Will Israel lead the AI revolution?

Michael Fertik is bullish on Israel.

The managing director and founder of Heroic Ventures and executive chairman and founder of Reputation.com, Fertik, was in Israel this week for the first time since the start of the pandemic. His venture firm, founded in 2016, has invested in 75 companies. Of those, a quarter are Israeli.

“I’m here to tell you that anyone who is not bullish on Israel either has an agenda or is just plain wrong,” Fertik told the Magazine, only weeks after Moody’s dropped the outlook on the Jewish state from “positive” to “stable,” citing concerns over the government’s judicial overhaul efforts.

“There has never been a better time than right now to invest in Israeli start-ups,” he said. 

Time to invest in Israeli start-ups

Fertik offered several reasons. 

First, he noted, Israel has never had as many successful entrepreneurs who are now working on their second and third companies.

“That’s very important because they now have a little bit of money in their pockets, and they can self-fund for a while. Then, when a project gets to a certain size, they can look for outside capital,” he explained. “We’ve never seen those conditions as richly as we can see them now.”

Second, he said, many entrepreneurs are more sophisticated than they were 10, four or even two years ago because they have worked at more global companies and built international-level best practices into their efforts.

Third, he observed, companies have gotten “sharper” about what they should be building, with a focus on solving a market problem.

“I have seen some brilliant people spend three years building a hammer, and they start looking for a nail,” Fertik quipped. “You have to figure out what nail you are hammering first, and this sophistication has just risen in Israel and is only getting better.”

Finally, he said, Israel as a nation is meant to lead the artificial intelligence revolution. Fertik noted that “cyber” and “Israel” are almost synonymous, and many of the things that have made Israel successful in cyber will make Israel successful in AI.

“So you know that AI, never mind if it is a little hyped or not, is here. Many of the underlying skills and technologies that give rise to good cyber also give rise to excellent AI,” Fertik explained. “You’ve heard the phrase ‘product market fit’? Well, you’ve got here in Israel ‘nation market fit’ in AI.

“I believe Israel will be synonymous with AI. I am here to invest money. And I have invested money in Israel and will continue to invest money in Israel.”

Michael Fertik

“So I believe Israel will be synonymous with AI,” he continued. “I am here to invest money. And I have invested money in Israel and will continue to invest money in Israel.”

He said his remit is not whether Israeli society is developing, or even if the technologies its entrepreneurs create are being leveraged in the country. Instead, “I’m holding a candle for the companies in Israel that drive transformation globally.”

Heroic Ventures was founded after Fertik succeeded in his online reputation management company, Reputation.com. He said that when he hit financial success at such a young age, he started to think about what he wanted next. Raised as a Zionist, he knew he wanted that vision to somehow connect to Israel. He also knew that he wanted to be involved in investing “first money” in companies  – not round A but actually initial or pre-seed cash.

FERTIK GREW up in Manhattan. His father, an American film director, partnered with Israel’s Tourism Ministry to create a campaign in the 1980s called Come to Israel. His older brother made aliyah and joined the IDF. Fertik had his bar mitzvah in Israel.

He said that when he evaluated what kind of connection with Israel he wanted, there were several options – from buying property in Israel to donating funds.

“I realized that I could probably do more for Israel if I were involved somehow in the start-up community,” Fertik told the Magazine. “And then I realized I could probably do the most if I were going to start investing here. I am a Zionist, but I’m not investing in Israel because I’m a Zionist. I’m investing in Israel because it’s an exceptionally good place to invest. I’m here to make money and to help Israel make money and succeed. And along the way, I hope to help Israeli entrepreneurs become more successful than they would have been otherwise and to help build this country.”

Before COVID, Fertik, the father of three, would travel to Israel several times a year from his home in California – most of his non-Israeli investments are in Silicon Valley. Recently, he and his family moved to Paris. Now, he said, he plans to return to Israel much more often.

He said he invests in a broad waterfront of industries, but his strong focus is hi-tech and life sciences. At the same time, he has kept an active advisory role as executive chairman of Reputation.com.

The company sold its direct-to-consumer business focused on personal online data management in 2018, and continues to work more with larger companies and businesses worldwide. Fertik said the enterprise has helped millions of people clean up their online profiles and now hundreds of thousands of companies worldwide.

Advice for Internet users

He offered advice for Internet users:

“Before you post something, you must understand that it’s digital exhaust. It is following you like a trail in the sand, possibly forever,” Fertik said. “So, you want to try to put your best foot forward or put less of yourself forward.”

At the same time, he noted that today, a digital stamp is often created even without people knowing it or actively posting anything.

“Even when you are not publishing it, it is still digitally available to companies that want to access it,” he said, referring to certain personal data records.

“The first trillion dollars of wealth created on the Internet – almost all of it was from advertising. The basic premise of the Internet from a commercial point of view was that someone could take your data without your knowledge or permission and sell it to someone you could never identify for a purpose,” he continued.

“That was the economic and market value. But the flip side is you become the product. So even though you think you’re the subject or the verb, you’re the object of the sentence in the economic bargain of the Internet. And that means that, to the extent that you can maximize your privacy controls or use encrypted communication, I would probably encourage people to make those choices in most cases.”

HE ALSO warned parents to think two or three times before posting pictures of their children online. Fertik said that is not only because of security reasons but also because you create a digital reputation for your children.

“You want your kid to define who he or she is later. The more digital exhaust you create for your kid, the more that child is defined by you or the algorithm,” Fertik explained.

He added that “very smart people in the world are looking for data to predict your child’s future.”

For example, there are those looking to see if children watching certain programs would influence their success in school. But the “great problem” of the Internet and algorithms is that “it’s never true or accurate with you. It’s only accurate about everyone who looks like you. That is the power and the poverty of statistical inference.

“We don’t necessarily want our kids’ university choices to be predetermined by the time they’re 10, based on their viewing habits,” Fertik continued. “Therefore, we should live in such a way as to safeguard ourselves from the machine.”

He added that while technology is, on the one hand, creating conditions for problems, it also brings solutions. So, if there is a challenge that fake and real news appear the same or almost the same on social networks, technology and AI will ultimately develop to uncover those things.

“I believe that entrepreneurship and investing in entrepreneurship can assist us in uncovering these problems and providing solutions,” Fertik said.

He called on people to embrace the revolution.

AI is inevitable, he stressed. “It’s incumbent upon us to act accordingly.”

JPost