"Companies with an unsustainable business model will cease to exist"
Yaniv Yesharim, Head of Marketing and Growth at KPMG Israel, spoke at Calcalist and KPMG’s Work After Work event about the state of the Israeli tech sector
"We are living in a time like no other. Along with global transformations, we are seeing local transformations. We are seeing a dramatic decrease in investment in tech companies, both in quantity and scope. The high-tech market is at the center of this. On the other hand, technological developments are taking off with the strongest example of the recent period being AI for the masses," said Yaniv Yesharim, Head of Marketing and Growth at KPMG Israel, speaking at Calcalist and KPMG’s “Work After Work” event in Tel Aviv on Sunday.
Yesharim compared the situation to Schrödinger's thought experiment: "Schrödinger described a cat that was enclosed in a box containing an atom that could activate a poison pill that would kill the cat. The chance that the poison pill would be activated is 50% and only when we open the box will we know if the cat is alive or if the atom disintegrated and killed the cat. The paradox is that as long as the box is closed the cat is both alive and dead, simultaneously. The cat is in a state called superposition. Only when we open the box will the cat's true state be confirmed.
“In the last year the box has been opened. The state of the tech sector has been revealed, but, unlike Schrödinger's cat, its fate doesn’t depend only on chance, but on the ability to exist in a superposition. Companies that knew how to leverage their superposition and respond to the market, and accordingly presented both growth and profitability, managed to break through. Those whose value was only on paper are having a hard time.
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“There is no doubt that one of the significant factors that changed the rules of the game is the value of money. We have seen interest rates climbing in recent years. This opened the box, revealing the strong and healthy companies and those that are not. The market received a shock that pushed it to course correct, which probably should have happened a long time ago. The next time you try to predict the fate of the high-tech market, remember Schrödinger's cat. This is a reminder to all of us that companies with an unsustainable business model will cease to exist. Don’t wait with a stopwatch in hand for the box to open - it's already open."
