David vs Goliath: Israeli entrepreneur takes on Amazon in brawl for brains

David vs Goliath: Israeli entrepreneur takes on Amazon in brawl for brains

In a Facebook post, Shai Wininger compares e-commerce giant to new neighbor wreaking havoc in the 'hood; says he fears for Israel's tech ecosystem

Lemonade co-founder Shai Wininger at his office in Tel Aviv; Dec. 20, 2017 (Shoshanna Solomon/Times of Israel)
Lemonade co-founder Shai Wininger at his office in Tel Aviv; Dec. 20, 2017 (Shoshanna Solomon/Times of Israel)

As competition in Israel heats up for tech talent, Israeli entrepreneurs have found themselves at their wits’ end as they see the best minds snapped up by giant multinationals that have started operating locally, offering salaries way above the market.

This competition reached new heights Wednesday, when the co-founder of  insurance technology firm Lemonade took the battle to his Facebook page, accusing online shopping giant Amazon of trying to poach his workers. The post created a storm of comments by other entrepreneurs, while Amazon’s chief technology officer promised he’d look into the matter.

Shai Wininger, co-founder of Fiverr as well as of Lemonade, wrote in his Facebook post that he had just learned that Amazon “is actively trying to poach Lemonade employees. Game on! Werner Vogels FYI,” he wrote, referring to Amazon’s VP and chief technology officer.

“I’ve been deeply concerned about Amazon’s aggressive approach, far beyond Lemonade specifically, and that if it doesn’t stop, we may look back at this moment a few years from now and say that this was a defining moment that changed Israel’s competitive advantage forever,” Wininger wrote. “I’m looking at this from two different angles. One – ethical, the other, existential.”

Boxes moving along a conveyor belt at an Amazon fulfillment center in Tracy, California, January 19, 2015. (File: AFP PHOTO / GETTY IMAGES NORTH AMERICA / JUSTIN SULLIVAN)

On the ethical side, he wrote, “If you buy a home in a quiet, friendly neighborhood, and want to become a pillar of that community, you don’t go around tearing your neighbors’ houses to the ground, just to make some room for your new tennis court and pool.”

He said Amazon’s promise of high developer salaries — which he said aren’t actually as high as publicized — are all about “wrecking everyone else’s business to get a few employees quickly.”

On the existential side, Wininger wrote, the introduction of a “new 3X salary standard” into a market like Israel’s could, on a macro level, set “Israel’s tech system back 20 years.”

“I have a grave existential concern for many startups that will not have the capital required to hire employees in Israel and will fail to be competitive in the global marketplace. Unless of course, they’ll set up shop somewhere else,” he wrote.

In response to Wininger’s post, also on Facebook, Amazon’s Vogels commented that he’d “dive” into the matter and follow up. “It may be a sourcing agency vs Amazon proper. I find that sourcing from our customers would be extremely counter-effective,” he wrote.

Israeli entrepreneur Yossi Vardi (L) speaks to Amazon’s Werner Vogels during an Invest in Israel event aat DLD Tel Aviv, September 6, 2017. (Courtesy)

Liad Agmon, the CEO of Dynamic Yield, a Tel Aviv-based software startup, said that Amazon recruiters are also aggressively trying to poach its developers in Tel Aviv, and threatened to switch to Google cloud for services instead of Amazon. He added that using a sourcing agency as a proxy “does not reduce Amazon’s responsibility for that practice.”

Other members of Israel’s tech community chipped in with a storm of comments. Entrepreneur Johnny Oram pledged to “march on” with Wininger, saying that Amazon is notorious for poaching, as are Google and other tech firms. Roi Tiger, a director of engineering at Facebook, wrote that it may be unreasonable to ask Amazon not to recruit from their customers “as that would rule out most of the market.”

On the hunt for talent

In November, TheMarker financial website said that Amazon was aggressively headhunting developers in Israel by offering way-above-average wage packages, exacerbating a local shortage of workers and boosting salary levels.

Amazon, which in October announced that it was setting up a research and development team in Israel, has targeted programmers, poaching them from startups and other firms, with the aim of enrolling the first 100 workers for its Tel Aviv center, TheMarker said.

An experienced programmer working at a cybersecurity firm was offered a salary of NIS 60,000 a month ($17,000) from Amazon, together with a signing and other bonuses, the report said. The going market rate for workers with that kind of experience is around NIS 40,000.

Amazon started its operations in Israel with the acquisition of Annapurna Labs for $350 million in 2015. The US giant is on the scout for university graduates in the field of machine learning, experienced programmers, chipset engineers and operating systems specialists, TheMarker said.

The US e-commerce giant is not alone in its efforts to draw skilled workers. There are some 286 active multinational firms operating in Israel, most of them from the US, according to data provided by Start-up Nation Central, a nonprofit organization. These include Apple, Google, Microsoft, and Johnson & Johnson, all of whom are competing for local talent as the ecosystem struggles with a shortage of skilled labor.

Israel’s high-tech industry will lack more than 10,000 engineers and programmers in the coming decade if the government doesn’t take immediate action to prepare students to meet the shortfall, the Ministry of Economy and Industry warned in a 2016 report.

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