Experts are now calling Israel "the world's techo-nation." EMC is seizing that startup spirit.
April 28, 2010—The Israel Center of Excellence is housed not in one building but three locations across a 15-mile radius. You won’t see large “EMC” signs advertising the sites. Inside them, however, you’ll find thriving, distinct workplace cultures stemming directly from startup-company roots.
Unlike Centers of Excellence assembled by EMC from the ground up to function as a single organization with a cohesive identity, connections at EMC Israel are structured loosely. It is a deliberate effort to preserve the innovative spirit of a highly entrepreneurial workforce.
Reflecting this unique approach for a unique environment, Gil Shapira, GM of the Israel COE and VP of RecoverPoint R&D, says, “We sometimes call ourselves ‘COE light.’”
Israel is renowned for its intensely entrepreneurial culture. The country has given rise to more technology startups than any other place in the world except California’s Silicon Valley. EMC’s present-day R&D operation in Israel was born from the acquisitions of four such startups beginning in mid-2006.
Establishing the official COE designation in 2007 brought centralized leadership and services to the groups. But it was done in a manner least likely to stifle their product-development talents. The company purposely opted to keep the smaller entities physically separated to retain their startup spirit.
“It’s local culture, and we’re really sensitive to it,” says SVP and CIO Sanjay Mirchandani. “In Israel especially, making a COE is not the same thing as simply merging R&D teams together.”
So what does the making of a COE involve? Global Delivery VP John Herrera describes it as “creating an interesting, collaborative, and efficient environment” where, in Israel, roughly 200 COE employees develop innovative technologies.
EMC does not transfer software code-writing projects to the Israel COE, as it does with several COEs elsewhere. In Israel, the primary focus is on leveraging the mature and seasoned engineering talent.
A startup evolution
EMC had an early R&D presence in Israel, although those Symmetrix-specific activities were discontinued some years ago. The current generation of R&D work really began in May 2006, says Gil Goren, senior director of corporate development, with the acquisition of a six-year-old, 75-person Israeli startup called Kashya. Kashya’s founders had named their company after an Aramaic term meaning “to solve a difficult problem.”
With labs in Ramat Gan, Israel, and offices in San Jose, California, Kashya was integrated into the EMC Software Group. The firm’s superb data replication and protection software became EMC RecoverPoint.
Just weeks later, in early June 2006, EMC bought nLayers. That company had been founded by a close-knit team of engineers from Kfar Saba, Israel, who had developed a unique form of software for IT environment application discovery and mapping. nLayers became part of EMC’s Resource Management Software Group (now EMC Ionix), adding dimension to what was then called the EMC Smarts family of products.
Before the month was over, EMC had acquired ProActivity, an early-stage innovator in content management. That startup had been launched in Netanya, Israel, and still maintained R&D operations there. ProActivity’s products included software to monitor and analyze business processes, adding value to the EMC Documentum business process management suite.
In August 2007, EMC acquired the intellectual property of startup Illuminator Inc., an Israeli developer of enterprise application recovery software, and hired its core employees. Today, those employees are based in the same building in Ramat Gan as the former Kashya teams.
Although it is not part of the EMC Israel COE structure, RSA, The Security Division of EMC, also has an active presence in Israel. Before being acquired by EMC in 2006, RSA Security had established operations there with its December 2005 acquisition of startup Cyota Inc., maker of online security and anti-fraud solutions for financial institutions. The division also operates the RSA Anti-Fraud Command Center and RSA FraudAction Research Lab in Israel.
Most recently, in July 2008, VMware (majority owned by EMC) acquired B-hive Networks, an application performance management software startup with R&D operations in Herzliya, Israel.
It was after the ProActivity acquisition that Shapira, an EMCer since 1998, was offered a chance to return to his native Israel to form a COE. He says, “We needed to establish a common denominator, some connection between the groups in Israel, and a stronger linkage to EMC corporate to take advantage of the great things the company can provide.”
The challenge was to engage the groups—each full of young, energetic innovators—without making them feel they’d been swallowed up by a big company.
Goren credits Shapira with bridging the gap between a corporate culture and Israel’s pervasive startup mindset: “Gil Shapira is a veteran of EMC who understands both cultures. Resultingly, people kept coming to work and liking what they do.”
School for startups
To understand Israel’s passion for technology startups, it’s necessary to appreciate the cultural factors driving it. The passion starts early, both Shapira and Goren agree, with the military. All young non-Arab Israelis must serve in the Israel Defense Forces or Sherut Leumi National Service: men for three years, women for two. In the process, they learn leadership skills and are exposed to cutting-edge technology in areas such as database management, security, and encryption.
The military gives younger service people comparatively high levels of responsibility, Goren notes, expecting them to challenge convention and offer ideas. The experience tends to magnify in them what is already an ingrained culture of entrepreneurship.
“Israel is like a school for technology,” says Shapira. “Young people leave military service more mature. Many who leave the armed forces open a startup.”
Israel’s advanced academic institutions also provide foundations for the thriving high-tech industry. The Technion-Israel Institute of Technology in Haifa, ranked among the top universities in the world, is affiliated with Massachusetts Institute of Technology.
Additionally, entrepreneurs access capital through government support programs and a network of venture capitalists attracted by Israel’s startup-friendly environment. Many global corporations have facilities in Israel to tap into the talent. As The New York Times columnist David Brooks notes, “With more high-tech startups per capita than any other nation on earth, by far, corporate investors and venture-capital firms pour an estimated $1.5 billion into new ventures there each year. Israel, with seven million people, attracts as much venture capital as France and Germany combined.”
The EMC Israel COE is being creative in taking advantage of its quasi-centralized structure.
Beyond expected efficiencies (HR, payroll, purchasing, etc.), a COE structure offers better professional-development opportunities, “and it closes the gaps between the startup mentality and the big corporate mode of operation,” says Shapira.
The product affiliations of each former startup are being carefully preserved. Development groups report up to the EMC business unit to which their technology pertains, not to COE leadership. Groups do collaborate, however, at regular monthly meetings of CTOs and architects. “We familiarize each other with the products we’re developing, and we get exposed to technology trends,” says Goren. “A lot of cross- pollination happens.” Representatives of RSA, while not officially in the Israel COE, also will participate in these meetings soon.
Many of the products coming out of the Israel COE are fairly new, with room remaining for more features and functionality. The COE is providing its young innovators with opportunities for challenging work, and staff members can move among the groups.
During the October 2009 EMC Innovation Conference, the COE held a local innovation event, including selecting an idea-contest winner. COE leaders are committed to helping to turn the winning idea into an actual offering. A wiki will soon let employees submit more ideas, and plans are in place to pick a local innovation winner semi-annually.
Extending outward, the Israel COE connects with EMC Sales and service groups via a steering committee focused on growing local market share by taking advantage of products developed in the COE.
And, to foster a family-like atmosphere, the COE has been hosting social events and organizing community volunteer outings.
Shapira considers the COE’s greatest achievement to be its success in retaining and growing talent in Israel’s highly competitive startup landscape. Mirchandani adds that the EMC Israel leadership team has succeeded in projecting a ONE EMC brand while retaining a startup feel. The challenge ahead, both executives agree, will be to continue to attract talented innovators. The COE’s career-growth opportunities support this effort.
Value to employees
Former Kashya employee Assaf Natanzon, now CTO of RecoverPoint and chief scientist of the EMC Israel COE, says being a part of a COE gives him a greater opportunity to “push many new ideas and get them funded.”
Natanzon worked at Kashya for five years before it was acquired. He liked the startup’s fast pace and close-knit atmosphere. But, he says, being an EMC employee lets him make longer-term plans for his future: “It basically alleviates the funding worries that employees of startups face.”
He adds that EMC provides interesting work, such as projects to help RecoverPoint grow into a top replication solution. EMC has been encouraging the employees to get more involved in emerging technologies, too.
Matan Gilat, R&D manager in RecoverPoint, worked for Kashya for three years before it became part of EMC. He says his group has more work, more customers, and more cooperation than in the startup days: “We get to know products beyond our own and share knowledge across organizations.”
Gilat says EMC Israel’s calculated preservation of a startup atmosphere has inspired employees to stay committed to a common goal “to keep our customers happy and, in our group’s specific case, to help RecoverPoint be the dream replication product for EMC,” he says. “We aim to become the iPhone of continuous data protection and remote replication software.”
Looking for the next opportunity
While the Israel COE will seek to grow somewhat more organically, further investment and acquisition will likely remain a growth engine.
Goren says staying plugged in to the startup market in Israel consumes much of his time. He maintains close relationships with Israel’s venture capital community, universities, peer companies, and entrepreneurs.
While other big IT firms also are vying to unearth early-stage companies, EMC’s reputation as an information infrastructure leader with a great track record for integrating startups provides an edge.
“Startups know of us because we’re number one in our field,” Goren says. “It is the dream of a lot of these tiny firms to work with EMC. We have a great reputation in Israel as a smart technology investor and skillful acquirer. We realize it’s all about the people.”