It was a funeral, but also a celebration. Many friends waited last week at the Kinneret Cemetery on the banks of Lake Kinneret to say farewell to the late Guy Sella, founder and CEO of SolarEdge Technologies Inc. (Nasdaq: SEDG). Catering was provided for the mourners, and singer Shuli Rand sang songs written by Meir Ariel, Sella's favorite musician. Some of them protested with a sad face that Sella could have chosen a slightly cooler place to be buried than at Lake Kinneret in late August.
Other than the temperature, anyone who knew Sella would probably have been surprised had his funeral been an ordinary one. Sella was not an ordinary person, and did not live an ordinary life, so it is only natural that his farewell was played out in his own special way. As was his way, Sella planned everything in advance, leaving behind him precise instructions for funeral arrangements. "Everyone wept, but it was a party," said SolarEdge VP R&D Yoav Galin, Sella's friend.
As recently as August 18, the beginning of the week preceding his funeral, Sella still managed the company's regular Sunday meeting. It lasted for four hours, and according to those present, he managed it as usual, and was as sharp as a razor. He left the company offices in Herzliya Pituah at 9:00 PM, and did not return the next day. The cancer diagnosed 18 months earlier was starting to overcome him.
Late last month, SolarEdge had to notify investors that Sella was resigning as CEO because of his illness, and he breathed his last only four days later. Sella died at home in Bat Hen in the Sharon area, surrounded by his family - his wife, Barbara and his four children: Gav, Zuk, Mika, and Suf (ages 16-19). "I would say that he is one of the most successful technology entrepreneurs in Israel, on the same level as Gil Shwed and Yossi Vardi," one SolarEdge investor said in a eulogy."
Nevertheless, in comparison with Shwed and Vardi, not many have heard of Sella, who died at age 55. Not much was written about him, especially considering that he was responsible for a groundbreaking company with a $4 billion market cap on Wall Street, making it one of the 10 largest Israeli companies traded in the US.
He was born and grew up in Haifa, the eldest of four children, with two twin brothers and a sister. He volunteered as a combat soldier in Sayeret Matkal (General Staff Reconnaissance Unit), and served as a team commander in it when the unit commander was Omer Barlev.
After completing his compulsory serrvice, he studied engineering at the Technion - Israel Institute of Technology in Haifa, and later received an offer to return to IDF service in the Intelligence Corps technology unit, which he eventually commanded. He finished his military career with the rank of lieutenant colonel, after winning the Israel Defense Prize for one of his developments.
"To do something that makes a contribution"
SolarEdge was founded in 2006. Lior Handelsman, Galin, Meir Adest, and Amir Fishelov, four of his former soldiers, came to Sella, who worked in the Star Ventures venture capital fund after leaving the IDF. "We decided that we would found a company," Galin says, "but we didn't yet know what or how. We went to consult Guy because of his position in a venture capital fund. After about one minute, he told us, 'Let's do something together.' There was no subject yet, no field, but we connected with one another."
"Globes": Just like that, in one instant, he joined you and the company arose?
Galin: "The truth is that when we came to consult him, we didn’t think that he'd want to go and do something with us, so when he said that, we were all very glad. Everyone who knows Guy knew of his ability to shape reality, to create something real and significant out of nothing. It's a rare quality. Guy could really make something out of nothing."
Handelsman, SolarEdge's VP product strategy and marketing, remembers things a little differently. "In the army, we worked with Guy on a very large project, and we said between us, half joking, that if we ever founded something in civilian life, we'd do it together. When the four of us decided to leave the army, we said that we'd phone him, and Guy said, 'If you're leaving, I'm leaving the fund and going with you.' He was the smartest man I ever knew."
Did you start in a moldy garage, like the startup cliché?
"Just like that. It was in Herzliya Pituah, but we started in one room in which we all sat and looked for ideas."
"We sat for about nine months gathering ideas," Galin remembers. "Guy helped raise money, so we could afford to do it. He went to some kind of fund and explained that we were a good team. They asked us what we'd do, and we said, 'We don't know, but it will be good,' and they gave us money, without an idea or a direction. It was a lot of fun. We got a salary and had no commitment. What could be better than that?
"Guy taught us how to analyze ideas and how to present them to investors. Some of the ideas were totally unrealistic. At some point, Guy noticed exits by energy companies, and that their multiple was higher than in other sectors. One of the ideas was solar energy, and when we went through the list, we liked it. We decided that it was simply much better than the other ideas."
It's not exactly a natural field for veterans of a technology unit.
"It was a field that looked like it would grow nicely. It was important to Guy, and to us, to do something that wasn't just another smart router or security - something we'd feel makes a certain contribution. There's no difference in the way we work, the analysis or the development. In the end, however, it's more fun to say that you did something solar that contributes to the environment."
Handelsman: "We realized that this solar energy world was getting bigger, and had the potential to become the next big source of energy. At the same time, we saw that the solar energy systems were a little outdated. There's a lot of research, but as far as energy conversion, energy management, and functioning of the system are concerned, there was no innovation. The sector had been stagnating for many years, so we jointly developed SolarEdge's technology, which is a smart electronic system based on chips that manages solar energy production, converts energy into a more efficient form, produces more energy, and facilitates remote control and monitoring through the Internet."
The first dilemmas emerged when they started, and Sella was the one who insisted on keeping the company independent. "Our initial development was a chip placed next to each solar panel, and many venture capital funds we contacted told us, "Sell this chip to large companies in the field," Galin says. "Under Guy's leadership, however, we didn't want to go to the conversion companies. We decided to develop the entire system, the entire converter. It was hard to find investors for that. Why should they believe that five nice guys could develop the entire technology by themselves? Before the first financing round, there were even investors who told us, 'We'll invest in you if you don't follow this path.' Thanks largely to Guy, however, we didn't give up this model."
What made you so insistent?
"There was a great temptation to combine with someone doing the other side, but Guy was opposed. He explained very cleanly that it wasn't in anyone's interest to lower the price of his product in order to enter the market. The system would be expensive, and we would always be dependent on someone. If we control both elements, however - the chip streamlining the solar energy system and the converter - we profit both ways. We can also offer the system at a reasonable price and not be dependent on others. He read the situation very clearly, and other companies that tried to take this shortcut really failed."
It's hard to argue retrospectively with success, but wasn't competing with companies like Huawei, Siemens, and General Electric a little pretentious on your part at the time?
"Guy used to quote Shimon Peres, 'Dream big. The bigger your dream, the more you will achieve.' It worked, because we had excellent technology, because we worked very hard, and we were also lucky."
Finally, despite the difficulty in finding supporters for the idea, SolarEdge managed to raise money from two US venture capital funds - Walden International and Opus Capital Ventures - and from Israeli fund Genesis Partners. "What convinced me was the entire team, not just Guy," remembers Genesis Partners general partner Gary Gannot, who led the first investment in the company. "We were very impressed by their capabilities. I knew Guy mostly as a colleague when he was at Star Ventures. He told me about things he initiated by himself - not startups that can reach a $1 billion valuation, but interesting technological ventures in engineering, and I was persuaded that he had the ability to do it."
The world's largest converters company
One of the mantras that Sella implanted when the company first started was that they would do only things that were "legal, moral, and profitable." What did he mean? "In the course of the life of a company selling in dozens of countries, you are contacted by representatives from all over the world," Handelsman explains. "There are companies that do less moral things for the sake of marketing, such as using lists of users or marketing based on gambling."
The company began to have sales in February 2010. That same year, two important people joined the founding team: CFO Ronen Faier and VP, general counsel and corporate secretary Rachel Prishkolnik.
Faier and Sella met when Faier was CFO in Modu, a company founded by Dov Moran. "I met somebody in shorts who arrived on a motorcycle," Faier recalls their first meeting. "The conversation started on the subject of currency hedging."
Why currency hedging?
Faier: "Because Guy was like that. You start a conversation with him about one subject, and it eventually moves to many other subjects. I told myself that if he was as good at technology as he was at hedging, then he was good."
Faier describes the atmosphere at the company at the time as "a very aggressive atmosphere of no concessions on anything. You don't do one thing or another; you do both of them. The striving for excellence was on an unbelievable scale. Everything had to be maximized. There was an uncompromising ambition to do something the very best way. We would be the fastest, the most profitable, and we'd sell in more countries."
The company's first important watershed came in 2012. Up until then, the company focused on Europe, where government subsidies made solar energy very strong. When these subsidies were discontinued, SolarEdge faced a parting of the ways. "We hesitated about what to do," Faier remembers, "and Guy made two decisions: not to grow rapidly, but not to cut back, and at the same time to look for the right market. Guy had an incredible ability to gather a lot of data and analyze it, and that's how he spotted the emerging solar market in the US, and realized that we should put our focus there. As a result, we grew at an insane rate: from a 1.25% market share, we reached a 60% share. This decision paved the way for SolarEdge to become the world's largest converters company today."
Why didn't other companies realize that the market was shifting from Europe to the US?
"They realized it, but they weren't determined enough. Once we became the market leader, everything was much simpler."
In March 2015, SolarEdge held its IPO on Nasdaq at a $620 million valuation. "Whether to hold an IPO wasn't the question," Galin says. "The question was only the right timing. Guy waited until we were making a profit, and we did a dry run and managed everything as if we were holding an IPO according to the books. When he said that it was time, we held the IPO."
The next development in the company came when it was decided to use the converter's technology in areas other than solar energy. This was accomplished through a series of acquisitions. "The global solar energy market is about $7 billion, which theoretically leaves us, as holders of a 60% market share, with $3-4 billion. Actually, however, it can be used for other needs," Faier explains.
In 2018 and 2019, SolarEdge acquired the activity of Gamatronic Electronic Industries, which manufactures uninterrupted power supply systems, for NIS 40 million; South Korean lithium batteries company Kokam for $88 million; and Italian company SMRE, which developed an electric car propulsion unit, for $77 million.
You could say that the company's past decade was one of acquisitions
Faier: "True, the first decade established the company as a leader in its field, and the second decade featured acquisitions."
Galin: "Guy always said that a company could be built to sell it, and a company could be built to become big. It was important to him for the company to become a big company with its headquarters in Israel. There were cases of all sorts of people coming to us from large companies to see the company, but they said that they hadn't come to talk about acquisitions. In these cases, Guy would say, 'Very good, because I don't think that we're ready to acquire you.' He couldn't stop himself. In some of these cases, it ended in a friendly way, but there were cases in which we never saw the people again. It may be funny, but I'm not sure he meant it."
A Japanese carpenter on the way to a roadshow
When Sella's friends are asked to describe what kind of CEO he was, they first of all cite the fact that he almost always walked around in slippers. At exhibitions, he could sometimes be seen wearing a suit and slippers.
"He was an exceptionally smart man," says Handelsman. "One of the great things about him was his ability to see things from above, like a CEO, and at the same time understand what we were doing down to the level of a screw. He went into the smallest detail, and at the same time managed from above. He had extraordinary analytical ability, and the ability to motivate people."
"Guy was a very dominant CEO, who made sure that the company would have as little politics as possible," Faier says. "He left no room for politics. So every one of the founders was responsible for his area, but was also able to handling other matters. Everyone was a manager in his specialty and a company manager."
How was the interface with him?
"We had almost regular talks at 11 at night and at 8 in the morning, almost every day, and certainly at the time of the IPO. I'd say that he had three prominent characteristics. The first was living outside the box. Guy didn't think outside the box; he lived that way. The way he thought was unique and original. The second thing was that he was very aggressive and determined, and let nothing stand in his way. He slept three hours a night. He worked ceaselessly, and it affected those working under him. Nothing was too hard for him. The third thing was that he was the most interesting person on earth.
"I'll tell you an anecdote: we were traveling to a roadshow in New York, and he suddenly asks the driver to stop. He brings me into a Japanese carpenter's store and tells me, 'Let's see how they build a table without glue or nails.' Do you get it? On the way to a roadshow, we're standing and looking at a Japanese carpenter. He had an incredible memory, enormous knowledge, and intellectual depth, but he also had traits that weren't so good."
What, for example?
"He was aggressive with suppliers, for example. He was totally dedicated to the company, demanded a lot from himself and from others, and it's true that sometimes, he wasn't nice. He wasn't a perfect person, but he was an amazing and inspirational man able to lead, set the right target, and map the way of getting there."
"It wasn't easy working with him," Handelsman admits. "He was demanding of everyone, but he spared himself nothing. He always analyzed things differently from the way other people did, and when you see things developing and how the vision becomes reality, you stand there open-mouthed. He was a person who knew everything about everything, and never stopped learning, reading, and asking questions."
"He was a social being," Prishkolnik says. "Beyond his charm, he was able to harness people to his goal, his vision, and the challenge. In addition, he had a very broad outlook. When he didn't answer a question, I knew that he was simply thinking about it."
"I must admit," Gannot adds, "that over the year, Guy fulfilled himself. This isn't something that could be taken for granted. Even though he was a commander of the technology unit, it couldn't be taken for granted that he was capable of growing into such a company. It emerged with time. Today, it seems to me that it's already clear that there aren't any CEOs like him. The fact that the entire team of entrepreneurs not only stayed with the company, but also in the same jobs, speaks for itself. I don't know of any company in which this happened. There's nothing like it in the US, either. Some of this can be credited to the people, but part of it is because of Guy, who managed to preserve it for the company's benefit.
"He also took care to divide the equity equally. All along the way, he and the entrepreneurs got the same share. I assume that this is another element in preserving the entire team. Usually, when people are replaced, even if it's for the right reasons, it creates some kind of disruption in the company's activity. Here, this problem was pretty much avoided, because he had a good team and knew how to keep it.
"Most entrepreneurs have specific capabilities. Usually, they don't have vision, leadership capabilities, managerial capabilities, sales capabilities, very detailed technical know-how, and the ability to manage from above. Guy was really strong in every one of thes features."
"Cut costs, fight cancer"
His cancer was diagnosed 18 months ago, and Sella believed that he would overcome it, just like he overcame almost every else during his lifetime. Friends say that he did not allow the disease to interfere with his life. For example, he continued traveling to overseas exhibitions while he was undergoing chemotherapy. He would say that he wasn't a cancer patient; he was a "person who has cancer."
"He made a set of goals that looked like this: cut costs, increase market share, and fight cancer," Handelsman says. Prishkolnik adds, "He regarded this as a mission, like all of the other missions he dealt with."
Sella's dominant personality, and the fact that the company was so identified with him, resulted in an 8% plunge in SolarEdge's share price following the announcement of his resignation, although it quickly jumped back up.
Some of SolarEdge's investors are now predicting that the company will be sold before long, because of the hole left by Sella. His partners, however, are convinced that despite his absence, SolarEdge will remain a well-oiled machine that works well. "The company has a very clear strategy,' says Handelsman. "It has managers who know what to do. In recent months, we talked a lot about how to continue the company and what path it should follow, and we feel that we know where it should go."
Published by Globes, Israel business news - en.globes.co.il - on September 8, 2019
© Copyright of Globes Publisher Itonut (1983) Ltd. 2019