Ashkelon Desalination Plant

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When: Wednesday morning, 10:00 am
Where: an undisclosed location behind two levels of security fences somewhere in  Ashkelon (supposedly)
WWW: www.water-technology.net/projects/israel/
Who: Oshik, an affable chap who served as our tour guide

Israel’s available freshwater supply is very shaky. It comes mainly from the Sea of Galilee which has been shrinking in recent years, also causing the Dead Sea to shrink. Israel’s water needs have only risen lately as the innovation and commerce that we spent a week touring use resources at an increasing rate.

Oshik treated us to a fascinatingly detailed description of the desalination process:

  1. Seawater is pumped in to the facility from a little less than a kilometer offshore to ensure the freshest possible seawater.
  2. The seawater goes through a pre-treatment process to filter and clean it. Debris trying to squeeze through the sensitive desalination equipment would ruin it.
  3. A high pressure booster brings the seawater up to a pressure of 70 bar (1,015 psi for those familiar with air pressure in tires)!
  4. SWRO (seawater reverse osmosis): the seawater passes through special filters which remove the brine from the (now fresh) water.
  5. Traces of limestone are added to prevent the water from corroding the metal pipes which would cause specks of metal to enter the water.

The brine exiting SWRO is still at an insanely high pressure, but instead of being innovative and putting a turbine at the exit to take advantage of the kinetic energy and generate electricity, the company has been doubly innovative and channeled the high power brine back into the system to directly energize the high pressure pumps. This ensures the highest level of potential energy usage.

The amazing thing about that is that typically when someone innovates something they are quite self-satisfied by their accomplishment, but the engineers at the desalination plant weren’t satisfied with putting a turbine at the exit to catch the brine, they achieved an even better end result. And this is not even part of their core business!

Photos:

Class photo (photo credit: Prof. Bachenheimer)

Me, Professor Bachenheimer, Professor Kessler, Oshik (photo credits: Julie)

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Omrix Biopharmaceuticals

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When: Tuesday afternoon, 1:30 pm
Where: Har Hotzvim, Jerusalem
WWW: www.omrix.com
Who: John Gethin, manager; Adrian McNeelance; Nadav; and Shai

Fredric Price of Chiasma was CEO of Omrix until 2008 when they sold to the Ethicon division of Johnson & Johnson for $438 million. One of Omrix’s main innovations involves using blood platelets to manufacture bandages that instantly close a wound using the inherent properties of the platelets. As they continue to develop the Fibrin Pad, a large pad which can stop the bleeding of an internal gash several square inches, they are moving in the direction of preserving many lives, especially out on the battlefield.

Mr. Gethin described how careful you need to be when you are making a product designed to be surgically inserted into human beings, and there is a high level of strict management procedures necessary to comply with. Israelis are much better at innovating than at managing the growth of their innovations, so Johnson & Johnson has brought in several foreigners to properly manage the operation.

We took a tour of the plant and I was impressed to see how they have 2 sets of machines that each go from beginning to end of their manufacturing process. They set up this system to enable an upgrade of machinery without having to pause the plant. Additionally, each section of each line is separated from every other section to decrease the potential for contamination.

Photos:

Professors Bachenheimer, Kessler, and Matalon with Mr. Gethin, Adrian, and Shai or Nadav (I don’t remember) (photo credit: Nikhil)

I guess they weren’t worried about us sneezing or touching things (photo credit: Prof. Bachenheimer)

The outside of the building (photo credit: Julie)

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Chiasma – Panel Discussion

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When: Tuesday morning, 10:00 am
Where: Chiasma’s corporate boardroom, 10 Hartom Street, Jerusalem
WWW: chiasmapharma.com/Page.asp?Id=1

Chiasma has engineered a way to deliver drugs via a pill that previously were only available through direct injection into the bloodstream. I don’t know the science behind it, but it seems like although we have been popping pills for some time already, we were only swallowing certain compositions of vitamins/nutrients/herbs/drugs/etc. that went from the stomach through the digestive tract and into the bloodstream. However, some sophisticated liquid concoctions needed to be delivered directly into the bloodstream and therefore required physical injection with a (not so much fun) needle. Chiasma was able to transform these liquids into a pill which could achieve the same results.

The Chairman and CEO, Fredric Price visited our class in New York on November 15, 2011 and spoke about the nature of starting a hi-tech pharmaceutical business, and specifically, about how it applies in Israel. He wasn’t able to attend our visit but he had a representative from Chiasma along with 4 entrepreneurs talk to us about a range of topics.

Panelists:

  1. Dr. Dalia Megiddo, Managing Partner, Expedio Ventures
  2. Galit Zuckerman, Founder and CEO, Medasense
  3. Steven Eitan, CEO, Exalenz
  4. Dana Gelbaum, VP Commercial Planning, Chiasma
  5. Dr. Daniel David, Founder, Commwell Medical

Dr. Megiddo is a venture capitalist and gave us a glimpse into the connection between entrepreneurs and VCs. She also spoke about the high level of Israeli innovation in the medical fields:

  • Elscint Ltd. developed the MX-8000 CT Scanner which drastically improved CT scanning technology. This part of the company was sold to Philips Medical Systems.
  • Elscint Ltd. also developed the Hawkeye SPECT scanner. This part of the company was sold to GE Healthcare.
  • Medinol developed the Nir stent
  • Serono developed Rebif for Multiple Sclerosis therapy
  • Teva developed Copaxone to treat Multiple Sclerosis
  • and Given Imaging developed the PillCam which Dr. Yaron had discussed with us at Itamar

She called on Mr. Eitan to describe how Israel was able to foster such an innovative environment and win the highest per capita number of Nobel prizes in life sciences, a full 3x as high as the country in second place (New Zealand). He talked about the Israeli culture and about the role the army plays in making young men and women grow up fast by forcing them to make critical decisions in an unknown environment. He also pointed out that the government recognizes this phenomena and tries to encourage its army veterans to join the workforce as innovators.

Ms. Zuckerman is the founder of Medasense, a company which measures pain using a finger probe. She spoke about the challenges of a new start-up trying to raise money. The conundrum is that investors want to see a prototype before giving any money, yet you need the money in order to reach the prototype stage. She detailed an “agile business development graph” which contains 5 stages in the growth of a start-up company. The key is to hold onto an ambitious goal of climbing 2 steps, while realistically attempting one step, and being prepared to fall back one step if necessary.

Mr. Eitan is the CEO of Exalenz (“breathtaking solutions”) whose mission is to become a leading provider of non-invasive tests for diagnosis and evaluation of GI (gastrointestinal) and liver disorders. He spoke about H. pylori, a bacterium found in the stomachs of people with various diseases, and about how Exalenz is marketing its BreathID breath test (which can detect H. pylori) outside of Israel.

Ms. Gelbaum spoke about Chiasma, their innovative oral delivery platform (pill), and about the challenge they faced when trying to decide how to commercialize their idea. Should they sell the company with its patent to “big pharma” and allow an established multi-national company to commercialize it (as many Israeli start-ups do), or should they pioneer the way for Israeli companies to develop and market their own drugs? She then described to us how Chiasma started developing it themselves in order to place itself in a more strategic position. They can either continue the development if they are able to handle it, or they can sell to “big pharma” but at a higher price than they could have commanded a few years ago because they have proven themselves serious about being able to develop it themselves.

Dr. David spoke about “the miraculous transmutation” of the Israeli hi-tech scene, and about “the inventor as a tormented entrepreneur”. This garnered the first of many laughs from our group which had just (happily) endured almost 2 hours of a barrage of information. He described how an inventor comes up with a brilliant idea and wants to market it when he is suddenly assaulted by the need to be fluent in a plethora of topics outside of his specialty: Business plans, funding, spending, management, location, personnel, accounting, lawyers, patents, regulations, contracts, technology, R&D, production, marketing and sales.

He talked about the issues which his company addresses:

  1. Most of the medical technology is located in hospitals but people spend most of their time outside of hospitals.
  2. Hospitals are prohibitively expensive.
  3. Hospitals are more dangerous than a home environment. 10% of deaths in hospitals are caused by problems picked up by a patient when entering the hospital for a different reason.

So Commwell Medical developed a home medical system: the Health-E-Chair. (Click here for a video that describes the Health-E-Chair) They also developed the PhysioGlove which can perform an ECG by simply holding the glove against the patient’s chest. (Click here for a video describing the PhysioGlove)

The panel was amazing and we heard a wealth of information running the entire gamut of the start-up community. But perhaps the most important thing I learned from our visit to Chiasma had nothing to do with the panel, but had to do with the human factor that went into forming it. Professor Bachenheimer was clearly overwhelmed with appreciation to Mr. Price for the amount of effort Mr. Price put into forming the panel and ensuring that we would be able to gain something from it. On several occasions throughout our trip to Israel the professor described parts of his interactions with Mr. Price and was clearly amazed by the CEO’s patience and commitment to ensuring that a group of college students that he doesn’t even know should have a meaningful experience. Mr. Price has more important things to attend to, yet he took care of us anyway.

As far as we have come along the technological revolution, the most prized and enduring qualities are the human ones.

Photos:

Dr. Megiddo
Ms. Zuckerman
Mr. Eitan
Ms. Gelbaum
Dr. David
(the above 5 are courtesy of Nikhil)

Chiasma’s team of rats that test the products (courtesy of Julie)

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Iscar

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 When: Monday afternoon, 3:00 pm
Where: Iscar’s headquarters, Tefen Industrial Zone, in the Western Galilee
WWW: www.iscar.com
Who: Dr. Moshe Goldberg, manager of marketing, training and engineering support; and Gideon Laymon

Iscar is a B2B business producing tools for the metal industry. Before getting there it was very hard for me to conceptualize what they do and how to wrap my brain around the idea that this was innovative and hi-tech. Every time I heard the name I kept thinking about electric cars because we heard so much about Better Place and Better Place’s name only talks about their concept (make the world a better place) not their product; there seemed to be a missing piece to my cognitive memory which was easily filled by the constant juxtaposition of our highly anticipated upcoming visit to Better Place with our equally hyped upcoming visit to Iscar: Israeli car – Israeli electric car. This was further reinforced by the lack of any tangible product with which to associate Iscar. I heard about tools but I couldn’t imagine how that would be something innovative enough to attract Warren Buffet’s attention. Even when we got there and started browsing some of their most innovative products, I was still associating “big drill bits” with “giant machines at construction sites that make incredible amounts of noise and are able, through updated technology, to move more concrete and earth at once”. It just seemed like a nice manufacturing company and I still couldn’t understand what all the hype was about.

It was only as we started hearing more about the company that it dawned on me that I probably never have, and likely never will, actually come across their products in real life. They don’t sell anything to consumers; it is strictly tools designed for the manufacturers in the large metal industry. We experience the products produced using their products. Now, I was able to grasp the hi-tech innovation involved. Iscar stands for “Israel carbide” as in tungsten-carbide: the hi-tech material used on the cutting tips of the tools that are able to withstand the extreme temperatures caused by the intense friction (more than 1,000 degrees Celsius!) Click here to link to an article by Dr. Goldberg about the science involved. Click here for another article.

After hearing a little bit more about the company and going on a tour of the plant I understood why there was a high level of security around the plant and why we were politely instructed not to take any pictures.

One of the members of the class asked what Buffet liked about Iscar that prompted him to make his first overseas investment. Dr. Goldberg answered:

  • The level of innovation
    • Iscar customers expect new products every 2 years
    • We took a first-hand tour of the large R&D department where employees are grouped in clusters to work on different projects. While there I noticed a group of about 6 employees hovering around a computer, and several people moving from sector to sector clearly discussing their ideas with other employees.
  • The human factor
    • Many of the factors discussed in Start-Up Nation that lend themselves to Israel’s innovative culture
  • Profitability
    • I was a little unclear exactly what he was referring to with profitability, but he must have meant that Iscar’s business model allows for a higher profit margin than other companies in its industry.

Pictures: We weren’t allowed to take pictures of the plant or the products but we have some pictures of our meeting with Dr. Goldberg.

Our meeting (courtesy of Prof. Bachenheimer)

The outside of the building, displaying the company’s motto (courtesy of Nikhil)

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Itamar Medical Center

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When: Monday morning 10:00 am
Where: Halamish 9, Caesarea
WWW: www.itamar-medical.com/
Who: Dr. Giora Yaron, co-chairman

“Itamar Medical is a medical device company which developes, markets and sells diagnostic medical devices based on the PAT™ (Peripheral Arterial Tone) signal. The PAT signal is a non-invasive “window” to the cardiovascular system and the autonomic nervous system.” (company website)

That means that the company has pioneered a method of checking various signals within the body via a small device clamped to one of the fingers and transmitting data to a small device (about the size of a wireless microphone transmitter that speakers get embarrassingly tangled in when they forget to unclip it from their belts) rather than undergoing extensive, expensive and unpleasant testing. Similar to Chiasma, which we visited on Tuesday, Itamar has, with advanced levels of engineering, developed a way to take an existing technology and extend it to cases which the medical world had so far been unable to extend it.

The main example we discussed was sleep apnea which is caused by obstructions in the airflow circulating throughout the body. It causes insufficient sleep due to an incomplete sleep experience and sudden and significant drowsiness by day. In order to test for sleep apnea patients are brought into a laboratory and wired up with dozens of wires and are then monitored as they sleep. Dr. Yaron joked that anyone taken out of their home, wired up, and instructed to sleep while technicians keep watch will have trouble sleeping! He showed us the WatchBand, a small device developed at Itamar which conducts the same test at home, with no wires, and no one watching.

Before Dr. Yaron got around to talking about Itamar he spent most of our visit talking about Israel itself and how the hi-tech scene got started in the first place. We were at least halfway into our meeting when the thought crossed my mind that he hadn’t said anything yet about his own company! But he was giving such an insightful lecture on the Israeli hi-tech and entrepreneurial scene that I just wanted him to keep going. It was almost like a synopsis to Start-Up Nation with a few extra chapters thrown in.

The main concept is the fact that Israel is a tiny nation surrounded by hundreds of millions of hostile neighbors and the only way to survive was to develop a hi-tech defense industry. Innovative minds then facilitated the transfer of knowledge from the military into civilian commercialization. Check Point is an example of Israeli military know-how commercialized and used as a firewall by 100% of Fortune 100 companies! Nice Systems was started by seven military buddies and provides technological security solutions. Given Imaging used missile technology to replace invasive surgery with a PillCam that is simply swallowed.

He shared with us an interesting observation about Israeli management capabilities versus American management capabilities. Many Israelis have started successful companies and have then sold them off to foreign corporations to manage. Israelis seem to struggle with the task of managing the business themselves. Dr. Yaron theorized that this has to do with where management skills are acquired. In Israel they are acquired in the military which has a more domineering method than is relevant to the business environment. Foreigners, typically Americans, bring professional management to the table, besides for a worldwide mature distribution chain.

Dr. Yaron also talked about how India and China are starting to do their own hi-tech research at much cheaper rates and Israel, in order to stay cutting-edge, needs to explore new higher-tech fields such as internet applications, clouds, med-tech, and clean-tech.

Pictures:
Meeting with Dr. Yaron (courtesy of Professor Bachenheimer)
Dr. Yaron showing us the WatchBand (courtesy of Nikhil)
A PillCam that Professor Matalon showed us. (courtesy of Nikhil)

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Welcome reception brunch @ Liliyot restaurant

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When: Sunday afternoon, 3:00 pm
Where: Rechov Weizmann, Tel Aviv
WWW: www.liliyot.co.il/eng/liliyot/index.php?option=com_content&view=article&id=59&Itemid=78
Who: Alan, the CEO of Liliyot spoke for a few minutes about Liliyot’s Social Action Project.

Liliyot employs 15 at-risk youth who have dropped out of school. They work in the kitchen alongside 10 adult chefs. The plan is to give these at-risk youth a respectable job so they can straighten out their lives. While this is extremely noble (and recommended) I have a few points to make.

Having conducted my own work with at-risk youth for the past seven years I have some first-hand experience. Many have substance abuse issues or just simply responsibility and fickleness issues that make it hard for them to hold onto a job. I consider it a “success story” when I meet a teenager that I haven’t seen in a few weeks and I ask him what he’s doing with his life and he tells me about the same job that I heard about the last time I saw him. Liliyot, obviously, tries to weed through the candidates and pick only the top 15 that seem capable and ready to hold a job. Frankly, teenagers on that level are probably able to go back to school. If their old school is no longer an option, I’m sure they can get into another one with that level of responsibility/maturity.

This is in no way a knock at Liliyot; on the contrary, they are doing amazing work. This is just a chance to blog about the need for more action. Comments are welcomed.

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Better Place

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When: Sunday afternoon, 1:00 pm
Where: Right outside Tel Aviv. Better Place’s welcome center is located inside an old, unused, and cleaned out national oil reserve tank. The pleasant irony is that they are re-using the inside of the old oil tank to move the country away from oil.
WWW: www.betterplace.com
www.youtube.com/watch?v=S3Os25gP4yA&feature=related (Drive Switch Go: shows the car and the switching station)
www.youtube.com/watch?v=sS8BNHyVmNk&feature=youtu.be (Technion visits Better Place)
Who: Scott Mortman and Yariv Nornberg

In 2005 Shai Agassi attended the Davos convention. The participants were asked to speak about how to make the world a better place by 2020. Most executives spoke about expanding or updating their company’s products. Shai suggested removing an entire country from their dependence on oil for transportation. He outlined a plan for affordable, manageable and practical electric cars to replace gas guzzlers. Shimon Peres liked what he heard so much that he discouraged Shai from accepting a vice president position with German company SAP and persuaded him to start his own company to get right to work on his idea.

Electric vehicles were around in the 1890s and early 1900s but they gave way to the internal combustion engine which has dominated for the last 100 years. One of my professors at Pace several semesters ago distributed an article blaming some sort of conspiracy for doing away with the electric vehicle back in the early 1900s. (I’m at an internet cafe in Tel Aviv now so I don’t have access to my files but if i find it when i get home i’ll try to update this post.)

Lately, they have made a (very) small comeback. As the introductory video we watched in Better Place’s amphitheater, outfitted with chairs (and cup holders!) salvaged from cars of different makes and models, pointed out, the current half-answer to getting rid of oil addiction is hybrid cars; but hybrid cars can, by definition, never rid us of oil addiction. It does use a percentage less than average gas guzzlers, but Better Place is looking for a solution… not a band-aid.

Modern technology has gotten us to the point of responding to the naysayers who demand POWER!!! from their vehicles and recite a memorized soliloquy about the inferiority of electricity to the ever-capable, powerful and manly GAS. People are willing to accept and brag about advances in cell phones, tablet computers, app shopping habits, internet search algorithms, biotech and car dashboards; but somehow, the prevailing perception is that a car’s hood acts as a shield, protecting it from the elements and innovation. (Perhaps people are aware of how much they don’t understand about internal combustion engines, transmissions, fuel pumps, intake manifolds, etc. and leave “car thinking” to the realm of mechanics who stereo-typically are not tech-savvy hipsters.)

The technology is there for an electric battery to compete with an internal combustion engine on all the relevant factors. The car that I test-drove at Better Place’s “race track” was quieter much quieter than its gas counterpart and was incredibly smooth. The internal design is of a completely different structure leading to fewer moving parts (no pistons, valves, and intakes of air, gas and sparks in the engine; no transmission (there are no gears, just “go”); no exhaust system) and fewer visits to the mechanic.

So what are the holdups?

  1. The high cost of the battery.
  2. The need to conveniently (i.e., quickly) re-charge the battery.

As chronicled in Start-Up Nation (Dan Senor & Saul Singer), Shai Agassi compares purchasing an electric vehicle with the battery to purchasing a gas car with enough gas to last 5 years! Better Place’s model is a revolutionary 2-step approach:

  1. Sell just the car, lease the battery and charge (money) for charge (electricity) based on miles driven; similar to the way a cell phone company practically gives away their phones and charges a usage fee. (Or fees if you use Verizon!)
  2. Create an infrastructure to make charging as simple as re-filling the gas tank. This is achieved through 3 methods:
    1. Simple to use and theft-proof charge spots, owned and serviced by Better Place,  at the customer’s home and office.
    2. A network of Better Place owned charge spots at malls and other popular locations.
    3. A comprehensive network of battery swap stations where customers can drive in and have their depleted battery swapped for a freshly charged one in an automated fashion that does not require them to get out of the car (combination of full service gas station and car wash that you get to sit in the car!) and takes less time than pumping a tank of gas.

Israel’s economic island, isolated from its neighbors, makes it the perfect test country for a pilot program. The required size of the infrastructure needed before a roll-out is feasible is minimal. Pretesting has been going on for a few months and this month the company will officially begin selling electric cars with subscriptions to Better Place. While at the welcome center we noticed couples, sabras, and army buddies coming in to inquire about purchasing their own Better Place car.

One of my fellow students asked if the government was doing anything to promote adoption of electric cars. Yariv briefly explained the tax benefits: 76% sales tax on cars; 10% sales tax on electric cars! Better Place is planning on deploying its fleet in Denmark next. Denmark’s sales tax on cars is over 100% (gasp) whereas its sales tax on electric cars is 0%!

Professor Bachenheimer sparked a brief discussion about plug standardization and compatibility. There are currently two standard plug models: a French-Italian style and a German-Japanese style. If the industry doesn’t settle on one standard within the next two years, the European Commission will purportedly force a choice. I’d like to see that happen effectively!

Before leaving for Israel, I was most looking forward to the Better Place visit, and I was not disappointed. From our van driver mistakenly driving through the rows of brand-new electric cars inside the gated parking lot that we mistakenly got inside of, while several Better Place workers tried to chase us down on foot and waved frantically from outside the gate to try to get us out of the narrow parking lot, to the fancy amphitheater, our tour guide from Professor Kessler’s New Jersey, the up-close look at a cut-out of an electric engine, and the cool experience of driving such a smooth and quiet car, Better Place was one of the highlights of my trip.

Photos:

Better Place’s amphitheaterThe insides of the car (photo credits: Prossefor)

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