This blog is just a re-post with minor changes of my comment on Steve Duplessie thought-provoking blog post on Why Israeli Startups Die.
It is best that you read Steve’s full post, but the main argument presented is that startups have will succeed only if they are based in the valley. The second assumption is that Israeli managers fail because they lack market, customer and product understanding due to their background as fighters.
Steve, the writing is very amusing and interesting, but I think it has some clichés which might have been true in the past but are no longer valid.
I definitely agree on the importance of marketing, product management and customer awareness , but don’t agree on some other points.
As an Israeli\American born in Atlanta,Georgia and living in Tel-Aviv I feel I have the right to criticize both sides :)
Let me challenge few assumptions that you are making in the post and others follow in their comments.
The Israeli entrepreneurs in the last years grew up under heavy American cultural influence. American television, movies, songs, food and culture from day one (no dubbing :) ). Most of them have an MBA as a their second degree and not a degree in computer science. Many chose to become experts in marketing or finance and in usually in some of the leading business schools in the world.
The question if an MBA is a good idea or not is another topic …
The myth of a sweaty army commander leading his developers to die in the C++ fields is mostly a creature of the wild American imagination.
Most Israeli developers spent their army career in air-conditioned computer rooms, and the hierarchy there is much weaker than in corporate America, Japan or even a cub-scout group in Texas. Trust me, I tried both roles.
The other misconception is that you can’t run a really big company out of Israel. Having worked in Check Point for five years, I see no reason this can’t happen in other places. It actually worked in many cases – Mercury, Nice,DSPC, Teva, Gilat,Amdocs, Comverse, M-Systems, Precise, Memco and so on.
The fact is there aren’t many big new companies in IT in last years due to many reasons, which are not related to the origin of the CEO.
HP, Cisco, IBM,EMC,Microsoft and the likes are buying any enterprise software\technology vendor once it hits a certain maturity and size. With their size and the lack of an IPO market it is no wonder many prefer the fast exit route.
Having many employees in the valley it might be true in the early days of the company, but it becomes less critical when the company gets really big and global.
I’m not sure that Israeli companies that failed had a great technology but lacked market understanding. I think many of them had lousy products that had bad scalability, many crashes, memory leaks, bad user interface and slow performance. I probably interviewed some 400 engineers in the last years and not one of them admitted the technology didn’t work. It was always the management fault. I feel quite differently.
BTW,it is extremely hard to get excellent product managers anywhere in the world. Moreover, amazing VP’s marketing are not easy to find in San Mateo or San Francisco as well.
On a side note to American CEOs and analysts, the assumption that all technologies come out of USA and the rest of the world just follows, is not going to hold for much longer,IMHO. Israel would always be a miniature market, but the common American CEO mistake is to ignore the small nations of Germany,France, China, Japan and India because they keep insisting on having their own culture and language. Not only they think differently, but they refuse to follow the same marketing, sales and product assumptions that work “at home”.