Israel Innovation 2.0

Israeli companies Kaltura and Clarizen have been included in IDC’s top 10 innovative applications companies under $100M to watch.

According to IDC chosen companies were identified based on whether they exemplified one or more of three key trends in applications today, which the company cited in January 2009 to be:

• Acceleration of software as a service (SaaS), business process outsourcing (BPO), and open source over traditional on-premise software
• New business models for software use by service providers (software-within-a-service)
• Web 2.0-like functionality moves into the enterprise (e2.0).

Clarizen is a project management software company that allows contributors to edit at the same time and for the changes to be visible immediately to anyone involved on the project. Last week it reported that it gained over 100 new customers in Q3. Clarizen is headquartered in Israel with its US headquarters in Menlo Park, California.

Kaltura, according to its site, is “the first open source video platform for online video management, creation, interaction & collaboration.”  Earlier today it was listed as one of 49 hot new open source applications on Earthweb.com as a video tool.  The company has an R&D center in Israel.

During the week of August 9, 2009, Crescendo Networks, which enhances the Web application delivery process, announced that it raised $5 million in funding and will move it’s headquarters to Menlo Park.  SiSense announced the release of PrismCubed, it’s new business intelligence product aimed at small businesses, and MyHeritage, the free family genealogy Website, released its latest version of Family Tree Builder. For more on these and the rest of this week’s 10 Israel-related headlines, check below.

Cleantech
1. Shai Agassi, Israel’s Homegrown Electric Car Pioneer: On the Road to Oil Independence

2. Tigo Energy finalist in two US gov’t tenders

Investment
3. Getting R&D together

4. Crescendo Networks raises $5M, moves HQ to Menlo Park

Information Technology
5. Who Needs Graphics? Create Charts in SQL

6. GamaSec Announced Zero Day Project To Fight Explosion in Web Attacks

7. SiSense Beefs Up SMB BI Tool

Miscellaneous
8. Globalization of Technology Ventures: Lessons from Israel

9. MyHeritage Releases New Version of Family Tree Builder

10. Israeli rocker Asaf Avidan signs on with Sony Columbia records

During the week of March 22, 2009, it was announced that Israel will share its farming technology with Kenya and more details of the government’s water technology initiative, NEWTech were given. The sale of Aladdin Knowledge to Vector Capital was completed with the news that Aladdin and SafeNet were under common management and information security company, Tufin, added new features to its firewall management platform. Facebook became even more stalkerish with a new photo facial recoginition and tagging application by Israel-based Face.com and SEO guru, Barry Schwartz shared what he found Israeli SEMs are looking for. These stories are only some of the main ones that made it into the media last week. For links to these and the rest of the stories from the week of March 22, 2009, check below. 

Cleantech and Environment

1. Israel NEWTech, A Government Initiative To Promote And Grow Israeli Water Technology And Innovation

2. Israel to share farming technology with Kenya

Investment and M&A

3. Value of Israeli high-tech M&A fell 19 percent in 2008

4. Funded: GoViral, BriefCam, Extreme Reach (BriefCam)

5. SafeNet, Aladdin Knowledge Under Common Mgmt

Information Technology

6. HP to Provide Compaq My Bhasha with its Desktops

7. New Cyber-Ark controller clocks all super-user activity

8. SkillIQ is set to Revolutionize the Human Resources World

9. Dell Certifies Aternity as ISV Partner

10. Tufin adds white lists to firewall management platform

Miscellaneous

11. Israel’s Explay helps you see the big picture

12. First Look: Photo Finder facial recognition app for Facebook

13. Drops in the bucket

14. Partnerships between Florida, Israel are key

15. What Israeli SEMs Want

Bonus: TechCrunch’s Sarah Lacy in Israel and reactions. 

Last week Twitter and the Web erupted when the newest member of the TechCrunch team, Sarah Lacy, posted that Israeli entrepreneurs lost their mojo and that investing in Israel was overhyped. Here are are just some of the responses to Lacy’s post as well as her post and its follow up. 

Now that China Is the New Israel…What’s Israel? (TC)

What’s behind Sarah Lacy trash talking the Israeli VC scene

Israel is the new Israel (Israel Innovation 2.0 response)

Israel Hype Cycle

Sarah Lacy, David Li and the Wrong Side of Historical Performance

Risk Aversion And The Perils Of Selling Too Early (Israeli Startups, Part II) (TC)

Sarah Lacy over at TechCrunch posted today that Israeli entrepreneurs post-bubble have lost their mojo and VC funding has reflected that. There has been a lot of reaction to her post in the comments section and off the site, but it is really much more complex and wide-ranging than a post on TechCrunch or even here on Israel Innovation 2.0 can handle. I think that Sarah is both right and, of course, wrong.  

She is right that the crop of Israeli IT and Web startups are disappointing when compared to Check Point and ICQ from the 1990s. There have been many theories, denials and other responses of the lack of companies of this caliber in the past few years and I have to say, when researching these different companies, there definitely is a difference. 

The theories for this that I believe and have often mentioned (sorry to anyone familiar with those posts) are the ones Daniel Cohen of Gemini Israel Funds wrote about in an article on Venture Beat back in the fall of 2007: “Entrepreneurs want to retire with $3-$4M, Impatience of investors, ‘Think small’ mentality and The lack of $1bn experience.” Add to these reasons the brain drain of top engineers and entrepreneurs and relocating the company outside of Israel and Lacy has a very good point. 

Fortunately though, Lacy’s post on TechCrunch was only fulfilling a certain agenda and only relevant for the IT and Web 2.0 sectors which TechCrunch covers. No matter what happens with Israeli IT companies in the future (and I believe Israeli SaaS and security companies, such as Clarizen, Imperva and Trusteer all have a lot of potential), Israel is almost guaranteed to be the main player beyond this in the next tech revolution, clean technology. 

A lot of VC funding has gone into cleantech companies in wastewater management, solar energy and wind energy that won’t mature and really show its worth for another few years. In addition, there is a noticeable trend over the past year of people from Israel’s IT sector considering and heading into cleantech.

So, where does China fit into cleantech? I haven’t researched it to say, but on the Israel end I know that China, along with several other Asian countries, countries in Africa and Australia have all expressed interest in Israel’s innovations especially to deal with water conservation management and solar energy. If in relation to Lacy’s article, China is getting more investments in IT (the greatest tech sector in the past) in comparison to Israel but not in relation to cleantech (the likely greatest tech sector in the future), the answer to Lacy’s question about “If China is the new Israel..” would really be that Israel is the new Israel.

Last month my colleague Krissi Danielsson posted on her blog that people are starting to call “Web 2.0,”
originally coined by Tim O’Reilly in reference to the more social and
dynamic manner of certain sites, the “Live Web.” While she explained
why she liked the term and that it had a good ring to it, I commented
that as great sounding as it is, the term wasn’t a perfect replacement.

My reasoning was and still is that Web 2.0 depicts the tools enabling the social interaction that has allowed for
the current state of the web to be considered the “Live Web.” This state, however, will presumably continue even long after Web 2.0′s initial tools have been replaced.

If the Live Web will represent anything, I think it should be in relation to the oft-spoken-about-yet-years away “Web 3.0,” which has also been called the “Semantic Web.” Presumably, Web 3.0/the Semantic Web will be the dawn of an era when the Web will be able to intelligently respond to natural language queries such as “Where does the President of the United States live?” as well as meaningfully and accurately connect people with the
information they really want, perhaps in a non-search required way.

However near or far off Web 3.0 is, Dan Farber raised a great point in a ZDNet post back in 2006 – that there will likely be something in-between Web 2.0 and Web 3.0. In the coming weeks, we may get a glimpse of this “Web
2.5″ period. Israel-based SemantiNet, which recently raised $3.4 million and is going to open a U.S. office, plans to come out of its stealth/Beta mode and release to the public its long-awaited semantic web product sometime this month.

Though descriptions of it indicate that it is essentially a Web 2.0 product that uses mash-ups to share relevant information from other sites on things such as friends activities and potential content of interest, presumably its shot at semantic-ism will come from its underlying, more intelligent algorithms that will be able to accurately connect information from current Web 2.0 platforms to searches done in an intelligent and close-to-natural language a manner as possible.

The Product page on SemantiNet’s website, explains SemantiNet’s technology as,

“Smart
Wherever
you go on the web, our product works to discover meaningful connections
between what you’re browsing and the rest of your world: your people,
your interests, your pursuits…

Social
Unleash
the power of Facebook, FriendFeed, Twitter, Digg, Last.FM, and other
great social services and take them with you as you roam the web. Our
product checks in with your friends and contacts to see what they’re
into and up to. It lets you know how content you encounter relates to
their activities, opinions, links and ideas.

Simple
Our
product is seamless, automatic and instant. Once installed, it begins
working for you behind the scenes: constantly researching while you
freely browse – politely integrating valuable links and info directly
into the web pages you view…”

How accurate and helpful the product and its features really are is yet to be seen. In the meantime, below is a sneak peek video that Robert Scoble posted on Fast Company’s site last May.

About the author: Lisa Damast currently resides in Israel. Any questions or inquiries regarding this blog can be directed to her via email at lisa (at) israelinnovation20 (dot) com. She can also be followed on Twitter, where she covers additional Israeli technology companies and headlines among other topics.

Last week, 15 Israeli web companies had the opportunity to meet with investors and various executives in Silicon Valley, CA during the Israel Web Tour 2008. ClickTale Ltd., one of the selected 15, was chosen to participate for its innovative technology that allows Website owners and staff to record, watch and analyze user behavior on their sites as part of its hosted service.

According to ClickTale CEO, Tal Schwartz’s LinkedIn profile,

“ClickTale (www.clicktale.com) is a web analytics service that captures
and analyzes customer interactions inside web pages, revolutionizing
traditional web analytics that measure activity between pages.
ClickTale records and plays back customer’s every online interaction,
every mouse movement, click, scroll, keystroke, and window resize.
Subscribers to ClickTale have been able to increase revenues and
improve usability by minimizing abandonment of shopping carts,
maximizing completion of online forms, optimizing landing pages, and
running usability testing.”

ClickTale’s software can provide IT professionals with vital business intelligence to help meet the company’s bottom line. 

Company Facts

Founded in 2006.

Dr. Tal Schwartz, Co-Founder & CEO.

Arik Yavilevich, Co-Founder and CTO.

Website: www.clicktale.com

News:
Making the headlines both left and right this week have been the rumor and then announcement that International Business Machines (IBM) purchased Israeli grid storage start-up, XIV.

Background:
According to XIV’s Company Profile on its website,

“XIV was founded in 2002 by five graduates of Talpiot, Israel’s preeminent military incubator for technology leaders. The company spent three years developing Nextra’s innovative technology prior to implementing the first customer system. XIV has built an outstanding team of storage and computing talent, including veterans of IBM, EMC, and other storage giants, and world-class engineers. All bring their vast best-practice knowledge to every aspect of the company’s endeavors. XIV is led by Moshe Yanai, one of the key architects of modern data storage.”

Analysis: What the media is saying and what you actually need to know
The sale of XIV to IBM is all over the news and blogosphere. Most articles have focused on different aspects of what is generally the same four things: IBM making this move to try to get an advantage over competitor EMC, how IBM gains not just a fast-growing successful company but a highly-regarded “brain” in the field and, sometimes, the actual benefits of XIV’s product, NEXTRA.

When the acquisition had just started to spark rumors earlier this week, while speculating on the at-the-time still-in-talks IBM-XIV acquisition, Mary Jander of the Storage Networking site, Byte and Switch, took the opportunity to sum up the major storage-related deals that IBM’s competitors, EMC, Dell and Double-Take have made. She also reminded everyone of the next major deal that will shake up the storage world, which is “a potential sale of all or part of Hitachi Global Storage Technologies (HGST) by its Japanese parent.”

While competition is one reason why IBM made this deal, the company’s internal development strategy shouldn’t be overshadowed by it. According to David Needle on InternetNews, IBM made the purchase to “address the demanding storage requirements of Web 2.0 applications and digital media.” Also, as it is soon after IBM’s purchase of Cognos, it shows IBM’s “more aggressive stance on intellectual property ownership.” Of course, solidifying the company’s storage strategy and, in the process, snagging up XIV Chairman, Moshe Yanai, an ex-EMC employee and technology storage legend, is pretty much the best of both worlds for IBM.

Moshe Yinai’s claim to fame in the technology storage world is his having “designed and built EMC’s key Symmetrix [now the "DMX series"] product line.” He is a legend and as having made his name with a major IBM competitor, the media, such as eWeek, has emphasized Yinai’s “changing sides.” Though it is a great story that will be interesting to watch unfold over the next few years, Yinai’s involvement is still only as XIV’s chairman, offering the guidance. He wouldn’t be back in the fold without the five young Israelis having started the company and developed its break-through product, Nextra, which, according to Duncan Riley on the Ajax-Blog,

“is a storage system based on a grid of standard hardware components. XIV will become part of the IBM System Storage business unit of the IBM Systems and Technology Group.”

Shaun Nichols on Venunet explains that,

“XIV’s flagship Nextra platform allows multiple storage devices and applications to be managed under a single system…The company estimates that Nextra systems are responsible for managing more than four petabytes of data worldwide… Big Blue plans to use Nextra as the basis for many of its future enterprise storage offerings.”

Indeed, aside from just publicity, XIV and Nextra, should provide IBM with a strong foundation for the trend of moving the enterprise onto the Internet and dealing with Web 2.0 in the coming years. XIV will remain and fully operate in Israel. Globes estimates that XIV was sold for between $300 million to $350 million after only having $3 million put into it.

Additional Resources
CIO.com: IBM Buys Israeli Storage Startup XIV
Congratulations to Moshe Yanai. I Hope the Shorts Fit.
Wanna make a quick $300 million? Sell your startup to IBM
IBM buys into massively parallel storage
An IBM developer’s perspective on the deal
A Forrester analyst’s perspective on the acquisition
EMC’s Vice President of Technology Alliances perspective on the deal

Tim Berners-Lee, the father of the World Wide Web, recently mentioned in his blog that social networking on the Web is providing people with the opportunity to share data about themselves and things related to them for the interest of others (i.e., for connecting to others). He explains though that the popularity of these social networks hide the reality of people using these closed sites not for the sites themselves but for the opportunities and connections that they provide them.

For those who aren’t familiar with Israeli society, it tends to pride itself on giving advice and having connections (protexia). The connection of people and information are strong values that are practically innate in Israelis and has probably contributed to Israel’s high-tech sector being very active in the Web 2.0 phenomena — so active, that I have been thinking ever since Daniel Cohen’s Israei Nokia article that if all these Israeli companies were pooled, Israel could have countered Google or created its own Facebook.

Unfortunately, it’s a lot easier said than done or even fully imagined. However, with Berners-Lee talking about the Giant Global Graph and the need to transcend the limits of the current social networking graph, maybe there is still the chance that Israel will build the next big networking phenomena. Israeli companies just have to think outside the box of the Web and the set up of social networks as we know it.

For anyone who wants to get started on this, here’s a list of some of the top Israeli Web 2.0 companies that offer interactive services that if were combined in a new way, I think could create the next big thing:

Fun:
Aniboom- Users can create animated clips, post clips, view clips here, and based on the popularity of content that you post, you have the chance to make some money as well.

Metacafe- A user-driven video-sharing site that shows only entertaining short clips that is first reviewed by users before it gets posted on the site. Program creators of the most popular content get paid.

BlogTV- For anyone who has something to share via video. This gives you the chance to create your own live channel on anything you want.

Search and Information:
Walla!- An Internet portal with free email for anyone, this is the first stop for local information and direction on the Web.

Answers.com- Formerly with the tag line, the encyclodictionalmanacapedia, Answers.com is a one stop information engine. It’s popular wikiAnswers allows users to post and answer questions on anything they might be wondering.

Collaboration and work environment:
eSnips- While it is great for its music features, eSnips’ 5GB storage gives users a way to easily store and share documents on the Web.

ooVoo- 6-way video conferences, video messaging and video chatrooms make this ideal for live video communication for business or for fun.

Verix- Offers solutions for Business Intelligence when it comes to sales.

Advertising:
Kontera- “Kontera is a leading provider of In-Text Advertising and Information Services based on patent- pending text and content analysis technology that maximizes relevancy and yield for online users, publishers, and advertisers.”

TVinci - “The TVinci media management platform helps video content owners, broadcasting channels and publishers enrich, socialize and personalize video content, while maximizing monetization.”

Hiro Media- Hiro’s ad-supported video downloading technology allows any video distributor to allow the unlimited sharing of its product over the Internet with the ability to monetize it. monetized.