InterWise Benefits From the High-tech Crisis

"Particularly now, during the high-tech crisis, we are experiencing rapid growth," says Dan Bengar, CEO of InterWise Israel, which has developed software for eLearning and collaborative communication in the workplace. Companies use the technology for both marketing and internal communication, and also as a solution to maintaining activity levels while reducing personnel.

Bengar relates that many companies are now adopting the long-distance approach. "There is no substitute for personal contact," he says, "but when, for example, the system allows for intercontinental business communication and reduces the need to send marketing teams abroad, it saves a company money."

The past few years have witnessed a growing awareness of long-distance working and learning, together with the increased use of the Internet and e-mail. "The assimilation of the system is not always easy from a psychological point of view and involves changes in habits. During a period of crisis, however, when the need to save money is felt, there is an incentive for assimilation," says Bengar.

InterWise was founded in 1994 by Hillel Kobrinsky and Zvi Frank, both veterans of the Israel Air Force. The company has held three rounds of financing. In each of the first two rounds $10 million was raised and in May 2000 InterWise raised $30 million based on a company value of $100 million after the money.

Investors in the company include the Benny Steinmetz group, Yitzhak Shrem and Avi Tiomkin. The most recent round of financing also included General Electric Capital and the German software company SAP, UBS Capital, and the American JP Morgan investment bank. InterWise is not a publicly traded company, although prior to the crisis the possibility of going public had been discussed.

InterWise, which now has offices in Tel Aviv, the United States, Europe and Japan, employs some 200 people, over half of whom are software developers. The company's collaborative communications and eLearning systems are based on several components.

First there is the software that connects the personal computers to the Internet and makes them accessible to one another. Each user can, of course, block access to the files that he does not want to expose. Participants in a discussion can present information in various formats, from text and graphic files to Internet pages. All the types of files can be edited online - text can be bolded, graphics can be altered, and sections can me moved or deleted - and can be discussed via voice transmissions and in writing. In order to keep such discussions orderly, any participant interested in presenting material requests permission from the others.

InterWise has also developed an application for compressing audio and graphic data so that large files can be transmitted quickly even to participants who don't have broadband access.

"Anyone using our products on a home computer can send and receive video files that won't take up much space on the Web," explains Bengar. "Every lesson or video conference call can be transferred relatively easily."

The third component is an "expressway" - a network of servers set up by InterWise for the convenience of both companies and individual customers. This means that a company that wants to use InterWise's system will subscribe to the service and will not have to invest in setting up its own broadband infrastructure.

Bengar notes that InterWise has doubled the number of its subscribers in the past two months, adding that 80 percent of the company's customers signed up over the past quarter. A year ago InterWise's customer list included 30 companies, while today it has 210.

Among InterWise's new customers are Microsoft, which uses the system for internal communication at its headquarters in Seattle, Washington, and the SAP software company, which signed up all 22,000 of its employees as registered InterWise users, in a business deal valued at $10 million.

Other new customers include NTT, Japan's cellular network, PeopleSoft, Nestle, Volkswagen, Lucent and Lockheed Martin. Some of InterWise's Israeli customers are the Israel Defense Forces, Comverse, Retalix, Nice and Blue Square.

Colleges also use InterWise's eLearning system in their virtual classrooms, including the Open University, Berlitz, the College of Management and the Amal network.

The company's business model is based on licensing. The more employees or students an organizational customer has, the more it pays for the use of the software. It was not always easy to convince the administrators of schools and companies of the capabilities of eLearning and collaborations communications software. InterWise's first clients were mostly companies and organizations that were more open to technological innovations. "The massive growth," says Bengar, "came only in the wake of the high-tech crisis."