By Omer Rabin In return for a stake, the UpWest Labs project lets Israeli entrepreneurs live and share together for three months while they hone their products and learn the Silicon Valley ropes.
It’s 10:30 at night, long after Palo Alto goes to sleep, and just before the last bar (of three) in Silicon Valley’s golden town hints to its few remaining customers that it’s time to go. Keren Yaniv (29) and Roi Oron (27) return home after a hard day’s work at the office where they have been located for just a few weeks. Instead of the peace and quiet that working people generally seek after thirteen hours of continuous meetings with investors, they find in the house the kind of commotion that only fifteen people in their twenties can make. No, this is not some version of the house in reality show “Big Brother”, but one of the more ambitious projects that has grown up in recent years for Israeli technological developments in Silicon Valley.
UpWest Labs, founded by Shuly Galili, formerly executive director of the California Israel Chamber of Commerce, and entrepreneur Gil Ben-Artzy, formerly a senior executive at Yahoo!, is an entrepreneurship incubator that enables companies at the initial stages of product development to pack up themselves and their team and go for three intensive months to the US. The aim is to develop the idea, find investors and partners, and make a great leap forward.
The Israeli technology incubator opened only in January this year, but it is already on its second cohort. At the beginning, the project mainly attracted the attention of the Israeli community in Silicon Valley, but UpWest is now succeeding in interesting people outside this circle.
The model is simple: After a meticulous weeding-out process, selected companies and entrepreneurs come to Silicon Valley, receive support from mentors with records of success, a place to live, and workspace and offices. In exchange, they give a stake in the company and its future profits.
The entrepreneurs who come to UpWest lodge in a large, fine house in Palo Alto, and live and breathe entrepreneurship and technology. They talk to each other about their various projects, and try to give support. If all this reminds you of reality television, that’s no coincidence. “There are difficult moments,” Oron admits. “Many times, from the pressure of the meetings, it feels as though all that is missing is he ‘Big Brother’ room where you can pour your heart out. Still, the intensity is part of the idea. There’s something exciting about it that dictates the pace, and that is what makes it possible to turn an idea into an established company within three months.”
The people at UpWest, like many Israelis here, are riding the global wave of interest in Israel that has grown mightier since the publication of the book “Start-Up Nation”, the bestseller by Dan Senor and Saul Singer that deals with the “the economic-technological miracle” that is Israel and the circumstances that made it a technology power. “The Israeli entrepreneur is very well placed in Silicon Valley today,” explains Galili. “He has a proven track record with companies like Check Point, Mercury Interactive, and many others. This gives the feeling that the Israeli entrepreneur didn’t begin yesterday, but rather knows what he’s doing. You have to remember that, even before “Start-Up Nation”, there was hard work done here to brand the Israeli entrepreneur, and the names that come to mind when the talk is of Israeli entrepreneurship are people like Yuval Shachar, Amnon Lamdan, or Shai Agassi, who certainly arouse respect.”
In what way are Israeli entrepreneurs considered different from Indian, Chinese, and American entrepreneurs?
“The characterizations are mostly positive. The Israeli entrepreneur is thought of as ambitious, original, capable of doing a lot with a little, and technologically innovative. These are qualities that people very much admire here.
“On the other hand, there are also less positive things, such as aggressiveness and directness that can be perceived as overdone,” she adds. “There is also a problem in the ability to accept feedback. We are sometimes seen as people who insist on a certain way of working, which is the opposite of the cooperativeness that is typical of Silicon Valley. In previous industries in which Israel was strong, it wasn’t all that important to be cooperative and understand feedback. The products and developments we had then were of the sort in which the engineer is thought of as omniscient, and he dictates to the community how things are used. Today, if you are working on some application, you have to understand how people use it. The feedback must be organic and built into the process, and entrepreneurs who come from Israel are simply not used to this. But I’m optimistic, because people are prepared to learn from experience.”
Is it possible to overcome these cultural divides?
“Merely staying here has a cultural aspect that forms over the period of the program. These are nuances that people notice immediately, and we take care to translate them for participating entrepreneurs and to help them understand what is going on. Ironically, the feedback on the inability to accept feedback is also not direct feedback, and we try to ensure that the message gets through. We have workshops on culture, but in the end we are very pragmatic, and build a program that concentrates on the product, on building the product, and on the market.”
The process of selecting the companies that come to this and other similar programs is complicated as well. “A broad range of people comes here,” says Galili. “We have a CEO with ten years’ experience in the Israeli labor market who has decided to set up her own business, and entrepreneurs fresh out of the army or university. There is no archetypal Israel entrepreneur. What is important to us is a strong team, with a strong technical background from the army or other frameworks, and a high capacity for work.
“We want to bring people capable of accepting mentors and of drawing from them information and know-how,” she adds. “This means people able to accept feedback and to adapt to an environment based on that. We work with leading mentors from Silicon Valley, and we want there to be someone on the other side prepared to listen and accept. Beyond that, of course, as a business, we look at the product and the size of the market. We look for a product that is aimed at a very large market, that can develop into something big, and that has the potential to change something and to be interesting.
“In the end, though, the most important thing is the team,” Galili concludes. “At such an early stage in the life of a company, it’s hard to know how the product will turn out, but it is known that a strong team is a winning team.”
“In the end, the talent is in Israel”
Among the companies that have met the criteria this year is Oron and Yaniv’s Groovideo. Together with two other partners, Ron Zohar and Guy Zisman (who are also currently participating in the UpWest program), they founded a company based on an application for making a group video within seconds. Group birthday greetings involving different people in different places can be recorded quickly and easily. The four started the project in Israel, but caught the plane to Silicon Valley with great enthusiasm. “This is the biggest and most successful place in the world for start-ups. Most of the industry is here, and it’s easy to form connections with companies and investors. The assumption is that from here it will be easier for us to reach markets that we will want to address in the future, such as the Far East,” explains Oron.
“Nevertheless, alongside the advantages there are also prominent disadvantages,” he adds. “Everything is very big here and there is tougher competition for every dollar from an American investor. We aren’t alone in the world. True, Tel Aviv University is excellent, but students from Harvard, Wharton and Stanford are competing with us for finance, and that’s very tough competition.”
Oron and Yaniv are at pains to mention at every opportunity how much the Israeli community in the area is happy to help and to respond to approaches from the young entrepreneurs. “This family feeling is a great advantage. There are many people here who have made it, and who are gladly ready to open the door for others and to encourage them,” says Galili.
Family feeling is great, but isn’t it a bit much to live in a house with fifteen young people?
Oron: “Personally, it takes me back to army days. I feel as though I’m at a closed base. There’s no doubt that everything is very pressured in the house, because in the end you have to cope with things and there’s nowhere to escape to. In the ‘regular’ world, each evening everyone goes back to his family and to his own world, and here that doesn’t happen. We are together all the time, for better or worse. It creates a sense of mutual responsibility. It’s true that every entrepreneur and company is here to promote themselves, but, in the end, when you are with the same people every evening, you have a genuine desire to help them. In addition, we learn about other countries and cultures. Israel is an amazing place for start-ups, but there are still things that we don’t know, and things that they do better.”
“As far as I’m concerned, it’s part of the experience, but there’s no doubt that I wouldn’t stay here for any length of time,” adds Yaniv, who, when she arrived at the house in April, was the only woman among ten men. “This intensity is healthy, if you cut yourself off from everything and devote three months to business. There’s also something interesting about returning to the house and not knowing who will be there, because we are all travelling, or working until the small hours. We all try to be at the house on Friday for a meal with kiddush, to share with each other what’s happening in the various companies, and to channel the competition that exists between the start-ups into competition in the kitchen, so that at least some good desserts will come out of it.”
At the end of the three months, most of the entrepreneurs get on a plane back to Israel and don’t stay in the Valley. “The entrepreneurs can’t stay here, because their visas don’t permit it, and they are legally obliged to return to Israel,” explains Galili. “But, beyond that, they have to hire talent, engineers and developers, and that’s the kind of people who are in short supply in Silicon Valley these days. The model that works the best, and we try to get the companies here to organize around it, is that the development team and the company’s center of gravity are in Israel, and will always remain in Israel, while the business aspect will be where the market is, that is, in Silicon Valley.”
“Many Israeli companies have worked in this fashion,” they say at UpWest, “They form connections here that represent a basis for business momentum, meaning that the CEO will initially have to be on the Israel-San Francisco route, and after the company starts growing he or she will set up a marketing team here. That is the model of Waze, for example, and other companies have adopted it. The model has to be dual you have to have one foot in R&D, and the other where your competitors, investors, and customers are.”
Oron and Yaniv refuse to be dazzled by the Silicon Valley sun. “Israel is still home,” says Yaniv with a smile. “There’s no doubt that there are many opportunities here, but from a Zionist point of view I would prefer my company to be Israeli. As a graduate of a unit like 8200, the people I can really rely on and that I know will do perfect, quality work are in Israel. Apart from that, there is no doubt that Israel will become stronger. People talk here with glistening eyes about what Israelis have to offer. I believe that Facebook too will soon open their branch in Israel and will make the process more accessible for Israeli entrepreneurs. We’ll certainly click on ‘Like’ for that!”
Published by Globes [online], Israel business news – www.globes-online.com
