How a Silicon Valley firm can ‘prosper’ from Silicon Wadi

US financial tech giant looks to newly acquired Tel Aviv-based BillGuard for inspiration and Israeli know-how

Instead of heading to Silicon Valley, Israeli start-ups can find everything they need at home, in high-tech hubs such as Tel Aviv's Kiryat Atidim pictured here. (Yossi Zamir/Flash90)
Instead of heading to Silicon Valley, Israeli start-ups can find everything they need at home, in high-tech hubs such as Tel Aviv's Kiryat Atidim pictured here. (Yossi Zamir/Flash90)

Many Israeli entrepreneurs ask themselves if they have what it takes to succeed in Silicon Valley. But perhaps the question is whether or not entrepreneurs from the US have what it takes to make it in Israel.

“The acquisition of BillGuard has been a real eye-opener,” said Aaron Vermut, CEO of San Francisco-based Prosper, who is in Israel for the first time in three decades to visit his company’s new Israeli subsidiary, which tracks credit card spending and monitoring.

“BillGuard’s team is small and agile, a group of engineers who know how to identify problems and fix them.”

That’s far different from the situation back home in the US. Prosper Marketplace, one of the world’s biggest peer-to-peer lending sites with 600-plus employees; Tel Aviv-based BillGuard has only 25.

“When you have a larger group, you have different clashing cultures, so there is a lot of adjusting that different business groups – the tech groups, finance people, etc. – have to do in order to get along. When you have a small group that’s been working together for years, it’s easier to be on the same page.”

But size isn’t the only issue.

“There’s something about the Israeli DNA that is different than what we have in Silicon Valley. By the time they get to work, most of the Israelis are older and more mature, have been through a full stint in the IDF, where they have to learn to operate as a team, even if they disagree on goals and ideas,” said Vermut. “This is a key part of best practices for a team – being able to coalesce around a leader and get the job done, while maintaining independent thought and creativity.”

Tech workers in the US, on the other hand, tend to go straight to the office after finishing university, and don’t have that built-in “maturing” group experience, he added.

BillGuard created a hugely successful mobile phone app that helps users keep track of their spending, helping them to avoid “gray charges” — charges added to credit card bills for services they didn’t actually order, want, or need, such as upgrading a service from a free basic level to a costly premium one, unintended renewals of memberships or insurance.

BillGuard screenshot (Courtesy)
BillGuard screenshot (Courtesy)

The Israeli start-up is now a division of Prosper, which offers a platform to enable users to lend money to each other for everything from medical procedures such as fertility treatment to home improvements and debt consolidation.

The company has experienced extraordinary growth over the past three years, originating $1.6 billion in loans through the Prosper platform in 2014 — a 350% increase from 2013 — and it expects to more than double that in 2015. To date, nearly $5 billion in loans have been transacted through the Prosper platform.

Prosper Marketplace was recently named to Inc. Magazine’s 2015 Inc. 500​, a list of the fastest growing private companies in America. The company was also named one of America’s “Most Promising Companies of 2015” by Forbes Magazine ​and is on Finovate’s Fintech Unicorn List.

Aaron Vermut (Courtesy)
Aaron Vermut (Courtesy)

With so many activities, Prosper naturally has a large staff – and a very diverse one, both in terms of personnel and business orientation, said Vermut.

“Over the past several years we have been reorganizing, trying to recreate the organization, redesigning our user interface, rewriting our tech stack and more.”

BillGuard’s method of working, he said, has provided a good example of how he would like to see actions taken in other divisions of the company.

Of course, no one appreciates a heavy-handed “do this, not that” lesson, and Vermut tries not to shove anything down anyone’s throat.

“The Israeli team sets a good example, but there is only so much you can do to get people to follow that example. I can’t tell my team to be like the Israelis, but I can facilitate an environment where they work together, and enable the DNA of the teams to mix.”

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