When I arrived at Soluto’s offices on Rothschild Boulevard in Tel Aviv this Monday, I was held up for a moment as I tried to figure out where the front door was. “The entrance is from here”, said one of the workers, “but soon it will no longer be used”.
It’s around 1pm and the company’s employees are leaving the offices for lunch at one of the nearby restaurants. Most of them are young, under thirty, with a penchant for scooters and sporting hipster looks, and could easily serve as the poster boys and girls of Israeli high tech.
Ironically, the lobby area looks a lot less modern, as it’s still dedicated to Soloto’s big exit in 2013, when it was sold to US tech giant Asurion for $130 million, a huge sum by any measure, especially in those days The entrance wall looks like a wall of fame for the two founders, Ishay Green and Tomer Dvir (and also serves as proof that print is not dead, it’s just sinking into the walls): as there are framed photographs of items. in the press at the time, with headlines like “Soluto makes an exit” or “Asurion that bought Soluto plans to acquire more startups in Israel.” However, just the day before my visit, Asurion itself announced the immediate closure of Soluto, which had served as a development center since the purchase, and the complete layoff of all 120 employees.
“It’s hard because this was our home,” one employee tells me, who even after being fired makes sure to behave according to the tough high-tech code and refuses to be cited for his name without permission. “It’s an amazing company, and what hurts the most is giving up an amazing social circle. But that’s okay, we understand the market situation.”
“The situation is that we are part of a much larger organization. Although it is an important part of the business, and our product is amazing, that is the decision that was made. The parent company changed a little the direction of the business and is making an organizational change in accordance with the state of the world and the technology industry. It also laid off employees in the United States before they came to us. The layoffs there heralded what would happen here. The layoff it is another consequence of the decision to deal with the economic situation”.
Are you stressed about finding a job in a market that adapts to the new situation?
“It might sound like overkill, but we’re confident because the outside world knows what we’re worth. The fact that we’re from Soluto will help us. The company has an amazing reputation.”
“It won’t be easy, and it’s not fun to start the process of looking for a new job, but I think we’ll get through it,” says another employee.
“I don’t worry about our employees, they will find work”
Asurion’s reorganization included layoffs of about 1,000 workers in the United States, out of a total of about 23,000. In this sense, Soluto is nothing more than a ripple in the ocean. Its closure, those close to the company say, was done out of a cold-hearted consideration of cost savings and neutralizing the headaches associated with maintaining a separate company in a foreign country, including tax planning, contracts of suppliers and the administrative costs that this entails. “At Asurion they came to the conclusion that there is no other choice and that the professional duty at this time is to ensure survival”, they say.
But from the perspective of startup nation, Soluto’s closure is a considerable drama laden with symbolism: a company that started with great promise, won a prestigious award early in its career, attracted high-quality investors , quickly completed a beautiful exit, established itself as a development center of an international giant, and even as a juicy trivial detail It was managed for a short time by the person who later became the prime minister of Israel, Naftali Bennett.
“From the point of view of the Israeli economy, we have lost the activity of an American company here,” says a source familiar with the company’s operations. “In terms of the high-tech industry, this is the first sign of a phenomenon that we will soon see: international companies that need to downsize and Israeli development centers that will absorb the successes.”
“On the one hand, it’s very sad, and somewhere, in an ideal world, you hope it will go on forever. On the other hand, rationally, you understand that there is not much to be done and that this is the reality.”, says founder Tomer Dvir. “It’s very sad, but each story of a high-tech company stands on its own, and nothing can be concluded from it about another company, or about the high-tech industry here in general. The market here was swollen and it’s leveling out a little bit now. And a shutdown like what happened here is a relatively extreme thing, and I don’t know if it’s going to happen to others as well.”
Dvir is married to Noa Maiman, daughter of businessman Yossi Maiman, who died in 2021, and the two have two children. He holds a senior position at Asurion, but has been on unpaid leave for the past year and a half and lives with his family on a yacht, which is currently docked in Florida. “It’s my first time in 20 years that I haven’t rested,” he says. “I have been working continuously since the day I completed my military service and founded the company, and we decided that children are the right age for a family vacation.”
All of your employees have been fired. Will they manage it?
“I’m not worried about their ability to find work. The selection processes at Soluto were tight and those who go looking for work will be caught quickly. The best are always in short supply. My only wish for them is to find work out there with the standards they had at Soluto.”
“On Sunday morning, we gathered the employees for an intimate conversation,” said Merav Oren, CEO of Soluto. “Layoffs had already started a week earlier in the US and employees wanted to know how it would affect us. Asurion’s John Leonard spoke at the meeting about the company’s strategic shift and the need to focus on its channels more profitable.”
I guess that’s not what upset the employees?
“That’s why I tried to quickly get to the real news in the conversation. I told the employees that I was proud of everything we did together and that it wouldn’t go away. There was crying, anger, frustration, and that’s okay. . Also I shed a tear, I was emotional. But I held myself together to be there for others.”
“I feel nothing. What is there to feel?”
One person far less sentimental about the closure is Ishay Green, who co-founded Soluto with Dvir and was his partner until his exit in 2013. Green, 43, is much more expressive than is usual in the industry. He starred in the docu-reality series “Connected,” produces independent plays with his partner, director/playwright Dafna Rubinstein, and is also a serial entrepreneur, founding four startups. From his point of view, not only is Soluto’s closure not sad, but “layoffs are a blessing.”
How do you feel the day after Soluto closed?
“I don’t feel anything, what should I feel? This is another company. It was founded 15 years ago, and I haven’t been there since 2012.”
You dreamed and you were born Soloto.
“I have no feelings, I have no pain. It’s just work, it’s not the most important thing in life. Companies can talk in the language of ‘welcome to the family’, but it’s not a family, it’s work. Yesterday I was busy with our show in Edinburgh.”
Why doesn’t Asurion want Soluto?
“Because all the powerful forces left Soluto after working there for more than a decade. Even Tomer Dvir, who was my founding partner and CEO, is already 40 years old. After 15 years he was does it allow to change jobs? As soon as the entrepreneur leaves the forces, the group becomes a technology group. Maybe with good programmers, but also means that cannot initiate and create new things. Ben Horowitz wrote in his book that all technology becomes obsolete after a decade, and you either rewrite it or die.”
Is this what happened to Soluto?
“It seems that Soluto got old and couldn’t start new things. But that’s okay, because the companies that employ 2,000 people were born from Soluto.”
According to this way of thinking, its closure is good news.
“The economic value of closing Soluto is positive. It closes at a good time because the strong minds that came out of it are already driving the economy in other startups. It is a cornerstone, those who left it will continue to drive the economy of other sites that need programmers. After all, Soluto itself was born out of McAfee’s development center, which I left with two other people to set it up. This is the Israeli ecosystem, this is the food chain. The ‘animal that dies in the field. , after the lions eat his flesh, his body becomes the fertilizer on which the trees grow, so now the lions eat Soluto’s flesh.’
Who are the lions in this parable?
“Today in Israel there are about 60 unicorns, and they are real. All these unicorns need programmers, and those fired from Soluto will work for them. So everything is good. They have had an excellent training, and I am glad that they are now. I no longer work for Asurion but they are returning to the Israeli ecosystem. I have no interest in the great programmers working for Asurion. What do I care about Asurion? Let them work for Israeli companies. We have sold the company, Asurion made hundreds of millions, if not billions, from Soluto’s software, everyone benefited. Thank you very much. Let the workers go.”
In today’s ecosystem, it may not be easy to find a job.
“Those who are lazy and bad programmers will probably find it harder to find work. Development centers that reach 120 people accumulate a layer of employees who were not really working and who are not really interested. But those who know how to do it. programming and having a passion will get you a job in ten minutes. Do you know how many good companies are out there? They all need great programmers and that won’t end in the next 20 years. Good programmers are a very rare commodity. With all due respect, this it is not a factory in Yerucham that closed down and now the workers have no other choice”.
“You want to invent? They’ll tell Asurion you’re going fishing!”
Soluto was founded by Dvir and Green, a couple of young nerds from Netanya, who found themselves repeatedly dealing with computer problems of family and friends. Their first product was designed to allow people to identify bugs in their computer and it brought them great fame in a world where everyone hated their computers. They won first place at the TechCrunch Disrupt competition held in 2010, and millions of users worldwide downloaded Soluto’s software to their computers. The next step was to develop a product that would allow remote treatment of problematic computers, and also smartphones. Once it was up and running, Asurion was presented with a check for $130 million. Asurion’s primary business was mobile phone insurance and it was the main provider of this service to the major mobile phone companies in the United States. Soluto’s technology fit like a glove, and from that moment Soluto served as a hub of innovation.
According to Green, this is the stage when a company loses its “mojo”. “Without entrepreneurs, everything crumbles and rots. A business needs inventiveness,” he says.
And don’t they invent in the development center?
“Inventing means that something will happen between the ears of someone out of nowhere, and then they will have the entrepreneurial power to get quotes and convince the company to do it. Now try to explain to Asurion that you want to make the next version of the product. , and that it will take a year and a half and cost 20 million dollars. They will say “go fishing!” Entrepreneurial power is the key. Now ironSource, for example, has a very strong entrepreneurial power. Another example is Wix , but if the founders or the leadership team leave the company, within two years the whole company falls apart.”
You gave an example of two unicorns, when today it is clear that unicorns are part of the bubble problem in high tech, and now they have a hard time justifying an unreasonable valuation.
“It’s jealousy and narrow-mindedness. What does it matter if they’re worth $10 billion or just $2 billion? They’re still billions. Big business. And they still have $200 million in their account, which is enough to support to a lot of people. It’s still infinite. If (cyber company) Wiz isn’t worth $6 billion, but a billion, what difference does it make? In the high-tech industry, it doesn’t matter. Similarly, if Wix isn’t . it’s actually worth $15 billion. The stock value of a company like Monday, for example, is only part of the picture, because in the long run it’s going to continue to grow and hire employees.”
“I understand you wanted to do an ‘Oh, it’s sad in high tech’ article, everyone does. But I say it’s all very well. Soluto is an excellent example of a story of entrepreneurs who left it and founded 20 startups. So it’s time for it to shut down and join the Israeli ecosystem. Hi-tech will only get stronger, because companies will spring up like mushrooms after the rain. The closing of a center development of a large company is a blessing for Israel. .”
“No. The closing of Intel, for example, would not be good, because it is an expert in maintaining development for years. Microsoft or Google also know how to maintain large development centers around the world and maintain innovation. Asurion is different. “
So do you reckon more development centers will close?
“Yes. Almost every American brand that has a development group here and doesn’t have something very creative or very important system maintenance will suffer cuts or closure. And like I said, that’s not a bad thing, the employees are coming back to an ecosystem that is hungry for engineering, quality and product managers.”
And you are not angry with Asurion?
“No, I congratulate them. Thank you very much. They gave me money, contributed to high technology here, and also made billions from the deal. And next time, when there is something interesting in Israel, they will buy a company”.
Is the ecosystem you speak of stable now?
“The ecosystem is stabilizing, the programmers at my current company are no longer looking for work. Everything has calmed down, it has become quiet, you can work. And don’t worry, everyone is making money, there are still thousands of millions and the demand for workers will not end. The only ones who lose are the working class. Those who are at the bottom of the chain, suffer much more from the increase in the cost of living and are not in the party of opportunities. my heart really aches for them.”
Aren’t you speaking out of enmity to a company that parted ways with you?
“The company didn’t fire me, I left when Tomer, my partner and CEO, asked me to leave. At first you’re offended, but then it doesn’t matter.”
“Like ‘The Lion King,’ the circle of life will close”
You speak in praise of the Israeli industry, but during the last two years unicorns became a symbol of extravagance, of hedonism on the verge of decadence.
“Making the whole ecosystem a waste is a gross generalization. I haven’t seen crazy waste in companies, and I know a lot of entrepreneurs. Rapyd threw a party because someone was up to it. It happens. It’s a temporary celebration. It’s a temporary celebration.” It doesn’t make all high tech wasteful and corrupt, or make someone delusional that they don’t understand what money is. Monday spends billions on Facebook advertising, so what’s the big deal about a billboard on the Ayalon highway? It’s marketing money pocket.”
And will any of these unicorns become the next checkpoint?
“Every unicorn is a small checkpoint, and it doesn’t matter if it is sold. More and more unicorns will survive to the checkpoint stage. And as Yitzchak Sadeh said, ‘Sports for thousands, not champions’ . It’s better to have lots of companies from which unicorns will grow, be bought or shut down, and from which more companies will be born. Innovation will not end.”
You talk about the situation in a way that may upset many people.
“Because they don’t look ahead. In the short term, some people will be out of work, in the long term the business environment will strengthen. In a year or two, they will see that I am right. Many companies will overcome this little crisis, and in the end we will achieve the ‘target of a million hi-tech workers. Remember the Lion King? It’s the circle of life. The king’s brother kills him and Simba the cub runs away. . But then he grows up and becomes king again and kicks the king out evil. This circle of growth is good. It’s not like textile companies move to China and then the industry ends.”
How do you see the mass layoffs in the industry so coldly?
“Industry is an infinitely hungry animal. No matter how much you feed it, it will eat. Unicorns are hungry for people, they’ve raised a lot of money, and some of them are money machines that don’t stop. Inflation, stagflation, any macroeconomic term what you put on it won’t change the fact that they are hungry and able to accommodate a lot of people. And like I said, this Soluto body is fertilizer for the industry. I feel sorry for the pressure and fear of people, but they are going to a adventure and, in the end, they’ll be better off too.”
