Demonstration nation: Business unusual

We used to initiate meetups, go to conferences, or just go out on Thursday evenings to that pub in Tel Aviv where you can always meet all the guys from the industry. Today we meet each other on Tuesday at noon in Sarona. or at midnight on Kaplan Street. Or in any other demonstration / protest / shutdown of the high-tech industry.

It's no secret that regardless of the severe global economic crisis, many of Israel's high-tech companies have been working at only partial capacity in recent months. The reality outside, the one to which high-tech has always been an antithesis and a possibility for convenient escapism, has broken its way into our world and does not allow us to remain indifferent.

In conversations with investors, partners and clients from abroad, which make up the majority of the ecosystem in which most of us operate, it is sometimes difficult to explain why we have low availability these days, find it difficult to find time to schedule conversations, and in most cases they are postponed at the last minute or we simply do not show up. We work in high-tech, not politics. We are paid a salary to grow our companies, especially in today's challenging market conditions that require out-of-the-box thinking and special preparation, yet we find ourselves spending much of our time in non-work social activities. Ourselves is most of us, not all of us.

CEOs, entrepreneurs, managers, employees, as well as investors, who have become accustomed to our schedule building itself around the needs of work, relatively sparse on Sundays and lasting until late at night during the rest of the week, including Friday evenings, interspersed with frequent work trips abroad, and with every moment used to promote the business. And what started out as private, almost partisan, initiatives of a few guys who talked to each other saying "we have to do something", and "let's organize together", and "let's just go demonstrate outside the office", has turned into an almost full time job in the last few weeks. Because even when we are not demonstrating, protesting, organizing and appearing in the media to explain and warn about the expected economic consequences of the judicial coup in Israel, it is difficult for us to concentrate on other things.

We have already gone through economic crises, intifadas, wars, periods of market uncertainty and growing social protest (the social protest in 2011, or the Balfour protests in recent years, for example). And yet, we have never experienced anything like this. So although I miss writing on this blog about the daily happenings of the business, I cannot put aside the complex reality we live in and ignore that what is happening in the political / social arena is more important, and also more relevant to my business than anything else. For the first time in my career, and also the first time in the country's history, the very existence of our industry is in doubt.

For someone not as old as I am, the existence of high-tech in Israel is taken for granted, because for them it has always been there. The media storm that accompanied the sale of Mirabilis for hundreds of millions of dollars in the late 1990s, like the IPOs of Check Point and Amdocs at the same time, does not characterize the frequent announcements about capital raisings, issuances and exits that hardly reach the general public. Israeli high-tech is no longer seen as a miracle, but as a fact. But it wasn't always there, and as we learned recently - it's not certain that it always will be. This industry was created as a big bang that combined investment in the development of military technologies, an academic focus on exact sciences, a government incentive system that began back in the 1980s, a generation of Israeli engineers and managers who grew up in Silicon Valley and returned to Israel, and any number of other circumstances that coincided with the transformation of the internet into a global network reaching every office and home, which allowed a small and poor country to position itself at the forefront of the global technology industry. The involvement of giant corporations such as Intel, Google and Oracle, the presence of the industry's leading funds such as Lightspeed, Insight Partners and others, and the reputation that the industry has gained thanks to the vision, daring, talent and hard work of the generation of Israeli high-tech giants, have created an oasis here under almost impossible conditions.

And so it turned out that despite unstable governments, a sensitive security situation and other suboptimal conditions, an industry was built here that is a model and a symbol of innovation and achievement in the entire world. My generation was privileged to stand on the shoulders of the giants who built the infrastructure for this, just as they stood on the shoulders of the previous generations who drained swamps here and succeeded in establishing the wonder called the State of Israel. The success was manifested in the creation of reputation and trust. The leading bodies in the world - financial bodies, governments, corporations and investors, have developed trust in this brand called the startup nation. This trust was expressed in investment, joint ventures, creation of business interests and partnerships. This trust made it possible to build an industry that currently employs about ten percent of the workers in Israel, but is responsible for more than half of our exports abroad, about a third of the state's income from taxes, and most important of all - the backbone of the entire economy.

Thanks to high-tech, it is possible to invest in public infrastructure such as transportation and energy, build more schools, lower the cost of services to the citizens and maintain other industries such as tourism, catering, real estate and more. Each and every one of our readers today would have less money in their pockets, less job stability, more taxes and a higher cost of living (yes, even higher than it already is), if it weren't for the high-tech industry.

In recent months, the Israeli media has been extensively dealing with the question of the extent to which high-tech will be damaged, and like it the entire Israeli economy, as a result of the apparent judicial coup of the new government in Israel. Today, this debate is less relevant, after the vast majority of experts in Israel and the world firmly decided that they anticipate a dramatic negative effect, and after signs of this effect have already begun to manifest. There are also other voices, but it is hard to remember when there was such a wide-ranging unanimity surrounding the prediction of the consequences of government policy on any issue, and as mentioned, what was an academic forecast but a few months ago, is gradually becoming a reality before our eyes.

I, like most of my friends in the high-tech industry (and again - by definition not all of them), follow the economic deterioration with concern and do what I can to prevent it. It started with demonstrations, frequent appearances in the media and attempts to influence the decision-makers, and unfortunately, in recent weeks, has turned into taking preventive measures. Moving money to accounts abroad, preferring avenues of growth outside of Israel, with many companies also seriously considering moving their intellectual property abroad and even "corporate inversion" (registration of an Israeli company as a foreign company) and in very extreme cases - moving out of the country completely. What started as a trickle and was initially met with a mixture of anger and contempt, can turn into a flood.

According to data published this week in Calcalist, 90% of the entrepreneurs and executives of high-tech companies say that if they had to re-establish the company today, they would incorporate it outside of Israel, while prominent investment funds officially announced that they hesitate to invest in Israel or direct their portfolio companies to withdraw most of their funds from the local banking system, citizens and companies transfer billions to foreign bank accounts, and the demand for local workers is declining.

These are not protest measures, but defensive measures: attempts to avoid as much of the growing damage caused as a result of the loss of trust. The trust of foreign investors, but also of us, the Israeli entrepreneurs. Those who for decades led the local high-tech sector, who confidently allayed the fears of foreign investors and partners thinking of expanding their activities in Israel, we find ourselves protecting our business and recognizing, de facto, that its future will be better outside Israel. The disastrous consequences of this trend will take many years to fix. Every month, week and even day of a slowdown in local activity will be reflected not only in the immediate losses, but in long-term consequences that will teach us again how difficult and long it takes to build, and how easy and fast it is to destroy.

The good news is that we Israeli techies refuse to surrender and give up on our country. We are fighting, raising a voice, shouting, exerting pressure in every possible legal way, and refuse to believe that the elected government of Israel will sacrifice the backbone of Israeli society on the altar of the narrow interests of some of its members. And so we may work less, but we fight more. And precisely in a challenging time when our colleagues in the world are working much harder to deal with the difficult market conditions, we are forced to largely give up the present for the sake of the future. Because if we don't struggle and we don't fight, there won't be an economy in which our companies can operate anyway. So when we are not in the office, and not answering messages, and dealing most of the day with issues unrelated to our companies, we are doing the most important thing not only for ourselves and our families, but also for our industry and the entire Israeli economy. This is a defensive war we did not choose, and we pray for the day when it will not be necessary and we can return to what we love and miss the most.

Shaul Olmert is a serial entrepreneur and the co-founder and CEO of mobile app developer Piggy. He formerly founded interactive content company Playbuzz Ltd. You can find his previous columns here .