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- [00:00]
A
Foreign.
- [00:04]
B
You are listening to an art media podcast. Jonathan, what's your number?
- [00:09]
C
This week it is 45. It is not dollars. This week it is the median age in Europe. That means that half of the 450 million people living in Europe are above the age 45. Comparably, that is 38 in the US and 30 in Israel.
- [00:25]
B
Well, my number is 8400 and this is the number of kids in Jerusalem who are going be attending a Khalidi school this year, an ultra Orthodox school. It's the first time that this number is higher than those students who are going to state schools or to Arab schools. So a significant number. I'm not sure who wins here. I mean, I think these are both indicative of just really interesting demographic Trends. I like 45 because I'm 45 years old, but I actually think my favorite number here is 30, which wasn't your number, but is, you know, part of the conversation.
- [00:57]
C
Yeah, I think both numbers sort of win. This time we're tied and they actually tie really well to, to what we're going to talk about in the episode.
- [01:04]
B
Let's do it. Jonathan. It is just after 11am here in Palo Alto.
- [01:16]
C
It is 8pm in Switzerland.
- [01:18]
B
Jetsetter. I love it.
- [01:20]
C
More like traveling with four kids, my wife, and trying to find some alpine, you know, mountain calm before we go back to Israel for the beginning of the new year.
- [01:28]
B
Well, I'm going to pretend like it's a very glamorous kind of travel and just pretend to live vicariously through you, but okay, we've got an amazing episode today. I'm really excited about this conversation because it's somebody that we've been wanting to get on the podcast for a while. We're talking to the one and only Michael Eisenberg, who I think many of our listeners are going to be familiar with. Michael is a co founder of the Tel Aviv based venture capital firm Alif and he was an early backer of startups like Lemonade Wix, which we have talked about at length here on what's your number? And of course been a backup backer of many other Israeli based and founded companies. He also, by the way, is an influential voice not just on tech and investing, but also broader economics policy, not to mention Judaism, which is something we don't talk about that often here. Every once in a while we have a Rabbi Yonatan moment, but it's rare.
- [02:20]
C
No, but listen, this is an important point, Michael, and you know, I should say it off the bat. Michael was a key investor at Healthy IO he helped me navigate some treacherous waters of, you know, innovating medical tech and AI, which proved to be more precarious and dangero than we thought initially. So Michael was there in the toughest moments. But I will say his ability to be the New York Jew who made aliyah, who can kind of translate to Washington, be it Democrat or Republican, has an open door in Jerusalem among, you know, key ministers, knows the tech ecosystem. He is one of the most consequential people in my view, in Israel today, far and beyond the tech investment side.
- [02:57]
B
Today we're going to focus on one topic that's really near and dear to his heart and that I think is really relevant and timely to us and to our listeners and that is the country's ability to attract talent and some recent new decisions to create new incentives for those making aliyah. So first, as usual, let's take a look at some of the week's pressing news AKA our big shorts. And of course the latest update on the Windex, the what's yous Number Index tracking the performance of publicly traded Israeli based or founded companies onto our big shorts. Let's kick things off with this week's Windex. Yonatan, how are things looking?
- [03:36]
C
It's a very interesting week on the Wind index, beating both S and P and Nasdaq with 3.16 in the green. Nasdaq down 0.56% for the week and I would say s and P500 and kind of moderately up 0.34. I think the market's starting to digest the Palo Alto Network Cyberark acquisition. This is the second week where both equities are still climbing. Last week was 6%, this week is 4%. And this is also at the tail end of an announcement by the company that its legendary founder Nuk will step down. So I think overall positive momentum around these two, I think, you know, near and and have some thoughts on that before we move on.
- [04:16]
B
Yeah, well he is a legend. Hopefully he doesn't think that their stock went up because he announced his retirement. But yes, agree with you. It seems like the market is digesting this acquisition and also excited for, you know, some of their forecasts and the performance over the last quarter.
- [04:31]
C
Yeah, I think what also happening is that the recent what seems to be the FD had a big read last week about how it seems like GPT5 and some of the recent releases are indic a degree of a plateau and so that would signify the sort of rise of agent AIs. And if that is indeed the case then this acquisition makes a lot of sense. Monday.com, which lost 30% in the last couple of weeks as we discussed last week, is moderately up in the green. We'll keep an open eye on Monday.com because I think it's indicative of where that market is going and also how AI is impacting, you know, those kind of direct to consumer applications. And topping the greens, which is really interesting, is 3D Printing Leader Strategies. 17% gain in a week. This is not a share that kind of moves up and down that way. I really tried to dig up the reasons. So there aren't any objective reasons. There's one thing that I found which is Senator Debbie Wasserman Schultz of Florida disclosed last week at the beginning of this rally that she has become an investor in Stratasys. I don't know if that's the case, but that's the only thing I could find.
- [05:34]
B
You are opening such a can of worms right now because one of the hottest topics out here in the US has been members of Congress owning stocks and trading stocks. So let's not, let's, let's save that for another episode. We can move along.
- [05:48]
C
And so I think the last one is the bottom of the list this week. Almost 12% down on the red is Zim Israeli shipping company. The company is sort of in the battle of its management buyout. It also had some pretty disappointing Q2 results. And this is just in from Israeli journalist Dean Shmuel Almaz who reported that a couple hours ago. We're recording on a Monday, a Zimship bound for Istanbul, Turkey was refused on grounds of bds. Erdogan last week has kind of put it out there that Turkey is about to block Israeli vessels from docking in Turkish naval facilities. And this seems to be also one of the things that may weigh heavily on the stocks of Zim is the sort of one on the red this week. We'll keep an eye on that. Some of it has to do with the manager buyout. We hope none of that will have to do with, you know, sort of boycott dynamics around the company.
- [06:39]
B
Well, we spent a whole episode last week on the BDS movement and its risk to academia. Not a topic that's going away for sure, but let's move along, lots to get to. Next up we want to talk about Israelis withdrawing money at higher rates than usual than before from so called self improvement funds. So we'll get to what these are exactly, but just some numbers real quick. Withdrawals from this type of savings account are growing at worrying rates and the numbers are NIS, new Israeli shekels, 21.9 billion from these funds that's been withdrawn last year, another 10.3 billion shekel in just the first half of 2025. And just for comparison, in 2022, withdrawals amounted to 16.5 billion shekel for the whole year. So, Yonatan, can you first just explain what these funds are and then let's get to why this is an economic indicator and what it means.
- [07:35]
C
So this is a Rabbi Onatan calling on this one. The idea is that much like in our history, our culture, every seventh year, you should kind of think through things, right? How you're plowing the land, what you're planting in the field and so on. That's what's called the Shabbaton in Hebrew, like the seventh or the seventh year. So when it comes to savings, when the Israeli sort of social democracy was built and improved over in 1985 also the government decided that they will give, and this is a very hefty tax benefit. And that's why this is an important macro, macro indicator. You're basically getting to save without paying income tax, right? Until you withdraw the money, if it happens within seven years. So after seven years, you can withdraw the money and you will not pay income tax. That said, you will not pay income tax if the money continues to accrue. So the incentive is to keep the money there, unless you're buying an apartment or and so on and so forth. The idea was for people to invest in themselves, right, in the schnacha baton, to do upskilling, to take courses, and so on and so forth. So when Israelis are kind of clutching, reaching out to this one, it's a bad sign. And the numbers you gave are indicative of how grave the situation can be. Now. The thing is that we can be blinded by the current macroeconomic dynamics and numbers and say, oh, Israelis are consuming. The summer was great, but where's the money coming from? Right? And it seems like this is a clue for what may end up being a very consequential indicator that Israelis, albeit spending right now, are reaching out to the most important savings account they have outside of their pension fund. And that is indeed sort of a growing concern. There's a reason why the bank of Israel sort of put it out there. And for us, over the next, I'd say quarter, we will look back at this number and see what's the trend towards the end of the year. My instinct is that somewhere in September there's going to be a breakthrough on the political side. And I think we're going to see this year end with a clear election date and a sense of where the budget is going. So I think it, it might be kind of like a small sign that would be less indicative. But, you know, come Q4, we'll look at that and we'll see where we stand.
- [09:41]
B
Well, so just real quick, I mean, where do you think this money is being spent currently?
- [09:46]
C
So we're seeing two trends. One, and that's very interesting, there has been, even though the interest rates have gone up in Israel significantly over the last three years, we haven't seen a big default rate on mortgages. That is a significant piece. So people kind of having to keep up with paying the, the mortgages. As you know, in Israel, the house and apartment ownership figures are pretty high. So that seems to be one part. And the other is just basically consumption. Consumption is strong. We were just talking about that a couple episodes ago. Consumption figures are strong. You know, even the cost of living continues to rise. You know, who would have thought? And the strength of the shackle and so on and so forth. So let's just see if this is a macro indicator or this is just kind of a sign in time and that's going to kind of actually prove that this piggy bank served its purpose in a trying time.
- [10:33]
B
Well, let's move on to how the government is spending its money. We talked about consumers. The Israeli cabinet has approved budget increase which includes 473 million towards Gaza humanitarian relief. This happened earlier in August and it's part of a much broader budget increase which we haven't talked about enough on the podcast. We can unpack more in a future episode. But given all of the attention on ghf, the Gaza Humanitarian Fund, and the controversy and complexities of humanitarian humanitarian aid in Gaza overall, which by the way, call me back, has tackled extensively and we will save the complexities for Dan to unpack. One question that I have here, because I think it's an important one just to start with, is generally speaking, how do Israelis, how do everyday Israelis, if you can generalize at all, feel about this budget item and how it's going to be spent?
- [11:29]
C
So I think a couple of things here. First, you know, the rating agencies have opined on that as well. Yesterday in a bit of an unexpected mood move, you know, in between the cycle, they got it wrong in the north with Hezbollah. They got it wrong with Iran. It was shorter and more significant and actually opened up the geopolitical horizon for Israel. They got it wrong with Rafah and so the Israeli government is kind of brushing this aside, right? The raiding agencies again and so on and so forth. They basically said if Israel goes into Gaza for full occupation, this is not like yet another, you know, kinetic engagement with a rival, with an enemy. This will end up costing a lot of money. Israelis sort of, I would say the, the word on the street or the framing right now in the media is it started off with the government saying we're not paying for this. Then the Ministry of Finance admitted that 700 million shekels were invested in the GHF and now it's 1.6 billion. It is a significant amount of money and this is part of a broader budget cut in order to enable that. So the kind of governing principle is Israeli welfare state is shrinking to care potentially for long term Palestinian welfare in Gaza. The argument has merit. I have a bit of a different viewpoint on that. First of all, as we said back in the day with the rating agencies and the budget, let the ministry just be transparent. If it's 1.6, it's 1.6. Now for me, 1.6 billion shekels is roughly one that is a tenth of a percent of the Israeli GDP. Investing that with the argument of trying to create a baseline humanitarian infrastructure in Gaza, that's better, infinitely better than the un, cleaner, more moral and so on and so forth is worth the risk, it's worth the investment. Whereas if this is money that goes out there to perpetuate an Israeli occupation of Gaza, unacceptable, right? Just be honest and put it out there. And so for me, you know, both are right, both have merit. I mean, this is an issue that would probably take parts away, but very insignificantly from the Israeli welfare state. That said, I think it's worth our while to invest 0.1% of our GDP in trying to create a baseline humanitarian dynamic in Gaza that would serve the Gazans, us, the region better on the day, I think it's a worthwhile effort.
- [13:37]
B
I've got a lot of questions about the budget. I think we need to really dive deeply into this in a future episode because those cuts are also very significant, as you said, by the way, some of the increases is of course to the defense budget, which makes a lot of sense, but lots of questions to get into in the future. Let's leave it there and jump right into our conversation with Michael Eisenberg. Moving on to our long play. Today we're speaking with investor Michael Eisenberg on Israel's plans to attract top talent, especially in key sectors like cyber defense AI and others. Michael, I know you and Yonatan have a relationship going back away, so I'm going to throw it over to Yonatan to give you a more proper and personal introduction to our listeners.
- [14:24]
C
As we said in the opening, Michael was, was a key investor at Healthy I.O. and he helped me navigate some pretty treacherous waters when it comes to introducing AI to the fda. It's been quite a journey together. And I think Michael is, beyond being a tech investor, is a super, you know, one of the most consequential Israelis right now that doesn't have a formal role. And the tweet that Michael tweeted last week caught both our eyes. Right. Michael is known for speaking truth to power, being critical of the government more often than not, but also kind of sharing his positive feedback when he didn't. This one was one of those cases. Michael was commenting on the changes of the Aliyah framework and the projected or possible impact of those Aliyah talent kind of influx into Israel. And so we have Michael on with us today to talk about that, but we can, you know, surely speak about many other issues.
- [15:14]
B
Yeah, I think everybody's probably familiar more or less with some of the incentives that have been in place for a while for people making Aliyah. For example, a free flight, one way flight to Israel, which is, you know, it's nice, nice. It's a nice little perk. But it seems like before we get into some of the actual policy changes here, it seems like there's a little bit of like a philosophical shift and sort of what's the end goal? So if you could just explain for us to our listeners what is that shift?
- [15:42]
A
You know, when I wrote this tweet, which is kind of a postscript to working on the policy issue, I got some feedback. I tend to send my longer tweets around to a couple of people for feedback before I put them up. And they said, you can't write this, so why can't I write this? People are going to feel that if they don't have some unique talent or they're not an investor, they're not welcome in Israel, which is of course not the case. And I think historically, philosophically, Israel has been almost a refuge and for some people, a place you just went to because you're Jewish. But I think we're in a transition moment now where one, the economy of Israel is incredibly resilient. Literally 20 minutes ago, I read a piece from UBS the bank saying how the shekel is going to go to three, two. Right. There's A strengthening of the shekel. The shekels at as strong a place it was prior to the war. Israeli's economy is good, and it's not just that, but we're now addressing an ever larger market, both regionally and other places. Plus, the needs at this rebounding moment of the state are going up. And people want to bring their talents, you know, to paraphrase LeBron James, to the shores of the Mediterranean. You know, this is an opportunity, but I think Israel's done a poor job of broadcasting that why we should be a magnet for talent, a magnet for people who want to join the project, a magnet for people who want to build a magnet for people want to bring the talent versus a refuge. And, you know, that's what we need. When I was making aliyah, this is 32 years ago, my father was doing some work, but I think some people, I think it was from bankroll me, but don't hold me to that. And he said, oh, my son's making aliyah. They were talking in Hebrews. I understand Hebrew. My son's making aliyah. And they said, oh, for sure he's religious. These aren't two people making ali are criminals and religious people. It was a terrible comment, by the way, and shame on them. But, you know, there may have been some truth to that. You know, people who needed refuge, you know, different antisemitism or something else. And people were. Was incredible ideology. But now we're in a different moment. And I think finally, finally the government of Israel. And particular credit goes to the minister of Ali Alfir so far and his director general, Albihayt Bahana. I've understood we need to compete in the global talent marketplace. We need to reach out to these people and we need to lean on them. We unfortunately missed a lot of opportunities right after October 7th. To graph his talents of the university, I'll call him out negatively. The Minister of Education, Yoav Kish. Missed opportunities. I've tweeted this in the past. These two guys so far and Kahane get this. And I think they really let a bold change in Israeli policy and it's dramatic. We're going to go compete with Dubai. We're going to Abu Dhabi for the people, you know, leaving England and the new tax regime in the uk. Oringo could be for the best talents at MIT and Harvard and Columbia and Princeton and other places like that. I like dukies.
- [18:11]
B
Tell us a little bit about what the government has gotten right when it comes to the actual policies. Like, what do you think in the incentives that are offered now in the overall framework. Framework here is going to work.
- [18:22]
A
Well, first of all, we don't fully know, because what the government decision says is 45 days to formulate a very detailed plan. But here's what we do know. It's going to include an incentive for people who run financial firms, hedge funds, investment firms, that if they bring their activity to Israel, they can get massive incentives. Right. The government is targeting how we build a second engine for our economy. The first engine, obviously, is high tech. The second engine can be financial services. There are so many talented or even Jewish people in financial services in the UK and the US and other places. They shouldn't go to Abu Dhabi or Dubai or anywhere else or Singapore. They should come to Tel Aviv. But we need to fix a regulatory and tax framework to do that. That's one thing. Number two, think student loans and doctors. So many doctors make aliyah. I wrote in the tweet, I know eight people of eight cases myself, people with student loans, you could come, but it's just overwhelming and the salaries don't cover it. A partnership between the Israeli government, philanthropy, and maybe even crowdfunding to wipe out student loans for American doctors who are trained in the US in the best hospitals, to come to Israel and solve a doctor shortage. Big deal. And there's many more cases like that. So they'll go sector by sector, see what their demands are, and then build frameworks for these people to come in an advantaged way.
- [19:31]
C
Michael, we had Neil Hirschman here a couple of shows ago.
- [19:35]
A
My bitcoin friend.
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C
Exactly.
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A
He's a great guy doing great work.
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C
Following the genius act in the U.S. and you know, the strategy, the crypto strategy that was presented to the government. To what extent do you think these two also align? When we're looking at financial infrastructure, regulation, how is the crypto infrastructure also? How does that tie into that? Or it's not at all, and it's sort of classic finance that you're looking at here.
- [19:59]
A
No, no, we need to lead on crypto as well. And watch this space. I'm actually working on a policy paper right now about this. As you know, I've been deeply involved. Yanatan knows that I've been deeply involved probably for five or six years now in trying to get crypto legislation done in Israel. And I was active actually in trying to bring a big American firm to Israel. I unfortunately failed. The Finance Minister Smutrich was in favor, but they just couldn't execute on this through all the various regulatory frameworks. What I think is going to happen is the following broad strokes. There's going to be an American policy framework. That's the Genius Act. America has an interest in a few things. One, being a innovation leader in crypto, but two, establishing for the long term the dollar as a reserve currency. Part of the way to do that is through stable coins, which is part of the Genius Act. And as people buy American treasury bonds in order to put behind these stable coins, that helps reinforce the value of the dollar. I think where we're headed, if we look 10 years forward, is there going to be like, there's the BRICs trying to challenge the dollar, right? The brick countries, there's going to be a dollar alliance. I think Israel needs to lead in the dollar alliance. Now, it's not of say, I love dollars. You actually need to create the crypto framework to enable that to be so. If there's going to be like a US led financial system, one of the superpowers, Israel should be actually the leading technology hub that innovates on the crypto regulations to enable that to happen and be in this US sphere of crypto. That's my view.
- [21:20]
B
I think a natural. Next question is to ask you kind of similarly, when it comes to a national AI strategy, which we're seeing some early inklings of, hopefully, how critical is it for actually attracting and retaining, importantly, retaining the kind of talent that Israel needs and wants, you know, to have this national strategy and to have the infrastructure that researchers, top AI researchers need and want to have in place.
- [21:46]
A
I think people are too skeptical about what's making its way through government now on AI. This is a dramatic thing. The Nagul Committee, which is the second one, has laid the groundwork for a revolution. And I want you to take a second and understand it, because it's important in Israel, I say this. Unfortunately, the three offices of government that actually get stuff done are the Finance Ministry, the Defense Ministry, and the Prime Minister's office. Nago's recommendation that this AI unit be set up not in some, you know, technology and innovation ministry run by a second or third tier liquid minister, but rather in the Prime Minister's office is a breakthrough. Conceptually, it means like the other officers there, the Mossad, the Shin Bet and others, this is the unit of the Prime Minister's office, and that matters a lot. And I can say with pretty good authority that it's moving its way through the government very, very quickly right now. And this is a big deal, not a little deal. I think we'll see something set up this year already and it will be meaningful. And there's 25 billion checkout recommendation over five years. Important now, all of this, both of the ALIA thing and the crypto piece which hasn't moved it, and the AI thing is critical to show that we're going to be leaders, not followers. It's critical to show that you can come and apply your great talents in Israel and not be shorthanded in the way you approach this. And you're also not dependent on the university system fully. The university system is like a guild in Israel. To try to get ahead and get an academia there is pretty challenging, but we can set up extra university outside university systems like the ones we're talking about right now that will attract the best talent. I'm involved in a private initiative called Nivo which is working on similar things for bringing researchers to Israel together. My good friend Senator Cohen and a bunch of also funding mechanisms for it. And I think, I think there's real opportunity now to completely change the tide. There's no way we should be catching, playing catch up to our cousins in the UAE who have done an incredible job on AI. They have a real strategy. We have not. Naugle is the first step in actually writing a strategy. This Aliyah initiative is a first step, writing a strategy. If we're to be a regional superpower, which we need to be, we need to start doing strategy, not tactics.
- [23:49]
B
Quick question for you. On the academia front, we had Professor Annette Barakoren on last week and she was incredible at also unpacking for us, you know, what's going on and giving a more, you know, you see all these headlines and these, these kind of anecdotal tidbits here and there, and it's really hard from a distance, at least, least speaking for myself, to unpack what is really going on. So speaking of academia and BDS and some of the more worrying trends that we've seen, she talked a lot about, you know, what needs to happen, how they're fighting back at Hebrew University and elsewhere among Israeli researchers. And I'm just wondering, you know, you're talking about bringing people to Israel, in fact, that a lot of innovation can happen outside of academia as well. But we do need academia for certain things. Things. And so is this something that you're looking at? I know this, the alia, you know, new programs are not necessarily addressing this, but is it a problem that you personally are looking at as well?
- [24:43]
A
My day is busy. This is not on my radar screen. Even if it is important and it is important I'll say one general thing. First of all, NET is incredible. And she's doing incredible work on many fronts, by the way, including what she wrote about the kind of UN humanitarian aid piece and what she did during the judicial reform. People don't even know what she did. She's just an incredible person with a lot of foresight and an incredible reputation. So that's number one. We need to play offense. We need to stop playing defense and start playing offense. And I find that because there isn't strategy, there isn't like a plan to go play offense in enough areas. And we keep being surprised. We also keep doing really stupid things. Just this morning I tweeted about Arye Dairy. You know, he wants you to 10 million shekels to give the Moldovan government to let the pilgrims go to Oman for Rosh Hashanah to the grave. That is a Jewish tax. That's what that's called. That's. We spent decades getting rid of the Arab boycott. Decades, which was the Jewish tax. We shouldn't do what are called in soccer own goals. Like, what are you doing? This is just stupid. But in general academia, we need to go on offense, and that means convening. Convening the best academics in Israel. I don't know if you know this. With a week and a half Jeffries, the investment bank is convenient, something called the Jeffries Tech Trek. They have attracted the most incredible roster of investors globally to come to Israel. It's a convening that you just don't want to miss out on. And so we need to convene people in Israel in places that's run by Israelis, etc, That's one level of office, second level, arms. We need to call out the BS when we see the bs. Okay, we're like constantly responding and waiting till we check. No, we got to get on the front line of this and go forward. And we need to name and shame those people who are doing bds. And it should be public. The problem is, and I'm telling you, you don't know Michal people, when they reach a certain status, want to play along with the game the way it's played. And they're kind of nervous to stick out and be authentic. And let me just say, stand up, stand up. Be like Neta, stand up. Fighting name and shame them, even if they're colleagues. You need to be heard.
- [26:43]
C
Michael. I think this all comes back to, you know, the notion of the. The new type of aliyah, the dynamics also around people who are leaving Israel right now and other Dynamics goes back to founders mentality. You know, you've inspired some of my thought process around the third founding moment. Nez the idea that this is the third time of founders, this is a time for founders. Some people who don't feel like they're able to be founders are leaving Israel for a time, for a period or what. And we're calling on talent to come with a founder's mentality. When it comes to bds, when it comes to fighting in growth, you've seen many founders come and go. As an investor, what are the risks to Israel over the next three to five years? Assuming that the geopolitical dynamics actually do align, actually do align, where do you see the things that people aren't looking at right now? Even if we apply this founder's mentality and reinvent and refound Israel, what's kind of the. A big hairy animal waiting, you know, around the corner?
- [27:43]
A
The first thing I want to just acknowledge is people are tired. People are tired. There's been a lot of people serving a lot of days in Dawson, a lot of families wrapped up this and the hostage. And before that there was the judicial reform. Didn't matter which side you were on. It's been exhausting the last four years and startup foundings are exhausting. I don't need to tell you that you're not a 10 year entrepreneur yourself. It's exhausting and it's not made for everybody. And I think we could lose, lose some talent. I hope we don't. I just came from a meeting. Now I'm meeting with somebody who was talking to me about this. I think it's a real risk and it should not be taken lightly. And I think some people, by the way, are exhausted from the political situation. There's some alignment there and the political, you know, it doesn't matter what your politics are. Too many of these people have been in politics for way too long and that's just bad for any system. And that, by the way, is both coalition and opposition, for that matter. It's time for a change. It's time for renewal. It may not happen fast enough on any of those things and people are tired. So I think that's the first rule risk. The second risk I think is, you know, let's say geopolitical alliance. There's always a threat. This is not, you know, Montana, the Middle East. And so if we settle Lebanon, which is looking promising, in Syria, which may or may not look promising, and even Iran, there's still Turkey and there's still Egypt, which is Pretty unstable. And there's still Libya. Life's complicated in this part of the world.
- [28:55]
C
By the way, our number this episode, I brought in 45, which is the median age in Europe now, Now compared to 30 in Israel. And Michal had the number of ultra Orthodox kids starting school in Jerusalem. Is that something you're keeping an eye on? I mean, for me, that's one of the big hairy issues is sort of what's happening in Europe with a 46, 45 year old age median with sort of Islamic pro, kind of Muslim Brotherhood mushrooms kind of coming up. Is that also kind of should be on the radar?
- [29:22]
A
Yeah, actually the third issue I was going to talk about was broad demographic issues. And so there's three parts to broad demographic issues. The first is global demography is slowing and that means growth will slow. And if growth will slow, who knows what that means for financial fortunes? It's hard to know. We've had a massively growing economy Since World War II on a global basis. You know, most of the young people in the world are actually in Africa, which hasn't exactly been a hotbed of innovation. I hope it will leapfrog, but I don't know. You know, in India we've been waiting for it to happen for a while, showing some early signs that I'm actually very positive about it, but. But, you know, who knows? And at the same time, Europe was a wreck, it's a train wreck. And it doesn't matter. It's like a graph making the rounds. Wasn't exactly right, but it doesn't matter. The trend is the same and that is Islamism is capturing Europe. And I'm not sure they have the political wherewithal or the gumption to do what needs to be to be done, according to Douglas Murray, not just me and others. And I think that's a hard one, a really, really hard one. I hope the US does. I'm not convinced about that either. Against Islamism. So. And then Israel's got its own demographic challenge or opportunity. I actually think I'm on the side that it's an opportunity. I think we are seeing the early phases of a big change in ultra Orthodox land. Big, big change. The young people are looking for something new. They want to be a part of Israeli society. For the most part, the political leadership was just abhorrent and abysmal and they have an interest in keeping them under thumb. The rabbinic leadership was mostly detached. And I think the young people get this and I think you're actually seeing a mainstreaming of a Significant percentage of the ultra Orthodox. Now, when these things tend to crack. A friend of mine, ultra Orthodox friend of mine, told me that you don't realize Bay Nazmanov is this period between Yeshiva's end on Tishabov and today, the first day of Elul. And when they're on vacation, he reported to me that many families he knows there are massive fights going on, which he called the more modern siblings and the more traditionalist siblings, he said, to the point it almost comes to blows about the direction of mainstreaming into Israeli society. When you see cracks like that happen in homo genius society, you know, it's changing. And so I think we're entering an era of 10 years of change. The risk is, you know, somebody who didn't grow up in the Israeli system, as they start to merge into, it's hard to know how it works. And there'll be obviously opposite reactions. This is the kind of radicalization of the rabbis you see right now. And so that's a risk as well.
- [31:34]
B
Curious to hear a little bit more of your thoughts on the brain drain question. I mean, we're talking about it now in, like, future worries and both in attracting but also keeping talent in. What would you say? I've seen some numbers, but it's hard to assess what's really going on post October 7th. How would you assess what we've seen with, you know, among tech in particular, with what kind of brain drain is going on? Is it higher than what we saw pre 10-7-7? Are you worried about where the trend lines are going?
- [32:05]
A
Number one, I'm always worried. Read Psalms tells us, blessed is the person who worries always, and I worry always. So that's the first thing. And, you know, I just came and met with someone from Tenafly, New Jersey. You know, he says there's, you know, 10 families arriving a month there from Israel. That's a real number. Most of those people are in tech. And Lima Soul is like a thousand families, and that's in Cyprus. In Portugal, there's a few hundred families. In Madrid, there's a few hundred families, plus a bunch of evacuees in the north. In Barcelona, there's a few hundred families, including some top cyber talent. In Amsterdam, there's a few hundred families. In Zurich, a few hundred families. All this worries me. The government, in my opinion, who is part of the challenge here for a lot of these people hasn't done a good enough job reaching out to them. I think that's an opportunity and a challenge. People want to be wanted and they don't Feel wanted now because of two years of the judicial reform and I think the exhaustion of the war. They need to reach out at the same time. These are very fluent people, meaning fluid. They can come from here, they can go there, they could be back just as fast as they left. I've been involved in bringing back a bunch of people right now, literally over the last few weeks for one of those European countries. And people can be persuaded to come, come home. In general, I think we need a new young generation of political leadership that is more entrepreneurial, more in touch with this entrepreneurial spirit, and more in touch with, I think, the most important thing that we discovered on October 7th, and that is that Israel has the greatest citizens on planet Earth, bar none. We have the most responsible civilians, the most capable civilians, all who turned up when the government and military failed and since then have been running the country. And there's somewhat of a disconnect between the incapability, lack of capability, lack of execution capability of the government, or whether capable of in the citizens. We just have incredible citizens. People should be envious all over the world to want to live as an Israeli citizen because it gives you superpowers. It really does. And you know, what people have done since October 7th is incredible. And we're going to need a civilian army to bring some of these people home. Home. So we're going to go back to your actual question about the brain drain is we need to bring as much as we can back. We have an opportunity, I think now, unfortunately, with rising anti Semitism, to bring a few hundred thousand people. We need to get that done too. That would change the face of Israel for a large generations, much like the Russian aliyah did. It's almost 30 years ago now. Oh, 30, actually, 32 years ago. And so that needs to be a big, big, big focus of the government. You know, I'll just give you one other thing on a time you asked about the risk. The other risk is we don't solve the budget problem. Why say the budget? We're in great shape at a macro level.
- [34:30]
C
Yeah, we were just talking about that earlier.
- [34:32]
A
But we can't stop spending money on expenses. That includes 10 million shekels to go to Oman, which sounds small, but actually symbolically it's a big deal. It's like French population extracting 10 million shekels because political, you know, arm wrestling. That's ridiculous. And we've got to invest in the core. We can't afford all this nonsense on the fringes and it's nonsense. Can't afford to spend money. It's not spending. That's not investment in infrastructure that needs a future economic goal. You can't do it. We're out of money. You gotta spend it on defense.
- [35:01]
B
Well, Michael, I'm very happy that you brought up Psalms because we couldn't end with you without something, something that was, you know, biblical in nature. So. Really? Really.
- [35:11]
A
So can I go on then?
- [35:12]
B
Yeah. You want one more? What's the Parasha this week?
- [35:16]
A
Okay. I have an upcoming book I'm working on, the fifth in the series of which is Divarim or Deuteronomy, which is a terrible Latin translation, but whatever of what the book is. But this portion is shim, which means judges. And one of the things you'll note is that the kingship or the monarchy, which is also in this one's portion, is an if. Right? If you decide and you ask for a king, so then this is the kind of king you should have. And by the way, we're going to limit him. So I think the king has his shackles. But justice and judgment in court systems need to be present in every local situation and everything. Now, Adam Smith is famous for saying that society can exist without beneficence, but it can't exist without justice. I think the innovation of the Torah is the following. Number one, we have fluid systems of governance, meaning sometimes a monarchy applies and sometimes a democracy applies. Well, we change with the times. Rabbi Naftali's view to Berlin pointed this out as well on this, on that part. The two things we can't do without, though, according to the Torah, are beneficence, meaning economic empowerment of the other in society, taking mutual responsibility. Economically, if you are in society, not the government, that's my responsibility. And justice, that is there needs to be court in every places. We just came through the democratic, you know, issue of the judicial reform and everyone kind of standard democracy exists. We need to remember that democratic forms and forms of government evolve and change. The United States has evolved over 250 years. Israel has evolved very little in the first 80 years. It could be that a form of governance, the exact, you know, balances will change. And it could be that we need to change some of the elements of the justice system. But we must, must, must have courts that are respected. That's what the Torah says. If we don't have courts that are respected, we end up with anarchy. And that is something absolutely fundamental. And it doesn't just say judges, it says shotrim, which are police people. And one of the challenges Israel has right now and yes, we know things. Our police is very weak week right now and the parish are open shoftimishotrim. Justice and police need to be present every place because without that, we have anarchy. And I think that's something to keep in mind as we go forward over.
- [37:21]
B
The coming decade, both in the United States and in Israel. Very, very relevant. You brought the Dval Torah, Yonatan brought the beard. Michael, you just need to work on yours a little bit. But thank you so much.
- [37:33]
A
I've been working on it for 50 years. It doesn't grub so well. All of my kids make fun of me about it.
- [37:39]
B
Jonathan could give you pointers. I don't know. Thank you so much. Hope to have you back on again soon.
- [37:46]
C
Thank you.
- [37:47]
B
Thank you.
- [37:48]
C
Bye bye.
- [37:53]
B
That was a fascinating conversation. I was hoping we'd get a little bit biblical and we got more than what we bargained for, huh?
- [38:01]
C
Listen, I think what you saw is quintessential Michael, right? You know, I've been a beneficiary of this on my board as. As he and Alif were a board member, not just an investor and very pivotal player in the company. And to our listeners, you know, Michael is a very strong voice in Israel. And there's a flock, right, like people like Michael are broadening their presence in the public sphere. You know, Michael makes me very optimistic. It's not Michael as a person, it's the phenomena that Michael represents. And I think we got it very raw and honest in the last 20 minutes.
- [38:32]
B
All right, well, let's end there. We began our show with the numbers of the week and we are going to end with the words of the week. And this time, the words of the week come from Nikesh Arora. He is the CEO of Palo Alto Networks, which announced founder Nir dzuk's retirement on August 18th after 20 years. Something you already brought up, Yonatan, here is what Nikesh said. When you think about Palo Alto Networks, you think of Neil. It's impossible to overstate Neil. Neil's impact. He didn't just start a company, he started a revolution with the next generation firewall, forever changing the security landscape. We've talked at length about Palo Alto Networks, the impact that it's had on the Israeli cyber landscape, not to mention the impact that it has on the Windex. Day in, day out. Nir really is a titan. I think I brought up on a previous episode that my favorite story about him is how he used to drive around Silicon Valley. And it old BMW with a license plate, basically no vowels, but it said Checkpoint Killer. Really, really incredible figure within Cyber. I do wonder what he's going to do next.
- [39:35]
C
Yeah, well, some speculations have him kind of related again to the media market in Israel. He's been an incredible force in creating competition in the banks and in the media. So we'll see what comes up next.
- [39:48]
B
All right, that is it for today's show. Thank you for tuning in to Ark Media's what's yous Number? We hope you found it interesting and if you did, please be sure to like, subscribe, rate, review. You know the drill. Most importantly, share it with others who you think will find it interesting. If you want to make suggestions or share your feedback with us, reach out to us at what'syournumber@arc media.org.
- [40:17]
C
What'S your number is produced by Arc Media. Arc Media's executive producer is Adam James Lavino. Redy sound and video editing is by Martin Huro. RC music is by Midnight Generation. I'm Yonatan Adiri.
- [40:29]
B
I'm Michal Avram. See you back here next week.
- [40:31]
C
See you here next week. Bye Bye.
- [40:38]
B
This podcast offers general business and economic information and is not a comprehensive summary for investment decisions. It does not recommend or solicit any investment strategy or security.