Israel Field Study MGT-630 Journal
- Julie Zhu (Jan 2012)
I. 1/7/2012 Jerusalem Culture Tour
- Breakfast: We had an early breakfast at hotel Dizengoff Suite Hotel in Tel Aviv between 7:15 am – 8:00 am. The breakfast has a few choices: Israeli Breakfast, Health breakfast and continental breakfast. When I got down, there are already six people down there. I took the Israeli breakfast: 2 scramble eggs, salads, 4 side dishes and some homemade bread plus two drinks either fresh made juice or tea/coffee at your choice. It is big, fresh, and taste great!
- On the bus: we were on the bus at 8:00 am. The driver Ali drove on a high way which is very well developed. There are lot interesting points along the way. We saw beautiful olive trees, fields, cities, and villages. The most important and interesting thing is that, on our left hand side, there are walls with electric power, and also high towers with soldier guards. Ali told us that is the border between Palestine and Israel. We saw city of Palestine, villages on the bald rocky mountain. The houses at villages are built by stones (a least the cement color is sand color, it looks like stone), surrounding the houses, there are olive trees. There is not much planting land at all as everywhere is covered by stone. It makes me wonder how the farmers make their livings. The security on the road is very strict, we passed the security check point and reached our first stop at Dan Jerusalem hotel, a very high level hotel, where we used their rest room and continued to the Old city tour in Jerusalem.
- Overlooking the Old City/David City from mountain Scotus: from the mountain we overlooked the City of David, Jerusalem at ancient times, is located on a narrow ridge south of the present-day Old City. The archeologists explored that the City of David began in the middle of the 19th and continues to today. The earliest permanent settlement uncovered is represented by rectangle builds dated to the Early Bronze Age (3rd millennium BCE). During the Middle Bronze Age, about 18th century BCE, a massive wall was built. During the 13th-12th centuries BCE structural operations changed the topography of the upper city. At 10th century BCE massive retaining structure for a monumental building is assumed to be part of the fortress of Zion, residence of King David (2 Samuel 5:7-9). In the 8th century BCE Jerusalem expanded; during the reign of King Hezekiah the hill to the west of the city of David was encompassed within its walls. During the 8th and 7th centuries BCE Jerusalem enjoyed a period of prosperity.
- Overview of Dead Sea, Jericho and Palestine: on the other side of the Scotus mountain (I call it Olive mountain), we over viewed the Judean Desert and Dead Sea, of course the land of Jericho. The Dead Sea is lowest points of the world with 400 meters below the sea level. The sea’s water contains the most density of salt ((340 grams per liter of water), which prevents any life form in the lake. In the mean time it provides tremendous healing powers to people. Between Judean Desert and Dead Sea, there are always clouds since the sea level difference between them. In front of us, we saw the land of the Jericho where Joshua sent his massagers from Judean River and they brought back great fruit of the promise land, the holy land.
- Olive Mountain – the prayer mountain, we viewed the thousand years old olive trees where Jesus prayed before He was sent to cross.
- Visit museum: Shrine of the book. This is where the bible history museum. The building itself is great Harsh chocolate shape:
- Shopping before visit the places where Jesus crucified and resurrected from His Tomb. This way we could get the gift especially the cross to be blessed when we go to the place where Jesus was crucified.
- Visit and touch the stone of both places where Jesus crucified and resurrected from His Tomb.
- Visited and prayed in the West Wall (West Bank) where Jewish prays to the Holy temple.
II. 1/8/2012 Tel Aviv Stock Exchange, Better Place, and Reception at Liliyot Restaurant
- Tel Aviv Stock Exchange (TASE) is Israel’s only stock exchange. It is one stop shop of stock exchange: trading shares, bounds, treasure bills, index products, derivatives clearing settlement, depository and custody service of securities and mutual found. TASE is fully-automatic –central order book keeping system. TASEE lists about 622 companies, about 60 of which are also listed on stock exchange in other countries. 54 companies dual-listed on QQQ, NYSE, AMEX, 6 foreign members & 1 remote member. TASE was founded in 1935, in 1983 the exchange moved to its current location in Tel Aviv. In 1993 TASE had the third largest IPOs of all the world stock exchange.
Regulation: 1). advanced regulatory framework – U.S. base legislation
2). Israel Security Authority is representing for protesting investors
3). Emphasis on corporate government practices
4). Designated offshore securities market by U.S SEC
5). No Foreign currency restrictions
6). Israel SOX
TASE also went through Tax Reform; there was no tax on capital gains before 2003. Starting 2003 till 2005, the tax rate started with 15%, and then it changed to 20% in 2006. A week ago, it increased to 25%. Tax on interest payment was 10-15% 2003, and 2005 for 15%-20%. From 2006, it is 35%.
TASE Globalization: 1). foreign investment: foreign member and 1 remote member are linking foreign investors to TASE.
2). Foreign Cooperation and cross listings: size of the market is small and border relations are not that good.
3). Net flow depends on the international market, when the global market went down. The market in TASE just fluctuates as international market just as other western county like U.S. However, the local economy did not have any problem at all.
4). The TASE work hours are from Sunday to Thursday just like other companies in Israel as the Jews Sabbath. However, the trading volume on Sunday is 20% less than the regular trading day.
TASE poses great contingency facilitates: alternative systems outside Tel Aviv are ready to go live a few hours if current system goes down. The connection between exchange members and contingency facilitate is alive all the time.
- Better Place: Our second site of the day is Better Place. Better Place Israel delivers services to enable confident adoption and use of EVs. It builds and operates the infrastructure and systems to optimize energy access and use. It works with ecosystem players to enable a compelling and integrated solution. Scott Mortman & Yariv Nornberg guided us first into the multimedia room and served with the great introduction of the Better Place initiatives, products and services. Then they lead us to the show room to see the structure of the electric cars. We were so amazed how the electric cars served through electric battery, switch station, and recharge volt. Currently the company has contract with the Israel government to install the electric charge station every 40 miles along the high way, each car owner also will get an initial station at home, and they have the choice to re-charge the better or swap it with new one at the switch station which takes about 5 minutes. Each battery can last 6 years; each battery power can drive 200 kilometers. It is not only going to supplement the lack of gas nature resource, it is also a clean energy with less emission, and can utilize the un-used energy to cars. The company will have its first production on the market in March 2012 in Israel. It does a great job in globalization: first global venture is Denmark Europe which provides a lot of electricity. The second global venture partner is Australia; and the third one is the China Southern Power Grid Guangzhou China. The company initiation capital is $2.5 billion. Serve customer by contract service. Cars cost about $3000, battery service on monthly basis according the miles used, typically around $300. It works just like other service products like cell phone services. It is affordable for most the family. After we watch video and show room, we also did driving test, the car is very quiet and smooth, and it is a great experience.
- Liliyot Restaurant: We had our welcome reception here held by our professor Bachenheimer. While we eat, the owner of the restaurant, Allan Barkat, introduced the restaurant. Lilliyot is a social entrepreneur, it had been handed to the current owner three years ago, and it started to earn profit within ten months. The profit of the restaurant is 50%. The business goal is providing a training opportunity to the ones who dropped out from school, army, or losing job. However, it has limitation for the candidates of who have to have a solid a living address. The restaurant is spacious, decorated greatly, and cooking great kosher food.
III. 1/9/2012, Visiting Itamar Medical (Caesarea), Baba’I Chrines (Haifa), and ISCAR, Tefan
- The first stop is Itamar Medical, Caesarea. Itamar Medical is a medical device company which develops markets and sells diagnostic medical devices based on the PAT™ (Peripheral Arterial Tone) signal. The PAT signal is a non-invasive “window” to the cardiovascular system and the autonomic nervous system. We all got a chance to see the device and presentation about the company was conveyed. The key successful factor for this company is Excellence (people, R&D and marketing). Get to know the person first; if they like you, you got the business.
- On the way we went to our first stop to Itamar, I discovered from my blackberry email on the bus that my father passed away during his night sleep suddenly in China. I told my professors Kessler and Bachenheimer. They were so supportive, providing me address of Chinese Embassy, and got me a ride from Ayla to go back to TEL Aviv. So I went back to Chinese Embassy to get a Chinese via. However, by the time I was there the office was close. But I begged them to help with my situation; then the guy worked in Chinese Embassy provided me a phone number to call at Chinese council who may be able to help. The person I called named Wu Zhi Hong. He is a director of Chinese Embassy. After a long wait, he understood my situation and let Miss Yie to speak with me through the already closed door (the steel grid door). She provided me the application form and let me finish within 30 minutes in the nearest photo shop. So I can get a passport photo and copy of passport as well while I get my application done. Everything was smooth, and she told me I can pick up the passport the next day. I appreciate them so much for their understanding and sympathy. After I came back to hotel, I searched the flight probability. It was so overwhelming that the one way flight from China to Newark priced at over $6000. I asked professor Bachenhiemer for help, he called travel agency in U.S. and asked them to help me. Everyone did their best to help. However since the time and flight constrains, it was impossible for me to get a ticket. I worked around clock with the situation as the time difference is seven hours between Israel and U.S., six hours between Israel and China. It seems God built the wall to prevent me to go. I discussed with Professor Bachenhiemer and he supported my conclusion not to go.
IV. 1/10/2012 Jerusalem: Chiasma, and Omrix Biopharmaceuticals
- We first visited the Chiasma Medical. A panel on the life science market including CEO of Exalenz, head of research and commercial planning of Chiasma, managing partner of Expedio Ventures, and CEO of Medasense. They each gave us a great presentation regarding how the startups built up and works.
Chiasma utilizes its proprietary TPE system to transform inject drugs into oral drugs with the same or with new indications. It has a pipeline of drug candidates in development that potentially improve patient convenience, provide better clinical outcomes or improve the cost of care. Its focus is on breakthrough products for the orphan drug community. The first presenter, Dalia Megiddo MD, Managing Partner of Expedio Ventures, presented with A Small Country – A Big Player. Four things contribute to it. First, managing intellectual property – patent; second, the army experience makes everyone able to operate in unknown environment. Third, the government policy supports defense center, immigration with Russian academic background (40% of immigration). Fourth, the Israeli entrepreneur culture helps.
The second person, Galit Zuckerman, former CEO of Medsense, which produces pain monitor, presented the strategy of startup business. The strategies the company uses are: First, start with an idea in small steps and continue with bigger view and together become the whole picture. Second, refine business plan. Third, build up your team. Forth, reduce uncertainty. Remove the highest uncertainty possible with money. Forth, get it in written. In regarding fund raising, she stated that, speak loud, see others reaction and get government support, or get venture capital, or bootstrapping. Then use this money to remove the highest uncertainty. She also noted: always plan the next two steps, get one step back (always plan for risk). When we asked her how she managed to raise the fund, she mentioned that raising money is about networking based on military experience (acquaintance); made people understand you and wanted to be friends with you. She also mentioned that prove of concept to show the capability of product is very important to investors. Two ways they fund their money through government or equity; for entrepreneur, fund raising strategy is needed, you are not funding next 5 year fund but piece by piece.
The Third presenter is Steven Eithan, the CEO of Exalenz. Exalenz provides hematologists and gastroenterologists with advanced systems for diagnosing and managing a wide range of conditions in the fields of liver and GI health. Exalenz` flagship product, the BreathID System, is an advanced breath-testing platform that enables to detect a wide range of disorders at the point of care including Helicobacter pylori, liver impairment, and gastric emptying. The device function can monitor heart, lung, and liver function. U.S. potential liver application is acute liver failure, chronic liver disease, and fatty liver disease. Additional applications are in the pipeline. Steven focused on the business strategy and marketing of the firm. Its strategy is through strategic partnerships for U.S. market: interact with physical, partnership with big pharmaceutical companies like Pfizer and Johnson and Johnson. Commit to R&D and seek partners in commercialization.
The forth presenter, Dana Gelbaum, is the president of Chiasma. Chiasma established as an oral delivery platform. Decision on strategy: self-develop unique Oral products (drug), drugs are included in obesities, diabetes, clinical trial, regulatory and commercial screen. Business strategy: 1). First drug: Octreolin, 10,000 patients in U.S. US is the primary market. 2) Patent portfolio management; 3). 3 months pre-clinical studies in monkeys. 3). Commercial plan, partner with big pharmaceutical company like Pfizer. 4). Marketing lead by higher rank person under CEO. 5). Business focus on strategy and position.
The fifth presenter is a cardiologist Shmulik Tuvia, Head of research from Chiasma. He knew at least seven languages, they turn sophistic medicine to patient home, invented many patents, from there, and they develop their medicine. He mentioned that their commercial cost is three times than development. The time of funding is far ahead of market, and teaches the world with their innovation or new invention.
Then we toured their medicine lab, lovely rats and scientists greeted us.
- OMRIX, ETHICON Biosurgery – a Johnson and Johnson Company. As of December 31, 2008, Omrix operates as a stand-alone entity reporting through ETHICON, Inc., a Johnson & Johnson company and leading provider of suture, mesh, hemostats and other products for a wide range of surgical procedures. Since 2003, OMRIX has partnered its biosurgerical product line for hemostasis with Johnson & Johnson’s Ethicon division, a leader in the market place. This allows each company to do what it does best, utilizing OMRIX’s know-how and manufacturing capabilities, and leveraging Johnson & Johnson’s sales and marketing leadership. (http://www.omrix.com). Before sold to J&J, Ethicon it was a medical devices & diagnostics company, Mr. Price was the CEO, who presented to us in our classroom. It manages seven extraordinary franchises: ETHICON, ETHICON ENDO-surgery, Cordis, Depuy, ortho clinical diagnostics, diabetes care, and J&J vision care lab. The growth strategies of the company are 1). Grow innovative products; 2). Accelerate and sustain a robust pipeline; 3). Strengthen global presence; 4). Drive customer value, operates effectiveness efficiency and compliance; and 5). Advance talent and leadership.
V. 1/11/2012 Visiting Ahkelon Desalination Plant, Ormat Industry, and Objet Rehovot
1. Ahkelon Desalination Plant: The new Ashkelon seawater reverse osmosis (SWRO) plant – the largest desalination plant of its kind in the world – commenced initial production in August 2005, less than 30 months after construction began. Initially running at around 30% to 40% capacity, it will ultimately provide an annual 100 million mÃ‚Â³ of water, roughly 5% to 6% of Israel’s total water needs or around 15% of the country’s domestic consumer demand (http://www.israelforum.com/board/showthread.php?10110-Ashkelon-Desalination-Plant-Israel).
Oshik first greeted us and gave us a presentation about the company. The company is a private own company, its initial fund is $120 billion. Since Israel is in the most water-scarce region, Israel has chronic problems over water resources. In 2000, Israel launched a Desalination Master Plan. This strategy called for construction of a series of plants along the Mediterranean coast to enable of 4000 million of desalinated water to be produced by 2005. The contract for Ashkelon facility was awarded in September 2001, the concession was granted on a Build-Operate-Transfer (BOT) basis and at the end of 25 year period, the plant transfers to government of Israel. The Ashkelon facility operating at full capacity will itself contribute 25% of the initial target set out in the Israeli government’s master plan. For each cubic meters of water, the government pays two Shekels, and consumer pays 0.8 Shekel. The Ahkelon Desalination Plant also owns a power plan. So the facility can work 24/7, no need to depend on other resources and it is energy saving as is uses the complimentary product of desalination. The whole operating plant is huge and only needs 5 people for each shift as all the process are automatically controlled. The amazing part is the filter pipe. It contains 45,000 filters for each array, each filter worth $500. In the whole plant, there are at least 4 equal sized filter arrays.
2 Ormat Industry Ltd is a geothermal power, recovered energy generation and remote power company. We were greeted by Lucien Bronicki ,the CEO and the founder of the company. He gave us a presentation on “How to build a sustainable energy company?” Their focus is on innovative Green Power technology: Geothermal power plants, solar thermal, Industry waste power. Geothermal power plant technologies are resource saving by using less land for facility and zero emission. While compared with coal, coal uses 10 times more land and a huge number of emissions. The company is vertically integrated firm. It has a niche market. Ormat is today’s only vertically-integrated provider of geothermal and recovered energy-based equipment, services and power that designs, develops, builds and manufactures most of the equipment used in its plants. The in-depth knowledge gained from these operations gives the company a competitive edge by enabling efficient maintenance and timely response to operational issues. Its business strategy is finding the great people first, then they will draw great business plan.
3 OBJET, Rehovo, we were greeted by VP of product marketing, Igal Zeitun. OBJET, founded in 1998, is a leading provider of 3D printing Solutions for rapid prototyping. Its global market first extended to Europe Office 2001, sold 3D printers, then distributed to U.S., in 2006 U.S. offices were opened. Till 2010, U.S sales are successfully moved a 100% indirect structure. In 2011, Objet 260 Connex (a new product) was developed; it was the first office-compatible multi-material 3D printing. Customers are thousands worldwide, and large shares among fortune 500 companies. It has offices in U.S, Europe, Japan, China, Hong Kong and India. Its distribution is through global networking of distribution partners. It has over 110 patents and 12 award-winning technologies. It is the industry’ biggest spender per capita in R&D. We visit the printers’ room, also the manufacture area. Their products are really fantastic.
4 MIT Forum. After visiting Objet, we went to the MIT Forum hosted by Ayla Metelon, our Israeli company visiting organizers. There panel members are Zvi Yemini (CEO of ZAG Industries), Ofer Shoshan (CEO of One Hour Translation), and Professor Bachenheimer. Every Israeli entrepreneur from the panel gave a great speech. Pace Professor Bachenheimer gave a great speech on What Business School Did not Teach. Then there was a panel discussion.
V. 1/12/2012 Tel Aviv – Carmel Vnture, Equivo, and Tel Aviv University
1. Carmel Venter is among Israel’s top-tier venture capital firms. It invests primarily in early stage companies in the fields of Software, Communications, Semiconductors, Internet, Media, and Consumer Electronics. One of the example of recent investment is internet banners. Buying banners from other source costs 20 times more. The clicking rate while download the software saved to cookie, so it calculates the number of clicks. It then can turns the counts to revenue. The business strategy is to approach big company as partner. It starts with an idea, contact with a while expressed words, express clearly in conferences.
2. Equivio: Equivio is a software company on text analytics for e-discovery. It dedicated to the problem of managing data redundancy. It is an Israel company, sales and support centers are in US. It was established in 2004 and earns profits since the second year. The business strategy is bootstrap approach, quick to market and building a going concern. It uses social network like LinkedIn to interview and focus typical discussion. Starting the company small is beautiful but the company has to be a market leader. The art of pricing is to balance needs/risks of customer and startup, long-term and short-term goal.
3. Tel Aviv University
Our second stop in Tel Aviv is Tel Aviv University, where PACE professors and students had a mingled class with Israeli Professors and students. It was hosted by Ayla Matalon, the executive director of MIT Forum. Guest Lecturers are Dr. Ed. Mlavsky, Chairman Emeritus of Gemini Israel Funds, and Professor Bachenheimer from Pace University. Dr Mlavsky’s lectured on Business Entrepreneurship for Engineers. In his speech, he started the Israeli policy support for Israel – US Binational Industrial R&D foundation (BIRD) and government incentive program Yozma which stimulated the creation of venture capital industry. In 1993, Israeli startups entered their VC age. In 2010, 231 new high-tech companies were establishes, 39 companies raised $1.26 billion, 60 companies traded on NASDAQ. The major force of emerging Israeli startup companies are rapid technological innovation, government policy deregulation, and globalization. Prof. Bachenheimer gave a lecture on Entrepreneurship. After class, students from Israel and U.S. discussed each other. It was a great experience to have a class like this.
VI. 1/13/2012 Farewell reception with Pace Alumni
The farewell party was held in Bariba restaurant, meeting with PACE alumni in Israel including Ilan Aisic (a General), Eran Frenkel, Eric Klein, Yoram Levinson, and Avi Mizrahi. It was great moment that all of us chatted, enjoyed the food and took great photos.
- The General
VII. The Free afternoon on 1/13/2012 (free time)
This is a free afternoon for everyone, some of us decided to walk to the beach towards Jaffa. On the way, we experienced hail on the beach. However, we continued to walk, after two hours we were at the restaurant we looked for. We had a nice dinner and take a taxi home.
VIII. 1/14 Saturday, the Free Day
A few of us decided to walk to the beach in Tel Aviv, the other side of the beach of Jaffa. It was cloudy but the view is very nice. We walked and had a beer or drink and then come to hotel to catch the bus to airport to US.