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- [00:00]
A
Foreign.
- [00:04]
B
You are listening to an art media podcast. So, Yonatan, what's your number this week?
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A
So my number this week was so surprising and positive that I had to go dig up the data and make sure it's real. The number is 2,000. Those are 2,000 kids registered in the school system in the Gaza envelope, more than there were in September 2023. The rebound, the resilience that this number represents and it is a real number.
- [00:34]
B
Well, that's it. You win. We can move on now. Mine is 400 million. That's $400 million, which is Egypt's reported investment in a pipeline between it and Israel. And we've talked about the $35 billion gas deal. It's in the works, not a done deal yet between the two countries just in the last few weeks. But this is another sign that things are, you know, it looks like moving forward with plans for Israel to supply Egypt with natural gas. All that being said, again, you win. All right, it is 11:46. I'm being very precise today, 11:46am here.
- [01:18]
A
In Palo Alto, 9:46 in Tel Aviv. I still haven't packed my bag. Going to India, to New Delhi in a few hours. So exciting times.
- [01:26]
B
On today's episode, we've got an interview with Oren Zev. He is the OG of so called solo venture capitalists or solo gps, and we've got a lot to talk to him about. He's a backer of many companies started by Israeli founders. In fact, about 80% of his portfolio companies are founded by Israelis and that includes Houzz Descartes Navon, formerly Trip Actions and by the way, Riverside. He told me that he wasn't going to do this interview unless we were on Riverside and luckily that's the platform we use, so it all worked out. But we're going to hear a lot more from Oren later on about the current state of the IPO market and some of the risks that we've been talking to the tech ecosystem in Israel and just what his opinions are on what comes next. So more on all of that soon.
- [02:13]
A
His investment thesis, by the way, in action over the last 20 years is like the incubator for the Windex Israeli founders in Tel Aviv or in Silicon Valley, predominant focus. So it's really great to see how the kind of pipeline for IPOs continues to roll, much thanks to people like Oren.
- [02:32]
B
Onto our big shorts. Let's kick things off with this week's Windex. Yonatan, how are things looking?
- [02:38]
A
So Windex is up for the Fourth week in a row. Very interesting dynamic this week it's pretty much of an even distribution of getting to the 1.6% with Windex. Usually we have a couple of top performers that kind of take the pack up. We saw digital bulls like Etoro Oddity Global, Ian Wix, each kind of giving their sort of 4.5 to roughly 8.5 bracket. Then we had a lot of companies in around the 0 to 2 range. We're seeing a very interesting dynamic obviously from a financial Wall street perspective. Cyberark and Palo Alto Network are coupled around the 2% mark. So we've seen the pack sort of rise that way. Two notables on the red one is Varonis, one of Israel's early cyber IPOs, acquiring a smaller company for $150 million. But Wall street again, we saw that before, not so happy about the acquisition. So Varon is shedding about 5% on the week. And I think the last point is on ICL, Israel Chemicals losing again 5.59%. We saw Zim in the red in the last few weeks.
- [03:47]
B
And just taking a step back on a macro level and from the US perspective out here, all eyes clearly on this upcoming what's expected to be rate cut and what that does to the market, including to the IPO market by the way, which we're going to be talking about with Olen Zev in a bit.
- [04:05]
A
Yeah. And by the way, it's a great parallel. I mean we're seeing the President in the US kind of breathing down the neck of the Fed through some activities or removing certain people. We're seeing a similar anti textbook dynamic from the Israeli Minister of Finance telling the chairman of the bank if you don't lower the interest rate. This is on the 28th of September if I remember well, the next kind of window I will start lowering taxes, which is like. What are you talking about? This is like pouring, you know, gasoline into a fire. If you lower taxes without an adjustment of the interest, we're going to see higher inflation. That doesn't fix anything. But these arm wrestlings, it's like sometimes the leadership of the economic space forgets it's not just them, there's also the market, there's the international investor.
- [04:47]
B
Yeah. And all of these dynamics we're talking about obviously have an impact on the Windex. So we're going to be as usual reporting the numbers every week and providing some analysis. But let's talk about another story story here that has unfolded. There's this damning report on the government's handling of Civilian affairs post, October 7th. So over the last, you know, close to two years now, and the report charges that hundreds of thousands of civilians have, and this is in quotes here, experienced the failures of the Israeli government firsthand. This includes those that were evacuated from homes in the north and the south, reservists who have been continually drafted, business owners who have felt the impacts of the war in various ways. And the charge here is that the government repeatedly botched its response. So, Yonatan, I know you have actually a sort of a positive take on what this all means, surprisingly enough. But what do you make of this?
- [05:39]
A
I'll finish with the positive. I will say a couple of things. First, you know, I do give a discount to any government in the world. You know, this is like the 911 dynamic, right? October 7th was so unexpected. Having said that, the degree of rotten entire divisions in government that have been exposed by this damning report are revealing to people who live in Israel. That's not that surprising. We've known that these echelons of government haven't been, you know, so responsive and adept into sort of what can happen. But it is sort of a reflection of something that is challenging here in Israel. And I think we're going to see more and more. We are fundamentally a social democracy. Healthcare is public and practically free for 70 plus percent of the Israelis. Education is public, you know, infrastructure and so on and so forth. But since the economy grew in the last 15 years so much and the private sector grew so much, we kind of acquiesced with the fact that we're paying high taxes and we're paying high private, you know, sort of high cost of living. That should not be the case. So I think what I'm reading into the report is how Israel kind of separated 15 years ago its private sector from its public sector. We heard from Michael Eisenberg, which I totally concur with, probably one of the top, if not the best civilian infrastructure, private infrastructure, you know, kind of civic movement in that void over the first 30 days post October 7th. So in a way, you're kind of like scratching your head now. We're like almost two years into this, the economy is growing, the Shekel is strong. Could it be that it could have been even stronger if the government actually acted well? And to me, just to conclude, and that relates to the number that I brought forward, Aviat Friedman, who was appointed very late in the game. But once you have the right person in place and the kind of institutional backing, the government operates with such great efficiency. And so you Know, I'm hopeful for a government to regain its effectiveness. It is a high tax social democracy, so it better get its act together. Otherwise, either cut taxes and let us do it on our own and let civil society handle, but this double dipping doesn't make sense.
- [07:44]
B
One of the things I thought about when I read this are all the remarkable ways in which civilian society stepped up in the absence of some of the resources services, especially right after October 7th. And one of my favorite, favorite expressions is im enanilimili. If I'm not for myself, who is?
- [08:03]
A
In the ethics of our sages, one of them is like where you see no one else stepping up, you gotta step up. You can't just walk away. And so to me, the story after October 7th has a lot to do with that.
- [08:18]
B
All right, let's move along. Another piece of news we wanted to get to. And we will be diving into much more next week when Yonatan's back from India. But India and Israel have inked a bilateral agreement. There aren't a ton of details here, but it is being held as a strategic step to open doors for Israeli and Indian investors, to strengthen Israeli exports, provide more certainties across the board for both countries doing business with each other. And of course, they're already doing business with, with each other. India is already one of the biggest purchasers of Israeli arms. But I think this kind of puts a ring on it. And by the way, at a very interesting time because we all know in the backdrop there's this very tense US India relations.
- [09:00]
A
My perspective on India, that's why I'm going, is not tactical. It is not transactional. If you kind of close your eyes and think what went wrong in the last 25 years? Israeli national security revolved around this notion of a villa in the jungle. Oh, okay. We look west, we're the only democracy in the Middle East. We're, you know, all of those cliches that have a degree of truth in them, but they fail to capture the strategic sense of where Israel needs to position itself. And sort of the way I see things. And Alenu and the stuff that I'm involved with is villa in the jungle is dead. It died many years ago, most likely around the disengagement from Gaza. The new concept must be what we call an alliance from India to Ethiopia, in Hebrew terms, from Megillah. Now, there's a rationale to that. Israel always had, since the Ben Gurion days, even one would say since the Herzl and Balfour days, a dual strategy which had a lot to do with its macroeconomic growth always have an alliance with one of or the biggest sort of empire of the day. Right. Clearly, Israeli American relationships today is sine quanon cannot do without. The biggest challenge for Israel, any Israeli prime minister is enhance strengthen the Israeli US relationship against certain headwinds and maximize the tailwinds. All right, so having said that, the other arm was we always had a regional partner. It was Iran. In the day when the shah, you know, collapsed, we had to reorganize. We oriented around Turkey, which for Israel was a phenomenal, you know, collaboration. Just a couple of weeks ago, their foreign minister announced that they will cut all commercial ties with Israel. So from a $7 billion relationship just three years ago, we're almost down to zero. This happened in 2009. That got severed. We went to Azerbaijan, who became an incredible partner for Israel. Now when we look east, if we are indeed indigenous, we're not a villain in the jungle. The biggest partner for Israel should be over the long term, India. And the basic premise is one and a half billion people with 200 million Muslims knowing and understanding the challenge of managing the democracy with such varying degrees of cultural affinity. Right. A neighbor that's already a nuclear power, an Islamic nuclear power, vowed to either destroy or make sure it doesn't kind of propel its economy forward. That is Pakistan. It was just a flare up what was a couple of months ago. Right. And when America and China are competing, and that's, I think the source of what you were just alluding to. The tension between the US And India is in no one's pocket. Right. They touted Modi after President Trump, you know, started a tariff move a couple of months ago. You will end up surrender Modi in India. They started doubting whether or not India can rise up. And I think over the last couple of months he is rising up. He went to Putin, he's doubling down on the oil. He went to meet President Xi after 10 years in the SEO in the Shanghai Corporation Organization session. And so it makes a lot of sense also on the economic side. And at the end of the day, when you think about Israel, Saudi, for that to materialize, which is critical, India, in my view, is the best anchor for that dynamic. Now, what's going to be signed later this week, I'm going to be there when it's signed. It's still sort of under the lid, but is important because defense relationships are critical. They're a foundation for broader cultural and economic ties. The broader private sector must lead. And what's going to happen in New Delhi this week is going to pave the way for the broadening of this relationship. And I would even venture to say it is going to put in place the foundations of a special relationship between Israel and India as it allows for the private sector to kind of scale.
- [12:50]
B
Please take lots of notes. Yonatan, we're gonna be excited to talk to you about, you know, all of your. All of your reflections, really, from the trip.
- [12:58]
A
I have to say, also on a personal note, on my mother's side, the Iraqi side, the family name, my mom's family name was Babu because her father's father was one of those merchants from India to Iraq. So it'll be fun for me to go back with all the spices that I love. And, you know, I'm looking forward to that.
- [13:13]
B
To your motherland.
- [13:14]
A
To my motherland in a way. Yeah.
- [13:21]
B
Moving on to our long play, today we're interviewing Owen Zev. He is a solo VC or solo gp, however you want to put it. Bottom line, this is a really unique thing still in Silicon Valley, although we're seeing a little bit of a rise here. He's not an angel investor. He's actually a venture capitalist, meaning he's got limited partners or investors in his fund, but he acts as on his own. He doesn't have other partners. He doesn't even have a secretary, by the way. So he really is a solo investor, but leading rounds in companies, taking board positions. And he's got a great perspective on both what's going on in Silicon Valley and of course, in Tel Aviv. Bohun, welcome to what's your number?
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C
Thanks for having me.
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B
Michael, I want to start by just having you explain what it means to be a solo vc. For those who are not familiar and maybe a good way of. Of getting there is just giving us a bit of your origin story. How did you become one? Because it's. It's an interesting story.
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C
I start out as a developer, became a VC when the whole VC thing in Israel started, mid-90s. Moved to the US in 2002 and basically retired in 2006. I really thought I was done. I was financially independent, didn't plan to do anything. After about a year, I figured out that I'm just too boring a person to do anything else. This is what I know how to do and like to do. So I started investing and I started in my own money because I liked the actual investing interaction with founders. I didn't want to deal with everything around it. So technically I was an angel. I never liked this term because I Didn't want to be confused with people who write hundred thousand dollar checks and party deals. Instead, every deal that I did, I led. Every deal that I did was between 1,5 million dollars. Every deal that I did, I got on the board of the company and was an active player, not a passive player who puts $50,000 checks. So I never called myself an angel or super angel back then. I called myself non institutional VC because I was behaving as a small VC. I just didn't have any LPs and was not looking for any LPs behind me. And I was doing it for 8 years. For example, I gave Houzz the first 2 million to start the company. Similar story with the part is a little bit different because it was my idea, but also put the first million to start the company. Navan similar was a little bit larger. The seed was four and a half million and then totally random meeting with Peter Thiel in 2015. So eight years into doing this and a half years into doing this, and after about 30 minutes of chit chat and you know, comparing notes and stuff, he asked me, why don't you? Is it fun? I tell him what I told, you know, 100 people who asked me before, been there, done that, I don't need the brain damage, things are working just fine, thank you. And then he said, why don't you let me be your LP and use it as an experiment and see how it works. And that was different because the hundred people before him said, okay, if you ever raise a fund, let us know. But they still sent me to raise the fund. He didn't send me to do anything, by the way. I didn't pitch him, I didn't show him a single slide as far as I know, he didn't diligence me. I don't know based on what. He made this decision so quickly, but basically I left the meeting with a fund I did not know I was raising an hour earlier because when he said that, I really had no reason to say no because it was an experiment and I knew I could could press the eject button anytime as I want because it was not a 10 year commitment or anything like it. So that was my first fund. And very quickly I figured I realized that it's working in the sense that I can continue to behave exactly the same as I was when I was just, you know, doing it on my own, even if I have investors as long as the expectations are set from day one. So the only tweak was that I needed an external cfo. But I realized that was very easy to outsource. So basically POD type CFO outsourced. Very, very easy. So when I saw that was working so smoothly, I realized, okay, I can eat the cake and have it too. It took me only six months to invest the first fund. I raised a second fund. This time I already had three other LPs on top of Peter, and two of them were institutional. And since then, every time I run out of money, I raise another fund. It became more and more institutional. So now 95% or maybe more of the money is institutional. And now I have about two and a half billion under management. And it's just still just me. No secretary, no anything. And not even AI assistant, by the way. No physical office. Exactly the same by far. There's nothing like it in the world at this scale. I mean, to the extent that there are people operating like me, there would be at least order of magnitude smaller in terms of scale. But it's working. It continues to work now for 17 years.
- [18:02]
B
So I have to push back on just one thing, and that's that you do have an office. It's an Italian coffee shop in downtown Palo Alto.
- [18:08]
C
That's right.
- [18:09]
B
Almost every time I walk by, I see, oh, and they're, you know, holding court with somebody.
- [18:13]
C
By the way, the reason is because my wife doesn't want me to have people over at home, so I. So I adopted a coffee shop. Yeah.
- [18:20]
A
Is it fair to say that some of this keeps you on your toes, that this is sort of part of the investment dynamic, is that it didn't go through that institutionalization, that it keeps you on your toes, it keeps you very much hands on. Because every institutionalization is one degree of separation from the actual business. Or you think it's not so much related 100%.
- [18:43]
C
And it's not just that. I think there are a large number of competitive advantages to doing it this way. I don't think I would have been as good if I was part of a partnership. And in fact, the friction or the buffer from the founders is actually a good point. Because one of the competitive advantages, the lack of friction with the founder. Now just give you the simplest thing. When someone wants to set up an appointment with me, I'm the one responds. I don't forward it to an assistant and I typically meet them the same day or the next day. Whereas the typical behavior is you send it over to Jennifer or whoever and it takes two weeks to schedule because the calendar of the VC is full and the assistant doesn't know how to prioritize. Exactly. So, yeah, that in itself is a competitive advantage. Speed is a competitive advantage. I move just faster. But also because it really impresses the entrepreneurs. They love it. You know, even post investment, they don't need to deal with any bureaucracy afterwards either. So.
- [19:39]
A
Yeah, my first attempt at raising money in the U.S. by the way, Michal, I remember, you know, there was a lot of art. It was in New York was a lot of art, proper art in the VC holding court, as you say, Michal. And I remember I left and I called a friend, he said VCs should not be like, you know, Catholic cathedrals that are designed to make you feel small as you step in. They should be more like synagogues. 10 people, you can pray and that's it. And very practical. And I will say, you know, I did healthcare, very heavy regulated stuff. So, you know, granted, VCs had to do, you know, proper diligence. I don't know in series B and beyond.
- [20:14]
C
No, I do not agree, by the way, but continue.
- [20:16]
A
Yeah, at least I accepted it as such. These were post Theranos days, so folks were kind of. And we were on the same path.
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C
I still don't agree. Let's continue.
- [20:28]
A
And so, yeah, though, just saying that for me as an entrepreneur to meet to raise money from people who've been through the path before, they were entrepreneurs, they walked the path. Was a world of difference than having folks who graduated business school were great, but were kind of immediately into the investment space. They lost that touch, they lost their velocity piece. And so at least that's been my experience.
- [20:49]
C
Yeah, no question. Every time. By the way, one of my companies is frustrated by all the bureaucracy and the difficulty to even schedule meetings, et cetera. On one hand I get frustrated with them, but on the other hand, I'm actually smiling to myself. It's okay. That's, you know, this is why I'm winning, you know, so well, on that.
- [21:08]
B
Note, actually, before we segue to the Israeli tech ecosystem specifically, can you share a little bit more about your approach to due diligence? You didn't agree with what Yonatan said about healthcare and.
- [21:17]
C
Yeah, because I don't believe that the, at the end of the day, the product of the VC's great returns, not great diligence. Okay. And the returns in VC are functional. The winners, not the losers. So a VC should not be. Luckily, I don't have it there in a story. Okay. Luckily, somehow I got spared and they know. But it could happen, you know, it could happen to me. I'm not even trying to be the most thorough and diligent and stuff. And people can fool me and you know, I can. Luckily it hasn't happened, but it could happen. But to me, I know that the VCs on resident internals got on other such cases. Maybe, you know, felt that they had egg on their face and you know, maybe they got criticism in the media, maybe even from their LPs, I don't know. But I don't think it's justified because at the end of the day I think they should be judged based on the performance of that fund. If that fund is great, then the fact that they wasted 3% of the fund on let's. What's the name of this guy? Sbf.
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A
Ftx.
- [22:14]
C
The great investors who put money in FTX are great investors. So they made a mistake. But it's a far greater mistake to be afraid all the time that people are lying to you. And because of that, take all the time in the world because the best deals, they're not going to wait for you. I think it's a mistake for VC to be too scared to look bad. What matters really is that you are in the winners. It's about the winners and about the losers. It doesn't make a huge difference to me if the loser was because you were wrong about the market or about the management team or because it was, oh, because someone fooled you. So bottom line is it's not great for VC to be too afraid to look stupid.
- [22:54]
B
So let's talk about some of your investments. About 80% of them have been into companies started by Israeli founders, regardless of where they're headquartered. So is this a feature or a bug? Is this part of the strategy? It's just your network, what is it?
- [23:09]
C
No, it's. It's the network. But you know, basically I'm almost always invest in people within my very close network and there is strong correlation between that and Israeli founders. And it's a great. So if I wanted to fix it, they could have. But I don't see it as a problem because I do think that it's a great pool of founders. It's a great ecosystem. On one hand, it's large enough to matter. There are enough great companies every year started by Israelis here or in Israel. But it's also small enough to still be intimate and everyone knows everyone and it's easy for them to vet me. It's easy for me to vet them. There's nothing in my charter that limits me. The next fund could be, in theory, 100% non Israelis. But I guess it is a feature.
- [23:53]
B
You mentioned you're one of your companies, Navan, which used to be known as the Artist, formerly known as Trip Actions. Right. They've been around for a while and I know that there were talks several years ago about an ipo. Now it looks like it's happening at some point by end of the year. Talk a little bit about. I know you probably can't say too much about plans there specifically, but take a step back and walk us through how you see the landscape as far as IPOs and we'll get to other exit paths as well. What do you see in the next few months?
- [24:23]
C
In general, this year is being the year of comeback for IPOs. They've already been something like 44 IPOs this year. This week, a few, including one Israeli via and planned for this week. And there's Klarna, for example, and a couple of others. And I think there's also an expectation of six or seven or eight others to go public with the rest one meaning that they're going to go public later this month or in October. I'm sure we're going to exceed 60, which is by far the largest number since 2021, I think. I think the market is receptive to IPOs for good companies, by the way, which is a good thing. You know, it's not, not like 2021, which when anyone could go public, it's not the. When a lot of crap went out. Not everyone can. But quality companies can go public and I expect it to continue. Also, there are strong M and A activity as well. So I think it's a healthy environment.
- [25:16]
B
On the M and A side. What are you looking at? I mean, is there. I know we've seen some consolidation on the cyber side. Are there any specific trends that you're looking to?
- [25:24]
C
I don't know that I'm looking for trends because I never invest in a company hoping that they could be acquired. I always, you know, invest in a company thinking that there is a path to a viable independent company. But in general, we've seen two very large MA deals that involved Israeli companies, the largest in history, I think Wiz and Cyberark. But both were amazing transactions. Right. And earlier this year, one of my companies, Next Insurance, got acquired by minicry, also not similar in size to Wiz, but also actually one of the top 10 Israeli exits of all times. I think in technology and M and A is a legitimate way to strategically build scale. And by the way, I expect Israeli companies to be also more and more on the acquiring side. And most of my companies have made acquisitions. Navan have, Tipalti have, House have. And will probably continue to make acquisitions when it makes sense.
- [26:20]
A
So I think on that path you gave us an insider look into sort of the solo VC part. We saw Wix acquire base 44, which is sort of like a solo entrepreneur in a way. Not really solo, but predominantly solo.
- [26:33]
C
He hired two or three people two weeks before the acquisition. Yeah.
- [26:36]
A
So are there parallels here? Do you think we're going to start seeing kind of like the same thing that you sort of seeded back then on the VC side? Is this a viable, scalable dynamic, individuals starting companies exiting within, let's say, 12 to 18 months at around 150, 200 million to build scale in a bigger company, given velocity.
- [26:58]
C
I don't know if necessarily would make the parallel because I think it's much more complex to build a company than to do. I do what I do is really easy.
- [27:05]
B
And you don't even have to write any investment memos to yourself.
- [27:09]
C
You don't need to do anything. I just, you know, ask my CFO to transfer money and get shares in return. And what I'm doing actually was not, not enabled by AI. Okay. I think that what you're talking about is a trend that's going to happen or starting to happen thanks to AI. So that's why I don't tight. You can say it's the parallel, but I think it's, you know, different drivers. So I think that AI has, you know, made things so, you know, you can basically have employees who are AI agents. If you can do that, you can really. You could build companies with very few people. I still think this is still going to be the exception. It's not going to be the rule, but we're going to see more of these exceptions.
- [27:51]
A
So if that's the trend. So you're not seeing that being competitive on the VC set or squeezing VCs out, is it, you know, kind of when you walk around in the valley, what's the change in the competitive landscape for companies? Given China, given maybe Europe in some markets, are we going to see, you know, Israeli companies having more competition? As many barriers for entry that were so powerful through the Israeli ecosystem are now becoming lower? I mean, things you could only do in Israel only could do in the valley now, thanks to AI, you could get done in Estonia or in, I don't know, other countries in the world, predominantly, I think China. Is that really a leveling in terms of competitiveness or as Far as your eyes can see, it's still dominant Israel, dominant US and then a couple other pockets on an ad hoc basis.
- [28:40]
C
Well, first of all, I don't know that I would count as a dominant Israel to the situation today. With all due respect to Israel, I think there is the Bay Area, which is dominant, and then there's another maybe 10 areas, Israel being one of the 10. You know, there's, there's Israel, there's maybe so called, there is Boston. Boston. Maybe Boston, New York. Yeah, maybe Florida, you know, and you know, maybe Tel Aviv is in the top five, not in the top 10, maybe it's even in the top two or three, it's hard to tell. But whoever is second, even if it's Tel Aviv, it's a distant second to.
- [29:12]
A
No doubt, no doubt.
- [29:14]
C
I do think that AI and remote, not just AI, the fact that the COVID and the fact that we got impact and the fact that we got used to do things remotely, it is easier to conquer the world even if you're not based on the Silicon Valley. And I'll give you just one striking statistics, I think personal to me. Prior to Covid, probably 90% of the company in my investments were headquartered in the Bay Area. Post Covid, probably 80, 90% of them are not. Oh wow.
- [29:44]
A
Full inversion, full inversion.
- [29:47]
C
So I think that if I have to guess, I think that fast forward 10 years, Silicon Valley is still going to be dominant, but less so. But that's the thing. Good news for Israel, because you know, because this means that it's easier from Israel to conquer the world. Okay. So I don't see it as a threat. The opposite, I think it's. And in general, I think that the next few years are going to be a golden era for venture because AI is the biggest technological shift probably in the history of the world, you know, maybe in the last 100 years. So anytime there's such a shift, there's an opportunity for value creation. And I think that Israel being more mature in market than some of the others, being only second maybe to Silicon Valley in terms of maturity of the market, I think is extremely well positioned because you have entrepreneurs with a lot of experience, also with a lot of Appetite. You know, 20 years ago, if entrepreneur in Israel could have sold a company for $200 million, they would have been here. Now everyone who served with them has already sold the company for more. So they feel like it's all failures if they don't get it at least in multi billion dollar outcome. So the experience, the access to, to Customers to investors to partners to everything is so much more developed than it was 10, 20 years ago and also more developed than it is in Europe and also more developed than it is in some of the other places. So I think that Israeli tech is extremely well positioned and I think everything else, it's like a miracle. But everything else that's happening around us, these demonstrations and reform and then the October 7th and the war, it's all very tangential. It's all very secondary impact, you know, on the success of the tech industry in Israel. So I'm very, very bullish about the success of the tech industry, irrespective of everything else that's happening around.
- [31:38]
B
I do want to ask you about a couple of potential risks to the tech ecosystem. And the first one is, you know, we're talking a lot, reading a lot about some of the money that's flowing into defense tech and into cyber, which obviously on the cyber front that's been going on for a long time. But it brings about this question or concern potentially of, you know, is there so much money going and attention going into these specific sectors that have really been boosted by the fact that we're in this war? Is that in any way hindering investment that's going into, you know, feeding other sectors that are very, very important for the continued diversification of the ecosystem in Israel? Is that at all a question you're asking yourself or looking at on the money side?
- [32:22]
C
It's not a zero sum game. So whatever goes into defense tech is not coming. It's not like someone has a budget for Israel and you know, because they in defense deca, the only place where it's more of a zero sum game, you can say, is the talent. But I don't see a situation that all the talent is dried up because everyone wins to defense tech. I just think this is so far from so divorced from reality. So I personally am not so much in the defense tech scene. Just it's on my world, but hats off, good for them and I wish them the best. Seriously.
- [32:51]
A
I agree with you. I see the originality. Like I visit from time to time and do some really micro angel investing, whatever that is, and work a lot with entrepreneurs. The aiming high piece has never been as aggressive as it is right now. And I'll tell you that the thing that resonated with me was the shutdown of the airport because people are like, okay, whatever happens in Israel, go on a plane, they take the meeting in the valley, even if it's for 24 hours. I come back but then you can't fly and that even that, like people.
- [33:18]
C
Are like, no, but you can still sail to learn a plane. No people did that. No people did that. Seriously. And also you can cross the border to Jordan and fly from there.
- [33:28]
A
Exactly. So for me, you know, the biggest piece was when I was in the public service. You know, the notion of being stuck was always Turkey, Turkey would somehow function and that's dead. But we're flying through the uae, which, you know, if you told someone five years ago, Israel's best kind of most reliable partner for getting to the Valley, for, for getting shit done, for continuing to deliver is going to be the uae. I mean, so. Yeah, I agree. I think people are hungrier than ever and I think they're aiming high.
- [33:56]
C
And with all due respect to United, and there's no comparison to Emirates, so.
- [34:02]
A
And I think maybe one last point on that, I don't know how that resonates with you. There's grit at the higher level of the altitude, of the atmosphere. Right. Like, there has always been grit at Seed ab. But I'm meeting folks who are also, I don't say happy, but they're willing to step down, bring other folks in. There's like, I don't know, I feel it's less talk, a lot more action. I do see a lot more in cyber though, than in other areas, which I'm not really worried is not the word, but there is this type of concentration that is becoming a bit of an issue, at least in my view. But on the other hand, if people fail, they build another company in another field and it's not a big deal.
- [34:37]
C
Not by the way, not in my portfolio. But it's also, again, reflects on me.
- [34:41]
A
Yeah, Broadly, broadly speaking, you know, there's.
- [34:43]
C
Navan, there's, there's Sunbed, there's Next insurance, there's many, many, many others. There's Riverside or building very, very large companies, multi billion dollar companies, and none of them is, is remotely close to cyber.
- [34:56]
B
And okay, one other question about potential risk risks to the ecosystem. And I have a feeling I know what you're going to say here, maybe not. But the other thing that keeps getting brought up is the risk of brain drain from Israel. By the way, you're agnostic, you're investing in companies regardless of where they're headquartered. Of course. But when it comes to the vibrancy of the tech ecosystem in Israel, are we risking fatigue and brain drain happening?
- [35:18]
C
Yeah. So first of all, there's always been, I think it's healthy that Israelis leaves Spend a few years in the US stay, some of them come back. Because one of the advantages that an Israeli startup has over, let's say an English or Italian startup is this Israeli diaspora. So many of the Israelis, even if they left Israel, they're still connected with Israeli and even if not so they work for non Israeli companies. But it's easier now to engage them because they're Israeli, because everyone knows about. So if there was no brain drain and everyone was all these roads were in Israel, the high tech would be in far greater trouble because you won't have all these informal networks on all that and would make things so much harder. So yes, the last year saw more than usual people leaving, but it's still a small percentage and I think it's also healthy. I don't know what's the optimal percentage, but some percentage is healthy that the only risk, if you will, is a very long term one. If Israel in 20, 30, 40 years just becomes a country country that people don't want to live there, then it's a risk. But then it's not a risk to the tech industry.
- [36:31]
A
It's a bigger issue.
- [36:33]
C
So, so it's not that I'm cavalier about this risk. I think it's a long term risk and hopefully we or people who actually live in Israel, hopefully can work on making Israel a place that people want to live in for not just for the high tech, but it's also going to help the high tech.
- [36:47]
B
Yonatan's doing his best.
- [36:49]
A
So yeah, me, my wife, our four.
- [36:51]
B
Kids, I love it. Okay, well, Owen and I, by the way, Yonatan are doing our part for from here. And speaking of which, I know you have to get to your Italian coffee shop or wherever you're going to next, so we appreciate you spending some time with us and we'll talk to you soon.
- [37:05]
C
Was my pleasure, for sure.
- [37:07]
B
Thank you.
- [37:08]
A
Thank you very much.
- [37:09]
C
Bye Bye.
- [37:10]
B
Bye. Well, we began our show with the numbers of the week and we are going to end with the words of the week as usual. And here it is this week. This is pretty heavy stuff. So standing next to, oh, you know, just Putin and Kim reviewing the might of the PLA marching in Tiananmen Square. This is what President Xi had to say. Humanity is once again faced with a choice between peace and war, dialogue and confrontation, and win, win cooperation and a zero sum game. The Chinese people will never be intimidated by any force. We will resolutely safeguard our national sovereignty and security and we will never allow anyone to bully, oppress or Subjugate us. Wow. What do you make of that, Yonatan?
- [38:03]
A
So I think this is a very consequential meeting that happened last week. This is critical for Israel, it's critical for the U.S. i think the world is genuinely going back into like a division of almost bipolar, only this time China is leading. Just three quick indications. They signed an MOU for 50 billion cubic meter gas, Russian gas, Siberian gas, deal into China, whereas, whereby China basically says we will decide for how long at what price and what's our commitment. Right. The take or pay, which is like, you know, so significant. It's basically turning Russia into like the gas station for the Chinese. Right. So it's very clear where that goes. The second piece, the word Taiwan was not. Not mentioned on the speech, but it was actually kind of even worse because it was like assumed that China has its sphere of influence and, you know, the world. And the third was the. The straightforward nature of the speech vis a vis the kind of supremacy of the west and the hegemony in rejecting it in full. And so I think it's very consequential, you know, as numbers matter for what's your number? Words matter. For us, this is the dominant piece that's going to drive the global economy in the next, I think, 20 to 25 years. And obviously it's going to be very consequential for Israel, both politically and for the Israeli tech industry and the macro dynamics. Hence why India is important.
- [39:28]
B
That is it for today's show. Thank you for tuning in to ARC 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. But most importantly, please share it with others who you think will find it interesting. And if you want to make suggestions or share your feedback, please reach out to us@whatsyournumberrcmedia.org.
- [39:57]
A
What'S yous Number is produced by Adam James Levine. Aredi. Sound and video editing is by Martin Huergo. Our theme music is by Midnight Generation. I'm Yonatanadiri.
- [40:07]
B
And I'm Michal Avram. See you back here next week.
- [40:10]
A
See you next week.
- [40:15]
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.