Joe Shapira always relied on his knack for timing. During the many years he lived in the US, he possessed an uncanny ability to know which business to enter, and when, and exactly when to get out. And this made him very rich. This was also the case with JDate, the online dating service he founded with his boyhood friend Alon Carmel, which was the basis for their joint holding company, Matchnet, which was traded on the Frankfurt Stock Exchange, and reached a value of $400 million. In 2006, after Carmel left the company, Shapira decided to leave as well, and began selling his shares.
Trusting his intuition, and after selling his remaining shares in JDate to J.P. Morgan, Shapira decided to enter the real estate business in Los Angeles, and focused on buying apartment buildings with potential for appreciation. That was in 2007. A few months later, the US real estate market was to collapse in a crisis that would drag the whole world to financial depths not seen since 1929. This is also a matter of timing. Within less than three years, Shapira was no longer riding high, and found himself back in Israel, fighting for his financial survival.
There’s no need to feel too sorry for Shapira - this interview took place at a coffee shop near the upscale neighborhood in north Tel Aviv where he lives in a rented apartment - but traces of the roller-coaster that he has been on in recent years can be seen in his face. Thrice divorced (with three children from his first marriage), he recently turned 60, and he says that this number bothers him, as he is in denial of his biological age.
He is trying to renew both his youthful vigor, and his financial success, with a new dating app called Fiix, with Tal Barnoach, one of the biggest angel investors in Israel, and three partners a few decades younger than he.
Despite the financial collapse, he believes that the instincts that misguided him once will not disappoint him again: “A banker once told me that if I have a talent, it is for finding the right timing,” he insists.
And the real estate?
“The timing was bad. I bought neglected buildings that had been poorly managed. I sold two of them at a large profit, but I got stuck with a lot of inventory when the crisis hit.”
And you lost everything
“Not everything, but I lost a lot.”
Quite a fall. You weren’t a beginning entrepreneur. You were in charge of a company worth hundreds of millions of dollars.
“I’ll tell you something: because I am not a businessman who has been in the same business for 30 years, I don’t really feel like I earned that money by the sweat of my own brow.”
You worked like a lunatic at JDate
“True, but the money came in one day. I made tremendous progress in a short period of time. Money is great, flights here, vacations there, fun. But I can have as much fun in a tent as in a boutique hotel.”
What about existential angst?
“I’m not so unfortunate.”
The press actually told a different story: in early May, 2012, Shapira told the Tel Aviv Magistrates Court that he was planning to declare bankruptcy in the US, due to heavy losses in his real estate business. This report came in the middle of a legal battle that Garlinder Properties had waged against him and his then wife (the two have since divorced), over a debt of half a million dollars.
In his statement of defense, Shapira stated that he had no property in his name, and no savings, and that he was living in a rented apartment. Sources close to him said at the time that he was only asking to postpone the repayment of the debt for a few years. The lawsuit, they said, was what was pushing him to declare bankruptcy.
“The situation was not that bad,” he says, in an attempt to soften the impression, “I did it to create enough leverage to negotiate. There was no need to feel sorry for me.”
Yoav (Joe) Shapira was born in Givatayim. His father was high up at Israel Electric Corporation (IEC) (TASE: ELEC.B22), and his mother was an editor at the news agency ITIM. His first foray into entrepreneurship was in the fifth grade, when he delivered flowers by bike. Because his father, grandfather, and uncles all worked in electricity, it was natural that he should learn electrical engineering at ORT Singalovski, and over the course of his studies, he began doing electrical repairs as well: “I always had cash in my pocket,” he says proudly.
After serving as an airplane technician in the Air Force, he started a company building circuit boards in his courtyard, and worked in electrical engineering for construction and industry. In 1979 he married Naomi, his first wife, with whom he relocated to the US when she was offered a job as a fundraiser for Tel Aviv University in Los Angeles. The plan was to stay for three years. He stayed for 32.
After fourteen years of marriage, he divorced Naomi, who moved back to Israel with their three children. After a few years, his two older kids moved back to the US, and Shapira, who had meanwhile remarried, visited his youngest daughter in Israel frequently.
In 1994, he and Carmel sold their videocassette factory at its peak. He was 40-years old. He had a lot of money, and he thought about retiring. After six months on the beach with a lot of alcohol, he understood that this was not the life for him, and decided to buy video production equipment, particularly for digital editing. And then he discovered the Internet.
“Over 30 years, I founded some fifteen businesses. Five failed, two succeeded. For the most part, my businesses had short life spans, particularly those having anything to do with technology. I don’t know. It could be that if I were to stick to one business, I would earn more, but you have to enjoy life. I can’t even think about a continuous 20-year run.”
OK. How did you get to JDate?
“At the time, I was newly divorced, for the second time, and I went on dates. One day, a good friend calls me and tells me there is a dating service that you pay $3,000 a year for, and it works great. So I scheduled an appointment. They sat me in a small room with a saleswoman, and I immediately started hitting on her. They had binders full of women; each had a page, a big photo, a few smaller ones, and some text about her. If you like someone, you leave a note at reception. If she looks at the book of men and she likes you, she leaves a note, and they introduce you. I did not buy a membership there, and the saleswoman did not go out with me, but I had the idea to bring it to the Internet.”
There were already online dating services.
There were 12 sites for Jews, but they were all in the style of singles classified ads from the 80s, “Divorced through no fault of her own seeks stable guy.” Go to JDate, and you’ll see there is no big difference between the site at its beginning, and today. There was search, there were databases. Some of the data was public, some wasn’t.”
And how did you plan to make money from it?
“It was a process. I came up with the “tokens” business model. People would buy five or ten tokens, each one would allow you to communicate with one girl. There was one guy who bought ten tokens, met a girl with the first one, and asked for a refund for the rest. Then I switched to subscriptions. Anyone who was afraid to pay online could send a check.”
“The end of my tenure at the company was frustrating, so it wasn’t difficult for me to leave. In retrospect, it’s possible that I should have fought harder for my strategy, but I’m a lover, not a fighter.”
That is all well and good, but why sell your shares in JDate? Wasn’t it a waste?
“Why should I have held on to them?”
If the business is going well, what do you care, if the money preserves its value?
“In Internet, life spans are limited. There are windows in which companies receive surreal valuations. There was a window of opportunity, which I took advantage of. From a value of $400 million, it trades today at around $135 million, and has also been at $60 million.”
And then you put the whole jackpot into US real estate.
“Yes. That was an opportunity. There was unreal hype. A time of incredible momentum in real estate, and the business model was not long-term investment, but renovation and resale.”
You said that you are not so unfortunate, but that is still a drastic change - from an Internet empire to debts.
“So what? So I lost the money. It’s just money. I fought. I lost the battle. I closed a chapter, and set out to have fun.”
Shapira’s new baby, Fiix, combines two elements in which he has proven success: dating, and technological innovation. Fiix is a dating app, not very different from the leading competition (OkCupid, Tinder, LoveMe), except maybe a few original features.
What’s the next step?
“Fundraising. We are on our way to the US. Dating is a sector in which it’s relatively easy to generate revenue. At Spark Networks, it took ten years to reach $80 million in revenue. Apps bring in much more money in a short period of time - the ascent is rapid and high. The direction is the US market, followed by China. I am looking for a large homogenous market rather than going to Europe and dealing with 30 languages.”
A final question: are you in a relationship?
“For more than half a year.”
After three divorces, you still believe in long-term relationships?
“Let’s put it this way: I am an optimist, and regardless of probability, and based on experience, you need to make many compromises to be in a long-term relationship. Sometimes people are willing to compromise, sometimes not.”
So is there are a chance you will need the app yourself?
“I am not in the target audience’s age demographic,” he says, smiling, and then stops for a minute and adds: “Though I refuse to accept that.”
Published by Globes [online], Israel business news - www.globes-online.com - on March 11, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014