Itzik Frid does not run a typical venture fund. Frid is CEO and Managing Partner of Takwin, a fund Itzik founded, as ajoint endeavor together with Erel Margalit’s Jerusalem Venture Partners and Chemi Peres’ Pitango. Tawkin invests exclusively in Israeli-Arab startups. Their goal to develop the first large exit of an Israeli Arab startup, and by doing so, jumpstart the entire high-tech sector in the Arab Israeli communities. The fund also provides work spaces for its portfolio companies in Tawkin’s Haifa offices. Takwin is currently invested in eight companies: Feelit, SOOS, SeismicAI, OlfaGuard, NanoFine Technologies, Ovotech, Myndlift, and Imagry.
Frid was born and raised in Tel Aviv. He is married, has two sons, and still resides in Tel Aviv. He attended the Tel Aviv University High School, which specialized in the study of computers, physics, and software development. Frid graduated from University prior to his Army service. He received a degree in Physics from Tel Aviv University. Frid fulfilled his Army service, commanding a special project in Air Force Intelligence. After his release from the Army, Frid received a Law degree, and then interned at Fox Ne’eman & Herzog, (considered to be Israel’s leading law firm), where he worked closely with Professor Ya’akov Ne’eman. When Ne’eman became Finance Minister, Frid followed him, serving as one of Ne’eman’s advisors in the Ministry of Finance. Frid worked in the Finance Ministry for three years.
From the Ministry of Finance, Frid jumped into the business world, becoming VP for International Affairs of AOL. During his tenure, Frid joined ICQ after it was sold to AOL. He turned ICQ from a startup with no revenue, into a thriving company with revenue of $160 million a year. Next, Frid became a partner in Argo Quest, an Investment and holding company. He was appointed Director and VP of Infogen, one of the firm’s portfolio companies, which was later sold to Israeli web-design sensation, Wix. After six years with Argo Quest, Frid became CEO of an Israeli/Japanese company, called Momenos, which was the world’s largest distributor of Android games.
Frid founded Takwin Labs five year ago. Here are his thought on some key questions regarding the successes and challenges facing today’s high-tech industry:
Marc Schulman: Most people in the high-tech industry today talk about the tremendous challenge of finding enough qualified workers. Do you agree with this assertion, and if so, what might be some solutions to this problem?
Itzik Frid: Israel has a definitive shortage of high-tech workers. It needs 130% above the current supply. This deficit originates from different sources. First of all, the problem stems from the natural growth of startups in Israel, which are booming, and the multinational corporations, for which we are the number one [research and development] center in the world. I think over 400 R&D centers of multinational corporations exist in Israel today. They drive demand. They pull up the salaries and increase the need for skilled employees.
Israeli Universities cannot provide as many high-tech workers as are needed. We do not produce enough engineers, and we are not a self-sufficient economy. For example, if a company in New York (or any other attractive spot in the US) needs additional employees, they just get people to move — because everybody wants to live there. Israel cannot attract people from neighboring countries. So, our only option is to provide more skilled workers from among ourselves. Therefore, the only way the Israeli economy can maintain its growth and continue this flourishing high-tech economy is by integrating new sectors into the high-tech.
I think the natural candidates for this growth are in the Arab Israeli sector — which makes up 21% of the population and constitute 20% of the best engineering students in Israel. In contrast to the field of medicine, where medical school graduates have a 95% chance of working in their profession, only 15% of the Arab-Israeli graduates in the science and engineering faculties work in the high-tech sector. On a positive note, from 2017 onwards, the number of Arab-Israelis studying in engineering and science departments (particularly in electrical engineering and computer science), totals more than their enrollment during the previous 20 years combined. We are about to face an outpour of Arab-Israeli talent coming to knock on the doors of Israeli high-tech companies.
The Arab-Israeli salaries, unfortunately, are still lower than the salaries of Jewish-Israelis, but they’re getting there. Today, Arab-Israelis in high-tech are already the second highest income providers, in terms of amount; second only to medicine. So, Arab Israelis already recognize that the high-tech sector is the best way for them to progress, in terms of social mobility. For that reason, I think Arab-Israelis will be found all over the high-tech world in the next few years, I really hope so, and I think we can see it coming.
The second sector [for potential growth] is naturally the Haredim, ultra-Orthodox Jews. I don’t have that much knowledge about this sector, and I also don’t have that much optimism.
Marc: I’m rather pessimistic regarding the ultra-Orthodox, because they do not have a solid primary education, which Arab-Israelis, by-and-large do.
Itzik: Yes! There is an excellent primary education system in the Arab-Israeli sector. Most of the schools are excellent, I think. As to the ultra-Orthodox, again, I have limited knowledge and experience with them. They suffer from a lack of primary education, and from so much social pressure to remain separate. However, I have heard about undercurrents in the ultra-Orthodox sects demanding better [general] education for their kids. They recognize that education is the only chance for them to achieve any social mobility, and the possibility of getting out of the vicious cycle of poverty. Like non ultra-Orthodox Jews, who have always appreciated the value of a secular/general education, and Israeli-Arabs who now recognize the importance of education, I hope that some of the ultra-Orthodox will realize its worth. Because it seems like the ultra-Orthodox community will eventually implode, if it doesn’t provide basic math, science and english education for their kids.
Marc: What’s your involvement in this [i.e. increasing the entrance of Arab-Israelis into the high-tech workforce]?
Itzik: I think it was a Greek philosopher who said — give me a leverage point [to bring about change]— we are looking for that leverage point. The Israeli society was not always the “high-tech” or “Startup Nation” that we like to call ourselves. It was only 20-25 years ago that we started to have the first exits, with ICQ, Converse, and other companies.
Suddenly, every Jewish mother in Israel had the motivation to say to her kids — “You dummy, you should’ve been like the student next to you in school. You were much better than your classmate and, but s/he made zillions of dollars from their startup”. Why study medicine to be a high-tech person? That’s the attitude we need in the Arab Israeli society. So our [Tawkin’s] contribution toward this is to create the first success story of Arab entrepreneurs, who will become a role model that will be discussed. [Then, people will say] I can make it too. Over family dinner, every Arab-Israeli mother will say to her children — “You were in high school with this guy or girl, why didn’t you have an ‘exit’?”
Today, when Arab-Israelis hear about an exit of a Jewish-owned company, they do not see that potential in themselves. They say, “Oh, he’s Jewish”. It sounds like an antisemitic statement. But they say, “Well, the Jews have all the connections to the money, and they have the army service [and training], that’s why they can succeed.” But once an Arab-Israeli entrepreneur makes an exit, Arab-Israeli mothers will say to their children — “Why don’t you do it. You’re just as talented. There’s no excuse. Look, he or she did it.”
We, [at Tawkin], are working to create the first pioneers of Arab-Israeli entrepreneurship. We just need one good success story. We are close, and I’ll tell you why — because I think we are at the tipping point of the Israeli Arab penetration into high-tech. I believe their learning curve will be much, much faster than the Jewish one, because Jewish high-tech entrepreneurship came about as a function of the natural growth of an ecosystem. The ecosystem exists the money exists everything awaits for them. The talents of Arab-Israelis are already being planted, like good seeds, on very, very fertile soil. The investors will run after them, once they see what good potential they possess. If Arab-Israelis don’t come to the center of the country, then research and development centers will be opened up North. I am not talking about the edge of the Galilee, I am talking about Haifa, as well as Shfaram that will probably become high-tech centers, because it’s also exotic.
Marc: How long do you think it will take until that happens?
Itzik: I would say that in less than three years we [Tawkin] will have the first [Arab-Israeli] exit, and I would guess that [after that] the [learning] curve will be very fast, because there is another element that creates an infrastructure for entrepreneurship, and that is previous experience. Now we have the first waves of Arab-Israeli graduates from Engineering schools, and they work for Google, and others of the best companies. They are shining. The number of Arab-Israelis on the Dean’s Lists in the computer science departments, throughout the universities, is beyond their proportion among the students. You have 20% Arab-Israeli students in computer science and technology departments (which reflects their proportion of society), but over 30% on the Dean’s List. Their accomplishments in academic excellence will also help these graduates will allow them to create the infrastructure for the future entrepreneurship, and bolster confidence in themselves.
Marc: What are the benefits of pioneering entrepreneurship over working for Google, or Apple, or any of the other big tech companies?
Itzik: I think there is no one answer. I believe that at the end of the day, everybody needs to go where their heart directs them. Arab-Israelis are no different from Jewish-Israelis. Many Jewish-Israelis work for Google and Facebook, and that’s great. But there are so many others involved in entrepreneurship. I would definitely advocate for everyone to become an entrepreneur at least once. Going into entrepreneurship does not necessarily mean being in a startup company. When you open your own flower shop, that is entrepreneurship. There’s nothing like entrepreneurship and start ups, in terms of the thrills; in terms of the overwhelming sense of what you can accomplish. However, it doesn’t suit everybody. Some people are better off working for the government, working for Google, working for various other secure sorts of employment.
Marc: A bigger question — Where do you see the high-tech industry in this country headed in the next five years?
Itzik: You know that the natural and logical inclination for everyone is to see what we have now project that a few years forward. Currently, it seems we have no reason to assume that what we have will decline. People talk about “The Israeli miracle.” I mean it is a miracle, what has been created here, because Israel is not known for, (how should put it gently), Israelis are not that good at organizing or planning far ahead.
I think what has been established here is an infrastructure that can last for a long time. Israelis are adept at keeping up with technology and markets. Yet, so far, we are still unable to build large companies.
Israeli talent is the country’s most significant advantage. It helps us be flexible, and able to adapt according to the needs of emerging markets. We are good at identifying trends and reacting fast — and everywhere you go, people talk about Israeli technology.
I’ll tell you a story — I was in China and I met the VP of China mobile, which is bigger than all the American operators combined. He said to me — “You know everywhere I go, I see Israeli technologies. In every layer of our network, I see Israeli technology. How many people are you in Israel?” I told him “about 7 million, at that time”. He replied [with surprise] — “No, I am talking about the whole country.”
It’s really amazing. We are talking about just 400,000 people working in high-tech. It’s simply unbelievable. We are like an elite unit, that moves fast, does crazy stuff, and sometimes breaks things. We cannot move massive troops like the Americans, but maybe we don’t have to.
Frid was born in Tel Aviv. He is married, has two sons, and resides in Tel Aviv. Frid grew up and went to school in Tel Aviv. He attended the Tel Aviv University High School, which specialized in the study of computers, physics, and software development. Frid graduated from University prior to his Army service. He received a degree in Physics from Tel Aviv University. Frid fulfilled his Army service, commanding a special project in Air Force Intelligence. After his release from the Army, Frid received a Law
From the Ministry of Finance, Frid jumped into the business world, becoming VP for International Affairs of AOL. During his tenure, Frid oversaw the sale of ICQ to AOL. He turned ICQ from a startup with no revenue, into a thriving company with revenue of $160 million a year. Next, Frid became a partner in Argo Quest, an Investment and holding company. He was appointed Director and VP of Infogen, one of the firm’s portfolio companies, which was later sold to Israeli web-design sensation, Wix. After six years with Argo Quest, Frid became CEO of an Israeli/Japanese company, called Momenos, which was the world’s largest distributor of Android games.
Frid founded Takwin Labs five year ago. Here are his thought on some key questions regarding the successes and challenges facing today’s high-tech industry:
Marc Schulman: Most people in the high-tech industry today talk about the tremendous challenge of finding enough qualified workers. Do you agree with this assertion, and if so, what might be some solutions to this problem?
Itzik Frid: Israel has a definitive shortage of high-tech workers. It needs 130% above the current supply. This deficit originates from different sources. First of all, the problem stems from the natural growth of startups in Israel, which are booming, and the multinational corporations, for which we are the number one [research and development] center in the world. I think over 400 R&D centers of multinational corporations exist in Israel today. They drive demand. They pull up the salaries and increase the need for skilled employees.
Israeli Universities cannot provide as many high-tech workers as are needed. We do not produce enough engineers, and we are not a self-sufficient economy. For example, if a company in New York (or any other attractive spot in the US) needs additional employees, they just get people to move — because everybody wants to live there. Israel cannot attract people from neighboring countries. So, our only option is to provide more skilled workers from among ourselves. Therefore, the only way the Israeli economy can maintain its growth and continue this flourishing high-tech economy is by integrating new sectors into the high-tech.
I think the natural candidates for this growth are in the Arab Israeli sector — which makes up 21% of the population and constitute 20% of the best engineering students in Israel. In contrast to the field of medicine, where medical school graduates have a 95% chance of working in their profession, only 15% of the Arab-Israeli graduates in the science and engineering faculties work in the high-tech sector. On a positive note, from 2017 onwards, the number of Arab-Israelis studying in engineering and science departments (particularly in electrical engineering and computer science), totals more than their enrollment during the previous 20 years combined. We are about to face an outpour of Arab-Israeli talent coming to knock on the doors of Israeli high-tech companies.
The Arab-Israeli salaries, unfortunately, are still lower than the salaries of Jewish-Israelis, but they’re getting there. Today, Arab-Israelis in high-tech are already the second highest income providers, in terms of amount; second only to medicine. So, Arab Israelis already recognize that the high-tech sector is the best way for them to progress, in terms of social mobility. For that reason, I think Arab-Israelis will be found all over the high-tech world in the next few years, I really hope so, and I think we can see it coming.
The second sector [for potential growth] is naturally the Haredim, ultra-Orthodox Jews. I don’t have that much knowledge about this sector, and I also don’t have that much optimism.
Marc: I’m rather pessimistic regarding the ultra-Orthodox, because they do not have a solid primary education, which Arab-Israelis, by-and-large do.
Itzik: Yes! There is an excellent primary education system in the Arab-Israeli sector. Most of the schools are excellent, I think. As to the ultra-Orthodox, again, I have limited knowledge and experience with them. They suffer from a lack of primary education, and from so much social pressure to remain separate. However, I have heard about undercurrents in the ultra-Orthodox sects demanding better [general] education for their kids. They recognize that education is the only chance for them to achieve any social mobility, and the possibility of getting out of the vicious cycle of poverty. Like non ultra-Orthodox Jews, who have always appreciated the value of a secular/general education, and Israeli-Arabs who now recognize the importance of education, I hope that some of the ultra-Orthodox will realize its worth. Because it seems like the ultra-Orthodox community will eventually implode, if it doesn’t provide basic math, science and english education for their kids.
Marc: What’s your involvement in this [i.e. increasing the entrance of Arab-Israelis into the high-tech workforce]?
Itzik: I think it was a Greek philosopher who said: “give me a leverage point we are looking for the leverage point. The Israeli society was not always the “high-tech” or “Startup Nation” that we like to call ourselves. It was only 20-25 years ago that we started to have the first exits, with ICQ, Converse, and other companies.
Suddenly, every Jewish mother in Israel had the motivation to say to her kids — “You dummy, you should’ve been like the student next to you in school. You were much better than your classmate and, but s/he made zillions of dollars from their startup”. Why study medicine to be a high-tech person? That’s the attitude we need in the Arab Israeli society. So our [Tawkin’s] contribution toward this is to create the first success story of Arab entrepreneurs, who will become a role model that will be discussed. [Then, people will say] I can make it too. Over family dinner, every Arab-Israeli mother will say to her children — “You were in high school with this guy or girl, why didn’t you have an ‘exit’?”
Today, when Arab-Israelis hear about an exit of a Jewish-owned company, they do not see that potential in themselves. They say, “Oh, he’s Jewish”. It sounds like an antisemitic statement. But they say, “Well, the Jews have all the connections to the money, and they have the army service [and training], that’s why they can succeed.” But once an Arab-Israeli entrepreneur makes an exit, Arab-Israeli mothers will say to their children — “Why don’t you do it. You’re just as talented. There’s no excuse. Look, he or she did it.”
We, [at Tawkin], are working to create the first pioneers of Arab-Israeli entrepreneurship. We just need one good success story. We are close, and I’ll tell you why — because I think we are at the tipping point of the Israeli Arab penetration into high tech. Then, the learning curve, I believe, will be much, much faster than the Jewish one, because the Jewish one was a natural growth of an ecosystem. The talents of Arab-Israelis are already being planted, like good seeds, on very, very fertile soil. The ecosystem exists the money exists everything awaits for them. The investors will run after them, once they see what a good potential they possess. If Arab-Israelis don’t come to the center of the country, research and development centers will be opened up North. I am not talking about the end of the Galilee, I am talking about Haifa, as well as Shfaram that will probably become high-tech centers, because it’s also exotic.
Marc: How long do you think it will take until that happens?
Itzik: I would say that in less than three years we [Tawkin] will have the first [Arab-Israeli] exit, and I would guess that [after that] the [learning] curve will be very fast, because there is another element that creates an infrastructure for entrepreneurship, and it is previous experience. Now we have the first waves of our graduates from Engineering Schools, and they work for Google, and others of the best companies. They are shining. The number of Arab-Israelis on the Dean’s lists in the computer science departments, throughout the universities, is beyond their proportion among the students. You have 20% Arab-Israeli students in the computer science and technology departments (which reflects their proportion of society), but you have over 30% on the Dean’s list. This accomplishment in academic excellence will also help these graduates create the infrastructure for the future entrepreneurship, as well as bolster confidence in themselves.
Marc: What are the benefits of pioneering entrepreneurship over working for Google, or Apple, or any of the other big tech companies?
Itzik: I think there is no one answer. I believe that at the end of the day, everybody needs to go where their heart directs them. Arab-Israelis are no different from Jewish-Israelis. Many Jewish-Israelis work for Google and Facebook, and that’s great. But there are so many others involved in entrepreneurship. I would definitely advocate for everyone to become an entrepreneur at least once. Going into entrepreneurship does not necessarily mean being in a startup company. When you open your own flower shop, that is entrepreneurship. There’s nothing like entrepreneurship and start ups, in terms of the thrills; in terms of the overwhelming sense of what you can accomplish. However, it doesn’t suit everybody. Some people are better off working for the government, working for Google, working for various other secure sorts of employment.
Marc: A bigger question — Where do you see the high-tech industry in this country going forward in the next five years?
Itzik: You know that the natural and logical inclination for everyone is to see what we have now to project that a few years forward. Currently, it seems like we have no reason to assume that what we have will decline. People talk about “the Israeli miracle.” I mean it was a miracle, what has been created here, because Israel is not known for — how should put it gently — Israelis are not that good at organizing or planning far ahead.
I think what is currently established here is an infrastructure that can last for a long time, and Israelis are agile at keeping up with technology and markets. Yet, we are still unable to build large companies.
Israeli talent is the country’s most significant advantage, because it helps us be flexible, according to the needs of the future markets. We are good at identifying trends and reacting fast — and then everywhere you go, people talk about Israeli technology.
I’ll tell you a story — I was in China and I met the VP of China mobile, which is bigger than all the American operators combined. He said to me — You know everywhere I go, I see Israeli technologies. In every layer of our network, I see Israeli technology. How many people are you in Israel? I told him about 7 million, at that time. He said — No, I am talking about the whole country. It’s really amazing. We are talking about 400,000 people working in high tech. It’s simply unbelievable. We are like an elite unit, that moves fast, does crazy stuff, and sometimes breaks things. We cannot move massive troops like the Americans, but maybe we don’t have to.
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