New-wave New Olim By Jessica Steinberg April 21, 2000 Jerusalem Post (April 21) -- Hi-tech is enabling some English-speaking immigrants to realize a Zionist dream. There are some new millionaires in town. You might know some, but it can be hard to distinguish them from the rest of the crowd. They could be your next-door neighbors, shopping in the local supermarket, taking their kids to school. You would never know how much money they have in the bank. And they like it that way. They are a handful of hi-tech entrepreneurial English-speaking immigrants who struck proverbial gold, capitalizing on a combination of hard work, smart ideas, a smidgen of good luck, and - even after the recent market roller-coaster - the wild valuations of today's hi-tech market. For the most part, they never expected to be rich. None is planning to retire any time soon, despite having earned enough to ensure his family's financial security for at least a couple of generations. No one is buying a private jet, but a few like to travel first-class. And they all say that creating a new kind of Zionism was a motivating factor in their success. Jacob Ner-David (Davidson), the 31-year-old co-founder of communications portal Deltathree.com, Inc., exudes the kind of confidence that would work well at a blackjack table. He has degrees from City College in New York and Georgetown University Law School, in Washington, where he also worked as the local representative for Seagram's magnate Edgar Bronfman. He likes to show visitors an album of clippings documenting his days as a Jewish activist, when he would storm meetings and lead rallies for all kinds of causes. He's an anti-establishment kind of guy. He wears a kippa, but doesn't like to define his religious affiliation. He would like to get involved in Israeli politics, but is particular about his causes. He doesn't necessarily see himself as a millionaire, but he is one, several times over. Back in the old country, Ner-David and his longtime friend and partner, Elie Wurtman, always dreamed about "the firm" they would create in Israel. They tried out a number of businesses along the way, including a Dead Sea minerals venture that never went anywhere. When Ner-David moved here in 1994, the two set up a series of technology companies, and the same year founded Pioneer Management Corp. - now called 2BVentures - as a type of hi-tech holding company. Deltathree was born in 1995 as "the world's first communications portal," transmitting phone calls, faxes, e-mail, voice mail, and other kinds of communications transaction across the Internet. The company started selling minutes in early 1997 and its lucky break came in the form of cosmetics heir Ronald S. Lauder, chairman of RSL Communications Ltd. Lauder purchased 51 percent of Deltathree for $10 million, $5 million in cash, with the other half in goods and services. Last November, RSL sent Deltathree to the Nasdaq Stock Exchange, where the company's $450 million valuation - whiched reached a $1.8 billion peak - raised over $100 million for the company. Naturally, Ner-David and Wurtman both did very well in the final tallying up. Now the two are hatching several other start-ups, including an internet project with a relative of Jordan's King Abdullah II. At the same time, Ner-David finds that his motivation to succeed has changed with the financial success. "I enjoy what I do, but my drive has changed. It's still strong, but now the goal is to make money to give away," he says. "I also have little kids and a studious wife who isn't going to retire any time soon." Ner-David is married to Haviva, a writer who has earned her own fame as a tzitzit-wearing Orthodox feminist who is studying to become a rabbi. The Ner-Davids have two daughters and a son, aged six, four, and 18 months. They live in the restored first floor of an old Arab house they purchased in Jerusalem's Baka neighborhood. Although they drive fairly expensive cars in Israeli terms, their lifestyle is surprisingly unchanged in spite of their augmented income. People make assumptions about his newly minted wealth, says Ner-David. But he does not apologize for the money he has earned or giving in to any spending urges he may have. "Sure, part of me would like to live in Scarsdale or Savyon," Ner-David says. And it is true that once you have enough money to fly first class, you can't go back, he adds. But, despite all that money in the bank, and that initial feeling of: "Wow, I can't believe we actually did this," making money was never actually Ner-David's driving ambition. "I had a dream of economic Zionism," he says. "I wanted to come to Israel and bring foreign investment to the country and build up a powerhouse economy. I just didn't know how." For Ner-David, who was brought up in a modern Orthodox environment in the Five Towns in Long Island, making aliya was part of acting out the full "Jewish drama" as he calls it. It just so happened that the hi-tech boom dovetailed with the Ner-Davids' move. "It used to be a severe economic disadvantage to move here," Ner-David says. "Everyone was supported by their families in the States, who sent toilet paper and peanut butter, and helped pay for a down payment." The hi-tech boom has created opportunities that didn't exist 10 years ago. Building up a company used to take years, even decades, of hard work and long hours. Progress was slow. Most companies didn't go public after a year or two and today's valuations would have been considered preposterous. Few Israeli companies dreamed of going public on Wall Street, creating millions of dollars in turnover before even earning a profit. For immigrants from the English-speaking world, the hi-tech industry also offers employment opportunities with decent salaries, American-style work environments, and - in the case of start-ups - the ever-desirable stock options. The best part of making money has been watching others gain as well, says Yaacov Ben-Yaacov, co-founder of PictureVision, Inc., which created the technology for viewing, sharing, and storing photos on the Internet. Ben-Yaacov and his two partners, Phil Garfinkle and Elliot Jaffe, sold 51 percent of PictureVision to Kodak for $50 million and an undisclosed amount to Internet portal America Online in 1998. Ben-Yaacov has since left PictureVision to become the CEO of Yazam.com - yazam is the Hebrew word for entrepreneur - a new firm that accelerates start-ups from seed stage to established companies. He doesn't actually need to work any more, but that's not the point. Ben-Yaacov wants to help create a new class of successful Israeli entrepreneurs. And he has always been motivated by the challenge of a new project. After making aliya at 17, serving in the army, and studying at the Jerusalem College of Technology, Ben-Yaacov made his way through several consulting and start-up companies before he and his partners came up with the PictureVision idea in 1994. "We had a lot of luck and some help from above," says Ben-Yaacov, who also wears a kippa. "There's no magic formula to getting a company off the ground. It's a lot of hard work for you and your family and friends. You have to be able to navigate where to make the left and right turns and it's a learning experience all the way." At 33, married with four children, one successful company under his belt, and the hope of several more on the way, Ben-Yaacov has a certain chairman-of-the-board attitude. He's friendly but firm, pressed for time, but willing to stop and chat. He's clearly driven by his ambition, but is trying to find a balance between work and family. These days, he likes to take the kids to kindergarten or tinker with his home karaoke system. While building a suburban home with ample yard space for his family is important to Ben-Yaacov, he still wants his offspring to appreciate the value of money. That's one of the reasons he likes living in the mixed community of Givat Ze'ev, where his children can see that not everyone has a big, grassy garden. "I want my kids to live the way I did," says Ben-Yaacov, who grew up in the suburbs of Atlanta, Georgia, "and there's no question that my kids know that they're better off, but they also know that the right thing to do is to give [money] away." At Yazam, Ben-Yaacov still works hard but tries to make sure he is home for Shabbat, traveling slightly less than he did during his PictureVision days, and he receives fewer phone calls at two in the morning. What pushes him on now is the ability to help other entrepreneurs and companies succeed, he says. "The Internet is a crazy market. It's revolutionary the way it creates the ability to be successful very quickly. If I were 15 years older, it would have taken me much longer to reach this stage." The Internet was certainly a boon for Barry Shaked, the 43-year-old founder and CEO of software provider Point of Sale Ltd. He toiled steadily for 17 years before his company went public on the Tel Aviv Stock Exchange in 1994 and on Nasdaq in 1998, with a $75 million valuation that netted $13.5 million for the company's coffers. Shaked came here from South Africa with his parents when he was three years old. In 1981, he had finished army service and was studying computer science at Bar-Ilan University while working as a night manager at Burger Ranch when his wife heard about a part-time programming job. And that was the beginning of Point of Sale. He first worked with a partner, programming software for cash registers. A year later, Shaked bought his partner out, and brought in executive vice president Brian Cooper as his new associate. "I've always been an entrepreneur," Shaked said. "I organized golf teams, the school shows. I knew that I wanted to work for myself." Shaked is motivated by the creativity inherent in programming software. Back in the company's early years, Shaked and his staff would work 36 hours straight when attempting to figure out how to connect a personal computer to a cash register. "I'm an old-fashioned techie," he says. "I did 50 percent of the software in the first years of the business and I enjoyed it. I love challenges. Remember Rubik's cube? I didn't put that thing down until I figured it out." Now that Point of Sale is hooking into the Internet generation with its Web Village product, a community of stores and retailers for whom Point of Sale will provide management solutions, it looks like the company's revenues could double to $50 million by 2001. But that, Shaked believes, is just luck. "We had a traditional business and we leveraged it to the economic boom and the opportunities in this new market," he says. "We always made money, there was never a time when we didn't have revenues." But achieving real success needs patience and perseverance, not grabbing the first opening that comes along, Shaked says. "Everyone has opportunities in life but those who are lucky know how to choose the right one," he added. "I'm willing to take risks, but I'm not a gambler. I've also always been an optimist because you can fix things when they go wrong but when you're a pessimist, you don't have enough energy to fix anything." Like most companies, the bulk of the money earned from the initial public offering was plowed back into Point of Sale's shopping cart. Moreover, says Shaked, sticking to a tight budget is a hard habit to break. And that is what makes him different from some other overnight millionaires, he says. The money is nice, says Shaked, but he is not a big spender. Sure, he likes his single malt scotches, playing golf - Shaked is an amateur competitor - and showing off his toys, such as the "Point of Ale" beer tap in the company conference room. And yet, "what interests me is the product and the customers and our evaluations and the investors," he says. "Why would I waste money on first-class tickets?" Nonetheless, Shaked, his wife, and three daughters aged 17, 14, and 11, go on vacation two or three times a year. He's also building a moshav home, where he hopes his daughters will settle even as adults. But while he wants his children to feel secure, he wants to see them work for their own rewards. "Israel has created an environment that forces people to think outside the box," he says. "It dares you to succeed on your own." Shaked remembers when the government used to give certificates to companies that were bringing in money to the economy. "We were so proud of our first $1 million and then our first $5m. [certificate]," he says. "But it's true that if one successful Israeli company helps other companies, it will help build the country." There seems to be a geographic, and even cultural component, to this type of newly affluent. These hi-tech aliya successes who chose to emigrate to Israel aren't raring to build villas of conspicuous consumption in Herzliya Pituah, Savyon, or Caesarea. And while they might hanker for a Learjet to fly them in comfort to and from their frequent business trips to the US, they're not buying them. "You have to ask, how much money can a person use?" says Ben-Yaacov. "It doesn't really matter whether you have $2m. or $30m. in the bank. The challenge is to think 10 times before buying anything because it's easy to say, "So what?" when you have the money." Too true, agrees Ner-David, who, with Wurtman, has established a charitable foundation and is working on a Jewish leadership program. In fact, it was his work for Edgar Bronfman back in Washington that made Ner-David decide to remain an activist, but as the power behind the reins. Now he can do that. "People know they can come to us and that we will give to those in need," says Ner-David. "But it's always a balancing act." Ben-Yaacov views his wealth as his guarantee that his children and their children will be provided for in the future. All the same, he asks, "Do you want your kid to still clear the table? That's what it's all about. If someone donates a new Torah to the shul, or helps others buy food for Pessah, I do it because it is the right thing to do." Stock options aside, these entrepreneurs like to think of themselves as the new version of the Zionist pioneers, beating plowshares into computers. There was a time when new olim couldn't make much of a living in their chosen professions and were told, "Don't think of coming to Israel as a career move." Hi-tech has changed all that. Now immigrants from English-speaking countries can make aliya and make a mint in the Middle East's Silicon Wadi. As Jacob Ner-David likes to say, Israel looks a whole lot different from the ninth hole of the Caesarea golf course. "Finally there's an advantage to being an American in Israel," Ner-David says. "And to some extent, we helped [create] that."