Wednesday, February 16, 2011

Middle East Turmoil & Entrepreneurship: What I Learned from My Trip to Israel

With the uprising in Egypt and the Middle East this analysis of Israel offers a timely insight to the region.

I had just returned from Israel when the rebellion in Egypt took place. In an odd way, I wasn’t surprised that it happened, nor that the name Israel was barely invoked during the revolt. Where once Israel was the rallying cry of the Arab street, they were now a mostly forgotten bystander.

 I remember thinking at the time just how calm was this new Israel. How long could this last I wondered? This was not the same Israel I saw 25 years ago: the once nervous, ramshackle outpost of world Jewry and the lightning rod of Arab animus had grown into a secure, wealthy nation state. Time Magazine even had a cover story in September 2010 observing much the same thing (“Why Israel Doesn’t Care About Peace”).

After the 2000 Intifada, Israel put up a controversial wall separating them from the Palestinians in the West Bank. At the same time, Israel’s lively mix of chaotic politics, citizen army, advanced education and pure chutzpah had met the technology revolution and liked it. The country took off. This is no longer the resource-starved country of old living off handouts from the Diaspora or gifts from Uncle Sam. The Israeli side of the wall – clear as day – is the showcase of a vibrant, self-sustaining knowledge economy that can fill highways with fancy cars running on $8 a gallon gas, glittering skycrapers and a bountiful middle class.

On the other side of the wall lies the hardscrabble Arab world brimming with its own chaos, dilapidation and poverty.

Thanks to this parallel showcase of socio-economies the differences between the two competing world views are stark and unambiguous. Thanks to Al Jazeera, every Arab with a TV has seen this and one way or another, they know.

For years, the PC party line of the left was Israel had sucked the wealth out of the Palestinians. There are plenty of arguments to show that Israel took first dibs of the resources. However, the Egyptian uprising showed that peoples’ conditions under the autocratic regimes of the Middle East weren’t that different from the Palestinians. So maybe it wasn’t just the Israelis. If anything, it made the Israel look pretty good, especially when looking at the Arabs living on the Israeli side of the wall. Regardless of Israel-US politics and their hankering after Mubarak as keeper of the peace - in terms of lifestyles - Israel stopped looking like the devil and more like an island of aspiration.

There ought to be a way they can trade on that because the future of the Middle East will be nothing like the past. The turning point is not just democracy or that the Internet and satellite TV have opened the eyes of downtrodden. There is also a changing of the energy guard. Israel is now sitting on one of biggest gas reserves in the world. You can assume there will be innovations that only a scrappy, inventive, barrier-breaking country like Israel can come up with. At the same time, we in the US are also awash in natural gas yet are deeply reluctant to make full use of it. Put that together with our need to migrate from oil and you can see why an influential source in the middle east with nothing but gas on their hands and an innovative will to use it across the board will open up new possibilities.

Israel’s influence has also grown due its population boom which is unusually sophisticated for the region thereby adding value more than the resources they devour. In the 70’s there were about 3 million Israelis. Now, it is closer to 9 million. Nevertheless, they will need space and my guess is they will eventually reach out to the Mediterranean in the same way Dubai did with its artificial islands in the Persian Gulf. Advances in water desalination combined with their own low-cost energy sources is likely to drive hydro innovation and once ntractable deserts may suddenly bloom. The Negev is still Israel’s biggest land mass. Going forward, peace negotiations may have less to do with land – there is plenty of idle, arid kind – and more to with hydration. In effect, the conversation will move more toward innovation than real estate.

To give you an idea of what I mean by an entrepreneurial country consider this: my host had recently taken his software company public on the NASDAQ with a $500 million cap and $187 million in annual revenues. They had invested some of that money with another relative who had developed and artificial bone biotech company. At some point in my trip I met an old employee of mine who had moved to Israel, used her experience with our parent company, TECHmarketing to get a job in a start-up that also went public on the NASDAQ and then married a colleague who went on to sell his company to IBM. Nowhere did oranges, real estate or kibbutzes play a part – except that a pioneering, collectivist state of mind probably molded a culture with a will to work and overcome.

The highways glitter with flashy high rises sporting Micorosft, Intel, IBM, Texas Instrument and other well known logos. Teva Chemicals has becomes a huge generator of biotech and pharma start-ups and so on. If Facebook is credited as the enabler of Egypt’s uprising’s, then it is worth noting that social media as a technology probably began in Israel – with Yossi Varid’s ICQ (now AOL’s AIM) while the proto-social media site, was itself invented by a homesick Israeli in New York. They may not celebrate this in Cairo or Teheran but somewhere it is known that the Facebook they cherish bears the imprint of the chosen people. In any case, Israel is a dramatically clear example of a free market knowledge economy vs. a repressive oil-and-religion economy.

More to the point this polarized vision of parallel universes has become clear enough to the Arab masses that it has raised the bar on their governments. Even the old revolutionary movements will have to take note: Hamas can chant and Hezbollah can hiss but thanks to Al Jazeera the Arab world knows what a tech paradise looks like and the young, I believe, will want them to match it or get out of the way. You can pray and innovate but when prayer bans it and progress it brings, the theorcrats will lose.

While Mid-eastern utopia is a long way off it is not impossible. There may be historical grievances that cannot be solved overnight but when people share a common goal, they can begin the process of forgiving if not forgetting. When the future is about creating abundance you no longer have to fight over vanishing resources.

When you talk to historians they will tell you that Jews and Arabs have always gotten along. They have had their tragic moments but it was nothing like the fate Jews suffered under the crusaders, Rome or central Europe. So there is hope. Perhaps Israel, rather than being the enemy can be reinvented as a kind of Dubai of creative technologists, brainpower, guts and a certain outlaw attitude. Remember, entrepreneurs are usually rulebreakers and apparently, the UN and the liberal West’s approbrium of Israel have, in a peculiar way inspired the country. Even Apple’s developers, for years, worked under a pirate flag. (So take note Microsoft, RIMM, Dell etc. loosen the ties get a little chaotic….)

While no one knows how the Middle East uprising’s will play out – the bottom line is that Israel is no longer its bogeyman but a silent exemplar of 21st Century possibilities. Tech innovation and entrepreneurialism will have a huge role to play, the China card is rarely discussed but as I will discuss in Part 2, it lurks – as it does in Israel – in provocative ways. Most importantly, this extraordinary moment of flux there are clear opportunities where we can influence the future and settle, with honor, some age-old differences.

Saturday, February 12, 2011

Meeting with Al Gore

My meeting with Al Gore at Social Media Week.

Good old Social Media Week. It brings up great topics - like our TV Goes Social iBreakfast - and it brings out the stars like Al Gore. It turns out we have a common interest in the Tobacco Industry! When he was Vice President, he stood up to the tobacco industry. As a southern politician with presidential ambitions, that took a lot of guts. Like Mandela’s release from jail – it was one of the things I never expected to see in my lifetime. While Al Gore did not risk his life the way Mandela did, his stand had its own world-changing effect: the great $250 billion tobacco settlement of 1997 and a fundamental change in smoking regulations here and around the world.

My interest in Tobacco is a little more academic. My book Cigarette Seduction is about the marketing research behind the brands, how that defines smokers and cultures (brands vary dramatically by country) and how smokers can use that knowledge to quit.

Al Gore believes that Tobacco Companies are evil. While I don’t necessarily disagree with him, I do think it’s a little more complicated. They are addressing some fundamental human needs. If we don’t understand what they are and how to deal with them, they will just re-emerge – probably in more harmful forms. In that respect, Tobacco Companies are, to certain people, the good guys - and you have to accept that.

In any case, I salute Al Gore who is really warm guy in person. I thank him for his Nobel Prize-winning work on Global Warming - it has made us think green and electrified ours and our children’s generation. 

Just one thing - and sure, this is a cheap shot - with this rotten winter, we could use just a little global warming right now……

Standing up to an Internet Bully - why we support Private Equity Events

For several years now the iBreakfast group has run low-cost Angel pitching events of its own where the winner gets a free seat at one of Mike Segal's Private Equity Forums. So on that basis I can speak to this issue. 

Mike Segal's Private Equity Forum events are always sold out and are packed with real investors and entrepreneurs - often from outside of New York.

In most cases, these players are worlds away from Calacanis and Digital Media. They never get the attention of the Fred Wilsons, the Esther Dysons, the DFJs and so on. They tend to come from energy, engineering, biotech, transportation, waste management – all the stuff that doesn’t make it to the blogoshpere. They are also usually older and let’s face it - you don’t see too many gray hairs in the digital Start-Up world. When they do, the seniors rarely get funded. 

At Segal’s events these participants are, for the most part what I call pedigree start-ups – people with 10 or more years of experience in serious business and technology fields. Their plans are not too sexy or too wildly conceptual and they will never be the next Facebook or Twitter. But they often have real customers on tap and genuine backgrounds in the field with deep relationships and so on. They tend to come from areas in the hinterland that are not flooded with investors – so presenting in New York means something to them. 

Should they pay what they pay? That’s their calculation. Does Mike have a right to charge them? Ask them? They know the cost and resources they need to reach out to investors – and there really are investors here – and so they make that decision.

The bottom line is they will never get an invite to Fred’s office, they won’t get a “free” invite to Techcrunch or any other hackerthon or techie start-up fest. And guess what, this is not a socialist country - people have a right to charge and you have a right not to show up.

So why the libel?

Has anyone stopped to ask what Jason gets out of this crusade of his? Free publicity for his ridiculous people-powered search engine, Mahalo that now answers your every lame question. Jason is the same idiot who dropped over $200,000 on a late night TV poker game and then claimed it was really publicity for Mahalo because he wore a logo shirt. Some publicity! See Calacanis Poker Face.
Last year, after he got into a fight with his partners at TechCrunch, he went after Mark Zuckerberg and Facebook. While the site has its flaws it is nowhere as evil as Calacanis made it out to be. But he was after his usual cheap publicity. I don’t recall any Egyptians saying “Thank you Mahalo.” Even the so-called “founder” of the revolution, a Google executive, said “Thank You Facebook.”

I have met Mark’s dad, Dr. Edward Zuckerberg so I know what it is like from his perspective to be slandered by the likes of Calacanis who has never found a cheap shot not worth taking. It is not only an unpleasant thing but almost impossible to respond to because he hogs the conversation. I even saw him hold up a gun of some sort when talking to a Keiretsu exec. Hardly a fair fight.

I am all for choice. If you can get a free ride as a Start-Up, for heaven’s sake take it. But most entrepreneurs heed some help and one way or another they are going to have to pay for it.
What I can’t abide is a bully. Calacanis made his mark as a champion of NY’s Silicon Alley in its salad days (remember that?). He picked battles when no one else would and paraded about with his trademark bulldogs – which made him look like a good guy to some people. That was 10 years ago. Flame throwing is OK when you’re in your 20s. Being a Tae Kwando black belt when everyone else is a geek is intoxicating all right. But this act is getting old – a touch of the Mubarak. In reality, Jason is rapidly becoming a slander machine that mistakes dirt-dishing for publicity and thinks it makes Mahalo and his various conferences look good. 

If he can make money doing what he does good luck to him. But here’s an amazing reality: the Private Equity Forums have never been fuller – precisely because they fulfill a need that others don’t offer. Apparently, Calacanis is just singing to his choir hoping they’ll pay for more of his web-thumping. Watch out, if he thinks there’s a publicity angle, he could come after you!

What IS Social TV?

This is the report from our TV Goes Social iBreakfast on Feb 9 during Social Media Week.
Speakers include: Simon Applebaum, Tomorrow Will be Televised • Bonnie Sandy Sterling, 28 Squared • Scott Varland, Social Bomb

This iBreakfast opened the door on what many think may be the next really big thing. The CEO of Endemol thinks so. So does Wired, Fast Company and so on.

But what is it?

There is a hardware and software component and a history.

The hardware is that TV will show up anywhere and may come from any source. Your flat screen will soon integrate TV, YouTube and Facebook and anything else you want from the web. Your mobile device and laptop will do much he same. Companies will soon offer really effective whole house servers that let you get the full experience on all your TVs and your smart phone will probably double as a smart remote. If they don't do this hackers are already doing it for them.

Simon Applebaum

On the software side, we are seeing communities form around TV - the content, the actors, the recommendations and so on. Marketers will try to create an ecosystem around their shows. Speaker Scott Varland of Social Bomb does this with an integrated platform they developed to help viewers develop a conversation with the shows they watch. Bonnie Sterling does this on 28 Squared with Brooklyn and African artisans who can share and sell their goods through this visual transaction medium. There is also a coding standard for cable systems that will enable the launch of App markets etc.

Alan Brody

The iBreakfast founders are already involved in doing this on the creation end - helping schoolkids develop their own network using social media tools to develop content and then promote it afterwards. Our first coup was their interview with Facebook's Mark Zuckerberg's Dad which got picked up by 700+ news outlets around the world.

The real magic is that the teens know how to use these tools for development and communication - more importantly, they know how to use it for social and academic gain. They get noticed by friends and eventually, college admissions officers. This is presumably a blueprint for way adults will eventually adopt Social TV. We just have to figure out which gatekeepers they want to impress.

According to Varland, TVs many gatekeepers have made investors fearful of entering this space - Social TV in all its forms may just be the means to getting around them!

As for the History - Social TV has become the new flagbearer for elusive quest for Interactive TV - and therein lies the minefield. Everyone gets the social community and communication angle - they even get the idea of communicating with visual references etc. They don't get the dangerous side - that viewers don't want their TV experience interrupted. In other words, they don't want their vegged out mental state disturbed. This is our national meditation time.

A key reason Interactive TV failed is they did a good job of disturbing viewers - with the exception of their amazingly successful caller ID on the screen feature. This was great precisely because it saved you from getting up from your chair to screen your call. If only it could handle the call itself - so you won't have to be bothered with it at all!

With these themes in mind and a million more questions - we will be running a number of additional panels as well as a TV Goes Social blog.

If you have any ideas of your own please share them with us at and we'll post them.

Additional Report on IPTV Evangelist
Want your Twitter TV? - read about it in Fast Company.

My Meeting with Al Gore

Good old social Media Week! It brought out a lot of important issues - see our report on TV Goes Social. It also brought out the stars.

 Alan Brody & Al Gore

This is my meeting with Al Gore. As it turns out, we have something in common - a deep interest in the Tobacco Business. VP Gore stood up to the Tobacco Industry despite coming from from Tobacco country. That took an enormous amount of courage - the kind I equate with Nelson Mandela in that I would never have expected it to happen in my lifetime and as a Southern politician, had a lot to lose. His stand lead to a worldwide change in smoking habits and legislation around the world.

My interest is little more academic - my book Cigarette Seduction is about the way the brands work: how they were created out of deep research, what that says about the culture and how it can help smokers quit. While Al Gore believes the Tobacco industry is evil - and I don't totally disagree - the issue is a little more complex because smoking fills certain psychic needs. If we are not cognizant of that, guess what? People can do a lot worse.

Wednesday, February 2, 2011

Social Networks Take Hollywood - Who’s the Gekko Now?

Who’s the Gekko Now?
Looking back, the two watershed moments of 2010 are when Facebook became the only real challenger to Google, hitting the 500 million user mark and attaining a valuation north of $20 billion. But that is nothing compared to the Oscar-worthiness of Social Network - the movie – which also came at the expense of Oliver Stone’s less than spectacular Wall Street.

Wall Street 2 is entertaining but it lacked the defining lesson of the day – so what’s the next big business principal. In 1987 the bad guys were corporate raiders – taking over old-line companies, throwing out old management and dumping workers. As it turns out, the resulting leaner, inherently efficient companies took full advantage of a computer revolution that fueled our economy for the next 20 years. The Good ol’ boy companies would probably have died off anyway. Moviegoers got a villain anyway since Gekko was an insider trader. But he was also part of the future….

Fast-forward to 2010 and we find that in Wall Street 2, Gekko is now a figure of redemption. He is out of jail and wrote a best seller that predicted the crash. He may be a crook but an old crook is better than these newfangled ones with their high frequency trading and funky derivatives. The solution? Bet everything on one big clean tech deal. Not only did this violate the rules of Hollywood redemption – give all your money to the poor and become a funky monk – but this just wasn’t visionary enough.

Social Media is Business Now
Social Network, the story of Zuckerberg’s founding of Facebook on the other hand, IS today’s Gordon Gekko movie. This villain is another overeducated high flyer but instead of a slick Wall Streeter he is a gangly student who is spurned by his girlfriend for his lack of empathy. This becomes the basis of a “who’s hot” college website. This, in turns gets him a project designing code for a group of uppity entrepreneurs who see the opportunity of creating a social site for people who want to date Harvard students.

Zuckerberg front-runs this project – coding his own version while he sandbags his clients, the old-money Winklevoss twins – and then voila, he’s in the Facebook Business. Just as Gekko 1 did, he defined the blueprint of business in the Digital Age 2.0 - the ultimate viral tool. Zuckerberg’s employers can’t compete, so they sue. They settle for a multimillion dollar sum – but as Facebook grows beyond all imaginable bounds the Winklevoss’ become increasingly restive hoping to kill the settlement and get more money.

Did Zuckerberg hide Facebook’s true prospects or were the Winklevoss’s lacking in the vision to see it? 

Either way, the message here is that every business has to find a Social Media angle or they could fade away.

Start-Up Nation for….Grown Ups

In a world brimming with Start-Ups we will continue what pioneered in the 90’s – connecting start-ups with sources of capital. We also provide a forum to help them shape their plans and find alternatives when they cannot get funding (the other 90%+ of you....).



In that light, it is worth noting that I recently took a trip to what has become known as Start-Up Nation – Israel. I once spent time there in the early 80’s when it was more like Hand-Out Nation because, other than oranges, they were largely living off donations. The difference today is instructive. Now that the Middle East is on fire – there might be some lessons here.

Contrary to popular thinking, Israel is a lot more than a protectorate of the United States. It is its own power center that has become quite interesting to China. Read my thoughts in “The Great Wall of Israel.”

Start your Own iBreakfast

As the iBreakfast enters its 15th year, we have taken a moment to reinvent this national forum. Soon we will offer a new self-run version of the iBreakfast for Executives looking to reinvent themselves and build a business community. Our specialty – daytime venues.