Editorial: Deloitte’s Technology Fast-50

By Raphael Fogel Sunday November 1, 2009

Today we were invited to Deloitte Brightman Almagor Zohar’s Technology Fast-50, an event in which the accounting firm announces the Israeli start-ups who have shown the most significant income growth in the past year.

It seems kind of odd to us to rank start-up companies by sales, seeing how many of the high-tech exits are by companies who always lost money and spent it without end, some of which never sold a single piece of software or hardware in their entire existence. Furthermore, many start-ups prefer not to sell at all, opting for collaborations instead. Why deal with money, support, licenses and salespeople salaries when you’re trying to sell a dream?

Another point that’s important to understand is that your solution’s price tag, as well as its annual income and sales’ expenses, may even hurt a CEO who’s trying to explain to a potential buyer, such as AOL, Google or an international medicine conglomerate, that his product is the next big thing. The idea is to get the buyer to think that once they buy your product, and incorporate your life-changing service into their platform, their salespeople and their clients – then the sky’s the limit. In addition, investors can also read a spreadsheet, and once they see your numbers, they’ll start making complaints and possibly bring in their own people rather than yours.

Take Twitter for instance, who recruited about $100 million according to an estimated market worth of $1 billion, there is not a doubt in my mind that their CEO doesn’t care about his sales graph. His sales data, if he were interested in selling, would probably be more in line with an annual sales cycle of an upscale Manhattan restaurant, they’d only damage his presentation and ruin him when he releases his social -media beast on NASDAQ.

Another problem with the Fast-50 competition is the complete lack of annual sales figures. It’s true that accountants love accurate numbers and detailed financial reports, but in a company dealing with privately owned companies, and through occult manners finds out their annual revenue gain in a percentage, you can’t know if you’re dealing with a start-up that reported the sale of 3 water purification projects for a million and a half dollars and showed an astronomical jump from last ear, where they only sold for $100,000, or if you’re dealing with one of the best global security projects, that is selling to Fortune 500 organizations on a regular basis, and increased it’s revenue to $5 million in 2008. However, Joe the Security company’s CEO, who is on the verge of making a hunderd-million dollar exit, will only be ranked 40th, as last year, he sold $4 million of his security software. Not a significant percentile growth when compared with a start-up that sold next to nothing last year.

Of course, the simple fact that we’re dealing with start-ups, most of which are bleeding money and need constant cash-flow from investors, doesn’t help with revealing the losses that stand behind these sales. We’re greatly missing the relation between sales result, company life expectency and how long their solution has been on the market, regular expenses and lastly, how much money the venture capital funds have already spent on this company.

Despite all financial reservations, the Fast-50 competition shows us fifty Israeli start-ups (well, roughly 50… some are non-start-ups that somehow weaseled their way into the list) that have managed to sell their product to the outside world for real, actual, tangible money. A significant feat, performed by the people of Deloitte Brightman Almagor Zohar.

The fact they present to us the companies who managed to sell a product people were willing to buy in one of the hardest years for a start-up company in the entire history of man-kind, despite countless cut-backs and downsizes and in the face of endless competition by mega-corporations, is a tremendous accomplishment for these entrepreneurs and their employees. We tip our hat at accountant Yigal Brightman and the people of Deloitte Brightman Almagor Zohar for shining the spotlight on these companies, and letting us know who are the top companies who are out in the trenches, dealing with customers on a day to day basis.

To us, the fact that all these companies sell a product, and more so than last year, is the real importance of this competition. The actual ranking doesn’t matter all that much. We’re usually not in favor of these start-up competitions, and think they’re only worth is as a tool for marketing and networking in the closed community in which they exist. There is no question, though, that a contest like the Fast-50 is ten times better than those amusing competitions where a start-up who’s never created something a person would have any interest in buying takes home the grand prize. These are companies who win international awards and acclaim roughly equivalent with winning a nobel prize (back when it still mattered) based on a powerpoint presentation with a cute animation, a crowd-pleasing presentational ability, a fictive business model more suited for a C-list sci-fi movie, or, worst of all, “professional” advisors – who make a living off these types of situations. More often than not, the winners of such international competitions are the only start-ups who were willing to pay thousands of dollars in entree fees, flights and lodging. Just because their founders have yet to visit the golden state, or they don’t have any real clients they need to take care of.

So after this long winded introduction, we’d like to present to you the fifty start-ups who did manage to sell their product in 2008. Their not all actual start-up companies, most lose money by the truck-load, a vast majority won’t make it through the economic crisis and the venture capital funds will cut them off, but there is one thing they can own to – according to Deloitte Brightman Almagor Zohar’s report, there exist actual organizations with actual IT managers, who decided to pay actual money for the actual products the company actually developed.

And so, without further ado, here is the list of the fifty Israeli companies that sold original products in 2008 (in no particular order):