"We must build a bridge between hi-tech and the ultra-Orthodox"
"I want an ultra-Orthodox to found the next Waze," says Moshe Friedman, a Litvak Haredi who founded the KamaTech organization and accelerator for entrepreneurs from the ultra-Orthodox community in Israel
Friedman began his path in tech as an outsider, but if he is feeling any bitterness regarding the uniformity which characterizes the sector it doesn't show when talking with him. "Most people in hi-tech are a prototype of a non-religious Israeli man from Herzliya," he admits, before adding, "The people in this industry are amazing, smart, open and wishl to make the world a better place."
Friedman is a Litvak Haredi born in Jerusalem who studied at the prestigious Hebron Yeshiva. He encountered hi-tech for the first time at the age of 30 when he moved to Bnei Brak. Alongside his Torah studies during the day, Friedman began attending tech events in the evenings and frequented lectures in Tel Aviv. "I understood the massive opportunity of this world. A person can create word changing technology from his home." This magic enchanted Friedman, who suggested to his brother that they found a startup. "We didn't have any training. We hardly knew English," he remembered. "We thought to ourselves ‘what could we do’ and came up with the idea of video editing. Ten years ago the video sector exploded and there was a lack of tools. We began recruiting a R&D team and tried to understand who we are competing against. As we did that we understood that we were the only Haredim in the sector. Even at the lawyers' firm they told us that we were the only ultra-Orthodox people to have set foot in their office. People look at you as if you are an alien."
Everything changed at the DLD Innovation Festival in Tel Aviv which Friedman attended. Yossi Vardi, founder of Mirabilis and one of Israeli tech's most prolific entrepreneurs, who was the chairman of that year's edition, noticed two Haredi men in the audience and approached them, curious about their presence. "I'm 70 years old and I've never seen ultra-Orthodox entrepreneurs," Vardi told Friedman. He wasn't as excited about their idea for a startup though, and offered them a different initiative - to help the ultra-Orthodox enter the tech sector. "He talked about how the immigration from the former USSR in the 1990s brought to the country a wave of hi-tech professionals and questioned 'where will we bring more people from? Maybe the next wave will come from Bnei Brak'. That was a moment that changed my life."
It was important for Friedman to emphasize that KamaTech's goal isn't to change Haredi society in any way. On the contrary, every step and decision are taken following consultations with rabbis, and every time the topic came up in our conversation he quickly promised: "We aren't here to start a revolution, but to do something that everyone can agree on." Friedman described the connection between the two communities: "I believe in live-and-let-live, but there is great talent in this community that can do amazing things and no one before us built this necessary bridge between hi-tech and the Haredi community."
Vardi was quickly joined by a long list of notable and influential investors and entrepreneurs, from Amnon Shashua (Mobileye), through Chemi Peres (Pitango) and Gigi Levy-Weiss (NFX). The initiative began with weekly lectures and was later followed by training programs, hackathons and an innovation center. "My dream is to cultivate entrepreneurs and not just integrate ultra-Orthodox employees in big companies. I want the next Wix or Waze to be founded by a Haredi," said Friedman.
In order to do so, Friedman decided it would be best to set up a fund dedicated to investing in Haredi entrepreneurs. He approached the founder of Pitango, Chemi Peres, who had previously set up an investment fund focused on the Arab private sector in Israel (Al Bawader which was founded with the help of governmental aid). "To Peres' credit, he didn't completely reject me, but said that it was a good idea," Friedman remembers. Peres asked for some data on the sector, which Friedman didn't have at the time. "He offered to announce the launch of a competition with a $10,000 prize in order to understand what is even happening in this scene." The event was held in the auditorium of Microsoft's offices in Herzliya in December 2013 and brought together some of Israeli tech's most notable personalities.
One of the difficulties we always hear about are the gaps in education in the ultra-Orthodox community.
"There are many Haredi men and women who have a technological background. There are 1,000 women who study computer science at the Haredi seminars every year and there are hundreds of men who study at a yeshiva, but also go to the army or the Open University. Besides that, you don't always require an in-depth technological knowledge in order to found a company. You might come from a background of design or law, but you need to have the character of an entrepreneur."
And they are entrepreneurs?
"We took part in a study conducted at the Ben Gurion University of the Negev that found that the percentage of entrepreneurs in the Haredi community, meaning people who have founded a business, is at 20%, the highest of all sectors in the country. We told ourselves that if there is such a massive energy and if there are so many people who have studied technology we need to provide them with the knowledge that already exists in Israeli hi-tech."
KamaTech's greatest success to date is Elementor, which develops design and website building tools for professionals. Elementor was just at the stage in which it made the change from being a website design studio to a technology company when it joined the first cohort of the KamaTech accelerator. It currently employs 300 people, and not just in Bnei Brak. Yoni Luksenberg, founder and CEO of the company, remembers the early days well. "I spoke with the founder of Fiverr Micha Kaufman not long ago and I told him that when he spoke in Bnei Brak years ago he may have thought he was wasting his time, but I was sitting in the audience and I listened to him," said Luksenberg. He added that he was recently invited to take part in a similar event, this time as a speaker. "For me this is coming full circle. This is a development that creates a new category and new beginnings. I have a Haredi friend at Moon Active and a friend at Google and they go home and tell their friends that they should invest in computer studies."
Are ultra-Orthodoc entrepreneurs any different from the characteristic entrepreneur?
"It is irrelevant with clients. This gives us that thing which everyone wants, as everywhere in the world people are talking about the need for diversity out of the wish to provide different perceptions which shatter fixations and create innovation. That is who we are and that is what we do. The opinion and perceptions here are different and varied. We have an utopia and to me part of our success is that we aren't all made out of the same mold. We couldn't have accomplished what we've achieved without that."
Luksenberg added that "as a designer, I can tell you that there are 250 shades between black and white. I also studied in a yeshiva, but chose my own path afterward. The Haredi world is more complex than it looks from the outside, and that is true for every sector. You need to be good wherever you are. Was it easy for me? No. But I'm not looking for things to be easy and I'm not looking for shortcuts. You need to work hard, have luck and get some help from above. You need it all, but entrepreneurship doesn't come from the mainstream."
When KamaTech began working on choosing companies for its second cohort they met Gig Levy, an angel investor and currently a General Partner at NFX, who suggested they should provide each of the participating companies an investment to help them get started. He also agreed to provide the first investment for companies himself. Within a few hours, Check Point co-founder Marius Nacht, Facebook Israel GM Adi Soffer Teeni and Yizhar Shai, the former Managing General Partner at Canaan Partners and former Minister of Science and Technology, also agreed to invest a token sum, and KamaTech realized that they wouldn't have much trouble raising a small VC fund, but "it was important to us that the investors wouldn't treat this as a donation but as an investment. What is special about this fund is that it is made of dozens of people from the top of the Israeli tech industry who have themselves founded companies or served as CEOs of massive firms," said Friedman. "This is a very strong network. Yuval Shachar from Team8 told us that we will have one of the best funds in the country because it will provide the kind of support that no other fund could."
The first fund invested in 11 companies and KamaTech is currently in advanced stages of raising money for its second fund. Friedman said that he had no intention of raising money for another fund until he registered an impressive success with his first fund, but members of the fund's investment committee convinced him that even a portfolio that looks good on paper is a strong enough attraction. They began by approaching existing investors and they almost all agreed to make another investment and even double it, meaning the second fund is expected to reach around $12 million, three times that of the first fund. "One of the investors told us that he believes that the next companies that will create disruption will come from the ultra-Orthodox community. Israeli tech is a closed club and as soon as you allow new people with a different education and culture to bring their insights you awaken a new wave of disruptive thinking."
But the goal isn't just the profit line?
"Of course there is a social goal: to ignite Haredi tech, the startup shtetel, but success will be measured by a good financial return. We are on the way to making a three times return on our first fund and so far the fund has created 470 jobs."
KamaTech insists that they aren't providing any shortcuts to the entrepreneurs they accept. "We are far more forgiving, but this isn't forgiveness from a business aspect but rather forgiveness when it comes to the process. A big investor once told me that if he notices the smallest mistake in an entrepreneur's presentation he won't accept him. That isn't the case with us. If there are mistakes in English that is fine. The idea is to identify the talent. We understand the difficulties and 'general' tech may be missing this talent pool."
What is different about the Haredi entrepreneur?
"The Haredi startups are built in a healthy manner because they built with the aim of being bootstrapped. An average startup raises funds before it even has a product, while a Hardei startup won't do so until it has clients. That is because the Haredi entrepreneur has a family to provide for and companies only raise money at the growth stage. These are companies that are built according to a slim model. People ask how we have reached such accomplishments with so little money and that is because there is also something humble in the amounts these companies raise."
How does that fit with the salaries being paid in tech?
"In my opinion, they have an advantage with having a quality workforce available to them. A Haredi entrepreneur can easily recruit Haredi employees which other companies aren't recruiting, people that might find it difficult to work at a secular company in Tel Aviv. The core of employees is ultra-Orthodox, but as they grow they begin recruiting more employees and face the same competition for talent as the rest of the industry."
Does this help open the Hardei sector?
"We don't want to breach the Ghetto walls. We aren't here to change anyone or for some ideological reason - we are here because everyone would benefit from the development of a Haredi tech sector."