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High-Tech Chutzpah
Adam Lashinsky traveled to Israel to check out a high-tech scene that
arguably is second only to Silicon Valley for its explosive growth, wealth
creation and consumption of venture capital. His reports on specific
companies to watch, trends in Israel's high-tech sector and the small
country's booming VC industry continue this week.
BEIT SHEMESH -- In this land of contrasts, Alchemedia, known until this week
as cSafe, just about takes the sponge cake.
It's an Israeli Internet company focused exclusively on the U.S.
entertainment industry. Its founders and Israel-based technology team all
come from outside Israel, but unlike typical Israel high-tech entrepreneurs,
are deeply religious. And its headquarters is in a "development" town once
populated mainly by North African Jews, nestled between, but a world away
from, tony Tel Aviv and modern Jerusalem.
And yet, Alchemedia is one of the most exciting start-ups I saw in Israel.
It makes server software that allows Web site operators to protect the
reproduction of images at the site. Using Alchemedia's technology, owners of
content can designate which images are to be protected and which aren't.
This way, a Webmaster can allow viewers to see an image -- a photo of Meg
Ryan, for example, at the Warner Brothers site -- but not enlarge, alter or
save it.
"We're not at all concerned about access," says Daniel Schreiber,
Alchemedia's England-born CEO and co-founder. "We're about usage control,
not access control. We're drawing up a way to look but not touch."
The 19-month-old company is one of the many in Israel's high-tech industry
that's there because its founders are, not because it has anything to do
with Israel. Schreiber is representative. He lived in Israel as a child, was
educated in Jewish schools in London and returned to Israel as an adult. He
flaunts the notion that there are no native Israelis in the company, in part
because the company doesn't take on the military-style culture of other
Israeli concerns.
And Alchemedia -- where employees host a daily prayer service, or minyan,
for workers at other companies in its gritty complex of high-tech as well as
industrial enterprises -- absolutely stops working on the Jewish Sabbath.
Schreiber says his investors and U.S.-based clients find it difficult to
accept that he's unreachable on Shabat. But he suggests that he and others
make up for it the rest of the week.
"We don't have a problem working through the night," quips Schreiber. "Just
not Friday night."
The company quietly is attracting attention for its development of what
looks like a killer app for the entertainment industry. It hired as its
president and chief operating officer Steve Miller, formerly an Oracle
(ORCL:Nasdaq) marketing executive. Typically, the company is moving its head
office to San Francisco. The product even has a clever name: CleverContent.
Investors so far include Jerusalem-based IsraelSeed Partners and two funds
based in California: Entertainment Media Ventures, headed by ex-Creative
Artists executive Sandy Climan, and Attractor Investment Management, the
tech-laden fund run by Gigi Brisson and Harvey Allison.
Says Climan, the talent-agent-turned-VC: "We have enormous conviction that
their technology is critical right now."
Perhaps because Israel is a serious country, the "Internet" companies there
tend to be serious too. At least according to my not-necessarily-random
sampling, the inventory of never-gonna-make-money ideas in Israel is low.
One company with a serious application for which e-commerce sites are likely
to pay real money is NewChannel, located in the Kiriat Atidim neighborhood
of Tel Aviv, where shiny office towers host numerous tech firms.
It's tough to explain what NewChannel does without devolving into a lot of
Web-technology mumbo jumbo. So consider this. The best retailers go out of
their way to give personal attention to their customers. If you're
well-dressed and you walk into a Jaguar dealership or a high-end furniture
store, you're certain to be solicited by a friendly salesperson.
Not on the Web. The best merchants can do is send annoying emails to good
customers.
Enter NewChannel's "targeted engagement technology." By using NewChannel's
software, an e-merchant can identify top prospects and solicit them with
pop-up messages while the customer is on the site. Hot prospects get
targeted messages offering special assistance or offers to phone a toll-free
number for more information.
Following what seems like a mandatory model, NewChannel already has a U.S.
headquarters, in Redwood City, Calif., and a U.S. chief executive, Chris
Risley, formerly with software maker On Technology, who apparently is
teaching his young Israeli colleagues how to spend money.
And they have plenty of it. Bessemer Venture Partners and Vantage Point
Venture Partners have joined three Israeli venture firms in funding the
company. NewChannel currently is raising another $20 million. Early
customers include Furniture.com.
Unlike Alchemedia, NewChannel is more representative of the Israeli
tradition of ex-military minds profiting from their expertise. Co-founder
Aviv Eliezer, a personable 25-year-old, cut his teeth studying computer
science at Tel Aviv University and in an elite intelligence unit of the army
that recruits home-grown computer experts to work on security projects.
By the way, the item here Monday on Chromatis Networks should have mentioned
the company's first and largest investor, Jerusalem Venture Partners, an
Israeli venture fund. JVP also invested in Scorpio Communications, the first
company started by the Chromatis founders.
Also by the way, a number of readers have wondered what all this talk of
private companies does for them and if there isn't any way to invest in
Israel now. A few answers: First, you might take note of the 24% uptick in
Check Point Software (CHKP:Nasdaq) since a favorable review of the company
appeared here. And though my bearish comments on Orckit Communications
(ORCT:Nasdaq) on our TV show never found their way into "print," that stock
is down 27% since then, a result of comments the Israeli company made last
week pushing out its profitability forecast yet again.
Second, my next column will focus on ways to invest, both in individual
stocks and funds. And third, though there's so much on this site that does
help you make money today, not everything does. Sometimes investors make
money by paying attention to trends or learning about developments coming
down the pike. Patience is required.
After all, the Israelites wandered in the desert for 40 years before
arriving in the Holy Land. Right? |
