SaaS Interviews with CEOs, Startups, Founders
He Invested in WeWork and Now Runs $150MM Israel Focused Fund, EP 291: Michael Eisenberg
16 Jun 2016
Chapter 1: Who is Michael Eisenberg and what is Aleph?
This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per talk. Five and six million. He is hell-bent on global domination. We just broke our 100,000-unit soul mark.
And I'm your host, Nathan Latka. Okay, Top Tribe, this episode is brought to you by FreshBooks, the invoicing tool that I use to make sure I collect all my money in an efficient manner. To claim your free month, go to nathanlatka.com forward slash FreshBooks and enter the top in the How Did You Hear About Us section.
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Chapter 2: What is Michael's investment philosophy at Aleph?
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You're in here from Carlos Cisco. He's going to break down your $250 ticket to luxury. And he did over 700 grand in 2015. Okay.
Chapter 3: How did Michael transition from unemployment to venture capital?
Top tribe. Good morning. Good morning. Our guest today is Michael Eisenberg. And I got to tell you, you got to check out the show notes to get the full bio. This guy has been in a lot of businesses that many of you heard of, like Wix. He's now working on Aleph, which is a venture capital firm. He's making some extremely interesting investments, which we're going to focus on today.
So Michael, are you ready to take us to the top? Yep.
Chapter 4: What was Michael's first big success in the tech industry?
Looking forward. Let's do this. Let's do this. So first things first, why don't you tell us about Aleph and kind of the idea behind the firm, and then we'll jump into Nexar. Sure, so my partner, Aiden Shochat, and I set up Aleph about three years ago to invest in Israeli startups and grow them into large global businesses. As we like to say, transition startup nation to scale up nation.
We raised $150 million and we've got a fair amount of investing around things we care a lot about, which is disrupting old industries using big data, machine learning, machine vision, and software generally. And so tell us, obviously the Israeli kind of startup scene has really grown super fast. Were you there at the beginning or are you jumping on kind of halfway through?
What did it look like 10 years ago?
Chapter 5: What makes Aleph's partnership model unique?
10 years ago, I've actually been a venture capitalist in Israel already 21, 22 years at this point. It's 1995. So I've seen a bunch of cycles, both in the general market and in Israel. And when I got started, it was, I don't know, maybe $250 million total under management today. That's invested in half a month here. And you're talking about just all VC in Israel, $250 million 10 years ago?
Yeah, if that much. Got it. And so 20 years ago, 20 years ago. Okay, so you jumped in real quick, just so people understand how you got into this.
Chapter 6: What is Nexar and how does it utilize AI technology?
What was your first big success? Did you come from just an investor? Did you write new investing? Or did you have your own startup that you sold? And that's what catapulted you? Neither. I have a much more sordid story than that. I was unemployed, and that's how I got started. I actually got out of school and started in political consulting.
Someone forgot to tell me that politicians turn out of office, and political projects come to an end, and I ended up finding myself unemployed, so I started something, which was kind of a...
Chapter 7: How does Nexar collect and analyze driving data?
semi-merchant bank fund for technology startups out of Israel. And I guess the first good-sized success was a company called PictureVision, or for most of your listeners, they won't even know what I'm talking about, but back then there were cameras that had film in them.
And what Picture Vision did was enable you to get your film scanned at a local grocery store or by sending it by mail, snail mail, to a Kodak facility. And then it was scanned and put up on this thing called the Internet, which most people didn't know about in 1995. And then you could share your pictures with Grandma.
This was the first online photo sharing site, and it was bought by AOL and Kodak, now with blessed memory. What was the exit price? I don't think we ever disclosed it, but it was a very large multiple on money. Got it. Above or below, call it a hundred million bucks.
Chapter 8: What advice does Michael have for aspiring entrepreneurs?
Oh, above. Above. Okay, great. So then you get into, did you go right from picture vision into the venture capital world? VentureVisual was my first venture-style investment. At my first firm, we did 11 deals. Then I moved on to another firm where I was for eight years called Israel Seed Partners based in Jerusalem.
Then I moved to Benchmark Capital, which is based in Menlo Park, to their Israel fund here. Then I launched Aleph three years ago. Just real quick, what was the investment that you made while you were at Benchmark in Israel that you got most excited about before we transitioned to Aleph? Oh, I don't know. You love all your children. I know. I'm asking you to pick one. Anyone in particular?
I can't do that. No. I was very fortunate to partner up with Conduit and Giga and Wix and WeWork. Just very fortunate. All right. Great. So let me ask you a question. Obviously, you had a lot of success at Benchmark. Why did you decide to roll up and start your own VC firm? Benchmark really wanted to focus on Silicon Valley in the United States, but primarily Silicon Valley.
And I really wanted to stay in Israel and focus on Israel. So I launched Aleph to do that. So that was 2013? The industry out of Israel. That was 2013, correct. Okay. So real quick for those folks, we have a lot of VCs that listen in because I get all the numbers from entrepreneurs and they call me and go, Nathan, we want to
you deal with them can you help broker it and you know we have fun that way but help folks understand that might get into the vc world one day when you know when they get older how did you raise 150 million i imagine you you put in some of your own money and maybe had some lps We have mostly LPs, and of course we put in our own money. But as I said, I've been at this for a fair amount of time.
I had a track record, and my partner Aidan is a rock star. He was a three-time successful entrepreneur. We got together to do this firm, and it's a new style of firm. We set up basically the first equal partnership in Israel, modeled after Benchmark, which is one of the greatest venture firms of all time. And we're trying to do things a little different over here.
Our core mantra is different is better than better. And we're trying to shake it up and do some different things and disrupt the pilot industries using technology. What do you mean? Sorry, what do you mean when you say you have an equal partnership? You said that like it was different from what people typically do. How's it different? Most venture capital firms are stratified and hierarchical.
Different people have different economics in the fund and different clout. All of this is an equal partnership, both on economics and decision making. And every partner we add going forward, it comes in as an equal partner on day one. So economically, when you get a return, what's the person like? Obviously, hedge funds just kind of follow the 2 in 20 model.
Is there a model like that that you're following on returns? We don't disclose our economic model, but, you know, among it and I, everything is split equally. And, you know, when we had another partner, he or she will be an equal partner, too. Got it. OK, so that's the part that's unique. Typically, the wealth is concentrated kind of in the managing partners.
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