Compression of high-quality video for quicker downloading.

WebGlide was founded in 1997 by CTO Yair Mann, who worked on a pure algorithm that compresses information at a rate 20-100 times faster than that in the market at the time. He was joined by Tal Kerret, the current CEO. The two entrepreneurs saw narrow-band video compression as their objective. Kerret and Mann studied theTel Aviv University's affiliated School of Engineering Technicians, a well-known incubator for entrepreneurs, but the crucial meeting between them took place during their MA computer studies. They later added two friends to their start-up: Tomer Ben-Kiki (president) and Assaf Monsa (VP for R&D), whom Kerret describes as "amazing guys, simply two geniuses." The successful compression algorithm had to be applied, and Kerret was asked to find an appropriate market for the technology.

Kerret: "At first, I looked for the right market: e-commerce, advertising, or games. The games field suited the technology, but this was still a very small market on the Internet. The e-commerce market, on the other hand, was the fastest-growing market in business history, making it the field where our technology had the greatest added value." At about that time, the company raised its first capital from the Polaris, Giza, and Veritas funds, and from Yossi Vardi.

The company's technology is actually a platform, which facilitates the creation of web sites with beautiful, quality graphics, an imitation of actual walk-in shopping. s. The technology's advantage is that it overcomes the problem of information overload, which causes sites like this to usually require many minutes for downloading. Kerret: "According to the world's leading analysts, the company is currently positioned as the world's leading front-end builders in the e-commerce field. We are interfacing with the content systems of commercial sites in order to create a non-linear experience, in place of the current experience."

Kerret is referring to one of the key problems in surfing the Internet. Surfing can be a frustrating experience, what with the long wait in accessing sites and the poor graphics and aesthetics. Surfing today is mostly for obtaining information, lacking the element of entertainment. This is demonstrated comparing the 5.5 hours spent on the average in the US watching TV with the 0.15-0.2 hours spent surfing on the Internet. It should be kept in mind that a large proportion of this time is spent sending e-mail, not in real surfing. The reason for the difference between these two figures is that surfing is not exciting. The excruciatingly slow processing of content simply bores surfers, making them stay away from sites.

RichFX has tried to provide an answer for this problem in the specific context of e-commerce sites. "We found that the human brain is much more tolerant of lengthy experiences, and we wanted to recreate the feeling of actually buying. When we shop, we make impulsive decisions. We walk around the store, take things off the shelves, try things on, and decide. On the Internet, you don't have that. You have to know in advance what you want, or else you have to wander through dozens of Internet pages, which lacks the pleasurable feeling of shopping. The problem was that in order to transmit an experience like that you need very high-quality graphics, which requires compression technology not yet in existence. Our compression algorithm makes it possible. We enable surfers to recreate a shopping trip on one page, in the course of which there is continual motion. Something is always advancing, something is always happening. You could describe it as a walking tour in a regular store on the Internet, with all the graphic advantages that implies. You can have models try on the products, and through even more advanced technology, the shoppers can try out the products on their own images."

The company enables shoppers to photograph the shops in which they are interested; then they create the environment itself. Navigating within the shop is done according to the company's definitions. Companies using RichFX's products pay for use of the broadcasting software, which includes the compression technology. This means that the sites of those companies have to be put the site on RichFX's servers. In certain cases, at the request of the company using the product, the design work is also done at RichFX.

The most significant capital raised by RichFX was from RealNetworks, which invested $9 million at a company value of $100 million. The real benefit of this was a strategic cooperation agreement with RealNetworks, which led to the inclusion of RichFX's compression technology in RealNetworks' G3 RealSystem software, which has 115 million users. The connection with RealNetworks led to the company's name being changed from WebGlide to RichFX. Kerret: "All our positioning moves are dictated by the market. We examined 300 different names, after we found out that the name 'WebGlide' is hard for Americans to pronounce. The new name, RichFX, is better, because it sounds to them like 'effects' or 'affects'. For us, it means that our product provides an experience that both affects and has an effect on people."

RichFX is currently raising another $25-30 million at an estimated value of $150 million. According to Kerret, "We are definitely considering a public issue, but it is not an end in itself. We are already on our way to making a big splash this year. The first site using our technology, Kirabo.com, is already on the air, and we are improving it still further as time goes on. We have signed agreements with large customers, and their sites will go on the air very soon."

Published by Israel's Business Arena on July 27, 2000