Last update - 00:00 04/01/2007
Hey, Israeli startups - MySpace wants you
By Lior Haner
Even though most Israeli entrepreneurs say they want to develop their startups into large companies, most secretly wish for generous purchase offers from abroad - and may even prefer working as senior vice presidents in an American corporation.
Both of these wishes were granted to Israeli Internet serial entrepreneur Nimrod Lev, 35, who founded KSolo in 2005, sold it last summer to Fox Interactive Media and now works as a senior vice president at Fox.
Fox Interactive is owned by the media conglomerate News Corp., and owns the popular MySpace Internet Web site. Lev is currently on a personal trip to Israel, and will be speaking at the Israel Management Center's convention this coming Sunday, January 7, where participants will choose the 2006 high-tech CEO of the year.
Haner's current visit is his first to Israel since selling KSolo and he does not hide his intentions to find more Israeli Internet entrepreneurs for Fox's acquisitions department. "If there is a company can benefit FOx's MySpace, I would rather find it in Israel than elsewhere," explains Lev.
Despite his Israeli background and the fact that there are other Israelis who could assist companies in penetrating the American market, Lev insists that due to the cultural gaps and problems in understanding one another, any company that wants to succeed overseas needs a local presence.
This week Lev hopes to meet with representatives of several Israeli companies whose products are in their initial stages, to form ties between them and Fox. Lev believes that the next big high-tech field combines the Internet and cellular services, but he has not revealed which Israeli companies he thinks have the best potential, or with whom he is meeting. In the meantime, he has been heaping praises on the more established and familiar Internet companies, such as Jajah, Oberon Media and Quigo Technologies.
He also feels the biggest underachieving company in recent years is Babylon, the interactive dictionary developer, which Lev says could have been much more successful. During his visit, Lev will share his experience and relate the story of his ascent to the upper echelons of the American Internet industry.
Lev started out as an editor at the Israeli Internet portal Walla in 1996, a job he landed after editing the student newspaper at Tel Aviv's College of Management.
Firing Cupid's arrow
In 1999 Lev left Walla to join Zion Madmon, the founder of cupid.co.il, to help promote that company and develop it abroad, thus beginning his journey to American Internet.
"We established JCupid, which joined forces with JDate," recalls Lev. "In 2004, Cupid was sold to Spark Networks, which operates JDate. That was my first exit and I immediately started looking for my next project and remained in the United States. The next thing turned out to be KSolo." KSolo, run by the Israeli developers of Cupid and headed by Lev in New York, is a site for karaoke singing and recording.
Lev says that his secret to success is not developing something that he thinks users want, but something that users need. The product does not have to be connected to the success of other sites or the entrepreneur's personal background.
"I was no longer a bachelor when I began matchmaking on the Web and had no connection to karaoke when I founded KSolo, but it seemed to me like a necessary product. One does not always have to invent the wheel. One can take something that works well in the real world and adapt it for the Internet. This was the case with the two companies I founded," he says.
"At KSolo, we signed an agreement with all the major copyright holders of the songs in America and share the revenues with them," Lev adds, adding that in the Internet era, content has so far been considered the main thing.
"One has to understand that in the past two years, the user has become the focal point," continues Lev, "and it is the users who control the content."
Lev's path to the Fox deal began like that of many Internet entrepreneurs, with a fund-raising campaign by private investors.
"The investors were American," relates Lev. "It is easier to raise money in the U.S. It depends on the project, but usually Israelis find it harder to spend money. It is something in their blood. Israeli market evaluations are lower, because Israelis were burned more severely by the bursting of the high-tech bubble. Since the American Internet market was much more advanced, many companies had already had exits, while in Israel, the industry collapsed a moment before companies closed deals, and the sting of the previous experience affects investors' decisions to this day."
In the summer of 2006, about a year after KSolo went on the air, Lev received a telephone call from, Tom Andersen, one of Fox's senior executives, who is also the president of MySpace. He had discovered a karaoke recording by a KSolo user on the user's personal site at MySpace.
"The negotiations [with Fox] were quick and very serious," recalls Lev. "For a few weeks I attended a great many meetings, at which [Fox representatives] explained to me exactly what they wanted. They exhibited a level of perseverance and determination I had not encountered before and did not waste any time, something critical to startups."
Lev would not disclose how much he received for the company, but commented that the investors received a good return on their money. After the sale, Lev was appointed a senior vice president at Fox, where he continues to be responsible for KSolo's operations.