'Israeli Mafia' Thrives in Silicon Valley but Can’t Escape High Cost of Living

Conversations with some of the more than 50,000 Israelis living and working around Palo Alto reveals benefits and drawbacks of living and working in the area.

Inbal Orpaz
Inbal Orpaz
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Inbal Orpaz
Inbal Orpaz

PALO ALTO, CALIFORNIA – Almost every Silicon Valley company, whether large or small, has Israelis among its employees. Some come as part of company relocation programs. Many originally arrived to study at top U.S. universities, while others immigrated to the United States a decade ago or more ago and settled down. What draws Israelis to Silicon Valley and what bothers them about the place? How connected are they to events in Israel and what do they miss most about the country?

Israelis are an inseparable part of the diverse human mosaic of the area. There are no official figures, but most estimates place the number of Israelis living in the region between 50,000-100,000. Some of the higher estimates place the number of Israelis in Silicon Valley at closer to 200,000.

Oren Zeev is an entrepreneur, startup investor and mentor to many Israelis in Silicon Valley, where he has lived for 11 years. Zeev has met in recent years between 100-200 Israeli tech entrepreneurs interested in moving to the area.

“Israelis here succeed at all levels, as entrepreneurs and as executives,” Zeev says. “An Israeli who lands here has a massive advantage over Swedes, Italians - or even Texans - because everyone knows everyone.” He says that Israelis are represented at every significant company in the area, so an Israeli will find themselves plugged into the local scene within three months. “The Chinese, for example, don’t help each other, because there are too many of them. They don’t have this feeling of being from the same village,” he says. “Israelis are one of the strongest mafias in Silicon Valley, alongside Paypal alumni and Stanford graduates.”

Zeev and I met four other Israelis in his office located within the headquarters of Infolinks, in which Zeev has a stake and whose chairman is Oren Dobronsky, Zeev’s business partner. Two of the Israelis we met do their work while standing up, a new Silicon Valley health trend. They speak Hebrew at work and for a moment you could almost think you’ve entered the office of a startup on Tel Aviv’s Rothschild Boulevard.

But by Israeli standards, the workday in Silicon Valley ends relatively early, with many employees at large multinationals leaving the office in the late afternoon, the peak of the workday for Israeli companies. The workday begins earlier than in Israel and people continue to work at home after they put the kids to sleep, but the work hours seem much saner here. Unlike the established companies, the work hours at Silicon Valley’s startups are more reminiscent of those in Israel.

Three of the four Israelis in the room recently moved their homes here. Eyal Shahar, head of user experience at e-commerce startup MallPad, arrived with his family just three months ago to join the company. Quickly, the conversation moves to the cost of living. Real estate prices in the region have jumped 50% in the past two to three years, pushing up rents as well.

Rent for a small house suitable for a family in Palo Alto costs between $5,000-$6,000 per month, pushing most young families to look for homes in towns further from the valley’s center. The further one gets from Palo Alto, the lower prices drop, with many Israeli families settling down in Sunnyvale, which has been dubbed Israelvale.

Despite the high living costs, Itai Sadan, a co-founder and CEO of Duda Mobile, acknowledges the advantages Silicon Valley provides high-tech entrepreneurs. “My analogy would be that it is like living in Florence during the Renaissance, where all the action is happening,” he says. “Everywhere you go when you ask someone what they are doing, it's technology related. So you get a real melting pot of ideas here that is hard to duplicate.”

“It’s easy for Israelis,” says Shahar. “We feel like we have moved to another city, not to another country. Everyone here speaks Hebrew. My son is in the third grade and is in a class of 20 kids, half of them are Israeli. There is even a kid in the class that was in school with my son in Israel.”

Oded Hermoni is co-chairman of the Israeli Entrepreneurs and Founders Forum of Silicon Valley and also a partner in the investment fund Rhodium. He explains the social geography among Israeli expats. “On the kibbutz in Sunnyvale, live the engineers who have come many times on relocation assignments,” he says. “The ‘hilltop youth,’ who are the older generation of Israelis in the valley and have managed large companies, live in the hills of Los Altos. The middle generation of executives is centered on Palo Alto and Los Altos.”

According to Hermoni, though, many of the Israelis who work somewhere in the management chain of large companies like Facebook, LinkedIn and PayPal did not come straight from Israel but from American universities. “They competed with every American or other foreign applicant for the job, particularly for product management positions,” Hermoni says.

After a brief debate, the four Israelis agree that a couple without children can live on one salary, but that families would find it difficult to meet expenses with just one breadwinner. The main expenses, they say, are preschool fees and housing. Consequently, couples moving to the area as part of a company relocation program try to wring as much as they can out of their work visas.

“I have friends who have become experts in American labor law,” says Einat Schrieber, a business development executive at Mallpad. Among families whose visas only allow one to work, the unemployed spouse, usually the wife, dedicates herself to raising the kids, studying at one of the local universities or developing new hobbies. Schreiber says that for many women, relocating to Silicon Valley with their husband is an opportunity to reinvent themselves and switch their profession to an area that always interested them.

Sadan, who previously worked at technology giant SAP in the valley before co-founding Duda Mobile, says that one of the main difficulties for Israelis in the area is the distance from their family and friends in Israel. “People work hard and there is no help, you can’t call grandma or mom to help with the kids,” he says. ”Help is every expensive. It’s hard to survive on one salary, so both parents work.[But] after education and rent, when both parents work you can save money. In Israel I feel like things are expensive to an insane degree.”

Despite the high cost of living, the young group of Israelis is satisfied with the comfortable life in Silicon Valley, which enables them to take part in the American dream. The pleasant weather certainly helps as well. “From a career perspective, there are greater opportunities [here] and there are beautiful places to visit on weekends,” Schreiber says.

The Israeli startup entrepreneurs have not only not forgotten their deep ties with Israel, but are seeking to strengthen them. The people at MallPad have been busy with an initiative to open a direct flight route from San Francisco to Ben-Gurion International. A petition drive is being led by Dobronsky, Zeev, Shuly Galili a partner in startup accelerator UpWest Labs, Noam Bardin from Waze and Zohar Lefkovitz, a co-founder of mobile advertising company Amobee. Within less than 24 hours the petition garnered more than 1,900 signatures. Within a week, it reached 5,000 signatures who organizers say account for 22,000 flight tickets per year.

'It is like living in Florence during the Renaissance, where all the action is happening.' MallPad offices.Credit: Inbal Orpaz

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