SPEAKER_04 0:09

Good morning everyone and welcome back to the future ventures podcast on scaling with clarity. This morning we have an amazing investor coming out of Israel. His name is Odet Agam. He's the managing partner and founder of NextLeave Ventures, an Israeli-based early stage deep tech fund. He's an accomplished operator, a return investor with over 35 years of high-level experience across Fortune 50 corporations, startups, and venture capital. His defining credential is that he has been on both sides of the table, building companies and funding them, which gives him an unusually grounded perspective of what it actually takes to execute at scale. Welcome, Odette.

SPEAKER_00 1:00

Hi Maxim. Thank you very much for having me.

SPEAKER_04 1:04

It's an absolute pleasure. I've been meaning to reach out to you and connect. Um given everything that is happening at the moment. I'm super interested in in the conversation this morning and get your perspective on it. So why don't we start with just kind of your origin story? How did you come to funding Next League Ventures? Um, and kind of what was your path to this point?

SPEAKER_00 1:45

Okay. So uh let me start uh maybe you know with the beginning. So my uh academic credentials, I started off as an as an engineer. I have my electrical engineering degree from the Technion. Uh, it's the most uh prestigious uh institution uh for academic engineering studies in Israel. I have my master's in electrical engineering from Tel Aviv University, and I also have an MBA from NYU, the Stern School of Business in New York. And um when I lived and worked in the US for about seven years throughout my life in three different periods, and the last time when I came back uh from my relocation to the US, uh back to Israel, was about 2002. And one of the first things I did back then is I uh looked for the alumni club of uh NYU in Israel, and when I couldn't find it, I created it, I co-founded it. I started the alumni club for uh NYU here in Israel, and ever since then, for more than 20 years, I serve a volunteer as the president of the NYU Alumni Club of Israel. Uh, in addition to that, I'm also volunteering uh in a kind of a strategic way as a member of the board of a nonprofit organization called Big Brothers, Big Sisters of Israel. Uh, I've been on the board since 2014 and I'm chairman of the board since uh 2017. So it's already nine years that I've lead I've been I've been uh leading that organization. On the professional side, I started my career in startups. So I've been with startups both here in Israel and also in the US for uh more than 11 years, and then I spent more than 11 years at Intel, you know, the cheap giant. Uh and um I like to say that I speak both languages, right? Because you know, a small startup, a big corporation like Intel, they might be saying the same words, maybe even the same sentences, the meaning can be completely different. And if you don't if you don't know how to translate, then you know they talk past each other. And what can you do? You know, big corporations like Intel need startups, and startups need big corporations in almost every stage in their lifetime. Uh, when I was at Intel, I led strategic planning of several different product lines, and uh uh these were product lines that actually uh um generated more than 30 billion dollars in revenue for the company. And in my last position at Intel, I led a group that was called the Strategic Technologies Group. And what we did back then is we identified and incubated transformational disruptive technologies. Uh, basically, what we would do, and this is this somewhat relates also to what we do at Next Eventures, we would start with what I call what we we used to call the long-term outlook. Basically painting a vision of how the world is going to look like in 10 years from now across business, usage, and technology. Because only if you look at all these three dimensions holistically, you can come to a realistic view of how the world is going to look like in 20 years, in 10, 20 years. And basically, if I if I um you know uh look at this long-term outlook as kind of an iceberg where most of it is underneath the water, there's only like 10% on the top that you see floating up above. So the thing that you see like uh uh on the top is like a matrix. On one side, you have the top 10 transformation areas, the paradigm shifts, the mega themes, the mega trends, the things that are changing in a big way in our world in the next 10 years. And then the other axis is the vertical industries, so like transportation, education, defense, uh, government, um, healthcare, etc. And we would build actually an understanding, a description of how the big transformations are affecting the vertical industries, and out of that we would derive the uh technology domains that we called long-lead technologies. These were, on one hand, technologies that are transformative, disruptive, changing the world in a big way, and on the other hand, technologies that uh uh Intel either has or should have a sustainable strategic advantage in that in those technologies. And then uh once we identify you know about two, three domains like that every year, I had in my team reporting to me entrepreneurs. Oh, amazing, internal entrepreneurs, and we would basically set up startups that would do the same things that startups do in their pre-seed seed all the way to series A, both technical, business, and so on. And um, uh the idea was to bring this into the Intel roadmaps of of products. Yes, I won't go into too much detail, but I'll I'll give one story, and I I always like to talk about my failures, the things that those are the ones that people don't share, so that's amazing that you're doing this. Um I'm very uh very excited about telling you about my failures, yeah. So 2012, 14 years ago, we've identified AI as the next big thing, artificial intelligence.

SPEAKER_04 7:36

I'm super curious because I mean Intel was a household name name, like Intel was the premier chip company that and so I'm like, well, how did Nvidia come about? Like if you have this futuristic thinking and entrepreneurial structure of you know matching the themes with the industry, to me, it was kind of obvious that at some point this would come about, and so I mean Intel is going through a lot of struggle, and last year the new CEO, so uh they're on the rebound, but but how do they miss the AI wave?

SPEAKER_00 8:08

So that's why I'm talking with you about 2012, right? Yeah, we identified the AI wave and uh we basically established a small startup within Intel. It started with one person, an entrepreneur, uh reported to me, then we grew it up to five people and more. And in the in the next two years until 2014, we did what startups do. We developed uh technology, uh proof of concepts and pilots, and we developed a full business plan. And in 2014, we presented the full business plan to the top management of Intel, and this was a program that required Intel to invest uh uh about$300 million to make this happen. Uh, and if we would have been successful, two things might have happened. The first one is that I would probably have chosen to continue and be at Intel at this point, and the second is that the queen of AI would not have been Nvidia, it would have been Intel. Yeah, but unfortunately, as you just as you mentioned yourself, you know, there's a fray a phrase that I really uh uh sympathize with with sometimes you win, sometimes you learn. So we learned a lot from that experience, and then fast forward 2017, I decided to leave Intel, and that the next chapter in my life is going to be about investing in high-tech startups. And what I did is I called my friends, my colleagues, to start Next Leap Ventures. When I say my colleagues, uh, we are uh I called four of my friends that I used to work with at Intel. Yeah, they left Intel before me in 2015, 2016, I left 2017. We were all working as the strategic planning and business development team of Intel. In the 10 years that we've worked together as an integral team, between 2006 and 2016, we led the definition of the Intel product lines that generated more than 80% of Intel's revenue globally.

SPEAKER_04 10:22

Wow.

SPEAKER_00 10:23

This is several hundreds of billions of dollars, consistently over the course of 10 years. And during that time, we developed a lot of uh expertise, experience, methodologies, networks, and so on that allowed us to do this successfully and are also very relevant for startups and for investing in startups. So we started Nestle Ventures in 2017. Uh, since then, we've invested in 26 companies. We invest in uh Deep Tech, Israeli early stage companies. Okay, and out of the 26 companies that we've invested in, we already had three successful exits. Um one of them, for example, was a company called the Concertio that did uh uh performance optimization for computing systems. Yes, three years after we invested in them, they were acquired by Synopsys.

SPEAKER_03 11:20

Okay.

SPEAKER_00 11:20

Uh our second exit was uh Nanofabrica. These guys did a 3D printing at one micron resolution.

SPEAKER_04 11:30

Amazing.

SPEAKER_00 11:31

The Mossad was one of their first customers, okay. Seriously, and I don't know what they what they do with it. Um and uh we were the lead investor of an equity round in Nanofabrica where we had investors like uh Microsoft Ventures, N12, and a few others join us, and a year a year and a half later, nanofabrica was acquired by nano dimension.

SPEAKER_02 11:56

Amazing.

SPEAKER_00 11:57

Uh our third exit happened just in December, uh, three months ago. Dell acquired Data Loop. Data Loop is a company we invested in in 2019 initially. Yes, uh, they they did uh um uh uh uh a platform that enables uh uh the development of AI platforms, and the part in Dell that actually acquired the data loop is the part that used to be EMC, so storage part, and they realized that um you know Dell is selling storage solutions, that they needed an AI layer on top of their hardware, and this is why they acquired the data loop. And just uh a couple of weeks ago, they already announced the Dell Orchestration engine or Dell AI orchestration agent engine, which is basically the data loop uh platform.

SPEAKER_04 12:58

Amazing, and so oh that is it. Um I mean, is it hard to find companies like that domestic success stories in Israel to invest? Or like the perception that we have here in North America is that Israel in particular is kind of like the Silicon Valley of the of the east, like they just abundance of these technology entrepreneurs that they're just uh spinning up amazing ideas in in in in companies. So give me a little bit more of a sense as to uh as to these companies because those are like really, really um important success stories with some of the household global names that that have acquired those companies.

SPEAKER_00 13:39

Right. So um, so you're right. I mean, uh Israel is considered to be uh you know second best to uh to the Silicon Valley in terms of uh startups uh NVC investments. Uh there's more than 6,000 startups here in Israel, and Israel is a very small country, right? It's uh the size of New Jersey and actually has this the almost the same uh uh number of people. Population is under 10 million people here, uh and still there's more than 6,000 startups. Uh on a per capita basis, it's by far leading you know, on almost every metric you can you can you know think of. And um but and and there is you know a lot of uh VC money coming into startups here, both from uh American, European, Far East, and also Israeli money that comes into these places. Uh and uh and there's also an abundance of uh Fortune 500 companies that have RD centers here, a lot of multinational corporations. Um, it started off in the 70s when uh Motorola started their uh uh center here, then IBM, and the third one was Intel. Uh and then later on, I mean today almost all Fortune 500 companies have RD centers here in Israel. And this is important because this is the exit strategy for the startups in many times many times, because many of these big corporations they acquire the Israeli startups and they integrate them into their RD center. Or if they don't already have an RD center here, the their first acquisition becomes the core of their RD center here in Israel, and then it continues to grow. Uh, but um, you know, 6,000 startups is a lot of uh is a lot of hay, and you need to find the the needle in the haystack, right? That's always the the the the issue or the you know the challenge with uh venture capital because there's many, many startups, and you know the success rate, right? Nine out of every 10 startups fail and shut down. So you need to find you know one out of ten that is going to be successful and bring you a nice return. And what we are doing so so how do you do it?

SPEAKER_04 16:03

I mean, obviously, now after doing it for so many years, I'm sure that people like you've developed such a strong reputation for Lexley ventures and people are coming to you in the beginning. That might have been different. So, how do you find this needle in a haystack?

SPEAKER_00 16:16

Right. So that's a that's a very good question. We actually have a very unique and differentiated way of doing this. We we work in cycles. We already completed nine cycles since we uh started Next Adventures in 2017. When we start a cycle, we look at several hundreds of companies across the ecosystem here in Israel, sometimes even close to 1,000 companies. And after a few months of uh due diligence, research, analysis, and so on, we choose the five startups for investment. Okay. And uh, when I say we choose the five startups for investments, I mean the partners of Nextly Ventures. This is the investment committee. So it includes the five um partners that uh founded Nextly Ventures 2017 that I described before. Plus, in 2019, we've added three American partners who live in the Silicon Valley in California, and they are part of the team as well. Uh, one of them, for example, uh used to be uh VP strategy of Adobe for 10 years. He uh he actually drove or led Adobe to be one of the first SaaS companies, software as a service, and this, you know, in 10 years, it increased the their market cap by 15x. Yeah, and if they we if they would not have gone to become you know a SaaS company, Adobe would probably have you know gone away, right?

SPEAKER_04 17:49

The uh been whereas now they've been acquiring companies and they were kind of they were kind of on the leading edge in terms of changing the pricing architecture because there was a bit of a backlash in terms of the you know, buy the product, the own the product, and now being a SAS product, right?

SPEAKER_00 18:05

But that a lot our my friend, our partner nextly uh in Next League Ventures, uh Dan Cohen. He's he's considered to be a world-renowned expert on that. And in fact, just last year, Michael Dell himself called him up to get his advice on SaaS.

SPEAKER_03 18:20

That's fantastic.

SPEAKER_00 18:21

Uh, our second partner in the valley uh is a guy who's an expert on technology. The guy has 88 granted patents with his name on them, and our third uh our third partner in the valley is a finance guy, Richard. So he has you know uh experience all the way to a CFO level in a variety of uh companies. So across the eight partners of Next League Ventures, we have uh experience and expertise and networks and understanding of a lot of dimensions of high tech, and we choose the five startups for investment, but we don't yet invest. What we do then is we take the five startups, we bring them to a pitch event, okay, and they present to a pitch event where the audience is about 100 former and current executives of multinational corporations. Okay, so obviously we started with the Intel community, right? Former and current Intel executives, but we've expanded these to Nvidia and Meta and Microsoft and Google and Amazon, etc. etc. Right, and this is a very diverse group of people because you have uh folks who are HR professionals, you have IT operations, manufacturing, RD, software, hardware, semiconductor, sales, marketing, lawyers, accountants, uh psychologists, chemists, physics, you know, what have you, everything. And they listen to the five pitches, they go then to an exhibition and they walk through the tables and see uh the demos and the POCs of the startups, they talk with the co-founders and then they vote and direct the companies one, two, three, four, five. Literally, in the top three, we invest. Okay, so this is a very, very selective process. It starts with almost a thousand and ends with three investments. And we coin the term, we call this with half a smile. We say this is the wisdom of the intelligent crowd, right?

SPEAKER_04 20:35

Open intended, right?

SPEAKER_00 20:37

Exactly. It's not that I'm going to the street and I'm telling people, listen, guys, please help me find startups. No, I'm going to the very experts of high tech from different disciplines, and I'm giving them first of all five startups that the investment committee already decided to invest in them.

SPEAKER_01 20:55

Yeah.

SPEAKER_00 20:56

But then this diverse group of people that come coming from different disciplines is helping us refine the list even further from five to the top three.

SPEAKER_04 21:08

You can almost make this into a reality show, it's it's that intense going from a thousand to a three.

SPEAKER_00 21:14

Yeah, yeah, yeah, yeah. It is kind of uh uh you know, kind of a beauty contents in a sense. Uh, and and it's it's on purpose because you know, if this the CEO of the startup cannot come to the stage and present their company in 10-15 minutes and then have a uh a demo on the side that shows what they're doing and talk intelligently to people, they will not be rated ranked you know among the top uh three. And it's a test for them as well, right? It's one of the tests that we have them go through.

SPEAKER_04 21:48

So, what makes them stand out? I mean, obviously, um they have to have a compelling story. The the founder, whoever is pitching the company, has to be an amazing equity storyteller, but kind of what makes Makes them stand out? Um, because obviously this is a very good question.

SPEAKER_00 22:04

Yeah, yeah, it's a very good question. It's um when we look at us at startups and we try to identify the ones that we like the most and have the most potential to become successful, we actually look at five things. So the number one thing, which is by far the most important, is the team. So you want to have an exceptional team of co-founders. Typically, it's best to have between two to three co-founders. One founder is many times, you know, not a good sign for the company to be successful, and too many founders can uh can also be difficult. So we find that two to three founders is is the right mix, and they have to be people that uh complement each other, not all of them from the same type, not all of them engineers, right? Not all of them business people. You want exactly, and you also want them to know each other from before. I don't want them to be just you know, they just met uh three months ago and started working together. Because is if there's anything that I can promise you about startups, it's hard, it's hard and it's going to be difficult, and when things get difficult, the first thing that can happen is you start to have conflicts in the team. And if they don't know each other from before, they haven't worked together or have been friends together, or maybe did sports together, you know. It doesn't not necessarily uh working for the same company, but they need to be you know to to uh to know each other's uh rough edges. There has to be a relationship capital there to to lean on exactly so when the going gets tough, you know, the tough gets going, right? Agreed, agreed. So that's number one. Number one is the team, and and part of this is like we said, is the ability of the CEO to present a compelling story on stage. That's part of the team excellence that we look for. Then the second thing that we look for is the need, the problem that they're solving, the challenge that they're addressing. Uh, that's that's number two. Number three, and this is really uh because we focus on deep tech, it's their technology. We strongly believe that deep technology serves as a sustainable strategic advantage. Uh, some people call this a moat, right? A barrier, a differentiation, a unique selling proposition. Because everything and anything can be copied and imitated. It's just a matter of how much time and effort you put into it, right? And money. So if you have deep technology that is difficult for others to develop, it gives you uh uh some headwind and uh some lead in terms of uh you know uh your ability to compete in the market and capture market segment share and become a leader and sustain your leadership in a in a certain market. So that's the number the third thing. Number four uh is uh is the business side, and the business side has two elements to it. The first one is uh we want to see that the solution that these startups is developing for the need that they identified has a tremendous business potential in terms of dollars, you know, very uh large, you know, TAM, total available market, potential for very large revenue streams, very high profits, and so on. That's one aspect of business. Second aspect, which is not less important, maybe even more, and this is from day zero, we look at the exit strategy, the exit potential of that start of that startup. Before we get in as investors, we want to understand potential ways for us to get back the money. And many times it's uh either an IPO or an MA, right? So you have to identify the potential acquirers and so on. Um, the number the fifth element that we look for is the traction, and here the traction is also um uh uh made uh out of two uh you know two things, two elements. The first one is the technology product uh type of uh thing. And here I want to see that the startup has the ability and actually did this already, develop a prototype, a proof of concept. I'm not looking for an MVP, you know, it doesn't have to be ready to for commercial revenue, uh, but I want to see that they have the ability to create, to develop. And uh it can be a demonstration in software, hardware, it doesn't matter, but something that I can see in my eyes and maybe hold in my hands depending on the type of uh thing that they're doing. And the second uh part of traction is the business side. Now we do come in most of the time pre-revenue, so it's not about generating revenue stream before we invest, but it is about creating a relationship with a potential customer. Typically, it's a design partner. I want to see that they were able to create such a relationship with a potential customer, and that this potential customer, this design partner have seen or have used their prototype, their proof of concept, and I can talk with them and get their opinion. What is the type of problem or challenge or need that this is addressing? Is it a good solution? If and when it becomes an MVP, would you be willing to pay money for it? How much money? Not a specific number, but a range, you know. So we get some sense into the uh uh how compelling it is this this startup to potential customers. Because at the end of the day, if a customer cannot generate revenue and profits, it will fail.

SPEAKER_03 28:12

Okay, agreed.

SPEAKER_00 28:15

So that's very simple, five things.

SPEAKER_04 28:18

Um I mean, this is a beautiful five-stage framework. I just took took notes down because I think this is uh it's something that founders have to keep in mind constantly in terms of how they're shaping um their equity story, how they're proceeding, how they plan. A lot of uh a lot of founders uh focus on the things that they're passionate about rather than looking at the business holistically saying, hey, are we are we solving uh challenge worth solving? How big is the the the size of the market? Like what signal should we get to uh to uh to to provide to investors in terms of giving them the confidence that that we're an investable company?

SPEAKER_02 29:00

Right.

SPEAKER_04 29:01

Um so speaking of investability, um what are the most common faux-pods or or perhaps uh founders that haven't done the homework? What are the most common things that you come across that they're like deal breakers or like uh maybe not ready, maybe too early, or because I mean you you already by definition invest in early very early stage companies that pre-reven so what are some of the things that come across you all the time that you're like nope, it's a pass for us.

SPEAKER_00 29:33

Yeah, so I mean there are several elements. I mean, first of all, if if if um you know I mentioned these uh five dimensions that we look at, so there is no perfect startup that has you know a full you know a grade or a plus grade on all five dimensions, it's always a compromise, yeah. Uh, but if they if they fail miserably on on one of them, it's a it's a it's a it's a go it's a no-go, it's a pass. Um we also you know, although we invest in deep tech, so uh that means that we invest in you know many different types of uh solutions and technologies and markets. We have companies in in uh med tech in medical technologies, but we don't have companies in life science. So we don't uh we don't invest in companies that are you know developing drugs because we really don't understand a lot about that. But if they're doing medical devices or maybe AI-based imaging or stuff that is unique and disrupting certain aspects of healthcare, yes, we will consider them digital health and stuff like that. And we have some very interesting uh companies in in these areas. Um, we invest in uh bioconvergence, you know, the convergence of biology with electronics or software and so on. We invest in in uh dual-use companies that have defense and civilian usages. Yes, we invest in uh you know uh a data center and AI factory enabling technologies, like for example, one of the companies we invested in is uh is called Zutacore. Uh, they do cooling for the data center. Cooling is a huge issue in the data center. Of course. Another company, that area is uh new photonics, they do optical communication and networking and interconnects in the data center. That's also you know uh a place where you you need more and more performance and less and less power, which is you know what you're looking for.

SPEAKER_04 31:34

But if as part of your criteria, that is this something that you're consciously looking for in terms of like evaluating thing was criteria number two in terms of the term, like uh technology that that can be applied to different use cases, like from like in this case, defense and civilian life or whatever it might be.

SPEAKER_00 31:54

Yes, so we look, I'll I'll try to answer this with an example.

SPEAKER_04 31:58

Okay.

SPEAKER_00 31:58

Uh um uh about five years ago, we started looking at the drone market because we realized you know, drones is a growing thing, and we need to be investing in the drone market. And we looked at several hundreds of companies in this was back in uh 2020, I think. And back then we saw many companies and we realized it's too early to invest in the drone market, and then we looked at it again in 2022, and then we looked at several different types of companies. So we looked at companies that are developing drones, and we looked at companies that are developing uh enabling technologies uh for drone makers. And uh at the end of the day, we decided that both of these directions are not the right ones for us to invest in because both these types of companies are going to be playing in a red ocean type of uh market, and we focused and identified a company called Airways that we invested in. Okay, and they they are the enabler of the whole drone ecosystem. How do they do this? They do UTM, unmanned air traffic management. So basically, they're doing the orchestration of drone traffic in urban areas and also obviously in military zones, yeah. So, because you know, when you when you have you know hundreds and thousands of drones flying concurrently, let's say, for example, uh they had a custom they have a customer for the past three years already, which is the port of Rotterdam. So the port of Rotterdam is the largest port in the Western world, and for the past three years, airways is uh system is used to manage their skies, and they're enabling 72 fleets of drones to operate concurrently in the airspace of the port, doing inspection, delivery, emergency, surveillance, all kinds of stuff like that. And without a system like Airways, they wouldn't be able to have so many drones flying concurrently because they would have to keep distances so far between them that it makes it non-economical to start with. Uh, and because airways is there, they're now able to do what is called uh bv loss. Bv loss means beyond visual line of sight. Yes, the regulation today already says that you cannot do beyond visual line of sight flights of drones if you don't have a UTM in place, an unmanned air traffic management system. And because they have this, now they can they they are replacing you know uh the taxi boats that go to the cargo ships every day, you know, because the cargo ships they don't are they're not next to the to the uh dock, right? They're out at sea about two, three, four miles, and every day you have you know traffic of taxi boats going back and forth to the cargo ships, delivering stuff, bringing stuff, uh fuel samples, and so today, instead of sending a taxi boat, you send a drone, and that's a savings of you know millions of dollars every month, and not to talk about the carbon emission savings that you're doing you're doing, and they wouldn't have been able to do these things without a UTM like the one that Airways has, and Airways has you know uh assistant that because of the founders that have you know uh a significant experience in air traffic, airborne air traffic control of very dense uh um air traffic areas from their uh service in the IDF in the past.

SPEAKER_04 35:56

So, can you just jump in and ask a question? So I'm I'm I'm obviously very curious. I mean, it's always uh a good idea if you can uh make a better utilization of your existing assets rather than having to build new asset base. And so AirWayste is clearly demonstrating this. Has has a global standard emerged around UTM or is AirWays kind of defining the standard?

SPEAKER_00 36:20

No, no, no, absolutely. There's there are standards that have already formed.

SPEAKER_03 36:26

Okay.

SPEAKER_00 36:26

Uh, in in this, uh, it's actually uh quite interesting because, unlike many other markets, the EU is leading the US in that sense in terms of the standards and the regulations, but the US is closely following. Um and you know, just for example, Airways is now engaged uh in some activities relating to uh managing drones for the FIFA games, the soccer games in the US that's going to be in two months. Yes, so you know, every stadium that's going to have a soccer game is actually going to have its own uh kind of air traffic control system to manage the drones, right? Uh for the media and for uh and for you know uh uh security related stuff and stuff like that. So, and and the the the the the whole you know UTM and air drone traffic and drone traffic and all that, uh this was this was part is is starting to be regulated and standardized. This was one of the reasons why we chose not to invest in airways in 2020, because the regulation was not there yet, the standards were not there yet. Uh, and airways over the course of the past six uh years have been working very closely with the standardization bodies, with the regulation bodies, helping them to create the right standards and regulations.

SPEAKER_04 37:47

Okay, how how long before we started to see UAVs and human transportation?

SPEAKER_00 37:56

That's a very good question. Uh um there are today more than 300 companies that are developing air taxis. Yeah, and this is already starting in in Israel. There's something called Indie, it's the Israeli National Drone Initiative. Okay, it's actually now in its third phase. It started five or six years ago, phase one, two, and now it's third third phase. Um, and and they are doing uh experimentation and testing and uh for standardization, for regulation, and the scale scale of the drone testing that they're doing is by far the largest on of everything that else that has been done in the world. It's more than anything in that area that NASA did or anybody else. And they started last year to experiment with air taxes, okay. So, you know, uh from my experience, and we've seen this in many markets, uh, innovations such as air taxis are uh are you know are taking longer than you expect to become mainstream, but they're coming in uh quicker than you think. So and uh why do I say that? Think of mobile eye. Mobile eye in 1999, you know, mobile eye, the ones that did uh mobile did um uh um computer vision for autonomous vehicles. Okay in most in most autonomous vehicles or even uh driver assist uh you know uh driver assist uh solutions, you have a mobile system inside it. Okay, and they they started developing it and has started selling it in in the in the late 90s, okay. And everybody in the late 90s told them, listen, guys, it's going to take 30 years before uh autonomous vehicles are mainstream, and even today it's not mainstream, right? It will take another maybe 10 years, yeah, but it doesn't matter from an investor's perspective because mobile eye has uh made uh one of the largest acquisitions that ever happened here in Israel, they were acquired by Intel in 2015, uh in 2017, sorry, for uh 15 billion dollars. It's amazing, and they had one of the largest IPOs ever. So investors made a lot of money on mobile eye and their technology and market leadership even before autonomous machines became you know uh uh mainstream. The same thing goes for uh airways and and drones and taxi, uh air taxis, and so on. It will take 10, 20, 30 years until this becomes mainstream.

SPEAKER_04 41:07

Can I just ask you a question then? Um uh it it in one of the one of your comments was you're looking for a founder or a company that that is doing something hard, uh focused on deep tech because technology provides for a moat. And and and I don't disagree with this. I mean, obviously, there are very few modes left deep tech or hard hard things is one of them, velocity distributions are the other two things, everything else is copyable. No, if we're to take the example of mobile life, because um so if you're too early, how do you capture the market? How do you provide the IP protection? How do you build the mode, whether you make it wider or deeper so that somebody like patterns expire, somebody else comes in and and redevelops kind of what you have done like because like I mean, famously Apple is known as they they're never the innovator, they're the follower, they're they're fast followers. So, kind of like how should we think about this from the perspective of a founder's lens?

SPEAKER_00 42:12

So uh I think that in today's world, uh most of the company are based on AI, and that goes for Airways, Airways is based on AI, uh, mobile was also based on AI since the very early computer vision and stuff like that. And in these areas, it um you continuously develop and expand and increase the data that you own, and the more data you own, the more uh differentiation and the more leadership you have, because this allows you to use AI and deep learning and all this kind of stuff to create a better solution for the problem that you're solving. So, one of the modes, one of the uh it's not a deep technology by itself, but it is an add-on on top of this deep technology, which is the amount of data that you have.

SPEAKER_04 43:06

Yes. So, can I ask you a question, a bit of a a bit of a provocative question? Um, you've lived in both Israel and the United States, and so I've I haven't taken a writing in Tesla, but I've taken many rights in a Waymo. Now, one can say, well, Tesla has a lot more data because they've they've had these cars on the road for a long, long time. Their cost of production, units unit of production is much lower than Waymo. Um, but Waymo at the moment has uh significant advantage, at least in terms of customer trips. Um, who do you think is gonna win? Or is it both?

SPEAKER_00 43:44

I think it's both. And and I'll I'll give you the example of the mobile market.

SPEAKER_01 43:49

Yes.

SPEAKER_00 43:51

So if if you look at the mobile market, Apple is Tesla, fully integrated, they control the full value chain, they do the full solution. Solution, everything and across the board. And uh in the mobile market, you have Android-based phones, right? Of course. And that's still a very significant market, right? With Samsung and many others. Same thing in the automotive. So Tesla is the Apple of the automotive, and you'll have many of the other automotive vendors that are going to be based on technologies coming from others as competition to Tesla. And there's you know a place for both. Uh, it's it's not going to be you know a monopoly of one vendor, right?

SPEAKER_04 44:40

Interesting. Interesting. I kind of go back to the historical examples where typically the one that's open to everyone rather than the wall garden typically wins. Not always, but typically. So if if I was to use this as kind of as a proxy, you would think that Waymo would win because they have the um uh it it it's not predicated upon creating uh being part of the ecosystem. But then Elon Musk has a very uh different mindset around intellectual property. He's like uh I mean his his famous saying is like uh if you have to hide behind a pattern, then you don't have a strong enough company. Um so for him, I agree with that. I think for him the the mode is really velocity, the speed with which he can execute.

SPEAKER_00 45:26

I I think it's I think it's uh it's both things. I don't think it's one or the other. I think you need to have IP, and uh, but I think it's um you know, we over the years we came. This is a you know kind of a nuance. Uh uh, I I spoke before about a sustainable strategic advantage. The actual term that I should have used, this is more advanced, is transient sustainable strategic advantage. Okay, because you create your own sustainable strategic advantage, but every year you have to create another one. So, because you know this the pace of change is exponential, we know that, right? Uh since the days of uh Christian uh uh uh Clayton Christianson with the you know disruptive innovation and the exponential curve and all that, so things are changing in a much faster uh way, and that means that even when you create a sustainable strategic advantage, it will not hold for long, so you have to continuously create more and more and more and more and more. And this is what Elon Musk is talking about, he's he's absolutely right.

SPEAKER_04 46:36

Uh so Odet, I mean, obviously, you're upbringing your time with Intel with influential, like you were in a strategic planning capacity, you were part of the kind of futuristic department, um, uh like working it kind of in a matrix between teams and industries. Um this is all very important uh um um uh foundational knowledge. Uh, how do you institute the same type of knowledge and understanding uh into the companies that you guys invest in? Because this is really, really helpful. There's uh there's always something the the the the uh I think the founder CEO of Adobe published a book called The Seven Powers. Uh and the Seven Powers is kind of trying to emulate and capture some of this transient strategic advantage uh in terms of like positioning and uh uh volume of scale and like uh kind of like switching costs. So how do you how do you translate what's in what's in here to what's in the the the portfolio company's minds?

SPEAKER_00 47:37

Right. So first of all, before I go into that, uh a little bit of a commercial. I also wrote a book, it's called Bridges to Leadership. Okay, and it's uh it's available on Amazon and it talks about these things and about every you know in much more detail about everything that we talked about today. And what we do at Next Lee Ventures is you know, once we invest in a company, we provide the company with what we call a virtual accelerator. Okay. Typically get a seat on the board or observe a seat on the board, and we proactively help the startup develop their strategy, develop their business, connecting them with other investors, with customers, with partners, with executives to hire, helping them open up offices in the US, in Europe, in the Far East, helping them go through the pain, uh the pains of growing up. Like, you know, when we are teenagers, we have growing pains, right? Of course. Same thing with startups. When they grow from five to 15 to 50 to 500, they need to put uh you know all kinds of uh procedures and things in place on one hand to start to scale the business, on the other hand, they don't want to inhibit innovation and creativity, so you have to do it in the right way, and uh from that aspect, uh I serve in six boards. So, in three of them, I'm a board member, and three of them I'm a board observer. And similarly, my friends, my the other partners at Next Adventures, they have their board capacity in uh in other startups, and we proactively work with the startups to help them uh you know develop the strategy and and to address challenges that they are uh uh you know coming and facing um every day, every week, every month, every quarter. It's uh it's part of the work that we do with them all the time.

SPEAKER_04 49:33

I mean, what I'm hearing is like a model that's like really refreshing and very much focused on uh driving as much likelihood of success with with the portfolio companies as possible. Now, my question is I understand you're Israeli-based. I understand that you invest in Israeli companies. Do the companies have to be dumb is out in Israel in order for uh next ventures to invest in them?

SPEAKER_00 49:59

That's a very good question. Uh, we invest in what is called Israeli-related companies.

SPEAKER_03 50:04

Okay.

SPEAKER_00 50:04

So I'll give you an example. Uh, one of our exits, Concerto, uh, was a Delaware incorporated company. Uh, the CEO and the business and marketing team uh uh were in uh New York City, and uh and the CEO was uh Israeli, and and the RD team was back here in Israel. Okay, so that's that's Israeli enough. So the company doesn't have to be incorporated in Israel, but it needs to have uh Israeli co-founders and it needs to have significant critical mass of employees here in Israel. Okay, many times it's the are at least the RD organization.

SPEAKER_04 50:45

So we have been working with Textiles, um and uh and and they they actually have a title uh or person that's uh that's responsible for called community architect. That's Eric Matisek. And so uh like some of the things you're describing about Israel are highly unique, but those are kind of foundational pieces that every uh entrepreneurial or tech startup ecosystem should should um strive to build. So uh you talked about some of them, like the the focus on RD, the influx of capital, but if you're architecting a new community from start, uh what would you build? Or what are the what are the elements that you would ensure that they incorporated to ensure that you have that you build something like the Israeli ecosystem where you have 6,000 companies, the highest per capita um startup ecosystem. Um like I don't know what the rate of success is, but I'm assuming it's higher because of the aggregation. Like one of the um uh for tech stars, the most successful uh community is Bota, Colorado. And if you look at it, it's a really small community, 150,000 uh population, uh, but it's the those uh um connections that exist between founders and that have exited companies, founders that can help other companies, and it's really it's the community aspect. So I'm I'm curious if you're the community architect of Israel or a new community, how would you architect it?

SPEAKER_00 52:16

That's it's a very good question. I I many times I give uh lectures about this, you know, for delegations that are coming to Israel to try and learn, you know, how the Israeli ecosystem uh is is how was it started and how is it built and all that. I can tell you that there's about five pillars that create an effective uh uh ecosystem for entrepreneurship and innovation. Okay. And it starts with education and academia. All right, so this is very important. Academia, you want to have universities that are leading-edge research institutions, and we are lucky enough to have uh you know in Israel uh six or seven uh institutions like that that are you know top top of the line in many, like um I think uh in the when you look at the uh universities that generated the highest number of entrepreneurs as graduates that become became entrepreneurs. I think uh Tel Aviv University I think is number seven in the world or something like that. And I I think the technion is number 10. So you know, really top of the line universities, that's one thing. Second thing is the military service in Israel. We have uh compulsory uh military service, yeah. And and that means uh, you know, and a lot of military service today is related to uh technology. Uh, if it's cybersecurity, for example, that's one of the areas that's really thriving here in Israel. So uh a lot of times, you know, the the the young adults, the 18, 20 year olds uh are serving in the military. And when you are, let's say in an intelligence corpse uh in Israel doing cybersecurity, you'll be doing at age 20, you'll be doing things that in the commercial world, it will take you 30 years to get to a position where you get to do these kinds of things. And so they again, you know, it's a it's an accelerated learning experience on the job for them. And many times when they are released from the from the from the army, from the air force, and so on, they go out and they uh and they found uh startups, they start uh doing uh their own entrepreneurship, and uh, but they've learned so much in the military that they're using these, you know, not only the methodologies, but actually the technologies and the way of thinking and everything like that. So it's academia and education, it's the IDF. Second thing is um uh um or third thing, sorry, is the existence of multinational corporations. Yeah, so like like I said, you know, uh innovation happens not only in startups, it also happens in multinational corporations. And multinational corporations many times are funding and are also creating an exit strategy for startups. So you need to have them in order for the for the ecosystem to be uh uh to keep to be complete. And then the next pillar is having startups, more and more startups, the more you have, the better. And and this uh and how do you get to a situation where you have more startups? Uh it's a mindset, it's a culture that actually um um admires entrepreneurship and innovation and accepts failure and does not penalize you for failing. This is one thing that we that we that we learn, you know, uh uh as Israelis is it's okay to fail as long as you get up, learn from it, and continue on and do something new, right? Yes, uh, in many other places in the world, uh people are so afraid of failing that they don't try, they don't try because they're afraid of failing. Here it's okay to fail. I you saw before that I started with telling you about my failures, right? Yeah, it's it's a mindset, it's really a mindset, and then so so, in addition to startups, you also want to have a significant number of large local domestic companies. So we have you know several big companies in Israel. Some might argue that we don't have enough, right? But place uh companies like uh Checkpoint, who is uh you know the original inventor of the firewall, right? It's a it's a huge cybersecurity company that's been around for more than uh 25 years, maybe 30 years. We have Amdox that's doing charging and billing for telcos for more than 30 years. We have uh pharmaceutical companies like uh Tiva. So there's a variety of companies that are very, very large companies. Um and uh uh and that's the the next thing. And another thing that relates to the human capital to the actual people is the uh mobility and flow of talent. Uh in Israel, it's very um it's very normal in the tech business to do relocation to the most of the times to the US, but also to Europe and and sometimes to the Far East. So I told you before that I spent seven years in of my life in the US. Yes. Many times you know, you go to the US, you spend a few years, you work there, you you study there. Most of the Israelis, even if they stay in the US for 10 or 20 years, they will come back to Israel at the end. Um uh I my last time was four years that I was in the US, between 98 and 2002. And I chose to come back, and most of the Israelis choose to come back. And when they come back, they bring the know-how, the expertise, the network of people that they've engaged with in the US or or elsewhere, and they bring it back uh here. So it's really a combination of all these things, and maybe the last thing to mention is the government support. And this is not to be taken lightly, it's very important uh because uh Israel has uh the Israeli Innovation Authority, which is a governmental body that actually fosters innovation entrepreneurship, provides grants, and helps helps entrepreneurs set up companies and uh you know and have different programs of uh funding. In some cases, they join capital raising uh you know equity rounds, and they invest um a third of uh a third of the of the money in the in the funding round. Uh and all of these things together, you know, they attract in Israel hundreds of organizations that invest in startups. So it's both locally based uh VCs like Next Eventures and others, but it's also a lot of American and European VCs that have offices and actual partners residing here in Israel and investing in Israeli startups.

SPEAKER_04 59:28

It only makes sense. No, uh a question on the government. Um, is the government typically involved in startups or scale-ups or both?

SPEAKER_00 59:37

Kind of like where where are they placing their many times they try to identify places where there's uh market failures, you know. So, for example, places that are more difficult to get uh funding, they would create a certain program for these areas and try to help them. Like, for example, uh in the past uh several in the past year, uh they are helping uh search several groups to establish uh incubators and accelerators for semiconductor uh fabless companies because there is a decline in in the number of semiconductor companies that are being founded because it's more difficult, because it takes more money, and uh so so they focus on this area specifically, or for example, on AI. Like, for example, you know, I just the other day I participated in a meeting. Uh uh, they identified that one of the most scarce uh resources for startups today is uh GPUs in the cloud, right? So they actually secured the uh the first phase is uh thousand GPUs, and then they're going to five thousand GPUs from a leading uh you know uh data center AI factory here, and they're offering this as a dramat in a dramatic discount, like it's subsidized actually, of course, yeah, of course to both startups and academia because both of them need this.

SPEAKER_04 1:01:17

I agree agree a great understanding. Um that you have been absolutely amazing in your insights. Now, where can people follow you? Where can people get in touch with you? Um uh we'll we'll uh after after the show, I'll follow up with you. I want to drop a link to your book, I want to drop a link to where people follow. But if somebody wants to follow your work because you're clear at the leading edge of of things, where should they do so?

SPEAKER_00 1:01:48

Sure. So I'd be happy to talk with uh anybody. I like to talk with entrepreneurs and innovators. I always find that I learn something new, uh, and I really like that. Uh and uh people can obviously uh you know look at our website, look at our LinkedIn page, uh, connect with me on uh you know by email. It's very simple oded at nextlibventures.com um or through the LinkedIn uh messaging app, and I'd be happy to connect and have a discussion with anybody.

SPEAKER_04 1:02:18

Amazing. Well, thank you so much for coming on the pod and sharing your wisdom. It was uh highly, highly informative, and I think that a lot of the lessons that you shared for um companies or for the community are universally applicable anywhere else in the world. So thank you so much.

SPEAKER_00 1:02:35

Thank you very much, Maxime, for having me. It was a pleasure, and I'll I'll be happy to come here again in the future.

SPEAKER_04 1:02:42

Absolutely.