This article was first published in The Jerusalem Post Magazine.
In 2009, at the height of the severe economic downturn, Ruti Zisser opened her first business, an Israeli women’s fashion boutique in Palo Alto, in the heart of California’s Silicon Valley.
“People thought I was crazy to open in 2009,” Zisser recalls. But since then, her business has grown quickly and she has opened additional branches in San Francisco and Santa Monica.
Although it is true that, in general, Silicon Valley has fared better economically than other parts of the US, it appears that the characteristic Israeli willingness to embrace risk has enabled more than a few entrepreneurs there to achieve huge successes in various fields during these challenging times. Zisser and several others shared with The Jerusalem Post some thoughts on how and why they went all-out while others held back.
Zisser, 38, offers only fashions by Israeli designers in her shops; She buys clothes from seven or eight designers every season and she also has her own line, which is produced in Israel. The idea for the business grew out of co-workers complimenting her on the Israeli-made clothes she wore to work at the Amdocs headquarters in St. Louis, where she worked moving to the US from Israel 10 years ago. “I was flying to Tel Aviv for work and buying tons of clothes there, because I didn’t find what to wear in St. Louis,” she says.
When she and her husband moved to the San Francisco Bay Area eight years ago, she decided to follow her lifelong passion for fashion and design and began hosting trunk shows from her garage studio. Word of mouth helped her business to quickly gain traction. Soon she had 4,000 people on her mailing list, and it was time to open a real boutique.
Zisser’s approach all along has been to think big. For all three of her boutiques, she has insisted on expensive, prime real-estate locations. “When I do something, it has to be amazing,” she states.
However, her success has stemmed primarily from her identifying the sweet spot in which to operate in a difficult economy.
“Because the economy was like that, I knew we’d do well in comparison to other designer wear,” she says about the price point at which she sells her merchandise. Individual pieces cost between $100 and $350, and ensembles go for somewhere in the $500 range. “The styles are classic and can be worn year-round in California, and they’re good for day and night,” Zisser says. “It’s a really good deal for a woman who wants to wear designer clothes.”
SIMILARLY, YARON BINUR, co-founder and president of Red Beacon, an online service that matches home service professionals with jobs that homeowners need done, saw an opportunity where and when others didn’t. Binur, 33, left a high-level job at Google in 2008 to start Red Beacon. “The whole world was freaking out, but we saw an opportunity,” he said of himself and his partners.
It was a time when contractors were looking for work and homeowners were investing in renovations rather than trying to sell. People were also more price-sensitive than in the past. “So, the disruption of the market worked,” Binur reflects. The economic situation also helped with recruiting employees for the company. “Lots of good engineers were out of work and available at the time,” he says.
Binur and his team were able to raise $7.4 million in their first round of fund-raising in August 2010.
The San Mateo, California-based Red Beacon, which currently operates in 11 cities and was acquired at an undisclosed price by Home Depot this past January, is now scaling up fast. Binur is glad that they started the company in 2008, when others were reluctant to take the risk. “We got a head start,” he says.
Binur says his family back in Herzliya never questioned his decision to leave Google for his own start-up in the middle of the recession. “The Israeli reaction to adversity is different,” he says. “I didn’t freak out. I stayed calm and didn’t over-analyze the risk.” He thinks that entrepreneurship is part of the Israeli DNA. “Life is short; you have to do what you’re passionate about,” he says.
“We’re entrepreneurs. We just go with our guts,” echoes Shuly Galili, co-founder of UpWest Labs, a Palo Alto-based accelerator for Israeli tech entrepreneurs. Galili, who led the California Israel Chamber of Commerce, came up with the idea for the accelerator a year and a half ago with co-founder Gil Ben- Artzy, who was working for Yahoo. “We saw the trend of Israeli entrepreneurs doing amazing things, but they could be doing better with more time in their market – which is Silicon Valley and the United States,” Galili explains.
To address this need, Galili, Ben-Artzy and their partner, Liron Petrushka, built “an easy and comprehensive bridge to the market in Silicon Valley” for a select number of Israeli companies. Since January, UpWest has been bringing cohorts of six company teams (working primarily in the realms of mobile, e-commerce, security, video, cloud or database software) to Palo Alto for a three-month intensive course on how to navigate Silicon Valley.
The accelerator provides the companies with a suite of benefits for the three months during which they are learning to build their businesses both in terms of team and product.
“Being an Israeli entrepreneur and being a Silicon Valley entrepreneur are different,” Ben-Artzy points out. UpWest gives them office space, housing and deferred legal and cloud services. The accelerator invests up to $20,000 in each company in exchange for a small piece of equity and, most importantly, it helps them build relationships with potential partners, investors and customers.
“Even in an economic downturn, you can get a start-up off the ground now,” Galili says.
“I’m a big believer in entrepreneurship as a driver of employment in the economy,” she adds as she reflects on the uptick in employment in Silicon Valley. For her, it’s about eliminating barriers. She sees what she and her partners are doing as a win-win situation in terms of contributing to employment. “Successful Israeli entrepreneurs will hire engineers in Israel to do R&D and people to do the marketing and sales in California. Jobs are created in both places.”
Real-estate broker Hanna Shacham not only kept her job during the recession, but she made it through almost entirely unscathed.
One of the top agents in the US, according to The Wall Street Journal, Shacham says her listings stayed on the market longer during the earlier part of the economic downturn, but that other than for the first half of 2009, “everything has remained very busy.”
Shacham deals mainly with high-end properties in Palo Alto, Menlo Park, Atherton, Los Altos and Portola Valley, where the market took a hit of no more than 10 percent. She currently has five listings on the market for between $3.295m. and $11.495m. She attributes a “mini-bubble” in the market earlier this year to the media hype surrounding Facebook’s initial public offering, and sees the market staying hot despite a bit of a recent cool-off.
In terms of the ability to succeed in Shacham’s field as well, there is something to be said for being an Israeli in Silicon Valley.
“My success is really due to my sharp negotiating skills, my honesty, my ability to connect with people, and my persistence and straightforwardness – all of which I learned from my family as I was growing up in Israel.”
Zisser, who sees herself as an ambassador of Israeli fashion to the women of Silicon Valley, is clearly a savvy businesswoman to have found a way to start a new venture and see it thrive at a time when so many already established ones could not survive.
But like Galili, who speaks of going with her gut, Binur, who focuses on opportunity instead of risk, and Shacham, who relies on her straightforwardness, Zisser draws on something beyond her business skills. It’s the Israeli willingness to embrace challenges and realize dreams.
“We do whatever we want,” Zisser states. “It’s the Israeli culture.”