Techstars and Barclays teach success the Israeli Way
How Techstars and Barclays brought together the hottest start-ups to learn the Israeli way of success.
By HAGAY HACOHENUpdated: OCTOBER 6, 2018 16:05PARTICIPANTS IN the Barclays and Techstars hi-tech accelerator program show their enthusiasm; managing director Hilla Ovil Brenner is in the middle.(photo credit: Courtesy)
Visitors to Tel Aviv’s Mindspace building, where the Barclays and Techstars accelerator is based, are met in the lobby by row upon row of used books – and a scooter. Inside the offices above, 10 start-up companies are sharing space during the 15-week program. I spot a miniature punching bag based on the 1999 cartoon series Ed, Edd n Eddy. A punch produces the voice of Tony Sampson as Eddy mouthing a loud “Ouch!”I ask Christian Torres, the CEO of Kriptos, why the people shaping the technological future of humanity seem drawn to spaces filled with assorted relics of the 20th century. “It might be because hi-tech people are very creative and they’re looking for a work space that would allow them to express that,” he says.Kriptos is designed to do something many people fear: replace human workers.To assuage the fears of anyone who might be alarmed by this, let me add that Kriptos intends to do filing – a task most humans dislike anyway.“Companies usually do not know how to classify what they have,” Torres explains, “and they give this job to workers who often find it tedious and boring.”The reality, he explains, is that workers tend to share documents among themselves, allowing sensitive information to spread around the company.“We once worked with a CEO who kept an unencrypted word document on his computer that contained all the financial details of the company,” Torres marvels, “how much each worker makes per month, where the money is kept, what the bank PIN number is, everything. Anyone working in that office could have opened it at any time and run away with the company fortune.”Bored and underpaid workers who are given the thankless task of filing away large piles of documents every day might present an unexpected difficulty. One of the biggest blows suffered by Russian intelligence near the end of the Cold War occurred in 1992, when the unassuming chief archivist of the KGB, Vasili Mitrokhin, defected to the UK. The spectacled gray-haired Russian did not come empty-handed; he presented the British with 25,000 pages telling what the KGB was doing and what it had done in the past.Thanks to the Barclays and Techstars acceleration program, Torres was able to work with six companies which allowed his company to install its algorithm temporarily so it might learn how data are archived by human workers. The result was that the software currently has 30,000 hours of machine learning under its belt. As it reaches release stage, it will keep learning how to rate each document within specific contexts, eventually showing a user which documents are sensitive and what can be done to keep them on a need-to-know basis.As the CEO of the only start-up from Latin America selected thus far by the prestigious program, Torres is highly appreciative of the advantages he gained by his time in Tel Aviv. “It would have been impossible to find such high-level mentors in Ecuador,” he says. “You in Israel truly provide a strong feeling that you are a start-up nation. This program acts like a powerful magnet. Everybody is drawn to it and you begin to think and play differently.”
LIFE SETTLEMENT Trading (LiST) CEO Yaacov Goldenhersch explains, “We met around 80 possible mentors. The meetings were back-to-back, so we really had to work on our pitch and hone it down to near-perfection. Thanks to that we got three mentors we are currently working with. It may not sound like a large number, but we would never have gotten to meet these highly meaningful people without the program.”American-born and Jerusalem-raised, Goldenhersch seems like he stepped out of the pages of the 2009 hit book Start-Up Nation, which helped shape the image of the Jewish state as the place advanced technological magic comes from. With a background in the Israel Air Force and the Hesder Yeshiva in Yeroham, one might wonder what he’s even doing here. Surely he knows all there is to know about Israeli innovation at this point?“To be invited to come here is a tremendous honorary badge, and there’s a lot more to it than just having a badge to impress potential investors with,” he says. “This program has real value. We came here with a set of expectations and we were blown away at how much more we got.”LiST is focused on a unique problem in the North American insurance market. Americans are required to pay large sums of money in order to secure a life insurance policy. These premiums present some difficulties. What do you do if for some reason you can’t make the next payment? Up until now, such people had no choice other than to sell their policy away. The buyer would keep the payments going, but would also collect the life insurance once the person eventually died, leaving nothing to his surviving relatives.LiST presents a different approach. Rather than selling the entire policy at one go, it can be divided into parts and these parts can be sold separately, which allows relatives to receive a portion of the payment in case of death. LiST is also building an easy-to-use online platform to allow small investors the means to buy such policy portions, making it feasible for both seller and buyer to operate under the noses of the large firms that currently control this market.This is not just business theory for Goldenhersch. A friend of his suffered a shock when he learned his grandmother had sold her life insurance policy and never revealed it to her family.“Yes, the people who need to sell their life insurance policy will still be selling it,” he says, “but hopefully they won’t be suffering such a massive loss on their past investment and will still be able to leave something behind.”When I pose the question about hi-tech people and their attraction to 20th-century relics to Hilla Ovil Brenner, she says, “I think it just reminds them of their childhood.”As managing director of the accelerator program, Brenner is in a good position to make that call. Raised in South Africa, she has a vast experience with creating her own start-up companies as well as helping others attain their goals. She is direct, earthy and optimistic to her core.“I really do think Israel has something special. There is a DNA structure here that encourages originality,” she says.Brenner’s project is the result of one of the world’s largest banks, Barclays, working with the Techstars network, and one of the ways in which she contributes to that unique culture. Techstars operates other such programs around the world, including in Dubai, and Brenner is on excellent terms with the manager there.“Every country has innovative elements in it,” she says, “and by operating this program in Dubai, a powerful message is formed that they are embracing innovativeness.”When I ask her how London bankers respond to the Israeli traits of being direct and, at times, terse, she says, “Money is not a cold thing. Money is owned by people who want to spend it wisely and make more of it, but also for the service or product they invest in to be successful and solve a real problem in a high-quality way.”FOR HER part, Brenner ensures that those who attend the 15-week program, including the native Israelis, attend field trips to Jerusalem and Haifa and even participate in a special show by mentalist Lior Suchard.Luxembourgian Simon Schwall came to Israel via Papua New Guinea, where he met an Israeli woman who later became his wife. Following a violent incident, the two returned to Israel.The business he was working with in Papua New Guinea was selling life insurance to tribal people via mobile phone. “Within the space of two years we had 350,000 clients and were selected as the best insurance service in the South Pacific,” he says. “In 2017, I decided I want to set up my own company and focus on crop insurance.”Farmers throughout the Third World are facing the combined challenges of drastic climate changes, surges of inner migration to the cities, and the often back-breaking demands of field work. Even in an advanced nation like the US, farmers are twice as likely as army veterans to commit suicide, according to the Guardian. A 2014 article in Newsweek claimed that one British farmer a week commits suicide and one French farmer every two days.The figure is even more staggering in India, where more than 270,000 farmers have committed suicide since 1995. The No. 1 reason is thought to be crop failure.This is where OKO CEO Schwall comes in.OKO uses phone technology to sell insurance and statistical models based on weather reports and satellite images that calculate the risks and potential gains for each policy. When I ask how anyone can sell insurance to people who might not even know how to read and write, or who don’t have a bank account, the answer is surprising. “We recruit and train local community members who teach about our service,” he says. “We also air commercials in local languages on the radio, buy billboard ads and call people up and offer them our services.”This way, he explains, farmers who see their hard work disappear when a crop fails have a way to pay off their loans and keep going.There are seven other companies that took part in the accelerator program: Cred connects banks to small investors while offering a personal investment portfolio developed by a sophisticated machine-learning process; the Italian company Cubbit allows users to farm out their web resources and create cloud services in order to compete with existing server-farms; InFront Compliance offers a fast and easy track to handle compliance validation; MADA Analytics specializes in renewable energy investments; the Indian- and Israeli-run SafeHouse offers mobile security services; StremX offers to facilitate mortgage services; and Uhura will eventually read contracts for humans.Schwall, who is not Jewish, is proud that his Israeli company can show that Israelis are much more diverse than people might think.“The system here is not designed for non-Jewish people,” he openly admits. “For example, the Israel Innovation Authority is unsure if it can give me grant money. The company is an Israeli company, but I’m not a citizen or Jewish and they just don’t know if they can do it or not. At the same time, we were selected to represent Israel in the UN World Summit Award in 2018.“It is possible to love Israel,” Schwall concludes, “even without Jewish heritage.”
