and between 2004-7, almost $18B was spent on the purchases of Israeli high-tech companies. The most significant deals include HP's acquisition of IT optimization software firm Mercury Interactive for $4.5B and SanDisk's buy of M-Systems, which invented the disk-on-key, for $1.6B. It is worth noting that these deals were announced during Israel's war with Hezbollah in the summer of 2006, as was Warren Buffet's acquisition of Iscar Metalworking for $4B. These are all extraordinary testaments to how the world's top businesspeople view investment in Israel despite the geopolitical situation. Dozens of other multinational firms have made acquisitions in Israel as well, including Microsoft, Intel, IBM, Applied Materials, Siemens and Cisco Systems. This is important to VCs because it means they know that there is a long list of potential buyers for a successful start-up.
Many of the giant corporations that have bought Israeli companies also have research and development facilities in the country, attracted, among other things, by a superior workforce. As Bill Gates said, "For Microsoft, having an R&D center in Israel has been a great experience... The quality of the people here is fantastic". This is also a factor for VCs, because they base their investment decisions on the caliber of a start-up's management and the talent pool from which it can recruit. Per capita, Israel is among the leading countries in the world for the number of engineers, PhDs, patents, scientific papers published, and citizens with a tertiary education. The World Economic Forum ranks Israel highly for the quality of its research organizations, which include the 'Technion - Israel Institute of Technology', the Weizmann Institute, the Hebrew University and Ben Gurion University of the Negev.
In addition, compulsory military service helps Israelis develop strong leadership and teamwork skills at an early age, and allows them to put into perspective the pressures they face in business.
One of the most important is the Israel-US Binational Industrial Research & Development (BIRD) Foundation, which provides funding to joint projects between US and Israeli companies. Since its inception in 1977, BIRD has invested over $245M in 740 projects that have produced sales of more than $8B. Israel has similar bilateral arrangements with other countries, as well as agreements with multinational corporations whereby the OCS helps them identify Israeli R&D partners and provides financial assistance to the partnerships.
Many of the factors that make Israel a top destination for venture investment form interlocking virtuous circles: Israel produces great technology because it has great technologists, which has attracted the attention of multinational corporations. These corporations help improve the quality of the technologists and their commercial abilities, whether as partners, employers or clients, and this contributes to the formation and/or success of start-ups. After some of these businesses are bought by foreign firms, the circle repeats itself once again. And underpinning this whole construct is the government, which created the VC industry and has done much to help it succeed.
To Benjamin:
Mika said it well: "Benjamin's tripe", because I you are talking only political nonsense and avoiding historical truth. Benjamin? Your name is one of the fixed evidence that the land of Israel, which both of its Romans and Brits occupiers called her in Hellenic name of Palestine, is the land of Israel and not the Muslims. Benjamin is a Hebrew Biblical name of the southern district of Samaria, which located just to the north of Jerusalem. Benjamin is the younger of 12 tribes of Israel; it is a Jewish name which you call yourself. I presume that you are going to tell us that that name is ancient Brit one and not Hebrew-Jewish name. Well, you are getting well with stealing Jews' property. You are a Brit!
The real Palestinians are the Jews. Arabs invaded through the last millennia and stole the land, bit by bit, under foreign occupations of Muslims, as the Turks and Christians as the Brits. Jews were the oppressed minority until Zionist movement began. Palestine was once divided by the Brits in 1922, but they didn't fulfill their obligation towards the Jews and only transferred the eastern part of Palestine to Arabs. Now the Arabs want to swallow the Western side of Palestine. Arabs as "good" Muslims consider all Palestine as theirs and all the ME as WAQF property under the dictatorship of Islam, the area that called in their code as "Dahr el-Islam", the area of completion the Islamic control over the land and inhabitants. The Muslims see Europe, US and Britain as "Dahr el-Harb", the area of war, which the devoted Muslims are obligated to take control and to annex it to the "Dahr el-Islam", until the world as a whole will be Islamic and ruled by Allah.
Israel is the Western civilization frontier to delay the Islamic mission. The Western Judeo-Christian civilization should fully support Israel and deny any achievement, small as it can be, from the Islamic forces.
Israel keeps the human rights of the Arab Palestinians as long as people are not hurt. In times that Muslims didn't shot rockets and practiced suicide bombing there were peace and stability in the land. It's up to the Muslims to decide whether the prefer peace or want terror.
As for the daily life, you are wrong too. Palestinians from the west bank are free to move as they want in west bank. Israeli enterprises are helping some cities, as Nablus, Jenin, Hevron to return to normal economy life. Arabs of the west bank study at their own universities, they don't need the Israeli ones. Arabs that study abroad can fly through Jordan and Egypt and study in Britain, for example.
I didn't know that Arab Palestinians are very highly educated with strong technological capacities. Can you brighten the picture for us and tell us some of their capacities? Suicide bombing accepted.
Israel can't be really boycotted because in one hand they produce most of their vital needs. No boycott is totally preserved, and Israel can achieve what ever they need in many ways. On the other hand, states and companied enjoy buying good and unique Israeli products and developments. Most of the clever and human people know where the true and justice located. Not in the Muslim yard, to be generous.
History repeats itself.
For the old history of Israel, I just refer it from bible and wikipedia.
I believe this is similar to the occasion after Moses lead the Israeli to their homeland, and similar to Israeli returned from their exile in Babylon. But this is just from my simple understanding.
Fall and Rise.
After the fall in Europe at WWII, I believe this is the golden age of Israel, again. Like in the time of Saul and David. Small but have big influence in many aspects in the world. This is very impressive.
This is web 2.0 until history repeats itself again
Hi Benjamin
You know only the dry facts about the conflict. I guess you never been in Israel long enough to understand the complexity of the conflict.
If you wonder why the Palestinians still stuck 50 years behind you need to examine where goes all the billions of dollars that were donated to them from the oil rich arab lands, EU and the UN.
The so called occupation of the Palestinians could have been over and they would have a sovereign state by now with tourist attractions such as the beach of Gaza.
More than that, they could have invested in their education and welfare. But their leaders prefer low educated people and investing in weapons (which their are not allowed under the Oslo agreement).
Read a little about the Israeli history for the last 200 years. Pay attention especially to the laws against Jews, the Holocaust and the 8 wars Israel had with its neiboughers and still maintaining a status of a technological advanced country.
Then ask yourself where the Palestinians could have been today if they were using wisely their money and the worldwide support and the fact that they had a better starting point.
Hooray for Ayelet ! I realy enjoyed the article. Noone knows the israei Tech scene better than Ayelet.
v
The poorest blog post on israel high tech i have ever read. Who are those startups i have never heard about (except boxee).