ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the October 2001 issue


There May Never Again be a Place Like Camelot: Myths and Markets


Camelot was the most famous castle in the medieval legends of King Arthur, and where, according to legend, he reigned over Britain before the Saxon conquest. At Camelot, Arthur established a brilliant court and hosted the greatest and most chivalrous warriors in Europe, the Knights of the Round Table. Camelot was the starting point of the Quest for the Holy Grail.

The mythology of Camelot and the story of King Arthur have been retold over the centuries. The legends of Arthur may have originated with an actual chieftain named Arthur who lived in Wales in the sixth century. Retellings have moved the story far away from that place and time. Because of the belief that Arthur will return, he is sometimes called "The Once and Future King", and Camelot itself has come to be viewed as a place, as well as a state of mind, and a reflection of a shining lost ideal. Tennyson, in the "Idylls of the King", writes that Camelot is symbolic of "the gradual growth of human beliefs and institutions, and of the spiritual development of man."

The year 2000, according to guest speakers at the one-day Ernst & Young Journey 2001 conference, may best be written into history as an illusory event. Indeed, it was like being in legendary Camelot. The money flowed incessantly into the coffers of the venture capitalists. These in turn bravely fought for "pieces of the action". Speakers valiantly set about to convince those present (almost 2000 hi-tech professionals, investors, entrepreneurs and service providers) who came to hear the wisdom of their seniors, namely that the year 2000 was a year out of sync. This was a year when the tidal wave of events resulted in situations which bore no resemblance to past performance. Common sense, proclaimed the speakers, is to accept the fact that 2000 was an aberration, a "once in a life-time event". They said it was an event that would best be forgotten, and that the proper attitude is "to get on with it". The conference colored identity name tags showed whether the attendee was an entrepreneur or an investor. Walking among the attendees, it was clear that the dominant color was red, (entrepreneurs seeking investors) with few other colors in evidence. One participant said that he came because " if I didn't my competitors would assume that I was dead". Another, a chief financial officer of a young medical products company, said that all was well. However, in an unexpected rash of candor he revealed that if the company did not receive an injection of cash, they might be facing serious problems.

"The conference is a success. The large number of attendees testifies to the strength and resiliency of Israel's high-tech sector," said Yoram Tietz, head of Israel's Ernst & Young (E&Y) Hi-tech practice. E&Y has invested heavily in the future of this country's high-tech sector. The Israeli group numbers more than 200 professionals, and has a greater market share than the next four competitors combined. Yet, beyond the stark reminders of the exit of many of the denizens of Silicon Valley and the two thirds drop in the valuation of Nasdaq, were the additional dark clouds of Israel's current security problems. In the aftermath of the attack on the US and the declaration of a "War on Terror", developments in the technology may be severely negatively affected. Only a handful of overseas participants arrived to the conference. It seems that lawyers are more venturesome than bankers. Larry Lopez of the Silicon Bank of California, which continued as a perennial co-sponsor failed to make it to the conference. John Roos, a partner in the Silicon Valley law firm- Wilson, Sonsini, Goodrich & Rosati, with more than 3,000 corporate clients, delivered a lecture on the current state of affairs and suggested that firms need to "clean up the mess of 2000".

In the aftermath of the disastrous events of 2000, when so much went wrong, many private investors in Israeli high-tech stated openly that while they are now on the sidelines, they will invest again when conditions improve. This recalls Camelot, which has come to be viewed not only as a place, but as a state of mind. 2000 though a period gone by, will continue to imprint itself as part of the tales and tapestry of financial mythology. Hoping for the "Once and Future Market".


Reprinted from the Israel High-Tech & Investment Report October 2001

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