Can Rad Group survive in submit Yehuda and Zohar Zisapel period

May 16, 2024 | blog

Last month Yehuda Zisapel died on the age of 81, lower than a yr after his brother Zohar died on the age of 74, symbolizing the top of an period. The brothers, two of the founding fathers of Israel’s tech sector, based the Rad-Bynet Group within the Eighties and within the following many years acted as serial entrepreneurs and philanthropists. Research greater than a decade in the past at Tel Aviv University discovered that the Rad-Bynet Group spawned 56 entrepreneurs who based 111 substantial tech ventures – a quantity which has nearly actually grown significantly since then.

The Zisapel brothers have been born in Tel Aviv within the Forties to folks who had immigrated to Israel from Poland and opened a shoe retailer within the metropolis. The Zisapel brothers have been inspired to check and every earned a B.Sc. and M.Sc. in electrical engineering from the Technion, Israel Institute of Technology in Haifa and an MBA from Tel Aviv University. Both have been awarded honorary doctorates by the Technion for his or her contribution to the event of Israeli high-tech and help for technological and scientific training. They donated tens of tens of millions of shekels to the Technion, together with for establishing a nano-electronics middle in reminiscence of their dad and mom Sara and Moshe Zisapel and a brand new constructing for the Faculty of Electrical and Computer Engineering.

The paths of the brothers began out utterly otherwise. Yehuda, who within the military served as a communications technician, was a math instructor whereas Zohar served within the 81st technological unit and was appointed the youngest head of the electronics division. When he was launched, they based the Rad-Bynet Group collectively.

Yehuda and Zohar have been shut, however very completely different from one another. Yehuda informed “Globes” in 2018: “We are aware of our differences and try to reduce friction and reach agreements. Each of us has responsibility for certain issues. After so many years, we know at what level we should share and consult and what we must not in order to make a joint decision.”

A senior determine within the business says that Yehuda “was very introverted, unlike Zohar. He was sparing with words, but always said good things. They had a crazy connection. They really appreciated each other. It may be that in they each focused on different things, but they consulted each other and there was genuine love between them.”

Another supply, a veteran within the telecom business who knew them once they have been beginning out says that each have been “fair, honest people, very generous to society. Yehuda was a talented marketing man and Zohar the ‘tech leader’, winner of the Israel Defense Award. Both were entrepreneurs at heart. Zohar’s uniqueness was in choosing successful people for the many projects he initiated.”

A supply near the 2 provides that “Zohar was the brain behind everything. They were both brilliant people, but in my estimation, Zohar’s death was the real blow (to the group of companies). In practice, the companies are running, but in the end it was through Zohar that the companies rose to such heights, he had better professional-technological understanding than anyone else, and now there is not always someone to ask questions and mentor. It isn’t that there is nobody else but I don’t see that they have brought others than can. Besides, Zohar knew how to make decisions. The two brothers made decisions and managed together professionally, but Zohar was more dominant due to his character.”

The Group: Dozens of firms and small holdings

The Rad-Bynet Group firms, other than the true property arm, are engaged communications tools. A supply near the brothers says, “The Rad Group, by and huge, is all varieties of telecom, and Bynet takes the options and implements them – an integrator. This is a discipline that was successful within the 80s and 90s. When they invented the Internet, they found that there was no infrastructure, it was like inventing vehicles when there have been no roads. Rad have been a part of the options, not the entire highway however an interchange. But this can be a discipline that’s not rising, it’s steady, and there are different issues which might be rising, resembling autonomous vehicles, AI, cyber.

Another senior determine within the business says: “Zohar and Yehuda’s forte for many, many years was communications. In recent years, they have dropped out of the field a bit because the whole industry was less ‘sexy’, and invested in other things.”

A supply near the late brothers provides that “people who graduate from university today don’t know what Ceragon, and Radcom are. In the 1990s they were like Check Point. The field is more mature and there is no longer crazy growth, the multiples have gone down.”

Rad Bynet Group includes over 20 firms, which over time has beenled by a philosophy wherein every firm operates autonomously beneath one strategic umbrella, guided by the Group’s founders. Four of the Group’s firms are traded on Nasdaq: Radware (Nasdaq: RDWR), which is managed by Roy Zisapel, Yehuda’s son, and has a market cap of $679 million; Ceragon Networks (Nasdaq: CRNT) , which has a market cap of $234 million; Radcom (Nasdaq: RDCM), which has a market cap of $134 million; and Silicom (Nasdaq: SILC), whichhas a market cap of $99 million.

Two years in the past, Yehuda Zisapel and his ex-wife Nava tried to problem Bynet, which they management on the Tel Aviv Stock Exchange (TASE). This is a 50-year-old firm that gives options and integration providers for communication and knowledge applied sciences (ICT). The estimates have been then that the corporate was aiming for a valuation of about NIS 1 billion, earlier than cash, to lift NIS 200-300 million. However, after a number of months the providing was shelved, so far as is thought as a result of the market believed the valuation was too excessive.

The Zisapels would normally maintain a comparatively small portion of the shares. In public firms, this can be a 5%-20% stake. Apart from Silicon, wherein Zohar bought his shares lately, they have been parties-at-interest within the different firms. In Radware, Yehuda held a 4.6% stake lately, and was chairman till months earlier than his demise. In Ceragon, Zohar served as chairman till the day of his demise, and held 8.3% of the shares. Zohar owned 18.1% of Radcom’s shares, right this moment, his accomplice Heli Bennun serves as lively chairman and Zohar’s shares are at the moment being transferred to his youngsters Michael and Klil.

A lot of the businesses are primarily based in Ramat Hahayal in Tel Aviv, in workplaces owned by the household. According to Rad Bynet’s web site, the Group’s actual property arm owns 13 buildings in Israel and northern New Jersey within the US. In a 2019 presentation, the Group owned area of greater than 300,000 sq. meters together with within the Or and Ziv Towers and Beit Immanuel in Ramat Hahayal.

Incubator for startups: “A model that not everybody liked”

The senior determine within the business talks about an uncommon enterprise mannequin. The brothers shaped a form of umbrella over the startups that operated beneath them. “They had a model that some didn’t like, a sort of incubator for startups. With little investment and a lot of technical and strategic help for their companies. They kept a lot of receipts, and those who know them remember them well. They were not easy, but they were always fair, with exceptional and positive values.”

Silicom founder and chairman Avi Eizenman says he knew Zohar from the military, when as a younger engineer he joined the unit wherein Zohar served as an electronics engineer, and labored with him for years, even after their discharge, once they remained consultants to the unit. “When I was discharged, I thought it would be a good idea to start a company. We didn’t know the word startup in 1986,” he remembers. “Zohar was the one one I knew who was one way or the other associated to founding firms, and in essentially the most pure means I approached him and requested if the concept was attention-grabbing, and he stated sure. The cash got here from Zohar and Yehuda, and later they each served as administrators at Silicom.

“I learned to appreciate Zohar very much. He had phenomenal technical knowledge, a very original way of thinking, and the ability to focus on details, on the one hand, and the overall picture on the other.”

He provides that Silicom was at all times a ‘uncommon chicken’ within the Rad Group. It doesn’t bear the Group identify “Rad”, and has by no means been primarily based in Rad Bynet’s Ramat Hahayal headquarters however within the early years there was nice worth in being a part of the Group, particularly when contacting massive potential clients who knew the Group, however not Silicom.

Eizenman provides that what impressed him concerning the brothers was their capability to get entangled, however to present the CEO and entrepreneur independence. “Zohar would say ‘this is what I think, that’s where you should go’, but never ‘You should do it this way.’ Even if by chance what I did didn’t go the places I hoped, he wouldn’t say ‘I told you so’. It was a full partnership of help.”

The exits: Hundreds of tens of millions of {dollars}

Over the years, their conventional discipline of exercise additionally yielded the brothers a number of exits. For instance, in 2012, Radvision was acquired by Avaya for $230 million. Zohar acquired about $60 million for his shares within the firm and Yehuda about $15 million. In the extra distant previous, different firms of the Group have been bought, together with Lannet, Radlan, Radnet and Armon, which have been every bought for tens to $150 million. “They were very conservative,” says the senior determine. “It was always said about them that they don’t sell easily, because they don’t give up their baby, nor do they buy easily.”

Zohar Zisapel, as an angel (personal investor) additionally had various spectacular exits outdoors the Rad Bynet group, most notably cybersecurity firm Adallom which was bought in 2015 to Microsoft for $320 million, and Argos which developed cybersecurity for good vehicles and was bought in 2017 for $430 million.

The demise of the brothers raises the query of what’s going to occur to any extent further to the group of firms they based and led. The supply near the brothers raises a priority that their demise could hurt the Group, though he notes that in public firms administration is extra impartial. “In the private companies, they always preferred not to bring in venture capital funds or investors who would bother them,” he says. “They have been on the boards, and there are additionally representatives of the subsequent era there.

“But your children aren’t you. If you are a singer, it doesn’t mean your son will be a singer. Yehuda and Zohar both worked until the end, because they liked it and not because they had to. But they did not appoint a professional next generation who could take it further, and in my opinion that was a mistake. In general the field in which the companies in the group operate is not easy today and it has an advantage of scale that they do not have.”

He provides that on the entire the businesses are profitable, however “I would have done it differently. I would have done what Eyal Waldman did when he realized that he would not compete against Nvidia (he sold Mellanox to Nvidia). Maybe I’m wrong, but I think their departure will be a blow for the long-term.”

The senior determine within the business provides that the brothers at all times cared concerning the nation and the folks. “It was difficult for them to fire employees. Before the bubble burst, Zohar told the employees at a company called RadGuard that everything would be fine. Soon after, the company was unable to raise money and they had to close. They sued him for it and he took it very hard.”

Within an empire of dozens of firms, essentially the most distinguished trait that individuals with whom we talked concerning the Zisapels is “modesty”. “Obviously, they didn’t live in a one-room apartment, but they were modest, they didn’t have luxury yachts and planes, even though they had a lot of money, they made a lot of money in real estate.”

Eizenman says, “I don’t know how they will be remembered, but I know how they deserve to be remembered. They are definitely the fathers of high-tech, or the startup industry in Israel. They understood that if you really want to create innovation, you can’t expect certain people to come and do it within Rad, but to enable and motivate them to do this in a separate company, where they, Yehuda and Zohar, have less control. Today it may sound trivial, but this was not the thinking 30-35 years ago, and they deserve a lot of credit. They also did a lot of things voluntarily and philanthropically things that didn’t always get, or maybe they didn’t want, exposure. I wish there were many more people like that.”

Published by Globes, Israel enterprise information – – on April 24, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

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