So we have to start with the war and the
effects of the war. And when you and I talk, we always say,
look, we don't want to forget the people involved and the human tragedy being
played out every single day. But with that, there are economic
effects. So give us a sense of the Israeli
economy overall. I know you had a bad fourth quarter, but
last year overall was not so bad. No.
Last year was actually growth of 2%. We beat the OECD average, which was 1.7
for the year. The year before, of course, in 22 is
6.5. So like a tiger kind of economy.
They're projecting that next year will be 2%, which is for Israel, sort of
sludgy. But but I think the projection for 25 is
already at four and a half percent. So the economy is clearly already in the
middle of a rebound. The bad numbers that were for the fourth
quarter were largely because the major impact of the war was in October and
November, when the full brunt of the call up of all the the workers who had
to go to reserves, 300,000 of them, but they're now coming back.
The economy is coming back. The three sectors that have been hit the
worst are tourism, agriculture and construction.
And all of these are are starting to see mitigation.
So in the tourism area, people like United have started to fly.
The channels are opening up in construction and agriculture.
Foreign workers are coming back from new sources.
There's discussions about how to bring Palestinians back from the West Bank in.
So all of this is coming back. And of course, everyone's watching the
tech sector to see what's going to happen there.
Exactly. And that's why we talk to you and with
relish. So that's the economic situation
overall. What about the business climate in doing
business, particularly with some of the startups that you invest in?
Well, what's amazing is that throughout the entire war, investors have behaved
incredibly maturely and seriously. They didn't stop investing.
And in fact, some of the investors kept on even flying into Israel during war.
They're unfortunately used to it. Right.
This is not our first war. We fought them over and over again.
And everyone knows the way that the economy in Israel performs, which is
immediately at war down. And I think it was even on your show, I
predicted that it would come right back up and the shekel went down.
Right back up. The Israeli stock exchange down.
Right back up. And it's in the tech area.
It's also happening. I mean, we're entertaining delegations
from Thailand and Korea and all over Europe.
People are still visiting. They're still making investments.
The big companies in the tech sector, the private ones, the unicorns of which
Israel has about 100, which is about 10% of the global total, which is fine for a
company, a country of 10 million people. They're doing okay.
The problem is the small companies, the guys who don't yet have tens of millions
of dollars of revenue, they haven't figured out their their product market
fit. So we set up a resilience fund, which
actually is a little strange for the venture capital because we weren't
taking any fees or carried interest because we wanted to simply save this
whole group of small companies who were really running into a terrible
weather pattern for fundraising and we manage, I think, in record time to both
get that fund raised. We've made 26 commitments in less than
three months. That's really impressive to hear that
that capital is being deployed at that scale.
But I am curious about the talent pool. Like you said, of course, some of these
foreign workers are starting to come back.
But also, like you mentioned, a lot of workers have been called up for military
service. And then when it comes to these smaller
companies, even if they get the funding that they badly need, what
does the actual workforce look like? So about 15 to 20% of the high tech
workforce was in service. That's now dropped to about 5%.
Most of them are back in their positions.
But even when it was up at those relatively high numbers, like one in
seven of a staff, we're really good at multitasking.
Even the men and we
everyone was covering and working late and there was this slogan in the country
which was Israel Tech delivers no matter what.
And we just made sure that the companies met their commitments didn't screw up
their customers. And it really it works.
That's how Israel operates. Now, in the other industries, like in
construction or in agriculture, not so much.
Workers aren't there. You're not getting them.
But was wild, is it? In Israel, there was this massive
outpouring of volunteerism where high school students and college students who
are not yet in the service were and families and retirees were all picking
fruit. It was like back to the old days when
there were. Kibbutz volunteers and the whole country
was trying to save the agriculture. Not so much in construction.
What about the region more generally? I remember one of the first times we
talked to you. You just gotten back from Riyadh.
It was really just before, I believe, the conflict began.
And there were great hopes about really doing business for the tech sector
across the region. Are those dashed or are they postponed?
Are they going forward? I think they're going forward with much
less fanfare. I was in Abu Dhabi and Dubai last week,
and we have a subsidiary developing artificial intelligence, would you
believe, in Abu Dhabi, together with support from the emirate.
We're creating some incredible technology around wealth management and
to my understanding, the leadership both there as well as in the kingdom of Saudi
Arabia, is strategically committed to reconciliation.
And while things are clearly not going to be big headlines and all kinds of
press announcements, there is ongoing discussions, investment.
And for us, really, nothing has changed. Do you still have access to the same
sort of investment funds coming in for your startups?
Yes. In fact, there's been, you know, some
reports about increased dollars coming, and I won't comment on that.
And people are not reluctant to go into an uncertain area.
Look, I think that remember when when there's a crisis, I don't know who has
said it's a terrible thing to waste because it's tough if you're holding a
portfolio of companies. Valuations come down.
They need more money. It's a problem.
It doesn't make it easy. But if you're a buyer and you've got dry
powder, oh my gosh, it's an opportunity. And there's a lot of smart money out
there that says, wait a minute, Israel is not going anywhere.
Israel's on sale. Okay, I'm getting into it.
And we're seeing a lot of that kind of investment going on.
