Turning Start-Ups Into Gold

What do you think of when you hear the name Goldfinger — an unscrupulous villain in a James Bond movie or maybe an American ska punk band of the same name? In Israel the response is more likely to be an instant messaging pioneer who continuously tinkers with tech to disrupt markets and uses the proceeds to help the country’s next wave of start-ups.

Intensely shy and fiercely private, Yair Goldfinger became a millionaire in his 20s after Mirabilis, the instant messaging company he co-founded with three friends, was sold to AOL in 1998 for over $400 million. Little has changed since then. He still works hard, wears his hair long, is rarely seen in anything but worn jeans and T-shirts and remains more comfortable hanging out with geeks than mixing with moguls. Now working on his third company, AppCard – a 3.0 loyalty platform still in stealth mode – Goldfinger has backed more than 25Israelistart-ups.

Goldfinger’s success rate has made him something of a legend in his home country. Last year alone he celebrated five exits. (See the chart).Composia was sold to NICE Systems for an undisclosed sum; the sale of PicApp and PicScout netted a total of $30 million. The Israeli press reported that Goldfinger personally pocketed a $70 million profit from the 2011 sale of Dotomi, a company that helps marketers re-think online display advertising. Goldfinger cofounded Dotomi and served as chief technology officer for eight years.

Now 41, Goldfinger won’t talk about financial gains. It has never been about the money for him, he says. “The first goal for me is to enjoy,” he told Informilo. “There are guys who more or less always do the same thing – they are an expert in storage and they always launch storage-related companies. Me, I like to navigate between different areas. Each time I start a company I like to learn about a new industry.”

Goldfinger is currently toiling away on his new company AppCard in an undisclosed location outside of Tel Aviv, away from the mainstream tech scene. The company is targeting the retail sector but Goldfinger refuses to divulge anything more than that. An outlier by nature, if he sees all the start-ups and VCs going in one direction, he heads in another. Israel, for example, has seen a whole new wave of dotcom companies. “It is because it is cool and sexy but honestly I don’t like it,” says Goldfinger. “A company should have some technology behind it.”

Goldfinger was first attracted to tech at the age of seven. His older brother, who worked as a marketing manager for a computer company, would bring home state-of-the-art equipment over the weekend and let him play around with it. Before long he started coding. By the time he got to high school he was using his tech skills to do business. He and Sefi Visiger and Amnon Amir, two school mates who would later help start the instant messaging company Mirabilis, shared the same computer in high school.

After they graduated and did their military service Visiger and Amir urged Goldfinger to come and work for a Tel Aviv company called Zapa Digital Arts, which specialized in three-dimensional graphic tools for the Internet. It was there Goldfinger met and became friends with Arik Vardi, son of DLD Tel Aviv co-chair Yossi Vardi.

In mid-1996 Visiger, Vardi and Amir left. Goldfinger stayed on for a time but, he says, “I got lonely”. So, he too quit. Finding themselves unemployed, the four started batting around ideas for Internet companies. ICQ, an instant messaging Internet service that allows you to identify and chat with friends online, was famously dreamed up while the guys were playing ping pong.

It took just two months to create the technology. Yossi Vardi, a co-founder of Israel Chemicals, gave the team the seed money they needed to get the project off the ground. Amir went off to college but the younger Vardi, Goldfinger and Visiger moved to California for a few months so they could get cheap access to servers.  They worked around the clock on the service but had no business plan and had no clue how they were going to make money.

By 1998 – just two years after launch – ICQ had gone viral, attracting 12million users. Several big companies bid to buy the company. AOL walked off with the prize. Goldfinger was 28 at the time and held 21% of the shares in the company.

Goldfinger worked for AOL for two years from Israel but left when his contract was up because he did not want to move to the U.S. and was itching to build new companies of his own. He launched Dotomi in July of 2003 and simultaneously started investing in and mentoring young Israeli entrepreneurs.

“Yair and his partners in ICQ were my first tutors in anything relating to the Internet,” says Yossi Vardi, who, like Goldfinger, has plowed his proceeds from ICQ and other successes back into Israeli start-ups, serving as an angel investor and mentor to scores of young Israelis. “Yair is a great guy, a great entrepreneur and one of the true pioneers of the Internet as we know it today.”

Goldfinger, a regular at KinnerNet, the elder Vardi’s invitation-only annual geek camp, regards programmers as artists. And just as he is passionate about creating and experimenting, he says he loves to help others do the same.

How does he evaluate which entrepreneurs to invest in? “It is a gut feeling – I look for that spark in their eyes and ask myself if I like him or her,” he says. “Secondly I go check with my contacts. Israel is such a small market everyone knows everyone. And then, unless it is a market that I don’t know at all, I’ll make a decision in a few hours.”

Goldfinger usually invests between $250,000 and $500,000 but has invested as much as $3 million in a single company. He has written a lot of checks. “My wife says I have a very expensive hobby,” he says.

It is clear, though, that building companies is far more than a hobby for Goldfinger – it is his life’s work. And while he genuinely loves what he does and has fun doing it, he has very big ambitions for his own companies and the ones he invests in. So much so that one could say that he shares one trait with the character of the same name in the Bond film. Asked what his ultimate goal is, he responds with a laugh :“world domination.”



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