Zionism 2.0

Jon Medved's vision is based on what Israeli technology can do for the world.

By TAL BENJAMIN
Hand coming out of computer screen (illustrative) 311 (photo credit: Don Hankins)
Hand coming out of computer screen (illustrative) 311
(photo credit: Don Hankins)
A mid-summer evening in a smart dining hall in the Old City of Jaffa. The guests are a who’s who of the health technology industry, from Daniel Hershkowitz, Minister of Science and Technology, and Avi Hasson, the Chief Scientist at the Ministry of Industry, Trade and Labor, to hospital directors and the heads of the medical insurance funds.
They have gathered to pay homage to Frans van Houten, CEO of Philips, the $35 billion Dutch electronics giant that employs more than 600 people in Israel and supplies most of the country’s medical imaging equipment.
But all eyes are focused on a large, bearded, bear of a man who is bombarding them with slide after slide of breathtaking statistics about Israel’s high-tech boom with the knowledge of a consummate insider and the arresting skills of a born orator. Meet Jonathan Medved, a California-born hightech entrepreneur and venture capitalist who has carved out a niche as the business world’s most effective salesman of his favorite product: Israel.
The mesmerizing effect on this cynical gathering of hard-bitten executives is palpable. If Medved was hawking a new religion, he would win a roomful of converts tonight. As he removes his Powerpoint presentation from the projector, an untidy, bespectacled man approaches and asks if he can have a copy for himself. Medved is startled but readily agrees. The man is the minister of science and technology.
Tonight’s presentation is one of half a dozen that Medved is delivering during a week in which he will meet the visiting presidents of major American universities, a group of central bank governors from Africa, a delegation of senior French diplomats, and a mission of US Jewish campus activists.
Medved has become accustomed to presenting the benefits of the local hightech economy to visiting dignitaries. For the past 20 years, he has captivated audiences with his tale of the emergence of Israel’s innovation economy from a critical mix of the entrepreneurial spirit of Zionism, the technological and management training of elite military technical and intelligence units, an influx of Russian-trained mathematicians and the opening of the state to foreign investment following the 1993 Oslo Peace Accords.
If th is all sounds fa miliar from the best-selling book, Start-Up Nation, it is no coincidence. One of the inspirations behind that book was an earlier version of Medved’s Powerpoint presentation that caught the eye of authors Dan Senor and Saul Singer. Back then, Medved called his lecture “Israel Inside” – like the Intel advert – showing how Israel-based innovation was already powering almost every aspect of modern technology.
“Jonathan is one of the remarkable stories of the start-up nation,” says Malcolm Hoenlein, executive vice chairman of the Conference of Presidents of Major American Jewish Organizations, who invites Medved to address officials and celebrities he brings to Israel as chairman of America’s Voices in Israel. “We just had a group of central bankers from seven African countries. He captivated them with a breakdown of all the immigrant populations to Israel, as opposed to the picture that many of them hold of Israel as an apartheid state.” “These African bankers said: there’s very little America can do for us, there’s very little Europe offers us, but Israel can do everything for us in terms of the things they need like agritech, medical tech and high-tech. They were blown away,” says Hoenlein. One of Medved’s favorite slides is a blue and white alarm clock showing the contribution of Israeli technology at every hour of the day, from consumer electronics to medical research and equipment, telephony and Internet software.
A series of slides listing which companies have bought Israeli start-ups reads like a fat Silicon Valley phone book. He says he got bored after the fourth slide and the 59th company. “Jon is among the most effective spokespeople in the country for the Israeli high-tech scene,” says Michael Eisenberg, a general partner at Benchmark Capital and Medved’s former business partner. “He’s totally passionate. Jon coined the term ‘Your daily dose of Israeli technology’.
Jon ha s made peopl e real ize that everything they touch is impacted by Israeli technology. That’s an extraordinary contribution.” Medved’s message, once visionary, has become mainstream. Now he has a new vision, based not on what Israeli technology can do for Israel, but what it can do for the world.
“I was sitting with a senator from Idaho and I wondered what I was going to talk about,” Medved tells The Jerusalem Report in the basement study of his Jerusalem home.
“It turns out that Micron Technology, one of the biggest employers in Idaho, just bought a division of Intel, which has hundreds of Israelis doing their development work.
The senator was well aware that Israel is a key part of Micron’s success.” Medved says that pattern is being repeated across the United States, with local mayors and governors competing to attract Israeli companies to set up their US branches in their hometowns. “There’s a little town called Anderson, Indiana, population 60,000, that has hundreds of Israeli-created jobs.
They led a trade delegation here to hit more Israeli companies to go and headquarter there,” says Medved. A recent study by consultants Stax Inc. that showed that, in 2009, Israeli companies in the state of Massachusetts generated $7.8 billion in direct and indirect revenue – equivalent to 2.1 percent of the state’s total GD P – creating nearly 6,000 jobs and indirectly employing another 10,000 people.
“When I saw th ese NUM - bers I couldn’t believe them,” says Medved. “The US Chamber of Commerce has now launched a project to try and track this nationwide. Stax Inc. was hired recently to do a similar study for New Jersey. They have not yet released the numbers, but it looks like they may be even better than Massachusetts. Last week I was in Atlanta where 75 Israeli companies have set up shop in the southeast. In Vermont, Plasan, the Israeli armor and protection company headquartered in Kibbutz Sasa, is pretty much neck and neck with Ben & Jerry’s in terms of how many people they employ there.”
For the first time, says Medved, it is clear that Israeli innovation is not just good for Israel – it plays a major role in helping to stabilize the economies of other countries and create jobs abroad. In a fantastic reversal, Israeli technology is now creating jobs and prosperity in the United States – a complete transformation of the traditional relationship in which Israel was the one-way recipient of US aid handouts. “A lot of Israel’s friends, and would-be friends, around the world are impressed with the sophistication and the stellar economic growth of the country, yet I think they are more interested in how it affects them,” says Bob Rosenschein, founder and former CEO of Answers.com, acquired in 2011 by Summit Partners for $127 million. Medved was an early investor.
“Jon has started to emphasize how Israeli technology is creating American jobs. Jon’s message is a very positive one. Not only are Israeli products found in everything you use, but even people who are hostile to Israel politically cannot but be impressed. It’s a very pragmatic message. It’s saying: even if you don’t love Israel viscerally, consider what the Israeli economy is doing for you,” says Rosenschein.
Medved says this positive aspect of Israeli innovation comes as no surprise, and fits neatly with his vision of Zionism as a constantly renewable source of cultural energy for the Jewish people. For Medved, Israel was a start-up nation even in Herzl’s day. The modern high-tech state is merely its new incarnation: Zionism 2.0. “Zionism began as a wild, bohemian, fun movement,” says Medved. “The people who got involved were whacky. For me, it’s never changed.”
“The notion that ideas can somehow motivate people and change the world is entirely in tune with today’s spirit. Herzl wrote a book, called everyone together and declared: Today the Jewish state was born.
It would be laughable if it hadn’t come true. It’s the same way that people now are reinventing the future,” he says. Medved believes the same spirit of innovation that created an entire state from a visionary idea is the one driving Israel’s success today.
“That’s been the core of Israeli essence and society from the beginning. That’s what always attracted me to the whole tech thing because to a large degree there’s this same kind of a sense of being avant-garde, of changing the world, of creating the new.
That’s pretty much what Zionism has always been about. For me, going back between these two worlds is a glide, it’s very easy. It makes perfect sense,” he says.
Medved’s own life has mirrored that glide.Expelled from Hebrew school in California at a young age, his family struggled to find a synagogue that would host his bar mitzva.
The ceremony was pretty much a passingout parade from Judaism until he found himself, at his parents’ insistence, spending a gap year after high school in Israel in the summer of 1973.
Returning to Berkeley, he was appalled to find overtly anti-Semitic demonstrations greeting the outbreak of the 1973 Yom Kippur War. He joined the Zionist activists and never looked back, except to switch his allegiance from an early dalliance with socialist Zionism and Conservative Judaism to become a committed Likud, Republican and Orthodox stalwart.
Returning to Israel after college, he dabbled with political activism until business contacts of his father David, a former NASA physicist pioneering the use of early fiberoptics, convinced the young Medved that Israel’s future lay not in politics but in business and innovation.
He went back to Cal ifo rnia to learn the business and, after the multi-million-dollar sale of his father’s company to oil giant Amoco, Medved returned permanently to Israel in the early 1990s, just as the Rabin government was launching the first incubators for early-stage technology companies. In 1994, he and three colleagues from the world of business and finance established Israel Seed Partners, a start-up investment firm. “Jon’s contribution to the Israeli entrepreneurship and venture capital communities is significant.
As a venture capitalist he was a pioneer in making early stage investments in Internet start-ups ahead of its time, not being afraid to invest in consumer-related ventures. He is a great ambassador,” says Chemi Peres, son of the state president and co-founder of Pitango Venture Capital.
By the time it closed in 2005, Israel Seed Partners had raised four funds with a total of $260 million under management, with investments in 60 different Israeli start-ups.
“We were the first dedicated seed fund in Israel and became one of the larger specific seed funds in the world,” Medved recalls.
Some investments were terrible failures, but the fund enjoyed a series of major exits.
Shopping.com was bought for more than $600m by eBay. Answers.com was bought for $127m. MobileAccess was bought for $200m, Broadlight for $200m, Tradeum for $450m, and Cyota for $160m. There were many others that achieved successful exits.
“The companies that we funded raised over $1b of additional capital – and we survived the bubble bursting,” says Medved.
In 2005, Medved launched his own startup, the video ringtone company Vringo. In 2010, in the wake of the US market crash, he guided it to the first Israeli IPO on Wall Street in three years. Earlier this year, Medved quit Vringo and is now launching another new company.
He continues to entrance visitors with his compelling message, and travels across the United States spreading his high-tech gospel.
He believes it is time the Zionist movement began learning from the innovation generation.
“Zionism is a revolution,” says Medved.
“But it’s a revolution within a traditional context. We wanted to recapture Hebrew and come back to our land and engage in a dialogue with the Bible. There’s this whole notion of dialogue between looking forward and looking back that gives Zionism its fertile tension.”
“It’s so easy to do that in the context of tech,” he says. “If you don’t see that obvious connection, you’re just not opening your eyes. The Jewish community and the Zionist establishment and the Israeli government and everybody who are custodians of our future in the public sphere are finally starting to get it. It’s been slow happening, but it’s starting.”
He compares the emerging high-tech Zionism to the first stirrings of the Jewish culture and emigration movement in the Soviet Union in the 1960s and 1970s, which took Leon Uris’s Exodus as its base text.
“Start-Up Nation has become the Exodus of this generation,” says Medved.