CALL ME CRAZY, BUT I LOVE ISRAELIS TRANSLATED from HEBREW
Sept. 23, 2014
Ten years after forming Israel at Heart that has taken hundreds of Israeli students on PR missions to the US, the NY based investor Joey Low established Star Farm Ventures, an incubator for Israeli startups, with a personal touch. How personal? All the way down to the boiler and to communal living. In a holiday interview to G magazine, Low and his daughter Tanya explain where the drive comes from. Vered Kellner, NY. Sept. 23, 2014
HOW DOES JOEY LOW HELP YOUR STARTUP SUCCEED? “Where to start?” That is more or less what all of the entrepreneurs of Star Farm Ventures portfolio companies are saying. “Where to begin” they say, and then tell more and more stories that sound like fairy tales. It’s not only that Low, an American Jew with a rare connection to Israel, decided to invest in 25 Israeli startups, and during the two years since founding Star Farm Ventures, has poured into them about 15 million dollars. Neither is it the fact that he gave them a base in NYC, the center of the global business world, from where they can venture in pursuit of new achievements. The generosity of Joey Low and his daughter Tanya who works with her father, extends far beyond the limits of regular investors. When necessary, they help young Israeli entrepreneurs find an apartment in NYC, improve their English and their presentation skills before an important meeting, recommend a doctor or an immigration lawyer. They also open their private home. Guy Eldar, the founder of AppMyDay, one of the startups in Low’s portfolio, gives an example: “Last winter I came to NY with my wife, about a month after our wedding”. “We rented an apartment in Manhattan, and on the coldest day the boiler in the building broke down. That was no fun at all. Joey and Tanya heard that we “showered” by heating water in pots on the stove. They invited us to their home, gave us a room and let us stay as long as we needed”. So tell me: This hospitality thing is all nice and from the heart, but that’s not how one breaks into the US market. Rather it’s all just a bonus. The main asset offered by Low to the startups he has invested in is the extensive network that he has established over decades of doing business here. Low gives his “kids”, as he calls them, the priceless shortcuts to the doors of movers and shakers. “Yesterday I went to some professional conference and talked to some Y&R employees, one of the largest advertising companies in the world”, says Lior Aharoni, the founder of Feature.FM, one of the oldest of Low’s investments. “When I understood where they worked, I told them that I had met their CEO David Sable, who is a good friend of Joey. They said ‘Oh yes, we see him in the elevator sometimes’. He is like god to them. In moments like that you understand what kind of jump start Joey gives you, and how he connects you to people that you would have no other chance of meeting. And Joey, he is the best at that.” For his part, Low admits that his interest in Israeli startups is not just about the bottom line. “Of course I’m happy to make money form it”, he says, “but I believe that money will come if we do our job right. I will not sacrifice my values in order to succeed. We treat the companies in which we invest better than venture capital funds, because for us it is not just about money, and people who know us, know that.” “They see how I live. How much does a person need? A certain amount. OK, I have that. Now I want to do something better, so that my mom and dad can see that I’ve succeeded. Towards the end of his life, my father, who passed away a few months ago, kept asking me what was going on with my investment in WeWork (the company founded by Israeli Adam Neuman, that rents out shared office space to entrepreneurs). He said: ‘I think that you’re on to something there’. It made me so happy.”
“LIKE TO BE INVOLVED” Low emerges from his office on the 4th floor in a modest office building off 5th Avenue, with his hand extended forward. He wears a polo shirt, shorts and sandals. “I didn’t know it’s a casual-dress day”, I smile. “For me every day is a casual day” he replies, and calls to his daughter Tanya to join us.
They started the incubator Star Farm Ventures in NY, exactly two years ago, after having a taste of what the Israeli high-tech scene has to offer. In the past Low had already invested in Israeli companies, and had been burned too. But this time he only did it after an Israeli friend suggested he take a look at Adam Singolda’s company Taboola, which developed an engine that gives content recommendations online. That was six years ago. Taboola is currently raising another round of capital, at an estimated valuation of 1.5 billion dollars.
The second stage was when Low invested in a Tel-Aviv accelerator called “IDC Elevator”. “For the past 14 years I have been on the board of the IDC, located in Herzliya”, says Low. “Prof. Reichman was at my office and told me that they were starting an investment company with two of their graduates, the other investors were Israelis, and that he thought it would suit me. So I told him to count me in.”
That gave Low the opportunity to study the field and to introduce it to his daughter – whom, despite her young age of almost 25, he found to have very good business instincts. “They took 6-10 companies”, says Low, “let them work in Israel for a couple of months, and then brought them to the US for a round of business meetings, to see which ones may be worth further investment”.
Low sensed the potential, and invested in four of the seven companies that came out of the first class of the IDC Elevator, but he was not ecstatic about the model. “That was where I learned what to do, and what not to do”, he says. “I am a person who likes to be involved with those I work with, beyond the initial investment. Not ‘see you next year’, but ‘what can I do to help?’”
What bothered Low was the distance. Not only was it difficult helping the startups with the ocean between them, but he also thought that a few-weeks trip to NY wasn’t the right way to penetrate the market. “Things FROM THE INVESTMENT PORTFOLIO
A SOCIAL NETWORK FOR PRIVATE EVENTS The idea at the base of AppMyDay came about by accident, when Guy Eldar worked at Face.com (which was sold to Facebook in 2012). “A close friend got married, and we wanted to surprise him with something original. We thought that it would be great if we could get him the pictures that were taken by all the guests at the wedding. So we built the prototype, brought it to the wedding, and installed it on the guests’ smartphones.”
So you stood next to the groom’s mother, while getting all the guests to join?
“It was so embarrassing, but eventually it was a success. From there we rolled with the concept, and it occurred to us that it may become a viable product.” AppMyDay became a platform for hosts of events. The application helps them build a closed private social network around an event, with the purpose of posting pictures and other content that otherwise would just have been lost. The app can serve private and corporate events, conferences and conventions.
are happening much faster if they are here”, say Tanya. Low adds: “Because I’m a New Yorker from birth, we have a very strong network of connections here. This is the town I know, and this is where my advantage is. My problem was how to sort through and select the right Israeli companies.”
That problem was solved after Low remembered that he was well-connected in Israel as well. To understand that part, one has to put aside for a moment the whole startup business, and say a few words about Low. Low may be known to the Israeli TV audiences from the reality show The Ambassador, which was aired on Channel 2 about a decade ago. Low is the man who 12 years ago started Israel at Heart, the project that sent the winner on a year-long PR tour in NY. That biographical detail may give one the wrong picture, such as: here is another rich American Jew who went on an orange-picking tour in Israel and loved it, who floods his friends’ inboxes with FOX-news-style video clips. A good Jew who is a bit of a sucker for all things Israel, who at the mere sight of falafel in a pita opens his wallet while singing Hava Nagila.
But two minutes in Low’s presence is enough to make it clear that he is very far from that cliché. There is no air of pretentiousness or formality about him, he is a human magnet and effortlessly befriends everyone in an honest and direct way. “If Joey meets a 19-year-old student or the CEO of a giant corporation, he speaks
Why is a Facebook page not enough?
“It does not work well enough if one wants to document things in real time from different perspectives. Privacy is also an issue, if I want to organize an event to which I would not invite all of my Facebook friends. And WhatsApp limits you to fifty users. AppMyDay lets people create an environment that would suit their particular taste with regard to design, color, cover picture and uploading of content. Even live-stream the event on a big screen.”
How does one make money from this?
“There are two models: The Online Premium is, for example, if your daughter has a Bat Mitzvah, you register on the website, build an event space and share with your guests. This is free for up to 25 users. As the number of users grows, we assume that so does the event budget, and so we feel more comfortable with charging a fee. The rates are $99 for up to 300 guests, $199 for up to a thousand guests. The other model, the more profitable one, is through partnerships with event-production companies or venues. We sell them packages of a hundred events at a discount.”
to them in the exact same manner” says Aharoni. “There are no formalities with Joey”, says Eldar. “Normally people of his financial status behave somewhat differently”, says Ron Teicher, the founder of EverCompliant, specializing in information security for credit-clearing companies. “With Joey you get the feeling that he is your best friend”.
“ISRAEL IS ACTING FOOLISHLY” Joey Low was born in NY 63 years ago, to a mother who emigrated from Berlin, and a father from Vienna who had a small diamond business. “My dad was a workaholic”, says Low. His efforts paid off, and the diamond business grew over the years. Later on Joey joined the family business, only to leave it after seven years to do what he really loved: the stock market. Over time the family grew to be very successful.
In 1971, after two years at NYU, Low went to Israel for a year, to study at Hebrew University. During that year a love for Israel ignited within him that’s still there. So, he’s been living with one foot in NY, and the other, plus his heart, in Israel ever since.
Incidentally, his initial connection was with the left-wing side of Israeli politics. “I served as treasurer for the US branch of Peace Now”, he admits, and proceeds to mention vintage Israel left-wing name - such as Dedi Zucker, Yuli Tamir, Shulamit Aloni, and Meron Benvenisti. “That was the world to which I was connected”, he adds.
“We started Israel at Heart in 2002”, continues Low. Those were not simple times for Israel, and its PR efforts were not in much better shape either. Following the battle in Jenin, Low decided to bring young Israelis who fought there to American college campuses, so that they could tell firsthand about what was going on. In addition to speaking with college students, they also met with senators and congressmen. The tour was a success, and Low decided to turn it into an ongoing project. At first he drew some help from the Israeli consulate, but it did not take him long to understand that his personality and the Israeli bureaucracy did not match, and he would be better off doing it on his own. “After two weeks I told two Israelis, Batya Eyob originally from Ethiopia and Elinor Kaftory, that we will be going at it ourselves. They both moved here, and we ran it together, like a startup.”
His mentioning of Ethiopia is not accidental. More than a thousand students have joined Israel at Heart delegations around the world, with three students at a time working in a specific region. About a third of them were of Ethiopian origin. “I decided that at least one of the three would be a guy or a girl from Ethiopia. This was a great way to show people the Israeli attitude towards racism and discrimination. If a white Israeli would speak about it, it would make no impression. But it is entirely different when a black person says it”.
That was how Low became closer to the Ethiopian community in Israel. Seven years ago he started a scholarship program at the IDC targeted for Ethiopian Israeli students. “There are currently 50 students there, and 70 graduates already. We invest a lot of energy in that project. There is also a group here in NY this summer doing internships. Some are residents at Mt. Sinai, three are in advertising, and another three have been working as tour guides at the Holocaust Museum, a program that has been running for seven years now. Sometimes they are asked: ‘Why are you working as guides here? You are black like us’. So they say: ‘Yes, but we are Jews from Ethiopia’. That is also a great way to say something about Israel and teach about the Israeli Ethiopian community in Israel.”
Some people will think that the cozy home feeling you give these young Israelis may persuade them to leave Israel and move here. “When I started Israel at Heart, my father said ‘Sure they will come, and they also would like to stay here’. I told him: ‘Not one of them stays here’. It’s hard to tell in the case of the startups though. Everyone comes here for their own reasons and they stay as long as they need to, but I am convinced that the people in whom we invest will eventually move back to Israel. Moving here first is the price they have to pay, because the Israeli market is small. Here is a chance of going away for a few years, to grow, learn, get exposure, make money – and then go back, so why not?”
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PERSONALLY TAILORED SOUND “In the US there are lots of TV screens in public places – such as in airports, bars, gyms and hospitals”, says Yaniv Davidson, giving the background for his concept. “The problem is that for the most part they are on with the sound turned off. What we did was to develop a technology that lets you scan the TV screen for a second, and then hear the audio on your phone.” The creative streak in Tunity is apparent not only in the technology itself, but also – and mainly – in the ways they make it profitable. Davidson lists three such ways: “TV advertising in the US is an industry of an annual $150 billion. 500 million hours are spent annually watching TV outside the home, which is 1%-1.5% of the total time spent watching TV – amounting to $2 billion. Currently these TV viewing hours are not measured. We will be able to measure them and consequently add some $2 billion annually to the bottom lines of these TV channels, without the need on their part to produce new content. Such information can be highly valuable to channels such as CNN.” The other way to make profit off the Tunity technology is through retailers. “When you scan the TV screen, you register with us, and this way we learn who you are, where you are, and what you are watching. All of which means that we have a segmented and targeted advertising platform, which is place and content dependent. Think how worthwhile it would be for Starbucks to know that now, at 7am, you are sitting in front of a TV screen in an airport, that you just saw a Starbucks commercial, and that you also have a Starbucks 50 meters away from where you sit. They can send you a coupon with a discount for your next cup of coffee.” Another way of making profit would be releasing the technology from the TV screen and transferring it to billboards. “Think of a funny commercial for the new Microsoft tablet on a wall in Time Square: you scan it in a second, Microsoft learns that the product caught your attention, and so they may send you additional information.”
You are right in that there are many admirable things about Israel, but to present it as a place where Ethiopians are being embraced and that it is free of racism is far from being accurate. “True. But as someone who loves Israel in a way one loves his family, I can also criticize it in the same way, and try to make it better. There are many things in Israel of which I am critical. Some things are very foolish - such as recently annexing a thousand acres in the West Bank territories. I think that such criticism should be heard, although it would depend on the audience. I don’t think that by bringing here young Ethiopian Jews I am sugarcoating reality. Israel has things that are both good and bad, and I prefer to focus on things I appreciate. The most disappointing thing to me is the treatment of the African refugees because we used to be in a situation just like theirs, and here we had a chance to show that there is a different way to treat the refugees, but we failed that challenge. I wish there was something I could do about it.”
Have you tried raising this with decision makers? “A little, but I learned that in Israel it is better to focus on things that one can influence, and not waste time on whining about things one cannot change. That’s why I’m trying to help them in the area of education and business. Clearly the issue is complex, but the government is not dealing with it appropriately. Israel is behaving foolishly, as these are the people who can talk to American - African Americans like no one else can. It could have been nice if Israel would understand the potential and give them the tools to grow.”
“I DID NOT KNOW THAT SUCH PEOPLE EXISTED.” Low is not interested in the limitations imposed by usual social norms. When the first Elevator class came for a tour in NY, the organizers asked where they would stay. “I told them: With me. We live in Westchester. So for that month I rented them a car and arranged everything else. They came to my office every morning to work from there. The idea is that if I am investing in them, I want to get to know them, and understand how they do things.”
But in your home? Tanya: “Sitting for dinner at home with people teaches you things you would not have learned by just visiting FROM THE INVESTMENT PORTFOLIO
A PLAYLIST WITH A MARKETING TWIST
Feature.FM, the ongoing startup project from Lior Aharoni, began in 2011 as a hobby called List n Play – a website where users can create YouTube-based playlists. “Soon enough the website reached 60 thousand users”, says Aharoni. “That was our first experience with music content, but we saw that there are other companies that are making better products, such as Spotify or Pandora. These are companies worth billions of dollars. So we decided to go for a social network built around music. The EQuala application lets the users select friends with similar taste in music, creating a radio station based on this shared taste.” EQuala was what brought Aharoni to NY, but it did not really take off. That was how the idea for Feature.FM came about. Aharoni and his friends noticed that even music-streaming giants such as Pandora and Spotify, who were spending a lot on marketing, were not making a profit, mainly because of huge royalties payments. “Pandora, for example, is losing $3 million quarterly.” Aharoni explains that these companies have two revenue-generating models: banners and audio commercials – one per each five songs. Feature.FM came up with a third model: “We decided that we are going to promote artists within EQuala. Instead of running a commercial once in five songs, we would run another song and sell that single play to the music industry, for the benefit of artists who are seeking exposure. We would then use that same content to generate profit.”
them in their office or during a business meeting. We have personal and real connections with these people.”
One of the guests who arrived with the Elevator was Lior Aharoni, whose startup back then was EQuala, now Feature.fm. “Joey and I connected very well on a personal level, and he decided that he wanted to invest in our company”, says Aharoni. “I lived at his home for about two months.”
Did it not seem strange to you? “At first it did seem strange. I didn’t know that people like this existed.” Later Low explains that when he refers to staying at his home, he does not mean that everyone was standing in line to the same bathroom. “We have another house on our property, a minute walking from our house where a Philippine couple who have been working with us for the past 26 years live. So the kids (the Israeli entrepreneurs) lived with them. It’s not like they were constantly in our hair - they were with Judy and Andrew, who don’t have kids, so they sort of adopted them as if they were.”
Additionally, every class of Israel at Heart concluded with a big party at Joey’s home. His four kids grew up in a home where Israelis have been coming and going all the time. Low kept in touch with most graduates, and now it is their time to return the favor. “I understood that I could select startups with the help of the network I built through Israel at Heart”, says Low. “These are the people I trust, they are loyal to me and we share similar world views.”
How will it match my taste?
“You will only hear music that matches the history of music to which you have already listened. We have a record of your listening habits – what you listen to and what you skip. We use this information to decide which new song you may like. The right time, for the right music, for the right person.”
Are they the ones comprising the selection committee? “No, the selection process is very informal. We are like family, a group of people who care about Israel. These are ties that go far beyond business and profit. We have graduates who are employed by some of the best companies. When they came here to the States, they were 23-24 years old, now 12 years later they are at Yahoo, Pitango, everywhere. I keep in touch with all of them, but I really use the help of those in the business world.”
How does this work? “We have hundreds of companies approaching us, so when something looks interesting, we ask our Israeli friends to check them out for us.”
Tanya: “We have different people specializing in various fields. For example, if a company in the field of gaming approaches us, and we don’t know too much about gaming, then we would send the information to a couple of guys who do. They don’t tell us whether to invest or not, but they give us their opinion on the team and their backgrounds, and the general idea of the company.”
Low: “We prefer working with Israelis – they are much sharper than I am, and most are tougher too.”
THE BUSINESS IS HERE, THE MARKET IS HERE In September 2012 Low and his daughter decided that following the Elevator experience, the time came to create something more structured and personal, something that would be their own – a NY home for Israeli startups. Tanya went to Israel to get a feel of the tech scene there. “The first week we didn’t even have an office. I went with a friend to a startup convention, and we talked to one startup. My friend introduced me as the daughter of Joey Low, and said that we are starting something with startups etc etc, and within an hour companies were lining up. We didn’t even have a name yet.”
What is the need for an incubator aimed at Israelis? Low: “It makes their transition easier. NY can be very cold and unwelcoming, even for those who have been living here all their lives. For someone from the outside, this town can be very exciting, but also very alienating. So I thought that it would be like a family, where at the end of the day you know that you have someone with whom to share what happened that day.”
The lucky ones who have been taken under the wing of Star Farm Ventures, are enjoying individual investments anywhere between a hundred thousand to a million dollars. “It depends on their performance and how they’ve progressed”, says Low. “I told some of them that I will match whatever they manage to raise from other investors they may find. With each company we have a different model.”
Tanya: “The model is based on the people who work in the company. The connection is personal. Before we talk to them about their technology, we speak more about where they’re from, how many kids each one of them has, get to know them a little bit.”
Low: “I think that the personalities of the people involved are more important than the concept. Concepts often change in the working process – what is important is whether they are persistent, hardworking, devoted, and have a great character.”
Most startups that Star Farm has invested in have not yet moved to NY. There are two of them here: Lior Aharoni from Feature.FM, and Yaniv Davidson from Tunity. Yaniv came to Low less than a year ago following an introduction from an Israeli friend who was part of Israel at Heart. “I can come to Joey in the morning and tell him: ‘I need to talk with someone from Comcast or from ATT’, and he will send an e-mail right away.”
How vital is it for the company to be in NY? “If I were located in Israel, it would look different. This is where the business is. I have a meeting with CNN next week, it is here in NY. The following week I’m meeting with ESPN, which is also here. Bruce Paisner, the president of the TV Academy and a member of our board, is also here in NY. The entire national media is here. This is where the market is. Even when you try to do it over the phone or e-mail, when people realize that you are abroad, trying to meet up is a process in itself. And when you are a small company, no one cares.”
Other than Davidson and Aharoni, six other startups spent several months in the incubator, and returned to Israel to work on their products some more. “I wish they were all here”, says Low. “I think that if one wants to succeed, one has to come here.”
So why doesn’t everyone come? “Some are married and don’t want to leave their families. Others are worried about the expenses. I don’t think it has to be expensive moving here. One can rent a small apartment, it doesn’t have to cost that much. In Israel there is a cost of living too. Some feel that they are unprepared: if your English is not well-polished, it can be scary. And, they are young and inexperienced in the world, so they are apprehensive.”
Is there anything in common between the companies you select for investment? Low: “I like companies with people who work hard, are well-grounded and are not spoiled.”
What does it mean? “They take low salaries, they are not fighting for themselves, but for success. They see the big picture.”
Tanya: “And they care about their team.”
“Israelis have a different mentality. Someone told me a story about this. An Israeli and an American are sitting down for a meal, and in between them there is a salt shaker. The Israeli would get up and take the shaker himself. The American would think to himself: ‘why didn’t he ask for my help’. Later the American would ask the Israeli to pass the salt, and the Israeli would think to himself: ‘What, does he think that I work for him?’”
“I like the “I’ll do it myself” mentality. I like that about the Israeli character: if you don’t need something, don’t ask for it. And even if you do need it, it’s better not to ask. Call me crazy, but I love Israelis.”
Tanya: “We have always had this feeling that we are Israelis ourselves.”