The Other Silicon Valley

There’s two of them. In addition to the Silicon Valley in, well, Silicon Valley, a mammoth entrepreneurial machine is also grinding away in Israel.



Or so I witnessed recently at a summit on early-stage investing in Tel Aviv. Organized by Los Altos-based Silicom Ventures, the conference’s speakers included Israelis such as Meir Brand, who runs Google Israel, and a hefty contingent of Valley denizens.



Palo Alto locals were present, of course. Eric Benhamou, CEO of Cowper Street’s Benhamou Global Ventures, and Amos Barzilay, a venture consultant at Lytton Avenue’s Walden International, gave talks on management and finding funding, respectively.
For Barzilay’s talk, so many Israeli entrepreneurs crammed into the beige conference room that it became standing-room only.



Admittedly, everyone from social scientists to civic boosters has been anointing new “Silicon” spaces since the 1980s.



But Israel – a country so small that driving the coastal plain takes as long as a trip between San Francisco and Gilroy – really does have a thriving culture of entrepreneurship.



Israeli high-tech firms netted about $1.75 billion in capital investments in 2007 – down from a 2000 high of just over $3 billion, according to the Israel Venture Capital Research Center. This year, the first quarter’s $617 million in raised capital is a seven-year high, according to the research company.



As in the Valley, money and talent cluster together. Herzliya Pituach, a city 15 minutes north of Tel Aviv, is packed with tech firms such as Microsoft and funders like Israel’s homegrown Carmel Ventures.



Menlo Park-based Daniel Cohen of Gemini Israel Funds was even moved to write an entertaining blog post comparing Sand Hill Road with Herzliya Pitauch’s Hamenofim Street.
His verdict: Sand Hill lacks bars, atmosphere and enough food options. (I guess The Sundeck doesn’t cut it.) But the silence is nice, sometimes, he conceded.



At the conference in Tel Aviv earlier this week, politicos were optimistic about the growth of Israel’s entrepreneurial culture – and collaboration with the U.S.



Outgoing U.S. ambassador to Israel Richard Jones partially credited the spirit of the Israeli people for the sector’s growth. Before 1993, there’d been one venture capital firm in Israel, he explained. Now, the average size of Israeli VCs is $250 million.



"If the creativity of the Israeli people can continue to be unleashed … the sky is literally not the limit," he asserted.



Peace is also important for growth, he said – a perhaps ironic statement given the roots of Israeli’s high-tech world: the military.



As former defense minister Moshe Arens explained at the conference, it was in defending itself that Israel’s cultivation of intellectual capital took root.



It makes sense. For young, brilliant minds, even a sizable check from a firm like Draper Fisher Jurvetson to scale and monetize a Web 2.0 firm is a pale motivator in comparison to a blank check from the Israeli military to … do whatever nationalistic, futuristic projects they do in those secret bunkers.



Adrienne Sanders wrote a great exploration of those military roots – and the Israeli influence on the Valley -- last October for the San Francisco Business Times. (PDF here).



Now if only all the Israelis coming to the Valley could bring some good hummus with them. And shakshuka. And falafel. Ok, I better stop here. Stay tuned for an upcoming post about Israeli ties to Palo Alto.

(Note: despite high spirits in the Holy Land, I can only imagine the mood is a bit glummer outside the espresso-fueled optimism of self-promoting conferences. The venture capital scene stateside is in the doldrums just now, The New York Times reported Saturday. No venture-backed firms went public in the second quarter this year, a bleak stat not seen since 1978.

Oh, and luxury-caffeine peddlers Starbuck’s are closing 600 stores. Maybe everybody started taking the Latte Factor money-saving method pretty seriously.)

Chart graphic from the New York Times Web site. Flag photo courtesy Creative Commons user Johnk85. Silicom Ventures conference graphic from Silicom Ventures’ Web site.

When "where" = money, money, money

It's not just for gadget-lovers anymore -- GPS technology has invaded common tools such as cell phones. Millions of us are walking around leaving traces of data on where we're going and where we've been. And where there's scale, there's entrepreneurs scurrying after profits.

A Columbia professor and businessman have created Macrosense, a massive statistical-analysis engine for geo-data, the New York Times reported today.

Knowing where and when consumers move could be crucial for businesses seeking to expand or improve services, according to Tony Jebara and Gregory Skibiski, founders of Sense Networks. They have already tested their enormous engine with major finance and consumer firms, reporter Michael Fitzgerald writes.

Unfortunately, founders wouldn't tell Fitzgerald how they got all the geo-data. (Cue creepy music...)

But they have released a Joe-Shmo version for local Blackberry owners -- sorry, Jitterbug devotees -- called Citysense. The service will tell users where traffic is worst in San Francisco and where everyone else is going out, according to its Web site.


In other words, if you were holding out hope that the corner of Broadway and Columbus was traffic free, now you can be told definitively, every time, that it's awful. Joking aside, the service could be neat -- I haven't tried it yet. But I do know that the attempt to cash in on the cache of geo-data out there is going strong in Palo Alto, too.

Local entrepreneur Shailendra Jain's geo-tracking Web site Abaqus went live earlier this month. Abaqus enables anyone to track him or herself using geo-enabled devices, either with embedded software or software downloadable from the site.

Users then upload their tracks to the site, adding photos and notes to the maps if they wish –Look! I’m at the drug store! Look - now I’m on vacation in LA! –- to create geo-diaries.
I borrowed a GPS recorder from Jain and tracked myself hiking around Hetch Hetchy Valley in Yosemite National Park.
(You can see my “track” if you visit Abaqus; I made it public. It’s called, creatively, Hetch Hetchy.)



Diaries are the tip of the iceberg, Jain said. Like the Sense Networks founders, Jain sees dollar signs in geo-data. In the future, it could help business services such as online shopping sites, he said.

For now, he’s working on synching the site with other online services such as Flickr. And there are also personal uses such as tracking fitness or gas mileage.

Nowhere else can users simply store the data and fiddle with it later, he added.
"There's no [other] service that says 'Independent of what you want to use it for, just record it here,'" he explained earlier this month.

He was sitting in his downtown Palo Alto home office in front of an enormous world map, continents and oceans unfolding behind him. Alongside him were two computer screens covered in maps. This is a man who’s done a lot of thinking about location, I thought.

While some software costs about $10 to download now, depending on the device you want to upload to Abaqus with, Jain’s plan is to offer it all for free by the end of the year. He’ll make money through the partnerships with other Web services, he said. Read more about Abaqus in the Weekly article I wrote.
Or drop everything and go straight to the site to get the software yourself. You don’t want to be the last one without some sort of geo-tracking program running on your phone, do you? I thought not.

But who will help the geeks?

Entrepreneurs, take note: your chances at success just hitched up a notch. Versatile businessman Saeed Amidi has opened another Plug and Play Tech Center for promising start-up companies in Palo Alto.

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Plug and Play centers are an alternative to traditional start-up incubators in venture capital firms, according to Amidi, the Plug and Play CEO. Instead of tying their fortunes to any one funder, young companies are housed in a sort of entrepreneurial ecosystem until they are ready to spread their wings -- and let the money come rolling in. Amidi is quick to point out that Google sparked a bidding war while housed at one of his properties years ago.

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The centers' model is to cluster start-ups in a sort of beehive of brilliance. As they draw on each others' energy and creativity, they are also given access to a formidable line-up of connections.

There are regularly scheduled visits from angel investors and venture capital firms such as Draper Fisher Jurvetson. There are monthly Web 2.0 events.

There are even semiannual expos, whereby a feeding frenzy of media and funders descend to hear an exhausting roster of business pitches. And Amidi’s own fund, Amidzad, may choose to kick in some dough for the best ideas.

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Lucky entrepreneurs, indeed.

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Amidi’s latest Plug and Play Center is on University Avenue in downtown Palo Alto. It opened in early May. With space for about 15 companies to work side by side, it may not reach the fevered pitch of the Sunnyvale site, which has 129 start-ups, he said. But it’s got the nearby businesses of downtown, including Accel and Norwest Venture Partners, he said.

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To read more about the Plug and Play concept and hear Tim Draper's thoughts on it, check out the article I wrote for today’s Palo Alto Weekly.

Meanwhile, reporting on Plug and Play got me wondering – what about the geeks?

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To rent space in a Plug and Play center, start-ups must demonstrate their potential, according to to Shobeir Shobeiri, a Plug and Play business manager. Applicants are screened not only for the strength of their ideas but also for the quality of their team, he said. That could mean an upper hand for communicative folks skilled at the sort of networking Plug and Play arranges. It could mean an advantage for the Stanford computer-science-majors-turned-start-up-founders I’m working with for an article series now (more on that later). Far from the stereotype of shy computer nerd, they seem immensely aware of how to meet-and-greet and pitch ideas. Their handshakes are firmer than most adults'.

So are the introvert genius-geeks just left in the dust? In the era of the elevator pitch, what about the nerds mumbling at their shoes? Think of the cliché of nerdy, adolescent Bill Gates. Or any stereotype about engineers or programmers, for that matter. Are the terminally shy worker bees still starting companies, and if so, how much does charisma matter?

A lot, apparently. Just visit Stanford’s School of Engineering, home to many of its entrepreneur-grooming programs, and you’ll see fliers for overcoming fear of public speaking plastered in the halls. Social know-how is not quite the reigning jewel of innovation -- yet.

Or maybe it is. Maybe those fliers are targetted at the small, stuttering minority. Perhaps the brilliant introvert truly has gotten a bit more savvy about wooing venture capital, now that such practices are Valley mainstays.

The rise of the Cool Geek to replace the Awkward Nerd was recently chronicled in a New York Times Op-Ed piece by David Brooks. And in fact, he credited some of Silicon Valley’s biggest legends with the transition:

“The future historians of the nerd ascendancy will likely note that the great empowerment phase began in the 1980s with the rise of Microsoft and the digital economy. Nerds began making large amounts of money and acquired economic credibility, the seedbed of social prestige. The information revolution produced a parade of highly confident nerd moguls — Bill Gates and Paul Allen, Larry Page and Sergey Brin and so on.”

The jury is out, however, on whether this transformation has happened to nerds or just alongside them. Does society like nerds more, or are they genuinely more likeable? If only someone could build a Facebook application capable of riddling me that.

Local writing. Really local writing.

Hi. I’m Arden Pennell, a journalist based in Palo Alto, California.
Welcome to my new blog, ArdentNews. Obvious pun aside, the name connotes passion. Silicon Valley is packed with passionate people. In this blog, I’ll write for and about those people – and anyone else with an interest in the Valley.

ArdentNews’ focus will be on questions I hear people ask and trends we residents observe. For example, in one post I'll ask what effect Facebook really has on downtown Palo Alto, hype aside. Other posts will address Stanford’s amazing start-up-company machine, female power brokers in the Valley (or lack thereof), and how to go on a cheap –but classy! – date in our pricey hometown.

I promise readers to avoid gimmick-based posts and snide commentary. Such writing usually isn’t informative, despite tantalizing headlines and a know-it-all tone.

I work as a reporter for the Palo Alto Weekly, so many posts will refer to articles I’ve written. There’s a difference between a blog post and a newspaper article. The former allows – heck, welcomes – opinion and having fun with the writing. The latter put the highest premium on facts. The reporter’s personality is frankly less important, or not important at all. (Or that’s how it goes at the Weekly, anyway. As most literate folks know, some papers have a more, er, flexible sense of journalistic ethics.)

ArdentNews will draw on both sorts of writing, personal and professional, to look at life in the Valley and Palo Alto in particular.
Questions are welcome. In fact, they’re requested. I’d like to hear what people want to know and then try to find out the answer.
If something interesting or crazy in that only-in-Silicon-Valley kind-of way is going on –I haven’t heard the phrase “Web 4.0 ” yet, but hey, it could happen – tell me about it.

Feel free to comment, correct, disagree, digg it, and so on. That’s all good stuff. The more dialog on ArdentNews, the better.
Thanks for reading and hope you enjoy. Below, some info about me.

About me:
I have a knack for original paragraph headings, as you see above.
I grew up in New York City and went to Stanford University for a taste of something new.

I later lived in Berlin and wrote the blog New Yorker in Berlin about the city’s post-Cold War culture. It’s hard not to become fascinated by a city where former Communist secret police are awarded higher pensions than their victims. Or where the main advocate for a Holocaust memorial stole a corpse’s tooth from a concentration camp to bury inside the memorial.

Now I live and work in Palo Alto. Silicon Valley is a magnet for creative, passionate – there’s that word again – people who ardently believe they are capable of transforming society. It’s fascinating to be surrounded by such people, even if their predictions are sometimes off (“tech bubble,” anyone?). Besides New York, the Valley is the only place where I won’t grouse too loudly about rents or $4 coffee. It’s worth it to be here.