speaking of AWEsome, NN, i know you be thinking i wuz on crack for posting this a month or so ago ...
nba.com
... but check out the nu lethal slamma jamma combo below! (sentence bolded)
"Feingold drives the lane ... dishes the rock behind the back to Anderson ... oops Alexander ... who catches ... spins ... and invert-Tomahawk 360s it with Authoritation!"
can you come up with a swank moniker for it?
NotsureifyouknowthattheBrianShawtoShaquilleO'NealAlleyOophasbeendubbedtheShawShaqRedemptionCM
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Money and Business/Financial Desk; Section 3
The New Israel: Land of Milk and Money
By WILLIAM A. ORME Jr.
04/16/2000
The New York Times
TEL AVIV -- WITH his collarless black shirt, close-cropped hair and wire-rim glasses, Gil Shwed looks like a 20-something denizen of the local coffeehouse scene. But he says he doesn't get out of the office much, unless he is traveling to one of his other offices -- in California, Singapore, Germany, Japan, France or Australia. Besides, there is a cappuccino machine just down the hall, next to the treadmills and stair machines that Mr. Shwed provides for his headquarters staff, now almost 300 strong and expanding daily.
At 31, this intense, fidgety Wunderkind runs Check Point Software, which is by stock market reckoning the biggest company that Israel has ever seen. With its capitalization bouncing between $11 billion and $20 billion, this Nasdaq-traded but Israeli-based company is worth much more than the phone monopoly and leading bank -- the two next-largest public companies here -- combined.
In an ascent that shocked the tightly knit Israeli business world, Mr. Shwed took Check Point to these heights in just its fourth year on the market. And he did so while keeping his global company openly and proudly Israeli.
The boyish Mr. Shwed, who started his first software consulting firm at 15 as the computer-prodigy son of a Jerusalem civil servant, is now deferentially courted by business leaders who are decades older. And he is lionized in the popular press in terms once reserved for war heroes and Zionist pioneers. His success has opened doors for dozens of other young companies that are now prospering internationally with Israeli technology and management.
"Gil Shwed is a role model in Israel today," said Nir Barkat, the eternally grateful chairman of BRM, an investment capital firm in Jerusalem. Back in 1993, when BRM was a small software developer, it gave Mr. Shwed $300,000 in 1993 and got half of his new company in return. (That stake has since been reduced to 4 percent, worth a mere $434 million or so.) "He did something extraordinary, coming out of nowhere and creating this giant."
More significant than Mr. Shwed's individual accomplishment, though, is his place in a phenomenon that many Israelis say is reshaping not just the business landscape, but also the very contours of Israeli society.
For the first time, Israel is witnessing an explosion of private wealth generated by foreign markets and foreign investment. The surge raises tantalizing visions of new cyber-empires operating locally but competing globally -- and, some people say, troubling prospects of new economic schisms in a society that was once proudly egalitarian.
Israel's technology boom also has knit a volatile country into the most volatile part of the global economy. Recent plunges in the Nasdaq have pulled the Tel Aviv exchange down, too, as an economy once based on self-defense and self-sufficiency now finds its fortunes more affected by a stock sell-off on Wall Street than by the paralysis of peace talks with Syria.
When Forbes published its global billionaires survey last year, it could identify only three Israeli candidates: Ted Arison, the since-deceased cruise ship magnate, whose diversified empire was worth an estimated $5.6 billion, and Yuli and Sammy Ofer, whose local Ofer Brothers industrial conglomerate was valued at $1.9 billion.
Now, thanks to Nasdaq, Check Point alone has produced three billionaires: Mr. Shwed and his two partners, who each own 10 percent of the company.
Others are suddenly halfway there, like Kobi Anderson [sic] of Comverse and Aryeh Feingold of Mercury Interactive, whose American-based companies both more than tripled in value since the beginning of last year, despite the Nasdaq's recent meltdown. Now the two are bidding jointly for Maccabi Tel Aviv, the country's European championship-contending basketball team, in one of the first Paul Allen-like manifestations here of the new economy. Another Israeli demi-billionaire is Daniel Lewin, 29, an M.I.T. algorithms whiz with 10 percent of Akamai Technologies, of which he was a co-founder.
"The Internet and Israel waited 2,000 years for each other," exulted Yossi Vardi, another leading high-technology entrepreneur, who recently concluded his second $400 million sale of an Internet start-up to American buyers.
In places like Silicon Valley or Fairfax County, Va., such overnight empires are no longer news. But it is difficult to overstate the significance of this sudden accumulation of corporate power for Israel, a $100 billion economy that until recently was dominated by a cluster of state-controlled banks, utilities and military contractors.
"The scale and speed of what is going on here has, I think, shocked everybody," said Jonathan Medved of Israel Seed Partners, a venture capital firm.
After almost four years of stagnation, the Israeli economy started expanding briskly in late 1999, posting a 5 percent growth rate that was propelled by high-technology exports and a record $1.3 billion invested in new electronics and software ventures last year.
But the full impact of this new wealth has not yet been felt, as paper profits from fast-rising stock prices are only now being used to finance corporate acquisitions and international expansion. High-technology job growth still isn't fast enough to dent the 9 percent unemployment rate, though the sector's earnings are rising fast enough to make income disparities plainly visible. Thousands of young Israelis are holding millions in unredeemed stock options, many of them still well above water.
Even business leaders driving this technology boom have some trepidations about the way it is transforming Israel.
"The only thing we have is high tech," said Mr. Alexander, the chairman of Comverse, which makes voice mail and messaging systems. "We have no choice. But what is not that good is that most of the wealth is going to 35 percent of the population. A lot of people are being left behind."
Many Israelis who have not been left behind are, like Mr. Alexander, relocating abroad, at least temporarily. In an age and an industry that encourages transcontinental mobility, Israel's high-technology entrepreneurs are torn between business ambitions and loyalties to a homeland that was predicated on attracting and retaining immigrants.
With technology stocks swooning over the last few weeks, Israelis are discovering another downside of globalization. Mr. Shwed's net worth, for example, fell from $2 billion to $1 billion in the space of a few days. But he shrugs off the fluctuations. "We are in this for the long term," he said.
Check Point reported a record $40 million profit and revenues of $78 million in the latest quarter, up nearly 80 percent from the corresponding quarter of 1999. Mr. Shwed said he expects continuing annual earnings growth of 30 to 40 percent, a projection that industry analysts call conservative.
The Seeds
The Plowshares Of High Technology
Check Point is the archetypal Israeli high-technology success story: Three army buddies, working as computer-wise draftees in military intelligence agencies, leave the service with what Mr. Shwed calls "a pretty good idea" for a commercial software product. Their now-patented firewall program, based on an improvised solution to the army's need for security in disparate interconnected computer networks, quickly becomes a global industry standard.
For many Israelis, there is a kind of delighted astonishment that their military survival skills and national ingenuity -- like entrusting teen-agers with the development of top-secret computer programs -- have proved so unexpectedly transferable to the global marketplace.
"Like the way the Romanians produced a Nadia Comanici, or the Russians produced chess masters, Israel produced electronic systems engineers," Mr. Vardi said. "Their army training gave them a kind of commando mentality -- you move fast, you improvise -- that is ideal for dealing with the Internet."
Their success at finding civilian applications for military hardware and software is hailed as a plowshares paradigm for this military-obsessed nation, which is just beginning to anticipate the possibility of a different and peaceful future. "It is part of our culture: They shall beat their swords into Sony Playstations," Mr. Vardi proclaimed. "It is right there in the Bible."
Their shared military origins may also better protect Israeli companies from a high-technology market implosion, some analysts say. These are not highflying Web portals or e-tailers; they are mostly back-office, inside-the-network mechanics, relying on the corporate market for secure communications and business-to-business computer transactions. Others are data transmission specialists. Most are reporting real profits and rising sales; one indicator is the record $2 billion that Israel earned from software exports last year, almost double the 1998 mark.
"These are not the Internet companies which people associate with losing lots of money in return for market share," said Clifford A. Goldstein, the American founder of Amdidex35, a Nasdaq-listed index fund of the 35 largest Israeli-run public corporations. "These are companies shipping product."
(Still, Akamai, the Internet systems maker that was one of last year's hottest Nasdaq stocks, has lost a stunning 80 percent of its market value since Jan. 1.)
About 100,000 Israelis now work for high-technology companies here, of whom perhaps one-third are highly-paid managers and engineers, estimated Shali Tshuva, an investor and analyst who has supervised government studies of the sector. Salaries in that upper tier have doubled in the last three years, company recruiters say. Yet wages elsewhere in the economy have remained stagnant.
"What bothers me is that it might create an upstairs-downstairs environment here," Mr. Tshuva said. "There is such an enormous difference in income between old-economy employees and new-economy employees, you might end up with two economies in the same country."
Or two societies. Israel's new entrepreneurial class is highly educated, fluently multilingual and politically unrooted, with leftish support for peace pacts matched by free-market scorn for business regulations. It is internationally transient, moving confidently through Manhattan and London and Silicon Valley from its staunchly secular base in northern Tel Aviv. It is ethnically European, including Russian and North American immigrants. It has little contact with Arabs or Orthodox Jews, Israel's two large, poor minorities.
In a culture that disdains ostentation, there are few conspicuous displays of new money. Israeli techies appear to be working constantly -- "like crazy people," said Mr. Barkat, admiringly -- online and by telephone, across several time zones, late into the evening, six days a week.
"We spend 14 hours in the office, half of it not even in Israel," Mr. Shwed remarked, shifting in a leather chair in the 24th floor of a skyscraper in Tel Aviv's diamond district -- the center of what used to be the country's only global civilian business. "We care about what is going on here, but our focus has been looking outside of Israel, rather than looking inside. It is a very strange situation. You are very attached to something, but you are also detached from it."
Within 5 or 10 years, Mr. Shwed predicted, he and his peers will be devoting much of their time and money to private philanthropy, especially in education, now almost wholly financed by the government and by Jewish donors overseas.
But for the moment, he said, they are concentrating on "building their businesses" -- and, in a new experience for wealthy entrepreneurs here, they are being cheered on from the sidelines.
The Impact
From Success, A Change in Values
Historically, from its kibbutznik grass roots to its avowedly Socialist leadership, this was a culture that cherished communal endeavor and frowned on individualism. Patriotism, not profit, was the incentive.
The business community -- despite the wealth concentrated in a few family conglomerates -- was devoted mostly to state enterprises judged essential to the survival of the young nation. Tax policies, social mores and limited investment opportunities made entrepreneurial fortunes exceedingly rare -- and entrepreneurs themselves the frequent object of envy and suspicion.
Even now, the success of the new high-technology rich "inspires fear as well as admiration," said Yaron Ezrahi, a prominent social commentator. "Because the scale of the wealth these people have attained is almost surrealistic, and because it comes out of a market that is partly incomprehensible, this new elite looks in some ways like an undeserving elite."
Overriding such misgivings, though, is a powerful surge of national pride in the idea of young Israelis triumphing in world markets "on the basis of their brains alone," Mr. Ezrahi said.
"They are making it globally, and we are proud of them," he added, "like we are proud of our soccer and basketball players when they make it internationally."
If there was a turning point in Israeli attitudes toward business, it was the development in late 1996 of an instant-messaging system by four army friends in their early 20's who distributed their software free on the Internet.
Their tiny company, Mirabilis, with the real-time e-mail system they called ICQ, was soon serving an Internet following in the millions.
In the summer of 1998, America Online snapped up the 19-month-old company for $380 million in cash and stock, then the largest foreign purchase of a local company in Israeli history. The sale not only made the young founders very rich; it also transformed them into local media stars, with commentators comparing them to the Israeli commando heroes of Entebbe and the Six-Day War.
"In 19 months, starting from zero, they created $400 million in value," said Mr. Vardi, who as the father of Arik Vardi, one of the founders, became the company's first business manager.
"It galvanized the whole country and made us all a little insane," he said. "The whole country got into a frenzy of Internet projects. Everybody wanted to be an entrepreneur."
It is a measure of how much and how quickly expectations and ambitions have changed that the Mirabilis founders are now criticized as having sold out too soon, and for too little. They and their company are now merely a small, Israeli-based division of the expanding AOL empire.
Still, one immediate result of the "Mirabilis effect," as it was called on Israel's business pages, was that hundreds of affluent Israelis were suddenly willing to bankroll their brilliant nephews' computer doodlings; scores of professional investors followed.
Israel has since become one of the most prolific incubators of technology companies in the world. Hundreds were founded last year alone.
A new survey of 10 industrialized countries by Babson College and the London Business School showed that Israel is surpassed by only the United States and Canada on several measures of entrepreneurial initiative, from the prevalence of independent start-up companies to the share of the adult population -- 5.4 percent -- reporting direct involvement in new business ventures.
Perhaps more significant, the researchers found a big change in attitudes towards business here -- a shift that many people attribute to Mirabilis.
"Social norms now stress individualism, materialism and independence," they reported. "The entrepreneur has become Israel's newest cultural hero and role model, a figure to be respected and emulated by large parts of the younger generation."
The Money
An Ever-Rising Tide Of Foreign Capital
Israeli entrepreneurs are enjoying not only local social acceptance, but also unprecedented foreign financial backing.
The central bank reported that Israeli companies raised two-thirds of their funds abroad last year, largely from American stock offerings; a decade ago, barely 10 percent of private-sector capital was from overseas.
By some estimates, American venture capitalists alone pumped $1 billion into new Israeli businesses in 1999, outpacing the $900 million in official United States economic aid that Israel received.
This month, in just one sign of growing investor interest, the American Internet pioneers Marc Andreeson (formerly of Netscape Communications), Jerry Yang (Yahoo), and Pierre Omidyar (eBay) helped bankroll a new $180 million seed fund for Israeli Internet start-ups.
But the money comes with a condition. Almost all venture capitalists --Israeli and foreign alike -- are requiring new companies to establish their headquarters in the United States, as a prelude to a Nasdaq offering or a takeover by an American multinational.
The largest of the high-technology expatriates is Amdocs, a voice mail and telephone billing specialist now allied with SBC Communications, the former Southwestern Bell. Once a small Israeli software developer, Amdocs is now worth about $13 billion. It employs more than 3,000 technicians and engineers here, but has its headquarters in Chesterfield, Mo.; it has also hired American senior managers.
Comverse, valued at more than $11 billion, has also lost much of its Israeli identity. "Comverse is not an Israeli company; it is an international company with a strong presence in Israel," said Mr. Alexander, pointing to its Woodbury, N.Y., headquarters and its recent inclusion in the Standard & Poor's 500. But, he quickly added, "the heart and soul of the company is in Israel" -- including the vital research and development division.
The trend is accelerating. By one common estimate, some 10,000 Israelis now work in Silicon Valley, many in companies that also originated in Israel -- including surging innovators like the DSP Group, a $1.2 billion software designer, and Vyyo, a wireless Internet broadcaster that is the latest venture of Davidi Gilo, a Tel Aviv entrepreneur who sold his previous company to Intel for $1.7 billion last year.
An American corporate identity is a better global sales strategy, many people contend, while the taint of political risk still associated with the Middle East is believed to depress stock values of companies registered here. Moreover, Mr. Vardi argued, integration into the American marketplace, with its technological ferment, is an inevitable and even desirable consequence of globalization.
"The whole success of the Israeli high-tech sector has been based on an alliance with the major American players," he said.
In any event, Israeli taxes and regulations are a disincentive for incorporating at home. Irked entrepreneurs cite what they see as archaic restraints on their management freedom; an Israeli public company sometimes cannot buy another business or give new employees stock options without convening a shareholders meeting, they complain.
"The rules are forcing every Israeli company with any brains to set up shop overseas," said Mr. Medved, the venture capitalist.
Check Point, with its headquarters here even though most of its 800 employees are stationed abroad, remains the most prominent exception -- one reason that Mr. Shwed, a vocal champion of Israeli registry, has such a following here.
"That is who we are," Mr. Shwed said. "We are a global company that operates from both Israel and the United States, and the fact that we are Israelis is a fact."
Check Point, like other companies here in the computer security trade, occupies a business niche where being identifiably Israeli may be an advantage. Even the company's name (unconsciously, Mr. Shwed says) evokes its Israeli military heritage.
Mr. Shwed says Check Point proves that young Israeli companies are wrong when they contend that they have to leave home to succeed.
"Obviously, I don't think it is good for Israel," he said. "But I also think it is not good for these companies. I think some of these companies are doing it because they don't look at building a real business as their goal. The idea is to be sexy for two years and sell out for a lot of money. I don't believe in that business model."
A better model, he suggested, would be Nokia of Finland or Ericsson of Sweden -- global companies competing successfully from small countries.
Some American industry leaders concur.
"If I were a government adviser, I would devote a lot of attention to ensuring that the success stories stay here," said Charles B. Wang, the chairman of Computer Associates International, on a visit to Israel earlier this year.
Mr. Wang is no detached bystander. He recently paid $600 million for three Israeli companies -- all of them Internet security specialists -- and added their 250 employees to his global work force of 17,000.
Israel "has all the technological know-how to become a major player," he said, but it needs comparable marketing expertise -- something best developed by building its own multinationals.
"Otherwise," Mr. Wang warned, "you become a minor league system," developing talent and technology for others. |
