from the October 2007 issue

Small is Beautiful

There are more than 100 Israeli companies trading on the American stock exchanges. Of these only Teva Pharmaceuticals and CheckPoint Software are billion dollar companies. The overwhelming number of relatively small companies raises the question why do Israelis limit their efforts to raising small companies. They have not given birth to a Nokia or Volvo.

One generally accepted view is that Israelis are impatient by nature. This is probably true and is evident in all aspects of Israeli life. Israelis hate to stand on lines.

Impatience is considered to be a career stopper for many major corporations. Impatient people are not considered to be good managers or leaders for a company. However, this probably is an oversimplification. More likely is the fact that there is a shortage of managers who have experienced the process of nurturing firms from startups to large companies.

There is a lack of experience in managing large companies. In the case of CheckPoint's Gil Schwed, its founder, grew with the company. Teva also nurtured its own management team.

Another explanation may be that Israelis tend to be problem solvers. They develop inhalable substances for specific viruses or DiskOnKey, a data storage device the size of a key chain, able to store various types of computer files. Cbyond's miniature medical camera found success in urological applications. The company was bought by a Canadian medical concern, at a fraction of today's value.

Adding the trend for keeping companies small is the constant parade of foreign companies that are searching to buy the smaller companies whose products fill a specific need. 2007 has already been marked a record year for merger and acquisition activity.

Reprinted from the Israel High-Tech & Investment Report October 2007

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