VCinJerusalem

My Son The Jew

This morning we went through the final hoop along the circus act known as conversion in Israel. As many of you know, we adopted our sixth child, Mishael Binyamin, almost 18 months ago. We have been winding our way through the bureaucracy of the Israeli social systems ever since. On top of all the obstacle courses set up for families who adopt, our journey was made even more special due to the fact that Mishael was not "born Jewish." Of course, what does it mean to be "born Jewish?" Nu, subject of postings to come.

The beginning of the process was an application to the Israeli formal conversion office, which actually is an arm of the Office of the Prime Minister. After many months of being ignored, finally we were granted an interview with the "Beit Din," or religious court, made up of three rabbinical judges. These days Mishael talks up a storm, then he was a little more reserved, as many one year olds are. So we were asked a series of questions, we gave the rights answers, next stop, which was to wait for a brit mila, or circumcision.

Finally that came together, after many bumps in the road, some of which were right out of Abbot and Costello mixed with Kafka (example: Mishael does not have an ID number because his adoption is not complete yet, adoption can't be completed until conversion is completed. Conversion office were insisting he couldn't have a brit mila without an ID number....).

After the brit mila comes the ritual immersion, the mikveh. The brit mila was in Bat Yam, even though we were living in Jerusalem, because get this, no mohelim (authorized religious surgeons) are currently under contract with the conversion office in Jerusalem. Believe it or now. The mikveh...well, the only mikveh currently serving conversion is in Tsfat. We were actually happy to go to Tsfat, as we know live relatively close (yes, I know, I owe a few blog postings on the move to Galillee -- they will come). Just funny again that that is the only place to go.

Well, we made it there, again after few false starts, and Mishael enjoyed himself in the dunking.

Now my son is a Jew. More on this subject to come.

Packing Up "Stuff"

In part of my professional life I spend a lot time talking about, and dealing with, virtual stuff. Web sites, avatars, twitter feeds, blogs, etc., lots of virtual/digital stuff.

In my "real" life I am overwhelmed just now by physical stuff. The real kind.

Right now in the process of packing up our "stuff," in advance of our move to the Galil (don't mean to shock loyal readers of this blog, which obviously has Jerusalem in the title...more on this subject in posting to come!).

Only a little bit into the process, and already can't believe how much stuff we actually have. Do we "need" all this stuff? Does it make any sense (environmental, social, physical) for us to keep so much stuff for ourselves? I don't think. Where should the line be in terms of stuff? Not sure. But giving thought to it.

In the meantime, enjoyed these two views on the subject of stuff, the first by the legendary George Carlin (of blessed memory) and the second by Annie Leonard.

 

Fred, You got it right. Things will pick up again. Question is when...

Fred Wilson gets it head on in his posting (see below) on the coming revival of the IPO market for "venture backed companies," which for me is a euphemism for young companies starting to show promise but not controlled by a single investor (who could simply live off profits/dividends).  The exit path for investors, option holders, etc. has traditionally been IPO, and M&A (if acquired for cash or by a public company with liquid shares).

I completely agree with Fred's analysis, but like many messianic prophecies, the question is not if, but when. On behalf of all of us in the start-up sector, may it be soon!

The End Of The IPO Drought Is Coming

Fred Wilson|May. 5, 2009, 8:01 AM|3

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Tags: Online, Big Tech

I've said it a few times on this blog recently as offhand comments, but I feel compelled to say it a bit more loudly. I think we will see the end of the IPO drought for venture backed companies within the next year, possibly by the end of this year. I don't know if this market rally we've been having is a headfake or the end of the bear market. My gut says we'll see at least one more pronounced down move before we see bottom.

But either way, at some point investors are going to want to own stocks again, and when they do, I think the old fashioned VC-backed IPO will have quite a bit of appeal. Here's five reasons I think this is going to happen:

1) VCs have been in the penalty box for almost a decade since we committed the cardinal sin of foisting crap into the public markets. Somehow the investment bankers who helped us do it got out a lot earlier than we did. But we've done our time and others have replaced VCs as enemy number one of public market investors.

2) There are a lot of really solid companies sitting in venture portfolios waiting for the right moment to go public. Stuart Ellman of RRE wrote last fall that:

RRE has a number of companies that had zero revenues when we invested and which are now doing $100 million or more in revenues and growing very quickly.  These companies have achieved what they needed to achieve, become market leaders, yet they cannot go public or exit under the assumptions that employees or founders assumed when they began.

So what do you do?  Sit tight, be patient, and continue to grow the company.

3) Many of these companies are subscription-based or annuity type business models that make for great public companies. Sarah Lacy touched on this on her post about Open Table's IPO:

OpenTable is hardly an Internet homerun. It’s frequently described as a consumer Internet company, when really it’s a software-as-a-service company. The good news –for this moment in time—is that that means Open Table doesn’t have an ad model. It actually has paying customers in the form of restaurants using its reservation software and paying it monthly subscription fees.

4) When investors decide they want to own stocks again, they are going to look for simple businesses, products they can understand, balance sheets with cash and not much else, and growth without leverage. Guess what? That's what the venture capital industry produces.

5) Sarbox is now well understood by the accounting industry and by the finance teams inside of our companies. There are providers of Sarbox compliance tools and services that have now brought the cost of Sarbox compliance down to reasonable levels. I'm not saying that Sarbox is good or that it doesn't need to be reworked (it does), but it's a devil we know at this point and it will not impede the IPO boom when it comes.

Last week the NVCA put out a four point plan to "restore liquidity in the venture capital industry" at its annual meeting last week in Boston. It involves getting more investment banks engaged in taking our companies public, spurring the development of secondary market exchages and related pre-IPO liquidity activities, continued lobbying for lower taxes on VCs and entrepreneurs, and reform of Sarbox.

Regular readers know that I am a huge fan of the secondary market idea and I welcome the NVCA's attention and energy on that issue. On the other three, I think they are wasting their time. It's like the government suing Microsoft while Linux was growing in popularity right under their noses. I believe the market will take care of this problem as soon as we get a market that wants to purchase equities.

And my gut says that time will come sooner than most think.

Fred Wilson is a partner at Union Square Ventures. He writes the influential A VC, where this post was originally published.

Nothing Can Stop Amy Winehouse...Mazel Tov Amy

As I travelled around Europe this week (flew to Barcelona via Prague from Tel Aviv, don't ask) and mulled and blogged about the reality of physical gatherings still important in this digital age, also followed the almost unbelievable (if it weren't true) story of the United States government refusing to grant Amy Winehouse a visa to attend the Grammy Awards.

While the "powers that be" in Washington DC continue to make policy decisions that kill thousands upon thousands, and directly pull the trigger on debatable military actions all over the world, fascinating that the US State Department found Amy Winehouse, of all people, too threatening to allow into the US, knowing that she had been invited to perform at the Grammy Award ceremony.

Now, has young Amy led a perfect life? No. I have not followed all the gory details, but enough to know she has substance abuse problems, emotional instability, and I am sure few other serious "issues."

Like all prophets (in Jewish tradition there are many that say prophets often were seen to be possesed, singing in dancing in a pitched fever, see King David and critique of him by wife Michal), Amy will take time to mold herself, and her God-given talents. If we as a society reject her, will only drive further away. If the US really wanted to make a point, should not only have granted her a visa, but offered her the best drug counseling US has to offer. Could have asked her to make a PSA (Public Service Announcement) to be aired during the Grammys about dangers of substance abuse. So many creative possibilities.

But instead the Americans utilized one of the last remaining powers they have in this crazy world, which was to formally deny Amy entry to the country (that doesn't stop the millions that cross in search of work, or the terrorists that often are granted Visas). Amy in the end used modern technology to one-up the American government, appearing at 4 AM London time by satellite, and taking 5 Grammy Awards.

From recent headlines it looks like Amy is making progress on pulling past her problems, it would have been nice if the US government would have given support.

Mazel Tov Amy, may you go from strength to strength, as my grandmother used to say. 

Gary Snowman Comes to Israel

Once again, we have to thank our friends at Blueprint Ventures for making us laugh (at ourselves) in a wonderful holiday spirit. And a special thank you from this Israeli VC, for bringing Gary Snowman to Israel...and allowing us to help launch his latest adventure. Happy Holidays to all!

Identity Theft on Facebook: How Many Israelis Are there?

The field of social networking is an Israeli/Jewish art form...we have been perfecting it for thousands of years. Jews in general, and Israelis in particular (one can look at Israelis as super-Jews[both those that consider themselves Jewish and even those that do not], but that is a whole other conversation...), love to talk. Israelis also love to travel, mainly to find new people to talk to!

No surprise that Israel is a center of communications technology development and commercialization, ranging from IM to VoIP to wireless to [next thing to come]. I have had the honor to be in the center of a lot of this action over the past 12 years (yes, that long since we founded Delta Three (NASDAQ: DDDC), soon after the introduction of [the original] iphone from Vocaltec.

The new buzz on the block is of course social networking, with the somewhat friendly face of Facebook. And Israel has taken to Facebook in a big way. A very big way. As of yesterday (last I checked) there were over 200,000 Facebook members who identified themselves as originating in Israel, i.e. self-identifying as Israelis. That is a lot, especially given the fact that there are only 7.2 million citizens of Israel, according the Israel census bureau. If we take the numbers on face value, 2.7% of Israelis are members of Facebook. Remember, this in a country where a good 10% are ideologically opposed to the Internet.

Are a lot of Israelis using Facebook? Yes. 200,000? No.

So how to make sense of the numbers being reported?

Well, a few ways. First of all, when signing up for Facebook, and even after joining, one can set any country as your home "network." For example, my good friend, the uber-social blogger and all around tech-guru Jeff Pulver listed his home network as Israel. Now, many of us would love Jeff, Risa, Dylan and Jake Pulver to spend more and more time in the Holy Land, and while they are, formally Jeff is not [yet] a full fledged Israeli. But he makes up one of those 200K+ Israelis on Facebook. And he is not alone.
So Jeff is utilizing a very light form of identity theft. Without altering his real world passport, he has created a virtual identity that is not 100% accurate. But since we love Jeff, we are honored that in the virtual world he has thrown in his lot with Israel.

Lets move on to a more serious form of Facebook identity theft...over the past few months I have been friended by some well known political figures....and lets just say that while I would be happy to be friends with [some] of them, something tells me that these virtual friends are something other than they appear. For example, one of my "friends" is Shimon Peres. Now, I happen to like Shimon, and actually am in communication with some of his family members, but Shimon himself...but even that is welcome. I actually like Shimon, so even if not really him, proud to say I am friends with him. Now take another "friend" of mine: Yasser Arafat.  Now, him,  I didn't even like, especially when he was alive.  Now that he is dead, a real stretch to say he is a friend of mine. But there he is, listed as a friend (for the record "he" friended me). [For more info on all these friends and more just peruse my friends on Facebook, itself a dangerous feature....]

Bottom line: it's the Wild West out there, a new frontier, and the rules have not yet been created. But they need to be, and quickly. Because while the above examples are humurous, and we love to brag about the intense interest of Israelis in social networking (after all, we are the "people of the  [Face]Book"), very soon, if not already, we will see some bad stories, criminal uses of false Facebook identities, and worse. Lets hope that Mark and friends over at Facebook central will start to develop some controls in the system. Because if not pretty soon Facebook will become faceless.

Jerusalem ROCKS! Live

Go now to here  for Jerusalem Rocks live....being broadcast by the man himself...www.jeffpulver.com

A Typical Wedding in 5767 (2007 to some)

Just got back to our hotel in San Francisco from attending the wedding of our good friends Danya Ruttenberg and Nir Avni (you can look him up yourself, media shy star mathematician). Held at the Berkeley Botanical Gardens, even on an overcast day it was really beautiful. It did not take much to turn the Redwood grove into sacred space (as it was already) befitting a Jewish wedding, just the couple, the guests, and wonderfully elegant huppa (wedding canopy) of four wood poles and pure white tallit. All pretty typical, right? Now let me go into some details.

Danya is a fourth year rabbinical student at the University of Judaism in Los Angeles. Nir is [now] a post-doc at UCLA. They met dancing on Emek Refaim in Jerusalem. Nir comes from Haifa, from a family that is not at all spiritually inclined, and professes to follow in that tradition (but remember, he just married a rabbi in the making...). Under the huppa, the bride wore a kippa, the rabbi officiating wore a kippa, but the groom did not. The bride's father, who identifies as member of a Reform shul, wore a kippa, as did the bride's brother. The groom's father did not wear a kippa, nor did the groom's brother. But the Episcopalian Minister friend of the bride did wear a kippa.

Nobody from the family lives in the Bay Area, the wedding was here because...we live in a globalized world. Danya lived and worked in the Bay Area for several years, but was born and bred in Chicago. Nir grew up in Haifa and lived in Jerusalem. The guests came from all over. The wedding preparations were done largely by email, and we all answered the virtual call.

All I can say is, May Danya and Nir be blessed to enjoy many many years of real and virtual events together with family and friends all over the [real] world.

Jerusalem in my Heart and Soul

Yeah, yeah, I know, I have been slipping again at the blog thing--but I have wonderful excuses.

First of all, between five children, 4 portfolio companies (yup, we've been busy at Jerusalem Capital!), who has time for blogging, especially when I am on "vacation" (anyway in the parenting or start-up world knows there is no real vacation...). But so much is actually going on in my life and my world.

We have been in Aspen the past few weeks, far physically from our home in Jerusalem but not emotionally. Every day we are asked, so where are you from, and when we answer Jerusalem, always the eyes widen, the interest level goes up.

Sitting in the Music Tent yesterday, listening to a showcase from the American Academy of Conducting at Aspen, I thought how global our lives are...in the span of two hours we heard music from Dvorak, Bach, Handel, Tchaikovsky, Weber, Strauss, and Copeland, composers from so many different countries, being played by the Aspen Symphony Orchestra, made up of top musicians from dozens of countries.

Reminded me how small the world is, and how music can bring it all together.

Which brings me to Jerusalem ROCKS!, a huge project I have been blessed to be a partner in the creation of, together with my good friends and soul mates Jeff Pulver  and Carmi Wurtman. To join the buzz appropriately, according to Jeff, need to be part of the Facebook group, which you can join by going here. Of course you need to be a Facebook user, but I assume if you are alive and reading this you already are...(the new neurosis...not having enough "friends" on Facebook...).

I will be writing more about Jerusalem ROCKS! in the weeks to come, but simply put, it is using music to remind us all that Jerusalem is alive and well as a symbol of peace, pluralism and diversity in this crazy world we live in.

It all culminates September 9, 2007, for the first of what we hope to be an annual event, designed to keep Jerusalem of today in all of our hearts and souls, no matter if we are in Aspen, New York, Paris, London, or Chicago (no reason for those places, just what came to mind!).

No Business Model...But

So much of the time we (those of us playing venture capitalist) focus on questions of business model, revenue generation, path to profitability, exit, etc. Once in a while it is necessary to sit back and just appreciate how cool some of the applications we deal with are -- Twitter is an example. I have no idea what the eventual business model will be, but I recommend spending a few seconds looking at TwitterVision. It shows how quickly something can spread around the world...all I could say after first seeing it was "cool."

Would I have invested in Twitter? Probably not (at this point probably way out of our ballpark, valuation wise). That doesn't mean its not cool....