In this blog I look beyond the obvious and try to find out why people and companies do what they do - and what it means for the rest of us. 
This week, the rumor mill has Israeli scale-out file system/NAS company Exanet about to shut down after many years of struggling and over $70 million invested. One of my favorite technology companies of the last ten years was another Israeli entity, Cloverleaf, that has either shuttered or is in some other industry now. These, and many others, had really, really good technologies – but they failed. Why? Because really, really good technology without really, really deep understanding of market realities inevitably ends in either death or a narrow escape. It almost never ends in glorious victory.
I love the Israelis. As a people, as a culture, and certainly as an engineering powerhouse. I love their will. I love their passion. I love that they can be surrounded (literally) by the worst of human competitors, and continue to smile. I’ve seen dozens, if not hundreds, of Israeli tech startups over the last ten years. They tend to follow one of two paths. The first is where they struggle to embrace the realities of the global markets (i.e. the U.S.) and go the way of Exanet. The second, the “victorious” case, is where they embrace those realities to varying degrees and exit – with a small technology valuation selling themselves to a bigger fish – typically in the $40-150M range. Path two is far better than path one, but rarely do you see these types of entities end up with home run kind of exits (not that I’m actually saying 40M bucks isn’t any good, but it’s all relative. I’d shoot you for $40M, no question).
The problem in either outcome tends to emanate from the same place: the belief that a company in IT/Tech over the last 20 years can be truly run from Israel. They can’t. I am an unabashed fan of all things Israel – but I’m a realist as well. You can make great things in Israel. You can sell to your army buddies in Israel. You can raise money in Israel. You can hire loyalists who will work like dogs and build stellar products in Israel. But you can’t grow a big IT/Tech company of relevance in Israel (with very few notable exceptions, of course).
If you want to be in the IT space, like it or not, you need to be a U.S. company. That doesn’t mean you can’t start in other places. It doesn’t mean you can’t ship your winnings back to other places. It doesn’t mean you can’t develop in other places or sell in other places – it means that if you want to be a integral part of the “game” you have to play it where the others do and unfortunately, that’s here in the good old U.S.A.
Non-US tech firms tend to be ignorant to the ways in which business in the U.S. is really done – much in the same way that U.S. companies are often moronic in the way they assume business will be done internationally. The difference is that if you can conquer the U.S. market, you can screw up internationally and still make a giant pile of dough. The reverse is simply not true. (I’m not making value judgments here – I’m simply stating facts).
There are tons of companies that have had huge financial success in the U.S. – to the tune of billions of dollars – that are complete and utter idiots when it comes to their international operations – but who cares? They already cashed the checks. Big piles of dough help you get over your inadequacies or failures in “foreign” markets. It’s easy for a U.S. CEO to think “those French, they don’t know anything about how to conduct business.” The fact that it’s really the U.S. CEO that has no idea how to conduct business in France (or Asia, or New Zealand, etc.) is easily dismissed as the CEO steps off of his Learjet. Unfortunately, the reverse is seldom true.
Companies that think too provincially tend to believe that what they need to do is:
- build the best gizmo ever (regardless of whether or not any market demands such a gizmo)
- go show the gizmo to the power brokers, namely the major US OEMs
- wait for the bidding war to ensue
I can’t count how many pitches I’ve heard over the years that invariably include the statement, “and then we’ll get an OEM deal with Dell, unless HP grabs it first.” When I explain to them that OEMs such as Dell are pitched about 1,000 deals a year, look more closely at 100, look very close at 10, and end up doing a deal with 1,they think I’m crazy. ”We’ll be the one then, our stuff is great.” Ugh.
They tend to open up U.S. operations as a sales and systems engineering (support) organization – usually with far too few qualified people and a grossly underestimated set of assumptions on how long, how hard, and how costly mercenary selling efforts are. Therefore, they put a team in NY (even though the LAST people on the planet that are going to buy anything from a crazy Israeli startup are in NY usually), a team in San Francisco, and then wait for the orders to roll in. Sometimes they hire a U.S. sales head, who more often than not is completely the wrong person, who then goes and hires a bunch of sales guys without a clue as to what they should be selling to whom, and end up creating nightmare support and engineering problems back in Israel. The engineers think the Americans are morons and the Americans think the Israelis can’t build stuff that works. It’s a no win situation – and both are at fault.
Eventually, after these efforts prove futile, those with the ability to raise more capital realize they can’t commute to the U.S. and expect to get anywhere. They need to be here. Worse yet, they need to open up their minds, wallets, and let down their guard. They need to invite non-Israelis to the party. Many times, the Israeli founder will relocate to the U.S. – but that almost NEVER works. You can take the business person out of Israel, but you can’t take the Israeli out of the business person. Israelis are strong willed people who tend to attempt to inflict their will on the U.S. business community. Many actually can do 90% of the jobs inside a company better than each of the individuals they hire – but they can’t do them at the same time. Bad idea. The best case is when that founder comes to the U.S. – not to set up Haifa west – but instead to help hire the right U.S. CEO, who needs to hire the right U.S. marketing chief (a more difficult and more important hire than the CEO most of the time, in my humble opinion) and the right sales head. They need to bring in U.S. money most likely (although there are tons of quasi-Israeli/U.S. money companies).
Startups in general face a brutal maturity ritual, no matter where they are from – the transition from what they “were” to what they need to become. Changes in people, culture, and process are hard enough in the same city and same building where you started – they are brutally hard when you add completely different cultures and 9,000 miles.
Israelis in general are a pragmatic people. They believe that since their stuff is the best, that is enough. I know differently. One of the most hated things in the life of an Israeli cum U.S. tech company is marketing. Engineering is art and science. Marketing is bullshit. Alas, while truth and engineering creates value, bullshit jacks that value into the stratosphere. Call me crazy, but I’d rather be full of bull if it means a billion versus a million. If a company is not spending marketing dollars on par with engineering investments, they are never going to optimize their value. Sad perhaps, but true nonetheless. I can prove of which I speak, lest you don’t believe me.
There are some fantastic success stories that have come out of Israel, and there will be more. But history has taught us that life is not fair, and business even less so. For every Checkpoint home run there are handful of doubles (XIV), a dozen small wins (Files-X, Diligent, Kashya), a hundred waiting and hoping (Mellanox, Voltaire), and a thousand left for dead. The biggest home runs of all have come with the combination of Israeli skills and US based companies – including EMC, IBM, Microsoft, and others.
The odds improve dramatically the earlier the company faces reality, opens up (in earnest) in the U.S., and spends the right amount of effort truly understanding the market dynamics at play.
Related posts:
- Fail Factors – Why Startups Die: Revenue versus Valuation
- Fail Factors – Why Startups Die – The Zealot
- Fail Factors – Why Startups Die: The Golden CEO
- Fail Factors – Why Startups Die: Running Backwards
- Fail Factors – Why Startups Die: The Market of One
Tags: Checkpoint, Cloverleaf, EMC, Exanet, Israel, Mellanox, Voltaire
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I had an experience working with a company (which was started in Israel) that would closely track with your experiences. Great tech, no understanding of business in the US and kept wondering why they were always getting screwed in their deals. They finally ended up selling their IP to a US company.
Steve,
On Tuesday, I’m going to listen to Dan Senor, author of “Start-up Nation: The Story of Israel’s Economic Miracle,” speak at Temple Israel in Natick. Want me to get you a copy of his book?
http://www.amazon.com/Start-up-Nation-Israels-Economic-Miracle/dp/044654146X
Better yet, join me.
John
Steve – nice article. I was more than happy to share it to all the usual social places when it came across via RSS.
Stepping outside of the world of storage, given our shared backgrounds there, the issue of starting a technology business and turning into a success can be extremely difficult for any geography outside of Silicon Valley. I have been attending the LeWeb conference here in Paris this week, and much of the discussion for European entrepreneurs and VCs is if they can compete with the US for innovation and aggressiveness. The entire Internet ecosystem, from Google to Microsoft to Yahoo!, Cisco, Sun, Oracle, Apple, Facebook, Twitter, you name it… has largely originated in Silicon Valley.
Comments today suggested that VCs in Europe tend to not be dreamers, and that those who fail are marked as having previously failed. It is an environment that is not conducive to taking risks and trying, trying again and again, which happens in the startup world, where 9 of 10 businesses fail, regardless of their start location.
If you look at Israel, you see some profitable acquisitions, such as ICQ (by AOL) or even XIV (by IBM), but not many start and stay in Israel and become a big success. The IT market starts and spreads from the US for the most part. I am partial to some startups (like my6sense, where I am an advisor) that are in Israel, but a free iPhone app is a much different market than a six-figure storage device.
I love your comment on matching engineering dollars with Marketing. This is not just an Israeli problem. Believe it or not, the Google diaspora has led to a number of sharp engineers in the Valley who love their code and don’t know, trust, or respect marketing. Thus, many of them dunder along with an interesting, unpolished product and a bad message. As much fun as it is to put the techies on a pedestal as amazing human beings with incredible talent, it takes a lot of salesmanship and marketing, in conjunction with good code, to make a real success.
Touche. The interesting issue is one of trust. Engineers don’t trust marketing because they are full of s&^t. Marketing is all about selling, engineering is all about function. As you know, those are often at odds. The problem however is that they are not mutually exclusive. History is littered with brilliant technology (DEC) that crashed and burned or was decimated in the market by superior marketing. It may not be fair, but I don’t make the rules. I think I understated the issue – I actually believe you need to spend MORE money and time on marketing than you do on engineering. Great marketing can make a crappy product succeed, but great engineering can rarely make crappy marketing effective. — Steve
Louis brings up an interesting point in his observation of in Europe (as well as other parts of the world) those who fail at a startup are or may be labled as a failure.
Meanwhile, back here in the good old US of A, it seems at times the opposite in that some are lauded as luminaries or success stories for thier success in landing VC funding, launching companies and then going no where except to their next gig where the pattern repeats.
Granted, this is not always the case, there are those who have done great jobs of either launching, or, stepping in to take companies to next level for either exit, or sustaining for life as an actual business as opposed to being propped up for something else.
This all begs the question then of how do you guage success, is how much money one can raise in x number of different companies, or, how much revenue is or was generated by y different companies.
The answer of course would depend on where you sit and your particular objectives.
One thing is for sure, with all of the startups in the wings, laying in the weeds, tempting their fate launching either with or without vc funding, there are now plenty of more candidates for this trend along with the V2.009 CEO musical chairs game to watch.
Cheers gs
For moronic American CEO’s the current metric seems to be “how much money can I blow before being run out of town….” My next post in this series is on the “He’s done it before, so he must be great” phenomenon that rarely proves true.
Steve–
Agree with most of these points. One thing to consider, however, is that Israeli culture is changing–and fast. What you’re describing is the Israeli personality of an older generation. The old, ingrained, heels-dug-in attitude is beginning to give way as younger Israelis are living far more connected, international, socially networked lives. This not only opens up their world, but it also presents new opportunities where they can once again excel. I predict that we’re going to see a raft of new companies coming out of Israel that are a far cry from what we’ve seen thus far in terms of their attitudes and marketing/PR efforts.
I should have made this point, and thank you for doing so. My perspective is based on ten years of observation, but I should have pointed out that the times we live in are much, much different today than they were even a few short years ago. The ability for near real-time feedback enabled by social media outlets has made a small world much smaller.
I agree that in Israel, and the rest of the world, the next generation is armed with tools that I, my father, or grandfather simply didn’t have – and those tools can be used to turn the whole world of business on its head. —Steve
[...] Fail Factors – Why Startups Die: The Israeli Illusion Share and [...]
Steve – great piece. It certainly captures many of the truths we are dealing with (and some we are unable to admit to).
While it is easy to criticize the practice of moving Israeli CEO to the US, one must remember that this was always plan B. Plan A – hire a top-notch US CEO who can take the company all the way – has failed over and over again, which forced VCs and companies to seek the next best option (or just not the worst option), which is to ship the CEO to the US.
As for the reasons US CEOs and Israeli companies is such a misfit — this may have to do with some of the Israeli traits you mentioned, but it may as well be the result of top-notch US CEOs not willing to join an Israeli company, which leaves most of these companies with a second-rate CEO or just a first-timer you’re willing to bet on.
If Israeli CEOs fail the US test and US CEOs are not a fit, is there a third option?
BTW – I second Sunchine Mugrabi. There’s a new generation of Israeli-born, US-groomed CEOs. Doron from Diligent, with whom you are familiar, is certainly one such example.
—-Thanks for the feedback. To be clear, I’m not just saying this is an Israeli problem – this is a global issue. H3C, just sold to HP for a trillion dollars, set up shop with one guy in Dallas and wondered why they weren’t getting anywhere in the U.S. The cultural differences within our businesses globally are staggering, and as such what seems perfectly logical in one is totally out of place in another. There are a TON of wildly qualified and successful Israeli (and other) CEO’s – and in the right situation, they excel. Doron has become a friend of mine, and is a fantastic guy – but even with the successful exit he architected for Diligent, there was clearly room for improvement. Namely, Doron is a task master – he is a great example of someone who can’t really be comfortable giving up control to others. He had his fingers in every part of that business, and while for any single area he was probably FANTASTIC, stretching himself too thin caused other issues. I think he would agree with that assessment. Home runs occur by TEAMS executing, rarely by individuals over achieving. A super human effort by an individual may have a great outcome, but rarely is that outcome truly maximized.
Point number two – by no means does the fact that you are a U.S. CEO make you any less of an idiot. Au contraire, most are total idiots. Whether the company was founded in Haifa or Cleveland, at the end of the day CEO skill is paramount to any success. My only point here was that the combination of skill requirements AND cultural differences is often too much to handle. Foreign born entities have to wrestle with both, whereas U.S. companies can focus on trying not to hire a moron, without (normally) concern for the cultural issues. —- Steve
Steve, reading your piece was a bit like reading an old magazine in a doctor’s office; whereby it grows on you slowly that you have read this article before. In my case I experienced the phenomena during the second or third rounds of Israeli start-ups who were seeking a partnership to correct the course pretty much outlined in your piece. It was always fantastic technology but wholly clueless in their market expectations and universally dismissive of the marketing role. This occurred twice in my career with Israeli firms, same script, different technologies. However, I am glad that there has already been ample discussion to point out that this is hardly a problem exclusive to Israeli firms. In almost every technology start-up I have been directly involved with, success and failure could be defined by the nature of the relationship between marketing and engineering. Those that I have known that failed, failed utterly and in spectacular fashion with barely a few assets to sell at auction. That marketing was “full of it” and only tolerated in some of these companies was an attitude almost pervasive throughout the organization. That the problem was particularly viral in Israeli companies, (where science may be a second religion) never really occurred to me as I saw it as fairly endemic throughout start ups in the U.S. as well. However, in hindsight the “Israeli Illusion” is as good a proxy as any for what must be one of the top reasons for failure among tech start-ups.
Often we forget the little guy, the SMB, in our discussions of the comings and goings of the Internet marketing industry. Sure there are times like this when a report surfaces talking about their issues and concerns but, for the most part, we like to talk about big brands and how they do the Internet marketing thing well or not so well.
[...] הישראלי לנטל במקום לנכס. רמזים לאותו משהו אפשר למצוא בפוסט הנהדר הזה של סטיב דופלסי, שנכתב בהשראתה של סגירת החברה הישראלית [...]
Couldn’t agree more. Or less. I’m not sure.
Steve.
Great reading. Many thanks.
I do disagree with Sunshine Mugrabi on his comment that the culture in Israel is changing with the arrival of a new generation of executives as these have a greater exposure to the internationalization of business and business cultures.
This new breed of highly educated, sophisticated and well traveled executives are by no means different than the older ones.
These managers have been trained by the elders, therefore carrying the same learned behavior, have for the vast majority spent several years in the army (a minimum of 3) and when out, run their business the same way as the army’s chain of command as they trained and taught.
The fundamental difference is that the elders would go through 3 to 4 business cycles to get it right, and it takes the new generation 2 to 3 business cycles if they survive the 1st one.
We all know that business is war and you have to execute accordingly. However, business strategy, tactical matrix, revenue models, risk management, and corporate leadership should take in consideration cultural differences, demographic behaviors and psychographic expectations, and in the Israeli these words don’t exist.
Companies that succeed have all one common denominator. A formula for success that can simply be described as – don’t swim against the current and focus on your customer, focus on your own revenue streams.
The concept that someone else other then “ME” is right and the client may have a real problem that needs to be solved does not exist in Israeli corporate culture and department divisions sub cultures (with a few exceptions). Therefore regardless of the CEO’s nationality, culture, background, it is extremely challenging for the small to mid size Israeli company to succeed in global competitive environments.
So, what’s the 3rd option; I have a few theories;
1st – charm school for Israeli CEO’s
2nd – An Israeli CEO must run a foreign company prior to become a CEO of an Israeli company (and not the other way around)
3rd – 3rd and 4th academic cycles. There is a clear lack of executive business education amongst Israeli senior executives
4th – grow into a job, like old times… don’t just be a CEO simply because you founded the company
Who knows, one of these may be a good idea that may work.
In my experience as a senior executive with Israeli companies operating in Israel and the USA, Israel is filled with the greatest engineering talent and creativity in the world, but with an enormous lack of understanding that the best product (often only the best in the developing engineer’s team mind) means very little to the potential buyer if it becomes disruptive for its business process or if it does not solve a problem or create a real opportunity.
Furthermore, there is a demographic tendency to describe all company’s problems as the “clients fault for not understanding or knowing how to implement it/use it”.
And this, as it was true back then, it still a reality now.
As for a new generation of “good CEO’s”, please note that the old generation also had great ones, just very few like Nochi Dankner and Yitzhak Tshuva.
Thanks.
Mario
Charm school!!!! That’s the best line I’ve heard in weeks! Thanks – great ideas.
Steve, the writing is very amusing and interesting, but I think it contains some cliches which might have been true in the past but are no longer valid.
I definitely agree on the importance of marketing, product management and customer awareness , but I beg to differ on some other points.
As an Israeli\American born in Atlanta,Georgia and living in Tel-Aviv I feel I have the right to criticize both sides
Let me challenge few assumptions that you are making in the post and others follow in their comments.
The entrepreneurs in the years in Israel grew up under heavy American cultural influence. American television, movies, songs, food and culture form day one ( no dubbing ). Most of them did MBA as a second degree and not a degree in computer science. Many have their expertise in marketing or finance and in some of the leading business schools in the world.
The question if an MBA is a good idea or not is another topic …
The myth of a sweaty army commander leading his developers to die in the C++ fields is mostly a creature of the wild American imagination.
Most Israeli developers spent their army career in air conditioned computer rooms, and the hierarchy there is much weaker than in corporate America, Japan or even a cub-scout group in Texas. Trust me, I tried both roles.
The other misconception is that you can’t run a really big company out of Israel. Having worked in Check Point for five years, I see no reason why this can’t happen in other places. It actually worked in many cases – Mercury, Nice,DSPC, Teva, Gilat,A mdocs, Comverse, M-Systems, Precise, Memco, Passave, XIV and so on.
The fact is there aren’t many big new companies in IT in last years due to many reasons, which are not related to the origin of the CEO.
HP,Cisco,IBM,EMC and the likes are buying any enterprise software\technology vendor once it hits a certain maturity and size. With their size and the lack of IPO market it is no wonder many prefer the fast exit route.
While it might be true in the early days of the company to have many people in the valley, it becomes less critical when the company gets really big and global.
I’m not sure that Israeli companies that failed had great technology but lacked market understanding. I think many of them had lousy products that had bad scalability, many crashes, memory leaks, bad user interface and slow performance.I probably interviewed some 400 engineers in the last years and not one of them admitted the technology didn’t work. It was always the management fault.
BTW,it is extremely hard to get excellent product managers anywhere in the world. Amazing VP marketing are not easy to find in San Mateo or San Francisco as well.
On a side note to American CEOs and analysts, the assumption that all technologies come out of USA and the rest of the world follows, is not going to hold for much longer,IMHO. Israel would always be a miniature market, but the common American CEO mistake is to ignore the small nations of Europe, China, Japan and India because they keep insisting on having their own culture . Not only they think differently, but they refuse to follow the same marketing, sales and product assumptions that work at home.
[...] when there is perhaps great engineering, and absolutely no marketing. I made this point in my Israeli rant recently and it holds true here. Great products are meaningless unless the world values them. How [...]
Pffft, and they say all MARKETERS are liars
haha
Seriously, as someone completely outside the storage industry, I found this post an engaging, highly entertaining read.
I’d agree that you have to be in the heat of the action to be successful in a given market, and add that the same is true of any B2B industry. You network, you learn things and get introductions 1-on-1, take someone out for a coffee or a beer (America – Australia / The Simpsons anyone
?), all of which doesn’t work nearly as well when it’s just virtual. Beyond just sales, there’s a degree of trust that we inherently give a familiar face and a strong handshake.
Separately, I think you’re playing the traditional engineer’s game of bash the marketers cuz we don’t get how they add value. Yet ironically, in this very post, you refer to companies making products for themselves that the market doesn’t want – a problem easily solved by a marketer armed with a test campaign and some analytics to measure leads or sales. That’s just one of many ways that marketers legitimately add value that engineers don’t really get, because of the ‘build it and they will come’ mentality you described (HP and Dell will fight for our gizmo…).
On a vaguely related note, do you or others in the industry take guest posts? [My storage-ignorant self would not be the writer; I'd have a qualified storage pro doing the writing.] It would be nice if you could email me back about this, please.
Regards,
Gab Goldenberg
[...] when there is perhaps great engineering, and absolutely no marketing. I made this point in my Israeli rant recently and it holds true here. Great products are meaningless unless the world values them. How [...]
Is it only Israel where this happens?. There have been some notable success in Europe per see, Autonomy and SAP for example. perhaps the requirement is being close to a large customer base or cluster of similar industries and probably english speaking. However it will be interesting to see a wave of indian and chinese startups…
True but those are exceptions versus the rule – even in a major market such as Europe. Most European startups fail at the same relative rate – although they tend to be more conservative in nature initially and as such can be “going concerns” – just not home runs.
Interesting on the Indian/Chinese commentary – very, very few of these countries produce tech startups that take over the western markets. They tend to do well on their own turf, and then suffer badly when they try to move abroad. Where this has worked for them is to “import” functions into their countries – off shore development or manufacturing, for example. Taking a product outside your own country and trying to sell it on foreign shores is where many of these efforts fail – for Americans and the rest of the world.
I think there is a meme at work in the USA/Europe where there has been 200 years of industrial revolution and entrepreneurship and a healthy disrespect for governemnt. Its going to take a while for this to develop in these other economies. It might be interesting to look at Japan as a model as it came from a industrial/manufacturing economy directed by the state – it has a woefull history of startups and I don’t think ever will. Maybe China and India will follow the same path and be great manufacturers but the Innovation stays in the US
[...] and CTO (Yoni Amit) as well as some of the greatest minds in the storage industry. I have to say, Steve Duplessie’s blog was right on when it comes to the technology capabilities that exist in that country. As most of [...]
[...] read this blog post. it was published 8 weeks ago, and its comments are very interesting as well. it claims that [...]
Very well written.. In many way depicts the past 15 years of my life… but having said that, there is a new breed of startups… and a new breed of marketing.. The gap is getting smaller and the ‘Israeli CEO’ a little less cliched…
My favorite part: “Israelis are strong willed people who tend to attempt to inflict their will on the U.S. business community.”
[...] This blog is just a re-post with minor changes of my comment on Steve Duplessie thought-provoking blog post on Why Israeli Startups Die. [...]
Every CEO of Israeli tech companies should read this thought provoking blog. The ideas posted are on target. The key issue for most Israeli start ups is a failure to truly understand the market needs. I focus on three issues.
1. the investment in marketing should at least be the same as the investment in R&D (www.marketingvp.com)
2. Israelis seem to thing that the sales process ends after the order is recieved. In reality it starts when the order is recieved.
3. The real cost of setting up a US office is $1M for the first year.
[...] good friend Ophir published a rebuttal to an article by Steve Duplessie. You should read both pieces, they make excellent food for thought. My thinking led me to an old [...]
Thank you for bringing this topic forward. It is important to everyone who cares about the Israeli technology industry.
This week I published an article on the same topic. Unfortunately it is only for hebrew readers (http://www.themarker.com/tmc/article.jhtml?ElementId=/ibo/repositories/stories/m1_2000/yc20100223_3478.xml).
My facts and conclusions contradict the main point in your article (sorry for being so Israeli – confrontal and direct…).
First – there are quite a few Israeli companies that became a billion dollar companies – some in valuation and some also in sales. Few examples: Teva, Amdocs, Checkpoint, Comverse, Mercury, NICE, M-Systems, and Gilat. All had a world leader position.
Second – What was common to all of these was keeping their HQ and top management in Israel and having an Israeli CEO. There are many more Israeli companies that make more than $100M. Again, the common to all these companies is a HQ in Israel and an Israeli CEO.
Third – my article points out that the reason for the reduction in the number of successful Israeli companies started when we started to try to become “American”, i.e. moving companies’ HQs to the US and replacing their Israeli CEOs. I don’t mean a US presence is not desirable. However, The core team should stay TOGETHER as long as possible (i.e. not move to the US as soon as possible), until the company figures out the product, the messaging, the positioning, the strategy, and the scaling etc., and now its all about execution. The problem in relocating the HQ and the CEO to the US is in breaking a company to two and breaking its internal communication when it tries to figure out its whole product.
Last – I totally agree that great marketing and generous marketing budgets are key success factors for a company. However, the successful companies I mentioned before were doing great job in this domain. True, there is less experience in S&M in Israel (since everyone is trying to become “American” these days); however, Israelis are smart and adjustable enough to do great marketing from Israel. Especially now, when the WORLD IS FLAT.
Thanks for the post. First, I know there are plenty of wildly successful NON AMERICAN companies – thank the lord. My post was specific to the industry where I live – namely big IT – and more namely, Storage in big IT. That is an American dominated industry.
You bring up a good point that merits more thought. For example, let’s say you were a Bolivian baker and you made the best bread in the world. Because it was so good, you did a deal with a distributor in Paris and wanted them to sell your bread. Do you think you’d be successful? No. Even though your bread was superior, you wouldn’t succeed because you are ignoring the market realities – namely how the French want to make and consume their breads. The best doesn’t matter in that case, any more than the best IT gizmo would matter – what matters is local (market) knowledge and participation.
You’ll never hear me tell anyone to become “American” – we’re annoying enough already. We don’t need any help in that department. Cheers.