An Interview with American Israeli Venture Capitalist Jonathan Medved

by Jerry Gordon and Mike Bates (July-Aug. 2009)

Native born Californian Jonathan Medved is one of Israel’s leading venture capitalists. The New York Times in 2008 named him one of 10 most influential Americans in Israel. Medved, a Zionist activist in his college days at the University of California at Berkeley, made Aliyah to Israel in the 1990’s. He lives in Jerusalem with his wife Jane and their four children, sons, Momo, Yossi, Itamar, and daughter Nina. His family includes his late father, David, and older brother, nationally recognized talk show host Mike Medved, younger brother, Harry of the Fandango movie review website, and Ben, a psychologist brother living in California. Medved grew up in Venice, California.

 

Medved is currently co-founder and CEO of Vringo – an Israeli company developing a system to send videos via cell phones. Vringo was the recent recipient of an innovation award from Global Telecoms Business Wireless network for their launch of world’s first paid video ringtone service. 

 

Medved, working out of his garage in Jerusalem, his adopted hometown, co-founded Israel Seed Partners (ISP) in 1995 with less than $2.0 million in capital. Before his departure in 2006 to become CEO at Vringo, ISP had grown to more than $260 million in four funds that gave birth to more than 60 Israeli high tech firms, many listed on NASDAQ.  Not bad for a History major at Cal Berkley who learned fiber optics from his late physicist father, David, founder of MERET Optical Communications, Inc. Medved was a senior officer and marketing executive at MERET.  MERET was sold to Amoco in 1990, a testimony to the Medved family entrepreneurial acumen and success.

 

Medved is considered as one of Israel’s best business ‘ambassadors.’ He is a frequent speaker at international forums on venture capital and high tech development. A member of the board of Israel 21-C, he extols the virtues of Israeli technological developments and firms. He also finds time to write opinion articles about Israel, his family life there and the culture that infuses the country’s dynamism as America’s democratic  ally in the Middle East.

 

We were fortunate to have interviewed Medved while he was on one of his many trips to the US. He was in America to speak, along with his cousin, Michael, the nationally syndicated talk radio host, at the Christians United for Israel Summit in Washington, DC. He was invited to speak at an American Israel Political Action Committee (AIPAC) event in Pensacola, Florida. Medved kindly consented to be interviewed on 1330AM WEBY’s “Your Turn” program broadcast from Pensacola. This “Your Turn” interview was co-hosted by WEBY’s Mike Bates and Jerry Gordon, New English Review contributing editor.

 

The interview covers Medved’s views on a wide range of topics: Israel’s technological contributions to America and the world, importance of Israel’s Army in cultivating the country’s successful high tech entrepreneurs, his family background, the question of US economic aid to Israel and Israel’s economic contributions in America.

You may listen to the interview by clicking here for part one and here for part two.

 

Mike Bates:  Good afternoon and welcome to “Your Turn,” this is Mike Bates and with me in the studio is Jerry Gordon

 

Jerry Gordon: Good to be here.

 

Mike Bates: A voice familiar to regular listeners of WEBY, Jerry is our resident expert on all things going on in the Middle East and specifically Israel. We’re also talking to Jon Medved who will be speaking tonight to the AIPAC meeting in Pensacola. Welcome to the program, Jon.

 

Jon Medved: Hi.

 

Mike Bates: AIPAC, as you may know is America’s pro-Israel lobby. It is a non-partisan organization that is probably the most important organization affecting America’s relationship with Israel, and Jon will be the featured speaker this evening at that event. 

 

Jerry Gordon: Jon, you have also recently attended the Christians United for Israel annual summit in Washington, we may have some questions about that later.

 

Jon Medved: Wonderful.

 

Mike Bates: Right now in Israel obviously security is a huge concern, it always has been. It seems to be more at the forefront now with the threat perhaps of Iranian nuclear weapons being developed and with a United States President who does not seem to be as friendly towards Israel as was his predecessor. What seems to be the overall opinion in Israel of the current state of affairs between the Unites States and Israel?

 

Jon Medved: Well, I mean, first of all, it’s a great time in Israel right now. It’s the summer time. The country is inundated with tourists. It’s hot and dry and it’s just a good time to be alive. We seem to have turned the corner on the economic crisis. Most people feel the worst is behind us. We’re always worried. In other words, living in Israel, one is worried about our relationship with the U.S. One is worried about what the Iranians are going to do. The Europeans think it is just part of our DNA to worry. I think that when we look at our relationship with America, we’re confronted by two things. One is the notion that there is this bedrock of warmth and support and that the alliance between Israel and America is unshakable. We’ve had our ups and downs. There have been Presidents who have been less friendly to Israel,  like Bush Senior and Jimmy Carter. They come to mind as people who were not necessarily Israel’s greatest friends while in the White House. Our relationship survived that. And clearly there is some trepidation and worry about the current Administration.   I’m not sure that people are questioning motives but they’re questioning, the process right now. Our Prime Minister Benjamin Netanyahu just made a policy speech that pretty much aligned himself with the U.S. Administration. I think there are a lot of people here who feel that the ‘tension’ that has emerged lately is really one of a fleeting nature. It is not going to be a big thing to really bother the relationship. We are going to get on with important work we have of building a better world. 

 

Mike Bates: Now, Jon, you live full time in Israel. I know you travel a lot but you live in Israel, right?

 

Jon Medved: I do and that’s where my family lives.

 

Mike Bates: Okay.

 

Jon Medved: I live in the air. No, I live full time in Israel. I’ve been there for decades. I grew up in the States. I’m proud to hold passports to the two greatest countries on this planet, Israel and America and I see a lot of the differences and similarities. I must say, today, more and more, I see similarities between Israel and America. They are  both incredibly productive and dynamic countries. These are not countries based on old wealth and old notions. They’re countries that are constantly building and renewing and refreshing themselves. In particular, they are countries that lead the world in innovation and in technology. My business is that of Venture Capital and funding new companies. Right now I’m running my own technology company. When you look at where this kind of thing is happening world-wide, it’s happening in Israel and it’s happening in the U.S.  I’m proud of both countries for leading that way.

 

Mike Bates: Jon Medved will be speaking this evening at the AIPAC lecture that’s the American Israel Public Affairs Committee in Pensacola so we’ve asked him to join us here on the air today and as Jon just said, he was born in America. He does live in Israel full time, dual citizenship. New York Times once called you one of Israel’s ten most influential people. That’s quite an honor.

 

Jon Medved: Well, no, not influential people in the country. Influential Americans who moved to Israel.

 

Mike Bates: Ah.

 

Jon Medved: Which I think was also a gross exaggeration.

 

Mike Bates: An honor nonetheless.

 

Jon Medved: I’ll take…I just crested 50 so I’ll take whatever honors I can get at this point.

 

Mike Bates: Jon, what is your core message that you will be delivering tonight at the AIPAC meeting? 

 

Jon Medved: I’ll be talking about why Israel creates so much of the technology which each and every American takes for granted every day of his life. Basically, if you ask most of your listeners to think about how often they touch Israeli technology, I think some of them would scratch their heads and say, “you know, I don’t know. I don’t do much with Israeli technology.” And then there will be some wise acre who will say,” no no no, it’s mostly military stuff because the Israelis have a very strong army and we export a lot” and that guy will make a joke and say “but I don’t need night vision when I come home from the bar” or “I don’t drive an armored Hummer through a bad neighborhood” or “I don’t  fly unmanned aerial vehicles for a hobby on the weekend.” But that’s not it. It turns out that each and every one of us is touching Israeli technology every single day dozens of times. We open up our computers in the morning. We send instant messages. We use cell phones or cordless phones or we leave a voice mail or we use flash memory. These technologies have all been touched very deeply by the Israeli high tech sector. It’s an incredible story which simply isn’t told. Companies like Intel should have a big brand on them saying Israel Inside. That’s why it’s so absurd that some people talk about, G-d forbid, boycotting Israeli products because if you did, you would literally have to go back to the Stone Age. There is no single major American high tech company whether it’s Cisco or Broadcom or Microsoft or Google or anybody who doesn’t do just enormous work in Israel. Recently, I had a meeting with Samsung, the Korean electronics giant. They have an operation in Israel which is only focused on simply sourcing Israeli technology into this multi-national Korean company. They have  got dozens of people working on the ground there just hunting and scouting new start-ups. Last year, there were five hundred Israeli start-ups that got venture capital backing. There are more Israeli companies traded on NASDAQ than any other country outside of the U.S. So really, when you look at that whole world of innovation and what’s making the world we live in so exciting and so dynamic and so much changing reality, it’s America and ,in particular Silicon Valley ,which is that engine of American innovation and it’s Israel. And that’s part of the relationship. This great alliance between our two wonderful countries which doesn’t get enough attention. That’s what I am talking about tonight.

 

Jerry Gordon: One of the hidden secrets of why Israel is so successful in this high tech environment is its military. You were quoted in a Foreign Policy article entitled “Boot Camp for Billionaires,” as saying that “everybody who matters in high tech here, meaning Israel, is ex- Unit 8200. I salivate over these guys.” Most Americans don’t realize that the IDF reaches down to the high school level to build competition and selectivity in getting these young, talented Israelis into the military and ultimately onto a track where they become high tech entrepreneurs. What’s the secret behind that?

 

Jon Medved: I think that’s a very good point. It’s not just the technology that has developed in the IDF but it’s the crucible in the socialization that goes on among our best and brightest. Our kids start competing before the end of high school not to get into an Ivy League school but to get into, excuse the phrase, an Ivy League unit. We have a whole series of these specialized units. There are dozens of these units where the best and the brightest kids compete to get in and once they are there they actually learn tremendous skills and they build technology which will determine the fate of our country and save or lose lives. When they come out of the Army, five to eight years later from some of these special programs, they’re ready “for bear” in the high tech sense. They have built products, led teams, and made deadlines. They have worked under budget and they often get together with other ex-Army kids who were in commando units and they become the marketing types, G-d willing, or the salesmen. It’s just an extraordinary thing to see how these companies come from the ex-Army culture. Our Army is very entrepreneurial. It’s very much part of our strategic thinking. We are  known for our strength in improvisation. One of my favorite companies was set up by a combination of ex-Army guys and art school students together who happened to go into the Army. Just imagine that happening in America. There aren’t that many guys coming out of the Army who are going to get together with a bunch of art school students and set up a start-up together. But that’s what goes on in our country with that kind of a mix and a culture which is extraordinarily important. 

 

Jerry Gordon: You have been a successful entrepreneur in Israel, however, there were seeds of that with regard to your own family. Do you want to describe that background for us?

 

Jon Medved: My late father, Dr. David Medved, was a kid who grew up with parents who never really spoke any English, who were lucky to have been saved by this country and escaped from Europe. He married my mom who had escaped from Germany and he got a scholarship and became a physicist. He was actually a rocket scientist and an early entrepreneur who built companies back when it wasn’t fashionable to do start-ups. He got me involved in my first start-up in an old Jewish tradition called “nepotism.”  I studied history and I had never dreamed of doing anything with technology. He said “oh, you can learn fiber optics easily.” So he got me involved in that and I haven’t looked back since then. My older brother, Michael, is a talk show radio host syndicated nationwide in the U.S. on the Salem network. I have another younger brother, Harry, who is the voice of Fandango who does a lot of movie reviews that maybe some of your listeners see. And another brother, Ben is a psychologist in California.

 

Jerry Gordon: You also have a cousin in Stoughton, Massachusetts, who we call the “warrior rabbi,” Jon Hausman. He’s an amazing guy.

 

Jon Medved: Jon Hausman. What an amazing story that is. We didn’t even know that he was our cousin until my son Itamar went on a charity bike ride called The Wheels of Love which is an amazing program where people ride for five hundred kilometers through the Israeli countryside to raise money for an orthopedic children’s hospital. My son Itamar registered and they distribute to all the riders in the program a list of who’s going to ride. Jon Hausman, whose mother’s maiden name was Madwed, saw a listing for my son Itamar Medved and said, “wait, maybe we’re related” and they started writing. Of course, we turned this email thread over to my other cousin who said, “hey, he’s related.”  It turns out that there was literally a whole family connection which we had just lost completely in the Holocaust. These things happened, and we rediscovered it through Jon Hausman’s commitment, which he shared with my son to raise money for this Orthopedic Alyn Hospital.

 

Jerry Gordon: And that is the Alyn Hospital in Israel and your cousin, Jon Hausman, is on the American board.

 

Jon Medved: That’s correct. He’s a great guy.

Mike Bates:   We are speaking with Jon Medved. He is an American born Israeli. He is one of Israel’s leading entrepreneurs. And he will be speaking tonight at the AIPAC meeting in Pensacola. That’s the American Israel Public Affairs Committee. Going to take a quick break and then we will come back with more of our conversation with Jon Medved here on 1330 WEBY.  

 

Mike Bates: Good afternoon. Welcome back to “Your Turn.” This is Mike Bates and with me in the studio is Jerry Gordon and on the phone is Jon Medved. Jon will be speaking tonight at the AIPAC meeting here in Pensacola. Welcome back to the program, Jon.

 

Jon Medved: Thanks Mike.

 

Jerry Gordon: Jon, what is it like for young people to grow up in Israel and what are the latest and coolest technologies that Israelis are involved in?

Jon Medved: First, in terms of being a young kid in Israel it is an incredible place to bring up children. Basically kids aren’t coddled there. It reminds me a lot of my childhood in America in the fifties. Kids get on busses, believe it or not, even now, G-d forbid; we have had experiences of them blowing up. But kids get on busses, they aren’t afraid of going to the park. My daughter, thank G-d, walks home from school, from her scout meetings at ten o’clock at night and I don’t worry about it. There’s a degree of freedom there and kids who come and visit Israel with their families are in a variety of youth programs which I urge your listeners to consider. It’s a beautiful country. Feel that sense of freedom and adventure. It’s not a society where we are  totally afraid of litigation and insurance so that kids are doing a lot of extreme and wild things whether it is white water rafting or rock climbing or hiking in the desert or going to hot springs or floating in the Dead Sea. The kids love nature. They are big into hiking. And they’re patriotic. The amazing thing is the perception that increasing numbers of kids are not serving in the Army, except the reality is that over seventy five percent of our population serves in the Army, which is an extraordinary number. That is what makes our country special because every kid grows up knowing they are going to serve their country and their people and that’s very important. 

In terms of new technology coming from Israel, there are a whole bunch of initiatives in “clean tech” and the environmental area which I think is going to be a great area for investment and future business. It turns out that the company that  is now building solar energy for two million homes in southern California is not a Silicon Valley company. It’s not a French or Spanish company. It is an Israeli company called Bright Source Technology from my hometown of Jerusalem. They are building power plants in the Mojave Desert for Pacific Gas and Electric and for Southern California Edison that will power two million homes and gets them off addiction to foreign oil. If you look at what is going on in the water area, Israel is leading the world in turning salt water into clean drinking water. We have a company called IDE Technologies, Ltd.  who has built the world’s largest desalination plant and we’re exporting that technology to thirty- five countries. We have the world’s largest geo-thermal company called Ormat Technologies which builds plants in Nevada, New Zealand and even the Big Island of Hawaii where that company is tapping into a volcano to power homes. We lead the world in drip irrigation which, maybe in Florida, given the amount of water you have, is not critical. But, in many parts of the world, where water is scarce, the ability to put small amounts of it in exact quantities is very critical. The leading company in this field is called Netafim, which means drips. It’s growing very fast. The largest shareholder, indirectly, is the State of New York through their pension fund. So, again, another example of U.S., Israel partnership where both countries are benefiting. The world’s largest and most promising electric car project called Project Better Place. It is led by Shai Agassi, who is building thousands of electric recharging stations all over Israel. They were the only non-Japanese company invited to join the Japanese electric car consortium. So if you look just at that area of clean tech whether it’s water, solar, geothermal or electric cars, Israel is just rocking in some of the new technologies that are coming from there.

Mike Bates: Jon, it sounds like things are really booming in Israel and there’s a very optimistic future for the economy of Israel. A lot of people here in the States complain about the economic and military aid that the United States provides to Israel every year. How critical is that to the economy of Israel?

 

Jon Medved: Ok, first of all, be very careful. There is no longer U.S. economic aid to Israel. In fact, this is an example of how U.S. foreign policy just hit the ball out of the park. The U.S. helped Israel get through some hard moments and now payback is happening. There is no more economic aid. What is happening is Israel creating jobs in America. All of these companies that are coming up with new technologies, they come to America and they employ people. For example, there is a company that has figured out a way to put a small video camera in a pill headquartered in Atlanta called Given Imaging, employing Georgians or Israeli company Amdocs, which employs thousands of people in the State of Missouri. Bright Source, which we have spoken of, is perfecting solar energy employing hundreds of Californians, just to plan the plants, but ultimately, thousands of Californians to build these solar energy plants. So, what you have now is Israeli innovation powering American job creation. Ultimately, these companies going public means that American pension funds or state funds will make money on that and will generate tax dollars. So, it’s really a virtuous cycle. 

However, we are no longer receiving U.S. economic aid. We are now in a payback phase where Israel’s high tech economy is creating value for America. Israel still receives, very importantly, military aid from the United States government. That military aid is matched with similar grants to Egypt. The reason that we receive this military aid is that we’re a tiny little country faced by enemies who want to wipe us out completely and we simply can’t shoulder the burden of having an Air Force, Navy and anti-missile defense. By the way, again, there is a lot of payback going on in terms of this military aid. Just so your listeners are aware, every dollar that is given in U.S. military aid gets spent back in America. So that, again, this military aid is creating American jobs through the process. There is also technology transfer. Israel is involved in missile defense for obvious reasons. We really want to protect ourselves against some of the bad guys in the world. It’s not just Iran, but also countries like North Korea. We are sharing technology. For example, the Arrow missile is a joint development of U.S. and Israel. Both our countries are protecting ourselves against ‘whackos,’ whether they happen to be in Iran, North Korea or anywhere else.

 

Mike Bates: Well, I think that is an important thing to bring up. Israel may benefit from America’s military strength but America benefits from Israel’s military strength and intelligence capabilities as well. Jon Medved, we are completely out of time. I appreciate you joining us, Jerry Gordon as well with me in the studio. Jon will be speaking tonight at the American Israel Public Affairs Committee meeting here in Pensacola. Jon thanks for joining us.

 

Jon Medved: Thank you. A pleasure. I look forward to doing it again

 

Mike Bates: Thank you for listening to 1330 WEBY.                   

 

 

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