The Uzia Galil story is the story of Israeli high-tech. And if high-tech is seen as Israel's greatest success on the verge of the new millennium, Galil is himself a success story of the kind that was once deemed the exclusive domain of the land of limitless possibilities.
At age 74, after thirty-eight years of enterprise and initiative, Uzia Galil last week announced his retirement. Well he isn’t actually going home, of course, just stepping down from the helm of Elron, to turn over a new page. "If I intend to do something more with my life, then now is the time". Hardly a platitude, coming from a man well beyond his seventieth birthday, but Galil is no run-of-the-mill character. He has proved his vision and his capability; he has to his credit more than twenty companies now extant, and more on the way. Elron, which he set up in a small apartment in Haifa, at an investment of $160,000, is already past the $0.5 billion mark.
Galil is one of Israeli industry’s last gentlemen. Something in the style, the manner, the phraseology, recall bygone norms. The man who proved adept at keeping pace with an industry characterised by an astounding rate of development, still adheres to progressively vanishing standards of modesty and honour. Even those still licking their wounds after an encounter with Galil hold him in very great respect.
In a candid interview, "Globes" glimpses an unfamiliar face of Galil’s, as he explains how he lives with the glorious but exacting title of "father of Israeli high-tech". Galil: "I look at the facts. It is a fact that when I initiated high-tech activity in Israel, I was the first to do so. There were some government-owned defence industries. There was academic activity. Nobody had any experience in turning knowhow into cash. I was exposed to this in the United States. I came back to Israel and set up Elron. I was undoubtedly the first to perceive a possible business basis for high-tech. I was the first to maintain, then, that if one looked at the State of Israel’s assets and capabilities, that might be its most important asset".
"Globes": Did the dream come true as you foresaw?
Uzia Galil: One good thing about dreams is that, in retrospect, they can be made to fit reality. It would be ridiculous to say that I foresaw precisely how things would turn out. However, if, at the time, I had been shown today’s reality, I would have said that is how I want it to turn out. It is certainly highly satisfying when what you dreamed and looked forward to actually takes place. Today, the lion’s share of Israeli export come from this and related industries. Today, even youngsters want to be the smartest in the Internet, in communications. It has really gone to extremes. It’s a fact of life".
As the father of the industry, are you bothered by the sight of the stepsons, young fellows who spend a few months in some basement, and then come up with an idea and sell it for millions of dollars? The unbearable lightness of the nouveau riches?
"I do not consider it a proper approach. Even if you look at the US, many young people got rich, but their motivating force was not wealth. In Israel, once upon a time, making money was considered ‘not nice’, but people got used to the idea that this was the yardstick for business success. They’ll get used to this, too".
The approach, with all due respect, appears slightly naive. Most people seem to be thinking of how to sell, or float the business even before it is actually founded.
"I say it is not so very naive, and I have seen lots of them. There are always exceptions to the rule, of course, but we are talking about the majority. There has to be a different mode of thinking, an ability to initiate. We are talking about keen people, hungry for success. I have seen lots of them who succeeded and are doing it all over again, not just taking the money and going home. Sometimes, they actually risk everything they have made on some new enterprise. One needs to understand the evolution of the process.
"We are talking about entrepreneurs, doers, to all intents and purposes. The evolution of this generation is not an Israeli invention. It started in the US, and Israel, as in everything else, is a few phases behind. In the distant past, there would be long intervals between developments in scientific and technological fields. That left people plenty of time to digest the latest development, to put it to use. In the course of time, the interval between developments shrank, producing a significant change in education and in people’s mode of thinking.
"It’s a new age. Today’s graduate emerges mainly with more tools enabling him to reach the most up-to-the-minute knowhow. Incidentally, one of the Internet’s greatest contributions is very fast, real time access to knowhow the world over. From a business point of view, also, a new type of economy has naturally emerged, the ‘Internet economy’. This is a situation in which I have an idea, I develop it, and the next step I must take before anything else, is to disseminate it through the wider market. In contrast to earlier times, what you need today is for as many people as possible to be familiar with your idea, and only then do you have an asset in hand. And on that basis, the world is prepared to pay and you can raise a great deal of money. So you have resources for your business, and now you need to organise and manage it so as to really put it on a firm foundation. The result is that business owners get rich, not at the end of the road, but at the beginning".
Former Chief Scientist Shuki Gleitman said recently, in an interview with "Globes", that he feared that Israel's high tech industry was vanishing, and that a prosperous start-up industry was developing here in its stead. Would you agree?
"Absolutely not. The one is not happening at the other’s expense. Start-ups are not preventing the development of the high-tech industry. This is an archaic approach, one that prevailed in industry in the past: first let’s build the technology, establish local manufacture, invest in research and development, and only then look for a world market, and so on. It might be good for the software industry, but for the new high-tech, it is too slow a process. To obtain a market is more important than investing resources in R&D, when you don’t know how you will sell. The fact that we, in Israel, don’t have a Nokia, is because we could not reach the market Nokia made, not because we weren’t smart enough. Nobody was prepared to invest the economic resources to first develop a market. In Israel, investment in technology was always disproportionate to investment in market development".
You sound as if you are angry with Gleitman. Could this be related to the confrontation concerning the sale of Elscint?
"I am not angry, I just think that sometimes you have to recognise the fact that the market determines growth capability. Elscint is a wonderful company, with great people. It reached a value of $300 million, but it was obviously incapable, when competing with giants, to create the added value. Today, Packard has the capability to attain far greater strength. The added value it will now bring to Israel too, is several times higher".
But it is no longer under Israeli control.
"What difference does it make? What does that mean? The people are here, their expertise is here, the added value is here. For years on end I argued with the authorities when we had all those laws about approved enterprises. One of the conditions was that the rate of manufacture in Israel out of total manufacture was high. I don’t understand what importance this has. Employment won’t make any contribution in the long run, either, if there is no added value. What counts is the added value".
Is the Internet one more stage in technological progress, or is it a revolution?
"A gigantic revolution, on the scale of the reading and writing revolution. The Internet is impacting our lives more than all the media invented hitherto".
People say you never go anywhere without your lap-top.
"That’s true. Ever since it was invented, I have kept one close by".
"Do you read books and newspapers, or do you get it all off the computer display?
"I certainly still read newspapers; books too, but not professional literature. The information you can find in professional literature is on the Internet. On the other hand, I am very fond of thrillers, novels, I read three or four simultaneously. I’ll always opt for a book, when I want that kind of literature".
And your grandchildren? Do they read books?
"My grandchildren hardly ever touch books. It’s very regrettable, and may be part of the way we are ‘overshooting’ the whole Internet thing. This is a generation whose development is most interesting. They mature at a young age thanks to the computer, the Internet, their built-in ability to cope with these things. Many years ago, I bought my grandchildren a ‘Game Boy’ in the United States. It had only just been invented. All the way from the US to Israel, I read the instructions and learned how to operate it. I arrived in Israel and said to the kids: Sit down now, and I’ll show you. My grandson took it, and took a few seconds to understand what to do, by himself. I went out of my mind. If there is anywhere where I sense a tremendous generation gap, it is there. The way today’s children can cope and learn, read instructions, go through the paces".
Maybe you make more of an effort than the younger generation, but you are there all the time. So why retire, and why now?
"I don’t really have any answer. When I was approaching age 65, ten years ago, I was asked whether I would retire. Actually, someone would ask me every so often. I did not retire, because I didn’t feel the need to. Biological age is not a factor in my view. Even now, I don’t feel I have to retire. But it’s not a matter of feeling. At a certain moment, you tell yourself that you cannot ignore your biological age, because you are at the head of a public company, and you have a responsibility towards the public. Anyone who heads a public company must be capable of looking forward, all the time, of making changes and implementing them over time. Of course, I feel young mentally, but ultimately, I also had to consider my age".
That is certainly a tough decision, there is a note of sadness there.
"Sadness is not the right word. I have some sort of sensation, but I think I am not yet fully experiencing it. I still don’t have time for it. It’s not the case of a man who switches from being fully occupied to sitting at home, and gets up in the morning and asks himself what he will do with his day. I haven’t really had time to feel anything. Maybe I will, later. I am not leaving Elron to go on excursions, but to have a chance to do something else. If I don’t do it now, when will I?"
Setting up Elron No. 2?
"I don’t know how it will work out. I want to continue fostering the same type of entrepreneuring that connects scientific research with business initiative. I will focus on e-commerce and tele-medicine. There are already people to work with, some very talented guys, in Israel and elsewhere. I have a few people who want to go with me. This will dovetail with the work being done in academic circles, in the Technion. I hope we will do this as an arm of Elron. The interaction with Elron can be very good and mutually fructifying".
About dreams again... is Elron the fulfilment of a dream?
"I have no doubt that the dream was to build up a large industry that would have a strong economic influence on State of Israel. It came true, but the structure and the path naturally took shape over the course of time. At first there was one company, Elron. Later spin-offs derived from the fact that this was a convenient way of raisin capital, and one that enabled us to bring in better people, more focused on certain fields. There were various opportunities that led to developments. Thus, for example, the founding of Elbit in 1966. Or my acquaintance with Avraham Suhami, which resulted in the founding of Elscint. Suhami is a great guy, a genuine example of an entrepreneur. The contact was recently renewed, after having lapsed for years".
You’ve had many partners over the years, but the Recanati family has been with you all the way.
"When I didn’t have a penny to my name, it was the Recanatis and the Rockefellers who consented, at the time, to put up $160,000. After a time, the Recanatis bought out the Rockefellers’ share and became my partners. Over the years, they have been good, pleasant partners, have stood beside me in good times and bad, and we had plenty of both".
Don’t you think Elron may have ended its role. Who needs holding companies at all, these days?
"Today, the only raison d'être for a holding company is if it is capable of generating added value for a company it owns. Added value can be money, management, training, the creation of conditions that enable access to the world market and other things. Today it is difficult for holding companies to provide added value, and that is why not a few of them are superfluous. For money, they are not needed, with all the options there are for raising capital. Altogether, added value today lies in focus and specialisation. The world is moving in that direction, and I have no doubt that a large part of holding companies will vanish.
Elron, too?
"When we were building up Elron, there were no venture capital funds. Elron evolved in appropriate directions when it decided to focus in fields such as Elron Software, Elron Communications. The company is always adapting itself, it is dynamic and growing, and that is what is important".
Have you no fears for its future?
"I think I have chosen the most suitable individual (Ami Erel, O.R.) to carry on, and there are some very good people in the system. At the same time, Elron will obviously be different after a time. Because that is how it should be. From the point of view of the public, I think a new manager, with less of an emotional investment than I have, can bring shareholders more added value".
Are there things that used to be there that you miss? Was there, in your past career, something that you failed to achieve?
"The very fact that I need to make such an effort to answer the question is your answer. Possibly, if I ferret around in my brain, I’ll come up with something. But nothing that is always with me. On the whole, there is nothing I regret and nothing I missed out on. I realised my vision. This is how I dreamed things should look. Reality exceeded all imagination".
Published by Israel's Business Arena August 9, 1999