How Israel (the “Start Up Nation”) Lost A Major Start Up

How Israel (the “Start Up Nation”) Lost A Major Start Up

A Better Place... no more.
A Better Place… no more.

 

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Reposted from The Jewish Week:

Israel’s Electric Car Crashes And Burns

The demise of Shai Agassi’s Better Place rattles a ‘Start-up Nation’ accustomed to success.

Tel Aviv — In recent years, theBetter Place electric car startup and its visionary Shai Agassi have been synonymous with the daring and genius of Israeli tech entrepreneurs. The story of its founding even served as the introduction to the best-selling book “Start-Up Nation.”

But with the announcement of Better Place’s closing this week, Israel’s tech community and the country as a whole have been trying to come to grips with the most spectacular flameout of a private Israeli technology venture ever seen.

Not only does it tarnish Israel’s startup brand, the implosion has reverberated throughout the world of “clean technology” companies and automobiles with renewable energies.

“The sad thing about it is this project was really associated with our national brand. It was a great story,” said Jonathan Medved, a venture capitalist who is the chief of Our Crowd Ltd., and a former partner in Israel Seed Partners. (Medved was not an investor in Better Place.) “As a country we had skin in the game. This is not just a loss of the investors, employees and suppliers; we all share in this loss.”

Barely a year after the Better Place cars hit the market and after burning through nearly $1 billion in venture capital investments, the company’s investors — chief among them Israeli business tycoon Idan Ofer — decided they could no longer underwrite the company.

Agassi, the charismatic young Israeli tech executive who was the heart and soul of Better Place, was selected by Time magazine as one of the 100 most influential people in 2009.

It was Agassi who sold Israeli President Shimon Peres and former Prime Minister Ehud Olmert on the idea of making Israel a pilot market to test a car that was supposed to upend the auto industry and free the world from dependence on gasoline producers.

But as chief executive, he is also bearing the brunt of accusations of widespread mismanagement and dubious business strategy that led to the squandering of the Better Place investment war chest. He left the company in October after a falling out with the Better Place board — the first sign that the company’s future was looking dim.

In the days following the announcement of Better Place’s liquidation on Sunday, there have been endless postmortems and debates about what went wrong.

Did the company lose focus on its all-important pilot market by simultaneously seeking footholds in bigger countries like Australia and China? Or did it not expand and build up infrastructure fast enough?

Was Israel’s expensive market for automobiles, concentrated in the hands of a few powerful importers and dominated by leasing companies, really the ideal pilot market? After selling about 1,000 cars in a year, could Better Place have done a better job at marketing in a country in which many saw it as a national project?

And finally, did it raise too much money and suffer from bloat, or did it underestimate the amount it would need in its coffers to fight big automotive makers and energy companies?

Despite the myriad problems, owners and others who had tested the battery-fitted Renault Fluence praised the driving experience.

One venture capital investor insisted that Better Place still had a positive impact by shaking up the automobile and energy industries, and focusing attention on shifting away from gasoline-fueled cars.

“Better Place was taking on big auto and big energy,” said Jeff Pulver, the founder of Vonage and a venture capital investor. “They needed a logarithmic amount of more money. I look at this as a positive failure not a negative investment. If I look at where the world is going, Better Place proved you could have a vision and make it happen. Maybe next time they will have deeper pockets.”

However, Pulver acknowledged, “From the public relations perspective, if it turns this company into the largest failure in a startup, it will stand out in the record books. But it was a big idea, and they had to do everything they could do to make it big.”

Better Place’s investors and a group of customers are now battling in court over the company’s liquidation. The startup made a promise to Renault to buy 100,000 cars by 2015 — an example of Agassi’s boldness. The company must deal with customers who paid some $30,000 for cars and prepaid tens of thousands of dollars up front for electricity service that may become unusable if there is no one to operate the company’s switching stations.

Jacob Ner David, a Better Place car owner and serial entrepreneur who is managing partner Jerusalem Capital I, said the company did not inform customers until the morning it filed for liquidation.

“The customers were the big believers. To everyone who spent 125,000 shekels [$33,000] and prepaid for four years of electricity, it was a big decision,” said Ner David, who faulted Better Place for forgetting it was a startup and allowing itself to become bloated from its cash. “The people who are really getting screwed are the customers, and they are the ones who stepped forward.”

Writing in the Jerusalem Post, Yosef Abramowitz, who pioneered the establishment of solar energy fields in the desert of southern Israel by establishing Arava Power, said that oil giants and autocratic regimes that export oil are the big winners from the Better Place collapse.

He noted that while the core vision of Better Place could still be implemented, investors are likely to be more demanding and barriers to entry will be higher.

“There was a moment in time when it was believable that Israel could lead the way to become the first carbon-neutral country on the planet,” Abramowitz wrote.

“The crash of Better Place is a sad day for Israel and for ‘Start-up Nation’ because the concept and brand so associated with making the world a better place through a business has failed.”

Medved, the venture capitalist, said he was trying to take the setback in stride. After nearly two decades on the international map of high-tech development, Israel needs to take a mature approach to the Better Place failure by realizing that startups involve failure as well as success. Israeli high-tech entrepreneurs need to learn the lessons and move on rather than bemoan Better Place, he suggested.

“A sign of maturity is not just how do you celebrate your big wins, but how do you deal your big losses. You should obviously reach conclusions about what lessons can be learned,” Medved said.

“You don’t get colossal wins without colossal failure. Anyone who doubts that Shai Agassi will be back is wrong.”


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Jewish Social Media 101 – Jewish Non-Profits and Social Media: Do They Get It?

Jewish Social Media 101 – Jewish Non-Profits and Social Media: Do They Get It?

Jewish bloggerHere’s an excellent blog post from Rabbi Jason Miller that illustrates the need for Synagogues and Jewish non-profits to do more than take the easy way out of performing social media. Key line regarding volunteers: “you get what you pay for.” And if you’re not paying, you’re probably not getting the best Jewish social media experience possible.
The Jewish Week
Published on The Jewish Week (http://www.thejewishweek.com)

Jewish Non-Profits and Social Media – Do They Get It?

By Rabbi Jason Miller

Are Jewish Non-Profits adding social media to their arsenal of marketing tools?

Are Jewish Non-Profits adding social media to their arsenal of marketing tools?

Cross-posted to Blog.RabbiJason.comAs a rabbi who is a social mediaologist, I find myself consulting a lot of synagogues and Jewish nonprofits on their social media strategy. The leaders of these institutions all recognize that they require a social media strategy, but the plan for how it will be implemented varies greatly.Many synagogues in 2012 have yet to budget for social media marketing so they look for the quickest and cheapest solution. In most cases this comprises of identifying a volunteer lay person or existing staff member who is willing and able to set up the congregation’s social media presence across the major networks. In some instances this is a teen who claims to be a Facebook wiz and over-promises and under-delivers. With many volunteers, congregations often get what they pay for.

Jewish organizations seem to be a little further ahead than synagogues in the social media department. Third party retailers like Target and Home Depot have forced nonprofit institutions to get on the social media bandwagon quickly because of their online contests in which the retailer partners with nonprofits for fundraising prizes. These crowd-raising initiatives have required nonprofits to bolster their social identity online to compete in the contests.

While businesses in the for-profit world have allocated serious funds to their online marketing initiative, the nonprofit world is still light-years behind. That should be no surprise because nonprofits often take a wait-and-see attitude when it comes to change.

Robert Evans and Avrum Lapin recently wrote on the eJewishPhilanthropy blog about an unofficial survey they conducted to investigate how Jewish nonprofits are “utilizing social media and how it enables them to meet the demands that they and their leaders are facing.” From the outset, they assert that the picture is not entirely positive and quote a synagogue software system developer lamenting that “most of the Jewish world seems frozen in the 20th century when it comes to being technologically advanced.”

Our recent survey demonstrated a significant lack of human or dollar resources invested by Jewish groups into Facebook and Twitter. Very few synagogues even seem to have any presence on Facebook or Twitter, although they all have websites, many of which are reasonably interactive. Robyn Cimbol, director of development at New York City’s Temple Emanu-El, noted that her congregation was probably the first Jewish congregation to have a website but today they have no specific plans to foster Facebook or Twitter activities, citing other pressing priorities and no apparent demands from their 2,800 member households. “We have limited staff resources and capabilities for this,” she noted, “but we are gearing up ultimately to recognize social media as one communications opportunity,” she told us. She did emphasize that “a number of staff members do use Face Book [sic]… to communicate with specific constituents but it is not used Temple-wide.”

Facebook reports that 89% of 1.3 million U.S. nonprofit organizations boast a social networking presence, offering opportunities potentially for fundraising. However, fundraising on Facebook is still a “minority effort,” despite recent gains.

The authors of the study recognize that the Jewish nonprofits that have succeeded the most in social media marketing have been those that have participated in social fundraisers with third parties, such as mega-retailers or major foundations. Many organizations that find themselves competing in these online social fundraisers have allocated staff time or in some cases hired dedicated part-time staff to manage these initiatives (if they win there is a good return on investment).

The Jewish Education Project and JESNA’s Lippman Kanfer Institute (in partnership with UJA Federation of New York) have launched the Jewish Futures Competition, which will dole out $1,800 prizes for Jewish nonprofits to advance their social media identities. As more synagogues and Jewish nonprofits become more focused on bolstering their social media exposure (moving from building their fan base on a Facebook page to increasing their brand amplification through likes, comments and shares), they will integrate their email marketing (Constant Contact, MailChimp, etc.) and online fundraising (Razoo, CauseCast, DonorPages, etc.) into their social networking.

Evans and Lapin’s study demonstrates that nonprofits do understand the value in using social networks for fundraising. “According to this year’s Nonprofit Social Network Benchmark Report, four out of five nonprofit organizations find social networks a ‘valuable’ fundraising option.” However, these same nonprofits aren’t able to quantify why that is. It is important to remember that social media is still in its infancy. As it grows (and its exponential growth doesn’t seem to be slowing down any time soon), more synagogues and nonprofits will get on board by allocating the necessary resources to its success.

As they say, the “proof is in the pudding” and the ROI will be noticeable for the synagogues and Jewish nonprofits who dedicate the necessary time and resources to building their brand/mission exposure through social media. Change is never easy and the nonprofit world is more risk averse when it comes to technological innovation. At least the conversations about social media integration are taking place in the Jewish nonprofit world, and the studies are showing that a realization exists that this is a necessary form of communication, marketing and fundraising in the 21st century.

Rabbi Jason Miller is an entrepreneurial rabbi and technologist. He is president of Access Computer Technology in Michigan and blogs regularly at Blog.RabbiJason.com. Follow him on Twitter @rabbijason.


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