Benzi Ronen is currently on a quest for his next start-up. He and his partner Yossi Pik recently launched Buddy Runner (www.buddyrunner.com ), a personal virtual fitness trainer for your mobile phone.  Israel Newsletter recently had the opportunity to sit with Benzi to learn about his newest venture.

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Most recently Benzi was Vice President of Product Management and User Experience at SAP. Prior to SAP, he co-founded and was CEO of Octago Inc. based in San Francisco. He was a product manager at both Microsoft (Redmond) and Netscape (Mountain View) and completed an MBA at the University of Michigan and a BA in Sociology and Anthropology at Tel-Aviv University. He met his business partner, Yossi Pik, at SAP where they had a chance to work together and realize that their skills and passions were complementary.  Yossi was VP of Research and Development where he led a team of 70 people.  You can read more about Benzi’s “Journey of an Entrepreneur” via his blog at http://benzironen.wordpress.com

Give us the elevator pitch about BuddyRunner
Benzi Ronen, co-founder, Buddy Runner: Buddy Runner provides the capabilities of an expensive GPS enabled personal trainer on your Android phone. Buddy Runner allows you to monitor each run by recording your distance, pace, time, elevation, and route. A personal dashboard is created for viewing, analyzing and sharing your progress. With over 10,000 downloads during the first 4 weeks of our launch as well as  being one of the highest ranked applications within the Android Market, we are much better positioned to place our next big bet.

Our premise for Buddy Runner is that smart phones will become our personal assistants for different aspects of our lives. Examples include; help with administration, managing our social lives, shopping assistance, and the area we are focused on which is a person trainer to get you fit and live a healthier life.

The convergence between a cellphone in everyone’s pocket , computing power on small devices, and mobile high speed Internet access created the perfect storm for the next technological gold rush.   Smart phones are in their infancy but became top of mind when Apple released the iPhone.  Why was this a significant transitional event and what makes a smart phone different from the phones we have seen to date?

• Smart phones provide a technology platform that enable developers to easily develop applications and make use of the different functionality of the phone.
• Smart Phone providers succeeded in circumventing the telecommunication companies that had a lock on what could run on the phone by delivering a market place where developers could freely upload their applications and consumers could easily download them.  In addition, there is a payment scheme on the store which provides incentives for developers to let their imaginations lose.
• iPhone’s slick user experience and savvy marketing quickly turned a geeky concept into a must have consumer electronics device for everyone.

Given the openness of Google Android, is there a technical barrier to entry?  How will you differentiate?
BR: Yossi and I selected the Google Android platform as our beachhead before broadening to other smart phone platforms. Our rationale was driven by Google’s open platform approach which provided us with the ability to rapidly build, experiment, and iterate our technology development. This approach worked well since today we are able to leverage most of our technology investment (server side) as we traverse to additional smart phone devices.

The tsunami of smart phone applications (already over 25,000 for the iPhone) make it difficult to gain market attention. Most of the applications being offered involve relatively little development (less than 30 days of development), don’t have any technological patents and have a short shelf life since their cache wears off quickly. As a result, the application demand behaves similar to movie box office hits. There is a short window of opportunity to materialize a big hit and the general public’s attention quickly moves on to the next new thing.

With Buddy Runner we have focused on a lifestyle category. We don’t expect to appeal to the masses but are rather focused on gaining the attention of a homogeneous segment of users that run at least once a week outdoors, are interested in tracking their results, and are willing to run with their cellphone which they often also use as their music player. This group becomes a diehard segment since the application becomes more meaningful as it contains more of your personal workout data.

What is the next step for BuddyRunner?  Risks?
BR: Since we are bootstrapping the company, we need to quickly determine the best way to monetize our success without challenging our popularity among users. We are constantly debating our long term vision with the need to generate revenue in the short term.

The fitness category has a many large gorillas which have a big interest in securing their positions. Nike and Apple released a joint offering (Nike Plus) which includes a pedometer within the shoe that communicates with the iPod.  Garmin, Polar, Suunto each have their version of high end fitness watches. Each company is trying to leverage their strength (brand, market traction, technology) in order to become the leader in this category.
It is clear to us that we will not be able to become a significant contender by playing by the same rules. Our product roadmap depends on utilizing the unique benefits of a smart phone and incorporating them into your workout in a way that none of our competitors are capable of doing. In addition, we need to ensure we differentiate ourselves among other fitness application running on smart phones so that we can justify charging a fee that will provide us the gas to bootstrap our way to the future.

Enjoy your Run!

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Avishai Silvershatz , Infinity: Infinity is an equity fund, not a traditional VC, focused on China. We manage over $600M. Our key focus is on a new $300M-plus fund, named the I-China Fund focused on late-stage equity investments. This fund’s main strategy will be to invest in late stage Israeli tech companies and on the other side, partner with Chinese companies that can employ Israeli technologies locally in China.

Who are Infinity’s Chinese partners?

AS: We have a list of very strong partners from both the government and private sectors in China. We’ve received a large commitment from the Chinese government for the fund. Political support of the fund comes from senior levels in both the Israeli government and Chinese government leading up to the Chinese Premier.

I assume that Israeli companies are traditionally nervous about sharing trade secrets. Is this the case?

AS: A key issue to establishing Chinese-Israeli partnerships requires overcoming this fear of Chinese firms co-opting Israeli tech. We successfully mitigate this problem by building multi-layered partnerships with key incentives beginning at the shareholder level all the way up to management level.

What’s Infinity’s advantage as an investor in Israeli firms?

AS: Infinity Equity had the first foreign fund to be incorportated in a GP/LP format in China. Doing business in China since 2004 has helped build a layer of trust for our network. We have strong support from the Chinese government. China is committed to Infinity because “innovation” is one of key things of the Chinese Government’s 5 year plan. The government has committed to moving from a low cost supply of labor to more value-added services as an economy. Innovation is mandated as part of this plan. The government views Israel and this fund as part of this movement to innovate.

What kind of criteria do you use when sizing up an investment?

AS: Typically, we invest in Israeli companies that have proven themselves in gaining marketshare through leading technologies and product development. Similarly, we invest in Chinese companies with strong market presence. We give Chinese companies, in some cases, equity in the Israeli company to incentivize the partnership and align working terms. There has to be mutual interest for these partnerships to work. We’ve had time to home our model over the past few years.

Can you give us an example of a recent investment?

AS: We invested in an Israeli company, Shellcase, which created a technology for packaging of chips used in cameras in cellular handsets. They had a.fab in Jerusalem with good tech and big losses. Many earlier shareholders gave up. We split the company in 2 parts. R&D stayed in Jerusalem and manufacturing shifted to China. The Israeli part of the company was sold to Tessera (TSRA) and the Chinese company is doing well and is very profitable and will probably float next year. Doing the manufacturing in the Far East has enabled them to do very well. By the way, the strong support from the Chinese government in the form of 0% interest loans made this successful investment and venture successful.

Which sectors are you looking at in Israel to make investments?

AS: In particular, we like the IT sector and see a lot of technology strength in Israel and demand for such technology in China. We also think Israel is quite strong in Medical Devices and related technologies. We’re seeing more activity and potential in Internet related technologies, spanning both consumer and B2B. Lastly, Mobile technologies coming out of Israel are very hot and in absolute numbers, China is the fastest growing market in the world.

Given your model, do you begin by targeting an Israeli firm and then look for a Chinese partner or vice-versa?

AS: More often than not, we start with a Chinese partner with a specific need for technology and we go shopping for the best in Israel. But, it really works in both directions. We get a lot of Israeli companies frequently approaching us looking for Chinese partnerships.

So, Israeli firms see Infinity as a distribution partner who takes equity in return for services?

AS: Infinity provides value in two ways. Most companies know that China should be their next play. These companies also realize that they can’t go to China alone. Many have frequently tried and failed to penetrate into China. They need a partner who can talk to Israelis and knows how to do business in China. We also focus on late stage entities and because this part of the market is not very populated, we can put up a lot of money when public markets are not very receptive to tech companies.

Are you seeing any fallout in portfolio companies that have their cash invested in subprime assets?

AS: Some companies lost money. This is not a huge deal. Other trends like the slowdown of the American market, weakening of the dollar has hit foreign companies twice, at both the operations and expenses level. We also see companies hit by the public market window closing and debt players less willing to put money into late stage technology companies.

Which sectors do you see in the near future as capturing larger share for Infinity?

AS: We are seeing more companies with little technology risk (it’s behind them) and less market risk (they’re selling well). As successful entrepreneurs start their second and third firms, we expect to see more of this as well.

Thanks.

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