VCinJerusalem

Flamingo as VC Nightmare (But they are so pretty....)

I dropped my daughter Hallel off at the Jerusalem Biblical Zoo this morning (called Biblical because they show references from Bible for all the animals...only in Jerusalem!).

Had a few minutes to walk around a bit and look around me -- in general I hate zoos (yes, in addition to being a vegan I am an animal rights advocate and don't think zoos are the way God intended them to live), but the Jerusalem zoo happens to be well designed, with a lot of room for the animals to move about, in semi-natural habitat. Hallel is in a day camp at the zoo, that starts before the zoo officially opens...so we parents also get to enjoy seeing the zoo when its usually off limits. And I saw a wonderful sight--the elephants were out walking (actually more like jogging, if you can imagine) around the zoo. I spotted them just as they passed the flamingos. Which really got me thinking about product design and animals, and what a VC would have said if sitting in on the product design meetings or presentations to the board of directors of Earth.

Just imagine the discussion. VP Product is asked to present the elephants and the flamingos. So with the elephants, fairly easy. She would explain that the elephants are slow moving but very big, with tough skins, powerful trunk to help ward off predators. They sometimes have sharp tusks, and camouflage easily, being greyish brown, blending into the background. OK, so there are a few bugs here and there in elephant design (what's with the floppy ears, no disrespect intended to Dumbo). The Board I am sure agreed that the elephant would make a useful addition to the world.

But then VP Product introduces the concept of the flamingo. Have you seen a flamingo recently? Take a look:

I had a chance to see the fully functioning version this morning. So the VP Product says to the board: its a bird, but with really long legs. Really really long legs. But it eats things buried in the ground, so we also gave a really long neck. It has wings, takes it a while to figure out the whole flying thing, and even then doesn't move too fast. And lets give a curved beak, pretty useless for defending itself. And to top it all off, we will have them stand in large numbers in shallow water or just next to the water.

Well, after the board finishing a good laugh, one board member, might have been the Angel Gabriel, said to the VP Product, well, even if we agree to authorize a budget to create such a ridiculous creature, obviously it would need to have serious camouflage to survive, as it will be practically defenseless.  The VP Product answers,  well, actually, we  want to make it pink. PINK!!!! Pandemonium erupts in the boardroom. Shouting from the more conservative members, they need to consult with their community, Pink! Pink! All the animals until then were brown, grey, green, a dull red here and there, but Pink??

The fight raged on and on. The VP Product was in tears. Of course there was no business case for the  flamingo,  it couldn't  be defended on any rational basis.

Suddenly the gavel came down from the Chair of the board --  and then the room went absolutely quiet. The Chairperson of the Board of Directors of the Earth, in a calm, clear voice, said: "The design for the flamingo is accepted, pink and all, because it is beautiful. And the Earth needs beauty -- not only functionality." And so it was. Thank God for that Board Chair -- because the flamingos were so beautiful this morning.

It Just Isn't Fair...

OK, so I am 100% opposed to any form of intellectual property piracy for so many reasons, but mainly because it is wrong to do it. That does not mean I do not feel the tension. Especially when some owners of intellectual property still look at the world with 20th century glasses.

Case in point: LOST series from ABC. LOST is a great show, as far as these things go, and my older kids are addicted to it. When the first few seasons came available to rent on DVD they rented them and watched them all straight through...(no commercial breaks on DVD rentals). But the current season is obviously not out yet in DVD. And then I hear from friends in the US of A that ABC hosts LOST for free streaming right from their website...so I go to ABC website, click on watch full show, and get this:

What do I tell my kids now? After all, they all have American passports, we will physically be in America in the Summer...why is ABC blocking Israeli IP addresses??? Well, because they are managing content in a very old fashioned way...with 2 shakes of an IP proxy I can get around this "walled garden" approach of ABC, but I will play along, because that's the way I am. "If" my kids can download it elsewhere, however, not sure what I will tell them. Thanks ABC, for putting my ethics to the test. :-(

"www" passe?

In designing a nice chatchke (translation: gimmicky thing to give away) for upcoming Com.Vention being organized by TheMarker (and co-sponsored by yours truly, Jerusalem Capital), we decided on a key chain Hamsa , with our logo and URL engraved on it. Turns out that www.jerusalemcapital.net does not fit so well on the size Hamsa we chose, so designer suggested we drop the "www" and just print "jerusalemcapital.net." This started a dialog as to whether the "www" is really necessary anymore. Obviously, from a practical level, most browsers (hedging myself with the "most") know what to do with URL typed without the "www." Type jerusalemcapital.net into the address bar and you will get to our website. So why do we still use www all the time?

One, it's difficult to break a habit...just think back to when we were still using DOS and needed to "multi-task," how we moved between programs...oh, yeah, that's what the Alt button was for, in conjunction with the Ctrl button (now see how many still shift between programs like that). And let's not forget the good old Fn button. Because of space issues, all these commands [Esc] were shortened and new wrds were created...And remember the file name limitations we used to have, until suddenly, Emperor Gates, reacting to Sir Steve, released us from bondage and we had somewhat unlimited file names.

What's the connection between all of this?  Well, it's that traditions get created very quickly. If you typed "www" 15 years ago it meant your "w"  key was sticking...yet today  it is one of the most recognizable,  even if already obsolete. Very soon here in Jerusalem (and around the world) the holiday of Pesach/Passover will be celebrated. Cultural "icons" were created thousands of years ago, Matza, Marror, Haroset, and more, all placed on the "desktop" of the Seder table on the first night of the holiday. Is Matza still today just as representative as it was almost 3000 years ago...no. Today we have 50 different kinds of Matza, whole wheat, egg, honey, etc., but we will still hold  on to the Matza...and for the Seder night we usually try to be as "authentic" as possible.

WWW represents so much for so many...a modern day liberation story of content, communications, and globalization (the good and the not-so-good elements). Where there is room, we definitely should continue to use it. World Wide Web has come to mean so much more than simply a header of a technical string of characters. On the other hand, where this pressure to save space, which in the physical world remains very much an issue, we can leave it out sometimes...and the community still knows that the World Wide Web keeps us all connected.

Ah, you ask, why not just shorten Jerusalem to Jlem...well, my friends, some things do not change. Ever.

And They Bloom Again...All the Same But So Different

When you listen to many dreams, they start to blend into each other, becoming increasingly more and more difficult to separate one from the other. As a venture capitalist, especially one focused on seed stage opportunities, there is usually little "reality" in the stories I hear on almost a daily basis. And on on the cynical side, yes, too often the answer to business model is "advertising." (The reality of advertising in the digital era has allowed that word to become a universal placeholder for a coherent business model).

If I were simply an industry analyst, so no big deal, let it all blend together into one big dream scape, I could then make grand statements like "in 2010 the revenues will reach five gazillion dollars from a user base of 3 billion," and everyone will be happy, like the prophets of old giving hope to downtrodden peoples. But I am not a prophet, I have real responsibilities to my investors, myself (I am on of the investors as well), and our "investees," our portfolio companies. I need to made difficult choices, place my bets, and then not leave things resting on Lady Luck, but work really hard to help Lady Luck do her job,and allow our companies to succeed in creating reality out of dreams.

After more than half a year on the job as venture capitalist, it was starting to get to me...and thank God the seasons changed. The Sun came out the other day, creating a day that was just too nice to spend sitting at a computer screen or running through powerpoint presentations. I jumped on my bike and took to the hills, and was reminded that while things look the same from quick glances, when you drill down the differences appear, and you realize that you can tell one from the other.

This is the one among the many poppies I came across in my ride...when I moved quickly, very difficult to tell one from the other...when I stopped, I could see each one is a singular creation.

Every flower is the realization of many dreams, but is reality that is created from these dreams. And each one is vital.

May we blessed to recognize the uniqueness in every dream, and at least some of the time see those dreams come to life (well, for my new VC career, at least often enough to achieve a highly positive Internal Rate of Return...i.e. make money...).

With the Best Intentions...

There we were tonight, spread out in multiple locations, different continents, all gathered for a conference call. The players were senior management of US based big company XYZ, management of Jerusalem based start-up ABC, and yours truly, Jacob Ner-David, present as the matchmaker and potential investor. To assemble the people took several weeks of planning, juggling everyone’s schedules, time differences, etc. Big company brought SVPs, VPs, Directors, and team members, 6 in all. Start-up had two, CEO and VP, and me.

To spice up the call, and to enable real time presentation of demonstration of the system and service in question, start-up management suggested using one of the many services that allow multi-casting of presentations (we will not disparage the actual provider, but there are many such companies).

Everyone was gathered, mouse at the ready to click on the link provided and start the session...we all clicked and….nothing. Wouldn’t work. ABC management said the usual: “we have used this 20 times, always worked, everyone log out and back in.” We all did, and still nothing. I took it upon myself to fill in the dead space while ABC management muttered about settings and rebooting. Finally I said guys, its not working, I will email out to everyone the powerpoint you wanted to use, but we won’t be able to see the demonstration in real time.

I emailed it out, but by then ABC management were so flustered that they could barely make their way through it. Finally senior XYZ senior person suggested that we stop, because some had already seen the demo working, and going through powerpoint was not productive use of everyone’s time (which I agreed with).

What to learn from all this?

1. Never rely completely on technological tools to get your point across. There will be errors/network failures – a good CEO needs to be able to paint a picture even just using their voice.
2. If something is not working – move on. Don’t waste time trying to fix it.
3. Conference calls are good, but only for moving forward projects – not so good for real time demonstrations. Need to be prepared to just get out there physically – with all of our virtuality, nothing like seeing it in person.

Business development remains an in-person sport, played right. That of course doesn’t match up with very limited start-up travel budgets, but I believe there is no substitute—sometimes you need to just jump on a plane.

Of course, the true breakthrough will come for all of us when we can just say: “Beam me up Scotty.” And pray that there are no bugs in the system!

Stuck in Time and Place

After five intense days of road trip with Shimmy Constante, CEO of our portfolio company mPortico, I was more than ready to return home. We left Israel on Sunday morning, and had been in San Francisco, San Mateo, Milpitas, Sunnyvale, and all over Manhattan. We spent time talking with technology gurus, multi-billion tech companies trying to figure out their next moves, premium brand content managers looking into the abyss of content chaos, and venture fund managers trying to catch a wave. Conversations swirled around mobile content, place shifting, time shifting, and the worlds of virtual lives.

All this came to  brutal hard stop when we crossed over into the archaic world of air travel. If you think about it, we have just about reached every technology dream of Gene Roddenberry (the prophet otherwise known as creator of Star Trek) except for the transport of physical bodies -- we still cannot simply say "Beam me up, Scotty."

I am jotting this down between flights, and will write more tomorrow, but let me sum it up by saying that THE next area ripe or technology disruption is commercial air travel...any incremental change for the better will be a "killer application," and much more important to real world people than all the avatars in the world....

As you can guess...my return trip is not going as planned. when its all over I will vent properly.

I hope you are ready this from the comfort of wherever it is you want to be!

Safe travels.

Water, Water, Everywhere, But Not a Drop to Drink!

I attended Telecom Israel conference this morning, mainly to say hello to my good friend Jeff Pulver, who came back to Israel for 24 hours from VON Berlin just to speak to us natives...Anything to get Jeff back here, I support, so I was at Telecom show.

Jeff and I tried to go on-line from the conference floor with my laptop (so he could update his blog...), and an incredible thing happened. I "saw" literally over 20 WiFi networks running in the conference room, and a good 5-6 unsecured, but I could log on to stable IP connection from a single one -- and Jeff remarked, wow, in the middle of the ocean of technology but no "water" to drink. How true.

It was a stark reminder of the limits of technology. Following my visit with Jeff, I hopped over to one of our portfolio companies, mPortico (no, we have not officially announced yet,and they are still in "stealth mode"). As I was in the area, jumped after that to see a great company, InspiAir, that is doing wonders to improve WiFi (I am not an investor, just a fan). A senior InspiAir exec was very proud to tell me that they support 48 concurrent users from each transmitter. Now, that may seem like a lot (and in comparative terms it is)...but what if all of our dreams (and sometimes nightmares) come true and demand for sustained IP connectivity goes way up...48 concurrent users will seem like barely a starter network.

IP connectivity to many of us is like water -- we cannot imagine living without it. But we must remember we live in a bubble -- with all the advances we have made, the majority of the world is not on-line. And I am not just talking about far-away places, but huge chunks of our neighboring countries are not part of the IP generation.

I constantly counsel start-ups working in the Web 2.0 space that one of the states of connectivity that still needs to be taken into account is off-line. You can be as thin as you want, but some provision needs to be made for off-line as well. Or at least recognize that reality in your product design.

And we as a society need to keep in mind that there are many in our ocean, even in our little part of the ocean, that do not have any water to drink. I happen to believe that on the whole, access to Internet connectivity is an overwhelmingly positive force in the world, but like water and oceans (think Tsunami, Katrina) can also cause destruction...it is up to us to keep it a positive force.

OK, enough of this thread of thinking. Tomorrow I will start to answer some questions I have received from locals in Israel about Web 2.0, start-ups, and funding. Stay tuned.

Virtual to Real and Back Again

Just back from dinner with some of the core players of the nascent but quickly growing Israeli game industry. We are talking about video games, PC games, console games...you know, next generation Pong type stuff.

Seriously, was part of a pre-conference dinner with Jesse Sutton, CEO of  Majesco Entertainment (NASDAQ: COOL), who is headlining tomorrow's IGDA (Israeli Game Developers Association) conference in Jerusalem, full schedule please see here . Special thanks to JVP for hosting the conference at the Maabada , the super funky performing arts space created out of a warehouse left over from the original Jerusalem train station (that yes, ran all the way to Damascus in its heyday...may that day return soon). For a taste of the space conference will be in:
One of the visionaries of the Israeli creative potential is Erel Margalit, founder of JVP , one of the few venture funds in Israel to get serious about games. Erel is also the core philanthropist behind the creation of the the Maabada. My former partner, Elie Wurtman , now a partner at Benchmark , is a big believer in the Israeli game industry -- he was an early investor in Double Fusion, Funtactix, and Game Array...and I would not be surprised if he invests more in this space.

My good friend Guy Ben-Dov organized tonight's dinner, as well as much of the conference tomorrow. Guy is a  co-founder of Double Fusion , in which I have the good fortune of another co-founder, past Chairman, and investor through our fund, Jerusalem Capital . Double Fusion is a leader in in-game advertising, which is part of the trend to bring games "into the mainstream," but as many of you know game publishing is already a $25 Billion+ business, so already a nice "niche."

Sitting around a gourmet dinner table (Canella, definitely recommend the vegan options, which is all I ever eat) in Jerusalem, talking about fantasy games within sight of the Old City walls, is really a wild experience. Nowhere else does one feel the loop between virtual-to-real and back again as in Jerusalem, a place of legend and myth but also bubbling center of state of the art technology development.

Sitting around the table were founders of companies backed by world class venture funds such as Accel, Benchmark, JVP, and of course Jerusalem Capital. And it felt so natural to be talking about the Israeli contingent that was at the Burning Man Festival this year (on of the Israelis at dinner, a founder of Funtactix , was already at Burning Man back in 1996!), cutting edge game development, and trading war stories of business development in Taiwan.

While obviously tech entrpeneurs anywhere in the world are a special breed of humankind, the crossroads that is Israel, and even more so at times Jerusalem, brings out an even more unique strand...that can handle living at the outermost edges of virtuality, while at the same time raising families at the heart of real world conflict, while hopefully remaining somewhat sane.

Come to the conference tomorrow if you can, if not in person than in spirit -- Israel will continue to develop its game industry, do not be surprised if the next AAA title is worked on in Jerusalem, Netanya, Haifa, or Arad.

May we be blessed to have incredible realistic fantasy wargames, but only peace in our realities.