Hi-tech icons debate the merit of quick exits
To seek a quick exit or not? Israeli hi-tech icons Zohar Zisapel and Ed Mlavsky debate the pros and cons.
ZOHAR ZISAPEL (center) and Ed Mlavsky (right) Photo: Hanoch Grizitzky
To seek a quick exit or not? That is one of the questions Israeli start-up
founders asks themselves, and one on which local hi-tech icons Zohar Zisapel and
Ed Mlavsky could not agree Tuesday.
Quick exits are bad news for the
economy, said Zisapel, who cofounded RAD Data Communications in 1982 and oversaw
its expansion into a group of 14 companies with combined sales of $1.25
“It’s good that we have entrepreneurs and that companies are
being sold,” he said. “But if you look at this from a national economic
standpoint, it is better to have bigger companies. Bigger companies employ more
people. It is better for the rest of the economy, not just for the elite – who
are able to start new companies and new ideas.”
But Mlavsky, founder of
Gemini Israel Funds and widely recognized as one of the founding fathers of
Israeli hi-tech, begged to differ.
“The last thing I want to see in
Israel is a Nokia,” he said, referring to Finland’s struggling
telecommunications giant. “To have the economy dependent on one company is not a
Matt Marshall, editor-in-chief of US online technology blog
VentureBeat, moderated the debate, which took place at the opening of Bootcamp
Ventures’s two-day Israel Innovation Marathon in Jaffa. The conference brought
together dozens of Israeli start-ups from different industries and investors
from 15 countries.
Zisapel said entrepreneurs would benefit from adopting
a long-term strategy because it would encourage them to invest in sales and
marketing rather than just focusing on developing their technology.
you are successful [in achieving an exit,] that is okay, but it is a bit of a
gamble,” he said. “If there are no buyers at the time you want to sell, then you
Mlavsky said Israeli innovators tend to become repeat
entrepreneurs, meaning the local economy does not suffer as much as other
economies do from quick exits. He referred to a Harvard Business School study
that found only 5 percent of American entrepreneurs founded another company
after their maiden exit. In contrast, he estimated that about 35% to 40% of
successful Israeli start-up founders become repeat entrepreneurs.
digital media, mobile, e-commerce and IT start-ups pitched to representatives
from offshore venture funds Tuesday, and more were set to appear on Wednesday.
Companies that pitched on Tuesday included: Ridefrog, a location-based
marketplace for carpooling that leverages social networks; PlugWallet, which
allows Internet users to buy and sell goods and services without paying
commissions to a third party; and ShopZooky, a social-shopping app that allows
local merchants and shoppers to interact with each other.
Eric Van Der
Kleij, CEO of the UK government’s Tech City Investment Organization, was among
the foreign visitors. He visited several start-ups on Tel Aviv’s Rothschild
Boulevard before the conference and told mayor Ron Huldai that it should be
renamed “Silicon Boulevard.”
Van Der Kleij said he was keen to encourage
more cooperation among UK and Israeli start-up companies through the British
Embassy’s new UK-Israel Tech Hub.