The “Israeli Model”

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Start-ups founded in Silicon Valley have enormous advantage in understanding the trends, connections to established companies, best advisers in the world and access to the biggest pool of venture capital there is. But with so many start-ups competing for large, but still limited pool of talented people, the cost of people has risen substantially and loyalty to a single company is a quickly disappearing virtue. Silicon Valley start-ups therefore continue to have grandiose plans, but execution is getting ever more difficult. One option that is increasingly used by Silicon valley start-ups is to off-shore some of development. But as I know from first hand experience as off-shoring provider and from stories of people on receiving end (e.g. our board member Scott Rafer), you can off-shore only development of peripheral services, while the core of the service (the API) must be developed close to the heart of the company, or you risk engineering producing something which is completely detached from the needs of the users. Therefore a Silicon Valley start-up still needs a few outstanding product developers and engineers in the bay area or San Francisco, which is exactly the category of people which is the hardest to attract. Zemanta has tremendous advantage that the product and engineering heart of company is outside of technology hot-beds such as Silicon Valley and New York. While it's not easy to attract top talent (we're hiring!) even in Slovenia, we at least have a fighting chance since we don't compete with Google, Apple, Facebook, and a myriad of other hot-shots. This observation was further corroborated at our recent board meeting where Fred has stated that he sees companies with business head in the States and product/engineering heart abroad (the "Israeli model") as great potential investments.

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