Kids Today

Feb 21, 2005 They were just computer geeks who really, really liked what they did. But when Israelis Yair Goldfinger, Sefi Visiger, Arik Vardi, and Amnon Amir set out in the late 1990s to invent something unique, they ended up making history.

Their brainchild: ICQ, "I Seek You," the world's first instant messaging software. It evolved into the killer app, and cultural icon, for a whole new-economy generation, and established a landmark in Israel's history of high-tech deals. In June 1998, the young men sold their company Mirabilis to America Online for a remarkable $407 million in cash (ICQ and AOL Instant Messenger are separate services).

The 1998 AOL deal was front-page news in Israel, where the Internet was in its infancy. Mirabilis triggered a trend in which American giants snapped up Israeli startups for vast sums. The kids had not only invented instant messaging, they sparked a rush for Israeli dot-coms.

Before its sale, Amnon Amir, then 26, had left Mirabilis to go back to school and his shareholding was reduced. The take was divided mainly among Mr. Goldfinger and Mr. Visiger, both then 27, and Mr. Vardi, then 28, and his father, Yossi Vardi.

Yossi was a well-recognized businessman, having served as the general manager of the Israeli Ministory of Energy as well as a financial advisor to former Prime Minister Yizhak Rabin. He brought business savvy to his son's experiment, and was the first to recognize the software's market potential. Later, he engineered the AOL takeover.

Today, Yossi, 63, is a personal business advisor to Amazon CEO Jeff Bezos and several AOL executives. Mr. Amir is pursuing a Ph.D. in biology at the Weizmann Institute of Science in Rehovot, Israel. Mr. Visiger is traveling the world, and working on his kite-surfing.

Vardi and Mr. Goldfinger, meanwhile, are stoking new startups.

The Pitch Man
With Dotomi.com, Mr. Goldfinger is re-envisioning personalized online marketing.

"We all get marketing emails from companies we bought something from?airlines, online bookstores, electronics equipment retailers, and so on," explains Mr. Goldfinger. "Most of us delete the email without a second glance. Who has time to read them all, even when they contain customized offers?"

Dotomi's aim is to improve e-marketing, rendering it much more effective. Instead of getting emails, surfers will see customized, rather than generic, banner ads. A different user sees a different banner, meeting individual needs or tastes. Privacy is protected, assures Mr. Goldfinger, as explicit permission is required before an advertiser can deliver personalized banners (permission is usually granted via one of the standard check boxes at an advertiser's site).

The click rate for customized banners is a relatively high 7 percent to 13 percent, says Mr. Goldfinger, four to five times more than regular banners or marketing emails.

"It customizes ads in a way no one has before, without violating privacy," says analyst Denise Garcia of research company Gartner G2.

Dotomi's banners appear on The New York Times' web site, USAToday.com, Advertising.com, and many others. Corporate giants adopting its technology include American Express, Avis, Office Depot, Blockbuster, and Tower Records. Recently, Dotomi closed a strategic contract with the online advertising company Blue Lithium, which runs more than 1,000 web sites visited by more than two-thirds of U.S. Internet users.

In September 2004, Dotomi raised $10.5 million from three American venture capital funds: Investor Growth Capital, Velocity Equity Partners, and U.S. Venture Partners. "Almost all our marketing targets the American market," says Mr. Goldfinger.

Mr. Goldfinger is the CTO for Dotomi, which he launched in March 2003. The company has a total of 50 employees at the R&D center in Israel and the marketing hub in Boston.

The Handy Man
Arik Vardi is secretive. When his Superna Systems presented its home automation software at the Consumer Electronics Show in Las Vegas this year, it did so via a hardware company, with no self-promotion.

Superna, today with 20 employees, was conceived when Arik moved two years ago, and wanted his new home to reflect his high-tech style. He wanted a "smart house" where electric blinds, lights, the DVD player, the stereo, and the air conditioner could all be operated by a single control unit.

Systems like that have been in the headlines for years, but have never become affordable?the simplest living room set costs around $5,000. Not much for a high-tech millionaire, but prohibitively pricey for most.

Arik had bought a "basic" but complicated unit and sat down to plan software to run his home. That gave him the idea for a startup making home automation systems that use standard home networks, wired or wireless, to identify and connect your appliances and electronics, without adding infrastructure.

Arik's partner in the company is his younger brother Oded, 32, who co-founded the price comparison web site RUSure (it competed with Dealtime, which morphed into Shopping.com, but died when the Internet bubble burst). When Arik started the Superna project, Oded had just been researching plug-and-play technology, to link household electronics to a central computer system.

"The main problem with systems like that, such as those of 30-year veteran Crestron Electronics, is that they are very expensive," explains Oded. Some require the whole house to be rewired or renovated to accommodate the smart system's requirements. "Also, the systems are difficult to use because they need to be programmed." The brothers saw potential in existing technology, envisioning an evolved, open-source system costing a more accessible $1,200 that would be user-friendly and flexible.

Their product is a control box to which all the main home electronics are connected with wires, or using wireless Wi-Fi. The system is operated via a central control screen, or the television, using a remote control. A basic Linux-run living room unit costs $1,200 and a system for a whole smart home runs up to $10,000, compared with prices of $30,000 per unit to several hundred thousand dollars.

Arik invested half a million dollars of his own money and raised $3 million more from private investors.

Installation is easy, says Oded, and can be handled by smart-house technology companies. In the future the brothers plan to sell via electronics companies as well. The market is at $1 billion, and growing: "And at this stage," he adds, "even though so many talk about it, we're the only ones offering a complete, low-cost solution for the smart home."

The Old Days
Looking back on the ICQ craze, the guys don't get too nostalgic. Mr. Goldfinger, for one, says he has no regrets, but hopes it wasn't the only peak of his career. The four remain friends, but don't plan to work together again.