Words from Down Unda

Here's a funny word mix-up that happened at the grocery store with my Australian roommate last night:

Matthew and I went to King Soopers and as we walked inside Matthew said, "While I grab the mince, can you catch a trolly for me, Mate?" I was going to tell him the buses don't run at night in Fort Collins, but he then pointed to the "shopping carts."

hamburger meat = mince
shopping cart = trolly

A Business Plan

I was also lost and during my freshman year I thought that Music Therapy would be a good route because I knew I played violin well, and it would be really neat to apply that to helping people.

I discovered that my passion for helping people and counseling others through music would be with me no matter if I had a degree in it or not - so lost and confused about the dreaded question "what will I do with my life," I declared almost a dozen different majors before discovering that Business Marketing was a good fit.

Why Because Marketing? Because it can apply to anything (so since I was indecisive, I could defer my descion of choosing an industry until after my degree). At first, I thought I would become a famous musican and apply my marketing skills to making millions and then giving all my proceeds to charities like the Multple Sclerosis Society (My Dad has M.S.) and other organization that have had a huge impact on my life like:
* Hillel & Birthright Israel
* The Brandeis Collegiate Institute in California
* Rocky Mountain Hebrew Academy
* Moodus: Heritage Retreats & AISH Institute
* Students In Free Enterprise
* Colorado State University.

Then, I thought I might be able to help market for the Jewish world - and after my last trip to Israel, I've realized that being a leader and taking a stand isn't that hard to do. The hard part is surrounding yourself with the right people so that you're comfortable with the descions that you make, and the contributions you instill. and even harder - standing by your contributions and making a commitment to make them worth something - a concept almost every Israeli politician that's not needs a lesson in.

So, I'm developing a business plan. I don't know what it specifically entails right now, but I do know it will be focused on helping to promote American connections with Israel to ensure that the Jewish people reach their highest potential in a world torn by war and poverty.

Part of the plan will include linking American Jewish entrepreneurs with Israeli University Student engineers and developers. Another facit will be finding the resources, communities, and investment opportunities that can be the foundation for a sustainable business model.

Wanting to play and travel is good too- as long as I remember to not runaway from my true potential.

Entrepreneurial Youth in Private Sector

The role of young people and entrepreneurship in Israel’s private and research sectors

India’s biggest hub is code-writing. Israel’s biggest hub is start-up companies and entrepreneurship.

Phenomena of Entrepreneurship in Israel
- Israel is tolerant to failure
- People care about “The Cause”
When ICQ was sold to AOL, the transition and adoption of the product was very important to Vardi
- Supportive domestic competition
When an Israeli company competed with ICQ and offered service that ICQ did not offer, ICQ referred customers to the Israeli company.
- International community support
- Government assists with start-up companies (Chief Scientist)

3 step program to become a millionaire:
1. Rise Early
2. Work Hard
3. Strike Oil

Before approaching VC, you must try to run the program on your own.
Then, once your concept is developed, then you can legitimately approach a VC.

Export Institute – Israeli export assistance
SMB assistance not well developed.

Coming from a revolutionist upbringing, Vardi believed socialism and government was the enemy. Most say those that start as a socialist don’t have a heart, and those that remain a socialist don’t have a brain. He was the opposite. Vardi now believes the government has its place with free markets, but through personal experience believes that if there was truly social justice, we would have discovered it at some point over the past 3000 years.

Trends in Middle East Economy

Trends in the Political Economy of the Middle East
IDF – Alisa Rubin Peled: December 29, 2005

First Book: Debating Islam in the Jewish State

OIL
The oil in the Middle East is the cheapest to produce. 2/3 of the world’s oil is in the Middle East (Saudi Arabia, Iran, Iraq, and Kuwait). 25% of the world’s oil is in Saudi Arabia.

1st highest mortality rate is Yemen at almost 7%
2nd highest mortality rate is in the Gaza Strip 6.17%
West Bank = about 4%


Is high births rate an effect of Islamic culture?
No. There’s actually family planning in Iran. The Total Fertility rate in Iran is only 2 babies per woman.

Israel’s average birthrate is 2.5%. This is high for a westernized country. Israel is one of the few countries that receive government incentive for additional children.

Young people having a lack of opportunity will contribute to extremism.

The Water Crisis
As well as desalinization - Israel is purchasing water from Turkey (for political reasons)
80-90% of water is used for agriculture in the desert Middle East countries. Why rely so much on agriculture? To be independent; for example, Saudi Arabia exports wheat.

Only 38% of women know how to read and write in Egypt.
Arab States put the lowest investment into R&D worldwide.
Israel has the highest percentage of GDP invested in R&D
Arab World puts 5.4% of their GDP into education, almost 1% higher than the world average.

Index of Economic Freedom: Israel ranks 33/161. Regulations and bureaucracy are still high. 5 families own most of the wealth in Israel. Netanyahu privatized this wealth to these 5 families.

Israel’s corruption is increasing, dropping 7 places to 28th on the Corruption Perceptions Index by Transparency International.

Israel’s biggest strength is High Tech. The Russian immigration helped boost this.
30% of start-ups in Israel are by repeat-entrepreneurs (versus 5% in the U.S.) – The Economist.

Never try to separate politics and economics in the Middle East. In the future, oil will help give Middle East countries a chance to make slow change.

Problems with the Arab World
• Freedom Deficit
• Woman Empowerment Deficit
• Literacy Rates

Dr. Alisa Rubin Peled

Alisa Rubin Peled, a professor at the IDC, specializes in international political economy (with a focus on the Middle East), business-government relations, and globalization. She completed a PhD in History and Middle Eastern Studies at Harvard University and a M.A. in International Economics and Finance at Brandeis University. She has held teaching and research positions at Harvard University, Brandeis University, Ben-Gurion University of the Negev and the Hebrew University of Jerusalem. She has also worked as an equity investment analyst in Israel and in Boston.

Her first book, Debating Islam in the Jewish State (SUNY Press, 2001). examines the development of Israeli policy towards the religious institutions of the Muslim minority in the state. She is currently working on a study titled "Where are the Managers: Higher Education Reform and Private Secotr Development in Egypt, Morocco, and Kuwait."

StartUp Jerusalem

StartUp Jerusalem (SUJ) is a non-profit organization aimed at stimulating economic development and job creation in Jerusalem. Our mission is to achieve the revitalization of Jerusalem and its national and international appeal through the development of the city's unique competitive advantages. We believe that aside from improving the capital's economic profile and creating new and high-value job opportunities, the achieveemtn of this goal will also assist in creating harmony between the city's diverse demorgraphic sectors.

Where are Jerusalem's Advantages?

StartUp Israel determined that there were 6 directions that start-ups in Jerusalem could be focused:
1. Health and Life Sciences
2. Outsourcing and business services
3. Culture and Tourism

StartUp Jerusalem benchmarked San Deigo:
Strong Academia, great zoo, and huge potential for bio-tech. Jerusalem is far ahead of where San Deigo was 20 years ago. StartUp is attempting to mimik Jerusalem's development with how they leveraged and branded San Deigo two decades ago.

Its a strange phenomena that when visiting Jerusalem, there's no information readily available for entertainment in the area. Your average tourist that goes abroad wants to spend a little extra cash, especially on the culture activities in the area. Only 5% of tourists in Jerusalem actually spend their extra cash on culture activities in the city.

Funding
- Local industry. This ogranization was created by the government of Jerusalem, who are actually putting their money where their mouth is.
- International partners. Most non-profit funders say, "You do the work, we'll give you the money." SUJ request money first
50% is the Israeli government and 50% is international donations.


Demographics
Ultra-Religious - Been 20% of the population in Jerusalem continuously.

SUJ is not focused on bringing American or European Theatre into Jerusalem, but promote what's already in Jerusalem to the international market. For example, if a play can only be viewed in Hebrew, non-Hebrew speakers won't go. To change this entry-barrier, SUJ tells the theater company - if you produce a play with English subtitles, we'll get people to come.

Eli Kazhdan

Chief Executive Officer, StartUp Jerusalem

Eli Kazhdan, 36, was born in Moscow, Russia, and immigrated with his family to the United State in 1975. Brought up in a religious Jewish home in Boston, speaking Russian, English and Hebrew, Eli Kazhdan was an activist in a number of Zionist and Jewish organizations and throughout his high-school and university career. Upon receipt of his BA cum laude in Government and International Relations from Harvard University in 1991, Eli made aliya to Israel.

In Israel, Eli became involved with the immigrant community from the Former Soviet Union, working at the Soviet Jewish Zionist Forum, a non-profit advocacy group serving this community's needs.

In 1996, Eli was among the small group of immigrant leaders in Israel, headed by Natan Sharansky, who established "Yisrael B'Aliya," the political party that showed unprecedented success in the 1996, and then 1999, elections. Eli served as the Cheif of Staff in the Ministry of Industry and Trade and then in the Ministry of Interior, and was intimately involved with the policy development of these two ministries. He served on a variety of governmental committees, and was a member of numerous business delegations abroad.

Prior to serving as the CEO of StartUp Jerusalem, Eli was the CEO of a management consulting company, assisting Israeli businesses and organizations in reaching the international markets, as well as US companies reaching the Israeli market.

Eli Kazhdan, who in addition to his degree in International Relations completed his Law studies at the Hebrew University, is married to Adina Kamien-Kazhdan and is the proud father of a 4-year-old daughter Alicia, 2-year-old son Yonatan, and new-born Amichai, Eli resides in Jerusalem.

The Israeli Brand

* Most people associate Israel with the conflict: army, terror, war, and strife at best - if not oppression and ethnic cleansing at worst.
* We accepted terms to a debate we cannot win. As long as we identify our conflict as an Israeli/Palestinian conflict we will loose. No matter how you slice it, Israel with be Goliath and Palestian will be David. Identifying the conflict as an Israel / Arab conflict avoids the David/Goliath perception, but still doesn't frame the debate in a positive image.

Is Israel Safe?

The latest market research has indicated that Israel's perception is very low. Mr. Medved's reaction to this statement is that "Israel's perecption has not even begun to be addressed yet."
With only $600,000 dedicated to tackling the negative image of Israel perception and awareness, an attempt to change its global perception has not even been attempted.

Our perception: Israel is still an unsafe place
The reality: 45 Israelis died in terror attacks in 2005 (In 2000, 450 died). In 2005, 600-700 Israelis died in car accidents.


How does VC in Israel Measure Up?

Israel has 4,000 start-ups in a country of 6 million people. Every single day in Israel, another company receives VC funding (not angel funding). In fact, after the 2000 dip in public and private funding as the intefada began to unfold, Israel's investments in VC funding did not dip as much as Europe. Furthermore, European VC investments continue to decline from 800, while Israel's VC investments account for half the VC funding of all of Europe.

Even when compared to the US, Israel is outperforming in VC funding. Israel is currently about 20% of American VC Funding (keep in mind the Jewish population in the U.S. is less than 2%).

Dot.com plus Intefada Boom
How did Israel come out on top and improve VC funding when they not only had to deal with the dot.com bust but a war as well?

The answer is culture. People around the world say "yeah, yeah, the Jews are smart..." give me a break. Look at our kids test scores - it doesn't measure up. The answer is culture.

- Israel compact entity is a huge plus.
- Israel likes to question authority
- Immigrants bring international networks
- The army is not only a technology hub, but another source of culture

Businesswise - Asia is Israel's friend, with trade increasing 30-40% every year.

Israeli is not your "Typical Sony." When you think of Sony - you think of Japan, even though Sony doesn't manufacture any of its own parts in Japan any more! When you think Intel you don't think Israel. Our obligation to Israel is to promote our story - because its not Intel's story - it's ours.

Your Daily Dose
80% of PC (Printed Circuit) boards are being inspected on Israeli technology.
The chips, algorithms, and 85-90% of every cell phone has Israeli technology.
The largest manufacturer of cellular phones is in Israel
VOIP was developed in Israel, (and made popular by Skype).
Flash Memory development is founded by Eli Hararri - in Israel.
Largest manufacture of DVD chips
Every single DirectTV box has Israel technology
You can't find a Cable TV system without Israeli technology
TEVA manufactures and sells more pills than any other company in America
From consumer, medical,

Israel Seed

Mr. Medved started raising money for his father's company before Venture Capitalism in Israel was created. The first VC in Israel was created in 1986.

Israel Seed Partners takes a hands-on approach to supporting and nurtuing seed-stage investments. Our investments are complimented by solid teamwork and a passionate commitment to building world-class companies.

Founded in 1995, Israel Seed Partners

Jonathan Medved

Founder and the Exectuive Vice President of Marketing and Sales at MERET Optical Communications Inc. (Sasnta Monica, CA) between 1982 and 1990. MERET, a pioneer in fiber optic transmission for high resolution video, was acquired by the AMOCO Corporation (NYSE: AN) in 1990.

Following his involvement at MERET, Jon came to Israel. He was part of the founding management team at Accent Software (Nasdaq: ACNTF), a leader in multilingual software where he served as Executive Vice President of Marketing and Sales in 1993-1994.

Jon founded Israel Seed together with Neil Cohen, starting up in his garage in 1994. Jon lead investments and later served on the Board of Directors of several Israel Seed Companies inclding: Compugen (Nasdaq; CGEN) and Business Layers (acquired by Netegrity, Nasdaq: NETE).

Jonathan currently serves on the BOard of Directors of Foxcom, Xtellus, Aelis Photonics, Softier, Mempile, Boradliht and Mempile.

Atid EDI

Atid E.D.I. (Economic Development for Israel) - 65% of business is done in the states. 7 of the U.S. states represented in Israel are owned by Atid. Atid functions as a contract operator.

Barriers to Israel Imports

Intellectual property protection rights are not very well developed. Money laundering issues are also being addressed.

Because there's no advantage to basic manufacturing in Israel, there are no free trade zones in Israel. Only when there are products that require highly educated workers, do you find a value to production in Israel.

Israel is very Euro centered. So when it comes to importing goods, mechanical aspects of the product are generally based on European standards.

$11 Billion of exports leave Israel every year, and only $6 Billion comes in. In the United States 15% of Americans have passports, 85% of Israelis carry passports with them.

-----

Israel has almost 40 bilateral trade agreements currently active.
Israel is New Mexico's 3rd largest trading partner. This strange relationship is easily explained with one word: Intel.

The biggest thing that students can do when returning to campuses is broadening the perspective of the American business person, and if America is going to secure its place in the global community, they must develope their global awareness. Another barrier is that most successful businesmen do not attempt to get involved with politics, and those that do, have a tough time with the transition.


How are American products currently promoted in Israel?
- Trade Shows
- Seminars
- Locating distributors

American Palestinian Trade

There are 2 Palestinian markets. The Israeli-Palestinians, which Atid works very closely with. The second market, is the West Bank-Palestinian market, which has no money. Supplying for these people becomes a problem, and the simple fact they can't afford anything more than what's cheapest and necessary also inhibits trade. Though the U.S. Embassy has tried working with supplying products to the West Bank, on the ground, it's still extremely hard to ensure that the goods will get to where they need to go.


In 1984, the old shekel was inflating at 3% a day. In 1985, through the efforts of Stanley Fischer and Shimon Perez the entire Israeli economy was changed overnight, and the new shekel was born.


American companies are not doing business in Israel because its Jewish. Intel got built because it made sense. The original start-up of Intel was developed with Jewish connections, but on a business level, any Jewish reason for Intel's presence in Israel is gone - and its now Israel's largest employer.

- 37 technological incubators
- 48 Israeli companies are currently based in Atlanta, Georgia. In March 2006, this figure is likely to jump considerablly when Delta will be offering non-stop flights from Tel Aviv to Atlanta.

EU Labeling

The EU requested that products made in the West Bank be labeled "West Bank." This labeling was turned down because it was too small of a market. Avoiding the issue of whether this would produced unwanted political side-effects.

Sherwin B. Pomerantz

Sherwin Pomerantz is President, Atid E.D.I. Ltd. He is a former Vice-President of Luz Industries Israel Ltd. with senior management responsibilities in policy development, public relations, administration, international relations and operations. Formerly President of Controls for Industry Inc. in Chicago, he graduated with engineering degrees from NYU and the University of Illinois and received advanced MBA education at Northwestern University.

Mr. Pomerantz founded E.D.I. seven years ago along with three other partners and they have been involved in economic development work ever since. The company functions as consultants to Israel's Ministry of Industry & Trade's Investment Promotion Center, and is responsible for the conception and preparation of all of their English language publicity material. E.D.I. also represents the trade interests, in Israel, of a number of U.S. states, including California, Delaware, Georgia, Oklahoma, Iowa, Wisconsin and Pennsylvania and maintains an office in Amman, Jordan as well. They also operate a local office on behalf o f both the Florida-Israel Chamber of Commerce and the America-Israel Chamber of Commerce/Chicago.

A 16 year resident of Israel, Mr. Pomerantz has been both Jerusalem Regional Chairperson and National president of the Association of Americans and Canadians in Israel. HE is a founding director and now Chairperson of the American State Offices Association, the umbrella group for the 16 US state offices in Israel. He is also a founder and General Secretary of the newly-established Visit USA Committee (VUSACom) in Israel, a group which encompasses a number of tourism service providers encouraging additional tourism to the US. In addition, he has been involved in a leadership position in many other community activities in Israel.

During his 20 years in Chicago prior to moving to Israel, he served as President of the Board of Jewish education, Regional President of the United Synagogue of America and in other community leadership positions.

An interesting point, the only country that Mr. Pomerantz will wear a kippah is Israel. Once, he covered his head in Istanbul, but never in America.

Mr. Pomerantz is married and is the father of one daughter, Debi, aged 32, living in Los Angles.

Notes from Re'ut Institute

Reut Institute is an Israeli Tel-Aviv based Think Tank. Avraham Infield, the founder of

Hillel is an inspiration for Gidi Grinstein.


Rabbi Ben-Zakie, leading the Jewish people during the destruction of the 2nd Temple left
Jerusalem in a coffin. He went to Yavney to establish a school to ensure the continutation
of the Jewish people. This is one of the first examples of Zionism.

Zionism was created to ensure the security of the Jews. Zionism is also about the Jewish
culture, prosperity, and Jewish majority in our homeland. Grinstein expresses that the
primary transforming piece that shapes the face of Zionism is the ways in which Jews connect
to Israel. There is a mismatch between the global Jewish world and the function of the
State of Israel.

Hehezkel Dror on Zionism in the 21st century said:
"The ability to compete is of fundamental importance... Israel's ability to compete is
imperative for its long-term prosperity"

Gidi Grenstein said: "Culture is part of prosperity"

Israel's external investment needs to be focused on
1. Moral High Ground
2. Jewish Added Value
3. Top 15

Moral High Ground - the values and responsibility of the young Jewish leaders on campus
Jewish Added Value - Development of uniquely Israeli products
Top 15 - Israel must remain in the top 15 developed nations of the world.

Being one of the top 10 in technology in the world gives us the potential to achieve this.
Israel's weakness lies on its dependence on government influence and policies.

Complexity of Challenges
- Existential Threats - the only country that talks about "ensuring its survival"
- Soci-Economic
- Sustainable Development - 2% growth per year (U.S. is 1%)
- Arab Minority
- Jewish World

Weak Governing Capacity
One of the weakest governments in the world. The average minister stays in power for 1 1/2
years. This presents a stronger need for strategic development, but an environment that
can't support it.

RI operational logic is to make Israel stay relevent during permanent adversity.
RI functions like a policy SWAT Team.

BLUE OCEAN STRATEGY - BY Harvard Business School
Red Ocean - feirce competition over small margins. Like sharks swimming in a bloodly ocean.
Blue Ocean - free swimming, like iPods
The challange of a Blue Ocean is always having to prove yourself

Educational Institution
Research Strategy: Knowledge / Expertise
Response Time: Weeks / Months
Focus: Information
Impact: Publishing Articles
Product: Policy / administration

Reut Institute
Research Strategy: Methodology
Response Time: Days
Focus: Mindset
Impact: Developing a Network
Strucutre: Teams
Prodcuts: 6 unique products

Reut can be the best in the world at making decision makers stay relevant.
Reut passion is focued on the State of Israel and the Jewish people.

How can we help? "Shop for ideas" of how to utilize our leverage.
Every part of the process needs to be transparent. This is the only way to make their
suggestions possible for those they're trying to help.

1995 - Rabin negotiates with Palestinian Economics
1.
2. Preserving the freedom of movement
3. Transitional Agreement (perment in a few years)
4.

Rabin created the "Economic Envelope." Through this system, there are Israeli officers that
collect and distribute monies to Palestinians.

The current policy is framed during a time when:
1. There is a wall
2. There is no free movement of goods and services
3. No agreement in sight
4. Israeli is actually WORKING with the PA

In essence, Rabin's agreement (10 years ago) has been redered irrelevant by our current
policies and actions (in 2005).

RI pointed out the the case now might be that the positions may be invereted. Therefore, we
should dismantel the "ISRAELI Collecting Process," and allow the PA to sort it out - because
they want and are striving for their own structure right now.


Our problem in Israel is not the quality of research. The problem is keeping those Israeli
researchers in Israel. Offering them a system that can compare with the 6 figure, safe
neighborhood environments in the US.

Creating your Mindset
1. Determining Where you look for your information
2. Deciding What value do you assign to that information
3. Refuse to accept the given mindset as the set way

25% of the information RI presents the government requests
25% of the information RI presents is pushed by RI
50% is developed by their on-going relationship

Gidi Grinstein

Founder and President of The Re'ut Institute, Gidi Grinstein served in the Bureau of Israeli Prime Minister Barak as he Secretary and coordinator of the Negotiation Team of the
Government of Israel to the Permanent Status negotiations between Israel and the PLO (1999-
2001). Gidi has extensive background in policy-planning in the ECF.



Grinstein is a graduate of the Harvard Kennedy School of Government (2002) and Tel-Aviv University Schools of Law (1999) and Economics (1991). Gidi is a Captain (Res.) in the Israeli Navy.

IDT

Michael Barnett, IDT
Global Marketing Director
January 2nd, 2006

IDT corporation grew through the development of pre-paid calling cards. Now bringing in almost $3 Billion in annual revenue, IDT is the 4th largest telecommunications company in the United States.

Howard Jonas, the founder of IDT, had a dream to find work from the worldwide talent pool. Howards vision of charitable work as an employment agency transformed into a 1000-employee telecommunication company. In 2002, 20-25 IDT employees were supplying customer service for 3rd party calling card distributors.

Mostly compared to India, other calling centers do not have the opportunity to connect culturly with their customers. IDT doesn't view themselves as competition with Inida, but more as a niche. IDT has developed a technology to detect a heart attack over the phone. These types of specific skills require's someone with a medical background even just to market the product.

75% of the people working at their call center have a university degree. Why settle for a call-center job even if you're overqualifed? IDT promotes from within.

Judy Low, Director of Recruiting
Past director of employment center for Olyim.

There are 3 main places where to find a job at IDT:
1. Call Center (850 people)
2. BPO
3. Managment

IDT provides the means for Americans that want to make alliah a way to move to Israel and still be connected to an American company and culture.

New Spirit

Yakir Segev, Chairman of HU Student Union
January 2nd, 2006
Student efforts to develope business and culture in Jerusalem

New Spirit, 2000 - the largest student organization in Jerusalem. Operating mostly through donations, New Spirit Functions with 8-9 part-time employees, and 15,000 involved students.
Jerusalem is Israel's poorest city. In addition, not only is the perecentage of Jews decreasing in the city, but is also loosing 1% of its total popluation every year.

To address these issues, New Spirit came up with the idea to give academic credit for voluntary work within Jerusalem. Intially without university support, the project itself was a complete failure. However, the project idea spawned the birth of a group that would be dedicated to rebuilding the city.

To get students involved, New Spirit allowed students to try for one week without a further commitment to the program.

They got their break when a Jerusalem entreprenuer believed in their idea and supported the groups cause. They realized they should not just be like every other student group requesitng assistance, but actually be a facilitator of creating student connections to businesses. This was achieved by creating Israel's first internship program, dedicated to integrating student needs with business development.

Sagev mentioned that he believes that one goal of New Spirit is to break through the mentality that NGOs do not need to be monitored or efficiently improved. Many times, you have the same businesses fighting for the same customers and resources without being organized about their efforts.