Last October marked two years since Facebook's most significant acquisition - not for the social network itself, which had already spent billions of dollars on acquisitions, but for the startup nation. After making innumerable acquisitions worldwide, including two in Israel, Facebook dipped its hand into its pocket, pulled out $150 million - its most expensive acquisition in Israel to date - and changed direction with the acquisition of startup Onavo. While in Facebook's first two acquisitions in Israel - Snaptu and face.com - it followed its usual practice of moving the acquired companies' management and development team to its headquarters in Menlo Park, this time it changed its policy. The social network decided for the first time to open a development center in Israel - only its second outside the US.
The decision by one of the strongest Internet brands of the past decade to establish a local presence was not just a small acquisition bonus. Facebook gave Roi Tiger, who founded Onavo jointly with Guy Rosen, a difficult task: connecting the next billion users to Facebook. The social network currently has 1.5 billion active users a month, but Facebook CEO Mark Zuckerberg's vision from the beginning -that is, onceherealized that Facebook could notbe just a site for rating the sexiness of students on campus -wasto connect thewhole world.
"Only one-third of the world's people are connected to the Internet, even though 90% of them are within cellar reception range," Tiger, who now manages Facebook's development center in Israel, says. "When we looked at the gaps, we realized that there was a problem here that had to be fixed. You understand that a person earning $2 a day, the amount that a person in the US spends on Internet connectivity, can't afford to pay for a mobiledata plan," he explains. "That made Facebook realize that the gap is not the physical hookup, but the high price of surfing. On the other hand, many people in developing countries don't know what the Internet is, and whether it's worth the investment."
This realization led to the Internet.org project announced by Zuckerberg in July 2013. The idea is to provide a free Internet connection in developing countries without advertising, and to offer them an array of basic services for free. Facebook and its Messenger app are two of these services, but there are also weather information services, the location of infant care clinics, sports updates, Wikipedia, BBC News, life coaching tips, etc. "Exciting things are happening here. There are people using Wikipedia for the first time, or asking questions and getting answers on the Internet for the first time," Tiger says. The Internet.org service is currently available in over 30 countries, including India, Ghana, Columbia, and the Philippines, and 15 million people in those countries have been connected to the Internet for the first time through it.
"Globes": What is Facebook's interest in connecting more people? So that it will have more users it can expose to advertising?
Tiger: "We don't consider Internet.org to be economic. Had that been our intention, we would have put the resources into the Western market, where the profit potential is much greater. When you look at Internet.org, the company is looking at the good it does in the world, not the financial aspect.
"As a company, we realize that our next billion users will be very different," Tiger explains, "Different in that they come from different areas of the world, and more will come from mobile, while far fewer will come from the web. They won't come from the high-speed Internet hookups we're used to. Less than 30% of the people in rural areas of the world have 3G. Most of them have 2G."
Simultaneously with the Internet.org project, Facebook is trying its luck in not only making the expensive Internet accessible to people throughout the world, but also in offering Internet connectivity in remote places. One of the projects in this field also involves Israel. Last October, Facebook announced that it would use Spacecom Satellite Communications Ltd.'s (TASE:SCC) Amos 6 satellite, made by Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), to provide Internet to 45 countries in Africa. Spacecom is set to earn $95 million , and the satellite is scheduled for launching at the end of the first quarter of 2016.
From Dov Moran to Zuckerberg
Tiger, 31, began his romance with computers and the Internet in high school by building websites and working at an instant messaging startup. He did his compulsory army service in the IDF 8200 intelligence unit, and after being demobilized, was immediately accepted as one of the first employees at the development center of Infone, later modu - Dov Moran's grandiose project to create an Israeli cell phone - which eventually failed. "I was there for two and a half years, and the startup dream began get to me, which was the signal for me to move on. I left before they knew where the company was going. Actually, just after I left, they started preparing for an offering," Tiger remembers. "That period gave me mainly familiarity with the world of mobile. That's something you know inside out: people in software, hardware, marketing, and sales."
Through his familiarity with themobile sector, he founded Onavo in 2010, together with Guy Rosen, his partner. The original idea was to help people reduce their surfing volume when they are overseas, among other things through data compression. The company later created a number of apps, including one popular one that makes it possible to monitor cellular data traffic on a telephone. After three years, during which they raised $13 million, Tiger and Rosen managed to do the impossible. Not only did they succeed in selling the company to Facebook at a fairly high price, but they also convinced one of the world's most talked-about technology companies to open a firstdevelopmentpresence in Israel.
"The decision to sell was born of the idea to think big," Tiger says. "We were looking atan opportunity to bring Facebook to Israel, and also to change the world. At a company like Facebook, you have the resources and the platform to do things on a large scale," Tiger reminisces. "This was the best opportunity to take what we had built to the next stage, together with Mark's vision of connecting the world. I don't know what would have happened, had they not acquired us."
How hard did you have to fight to leave the employees and the development center in Israel?
"Both sides supported the establishment of a development center in Israel, among other things because ofthe realization that there is very strong talent in Israel. During the negotations it wasalready recognizedthat we'd be dealing with Internet.org."
Onavo's success was not only bringing Facebook to Israel, but also in creating continuity in the local innovation and startup sector. "Our first employees founded four new startups," Tiger boasts. One of them, Fundbox, a platform for financing and loans for small businesses, has already raised $108 million from prominent investors, such as Amazon.com founder Jeff Bezos and actor and investor Ashton Kutcher. Other startups are Docady, which makes it possible to store and manage various documents; advertising platform Singular, and Crosswise, which connects people with devices. The burden of proof is now on the next generation of Onavo graduates to score a big success and not embarrass the company where they were guided by Tiger himself.
Published by Globes [online], Israel business news - www.globes-online.com - on December 24, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015