Subscribe to Print Edition | Thu., August 28, 2008 Av 27, 5768 | | Israel Time: 21:52 (EST+7) web haaretz.com   Back to Homepage Haaretz Toolbar Diplomacy Defense Jewish World Opinion National Print Edition Car Rental Books Haaretz Magazine Business Real Estate Easy Start Travel Week's End Anglo File

U.S. entrepreneur makes aliyah seeking 'next big invention' By Haim Handwerker Tags: Israel, high-tech NEW YORK - Scott Tobin, a successful venture capitalist, rented his house in the Boston suburbs, took his wife and four kids, boarded a plane and moved to Israel last week. "We believe that the next big invention will come from Israel," he explained before he left. "There are not many places in the world where there is that kind of actual innovation." Tobin, 38, is a senior partner at Battery Ventures, which manages investments totaling $3 billion. In 2006 Forbes Magazine ranked him No. 47 on the Midas List of top technology deal-makers in the world. In 2007 he had to settle for No. 50. Venture capital funds and financial companies are not in the habit of sending such high-ranking executives to live in Israel, much less with their families. Israel is too far away, too dangerous. The companies thus send personnel on work visits to Israel, or else employ former Israelis who know their old homeland, or local workers. Advertisement "I'm the only Jewish member of the general partners," Tobin explains. "Battery's top partners visited Israel last October and were very impressed. It was four days packed with meetings and tours. We were in the middle of debating where we should open offices, and finally we settled on India and Israel, because of the research and the high level of innovation there. People used to say that if you want to make $1 million in Israel, you have to invest $5 million. Those days are over. Israel has the best minds and the kind of innovation you can't find even in the foremost technology centers, such as Silicon Valley. It's a matter of business logic. We mean to make real money in Israel. The fact that I am a Zionist is just icing on the cake." Tobin knows that some people think he is crazy to be moving to Israel, because of the security situation. "I'm not afraid," he declares. "I already lived through a difficult time in Israel during the first Gulf War, when I was studying at Hebrew University. It was not pleasant, and I was afraid. But we survived. It's part of life in Israel. I have four boys, ages three, five, eight and 10. If I thought it were dangerous, I would not do it. "We bought a house in Ra'anana and got a pre-immigration visa, so it's not a move for a year or two. If I have to choose between Paris, London and Israel, I go with Israel. I see it as a cosmopolitan place, vibrant, lots of fun. Israelis appreciate good food and a good time. But believe me, I'm not exactly planning on a wild nightlife. Israel is a different country. People no longer ask me to bring them Nikes." In late 2005 Battery opened a two-man office in Herzliya, to develop a better understanding of the local investment scene. "We found many venture capitalists in Israel," Tobin says, "more than rabbis. We studied the potential." How much money are you planning to spend in Israel? Tobin: "I'll be happy if we invest $50-$100 million a year. Battery reviews 7,000 potential deals a year, and we invest in only 12-20 of them." Central player Tobin himself has spearheaded around 20 deals so far, including the purchase of the London International Financial Futures and Options Exchange. Battery bought the Exchange in 2000 for $300 million, and sold it 13 months later for some $1 billion: "In those days the theory was that technology would wipe out the stock exchanges, and they would disappear. Their prices dropped dramatically. But the exact opposite happened: The stock exchanges in the world continued to thrive." Tobin missed out on at least one good deal, however: When Mark Zuckerberg began tossing around the idea of Facebook, he met with Tobin in an effort to raise money. Tobin decided to pass. Why didn't you invest? "I didn't have a good feeling about it, and we didn't make a good connection. In my business sometimes you win, and sometimes you lose. For every deal you make there are dozens and hundreds that don't happen." You must regret your decision. "Some people like to remind me of it, but I don't see it as a mistake. We're in this business for the long term. Sometimes it works, sometimes the fish gets away from you." Tobin, who speaks basic Hebrew with an American accent, grew up in Great Neck, New York - a middle-class town with a large Jewish population, about an hour's drive from Manhattan. His father is in insurance, his mother is a homemaker and is also, her son says, a "professional volunteer." He studied Islam and Middle Eastern history at Brandeis University. As part of his program, he spent a year in Israel, studying Middle Eastern history at Hebrew University. One of his brothers is a lawyer living in Beit Shemesh. Tobin's first big success, it might be argued, came through his Israeli connection. During his time at Hebrew University, a friend introduced him to Danny Lewin. When Lewin went on to study at the Massachusetts Institute of Technology, they met again. Eventually Lewin founded Akamai with one of his professors. He pitched the idea to Tobin, who had then begun to work at Battery. Battery was Akamai's first investor, giving the company some $10 million. Akamai then became one of the meteors of the Internet world, surviving even the collapse of the high-tech bubble. Battery made a big profit from its investment - $200 million, according to Tobin, for whom the deal was a career-booster. Danny Lewin died in the September 11 attacks on the Twin Towers, aboard the American Airlines flight to Los Angeles. In late 2000 Tobin began to work with Michael Lewin, Danny's brother, who lives in Israel. Lewin pitched some ideas for high-tech projects, and Tobin came in at an early stage. He arranged meetings for Lewin and his partners in the United States, and was involved in formulating the concept for a data-storage security company named Kashya. "Battery invested over $10 million in Kashya," explains Tobin. "The company was sold two years ago to the EMC data storage corporation for $153 million. Battery made some $65 million off the investment." Lewin is now working with Tobin on another project, about which he refuses to elaborate. "Scott's move to Israel upgrades the local venture capital field," he says. "He is very experienced and plugged into the American venture capital world. He understands well how a company penetrates the American and international market, and he has a profound understanding of the Israeli side. There is no other American venture capitalist of his stature in Israel today. When one venture capital firm sends such a central player here, others might do the same. "I think Scott's move could help us cope with one of the biggest challenges of Israeli high-tech. We develop companies and sell them, and the challenge is to establish mega-corporations like Teva and Comverse." Battery has investments in five Israeli companies: Anobit Technologies, cVidya, Freshpoint, Neocleus, and a fifth company whose name has not yet been revealed. The overall investment is $50 million. In the near future the company will be hiring seven Israeli staff members. Tobin says that Battery intends to invest in different areas, not only in high-tech. "You have to remember that in Israel there are large companies with excellent international reputations, such as Ormat, Keter and Netafim," he says. "Venture capital funds usually don't go in these directions. I intend to invest even in areas that are unusual for venture capitalists. We may well invest in public companies as well, and maybe make them private. I promise to spend many hours out of the office doing field work." The vision Scott Tobin has a vision: "If you look at Israel's human capital in mathematics and computer science, combined with government reforms, it seems likely that Israel will someday play a central role in the international world of finance. The world is changing, and financial centers will expand beyond New York, London and Hong Kong. There is no reason why Israel will not become a center of financial trade. "It's been a long time since Israel produced a revolutionary invention like ICQ. In general, there are no revolutions in technology today. Changes are more evolutionary, but Israel shows more impressive innovation than other high-tech areas in the world, including the United States. Many high-tech companies copy others or miniaturize existing inventions, but there are no huge new inventions. Companies like Microsoft, IBM or Cisco invest funds in Israel because they realize that they have to be active here." Where will you be looking for ideas in Israel? "The biggest incubator for ideas in Israel is the army, and there is nothing like it anywhere else in the world. In Israeli academia there are some brilliant minds, but for some reason it has not done as well as MIT or the California Institute of Technology, even though it is the universities' job to promote the commercialization of ideas. We have to find a way to increase the motivation to make their ideas commercial. Therefore I plan to spend some time on Israeli campuses." Some would claim that Israelis have good brains, but that it's hard to do business here. "And doing business in China or India is easy? I met an Armenian businessman who told me that it's very hard to do business with Armenians, because they are so tough. But everyone is tough in business. So it's hard to do business with Israelis, too. I think these are stereotypes. "When we built Kashya, everyone told us we were wrong to use a local CEO and team. But the fact is that a giant like [software developer] EMC was willing to pay a lot of money for the company. EMC made a good deal, because they are now selling many products based on Israeli knowledge. Believe me, I'm coming to Israel with my eyes open." Aren't you afraid that your position will be compromised if you live far from Battery's head offices? "Absolutely not. Our world is becoming smaller. In the past I lived in Boston and flew to Israel, and now I'll be living in Israel and coming to Boston to visit." When we met Tobin he told us that before leaving for Israel, he intended to take his kids to Niagra Falls and the Statue of Liberty. "Israeli friends who come to visit the States always go there, so I thought it was a good idea for our children to visit those places before they go to Israel." ICQ founder sells another startup Study: 25,000 high-tech workers left for U.S. in last seven years Bookmark to del.icio.us   Voice of peace silenced Israeli peace pioneer Abie Nathan dies aged 81. DeadSeaScrolls.com World's oldest Bible fragments to be available online.   1.   True Son of our Land 12:42  |  Nate Levi 23/08/08   2.   A thinking man - he`s welcome here 13:59  |  x-ray 23/08/08   3.   yeah... zionist with loads of money... 16:00  |  Gali 23/08/08   4.   #3 Is A Jealous Israeli 18:54  |  Laguna Geno 23/08/08   5.   Could it be cold water-fushion? 20:36  |  Mark B. 23/08/08   6.   Gali we need all sorts 20:52  |  x-ray 23/08/08   7.   Gali, at least its the other way round! 21:56  |  Zev Davis 23/08/08   8.   Scott Tobin 21:57  |  stanley cohen 23/08/08   9.   Scott Tobin 21:58  |  stanley cohen 23/08/08   10.   Agree with 6 & 4. Sorry Gali... 22:08  |  Ace 23/08/08   11.   Battery Ventures : Israel as international world of finance 22:50  |  Joseph.E 23/08/08   12.   Misleading headline and hype 01:10  |  Ade 25/08/08   13.   Good luck Tobin. 04:50  |  Akram Zekaria 25/08/08   14.   He didn`t make aliyah, read the article! 06:21  |  Gershon Reed 25/08/08   15.   Gershon Reed 10:25  |  ChanahS 25/08/08   16.   #15 ChanahS Gershon`sSour Grapes.Wonder Why Eh? 19:22  |  KATHY 25/08/08   17.   #4 Laguna Geno..Versus A Jealous Israeli(which i doubt) 19:31  |  KATHY 25/08/08   18.   Let`s talk future 21:09  |  Emmanuel 25/08/08   19.   #3 Gali 21:24  |  Bob 25/08/08

Read & React Judea Pearl: U.S. media suffer from 'Down with Israel' syndrome Responses: 106 Aluf Benn: The first American military base on Israeli territory Responses: 29 Israeli peace pioneer Abie Nathan dies aged 81 Responses: 58 Abbas: All Palestinians should be given right to return home Responses: 33 More Headlines 21:48 Aviva Shalit: Politicians too busy with their own affairs to free my son 20:36 2 Israeli Arabs arrested over suspected Jihad plot to kill pilots, scientists 20:28 Obama hits back, accuses McCain's top aides of ties to Iran 21:39 Abbas: All Palestinians should be given right to return home 20:37 Was Hezbollah responsible for downing Lebanese military helicopter? 20:54 Nigerian militants: We know where abducted Israeli is held 14:58 Record yeshiva enrollment predicted to cost economy NIS 5 billion 21:12 Blockade-busting boats leave Gaza Strip for Cyprus 16:27 Report: West fears Hezbollah setting up cells in Venezuela 20:44 Ex-Shin Bet man suspected of selling stolen gas to Gazans 20:07 400 Druze cross into Syria through Golan for annual pilgrimage 18:14 Talansky to be questioned in U.S. over role in suspected Olmert graft 14:43 Israel: Egypt must press Hamas to ease stance on Shalit deal 12:22 Israeli peace pioneer Abie Nathan dies aged 81 15:58 Shin Bet chief: Hebrew Univ. rector slandered my agency Previous Editions Select Day 27 aug 26 aug 25 aug 24 aug 22 aug 21 aug 20 aug 19 aug 18 aug 17 aug 15 aug 14 aug

Special Offers Advertisement Fattal Hotel Chain Perfectly located hotels on best resorts of Israel. Jewish Singles Personal Ads Find the love of your life on JDate.com MBA in Israel in English APPLY NOW! Limited spaces available Israel's Premier Real Estate Website www. israel-property.com Hebrew Summer courses From $39.95 ISRAEL BONDS Build Israel Israel bonds - a multi-purpose way to celebrate Israel's 60th Eldan Rent a Car Israel's leading car rental company offers you a 20% discount on all online reservations Junkyard Junk a car - get free towing nationwide and a tax-deductible receipt

Home | TV | Print Edition | Diplomacy | Opinion | Arts & Leisure | Sports | Jewish World | Underground | Site rules |

Real Estate in Israel | Travel to Israel with Haaretz | Hotels Israel | Restaurants Israel | Tourist attractions Israel | Shops Israel

birthright Israel | Search engine marketing

Haaretz.com, the online edition of Haaretz Newspaper in Israel, offers real-time breaking news, opinions and analysis from Israel and the Middle East. Haaretz.com provides extensive and in-depth coverage of Israel, the Jewish World and the Middle East, including defense, diplomacy, the Arab-Israeli conflict, the peace process, Israeli politics, Jerusalem affairs, international relations, Iran, Iraq, Syria, Lebanon, the Palestinian Authority, the West Bank and the Gaza Strip, the Israeli business world and Jewish life in Israel and the Diaspora.

© Copyright  Haaretz. All rights reserved