Tech Startup Bridges Mideast Divide

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In contrast, "the cost to the employer of a Palestinian engineer is only 30% to 40% of the level in Israel," says G.ho.st's Maayah.

With an increasingly tight labor market in Israel's booming high-tech sector, thousands of startups and older companies find themselves competing for qualified manpower—leading some Israeli companies to outsource to India and China. Schreiber figures it makes more sense to look for talent closer to home. G.ho.st has more than doubled its Ramallah-based workforce in the past year and expects to hire an additional 30 people in 2008. It's also hiring on the other side of the line: In mid-December the company hired its first five Israeli employees for a newly opened office in Modiin, an Israeli town located halfway between Tel Aviv and Jerusalem.

Schreiber, of course, wants to do well at the same time he does good. The $2.5 million invested in G.ho.st so far comes from an undisclosed venture fund and several private investors, including Schreiber himself. He sold his first company, Tradeum, a business-to-business e-commerce trading platform, in 2000 for $500 million to Philadelphia-based supply-chain management company Verticalnet (VERT). A second venture he founded, an enterprise information-management startup called Unicorn Solutions, was sold to IBM (IBM) in 2006 for an undisclosed sum. Schreiber is planning to raise an additional $5 million in the coming year to help G.ho.st expand.

Similar Products, Different Philosophies

The company is set to officially launch its product in April and hopes to start making money by the end of next year. G.ho.st plans to offer premium services, such as extra storage capacity, to customers. The initial target markets for the service are students and users in the developing world who in many cases don't have their own computers.

"Their service is extremely user-friendly, but there is no lack of competition in the space," says Gilad Nass, senior analyst of communications and media at IDC Israel. He cites other startups such as Wixi, Goowy, and YouOS (from a company called WebShaka) as having similar products. But whatever happens to its technology, G.ho.st likely will be remembered for its pioneering work in bridging the gap between Israelis and Palestinians.

Sandler is a correspondent for BusinessWeek in Jerusalem .