Based on an Interview in Tel Aviv
Creation of IBM Israel’s GTUGabi Tal is a can-do visionary who has been involved with Israeli high tech for decades, exerting a significant impact in a variety of different ways – many as a senior executive at IBM Israel where he led several lines of business, including the Public, Communication, and Distribution sectors. This experience gave him a broad and in-depth understanding of what was happening across the Israeli Information Technology industry as well as on the Israeli high tech scene, and made him realize that IBM was not sufficiently aware of the innovations being developed by Israel’s startup community. This fact was brought to the attention of IBM Corporate Headquarters, which, in 2001, set up a committee tasked with evaluating the Israeli High Tech potential for IBM in global markets. Gabi took on a major role in this study – which brought a number of critical facts to IBM’s attention: Israel in 2000 influenced global IT industry spending to the tune of $12 billion, yet almost no Israeli developers were using IBM hardware or software (MS, HP, and Sun had cornered the market), innovation was the unique ingredient in Israeli high tech, and since the local market was so small, Israeli entrepreneurs looked toward foreign markets from Day One. Following 6 months of research, these findings led IBM to set up a unique business unit in Israel – The GTU – IBM’s Global Technology Unit, with Gabi appointed to establish and lead this new venture. According to their website, the GTU is “… the crossroads between IBM and the Israeli High Tech Industry … enables Israeli based high-tech companies who are interested in conducting business and cooperating with IBM world-wide to receive local support together with international sales assistance.”
Penetrating the Israeli MarketIn order to build a significant share for IBM in the Israeli market, Gabi put together an innovative strategic plan. First, he spent considerable time with leading VCs, realizing that VC insights could help him learn the best way to make decisions regarding where and how IBM should invest its resources. He then created an extremely capable technology team of 12 people, many recruited from the competition, since he knew it would be relatively easy to teach them about IBM products, but hard to teach them Oracle, MS, etc. This team would be responsible for providing Israeli high-tech companies with technology support. He then proceeded to build an entire ecosystem – covering incubators, special army units, academic institutions, the Office of the Chief Scientist, VCs, etc. – all the while, working to get to the right companies and to get them engaged. Initially, the GTU team went after a few of the largest companies, including Amdocs, Comverse, Nice Systems, etc. Within a few months, they began collaborating with IBM on several significant deals, and by the end of the first year of the project (2002), IBM – together with several Israeli high tech companies – would show joint revenues of $50-60 million. This sum has doubled annually, and in the last few years has reached joint revenues of over $1 billion annually in global sales.
Introducing Israeli High Tech to the Global MarketAt the same time, Gabi put together a group of seasoned business development people to use the network of IBM sales teams to introduce Israeli solutions to their markets … matching Israeli ISVs and startups with IBM in destination countries. This resulted in a rapidly developing cooperation between IBM in various parts of the world, and the sale of Israeli technology in conjunction with IBM solutions. Through this process, the Israeli high tech industry began to appear more and more on the radar of IBM’s top executives – which, among other things, resulted in the altered pace of acquisitions in Israel. Prior to the establishment of GTU, IBM had only acquired one Israeli company; once the GTU came on the scene, IBM executives began to visit Israel more frequently, and to date IBM has acquired 14 companies.
GTU Becomes a ModelIn addition to its impressive success in Israel, the GTU has also become an excellent model for other IBM locations, and many of the GTU concepts were adopted by the special business unit, IDR (ISV and Developer Relations) – of which the GTU became a part. The GTU is already 12 years old, and going strong. The Unit developed a special process for assisting Early Stage Startups – by which they are nurtured through activities that help them build their business models and design their products together with IBM. GTU provides a tangible facility – including rooms, equipment and software – and has made a meaningful contribution to the Israeli high tech community. Gabi also mentored many people who became influential within IBM’s innovation community. For instance, the global competition, SmartCamp, which selects the early stage companies best matched with IBM’s “Smarter Planet” agenda, was initiated by an IBM Ireland employee who was mentored by the GTU and by Gabi personally. In response to the success of the GTU, other multinationals with a presence in Israel also created similar programs for early stage startups – including MS, Google, and Oracle.
The Times They are a-Changin’
Still Working with StartupsToday, having left IBM, Gabi still works closely with startups – advising and mentoring them – helping them to build out their business plans and business models, find the right channels, determine the correct positioning, develop a set of early references, and set well-defined strategies and targets. He has found that most first-time entrepreneurs – as well as early stage startups – don’t know how to focus on these critical issues, or to determine whether their ultimate goal is to build a large company or make a quick exit, and if an exit, figuring out who will buy them out (and creating their development plan accordingly).
Types of StartupsGabi has broken down startups into three types: Fast Food: App developers who want to make a lot of money at “$1 per download” in a short time. Clever Integrators: They identify a real need, combine existing technologies with their own, and often come out with a brilliant solution. An example is WAZE. They need to be open to collaboration and joint efforts; they don’t need to reinvent the wheel. Core Technology: Core technology companies in areas such as Cyber Security and Enterprise Software require investments of $10-$30million before they can start running. We need to figure out how to nurture this type of startup, to promote and encourage them. Gabi’s focus is mainly on mentoring the last two types of startups, and invests small amounts together with friends.
Market TrendsWith his finger continually on the pulse of the industry, Gabi now focuses on working with Israeli companies that address the major Market Trends – and have a strong innovative, unique, and focused approach: In Technology — Big Data, real time Analysis and Prediction, Mobile and mobility device management, and the Cloud as a main delivery and management system. In Solutions — Cyber Security, E-commerce (buying behavior is changing dramatically), Healthcare (patient records, analytics, research), Education, some areas of Clean Tech (energy, transportation).
Personal ProjectsGiving back to the community in a big and very personal way, Gabi is deeply involved in a number of volunteer projects. One is Unistream, founded by Rony Zarom, an inspired educational venture in peripheral areas in which tenth graders build a company, with a CEO, CFO, Marketing Manager, and Administrators. Following a year of study, they select a product, create a plan, develop and manufacture it, raise money, and sell it – working and thinking as entrepreneurs for 3 years. His main volunteering activity is with the “Tovanot B’Chinuch” initiative, founded by Dr. Yossi Vardi and led by Karen Tal, which takes on projects which invest and support underprivileged neighborhood schools. Rolling up his sleeves, Gabi personally heads the activities for 2 schools in Pardes Katz (the only non-orthodox neighborhood in B’nei Brak) with a total of 450 kids, in grades K-12. He spends two days a week at the schools, and says that the kids – some of whom are from single-parent homes and kids of foreign workers – are bright and eager to learn, and he loves them. In order to maximize the effectiveness of this program, which is now working in 14 (with an additional 6 to be added for a total of 20) of the 400-500 schools that need such support, the volunteer managers heartily support the Ministry of Education, the headmasters of the schools, and the teachers – fully cooperating rather than competing with them. The program provides funding for the activities and improvements. In Pardes Katz, there are already over 200 volunteers from IBM, Cisco, banks, university students, army units – all giving freely of their time so that the kids can stay in school in productive and interesting activities from 8-5 – and not spend their time on the street. The volunteers help with homework, give private lessons to students who are weak in certain subjects, and create programs according to their personal hobbies and expertise. Gabi, for example, teaches photography. The project is now in its third year and several schools have been significantly upgraded – libraries have been expanded, computer rooms have been created, the level of sports activities has been improved, and buildings have been painted. Another of Gabi’s volunteer activities involves support in the recruitment of the orthodox – both men and women – into high tech companies such as Cisco, Amdocs, IBM, and Intel – an initiative that has proved very successful. Bringing additional sources of manpower into the high tech community, it is also creating new and acceptable ways to support large religious families and enable more women to join the workforce. It was my great pleasure to interview Gabi Tal – a man who has made and continues to make a lasting and important contribution to Israeli high tech, to the country’s economy, and to its future.