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.
Recently Israelnewsletter.com had a chance to interview Jamia Jasper, portfolio manager of The American Israeli Shared Values Capital Appreciation Fund. This interview shouldn’t be taken as a solicitation or recommendation to buy or sell securities. The views and opinions are solely of the interviewee, and are not that of Israelnewsletter.com. You should not consider the information here to consist in any way of investment advice, and you should speak with your own adviser and do your own research before making any investment decisions.
Jamia Jasper: The American Israeli Shared Values Fund is an actively managed mutual fund that invests in the stocks of Israeli companies and U.S. companies that do business with Israel.It is a multi-cap fund with about 50% Israeli stocks and 50% U.S. stocks.In addition to the primary goal of long-term capital appreciation for investors, the Fund aims to expand the market for Israeli companies, making it easier for businesses there to raise capital and expand.Lastly, I have pledged to donate 7% of my personal profits from this venture, or a minimum of $5,000 per year, to charities and educational and research institutions in Israel.
How did you get started investing in Israel?
JJ: I have a business education and prior career experience as a credit analyst and a long history of personal investing.I noticed that many interesting technologies were coming out of Israel and that many of their stocks traded in the US. Israeli companies are conservatively managed with low valuations, allowing for significant appreciation potential.I did well with my initial investments and began looking for other ways to invest in Israel.At the time there was one index Fund for Israeli stocks and no actively managed mutual funds.I was very surprised that a big investment house had not already created an Israeli mutual fund.I decided to create one to satisfy the needs of other investors looking to invest in Israel, whether for investment purposes or for a show of solidarity.
Can you tell us about some of the Israeli stocks that trade in the US?
JJ: All of the companies listed below are in the portfolio because they have solid business fundamentals, excellent management, are debt-free, and have good free cash flow.
ESLT– Elbit Systems focuses on advanced solutions in defense electronics.It is a growth company due to the early stage of adoption of its products in the market. The company is experiencing rapid earnings growth and the shares trade at a reasonable multiple of earnings and cash flow.Also, it is a defensive play given its lower exposure to economic cycles.The company is winning an increasing number of contracts from countries outside its traditional market of the U.S./Israel, in places such as Europe, India, and the Far East.
NICE- Nice Systems is a provider of solutions that capture, manage and analyze unstructured data. Its largest clients include the U.S. government for homeland security monitoring and financial companies for compliance purposes. NICE has organic sales growth of 12-15% annually, no debt, and approximately $150 million in free cash flow, which equates to a free cash flow yield of 7-8%.The company can buy back 25% of its outstanding shares, which would increase EPS by 20% or it can institute a dividend of 5% or more.The shares appear undervalued at the current price of $28.
GIVN- Given Imaging Ltd. is a medical device company that specializes in non-invasive, wireless technologies to diagnose gastrointestinal disorders.It has a unique, principal product, the Pillcam SB, which is a dissolvable pill that takes color video of the gastrointestinal tract. It is sold in 60 countries worldwide. The company has a solid balance sheet, with more than $100 million in cash and no debt.Currently the U.S. and Japan have insurance carrier coverage for the products. The French government is expected to provide reimbursement for the product in 2008. Given Systems could be an attractive acquisition target for any of the large GI or diagnostics companies.
TEVA- Teva Pharmaceuticals is the largest generic drug manufacturer in the world.Generic drugs are part of the solution to the world-wide healthcare cost crisis.Their next big leg of growth should be generic biotechnology since the company already has the unique capability to produce protein-based drugs (as opposed to chemicals).Teva also has excellent research capabilities in conjunction with other Israeli research institutions. In addition to organic earnings growth from its generic drugs and proprietary treatments for MS and Parkinsons, the company just reached an agreement to acquire Barr Labs.Barr is a U.S.-based generic drug manufacturer with 25 applications for generics already filed with the FDA.The acquisition of Barr is expected to be accretive to Teva’s earnings shortly after the transaction closes.
Tell us about some of the companies that you hold that do business in Israel? Why is the Israel piece interesting?
JJ: The US companies in the portfolio must have a business relationship with Israel.These include:
MSFT- Microsoft has been in Israel since 1991 with core R&D and start-up incubation activities, as well as venture capital outreach to create partnerships with the local pool of high-tech talent.Windows NT and XP were developed in Israel.Right now, the stock is incredibly cheap at 12x earnings and $23 billion of free cash flow in fiscal 2008 (8% fcf yield).
MDT– Medtronic is a medical device company that, among other things, controls nearly half of a $6 billion global defibrillator market. Its fastest-growing businesses include products for diabetics and small electrical implants used to alleviate pain and to treat neurological disorders. Medtronic has offices in Israel, which are primarily sales offices, but also are used as a base for discussions with Israeli medical device R&D companies.The company has expected earnings growth of 11-15% for 2008 and the shares currently trade at a significant discount to historical valuation.
AMGN –Amgen is one the world’s largest biotechnology companies. The company has a licensing agreement with the Israeli company Gamida Cell Ltd., to share several of its proprietary cytokines in the manufacturing of Gamida’s StemEx, a treatment for hematological diseases. Amgen will receive a minority equity interest in Gamida Cell in addition to royalty payments from future sales of StemEx.Right now AMGN is selling at a low 14x EPS and free cash flow is estimated to climb to $5.4 billion in 2008.
CAT – Caterpillar sells their tractor and trailer equipment to the Israeli military.While it is not a significant part of their business, the company has shown loyalty to Israel by continuing to sell to them despite threats of boycotts.From an investment perspective, CAT is benefiting from the boom in mining companies purchasing large machines.Right now the company trades at 11x earnings.Last year the company had $5 billion of free cash flow, which is nearly a 10% free cash flow yield.This is very high, even for a cyclical company like CAT.
Thanks.
Jamia C. Jasper is the portfolio manager of the American Israeli Shared Values Capital Appreciation Fund and has been responsible for the Fund since its inception in 2007. Ms. Jasper has committed her own capital to establish and launch the Fund and its investment advisor.
Ms. Jasper’s background includes nearly a decade in investments and financial services and several years as a staffer in the US House of Representatives. Jamia was most recently with the Bank of New York, where her responsibilities included the financial analysis of public companies. Prior to joining the Bank, Jamia worked for Jones Lang LaSalle, a leading real estate and investment management firm. Ms. Jasper holds a BA in International Relations from the University of Southern California and an MBA from Cornell University.
It is important to understand that share price, principal value and return will vary, and you may have a gain or loss when you sell your shares. All mutual funds can be affected by market and investment style risk. The Fund’s investments in small and mid capitalization companies could experience greater volatility than investments in large capitalization companies. Request a prospectus, which includes investment objectives, risks, fees, expenses and other information that you should read and carefully consider before investing. A prospectus can be obtained by calling your investment professional.
The Israeli trade deficit continued to widen in June as a strong Shekel and the cost of fuel imports rose more than the growth in exports. As reported in the Jpost, “The deficit, excluding diamonds, ships and aircraft, increased to a seasonally adjusted $1.27 billion from $1.04b. a year ago, the Central Bureau of Statistics said in a preliminary report Sunday.” I have never thought trade balances mean a whole lot. So what if you run a trade deficit? As colleague Zack ‘check out our new website redesign‘ Miller said to me over a cup of coffee, ” Isn’t it obvious that Israel will become a net importer, as the country becomes wealthier?” Giddy up!
Microsoft (MSFT) is at it again. The Redmond based software giant has agreed to purchase another Israeli company. This time it’s data quality start-up Zoomix. According to unnamed sources in Globes, purchase price is between $20-30 million. Hey Softie, can you spare a million or two?
Hey, anyone know what’s going on at Fundtech (FNDT)? The stock has surged over the last month by more than 15% on heavy volume, in the face of strong headwinds provided by the general market. Fundtech, which provides financial transaction processing software solutions for financial institutions all over the world, has managed to continue to sign deals even as IT spending in the financial sector remains sluggish.
Part of the puzzle as to the dramatic fall in shares of BluePhoenix (BPHX) has been revealed (aside from declining revenues, foggy outlook…). It turns out that US investment group Gilder Gagnon Howe & Co. sold off most of their holdings in the company. Globes reports that according to SEC filings, GGHC held 354,000 BluePhoenix shares at the end of June down from more than 2.2 million shares held at the end of Q1 ‘08. That’s a huge amount of stock hitting the market for such a thinly traded share.
NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.
Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
Shares in Medis Technologies (MDTL) reached a 5 year low Friday on news that the company was doing a $29 million offering. This raise leads to the question of whether the company is teetering on the brink of financial solvency? For those who don’t know, Medis focuses on its fuel cell technology, and sells through OEM partnerships.
The problem is that they aren’t doing much selling. The company has made announcement’s in the past about prospective deals but little has come to fruition. A year ago, after announcing a deal with Microsoft (MSFT) that was said to be in the millions, Herb Greenberg wrote in SeekingAlpha.com: “A Microsoft spokesman, noting that the order was “small,” told me there has been “inaccurate” information in the marketplace about what Microsoft plans to do with the fuel cells. “We have no plans to resell these products around the world,” she said. She added that Microsoft has no plans “for development of the product.”
Then what is Microsoft doing with it? As John says in his piece, Microsoft plans to use the Medis products as a giveaway at an upcoming event…like a chatchke. Yet another Medis announcement that isn’t quite what it appears to be.
Jonathan Weil of Glass Lewis, the proxy and research firm, added color in a report to his firm’s clients. He quoted a Microsoft spokesman as saying the Medis product is “not a Microsoft branded product. He added that the total purchase price was “less than $15,000. We have no agreements with them. No joint development. There’s no partnership around accessories. If you think of this as akin to Microsoft buying a pen or a Frisbee — that’s the way you should think of it.”
If you look at their Q1 ‘08 earnings report you will find that the company lost more than $14.7 million in the quarter. The report goes on to say: “We recently announced the signing of a $60 million equity line of credit facility with Azimuth Opportunity Ltd. We believe that the equity line offers financing which is sufficient to meet our current and near term foreseeable needs but is also very flexible. As we move forward with our sales and marketing programs we will determine how best to finance our activities.”
That was on May 12th. A short time after signing a $60 million equity line of credit, the company goes out and raises $29 million? I know that when talking about an alternative energy company this may sound heretical, but it seems like Medis is about to run out of gas.
Disclosure: Author’s fund has no position in any stock mentioned as of 6/22/08.
NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.
Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
