There are at least half a dozen candidates for the title “father of Israeli
high-tech,” including Stef Wertheimer (Iskar), Uziah Galil (Elron, Elbit), Eli
Hurvitz (Teva), Dan Tolkovsky (venture capitalist) and Yossi Vardi (involved in
dozens of start-ups).
But if I had to pick only one name, it would be
Efraim R. (Efi) Arazi, founder of Scitex, who died on his birthday, April 14,
age 76, after a long battle with Alzheimer’s.
Arazi was a fearless
larger-than-life role model who revolutionized color printing and showed how to
build global high-tech startups, long before the word high-tech was invented.
His first company, Scitex, founded in 1968, blazed the trail for other
start-ups, manufactured all its products in Israel and, at its peak, employed
4,000 Israelis. Scitex was a school whose ‘graduates’ went on to launch many
other successful start-ups.
As Arazi’s friend Benny Landa, founder of
Indigo and himself a pioneer in color printing, noted in his blog, “In today’s
age of smart phones and iPads, it’s almost impossible to imagine our world of
the 1960s, when everything was manual. Yet, Efi Arazi had already envisaged a
digital world: if he could combine the digital scanner with the computer, the
arduous manual task of preparing graphic information for printing could be
automated. And thus, digital prepress was born – and the printing industry was
Indigo, now part of Hewlett Packard, pioneered
high-quality computer-to-drum digital color printing. The two Israelis, Landa
and Arazi, changed color printing forever.
In 2005, despite lapses of
memory and loss of words, Arazi was still able to recount his life story to
Dalit Milstein, who wrote and published a fine biography, aptly titled “His
Way.” Arazi tackled this task with the same courage and determination that he
used to build his start-ups.
Arazi was only 13 when he decided his life’s
passion was electronics. But schooling did not come easy. His younger brother
Dani told the Herzliya Interdisciplinary Center radio station that their mother,
now 98 years old, was told that her sons were being expelled, each from three
Efi ended up at the Israel Air Force Technical High
School as a cadet and won a prize for his innovations during his military
In 1959, after finishing his army service, with only $50 in his
pocket, knowing almost no English and without a high school diploma, Arazi left
Israel for America, knocked on the door of the admissions officer at Boston’s
Massachusetts Institute of Technology (MIT) and asked to be admitted. After the
interview, he was accepted as an “extraordinary student” and eventually
graduated. Today, I doubt any college in Israel or America would accept
While at MIT, Arazi supported himself by working for Itek, a Route
128 defense contractor specializing in spy cameras. He rose quickly to a
high-level position and was surprised to learn later that two of his MIT
lecturers were his subordinates at Itek. In 1969, on Apollo 11, Itek’s camera
sent back pictures of Neil Armstrong walking on the moon; Arazi is said to have
made major contributions to developing it, especially its scanning
Arazi rushed back to Israel in 1967, just after the Six Day
War, and in 1968 founded Scitex (Scientific Technologies), with nine
American-trained Israeli engineers that he brought with him to form the backbone
of the company. At first, Scitex sold software and computers that enabled color
printing directly from mini-computer screens to textiles.
quickly saw another, more important use for his technology – preparing color
plates directly from a computer screen for printing magazines and newspapers, in
place of the existing costly, laborious cut-paste-and-film method. This
pre-print technology existed but Scitex massively improved it. Scitex grew to
capture 46 percent of this market, thanks in part to a major contract with the
American daily USA Today, a pioneer in the use of color in
According to the late Zvi Zur, a former member of the Scitex
board, cited in Milstein’s biography, “Scitex was a super-technology company
with a very advanced marketing organization. Today every company likes to define
itself as global, but Scitex was global from its very first day with branches in
New York and Boston, Belgium and Japan, and with professional teams, systems,
display rooms and service people in each one. In this, too, Scitex was a real
pioneer and operated ‘far and wide’ in the fullest meaning.”
the unique atmosphere Arazi created at Scitex is www.exscite.net (a play on the
word ex-Scitex), the website of Scitex alums, now with 1,818 members. A great
many Israeli high-tech leaders and founders cut their teeth on Arazi’s unique
team-based management style and the ambiance he created. Among them is the
current Minister of Agriculture Yair Shamir, Scitex CEO for seven
“I worked with Efi from late 1987, when I joined Scitex, until
January 1989 (when Efi was replaced by Robert Maxwell as chairman), but I
continued to be in touch with him for at least 20 years afterward,” Shamir told
me. “Efi was a unique person, very different from other people; even simple,
everyday life activities he did in a different way. He had his own way and he
always had an educated explanation why his way was the best way.
the ultimate innovator, not just in the field of technology. When he was in the
process of creating a new idea, he focused only and absolutely on this. Nothing
could have changed his course of thinking and dreaming, which could last for
days or even weeks. Once he was satisfied with the outcome he had imagined, he
got someone to put the idea on paper. And then started to push for execution,
bringing his idea into a final working product.”
“If I expect you to
build me a ‘Mercedes,’” Arazi once said, “I must give you surroundings that look
like a Mercedes.”
And he did. He demanded long hours of work from his
workers but took pains to serve them dinner in a Scitex dining room whose
culinary level was so high that journalist Yaron London, then a restaurant
critic, came to dine there and reviewed the meal (highly favorably) in his
Arazi told biographer Milstein, “my focus on colors,
shapes, acoustics… was essential to employee performance and the impression made
on customers and potential investors.
They have a striking effect on the
activities of the entire company. Everyone today is aware that the benefits from
the business standpoint are indisputable.” Google’s famous Mountain View,
California, headquarters features highquality restaurants with executive chefs;
Arazi did it 40 years ago.
Arazi resigned as chairman of the Board of
Scitex in 1988, when media magnate Maxwell bought a quarter of the company’s
shares and then appointed himself chair. Why did Arazi quit? Arazi told the
business daily Globes seven years later, “No other high-tech firm, not even
Microsoft, gives out dividends. The high-tech way of thought is to channel every
profit into the next project. But Scitex allotted dividends and kept on with the
same existing products, without being concerned about future products.” This was
a hint of what was to come in Israel, when local and foreign tycoons plundered
high-tech companies to finance reckless plunges into real estate.
was indomitable. He went to Silicon Valley, raised some money and launched EFI
(Electronics for Imaging), which pioneered in creating software that turned
color photocopiers into color printers. EFI’s shares today have a market value
of $1.18 billion.
Nor was Arazi finished with his start-up career. At his
death, he was still chair of Seerun, which sells customer relationship
When he died, it is perhaps well that Arazi was not
fully aware of the fate of Scitex.
Part of Scitex was sold to
Hewlett-Packard; in 2005, part became Scailex, 79 percent of which is owned by
Suny Electronics, of which 73 percent in turn is owned by tycoon Ilan Ben-Dov,
who used Scitex cash and enormous debt to take over cellular operator Partner.
Scailex now admits “the continuation of our operations as a going concern is in
doubt,” a result “as far from Arazi’s vision as east is from west,” noted the
Tycoon Nochi Dankner acquired Koor, once Israel’s
industrial giant, and according to Haaretz turned it “into mostly an option on
the Swiss banking industry.” Real estate tycoon Motti Zisser bought cash-rich
Elbit Medical Imaging, formerly Elscint, a pioneering advanced medical imaging
company, and used it to leverage bad real estate investments in Eastern Europe.
Zisser now struggles to pay his debts.
When, I wonder, did the leadership
of Israel’s economic future shift from technology visionaries, like Efi Arazi,
to reckless financial gamblers like Ben-Dov, Dankner, Zisser and others? And how
did we allow this to happen? A soon-to-be-published report by the State
Comptroller reveals that between 2008 and 2011, there were 94 “haircuts” (debt
forgiveness plans), that wrote off NIS 21 billion ($5.8 billion) owed to banks
and pension funds. In 2011, according to this report, 72 percent of all bank
credit went to only 2 percent of borrowers – the tycoons – who borrowed with
little or no real collateral.
It is the Israeli public who now pays the
price, through loss of their pension assets, of the unholy collaboration between
the banks and the tycoons.
If the misdeeds of the tycoons help Israel
reestablish its business leadership in the hands of visionary entrepreneurs like
Efi Arazi, there may be some small benefit in the huge losses they
The first step must be to stiffen the proposed Anti-Concentration
Act, now being discussed in the Knesset Finance Committee, to absolutely forbid
the kind of pyramids that Dankner and other tycoons built. And the banks’
practice of forgiving tycoons’ debts while foreclosing on mortgages and debts
ordinary citizens struggle to pay must also end. The writer is a senior
research fellow at the S. Neaman Institute, Technion.