Running out of air

1. Davidi Gilo

If there was ever an Israeli technology entrepreneur for whom the Israeli public fell head over heels, one with whom, despite being rich beyond their dreams, many identified and liked ¿ it was undoubtedly Davidi Gilo, the wonder boy who sold Israeli company DSPC to Intel for $1.6 billion.

Gilo didn¿t speak to the press much and when he did, he always had something worthwhile to say. In the past few years, there were two opportunities at which he shared his management philosophy with the tech world, offering a series of original and daring tips to entrepreneurs, executives and employees.

How disappointing to discover in the past few months that Gilo didn¿t adopt those tips himself, first and foremost his pointer: Remember where you come from.

In the past few months we have heard criticism of Gilo for financial moves he made in his public companies Vyyo and Zen. Both companies business models failed, and investors saw Gilo take care of himself, but didn¿t see how he took care of them.

However, the most prominent expression of this behavior came this weekend, when the company he founded and took public on Wall Street, Vyyo, filed its annual financial report, detailing relationships and related transactions.

Vyyo is a wireless access company with what is now considered a dubious business model. The company, which raised $220 million from the public, posted quarterly revenues of less than $4 million and its loss for the year was $49 million.

How does a mature company with little activity manage to lose so much money in so little time? The SEC filing indicates one way: Vyyo saw fit this year to spend $390,000 on renting a private jet for Gilo¿s business trips. Vyyo rented the plane from Gilo¿s wholly-owned company, and, in addition to rental fees, paid Gilo $310,000 in wages and $285,000 in expenses.

Gilo is a very wealthy entrepreneur and may feel he no longer has to crowd into business class with the other lowly travelers ¿ to each his own.

The question is why a sensitive and wise entrepreneur like Gilo sees no connection between the fact that Vyyo¿s business has collapsed and the company has fired most of its workforce, leaving it virtually empty of all content, and the $390,000 payment for a private jet and salary and expenses of $675,000.

If he insists on continuing to use private jets ¿ be our guest, he deserves it and he has a lot of money he made the old fashioned way that he can use to finance the extra from his own pocket. But why send the bill to a failing company whose investors have gone broke and whose only asset is cash that those investors paid for the shares ¿ primarily because they believed in him?

2. Carmel Vernia

Many in Israel have asked themselves many times why we don¿t have more senior civil servants like Carmel Vernia.

What made Vernia so unusual in Israel¿s public sector is that, as opposed to many directors of economic ministries for whom the job is mostly a springboard to a more lucrative private sector post, Vernia needed no such springboard.

Vernia became the Minsitry of Industry and Trade¿s Chief Scientist after holding a senior position at Comverse and after selling shares worth $50 million, becoming one of Israel¿s richest technology managers.

Yesterday, Vernia left the ministry after longstanding disputes with Trade Minister Dalia Itzik. Now Itzik can appoint someone for whom the big money still lies ahead, someone who will have to behave.

Yossi Maiman

The scope of Yossi Maiman¿s wealth is unknown. Maiman made most of his money in private business in developing countries ¿ and any number between $100 million and a quarter billion is possible.

But one thing seems certain ¿ Maiman isn¿t rich enough to fund a new commercial television channel in Israel under the present conditions.

Leo Malmud and Nimrod Novik, Maiman¿s managers, have led a rapid cost cutting program for the past month at Channel 10, lowering the costs per day from $210,000 to $65,000.

However, besides cutting the burn rate, the move has no long term significance. The channel left after the cuts is walking dead with nothing to say ¿ not to viewers and certainly not to advertisers.

Anyone who wants to establish a new commercial channel in Israel, one with a real message and the ability to compete with Channel 2, would now have to invest, over a long period, double and triple the sums of money Maiman is willing to fund.

The truth may be one would have to be a real nut to do it in today¿s business climate. Maiman, we learned this month after the cost cutting drive, is a businessman, not a nut. He cut the fat, the flesh and even the channel¿s bones.

So maybe it would be better to close down Channel 10 until further notice, until it can be resurrected as real competition for Channel 2. Right now, the channel and the reputation it is earning the television business are doing more harm than good.