When Big Blue Was a Start-up

To mark 60 years of operation in Israel, a nostalgic IBM has organized an exhibition, providing an opportunity for old-timers to reminisce about the days of punch cards and of working in an office with 12 employees

David Familiant, 80, and Joel Varod, 84, are among the veterans of Israeli high-tech. They worked in high-tech before people even called it that, during the country's early days, when round brimless hats were fashionable. Varod, who had been a member of Kibbutz Kfar Hanassi, came to IBM by way of an advertisement. It was in 1951, and he had left the kibbutz and was working as a driver in Jaffa, when someone told him that IBM was looking for workers. Familiant says: "I worked in ships. In 1952 I left the sea, and passed a test to study nautical engineering at the Technion [Israel Institute of Technology]. I saw a newspaper ad saying they were looking for people who knew mechanics and electronics, and who spoke English. I applied, and I took a course that taught me how to repair and handle punch-card machines."

Neither man had heard of IBM before. Varod says that a French engineer interviewed him because at that time there were no high-tech engineers in Israel. There were no tests and no handwriting analysis, both standard elements of today's hiring process.

"He spoke French and I didn't understand a word," says Varod about his interviewer. "Finally, after seeing that I did not understand a thing he looked at me and asked for my hand. I gave it to him, and he began caressing it. A few years later, when I was already able to talk to him in English, I asked him why he decided to hire me, and what it had to do with caressing my hand. He said that the only way he could determine whether I was suitable for repairing and handling machines was to examine my hands to see if they were those of a laborer."

For years, Familiant and Varod served as technicians and operators of machines that IBM Israel leased to its clients, be it the Israel Electric Corporation, or the army's payments department. Varod recalls: "They summoned me to the Weizmann Institute to handle one of the punch-card machines. The researcher there told me he had fed in 800 cards and 40 minutes later had received a faulty calculation. You have to go over all the punch cards in order to understand where you erred. I looked at the machine and saw that one of its counters was vibrating. I told the researcher to stop the machine and replaced the counter. Forty minutes later we saw that the calculation was correct."

Varod says he sensed technology changing before his very eyes when the punch cards were replaced by machines with vacuum tubes.

Today work in high-tech is prestigious. It generally pays well, although the work hours are tough. "Conditions at IBM were good" in the 1950s, too, says Varod. "They gave us good sandwiches. They didn't think about meals in restaurants. Time was money, and they didn't want us wasting it on something other than the machines."

Salaries were good, too. The average was 80 pounds a month. Varod says that before he joined IBM, when he worked as a driver, he earned 35 pounds a month, as compared with an average wage in the economy of about 40 pounds a month. After completing the in-house course, his salary jumped to 110 pounds. There were perks, too. True, they worked six days a week, but IBM employees received 13 salaries a year.

Varod recalled trying, at that time, to buy material for IBM in Israel, but the local business culture was problematic. It barely existed. "I looked for an electric switch and only with difficulty found somewhere to buy it. Finally I found such a place, and I wanted to order 1,000 pieces. I asked the owner to give me a quote for number and price. He didn't understand me. In another place I wanted to buy [control] panels with wires. Finally I found someone who makes the wires and asked him to produce them according to particular specifications. He did not understand me and said: 'What's the problem? Why don't I just make you a wire without all those specifications?'"

Familiant says he enjoys seeing the lively high-tech industry of Israel today, with all its start-ups. "It's excellent, terrific. Every day they invent something new."

IBM Israel, registered here on June 8, 1950, became the country's first high-tech firm. To mark its 60th anniversary, it is holding an exhibition at the IBM Israel building in Petah Tikva, which offers a rare glimpse into the high-tech of bygone days.

No plans for Palestine

The idea originated long ago, when a Jew by the name of Leo Yehuda Feldmann strolled through the streets of Geneva, Switzerland. It was the end of the 1930s, and he was waiting for a "certificate," a British permit to enter Palestine. When he saw a store belonging to International Business Machines, he imagined its potential for future business and sought to be its representative in Palestine. IBM International turned him down. "For the time being we do not have any plans to enter the market in Palestine. We thank you for your interest," J.W. Scott, the director of IBM's overseas commerce department, wrote him on December 12, 1940.

On May 14, 1948, David Ben-Gurion declared Israel's independence. The British officials' departure and the waves of immigration presented Israel's leaders with difficult organizational and managerial problems. The fledgling government approached IBM's management and asked for a survey that would determine the applicability of mechanized data-processing systems in Israel, especially for use in the population registry. IBM sent one of its managers to Israel and he reported that there was room for a wide range of activities here.

Less than a year later, the company opened an office in a narrow shop in the Solel Boneh Passage, near the Tamar Cinema on Allenby Street in Tel Aviv. Neither Ramat Hahayal nor Herzliya Pituah, today two of the country's principal high-tech zones, existed yet. In January 1950, Jindrich Polak, a Czech-born Holocaust survivor, came to Israel. He became IBM Israel's first manager. Polak hired Zvi Ariel as IBM's second employee.

Today high-tech salaries vary from NIS 10,000 to 30,000 a month. Zvi Ariel's monthly salary amounted, then, to 80 pounds, more than double the customary wages in those years of official austerity. He still recalls the day that prime minister Ben-Gurion was invited to see new IBM equipment that had been installed in an office in Tel Aviv's Kirya government complex. Ariel, wearing a white coat, stood near the machines and explained what they could do. Ben-Gurion listened to the explanation and when it was over he looked at the machines again and asked: "Can you make money with them?"

IBM launched its first course in 1952. It was held in Jerusalem and lasted six months. The instructor was Otto Widley, a Swiss national who had already run very successful courses in Turkey. In those days, data was registered on punch cards. For a full day, Widley talked to participants about the punch card and the importance of punching the holes in the right places.

Recalls Joel Varod: "I remember that on the first day we looked at one another with amazement. What is this supposed to be? We are technicians. Instead of teaching us how to assemble and repair machines they are lecturing us about holes and about paper." He also remembers, "They put us up in a good hotel and even paid us high per diems."

The mystery was resolved on day two, when they turned to the machines. They learned about punch card machines, sorting machines and tabulators, which in those days were considered the height of technological sophistication.

In January 1954, IBM Israel moved to offices at Ahuzat Bayit 6 in Tel Aviv because the small shop on Allenby could not accommodate all 12 of its workers.

At the time, punch cards were an important source of income for the company. They were used as vouchers for paying taxes, salaries and more. In 1956, it was decided to open a plant that would produce punch cards locally. Its first location was on the third floor of 25 Petah Tikva Road. One floor below it, according to Varod, was a plant that produced condoms. Eventually, IBM moved its punch card plant to a large building in Bat Yam, which operated at full steam for some 20 years, until the end of the punch card era.

In 1957, IBM opened its first service center. It approached clients and offered computers worth a million pounds, data processing that would be billed by the hours invested or the volume of the work accomplished by them.

Service center employees were generally required to follow a dress code set by IBM International. In Israel, the requirement for jackets was waived, but male workers still had to report to work in white shirts and ties.

The list of equipment sold by IBM Israel in the 1960s included punch card machines, tabulators, time clocks and electric typewriters. And everybody waited for the arrival of IBM's long-promised 1401 computer. When the day arrived, the 1401 was presented to the public in an exhibition at Beit Hasofer on Kaplan Street in Tel Aviv. The big attraction was the 1303 printer, which had a stunning capacity of 300 lines a minute.

In 1962, IBM introduced its Selectric 72, which represented a revolution in typewriting. Instead of a set of keys and a moving carriage, IBM produced an electric typewriter with a golf-ball sized ball, on which the letters and numbers appeared, and which printed by moving sideways. The miracle machine cost a few thousand dollars. A short while later IBM produced such a machine that wrote in Hebrew, but creating a machine that could write in both Hebrew and a foreign language was still problematic. Dani Olami, a company employee, decided to solve the problem by designing a bilingual ball. It was nine years in coming.

In 1964 IBM International celebrated its 50th anniversary and made the biggest announcement in its history: the coming of the 360 computer. Fortune magazine called it a "five billion dollar gamble."

"Within half a second, IBM's new system, called 360, can locate full details on a person whose name appears in a population registry containing six million entries," Maariv correspondent Zvi Elgar noted excitedly on October 9 of that year. "The era of electronic computers is arriving to Israel."

In those days IBM owned 80 percent of all the computers in Israel. Not all residents appreciated the technological revolution, or the fact that Israel was slowly becoming a high-tech state. One bitter citizen sent the company a letter in which he wrote: "To IBM for Computer 360. Dear Computer! Don't be so proud of yourself. The sticker you printed is wrong. Our address is: Doar Na (Mobile Post) Hasharon Hatihon. This letter was written with brains."

The 1970s began with the development of a new family of computers designed to meet current computerization needs: the IBM 370. The first systems were installed at the Technion in Haifa and at the Weizmann Institute in Rehovot. At the same time, IBM announced, at a Tel Aviv press conference, its plans to begin marketing the compact and economical IBM 3 for small- and medium-sized customers.

Israel's 1973 election was held in the shadow of the Yom Kippur War. During the election campaign there was widespread use of an optical reader, and soldiers' votes were counted with the help of a computer. In 1976, IBM launched its first portable computer, the 1500. It weighed 24 kilos and was a few centimeters larger than the electric typewriter.

By the early 1980s, IBM faced stiff competition from Digital, Data General and Honeywell. In 1981 it announced the birth of its personal computer, and an image of Charlie Chaplin accompanied the publicity campaign. The PC arrived in Israel only two years later. A mobile personal computer was also launched at that time. It was light: a mere 3.6 kilos. Everything is relative.

Electronic mail made its first steps. Even before Hotmail, Yahoo and Gmail, IBM developed a Hebrew software program that allowed organizations and companies to manage electronic correspondence, lists of contacts and calendar entries.

The early 1990s were a tough time for IBM International, which failed to adapt to the changing market. Louis Gerstner was brought in from outside the firm as chief executive officer, and given the mission of pulling the company out of a serious crisis. The new business model called for all-around computer services, not only hardware, but software and services as well.

As IBM expanded its service activities, in 1996 it bought 51 percent of Tadiran information systems. Meir Nissensohn was appointed country general manager and the company's offices moved from Weizmann Street in Tel Aviv to Azorim Park in Petah Tikva. The building's design - half of it shaped like a ball - was unusual. IBM International bought seven Israeli start-ups.

Rachel Yaacobi, curator of the anniversary exhibition, says that the process of preparing it has been educational: "The effort to get all those old items, like punch-card machines, was fascinating. I met company pensioners, heard stories and obtained old pictures. What people held onto over all those years is amazing. Some of them kept old equipment in very good condition. All of them had a soft spot for IBM, even though many left the company many years ago." Yaacobi mentions, for example, Tzvia Cohen, the widow of IBM's onetime country general manager David Cohen. "She kept boxes of pictures in her home, press clippings and more. It was simply amazing to meet her and others and to hear about her connection to the company. And to learn about the history of high-tech and of IBM, how the first machines arrived and the computers came."

The exhibition will be on display at the IBM Building, in Azorim Park, until the end of October. Entrance is free.