Web 2.0: Why Israeli Companies Fail?

in Opinions by Yohay Elam — March 11, 2010 at 2:55 pm | 3 comments

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Contrary to the bubble days at the turn of the millennium, the presence of Israeli companies in the Web 2.0 scene isn’t in the forefront. Israelis are considered very social and there’s no doubt that Israeli technology is advanced. Here are a few possible explanations and some hope for the future.

Bubble 1.0 and Web 2.0

The Web 1.0 era wasn’t only about websites, at least not in Israel. The first outstanding buyout was of ICQ. The software is social, but the lion’s share of users didn’t know about the web interface. The second outstanding buyout was of Chromatis, for a legendary sum of 4.7 billion dollars (in shares). In this case, their product was hardware, without any social features. There were many more Israeli achievements during that time but websites didn’t stand out then.

After the bubble burst, the internet did come to age: most of the Western world connected to the net and the connections became fast. Te ground was set for new web applications, mostly social – Web 2.0. Yet Israeli companies were only on the sidelines of this new trend. None of the leading sites such as Facebook, Twitter, LinkedIn, YouTube and Wikipedia are Israeli.

Why?

In general, Israelis are social creatures and have a good understanding of people. In many cases, this attitude is considered rude. Did the rude attitude block Israeli technology? This explanation isn’t enough.

Socializing face to face is different than building friendly, intuitive social software. Perhaps the rough attitude of Israelis is good for hardware but not for smooth and shiny websites.

A success of social site doesn’t depend only on technology, but also on the company’s network in real out of the web. In many cases, Israeli companies lacked the essential presence in Silicon valley. Here’s one witness:

Eyal Hertzog, founder of video site Metacafe, said that his company suffered by not opening an office in Silicon Valley soon enough. It opened shop in Palo Alto last year after three years in operation, and could have benefitted from the tech expertise and exposure to the Silicon Valley zeitgeist. “People are living the culture here,” he said

Metacafe did have significant success. Could it lead its segment if it assumed a position in the valley? Hard to tell.

Here at TheWadi, we’re trying to bridge over the lack of internet presence overseas. Social media, that is coming to age for businesses, should also assist in enhancing Israeli presence.

Web 3.0 still seems far away. The semantic web may be exciting for geeks, but it’s still very far from anything commercial. As I see it, we’re now in a Web 2.5 era, in which Web 2.0 is mature, but is still evolving and has lots of room for fresh innovation. Israeli technology can have a bigger share now.

We’d love to hear your thoughts: What reasons do you see for Israeli technologies being on the sidelines of Web 2.0? Do you see Israeli success coming in the near future?

Disclosure: I used to work for Metacafe.

Tags: featured metacafe web 2.0