Yair Goldfinger: I’m not the type of guy to do nothing.Yair Goldfinger doesn’t like interviews. He lays down the ground rules immediately. “I’m not going to reveal any personal details,” he says tersely, sitting awkwardly in his chair as if …
Once he’s got this off his chest, the 32-year-old Goldfinger starts to relax a little, particularly when he is assured that none of these subjects are of interest here.
It’s not surprising that Goldfinger is so edgy about the press. Five years ago last month (June), Mirabilis, the company Goldfinger founded with two friends was sold to America Online for $407 million, turning Goldfinger and his friends into instant millionaires. The Mirabilis deal was Israel’s biggest up to this point, and though surpassed many times since by companies like DSPC, which was bought by Intel for $1.6 billion, it has earned a special place in Israel’s history.
It was not just the size of the deal that attracted so much attention, it was the fact that Goldfinger and his friends, Sefi Visiger, and Arik Vardi, were only in their 20s and had come up with the idea for their instant messaging service, ICQ (pronounced I seek you), while hanging out around a ping pong table two years earlier. The company was the epitomy of the Internet era. It made no revenues, had no business plan, and nobody had even the faintest idea how it would ever make money. Overnight, Mirabilis became the ultimate Internet fairy tale, it was a major driving force in the new trend of instant messaging and inspired a whole generation of Israeli software engineers and programmers to take to their basements in search of the next big thing.
“Today instant messaging is all over the place and it’s getting bigger and bigger,” Goldfinger says with satisfaction. “Mirabilis started it all. I don’t go places and say I invented ICQ, but I’m very happy with my life. I have no regrets about what I’ve achieved.”
Still, Goldfinger plays the part of the classic Internet geek and not the high-tech mogul. He is skinny,and understated, with dark hair that hangs to his shoulders. He wears t-shirts and old jeans and clearly is not about to dress up for anyone. He still works 11-12 hours a day, including weekends. The only difference is that now he is involved in four companies, FiTracks, Strategy Runner, i-Cognito, and Dotomi which just last month raised $5m. from the US Venture Partners (USVP) fund, one of the largest funds in the United States.
Goldfinger is the only one of his family to move into high-tech. One of his brothers owns the Lee Cooper brand in Israel and runs 30 or so shops, another is a celebrated filmmaker, and his twin sister is a reflexologist. Goldfinger met up with Visiger, Vardi and a fourth founder Amnon Amir (who left Mirabilis in its second month to go to university), when they were all working at Tel Aviv software company Zapa Digital Arts. The company, which changed its name to Gizmoz, specialised in three-dimensional graphic tools for the Internet.
In mid-1996 the foursome left Zapa after a disagreement and, finding themselves unemployed, began throwing around ideas for new Internet innovations. They came up with ICQ, an Internet program that allows you to identify and chat with friends on-line. It took just under two months to create. Initially Goldfinger had misgivings about the project but Yossi Vardi, the father of Arik and one of the founders of Israel Chemicals, was enthusiastic and decided to invest a few hundred thousand dollars to let the boys set up Mirabilis and develop the technology.
“In the early days we didn’t realize the magnitude of it,” admits Goldfinger, sweeping the table with his hands. “Of course we believed in it, but we didn’t think we were going to make money doing this. We didn’t have a business plan and didn’t raise a lot of money. It just started with a group of people wanting to do something new together, something we liked, and that evolved into ICQ.”
The Mirabilis team set up the company in a small three-room apartment in San Jose, California, where Internet access was cheaper. They worked in shifts around the clock to develop and maintain the ICQ service. “We were in our submarine phase,” says Goldfinger. “We didn’t see TV or movies for six months, we didn’t go to good restaurants, we just worked all the time, developing and keeping up the services and making it a better product.”
About six months after they had started work Yossi Vardi came to them and pointed out that ICQ was turning into an Internet phenomenon. He predicted how many users would join each month, predictions that turned out to be almost 100% accurate. “It was only then that we realized what was going on,” admits Goldfinger. “We’d known we were getting more users but we had no idea how big ICQ was becoming.”
The real strength of the ICQ service was the decision by Mirabilis to hand out the software for free. They started with 40 of their friends and by May 1997 had already accumulated 850,000 users. By April the following year, the figure had grown to nine million, of which 2.5 million used the program on a daily basis. Thousands of new users were joining every day. There was no need for marketing, which is often the Achilles Heel of Israeli business. Instead, news of the software spread from one friend to another by word of mouse alone.
The huge growth soon attracted the attention of several Internet giants, and in June 1998, AOL decided to purchase the company. Goldfinger was just 27 when the deal with AOL was signed. He held 21 percent of the shares in the company.
“It was exciting,” admits Goldfinger when prodded. “But it took me a few years to realize the size of the deal. It was fun, but on the other hand it hasn’t changed my life that much, not yet. I have the same car, the same stuff. I live in the same place and wear the same jeans and t-shirts. Maybe I have a few more t-shirts now. If you see me, you’d never guess I have so much money, which is great. I never went and did something wild with the money. None of us did.”
For the next two years the Mirabilis team continued to work hard for AOL. “I was a millionaire, yes, but they didn’t just buy the product and the users, they bought the company. I thought I should do my best and help the product succeed,” says Goldfinger, who worked from Israel during this period.
When Goldfinger’s two year contract was completed, AOL invited Goldfinger to relocate to Virginia, but he preferred to remain in Israel and try something new. For a few months he did not work, but soon grew bored. “I’m not the type of guy to do nothing,” he admits.
The four companies that Goldfinger is now actively involved in are an unusual mix. His first investment was in i-Cognito. The company develops technology that identifies Internet content using artificial intelligence and enables sites to be catalogued according to content. Next comes start-up called FiTracks, which was founded in August 2000 and has developed a 3D measuring technology that makes a virtual map of the foot and matches suitable shoes. The company has raised $1.5m. so far from private investors including Goldfinger. Thirdly there’s Strategy Runner, an Israeli-American company based in Chicago. The company, which was founded in 1999, has developed a hands-free, auto-execution trading platform and has sold systems to three of the 10 largest clearing houses in the US.
As an active investor, Goldfinger’s role in each of these companies varies according to the needs of the management, and also Goldfinger’s knowledge of the business. Mostly Goldfinger gives technical help, sometimes even writing code when something has to be done urgently. He tends to visit the companies once a week or once every two weeks. Most evenings, and some Fridays, he has conference calls with Strategy Runner.
His real baby, however, is Dotomi, where he holds the position of chief technology officer. It’s not surprising that Dotomi should attract so much of Goldfinger’s attention since in many ways it is the closest in character and concept to Mirabilis. “I can contribute the most to Dotomi,” admits Goldfinger, who is one of the founding members of the company.
Dotomi, which was founded in 2000, has developed a new direct communication channel for relationship marketing between corporations and their customers, via the web and interactive TV. The technology enables companies to send personal one-to-one messages via advertising spaces on the web to clients who opt into the service, creating a highly focused, permission-based new marketing channel.
Dotomi launched its service in Israel in October and so far over 50 companies in Israel including El Al, Isracard, Avis, Steimatzky, Bank Hapoalim ,and Yes, have joined the marketing activity. So far some 75,000 surfers have registered to receive the messages. Esther Dyson, an influential figure in the US high-tech scene is a consultant on the company’s board of directors.
Goldfinger has also made financial investments in another four companies. He usually invests a sum of between $250,000 to $500,000 in each company.
Goldfinger smiles broadly when asked why the companies are such a mixed bunch. “Most of my companies are strange,” he admits. “They’ve got nothing in common. I didn’t go with the trend. The VC companies go with whatever is hot. They always want the next big thing. I don’t do it. I want to work with different companies in different fields.”
The only common factors that tie these companies together is that they are all Israeli, and most provide niche solutions. “It’s normally an area that I believe hasn’t been taken care of the right way, a field where there’s lots of room to improve,” says Goldfinger. “I choose the companies because of the technologies and the people. I have to have some interest in what they are doing. I don’t do research and check on the companies. I don’t see what the analysts say, or what the trend is. It’s more from the stomach. I look for good timing, good technology, and want to see that no-one else is doing the same thing, or that if they are, that we are doing it better.”
The other thing the companies have in common is that they are heavily based on software. “That’s something I know well,” admits Goldfinger.
He believes his decision to invest in these different companies gives security. “There’s less risk as an investor to be involved in such different fields,” he says. “I’m realistic and know that I can’t have 100 percent success, though I’m hoping.”
Does Goldfinger feel a pressure to create something as successful as Mirabilis? “Pressure from whom?” asks Goldfinger. “I do this because I enjoy it. Whether it’s bigger than Mirabilis or smaller, it doesn’t matter. If Dotomi is small, but succeeds, I will not consider it a failure. I’m doing what I like. Some people like driving fancy cars, travelling the world, or writing books. I like to create software and programs. I look at programmers as artists. They don’t paint, but they do create something new from nothing. Programmers use software, and artists use paper and paint. I consider my work an art form. That’s what I have a passion for. Most successful painters are passionate about their work, and most of them are not doing it for the money it brings. They don’t care as long as they can create. That’s the same here. I enjoy it, I love it. I’m lucky, I made money from my hobby. Money gives you ability to choose what you want to do without taking into consideration how well off you’ll be end the month.”
Does Goldfinger miss the days of Mirabilis? “Yes it was fun, but I believe we have something similar in Dotomi. People work here because they believe in the product. They don’t come here to work 8am-5pm and then take the money and go. They’re devoted to it. That’s very similar to how ICQ started.”
The main difference, of course, is that today’s market is completely different from that of the Internet heyday in 1998. Goldfinger’s current companies have firm business plans, and clear revenue goals. “The boom thing is over but there are still opportunities for good products out there,” says Goldfinger. “Companies that manage to survive the last two to three years have more chance to succeed because they’ve managed through the rough times. It’s survival of the fittest. The strong ones survive. It would bother me if one of my companies fail, but it won’t stop me creating or investing in more. That’s my nature. I don’t see any of them failing soon, they are all going up, but who knows.”
Despite the poor business climate, Goldfinger is optimistic about the future, and points out that though hundreds of start-ups closed their doors in the last few years, there is a new generation of entrepreneurs setting up shop. “We are going back to the old days when Mirabilis was first founded,” he says. “In 1996, there weren’t many start-ups. It was the early days of the Internet as we now know it. When we started we didn’t care if we were getting paid, we just wanted to create something. It’s the same today. There’s a new generation of kids starting out. They don’t care about money or sales, they just want to create something and they’ll do it in the garage, or in the basement of their parents house. Some people are entrepreneurs in their hearts.”
Though Goldfinger is clearly a Zionist through and through, he admits that being based in Israel can have drawbacks in the current market due to the geopolitical situation. In some cases, clients of Goldfinger’s companies have cancelled orders. Goldfinger, who calls himself a left-winger, believes, however, that there’s a ‘smell’ of change on the air. “Something has happened in the last few months,” he says. “Whether it will fade away or get stronger is a big question, but I personally believe there will be peace. There is no other solution. And when peace comes, Israel will be at the center because we are one of the most developed countries in the region.”
When Goldfinger looks back, he admits he is proud of what he has achieved. “Mirabilis helped change the high-tech industry and injected new blood into the system,” says Goldfinger. “It was very inspiring. Lots of kids saw what we had done and decided they wanted to be the next Mirabilis.
“I’m very proud of ICQ today and what AOL is doing with it,” he adds. “It makes me feel good to know that we started it all and I respect the people who are continuing the vision.”
ICQ’s strength continues to grow. In October last year it was revealed that the US military used the program repeatedly when they went into battle in Afghanistan to improve the efficiency of its forces. The messaging program was also used in the Gulf War. Goldfinger admits that initially he was surprised to hear about this and doubted the vericy of the reports.
“I didn’t think it was true at first,” he admits. He checked the facts, however, and discovered that the story was correct.