Gilder shames the pessimists

Shlomi Cohen

George Gilder is a guru whose predictions actually come true, so perhaps we should set more store by his esteem for the local tech industry than by Zeev Bregman's gloom.

Thank goodness for George Gilder, the technology guru who years ago predicted what is now happening in the world of telecommunications. He came all the long way from the US to tell us at the "Globes" Israel Business Conference what wonderful developments are taking place here, and how we are challenging almost every technological innovation in the world. He is not Jewish, and for him a trip to Israel from time to time and a tour of the various technology companies is reminiscent of his trips around Silicon Valley decades ago, during the period that saw the birth of the Intels and the Ciscos of this world

Apart from George Gilder, the picture painted by several of the leading lights of Israel's technology sector at the "Globes" conference was fairly depressing, perhaps in line with the spirit of protest and letting off steam that has characterized us lately, but to my mind not a true reflection of the great successes the sector has had in the past decade. To take only the example of Yokne'am, it was a sleepy agricultural town until ten years ago, and now it's home to companies with an aggregate market cap in the billions of dollars, and there will be plenty more like them in Israel in the years to come, so why all the wailing?

NICE Systems Ltd. (Nasdaq: NICE; TASE: NICE) CEO Zeev Bregman, for example, sounded angry yesterday, and I don't quite know what about or who with. He mentioned the word "excellence" several times, as though it were a university faculty that the government is about to shut down. He spoke against the culture of exits and the giant companies that come here and buy the cream of the start-up crop, but that's the way of the global world, and Bregman himself brings about exits every year of the companies he acquires at home and abroad.

It's about time that we understood that all the talk about exits is nonsense, because start-ups emerge into a very complex world, and their destiny is connected to many factors, such as the character of the entrepreneurs, the kind of technology, who the financiers are, the market's needs at the particular moment, correct timing, and many other things, plus a great deal of luck. For example, Gil Shwed and his partners enjoyed a huge slice of luck that the Internet got going and was thirsty for security solutions just when they left the army with relevant knowledge in that field, and founded Check Point Software Technologies Ltd. (Nasdaq: CHKP).

There are companies that make it by themselves to the size of NICE Systems, through organic growth and mergers and acquisitions, and there are other companies, no less worthy, such as Galileo, which was sold to Marvell Technology Group (Nasdaq: MRVL). That particular merger created a local semiconductor giant that contributes greatly to the Israeli economy, and I am by no means sure that Galileo would have survived the semiconductor battles of the telecommunications world by itself.

Gilder rightly says that he fails to understand what's wrong with technology giants coming here. As far as he is concerned, Intel (INTC) is an Israeli company, in that many of its developments have taken place here, ever since Dov Frohman's inventions in flash memory 30 years ago became big sellers for Intel. He added that he shared the widespread view that there was a good chance that Intel's next CEO would be its Israel VP Dadi Perlmutter.

As Gilder complimented Israeli companies yesterday, I knew that it would only take him seconds till he mentioned how much he admires EZchip Semiconductor Ltd. (Nasdaq: EZCH; TASE:EZCH), because at this very time, Gilder's long-standing assessment of EZchip as "the Intel of routers" is coming true, with the company flirting with the amazing market cap of $1 billion.

Gilder explained that EZchip had come at exactly the right time with its unique, advanced router processors, that will cope with the huge growth that we will see in the coming years in video transmission over the network. This growth reminds him of the beginning of the voice revolution, when the world still relied on the telegraph in the nineteenth century. Gilder likes Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) as well, because in his view it's a fab with unique specializations of the kind that Israel needs in producing chips. He praised the acquisitions the company had made in the US and Japan, and only hopes that its problematic balance sheet will soon be sorted out.

Among the local start ups, Gilder is a big believer in ASOCS, which has developed a processor that runs multiple communication standards concurrently on a single chip, using sophisticated algorithms. Gilder mentioned the company's chief scientist, Prof. Shimon Litsyn, who was among the inventors of X4 technology at M-Systems.

In biotechnology, Gilder sees a breakthrough in the offing for Compugen Ltd. (Nasdaq: CGEN; TASE: CGEN), and among the companies traded in Tel Aviv he mentioned Evogene Ltd. (TASE:EVGN), which is active in plant genomics. US company Monsanto (MON) has invested $35 million in stages in Evogene, and Gilder does not understand why Bregman should see such collaboration as unwelcome.

Published by Globes [online], Israel business news - www.globes-online.com - on December 12, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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