I've spent the majority of my adult life working closely with tech startups as an investor and advisor. These companies typically have been led by entrepreneurs born and bred in the U.S. These companies' founders either spent some portion of their growing-up years in the States or received business training in American colleges and development programs. I've been privileged to be involved with rising stars such as SeatGeek and Adaptly. In my time with Dreamit Ventures, General Assembly and other endeavors, I've spent time with hundreds of aspiring entrepreneurs and gotten to know them at the earliest stages of their journeys.
That "home-grown" focus shifted about 18 months ago when I decided to co-found ICONYC labs, an accelerator program exclusively for Israeli startups. Our family now counts 15 companies among our diverse group of founders: 20- through 40-something year-olds, men, women and native-born residents as well as transplants.
I've spent countless hours with these founders in business meetings, investor sessions and private moments. Sometimes they've needed a pat on the back. Other times, the situation called for a mild scolding or simple words of encouragement. Through this experience, I've learned there are both pronounced and subtle differences between the American entrepreneurs and the Israeli founders who have moved through Startup Nation's ranks.
Based on this background and perspective, I've outlined five traits possessed by most of the Israeli founders with whom I've worked. Because these traits are instrumental to build a startup, their value bridges cultures. All entrepreneurs should recognize and try to develop these attributes.
I call this being an entrepreneur for the right reasons. Many local entrepreneurs are lured by the glamour of tech culture and badly want to call themselves a startup CEO, all the while casting a blind eye to the sacrifices required for the long haul. Numerous bad days will require nothing less than the fictional "arc reactor" energy source keeping Tony Stark alive (spoiler: He's Iron Man).
Israeli founders also value fame, fortune and the sense of control that can be afforded only by entrepreneurship. But many of them are problem-solvers at heart, and this is what truly motivates them. You need look no further than Israeli culture and civic responsibilities to understand why.
How can I say this nicely? Israelis are frugal with their capital and treat other people's money as if it were their own. In fact, I've discovered this dynamic leads certain entrepreneurs to show too much deference to early investors. The biggest fallacy around startups is they fail because they run out of money. In truth, they fail because it takes too long to find a fit between product and market. As a result, they run out of money -- but it's a symptom, not the root problem.
Most Israeli founders with whom we work understand the importance of finding this fit as soon as possible. One of our ICONYC startups raised less than $200,000 and expects to make it last for up to 12 months if needed. This is lean methodology personified, and it's something all investors appreciate (especially in the early days).
We all know people who bounced from one startup idea to another without showing enough time, patience or commitment for any of them to fully develop. It's tough to know "when to hold them and when to fold them," and it's not necessarily prudent to stick with a dead-end idea for too long. That said, there is a doggedness among Israeli founders that promotes confidence in their ability to continue getting back up after getting knocked down.
Every one of the startups we've helped launch still is in operation, some of them 18 months after we first met. Anyone who knows accelerator math can tell you there's a high failure rate among startups in the three- to nine-month span after completing an accelerator program. It's unrealistic to expect this to last, but this type of survival rate is simply unheard of.
Simple business models.
New York City is a natural backdrop for Israeli startups because of the meat-and-potatoes nature of the Big Apple's business environment. Most local-area investors I've come across don't leave a pitch meeting without a clear understanding of how a company intends to make money and how soon its founders expect it will happen.
This meshes well with an Israeli business mentality. Many Israeli founders equate a paying customer as an acknowledgement of real value -- and its absence somehow construed as flawed execution. Though Waze and a few other successful Israeli startups adopt a "build it now and they will come" model, most founders are quick to identify who's paying for their product. It's not surprising, then, that all our companies use business models in which consumers pay directly. None of them follows another pricing scheme, such as third-party subsidation through ad-based revenues.
Building a business is one, long roller-coaster ride -- the kind that spins you while you're upside down. Many accomplished athletes talk about not getting too high or too low during games and always staying focused on the job at hand. On any given day, you could walk into an office belonging to one of our Israeli founders and have no idea if he or she is having a great day or a rotten one.
There's something to be said about keeping the flames burning inside without catching fire on the outside. Most successful entrepreneurs try to take emotion out of the day-to-day work of building of a business. I believe this helps them think more clearly and enables them to take on challenges analytically and without prejudice. It also lets the fuel burn longer.
The next time you see an announcement of an Israeli startup that's raised a large equity round or found an exit worth writing about, chances are you'll find founders with a familiar profile.