"New York is starting to be preferable to Silicon Valley"

Bogner, Goldstein, Inbar, Oron, Kotlicki, Salzman, Rapoport  photo: Ezra Levy
Bogner, Goldstein, Inbar, Oron, Kotlicki, Salzman, Rapoport photo: Ezra Levy

For the Israeli companies that participated in Oracle's startup accelerator, direct flights and time zone are just two reasons to open up in New York.

For me, "enterprise" is the name of the spaceship in Star Trek. For five startups that took part in the first accelerator of Oracle Israel, it is life itself. I would hear this word "enterprise" a great deal at a conference this week conducted in New York by the software giant - an event marking the end of the first class of the company's first international accelerators program.

The six-month program took place simultaneously in eight cities: Bangalore, Bristol, Delhi, Mumbai, Paris, Sao Paolo, Singapore, and Tel Aviv. In contrast to most accelerators, it did not end with a Demo Day, as they call it in the industry - a happening in which each startup presents itself for a few minutes. Oracle chose to bring the companies to New York for meetings with potential customers. "These are not companies in the initial stage," Noam Inbar, who heads the program in Tel Aviv, tells me, "so we saw no point in a Demo Day. The goal now is to help them expand their customer base."

I meet Inbar and the five Israeli startups taking part in the program at the Sheraton Hotel in Times Square. Like the hotel, Oracle is an island of stability in a volcanic area. It has been doing business successfully since the 1970s, before the Internet and smartphones, and is now a dominant competitor in cloud computing to all the young and trendy companies. Some may call it a boring company, despite the stories about founder Larry Ellison, but its model works.

Oracle's international program is led by Reggie Bradford, a serial entrepreneur who sold one of the companies he founded to Oracle in 2012 for $300 million. "The goal was to design a program I'd want to participate in, were I to found another company," Bradford says. In the program, the participants receive mentoring, infrastructure and access to the company's cloud computing products, various platforms that work on the infrastructure, and a network of connections with over 400,000 enterprise customers around the world; were it not for Oracle, these young startups would find it very difficult to get access to them. In contrast to other large technology companies, which invest a great deal of capital in startups, Oracle refrains from making direct investments that are not acquisitions. The accelerator is no different; Oracle does not invest capital in it and does not get a share of the startups.

"The relationship is only beginning"

Startups will be startups, and it was not difficult to identify them at the conference. Among three floors of software people, business partners, and analysts in three-piece suits and ties suddenly appeared skinny pants and light jeans with a belt, a colorful backpack, and an every-day sweater. Some of them might be dressed casually, but they were the very few chosen from among thousands of applicants all over the world and hundreds in Israel. The selection of the Israeli representatives was made in a process led by Inbar and based on a discerning eye, not inflexible indices. "We wanted mature startups with a product that were in need of the cloud and that could undergo integration with our cloud, but the team was very important. We chose the best teams, even if we thought that their product needed a lot more work."

I can understand what Inbar is talking about. The small group I meet looks comfortable and confident. "All the Israeli companies  focus on the US market, and we're no different," says Etay Bogner, founder and CEO of Meta Networks, one of the companies in the program that provides an infrastructure cloud-based solution for IT enterprises. Bogner's statement, even if it is a generalization, receives silent assent from all the people in the room. Toonimo, which is developing an audiovisual training platform for online services, has had an office in New York for more than a year already. "I'm sorry that we didn't open the offices much earlier," says Toonimo cofounder and CEO Dan Kotlicki. The other four companies plan to open offices in the city soon.

"Three years ago, the decision was very clear that if you open offices, you do it in Silicon Valley," says Barak Goldstein, founding partner and COO of startup Bonobo.ai. "Today, New York is already a real alternative, and is even beginning to be the preferred choice for reasons of convenience." Bonobo.ai offers customers an artificial intelligence platform that gathers, analyzes, and produces insights from mountains of text information generated unceasingly by the customers themselves. Bogner agrees with their views on the subject of location: "The first filter for the selection of New York is the direct flight."

"The customers we want with work with are in both New York and on the West Coast," Kotlicki says, "but here, the time difference with Israel is smaller. There are many more overlapping hours with the technical teams in Israel, and that's very important for communications between them." But it is not only a matter of direct flights and time differences. Hundreds of Israeli startups are now operating in New York - an enormous community that is attracting more and more companies. This community provides support and softens the hard landing in the city, which drives away many entrepreneurs, whether because is exudes competitiveness all year, or because of the freezing winter that never fails to surprise Israelis.

With all due respect to this community, however, the situation in the US is still difficult for Israeli entrepreneurs, especially those who want access to large organizations. "It's very difficult to enter the US market," Inbar notes. "It's a little like a closed club, particularly the enterprise market. There's no denying it; people in the US like buying from Americans. It's very difficult for a young startup to succeed, until it gets the first logos of customers on its website. As soon as you get your first customers, however, it's much easier for their competitors to join in and buy the product."

"They put us in a room with a lot of large or giant companies we would never get to meet without the accelerator's mediation," says Gal Oron from Zoomin, which provides a software solution for managing personalized interaction with customers based on artificial intelligence. "For us, the accelerator program may have ended, but this relationship is only beginning."

"The startups create an advantage for us"

Besides "enterprise," the other buzz word heard at the conference is "cloud." In the past two years, Oracle has made the cloud the focus of its business activity, and it's paying off. The company's share price has climbed 42% during this period. The current accelerators are expected to add more combustive material to Oracle's new model through the innovative thinking and energy that the entrepreneurs bring with them.

In exchange, Oracle, a company with a $200 billion market cap, is planning to strengthen the connection between startups and their customers. It's worthwhile for it, of course: its activity in this regard will enlarge the ecosystem it is striving to foster around it. "If they (the startups) succeed in forging a connection with Oracle's customers, it will generate an advantage for us. That is the substance of the program: to present innovation on the cloud," says Inbar.

The fact that there is groundbreaking innovation and an environment replete with accelerators in Israel enables Oracle to do something slightly different on the local scene from what is being done at accelerators elsewhere in the world. "We wanted to get away from conducting workshops, seminars, assigning mentors, and teaching how to write a presentation," explains Inbar, who was appointed to his position less than a year ago after working at PayPal and startup Zooz , among other places. In the Israeli program, every startup gets personalized guidance, including a technological link to the cloud and Oracle's other technology, together with a business link to Oracle customers or inclusion in the company's existing platform.

Despite the focus on the teams behind the companies, rather than the product, Oracle aimed at startups already demonstrating a presence in the field. "We wanted to leverage our capabilities in selling technologies to businesses in order to work with mature companies with a product on a good level, an initial customer base, and enough money in the bank to stay afloat if they have to make changes and adjustments," Inbar says. Accordingly, the startups that took part in the first class were all founded at least a year before.

With the end of the current cohort, registration has now been opened for the second cohort of Oracle's accelerator, which will take place in Austin, Texas. At the same time, the company is also operating a new program - Oracle Scaleup. This program requires less commitment than the existing one, and takes place in a virtual space independently of the physical location. The program is designed for mature companies with fast growth that have already received support from venture capital funds.

Published by Globes [online], Israel Business News - www.globes-online.com - on February 15, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Bogner, Goldstein, Inbar, Oron, Kotlicki, Salzman, Rapoport  photo: Ezra Levy
Bogner, Goldstein, Inbar, Oron, Kotlicki, Salzman, Rapoport photo: Ezra Levy
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