ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the February 2015 issue


The Impatient High Techies

We recently surveyed the list of publicly listed Israeli high-tech companies. The total number was certainly impressive. The lisitngs included on the New York Stock Exchange, NASDAQ, London's Aim and some smaller European exchanges. What impressed us the most the few number of companies that could be called as biggies. These included Teva, Checkpoint and Amdocs. This discovery lead us to analysis of how such a high tech savvy country was content to spawn only small companies.

The first conclusion was that it was connect ed to an impatience to achieve financial success. Israelis by nature are impatient. Their search for early success is only a part of the story. Admittedly the other issue is a lack of experienced management. That is understandable since the high tech industry is only some thirty years old. There has been little room for acquiring management experience. Most managers assume their positions after their army service. The elite 8200 unit provides them with excellent technical experience but no management or administrative experience. Israeli business schools are not suited to provide managememnt training.

We watched with interest the development of Yoram Galai. He founded Quigo, then a second company and now is on the verge of floating Outbraim, his third company. We don't know whether Yoram has the ability to manage as a large company however it is certain that he has made a lot of money for his backers. All of this before reaching 45.

Yet Israel hads proved that it can produce high quality management. Afi Arazi who founded Scitex was one of Israel's top managers. At its peak the company employed more than 4,000 workers. Scitex had a top management team. Eli Hutwitz was another example. Eli was a kibbutznik who developed world class talent. Another example is Steff Wertheimer who founded Iscar in a garage. The company employs several thousand workers and is managed by Wertheimer's son. A few years ago it was acquired by Waffen Buffett for a big company price of more than $4.0 billion.

From the point of view of employees it is to their advantage to work in a large company. It provides them with extra security.

Management experience is hard earned and requires many years on the job. Yet we believe that in the next decade we will see the development of larger companies in the process of raising capital, and $1.1 billion is forecast to be raised during 2015.



Reprinted from the Israel High-Tech & Investment Report February 2015

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