Confidential

BEYOND THE START-UP NATIONJosef MandelbaumCEO, Perion

March 2014

Confidential

Tieg, Amir and Inbal Orpaz, “The Hi-Tech Boom of 2013,” The Marker, February 19, 2013http://www.themarker.com/technation/1.2100652

SOLD $900MSOLD $800M

SOLD $1B

SOLD $560MSOLD $650M

SOLD $100M

What is the Next Big Israeli Start-Up Going to Be?

Confidential

Great Success Stories

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… But We Need More

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We Should Also Be Striving to Build the Next Google, Microsoft, Oracle or Apple in Israel

Confidential

Maintaining Israel’s Growth

Vilenski, Dan, “Wanted: Angels,” The Marker, June 21, 2011http://www.themarker.com/technation/1.1769225

Confidential

I hate it when people call themselves “entrepreneurs” when what they’re really trying to do is launch a startup and then sell or go public… They’re unwilling to do the work it takes to build a real company, which is the hardest work in the business.

Steve Jobs(as quoted in Walter Isaacson’s Steve Jobs, New York: Simon & Schuster, 2011, p. 569)

Confidential

The Other Side of the Start-Up Nation

4. Start-ups don’t create enough new jobs

3. Danger of brain drain

2. “Exit” used to be just a word on a sign

1. “Built to Last” is just a book

Confidential

1. “Built to Last” is Just a BookHaving a great idea or being a charismatic visionary leader is “time telling;” building a company that can prosper far beyond the tenure of any single leader and through multiple product life cycles is “clock building.”

Collins, Jim and Jerry I. Porras, Built to Last, New York: HarperCollins, 2002

Confidential

2. “Exit” Used to be Just a Word on a Sign

Exit isn’t a bad word, but start-ups alone don’t contribute enough to drive future GDP growth

Sasson, Assa, “Startup exits cost Israel heavily.” Haaretz, December 10, 2013 http://www.haaretz.com/business/.premium-1.562603

Confidential

3. Danger of Brain Drain

30%of founders

move abroad

Morgenstern, Ronit, “Within a year we will lose 30% – 40% of high-tech positions,” Ma’ariv, November 24, 2004 http://www.nrg.co.il/online/16/ART/826/761.html

Confidential

4. Start-Ups Don’t Create Enough New Jobs

of Israeli start-upsemploy up to 5 employees

70%of jobs at Israeli companies acquired by foreigners disappear within 3 years

40%

Orpaz, Inbal, “70% of start-ups employ less than 5 employees,” The Marker, November 4, 2012http://www.themarker.com/technation/1.1856327

Confidential

Isn’t This A Good Formula?

+ =Start-ups

Big foreign companies

$

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Yes, ButThere is a Better Formula

+ =Start-ups

Big foreign companies

$$

+

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Growing an Apple Requires a Fruitful Valley

Confidential

To Fuel Future Growth We Need a More Balanced Ecosystem

Confidential

How Can We Grow More “Trees” in Israel?

Government Cooperation

More Mature Management

Venture Capital

Education

Confidential

How Can We Grow More “Trees” in Israel? Education

Increase exposure and funding for programs that celebrate executivemanagement

Entrepreneurshipprograms

Institutions with 30 58

Walla Education Database. Accessed February 25, 2014 http://yoram.walla.co.il/

Confidential

How Can We Grow More “Trees” in Israel?

More Mature Management

Role models

Encourage Aliyah for Seasoned Executives

Shift the conversa-tion.Make it sexy to be an executive

Confidential

How Can We Grow More “Trees” in Israel?

GovernmentCooperation

Tax incentives Access to capital Less regulationHelp in accessing other markets Belizovsky, Avi, “Tsvi Oren, the Manufacturers Association of Israel:

The expansion of Israeli hi-tech factories to other countries is not desirable,” People and Computers, February 24, 2014. http://www.pc.co.il/?p=147865

Confidential

How Can We Grow More “Trees” in Israel?

Patient Venture Capital

Israel Ministry of Economy, “Venture Capital in Israel,” Last modified April 24, 2013http://www.investinisrael.gov.il/NR/exeres/A19A138D-87A7-416B-8D62-1C968E035E13.htm

Seed

Early

Mid

Late

of venture capitalis late-stage

20%

Confidential

Long Term Benefits

Long-Term Stability

Economic Growth

Diverse Workforce

High Employment Rates

Contribution to Society

Confidential

60 Years Ago Individuals Planted Trees…

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Today We Have Thriving Forest

Confidential

Let’s Do it Again