Failure University Resilience in the Face of Failure Is the Secret Ingredient That Drives Both Israeli and American Entrepreneurs

MARKETPLACE SHLOMO MAITAL Failure University Resilience in the face of failure is the secret ingredient that drives both Israeli and American entrepreneurs THE IMPACT “Start-up Nation,” Dan Senor executives scatter in all directions. For the Moran made his fortune from an earlier and Saul Singer’s bestseller about Israeli founders and investors, it’s a nasty shock; exit. His company, M-Systems, invented entrepreneurs, has had on Israel’s image all while for the employees, who are rudely thrust the memory stick, also known as the thumb over the world is enormous. More than seven back into the job market, it means beginning drive or disk-on-key and was acquired by million copies of the book have been sold; a new chapter in their lives. Sometimes the global giant SanDisk for $1.6 billion in and Technion-Israel Institute of Technology trauma ends up being of immense value to January 2007. He didn’t need to put in the President Peretz Lavie reports there is now the entrepreneurial environment.” 20-hour days that start-ups require. But for an endless, blessed stream of visitors from The failure of Modu is just such a “Big Moran, like many Israeli entrepreneurs, it is all over the world coming to the institute, Bang.” not about the money. It is about the challenge where Israel’s high-tech industry was born in At noon on a chilly November day in of doing things others say are impossible, to Professor Yitzhak Kidron’s microelectronics 2010, Moran left the offices of Modu, the change the world for the better. lab. company he had founded and that made Everyone knew no Israeli company could I am fortunate to meet and greet many the world’s lightest, modular, touchscreen succeed in the field of mass-market consumer of those visitors. Scholars, ambassadors, mobile phone, a tiny three-inch marvel, electronics. That did not stop Moran from professors, students, they all want to know an early smartphone. Modu was broke. Its launching Modu. When you tackle the near- one thing ‒ the recipe for cooking up their attempt to raise money by selling shares had impossible, you often fail, as Moran did own start-up nation. They want to know the failed. Apple’s iPhone had proved too tough a with Modu. But entrepreneurs regard failure secret ingredient that generates armies of competitor. Some 120 talented workers were not as a graveyard, not as an end, but as a intrepid and creative entrepreneurs who build unemployed. “Good night, Modu,” wrote a beginning, a school where you learn bitter wealth, employment and growth. blogger. “We’ll always remember you as the lessons, make mistakes, and avoid them I tell them stories about legendary audacious underdog who had the brass to tell in the future. Failure, for Moran and other entrepreneurs, like the late Efi Arazi Nokia to say their prayers.” Moran later sold entrepreneurs, is a university. And, I have to (The Jerusalem Report, May 7). But as Modu’s key patents to Google and paid off admit, the Technion, where Moran studied a management educator and innovation his creditors. electrical engineering and graduated in 1977, researcher for the past 46 years, I have and the other Israeli universities, too, afford learned that defining the one key start-up At 12:30 P.M., Moran walked to the nearby entrepreneurs a stellar education, but the ingredient ‒ the yeast that makes start-up offices of his next start-up, Comigo, where “University of Failure” is where the cold steel bread rise ‒ is elusive. a handful of Modu veterans were launching of will and resolve is tempered. Perhaps, after an email chat with 58-year- a new change-the-world idea. Moran had Resilience in the face of failure is, I old serial entrepreneur Dov Moran, I am a been unemployed for 30 minutes. And he believe, the secret ingredient that drives bit closer to finding the answer. The secret was already at work, scheming about how both Israeli and American entrepreneurs. It ingredient is the ability to deal with failure. his new idea would create new value for is widely known that in Silicon Valley, when Writing in the business daily The Marker, people everywhere. Far from being deterred entrepreneurs pitch to venture capitalists, Inbal Orpaz recently observed, “Every few by Modu’s failure, Moran’s alums competed a track record of three failures is far more years, Israel’s tech sector experiences a fiercely for the right to join his new venture. attractive to investors than a clean track ‘Big Bang,’ in which an important company (Comigo is developing smart set-top boxes record without them. disintegrates and its employees, founders and that link TV with smartphones). When addressing entrepreneurs in Israel 32 THE JERUSALEM REPORT AUGUST 26, 2013 KATZ I AV THE JERUSALEM REPORT AUGUST 26, 2013 33 MARKETPLACE and abroad, I use the events to do some in France, that a competitor had beaten his of the company.” research. I often give them a list of a dozen start-up, Cyota, to market with pioneering Why did the group from Modu want to factors thought to drive entrepreneurial software. Instead of accepting defeat, work with you again? innovation and ask them to assign points to Bennett and his team quickly changed “You need to ask them. What they told each, reflecting their importance. Among direction, developed successful anti-fraud me was they enjoyed working with me, Israeli entrepreneurs, the top two are: software, and then sold Cyota to RSA so why not continue? There are active ex- Resilience – the ability to recover from Security in 2005 for $145 million. Modu groups on Facebook and LinkedIn. misfortune and failure, which heads the list; Moran’s company, M-Systems, was For instance, recently there was a meeting and Stubborn Persistence, a close second. acquired by SanDisk, founded by Israeli- of Modu alums arranged by Inbal Arieli at Among Chinese entrepreneurs, the dominant born entrepreneur Eli Harari. Harari, too, is her new start-up. I am in touch with many of driver by far is Desire for Wealth. Resilience a graduate of Failure U He told interviewers my former workers through email and Friday is an also-ran. (Desire for Wealth is a distant from the Computer History Museum that at meetings. If I can help, I will invest my time sixth among Israelis). age 43, he was kicked out of Waferscale, a and connections for them, or provide them Today, everyone talks about the “cloud,” company he founded three years earlier, with advice… although most are smarter the system of distributed computing running after a dispute with its board. “It was an than me.” on computers linked by a network. But there unmitigated disaster,” Harari recalled. “I is another cloud ‒ one with a silver lining – was an also-ran.” THAT LAST comment brought me another the cloud of new start-ups that emerge from insight. In start-ups, egos destroy far more old failed ones. The Marker recently ran The ‘University of Failure’ ventures than they build. A touch of humility a graphic showing 15 such start-ups that goes a long way – and nothing fosters emerged from the failed Modu’s employees is where the cold steel humility more than a Failure U diploma. As and managers. Moran himself is running one of will and resolve is Eli Harari says, “It’s amazing what you can of them, Comigo, as CEO, and has invested achieve if you don’t mind that somebody else in others. They have names like Flayvr, tempered gets the credit.” Dov Moran agrees. Loopjoy, Vidmind, Onavo, GrabIt, Triapodi On his dreams for future inventions – “I and Minit; and some, like Gammado, are Harari then went on to found and build believe the medical world needs to move headed by women. SanDisk into the global leader in flash forward. Smarter medical devices, better I saw another such cloud in the office of memory cards, with just-announced medicine, closer monitoring. It may sound Yehuda Zisapel, legendary founder and second-quarter revenues of $1.5 billion and distant, but Comigo, which develops better president of the RAD group. On the wall of net income of $262 million. TV/display operating systems, is tied to this his office is a chart with some 80 start-ups, all Here is what I learned from Dov Moran vision. One of these days, we will hopefully born directly or indirectly from the womb of about failure, leadership, resilience, merge the two. I hope not too far in the the mother ship, RAD, shown at the center. mentoring, and what drives the legions future.” The RAD cloud has concentric circles, with of Israeli entrepreneurs. He prepared the Before entrepreneurs even approach Failure the outer start-ups launched from those in the answers to my email queries during a long U, they often serve long apprenticeships. inner ring, like ripples in a pond. flight to Tokyo. He flew economy, a chance, After graduating, Moran spent seven years he says, “to speak with his Comigo workers,” developing electronics for the Israel Navy YEHUDA AND his brother, Zohar, crammed into a narrow seat to show deep and another five as an industry consultant. started RAD, an early high-tech pioneer respect for investors’ money when he could He launched his first start-up, M-Systems, in specializing in low-cost modems, with afford to buy the whole airplane. 1989, when he was 34. fierce single-minded focus. When a worker On start-up DNA – “What was different How did Moran get the idea for the disk- had an innovative idea outside of RAD’s at M-Systems and Modu was the DNA of on-key? In 1988, at a New York seminar, he core business, Zisapel encouraged him or innovation ‒ the constant desire to innovate, failed to close his laptop computer properly, her to leave and start a new business.

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