Crains New York - March 25, 2013 - (Page 4)

IN THE New York is promised land MARKETS for Israeli tech startups To reach global audience, firms are moving here instead of Silicon Valley so-called startup nation a higher profile in the U.S.technology industry than any other foreign country. That profile has become even more prominent lately in New York,as the city’s expanding tech economy has helped draw Israeli firms that might once have moved to Silicon Valley. BY MATTHEW FLAMM Six months ago, StartApp Inc. moved its headquarters to Manhattan from Tel Aviv, where the startup was founded in 2010. The funny thing was, it was already an American company—registered in Delaware on its first day. “When the founders are experienced, they know you have to be in the U.S.,” said Itay Rokni, vice president of marketing at StartApp, which helps mobile developers generate advertising revenue from free applications.“From day one,the target audience was not in Israel.” StartApp was, in fact, following the unofficial rule book of the successful Israeli startup: establishing a company aimed at the global market, and then gaining enough traction to move its leadership to the U.S. Like nearly all tech firms founded in Israel, StartApp kept its research and development team at home, in Tel Aviv’s Silicon Wadi, where a deep bench of engineers is fed by universities and the military. (“Wadi” is Arabic for valley.) The model has helped give the A simplified process “There’s an acceleration of the ecosystem in New York, and Israeli startups happen to be a big part of that,” said Yaron Samid, a serial entrepreneur whose newest company is personal-finance security firm BillGuard.“You’re also seeing an in- NYC has nearly 200 active Israeli tech companies creased interest [among U.S. investors] in funding Israeli startups, and at a certain phase investors will recommend that the company move to the U.S. More than ever, companies are choosing New York.” The Israeli startup model also simplifies the process by which founders and executives can move to the U.S. Since these are established companies, they can apply to bring in their top people on an L-1, or management, visa as long as an American can’t do the same job. That’s an easy case to make when the executive needs to communicate in Hebrew with the company’s engineers. Mr. Samid, who runs TechAviv, a global “founders club” for the Israeli tech industry, counts nearly 200 active tech companies in New York City founded by Israelis. That roughly matches his estimate for California and is double his total for Massachusetts. Those numbers don’t include all the Israeli startups that have been acquired by U.S. firms over the years and continue to drive innovation, like 5min Media, which became the core of AOL’s video syndication business and still keeps its engineers in Tel Aviv. Israel is also known for having more firms listed on the Nasdaq than any other country except China and the U.S. CITIGROUP Chief Executive Michael Corbat Citi eases peer pressure on pay A big reason executive pay is constantly on the rise is the tired and easily refuted argument that if corporations don’t keep up with the Joneses, they’ll lose their best people. And some companies are regularly redefining who the Joneses are. Exhibit A: Citigroup. The bank is forever fiddling with which rivals it compares itself with for the purposes of justifying pay awarded to top managers. Gone from its latest list of peers are American Express, Capital One and U.S. Bancorp, according to the bank’s annual proxy statement, Proximity a key Israeli executives give several reasons why New York has become a preferred destination. There’s proximity. The time difference is only seven hours, versus 10 in California, and the 10-hour flight to Tel Aviv is nonstop. From Silicon Valley, it’s 20 hours and two stops. See ISRAELI STARTUPS on Page 39 filed earlier this month. Most decidedly in are stumbling global giants like Bank of America, Barclays, HSBC and JPMorgan Chase. A spokeswoman explained that the changes in the peer group “were made to focus on firms with similar lines of business to those of Citi.” So it must be simply a coincidence that the new list excludes three of the best-performing financial institutions and includes many of the worst. For example, AmEx last year generated a return on equity of 23.5%, and its share price has risen by 66% over the past three years. Capital One’s ROE last year was 9.9%, and its share price gained 34%. For those keeping score at home, Citi’s ROE last year was 4.1%, and its stock is up 12% over the past three years. No wonder Citi would rather keep company with the likes of BofA (1.3% ROE, 25% stock decline) or Barclays (negative ROE, an 11% stock drop).AmEx and Capital One disappeared from Citi’s self-selected peer group after only a year in it. Now let’s suppose that one reason Citi awarded $12.4 million to Discover True Client Service. Above and beyond is our starting point. Discover Excellence in Commercial Real Estate Services. Discover Cassidy Turley. Project & Development Services / Tenant Representation / Project Leasing / Property Management / Corporate Services / Capital Markets 4 | Crain’s New York Business | March 25, 2013 bloomberg news Peter Hennessy President, New York Tri-State Region 212.318.9790 Peter.Hennessy@cassidyturley.com www.cassidyturley.com bloomberg news by Aaron Elstein Chief Executive Michael Corbat and $15.1 million to Global Consumer Banking CEO Manuel Medina-Mora last year was because that was simply the market price for such executives—at least the market defined by Citi. Let’s further suppose Citi feared that if it didn’t pay such generous sums, the executives, who have spent their entire careers at Citi or its predecessors, would take their talents elsewhere. This is the accepted wisdom within the corporate world, but a study last year from the Investor Responsibility Research Center Institute showed that of the 1,827 CEOs appointed at S&P 500 companies between 1993 and 2005, only 2% had been CEOs elsewhere.The reason, the study explained, is that “the necessary skills to successfully run a company cannot be acquired besides through actual experience at the company; therefore, executives are not typically transferable between firms.” In other words, no matter how much Citi chooses to contort itself to rationalize the pay it awards its top folks, it has little reason to fear that they’ll actually defect. Ⅲ $68,379 JPMORGAN CHASE’s cost of providing “residential and related security” for Jamie Dimon in 2012. The chief exec was awarded $18.7 million in total compensation last year, when the bank’s record earnings of $21 billion were marred by $6 billion in “London whale” trading losses. Mr. Dimon’s pay was 19% lower than in 2011. http://www.cassidyturley.com http://www.cassidyturley.com

Table of Contents for the Digital Edition of Crains New York - March 25, 2013

In the Boroughs
In the Markets
Real Estate Deals
The Insider
Business People
Opinion
Alair Townsend
Greg David
40 Under 40
Classifieds
For the Record
Small Business
New York, New York
Source Lunch
Out and About
Snaps

Crains New York - March 25, 2013