Global Economics

Yossi Vardi: Israel's 'Mr. Tech'


A champion of Israeli tech startups, Vardi has been asked by the government to strengthen Israel's business ties with Europe

It's May 15, and Israeli technology guru Yossi Vardi is moderating a session on the future of the Internet at a conference in Jerusalem. On stage with the fatherly 65-year-old is a who's who of tech and media bigwigs, including Google (GOOG) co-founder Sergey Brin, Yahoo! (YHOO) President Susan Decker, and News Corp. (NWS) Chief Executive Rupert Murdoch.

Vardi (right in the above photo) isn't the least bit cowed by their eminence. In his irrepressible manner, he calls out to the crowd: "How many Israeli entrepreneurs in the audience want to do business with Yahoo?" He then tries to get Decker to give out her personal e-mail address. (She declines.) Vardi settles for announcing the e-mail of Yahoo's head of European operations to the scores of entrepreneurs who have raised their hands.

Undoubtedly the most prominent and connected tech entrepreneur in Israel, Vardi makes no bones about his objectives. The point of moderating the tech panel, he says later with a laugh, was to "shamelessly promote Israel's high-tech sector." The same evening, he tries to convince Brin to do more business in Israel by dragging the Google co-founder and his parents to a dilapidated warehouse in the suburbs of Tel Aviv to introduce them to 300 Israeli "garage geeks" who tinker there.

Now this goodwill ambassador—long known for his connections in Silicon Valley—has been tapped by the Israeli government to help deepen ties with Europe. Vardi was recently named co-chairman—alongside Mathias Döpfner, the chief executive of German media company Axel Springer (SPRGN)—of a group called the EU-Israel Business Dialogue. Its aim is to foster business relations between Israel and Europe through events such as the upcoming Israel Innovation Day in Germany on June 16.

Making Deals, Earning Respect

Although the panel's work is just getting under way, Europe's big tech companies have already been eyeing Israeli innovation for some time. In March, a France Telecom (FTE) subsidiary spent $21.4 million for a startup called Orca Interactive, based in Ra'anana, near Tel Aviv, that develops Internet TV software and applications. Germany's Deutsche Telekom (DT) has opened a research and development laboratory at Israel's Ben-Gurion University focused on network security. And Britain's BT Group (BT) is "actively scouting for Israeli technologies to use either ourselves or for our customers," says Gary Shainberg, BT's vice-president for technology and innovation support.

Such deals are welcome news to Vardi, who founded his first technology startup in 1969 and has gone on to be involved in more than 60 Israeli tech ventures. He has taken seven companies public and sold many others—the most famous of which was ICQ, the first Internet instant-messaging company, which was acquired by AOL (TWX) for more than $400 million.

But more than his financial success, what has turned the avuncular Vardi into Israel's Mr. Tech is relentless networking, his passionate belief in the cause, and generosity with his time and money. Known for his love of gadgets and mischievous sense of humor, Vardi has plowed his gains from ICQ and other successes back into startups, serving as angel investor and mentor to scores of young Israelis. He now counts more than 40 companies in his investment portfolio, and spends much of his time traveling around the world to promote these and other Israeli companies at business events.

That commitment and kindness has earned Vardi legions of admirers, including Shimon Peres, the President of Israel, who calls him Israel's "best ambassador" to the world of science and technology. Vardi isn't in it for the money, Peres insists. "He is after the science itself. He really and sincerely wakes up in the morning, opens his eyes, and asks, 'God, what can I discover of your secrets today?' And once he has it, he will relate it to others."

Groundbreaking Generosity

There's another motivation as well, says Vardi, who had a long civil service career in Israel: what he calls modern day Zionism. "I belong to the generation that witnessed the creation of the state," Vardi says. "I still remember the dancing in the streets on the 29th of November, 1947, so for me, what I am doing, is a current manifestation of pioneering the building of the state of Israel."

At times, Vardi may be too much of a soft touch. He says he hates to read business plans and instead goes with his gut—sometimes even committing to investments over the phone if he believes in the entrepreneur making the pitch. "My wife, Thalma, who keeps me connected to the ground, tells me it doesn't make sense that every kid with shining eyes walks away from a meeting with me with a check," says Vardi. "But I tell her if I lose the money at least it goes to nice people and allows them to follow their dreams. Who wants to give money to jerks?"

Thanks in part to his involvement, high tech now represents a vibrant portion of Israel's economy (BusinessWeek.com, 5/13/08). But the domestic market is so small that Israeli tech companies have to grow their businesses quickly in the U.S. and Europe. Nobody can open doors abroad like Vardi, say entrepreneurs and executives.

"Yossi is a super-node," says BT's Shainberg. "He connects people and companies from around the world to leverage the world-beating technology innovation in Israel." With the help of Vardi and the Israeli Trade & Industry Assn., Shainberg is bringing a group of Israeli tech entrepreneurs to London on June 10-11 to meet with executives from the British phone company and its partners.

Forging Relationships

Indeed, Vardi's web of connections spreads throughout the Continent. He has, for instance, a long-standing relationship with German publishing company Hubert Burda Media, acting as an informal adviser on digital strategies. A few years back, he helped the company set up a conference called Cool Companies in the Hot Desert that brought a group of German tech entrepreneurs to Israel. "Yossi is a connector, a sharer, a giver, a storyteller," says Stephanie Czerny, Burda's managing director in charge of R&D, marketing, and communication.

The success of the event led Vardi and Burda CEO Hubert Burda (left in the photo) to launch what has quickly become one of Europe's most important technology conferences, known as Digital, Life, Design, or DLD. The annual event now draws 1,000 attendees every January, and this year Vardi brought 150 Israeli Internet entrepreneurs along with him to the conference to introduce them to potential investors and business partners.

Vardi thrives on forging those sorts of links. "Yossi has an amazing capability and will to connect people," says Tal Keinan, CEO of an Israeli startup called SemantiNet, one of the companies in Vardi's portfolio. "This is priceless for a startup."

Keinan found that out firsthand when Vardi invited him to a private dinner in London in April. Held in the BT Tower, the exclusive event included senior executives from Apple (AAPL), Yahoo, Hutchison Europe, and Google, as well as partners from investment firms such as Accel Partners and Hasso Plattner Ventures. As if that wasn't enough, a few days later back in Israel, Vardi introduced Keinan to Dell (DELL) founder and CEO Michael Dell.

For all his brokering of deals and relationships, Vardi isn't impressed by big names and isn't in it just for the money. "It is about building things, about having fun, about exploring new boundaries, and crossing boundaries," says Uri Admon, CEO of an Israeli startup called Dyuna, another company in Vardi's portfolio. "He is an inspiration to us all."


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