Start-up Attraction: ScaleIO and Alvarion: Two Different Tech Exits

ScaleIO was sold recently for $200 million, giving it's founders, owners of 30%, $60 million. Not a bad exit for a new start up. On the opposite side, Alvarion, a publicly traded wireless equipment company is breathing it's last gasps: a bank is taking the company into receivership. Exits in tech start-ups are like watching a slow baseball game. Sometimes they turn exciting, the rest of the time the game is slow and sleepy. ScaleIO is a software only company. This is the kind of bet most Israeli entrepreneurs like to make. Most of the effort is in the code and the marketing. Building real hardware takes more time and usually much more money. Selling something that requires samples and stock is also more complicated. Software is easier to sell from Israel, especially if the target markets are Europe and the US. To contrast, Alvarion is almost completely a hardware company. They are also in a highly competitive networking sector. To add to this, Alvarion put their effort into Wi/MAX, a new format of wireless networking supposedly covering a wide area and solving some problems in WiFi we use today. I don't want to go as far as saying that software only start-ups have a better chance of success than hardware only. It is much more complicated than this.

Insiders in the Israeli start-up field are used to watching the wins and losses. Just like a busy commercial street, you have to expect shops and pizza parlors to go out of business. You also have to expect new managers and owners to try their luck with new businesses. It tuns out to be a good analogy between retail business and start-ups success. Retail businesses and high-tech start-ups have the image versus reality in common. While their business may look simple from the outside, running and profiting day in and day out is not that simple. There is also the element of experience, which is crucial if you start getting into difficulties. Add to these elements, almost constant changes in the market and competition, and what you really end up having is a game of sports. Here comes the comparison to a slow baseball game. I guess if you are a baseball fan, the start-up field, from venture capital investor, to technology entrepreneur, is for you.

Besides the small odds of success in the start-up world, Israelis are still at it. On a regular basis, even on a daily basis, you will find an interest group, a training or discussion on start-up topics. There is a split between “how to really get funded”, which is classified as business and technical topics, mostly recent development in programming languages or upcoming technologies. A good way of gaging the meeting activity is looking at meetup.com and linkein.com groups. Just search for “Israel start-up” or “Israel entrepreneurship” and dozens of groups and meetings will pop up. On a recent financial technology meetup session, start-ups of all kind were represented. Some more mature and now appended to a large international company, some just getting their product out to the world, and some just getting started, with a gleam in one or two man's eyes. Each has their story and exciting dream for a successful future, and obviously, a stellar 'exit'. So if you are visiting Israel, come to a start-up interest meeting. It's a new experience you will never forget.