When he was four, Tomer Kagan moved from Kiryat Bialik, Israel, to Silicon Valley where his father was offered a job. Growing up in the epicenter of the flourishing technological industry made its mark and two years ago Kagan, together with his partner, Liron Shapira (who also left Israel at the age of four) founded Quixey Ltd., which has been nicknamed, "The Google of the application world." Now, at the age of 27, Kagan is beginning to show signs of Israeli patriotism. Granted he is not planning on moving back to Israel, but he is seriously working on setting up an R&D center for Quixey in Israel.
"Investors prefer to invest in companies that are near them. Therefore, if we open an office in Israel, we will want one or two local investors to join the next round of funding," Kagan told "Globes" in an exclusive interview. "We will soon start our next round of funding, some of which will come from Israeli sources."
Last September, when Kagan visited Israel, he split his time between visiting family, venture capital funds and friends from Israeli start-ups in an effort to familiarize himself with the industry before hiring employees for Quixey's Israeli R&D center.
"Office space in Palo Alto is extremely expensive. It's crazy. I have to wonder whether it's logical to continue with R&D in Silicon Valley, especially when there are employees at a similar or even higher levels in Israel."
Kagan and Shapira (23) met through the largest Jewish youth movement in the world: B'nai Brith AZA. Kagan continues to volunteer as a counselor in the movement, which brought them the initial investment of $25,000 from their counselor, Dan Appleman.
The idea for Quixey began when Kagan and Shapira felt that someone needed to organize the thousands of applications currently available for smartphones and personal computers. The idea to develop a search engine that would enable users to search easily and efficiently for applications also excited Google CEO Eric Schmidt, who understands a little bit about search engines. Through his private investment fund Innovation Endeavors , Schmidt invested $400,000 in Quixey in seed funding and invested an additional $3.8 million in the subsequent financing round in August 2011, which was led by US Venture Partners, WI Harper Group, and Webb Investment Network.
Despite the investments, Kagan, Shapira and the Quixey team continue to work hard. So hard that Kagan has not even had time for a relationship. "Working for a start-up does not allow you to be in a relationship - it kills them. I sleep at the office every night," he says. "We are trying to do something big here and therefore everyone needs to do the work of two or three people. We should really have 100 people working here."
We don't want to argue with Google
Quixey's search engine enables people to find not only applications for Apple and Google operating systems, as competitor, Chomp, does, but for all platforms. It supports all cellular operating systems, as well as supplements like Chrome and Firefox and applications for Facebook and Twitter. Quixey allows users to categorize applications according to Intel app stores, LG, Samsung and Dropbox, as well as by receiving a security rating for applications through a joint venture.
"In a perfect world, every time we had a problem, we would search for the appropriate app, find it, and use it," Kagan said. "The solutions are out there, but it is difficult to locate the appropriate app. We want to build a search engine that would help you find what you are looking for."
Currently, a regular search on a mobile device analyzes the application's name and its short description. Quixey's engine, on the other hand, checks tens of blogs, critiques and Internet sites. The search uses extremely simple language.
Kagan emphasizes that the company's solution is not perfect and that they still have a long way to go. Two years ago when Quixey was founded, a standard search in built-in mobile stores included only 0.1% of all existing applications. Since then, the situation has improved, and searches cover 1-2%. Quixey currently covers 5% of applications. "Even what Larry and Sergei (Google founders R.G.) have done at Google is not a 100% solution, but can locate only 60% of what is available."
"Globes": Apropos Google, what is your opinion about the nickname you've been given - the Google of applications?
Kagan: "It's nice, but we are not trying to compare ourselves with Google. We have our own identity. We like what Google does, and we have a connection with Schmidt. That is a good enough reason not to start arguments."
Do you ask Schmidt for advice?
We are mostly in contact with Dror Berman, his managing director. He has recommended a few consultants with whom we work." One of these consultants is Raymond Nasr, who also provides consulting for Innovation Endeavors and is a close friend of Schmidt's from when they worked together at Novell and Google. "Nasr helped Schmidt learn how to speak in front of an audience, and now he is helping us. He is advising us on issues such as which words to use, what to emphasize, and how to talk to the media. I am still not good enough at this," Kagan admits.
"We are not developing a mobile application"
Despite the fact that Quixey is involved in the world of applications, Kagan and Shapira have not developed their own mobile application. "We prefer that other companies assimilate our search engine. If we also had to develop our own mobile application, we would need to allocate employees to continuously update, market and support it. We have a tremendous amount of development that we need to do and we prefer to invest our time doing that," Kagan explained.
For this reason, Quixey is conferring with manufacturers and large global mobile companies. The idea is to offer licenses to use Quixey's search engine free of charge, which brings up the question, what is the company's economic model? Kagan explains that, like Google, Quixey also plans to create an advertising system based on search results, but in a more sophisticated way. "We have been working on this model for a year and it will be ready in the next few months," Kagan said. "First we want to reach a billion searches a month and to close serious deals."
Kagan says that senior mobile manufacturers are concerned about the explosion that recently occurred in the industry, when Google decided to acquire Motorola for $12.5 billion. "They are having a hard time getting used to it. They fear that Google will prefer using Motorola's operating system in android devices, despite the fact that Google denies this. Look at Samsung, for example. They are restoring their bada operating system. They want independence, not to be stuck only with android. All of the manufacturers are scared of what will happen if one day Google closes its doors to android and decides to operate only through Motorola cell phones."
Published by Globes [online], Israel business news - www.globes-online.com - on November 1, 2011
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