Yossi Vardi: “You cannot expect to succeed if you cannot take a punch”
One of the forefathers of Israel’s tech ecosystem explains why luck is so important to entrepreneurs and why he likes to bring up his own glorious failures
“Throughout my career, I invested in 30 companies that have gone nowhere, which is unpleasant. In 2000, when the dot-com bubble burst and companies that did not have enough cash were decimated - I got quite a few headlines like 'Another Vardi company shuts down'. It was embarrassing, unpleasant, sad."
How do you cope?
"I did not exactly know what to do with it until suddenly I had an enlightenment and I realized that there is nothing to be ashamed of. Since then, every time I was invited to a conference I made sure to mention in my presentations that besides the successes I also had 30 companies that closed. That I also had glorious misses. I pulled the chestnuts out of the fire myself, and it helped me mentally. Because it is not pleasing when a company you have invested in closes, but you have to be willing to deal with it. You cannot expect to succeed if you cannot take a punch.
Yossi Vardi. Photo: Amit Shaal
"It is one story for me, I am established so it is just unpleasant. But for my young partners, it is much harder, they see their dreams shatter and have to deal with the heartbreak."
Can you give an example of a glorious miss?
"One day around 2010 I was traveling with my good friend Ehud Levy, who told me: 'Vardi, I invested in a company. It is called Waze, the drivers draw its maps and they come out the most accurate.' He invited me to invest as well."
At what value?
That was a great deal.
"But I said to him, 'What do you think, that I'm a sucker? To invest in users who draw maps? What is this nonsense?' Three years later Waze was sold for over a billion dollars, and of course it stung. I called him and said I changed my mind and that I am willing to invest."
What was your latest success?
"My last exit as an investor was with SimilarWeb (which went public in May at a valuation of $1.6 billion)."
Is an entrepreneur whose company failed an unsuccessful entrepreneur?
"It is a mistake to judge a failed entrepreneur and say he is not successful. Luck plays an important role in success, and in the same way, it can play an important role in failure."
Like Napoleon, should investors look for entrepreneurs with luck?
"I will quote Shlomo Eliahu, an exemplary entrepreneur, a man whose willpower, ambition and intelligence built an empire from scratch: 'The goddess of fortune is very important, but when she knocks on your door - it is better not to be in the bathroom.' Meaning if you are working hard and doing a lot, it positively affects your good luck too. Those who work and sweat have a better chance."
Mirabilis, which you helped set up with your son and his three partners, was a resounding success with its ICQ messaging software. Was there luck there too?
"ICQ is a great example of a sweet success that has captivated an entire generation and is a great example of timing. If the four smart kids I joined had come up with the idea a year earlier, there would have been no market for their product at all. A year later, however, there were already a few dozen products out. I want to think I gave some added value there, but really, all the stars aligned just right. "
"If across the wall sits a company that does the same thing but with one more feature it could be enough for all the users to switch to it. For seven whole years, we were the leading internet product on download.com. Then after seven years, someone from Estonia added voice to ICQ and all of our users migrated to Skype. Then Skype disappeared because WhatsApp appeared. In short, the difference between failure and success is very small, and the products of many talented entrepreneurs fail because of a small thing. Things are very delicate. It is like a restaurant serving you a hot soup, which smells incredible, but then a fly comes into the restaurant and everything is lost. In products of this kind, that is the reality."
Mirabilis was sold for $400 million and shook the industry.
"The amounts that were available then were much more modest. In today's unicorns, there is enough funding to cover for failures."
You say you hope you provided added value in Mirabilis. Do you see yourself as a creative person?
"I see myself not as a creative person, but as someone who empowers creative people. I understand what needs to be given to people."
What is that?
"Contrary to many people's beliefs, the fuel that drives creative people is not their desire to make an exit and make a lot of money, but the desire to create something original and gain recognition - just like artists.”
When it comes to success, is it possible to not let it go to your head?
"Success paints everything in very bright colors, and it makes you confused. It makes you smug, makes you think it is all thanks to you - even to yours truly. And that is while, as I said, there is a lot of luck in having the right product at just the right time and place."
So how are you coping?
"When it happens to me, my wife smacks me over the head. Apparently not enough."