Mobile Horizons: Israel

mobile horizons israelWith the regularity of new announcements from the major mobile players, it’s easy to think that all the progress in the world of smartphones and tablets is being made by five or six companies based in the US, China or Japan, but that couldn’t be further from the truth.

In countries all over the world, companies are driving hardware and software innovation, and integrating mobility into businesses in new and exciting ways, often adapting the capabilities of mobile to unique local needs and finding solutions that larger firms are unable to spot.

In smaller markets, firms can be more agile and take advantage of close-knit communities of programmers, developers and entrepreneurs to fuel ideas and support each other, as well as remaining closer to the consumers and businesses they are trying to connect with.

One country that has truly taken advantage of its unique qualities to power mobile development is Israel. Dubbed the ‘startup nation’ by authors Dan Senor and Saul Singer in their 2009 book of the same name, Israel has served as a hotbed of technological innovation and success despite a population of just 8.2m and a relative lack of natural resources. Many venture capitalists consider the Tel Aviv-centred ‘Silicon Wadi’ second only to its Californian counterpart in terms of importance to the tech industry, and mobile is a huge element of that.

Rabin Square Tel AvivMobility in Israel
The mobile phone industry has always been strong in Israel. The nation ranks 12th for smartphone penetration, above the US, Canada, Germany and France, and mobile penetration is at 132 per cent, with 99 per cent of the Israeli population covered by network operators. Israeli children are considered to be very independent, often travelling to and from school alone, so many are given mobile phones from a young age by parents wishing to keep in touch, and grow up as mobile consumers.

Until recently, there were three major operators in Israel: market leader Cellcom, Pelephone and Orange. Then, in 2012, changes in legislation and a widening of the spectrum available to mobile operators meant two new carriers entered the market (HOT Mobile and Golan Telecom), plus three new MVNOs (YouPhone, 012 Mobile and supermarket-owned Rami Levy).

Many of these operators are quad-play providers, offering landline telephone, broadband and television services as well, and competition is fierce between all operators, driving prices lower and increasing data allowances and prompting faster development as carriers search for a unique selling point that will give them an edge.

When it comes to technology startups, Israel is almost unrivalled. 1000 companies are formed every year, attracting around $3.4bn (£2.2bn) in investment. Israel has the highest rate of startups per capita, along with the highest number of patents granted and scientific papers written per capita, and 4.7 per cent of the nation’s GDP is invested in research and development.

Military service is still mandatory in Israel, and the largest unit in the Israel Defence Forces is a technology unit, meaning that many young people emerge from their national service with training in computing and telecommunications, along with a strong sense of discipline and teamwork. Given the task of picking out Israeli startups doing interesting things with mobile, we really are spoiled for choice, but we think we’ve managed to pick four of the most interesting new companies to spotlight.

One of Israel’s great success stories of the past few years is public transit planning app Moovit, which offers real-time information and GPS navigation across different transit modes, and integrates crowdsourced community information into directions so users are guaranteed to be given the most efficient journeys that take conditions like traffic, weather and delays into account.

The firm was founded in 2012, launching in beta in Q2 before its worldwide launch in Q4 2013, and now has over 22m users worldwide in more than 600 cities. In the UK alone, there are over 800,000 users, and that number is growing daily. In January of this year, the company raised an additional $50m in Series C funding, taking its valuation to around $450m, as it prepared to expand further and take on competitor Citymapper in cities where it is dominant.

“The startup scene in Israel is, on a per capita basis, larger than in any other country in the world and tech startup exit amounts increased by 980 per cent over the past five years, to a record of $9.2bn in 2014,” said Alex Torres, vice president of global product marketing at Moovit. “It’s impossible for the buzz around the industry not to affect the way you do business. It is, of course, not without its well-documented challenges, but as with anything in life, challenges are key to growth.

Moovit was built with a mobile, global community in mind. The huge emphasis on mobile in the Israeli tech sector impacts on product directly, as the people you hire have great experience and intrinsically understand the mobile generation.”

5k app comboClear Sky Apps
mHealth is one of the key growth markets of the last five years, and Clear Sky Apps has positioned itself to be a leader in the field. It has developed a wealth of apps for iOS and Android built around taking consumers from couch potato to seasoned athlete, with one of its most popular applications helping users go from no running experience to being able to run 5km in eight weeks.

The 5K Runner app alone has seen 4.2m downloads, and the company’s suite of products also includes apps for various exercises, sleep monitoring and productivity. The apps have also been linked together to better tailor exercises to individuals, and are compatible with Apple’s HealthKit fitness product. The company was founded in 2011 by CEO Benny Shaviv, combining his twin passions of technology and fitness, and thanks to the huge success of its apps, has never needed to take external funding and has been profitable since the second quarter of its first year.

“Starting a company in the start-up nation has given Clear Sky the platform and support for growth and success,” said Shaviv. “Friends, acquaintances and former colleagues have all had experience in startups, which has created a strong supporting network for us and there is a good talent pool here to hire from.

“Israel is a hub for mobile, high tech and, what some may not know, pretty big on fitness as well. It’s not everyone, but its common enough that for many of us it’s all connected: mobile, high tech and fitness. We want the whole world to integrate fitness into their daily lives, so what better way to do that than to make it accessible to everyone through their mobile device?”

With such a strong mobile ecosystem in place in Israel, you need something to ensure that all these clever apps are reaching consumers. That’s where ironSource comes in. The company is one of the world’s leading platforms for software discovery, distribution and delivery, combining a premium ad network that targets engaged users with an installer-based platform for monetisation.

The company was founded “by developers, for developers” and was originally an app development studio, but shifted focus. Daphna Giniger, UK Director for ironSource, recalls how “we quickly found that the process of getting content discovered by the right users, installed successfully on their devices, and then monetised effectively was huge challenge stopping a lot of great products from becoming successful businesses.”

By pivoting to using data-driven solutions that help app developers succeed, the company was able to develop into a billion-dollar firm with over 550 employees in four continents, with a mobile offering that reaches over 400m mobile users a month. The company has expanded through a series of smart acquisitions such as gaming studio Upopa last September, and earlier this year closed a $105m funding round with investors including JPMorgan and Morgan Stanley.

“Being part of the vibrant and dynamic Israeli tech scene has definitely been an important factor in ironSource’s growth,” said Giniger. “For us, this has been particularly true in the sense that building a company in a relatively small local market means we had to rapidly work out how to succeed on a global scale, and that’s become the basis of the solution we offer clients around the world.

“Additionally, we are able to leverage a unique geographical advantage – we’re the western tip of the East and the eastern tip of the West. This allows us to act as a bridge between east and west, and it’s reflected in the huge amount of Chinese investment in Israel we’ve been seeing recently.”

zikit dashboardZikit
One of the new up-and-coming companies in the Israeli startup scene is Zikit, a location-based retail platform that offers users targeted rewards at various merchants and provides the companies with rich behavioural data and analytics tools to improve their marketing. The platform beacons to send consumers offers when they enter bricks-and-mortar retailers which expire when they leave, creating a “now or never” shopping experience that boosts engagement and revenues.

The company was part of Publicis’ accelerator, and is currently running its first pilot in Israel, teaming with 13 different mid-sized retailers to fine tune its platform before a wider release. They are keen to expand beyond Israel, and are looking for strategic partners to help them bring their platform to a more global audience.

“It’s not formal here – the whole culture of talking with each other, even with investors, we’re never in suits and ties. You can meet your potential investor on the beach in flip flops sometimes,” said Idan Meir, CEO and co-founder at Zikit. “It’s the same with helping each other out among startups. We all talk about everything, and most of the more mature entrepreneurs are very open to assisting and helping everyone.

“When we started and were looking for a technology that could allow us to provide this experience, we found that nobody really knew about beacons here in Israel. So we decided to open a developers community that will use beacons for other solutions, because you can do a lot of things with them. So we started a website and hosted the first beacon hackathon in Israel. It was amazing; it ran for 24 hours and people were really into it.”

This kind of story is common when you ask around, and really highlights what makes the startup scene in Israel so unique and influential. A young, tight-knit community of developers who are motivated, highly knowledgeable and eager to not only advance their own ideas, but help out each other along the way. Combined with the massive investment in technology within the country, it’s made for a perfect storm of conditions to drive innovation and experimentation, and will likely continue to produce interesting, influential ideas in the mobile space for the foreseeable future.