Prime Minister Ohlmert's Speech In Annapolis

Dear Arab Leaders -
We come to Annapolis in peace. We always do. We came to Camp David in peace and we have enjoyed our peace with Egypt for years. We came to Camp David a second time and we were treated to terrorism. We come to Annapolis in peace, as always, and certainly expect, that no matter what the outcome here, it does not end in violence.

Peace works when everyone comes in the right frame of mind to end conflict entirely. It is a process that is based on building trust between leaders and trust between peoples. That trust is built by fulfilling past agreements to the letter and not moving on when the situation changes and agreements are inconvenient. When leaders take their commitments seriously, so do do everyday citizens and that builds trust. It is true in business, it is true in friendship and it is true in diplomacy.

You cannot microwave peace. It does not happen overnight or because two leaders decide to make peace. Peace comes when a people, a nation, wants to focus on building its own society instead of destroying another's. It comes when citizens have jobs and a decent living and are striving for a better education and a better society. Peace requires a bold change of mind and heart at all levels of society in order for it to be stable. Nuclear saber rattling, rocketeering, and educational incitement are not conducive to bilateral peace nor regional stability. No Annapolis microwave will change that. But, over time, we can and we will.

Dear President Bush - you have been the best friend Israel has ever had in the White House. Ever. You understand the threat that radical Islamic terrorism posed and poses to Israel and the world, and you acted. That was bold leadership and a far-reaching vision and we are grateful to you. You hssisted and reassured the people of Israel and former Prime Minister Sharon with your visionary road map that called for the end of terrorism and then a more milestones and a two state solution. That is the cornerstone of building trust in keeping in agreements that build peace over the long term.

President Bush - We trust you and trusted you. We also trusted our Palestinian neighbors when we entered into the Oslo agreements and the unilateral withdrawal from Gaza. We are in receipt of your letter that puts the end of Palestinian terrorism and incitement in schools as a sine qua non for the peace process to move forward. We share your view and your road map.

Our country has still not healed from the forced removal of the dwellers in Gaza from their homes. My citizens and brothers, formerly of Gaza, continue their personal and family suffering. We have failed as a world community and a government to care for them. Many are unemployed and are still in temporary housing. They are suffering through a humanitarian crisis.

In addition, we have sustained rocket attacks from Gaza almost every day since the withdrawal. That has caused a humanitarian crisis in Sderot which is not far from the Gaza border. This was not what we bargained for when we withdrew our people from Gaza. Hamas, the long arm of Iran, has surprised us all there, including Abu Mazen. This is a volatile situation and certainly not an end to terrorism as called for in the Road Map.

Democracy is about choices. When a people chooses a radical Islamic leadership they might get war and poverty. If they choose a moderate, democratically elected leadership, one may get peace and prosperity. You can get capitalism and investment, education and advancement. However, when you have a split leadership, we can't read the map.

Mr. Abbas - Let us both deal with our humanitarian crises. We need to resettle our people and find them jobs. You need to find jobs for your people so their motivation to fire rockets is reduced. we need to focus dmoestically and you need to focus domestically. We want Palestinians to have jobs and prosperity. And, we want to help with that. Our economy is booming because we focused on economy and education and not terrorism. I know you know that. You can do the same. You can be the Ben Gurion or George Washington of the Palestinian people. It is all about tough leadership decisions. Ending the violence and investing in education will get you there. Together with the Americans and the Europeans, we will be happy to set up an investment fund that funds real businesses and puts your capable work force to work in a productive way.

Focusing domestically is a way for both of us to build our bases of support for peace. Focusing on building bridges will heal wounds and build trust at all levels. Growing economies is a way to build stability. And, honoring agreements and Road Maps develops the credibility needed to bring our coalitions and countries along the long road to peace.

Thank you.

Well, unfortunately, Prime Minister Ohlmert, did not contact me to write his speech for Annapolis, but this is what I would have written for him, had he asked. Good luck!

Dialogues

I had a great time today teaching the New Media class at the Interdisciplinary Center (like a private university in Israel). The students were really sharp and asked good questions. I came away very encouraged by the skepticism that students displayed toward traditional media. young people today are checking and cross-checking facts and opinions and asking what is the agenda of the writer, editor and broadcasters. One student, Shai, caught me real time on a wrong statistic I quoted (although he did use Alexa to prove me wrong, which is less-than reliable).

The salient point in my mind that emerged today is that younger people today are more interested in other people rather than packaged and produced entertainment. They want to do things with friends, hear from them, share with them and find ever-more ways to interact with them. This may sound obvious with facebook and Myspace growing at unbelievable rates but it begs the question of what is the media and other impactful applications that follow this social interaction. I also look forward to see what the cultural implications are of all of this online interaction. I learned alot today from giving this class and hope to do it again.

Whither Newspapers

I have written in the past (Hebrew and English) about the impending end of the newspaper as we know it. It was with great interest that I read this post on Techcrunch entitled Spiral Death Watch (love the title) about the decline in Newspaper ads.

"Newspaper ad sales continue their long, sad decline, down 7.4 percent in the third quarter. The shift to online is not going to save the industry. (And neither is the Kindle).

While online ads keep growing at a healthy clip, up 21 percent to $773 million industrywide, it is not enough to make up for the decline in print ads. Print ads in the third quarter were $10.1 billion. That is $1 billion less than they were in the same quarter last year. Meanwhile, online newspaper ad sales rose only by $135 million. After six straight quarters of decline, print ad sales are at 1997 levels—lower if you adjust for inflation."

This says that not only will revenues go down but that the entire business model is broken in the newspaper industry. What makes me so happy about this is that in Israel, so much of our society is controlled by the media and particularly the print media. They are kingmakers and protectors, arbiters of the daily national agenda. Yesterday, I met with a wonderful organization that helps the disabled in Israel. They told me that they can't get any recognition in the public eye. It is not interesting to the media. Today I happen to be lecturing on the future of media and newspapers at the Interdisciplinary Center in Herzliya so this is very topical.

Thankfully we have started an alternative in Israel with a much more scalable business model that better reflects the news the public wants to read about and without the corrupting political interests of the amjor newspapers. Scoop.co.il (where I am a co-founder) is 2 months away from its 2nd anniversary and close to reaching 2000 citizen journalists and we are making a difference. We can all make a difference in changing this company by availing ourselves of the media outlets available. Blogging and Citizen Journalism are gaining power as the newspapers whither. So come sign up at Scoop (if you are a Hebrew writer) or start a blog and start to make a difference. You may also save some trees in the process.

The starbucks Boom, the Starbucks Bust

I sat in Starbucks in Manhattan yesterday morning merrily pecking away at my keyboard and constantly struck by the long line that seem to meander outside into New York’s fall rain. I watched as new Yorkers of all stripes queued up to fork over $3.40 - $6 for various shades of brown caffeine with foreign sounding names. Sitting there and watching the endless ka-ching of 90% margins for colored water and and steamed milk made me think that this has got to be the greatest stock to buy on the planet.

Then I turned on my new Nike watch’s stopwatch to time how long each of these wet new Yorkers spent waiting on line for coffee. Average wait time = 10 Minutes!!! 10 minutes!! That is from the time they enter the door, get to order their grande latte’s and then have their name and favorite coffee's name screamed out by a barista. Some waited as long as 12 minutes. Given that I see many new Yorkers strolling around midday with starbucks coffee cups, I realized that people probably drink 3-4 cups of Starbucks a day and spend 30-40 minutes a day on their coffee fix. As I sat on the Starbucks/T-mobile WIFI network admiring the productivity increases technology affords us, I could not get over the wasted productivity on that line. Great for Starbucks but no wonder the US economy is on the verge of a recession. Nobody is working. Everyone is wasting the productivity gains waiting on line for coffee!

Web 2.0 Indigestion

OK. I have reached indigestion on web 2.0. My inbox is continuously filled daily with web 2.0 features. I can recite the business plans by heart before I open them. User Generated content, widgets, social graphs, ads, search engine friendly (that is my favorite) etc. etc. Enough! These are not companies. They are features.

Chris Shipley says the good news is that this will not be a buuble like the last one because the capital invested is not as great. She is probably right but we are all going to have a feature hangover nonetheless. Saul Hansell says that ad networks are the dot-bomb circa 2007. Maybe in quantity but there is one difference:The ad networks are almost all generating revenue and profits even at a small scale. This is all true but misses the core point which is we are not creating anything of meaningful scale. It is the Google satellite solar system being created or other meaningless features. (For Hebrew readers, you can read this Rafael Fogel "feature" column in TheMarker today remarking on Yedda's sale to AOL)

There are still going to be great consumer internet companies built and great ones built out of Israel but these need to be companies and not add-on (or should I say ad-on) features or me too, three and four companies. I mean how many answer engines or ad networks does the world need?

So when you want to come pitch or send me a plan, send me some robotics; I have not seen a robotics deal yet and that feels like an uncrowded space. Even robotics 1.0 would be fine. Find some market space that nobody else has thought of (that would eliminate Cleantech). Or, at least, send me something that is Web 3.0.

Winter Travel Advisory

My traveling travails provide endless fodder for the blog. Since it is now winter, I was wearing a mock turtleneck as a shirt when flying today. As I came through security in LAX today, the TSA worker asked me to take off my sweater. I explained that it was my shirt and I did not have a shirt underneath. She told me that it was too baggy and I needed to take it off. I refused because I feared for the safety of the people around me who would see me topless. She said, "well we need to check you"and called out those dreaded words "Male assist." When the male assist asked her what had happened she told him that I refused to take of my sweater. I explained that it was all I was wearing to which he retorted, "Sir, when a woman asks you take off your top, just say yes!"

You can't make these things up.

Google AdTech

I walked the floor of the very overcrowded AdTech conference this week in New York and walked away with one conclusion: BUY Google’s stock even at $750. Google had a tiny booth for what ought to be a core conference for them. That may seem puzzling at first but then I realized that every booth at the conference was a Google booth as every ad network (and there were zillions there) touted how they worked with Google. SEO vendors and other ad “targeting”, “contextual”, “behavioral: ecosystem vendors were all sporting their Google smarts. This entire “adtech industry” orbits on the Google planet.

The second astounding fact about the conference is how much money is being made in online ads for lead generation. I took pains to ask as many companies as possible about their size and revenues and they are all generating millions of dollars and are profitable. There were virtually no venture backable companies there but there was an enormous cottage industry of folks across America and the world making a very good living off of legitimate and somewhat less legitimate advertising online (see Om's piece today). Truly remarkable.

China and the Shekel and Israeli Companies

As the Shekel/Dollar exchange rate hit 3.9 this week, I took note of the following item in Seeking Alpha’s Wall Street Breakfast Email (full disclosure: Seeking Alpha is a Benchmark company):

"China to Move From Dollar to 'Stronger' Currencies (more here)
The dollar slumped to record lows and stock index futures fell sharply early Wednesday after Chinese officials said they would further diversify the nation's $1.43 trillion in foreign reserves in view of a declining U.S. dollar. "We will favor stronger currencies over weaker ones, and will readjust accordingly," said Cheng Siwei, vice chairman of China's National People's Congress, told a conference in Beijing. Siwei's comments sent the euro to a new record high of $1.4703, gold futures up $20 to as high as $848, and oil futures as high as $98.6. At the same conference, Xu Jian, a central bank vice director, said the dollar is losing its exclusive status. "The world's currency structure has changed; the dollar is losing its status as the world currency," Xu said. At least one analyst downplayed Cheng's remarks. "Cheng has a history of speaking out on a range of financial market and economic developments, and his comments are not always accurate," Glenn Maguire ! of Societe Generale told Bloomberg. In January, Cheng referred to the Chinese stock rally as a 'bubble,' sending markets into a severe tailspin. At the time the Shanghai and Shenzhen 300 Index was just over 2,500 points; it now registers over 5,300.
Commentary: As Long As China's Excess Money Supply Remains, Keep Buying • The China Bubble Can't Last

This has major implications for Israeli high tech:
1. Israel has historically been a dollar denominated economy. VC investments into companies are made in dollars. However, many of the underlying companies’ expenses are in shekels. So labor costs, which are the major component of technology companies’ expenses, will be rising in dollar terms. Local communications expenses will be rising, perks such as company cars will be eating more into your company’s burn rate. Dear entrepreneur, controller or CFO - which conversion rate are you using for your 2008 budgeting? 4:1? 3.75? can it get to 3.5?

2. Whereas public companies such as Google and other American companies are benefiting in their quarterly earnings from the weak dollar, Israeli public companies have an extra hurdle to climb in order to beat or meet earnings expectations. Companies such as Nice Systems, Teva and Amdocs could have negative exposure to currency risk.

3. Combined with the price of oil, now at around $100, the price of airfare is continuing to climb. This may sound trivial but in a country which has no domestic market, Israeli technology executives and employees are on the plane all the time. Ticket costs have skyrocketed on El Al and I am certain that it may cause companies to rethink who and how many employees really need to travel. This puts a premium on maintaining communication with customers and foreign offices

4. Historically, the Israeli tech sector has focused on the US market, with the US economy teetering and the dollar so weak, I expect to see many start ups look east for their core market. This will require building new networks of relationships for many in our industry

I do not know what the remedy is for this but it would serve us all well to prepare to weather the storm which may reach its climax with a US recession.

The Israeli Invasion of facebook

I wrote previously about the pervasiveness of facebook among business executives that I interact with. In fact, I keep thinking more and more about Facebook as the world of real world interaction and communication whereas MySpace is alternative self expression and LinkedIn is a very directed business network for searching for talent or to get meetings.

Further proof that Facebook mimics the real world of social interaction can be found in the following anecdote. When I first signed up for a facebook account some 90 days ago, 90+% of my invitations were from Americans I know. Well, much like the movies some years ago, everything gets to Israel a 3-6 months late and 3 months later, the Israelis have invaded facebook. I use the word invaded because it even mimics Israeli style and culture. Whereas I knew every one of the Americans who asked to connect to me as my friend on Facebook, there are many Israelis inviting me who I never heard of before. Even when I click on their friends I do not know who they are. And, Israelis are joining Facebook in droves. 80+% of my recent invitations to connect were from Israelis. When they come, the whole family moves in.

Israel, in fact is one big family. Everyone feels a sense of connection and responsibility to those around them, whether they know you or not. Many an unfamiliar mother or grandmother has stopped me on the street to scold me for bad parenting. People email you as if they are your brother, when in fact you have never heard from them. In world in which many psychologists are suggesting that the internet is becoming a cold and lonely place, it is nice to see that some of the Sabra warmth is alive and kicking online.