Israel's Silicon Wadi | Adweek Israel's Silicon Wadi | Adweek
Advertisement

Israel's Silicon Wadi

How booming Web ventures are transforming hip, arty Tel Aviv into a top city for startups

Photo: Ronen Goldman

Advertisement

Avishai Abrahami sits on the rooftop patio of his five-year-old Web company, Wix.com, contemplating the scene below. The Mediterranean Sea gleams in the late afternoon sun, shedding rays on the wooden planks of the uber-popular Namal boardwalk at the Tel Aviv port on the city’s north end. As he reaches into the well-stocked ice cream chest for two chocolate popsicles, a programmer pulls a beer from the fridge while a kitchen staffer lays out trays of fresh melon, dates and mango for the 7 p.m. round of fruit shakes.

“It’s a little early for beers,” says Abrahami with a smile (since office hours go until 8 or 9 p.m.). “But he’s been working hard.”

In his jeans, T-shirt and flip-flops, the 40-year-old Abrahami appears completely relaxed. His fourth venture in 19 years, Wix offers easy Web-top publishing for regular folks, making inroads against competitors such as Geocity and Weebly. “We made a conscious decision that the uniform is jeans, T-shirt and flip-flops,” says Abrahami, gesturing to his own outfit. “We don’t want to give bonuses for the way you dress. Come and do your job well, and that’s how we measure your performance.”

The approach seems to work. With 23 million users, the company has been attracting 1 million new customers each month since launching its HTML5 website builder in late March. Now it is up to 200 staffers around the globe, most of them, naturally, in the firm’s Tel Aviv offices.

Abrahami fits right into the city’s tech scene, where some 600 early-stage companies have set up shop far from the suburban business parks and glass towers that typified Israel’s earlier round of successes. Besides gaining distance from those office complexes and fleets of company cars, today’s hottest companies, like Wix, are involved in consumer Web services instead of the data telecommunications, semiconductors or software security of the ’90s boom.

With startups accounting for 30 percent of the $2.15 billion raised in 2011 from local and foreign investors in Israel overall, Tel Aviv has emerged as the new center of the “Silicon Wadi,” named for the dry river beds snaking through the desert nation. Worldwide, the city is ranked fifth on the Startup Genome’s list of top ecosystems for newly launching companies—behind only Silicon Valley, New York, London and Toronto and ahead of Los Angeles, Singapore, Sao Paulo and Bangalore.

Tech fever is a relatively new trend for the White City, named for the modernist white Bauhaus buildings flanking its streets. Profiled widely for its hothouse DJ and club scene and beachfront vibe, Tel Aviv’s streets were the headquarters for last summer’s social unrest—a precursor of sorts to Occupy Wall Street—when hundreds of Israelis pitched tents along tony Rothschild Boulevard to protest rising rents and food prices.

But engineers, designers and other employees at tech companies like Wix generally don’t need to worry about costs. Their salaries are relatively high compared to the national $2,572 monthly average, ranging between $5,000 and $8,000 a month. When these techies are young and single, or even coupled with kids, they want to live and work in Tel Aviv, the Israeli equivalent of Manhattan’s Big Apple also known as the “Big Orange.”

The country’s ability to constantly reinvent itself—fine-tuning back-end programming that makes software run better—has kept it on the world technology map for more than two decades. Today, with renewed global activity, many Israeli companies such as Wix.com are striving to build empires, while others are hoping for quick buyouts and partnerships in deeply entwined relationships with American businesses including VC firms with offices in both countries and old school ties reaching from Stanford University to Haifa’s Technion, the local equivalent to MIT.

Continue to next page →