Michael Eisenberg, an Israeli VC, wrote two thought provoking posts about the way the government  invest properly in Israeli High Tech. From Microsoft and .Net monopoly through iPad banning, to poor distribution of CSO funds, our government neglects the important aspects of maintaining Israel’s technological leadership.
Though not a VC, I’ve worked in several industries, from mobile to internet to media, and I meet a lot of startups in different stages. And I think that though Michael is right in his claims, there is another angle to this story – the core competencies of the Israeli industry is not as important as in the past.

Origins of Israeli High Tech
Israel’s High Tech originated, broadly speaking, from 4 sources:
1. Technological army units such as 8200, Air force and Mamram
2. Universities such as Technion
3. Russian immigration
4. ECI/Comverse RAD group and other major companies, whose employees who jumped ship and opened their own startups.

The strong points of these sources were electrical engineering and telecom oriented know how.

The Best Beta Site
Israel has one of the highest mobile and broadband penetration rates. Therefore, a mobile startup could easily sign a deal with a local mobile operator and make it a beta site. The local mobile industry was at the same level as  European mobile markets, so Israeli companies could launch products in that huge market relatively easily, as it was close to what they had locally. I was a part of such process when working with Flash Networks. First we sold our product to Orange, and then to T-Mobile. We knew what was needed in order to build and deploy a product in such an environment.

Media and Internet are Winning. Pipes are losing.
However, the market changed. World wide innovation lies more and more in internet companies. Hulu is more innovative then Motorola. Google is more innovative (and profitable) then Nokia. Mobile operators are not as important in the value chain as they were before. And Apple is changing the game again and again with innovative hardware and software.

Failure in  Growing the Business
Most Israeli companies are just not big enough, or maybe not with the right culture and financial resources to win over the mobile and telecom market and create the next Nokia or even next iPhone. The last guys who tried it failed and closed shop, not to mention their founder’s financial trouble. Yes, I am talking about Else Mobile and Eli Reifman‘s troubles. So in that area we are basically, well, screwed.

No Longer a Beta Site
So let’s look at the Israeli internet industry. Unlike the mobile market, there is a huge difference between local internet industry to international or American one. While video is growing drastically in the US, and major media companies experimenting with new business models, our market is just too small, too centralized, to make companies feel their bread and butter is at risk. With 3-4 major media players (Hot, Yes, Reshet, Keshet), and two major portals (Walla, Ynet) no one has the incentive to innovate. They are making enough money as is, and digital cents are not even on their map, as no one buys content here.
We don’t have an Israeli iTunes. We don’t have an Israeli Hulu. We don’t have an Israeli Huffington Post. We don’t have an Israeli ereader market (Sorry E-vrit, not enough units sold yet). Come on, iPhone, one of the biggest media innovations, landed here less than a year ago.
Amazingly, there is a huge gap between Startup innovation and portals’ adoption of technology.
So the Israeli media and internet is like Shakshuka – some great cutting edge media technology (eggs) floating in a sea of not extremely innovative portals (tomato sauce).

Culture
With technology less of an issue and winning product is the focus in the online and media industry – culture and media consumption habits become the key for creating a winning company. And, we don’t have the visibility of neither. Cause our local market is so different.

Is This The End?
Is this the end of Israeli startup industry? No. There are several amazing content and media companies here in Israel such as Innovid, Outbrain and many more.
But we need to start think differently. It is not like 8200 will start to create cool video players so Israeli innovation won’t die. But it might be that in the future these units won’t be as important in Israeli High Tech as in the past.

Possible Solution
We need a simple plan – and do the so unIsraeli thing to do- actually follow it. We should encourage Hot, Yes and the major portals to invest in innovation. It might be through tax incentives or other ways, but we should give them a reason to do so, cause they don’t have one now.
We should create special incubators for media companies with international media veterans. I have couple of names in mind.
And we should take into consideration that the market is going to change to the worse for us. As Michael said, we are definitely not competitive in price. If the current situation will continue, we will lose our technological edge as well.

What’s Wrong with this  Post?
If you know me you know that I love well established facts. Unfortunately I don’t have the numbers to back the claims here. It is based on personal experience and being in the industry for 10 years.
Would love to hear your opinion.

Last year, brave citizens of Iran decided they had enough. After a suspected rigged election, thousands of young Iranians started protesting against the elected government. The movement, called the Green Movement, arranged mass demonstrations, and clashed with security forces.
And while the government controlled the media, it couldn’t control Twitter.
Protesters, Green Movement activists, and ordinary citizens, used Twitter to coordinate protest efforts, and tell the world what the government was trying to hide.
Blogs, magazines, and newspapers, were full of articles about the power of Twitter, and how important it is in such events.

Year later, the green movement is crushed. Iran’s Basig, the ever faithful Republican Guard, crushed the resistance. Demonstrators were shot and killed. Some were jailed and tortured. The first anniversary of the biggest uprise against Ahmadinejad regime ended quietly.

Twitter is an amazing network. I use it every day.
But we should remember that it is just a website, a social network, a communication medium. At the end of the day, Twitter won’t bring democracy to countries under dictatorship. It might prove a film distributor that it is worthwhile to bring the latest horror flick to the theater near you. It could help raise funds for nobel cause.
But at the end, as Iran case proves, the gun is mightier than the Tweet.

Related articles

• The Myth of the Iranian Twitter Revolution (subtraction.com)
• The Limits Of Twitter (andrewsullivan.theatlantic.com)
• Iran 2009 protests: Where are the green Twitter avatars now? (blogs.telegraph.co.uk)

These posts were published in IMTC‘s blog, an international consortium of visual communication companies,  and were written by me and Anatoli Levine, President of IMTC and Director of product management, Americas  at RADVISION.

If I told Dr. Gregory House that his season finale will affect the world of photography and film making, he’d probably answer with some witty-yet-rude comment about my possible film maker wonnabe frustration, and go to annoy Dr. Wilson.
But strangely enough, House MD 6th season finale, aired tonight,  will be one of the most important events in the history of HDSLR filmmaking and affordable filmography as a whole. More to it, the debate that started due to the show’s  Director of Photography  decision will affect not only these markets, but could be also a game changer to the whole filmmaking and TV industry, as well for the innovative camera company RED.
The reason is simple. House MD’s season finale was not shot on film as usual, but on a $2,700 camera from Canon, 5D Mark II. And that’s pretty damn affordable, in comparison to the cost of high end cameras.
This is the story how simple cameras are changing the way stories are being told, how money is lost and gained, and how the filmmaking industry is changing forever.

The Beginning of a Revolution?

As I’ve laid out in a previous post, HDSLR, stills DSLR cameras with video capabilities, are slowly changing the world of video and film making.The ability to use a wide varity of lenses, the high quality image, portability of the cameras, and high quality sensors, sounds like an indy filmmaker dream.
Therefore it is not a huge surprise to see online forums full with enthusiasts, as well as Vimeo groups with stunning videos made on a budget. Vincent Lafouret, LA based filmmaker was one of the first people who advocated these cameras, in the best way possible: creating this stunning video:

Not too long after that Canon introduced its 7D model (which I proudly own), that introduced new key features (such as the most coveted frame rate of 24 frames per second – the same as film), in almost half the price of the 5D Mark II. And then the 550D, half the price of the 7D.

The ability to produce amazing looking videos was quickly advocated by the gear company Zacuto and Philip Bloom, a gifted video maker who contributed a lot to the community through his blog and videos explaining how to best utilize these cameras.
Even my filmmaking hero Robert Rodriguez, was caught using these cameras for some of his productions.

Money To Be Made?
Using an HDSLR camera for video requires more than just a camera. As these cameras are built for stills photography in mind, their ergonomics and features don’t answer some key needs of video makers. And where there is a void in the market, there is money to be made. A new market for support gear and rigs was born, with companies such as Zacuto and RedRock Micro leading the pack. These companies, originating mainly from the film and video industry, price their equipment accordingly. And while cameras cost less and less due to mass production, HDSLR video makers find themselves spending more money on rigs than on their camera. Still, price point of a fully equipped HDSLR camera provides amazing production value for fraction of the price of comparable equipment.

From Hobbyists to Mainstream
In the last months two important announcements changed the way HDSLR cameras are perceived:
George Lucas, the visionary filmmaker, announced that he will use 5D Mark II in his next film. We are talking about theatrical release. The real thing. With Lucas. The guy behind Star Wars.
AND Greg Yaitanes, Director of House MD, announced on Twitter that the season finale, airing tonight , was shot entirely on 5D Mark II.
These announcements have a huge impact on the HDSLR market, and filmmaking as a whole. HDSLR cameras are ready for prime time TV and feature films. And they cost a fraction of a professional HD video camera, not to mention film equipment.

Since the birth of YouTube, indy filmmakers and budget productions could easily distribute their content, but couldn’t afford to get the production value of high end films. Now they can do it.

It is all about talent now.

In the next post we’ll cover the reactions and backfire against the HDSLR movement.

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Apple is continuously  under fire for lack of openness. Once the industry’s underdog, as it’s market power grows, Apple slowly becoming the target of many attacks, the latest one from Tim O’Reilly.

Interestingly enough, Apple never claimed to be open. Or nice. Apple claimed one thing only – that it knows how to create great innovative products. They aren’t cheap. They are good. and that’s how the Cupertino based company mange to have 10% market share with 83% market cap in comparison to Microsoft.

The myth of openness
Being open is a business decision. Nothing more and nothing less. Some companies harness openness to cut development cost (open source companies are great example). Some do it in order to cultivate a vibrant development community that in turn increase its value and market power (Google is a good example). But there is nothing sacred or better in openness.

The irony is that one of the most so called open companies in the world, Twitter, just dropped an A bomb on its ecosystem, when it announced the development of desktop and mobile clients. While the blogsphere is attacking Apple and praising Twitter, the industry darling itself single-handedly sent the companies that made it so succesful to the deadpool.

So, let’s stop being naive. At the end, it is all about business. The rest is fluff.

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• Apple vs Google: The Next 10 Battles To Watch (GOOG, AAPL) (businessinsider.com)
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iPhone was and still is a revolutionary device. it changed the whole concept of mobile interaction, the way we perceive mobility, and our expectations from mobile devices.
But just like any other device it has its flaws. Two of the most important ones are:

1. Lack of mulitasking – the inability to run several applications in parallel was one of the main points against the iPhone by Linux/Android/Symbian lovers around the world.
2. Lack of Adobe Flash support – well, unless you don’t have internet connection you probably know that Jobs hates all thing Flash with passion. iPhone and iPad do not support Flash. At all.

These two points were really not that important on the iPhone. I found that I have no issue what so ever with multitasking. Whenever I need a background app, Push notification gave me all that I needed. The whole “listen to Pandora while browsing” Scenario seemed a bit stupid to me – or at least relevant to less than 10% of my time. Other issues raised by iPhone users seemed esoteric to say the least.
The lack of flash wasn’t a biggie either. The iPhone screen is too small to watch embedded videos, as you need to watch them in full screen anyway. And besides one case, I never watched long format videos in the iPhone – and this one too was from the iTunes store.

But while these issues are minor when talking about the iPhone, iPad is a totally different story.
The iPad is using the same OS as the iPhone, with both limitations. But while I use my iPhone for limited time in each iteration, the iPad is an actual laptop replacement. I am writing this post on the iPad with a bluetooth keyboard – an activity that takes time. Suddenly, not being able to have my IM client running in the background becomes an issue. I am using IM+, that supports push notifications, but it isn’t enough. Luckily this lacking feature will be implemented in the next iPhone OS, that will reach the iPad in the coming Fall.
But lack of Flash support is a different story. And there is no light at the end of the tunnel here. We know that Apple is in a head to head battle against Adobe, and judging from history, it doesn’t seems like Apple is going to back down. Not having Flash on my iPad means that not only I can’t watch video streaming from most sites out there today (including many of the local official TV sites, that stream full episodes for free). It also means that I can’t access Google Analytics, Livestream Statistics and many other websites that I use every day. Cracking open my laptop just to look at stats seems stupid to say the least.

It might be just a matter of time before HTML 5 will gain more ground and additional sites will support it. And I am still very happy with my iPad, and amazing device that is truly a game changer.
But till then, I feel that my iPad is a bit crippled, and a bit less useful.

Yes, I know, I am an Apple fan promoting a Microsoft‘s event, but this one is different…
Last year, Think Next was an awesome event – covering innovation, startups and keynote from thought leaders. This year the Microsoft guys are planning an even more exciting event, with Craig Mundie as a keynote speaker (Chief strategy and research officer of Microsoft), Moshe Lichtman (President of Microsoft’s Israel R&D Center and a great speaker), a DemoFest AND – Yes, Natal.
So here is the thing – it is a closed event but a little bird gave me several invite codes. Each code could provide 10 invitations.
After 20 RTs of this post – I will publish a code on this blog.
In the weeks leading to the event I will publish additional codes on my Twitter and Facebook profile.
ThinkNext will take place in Tel Aviv Port, Hanger 11, on April 14th.

2025- an invitation from Kfir Pravda on Vimeo.

2025 is a free vitrual conference about the future of your living room and cubicle.

For more info check 2025.imtc.org

(Shot on 7D)

As magazine publishers are looking for ways to survive the digital revolution, there is one knight in shining armor – the iPad. At VDZ’s Digital innovator summit, the “magical” device was mentioned every second panel. Booths at the exhibition area showed protoypes of iPad applications, and CMS vendors stated that they are planning iPad support sooner then later.

However, amazingly enough, most of the people I’ve talked with never saw the iPad or held it in their own hands. Most of their knowledge about the device derived from Apple’s announcement and blogs – not first hand impression.

Though seems strange at first, that a whole industry would be betting its future on a device that almost no one  used or seen, when looking t the deatails, the iPad is a publisher’s wet dream:

1.  A sexy device

2. That provide a rich media experience, way better than the black and white Kindle

3. With embedded DRM, billing, and distribution mechanism

Based on iPhone and iPod success, iPad has the potential to become the magazine industry’s savior. However, magazines could not rely on single device or concept to be the answer of  all their woes.

Want to know what P&G told publishers about their future? check out this post.

Last week I was invited to speak at Digital Innovation Summit in Berlin, organized by VDZ, the German Magazine Publishing association. In this series of posts I’ll cover some of the topics discussed.

Susanne Kunz, media and communications director, Procter & Gamble, Germany, spoke at Digital innovators summit in Berlin last week, and had some very direct words to say to publishers. She stressed the fact that magazines are facing competition for ad money – and they aren’t necessarily delivering premium value.
First she explained that magazine publishers in Germany are missing the most important value they could provide – customer insight. Publishers are not investing enough in knowing their customers and provide valuable information to advertiser.
Second, she believed that companies and brands should be present on all platforms, cause their customers are on every platform too.
Third, she stressed the fact that with content becoming more and more open and free, magazines should focus on bringing truly unique content to customers.
And last but not least, she mentioned mobile as more than a content distribution platform – but also could be used for virtual goods and product delivery.

The session was meant to be a wake up call to publishers – it seems that at least in some cases it worked…

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• 60% of bigger magazine websites profitable, survey shows (guardian.co.uk)