Senior managers at PayPal, the giant online payment company, have been coming to Israel to check out local start-up companies every year since 2008. That’s when PayPal bought FraudSciences, whose products prevent credit-card fraud, for $170 million.
Last week, PayPal vice president of strategy and business development Mark Lavelle arrived in Israel. PayPal regional manager for Israel and South Africa Oded Zahavi organized Lavelle’s information-gathering visit.
Lavelle met with more than 25 start-up companies in various fields, including Internet commerce, cellphone payments, analyzing Internet users’ habits and enhancing Internet users’ experiences.
Among the companies that Lavelle visited are Wix, which supplies platforms for building and designing websites; CreditGuard, which supplies secure clearing solutions; Zibaba, which develops virtual stores on Facebook; and Plimus, which offers commerce and clearing platforms for selling digital equipment on the Internet.
Start-up owners have a sparkle in their eye
“It was exciting to discover the local start-up world, the activity
going on in Israel, and to see how these companies are integrating into
electronic commerce and payment by cellphone,” Lavelle said in an
interview with Globes. “But mainly it is just fascinating to see the spirit that drives them forward.”
“Every start-up owner that I met had a sparkle in his eye,” he said.
“They give you the feeling that anything is possible, that it doesn’t
matter if you are only two people who started yesterday, or a company
that has been around for two years.”
Globes: How do you decide when to invest in a company?
Lavelle: “When we form a connection with companies, the idea is first of
all to think how this company can help us serve our customers better.
We have connections with hundreds of companies in the field, and if it
makes sense to invest in them, we do so.”
Have you noticed any unique attributes among Israeli entrepreneurs?
“One of the things that I have seen is that Israeli entrepreneurs focus
on the global market. This is unique in comparison with most of the
companies in Europe and in California. Here, no one focuses on the local
market. They automatically focus on the American, Asian and European
markets. It’s a huge advantage to think globally from an early stage,
and not to first focus on developing a product for one market and then
trying to grow from there.”
Lavelle would not divulge his impressions of the start-ups he checked
out, but he met with two companies that PayPal president Scott Thompson
also met during his visit last year: FiftyOne, which assists well known brands such as GAP in managing their global electronic commerce strategy; and ClickTale, which gives website owners insights into their customers’ online behavior.
Both of these companies declined to discuss their meetings with Lavelle,
but it wouldn’t be surprising if their frequent meetings lead to future
cooperation with PayPal.
Breaking the news about purchasing Magento
“The entrepreneurs here in Israel have made a good impression on
PayPal,” Lavelle said. “Successful businesses are built on people, and
we have found in Israel a concentration of the type of people that we
want to see in our company… We are looking for people who think
globally, who are thinking how to improve the customer’s life, how to
use technology in sophisticated ways, and how to do things better and
quicker and to market innovative products and ideas.”
One company that meets Lavelle’s requirements, and that was bought two weeks ago, is Magento.
Although the company is located in Los Angeles, its two founders, Roy
Rubin and Yoav Kutner, are Israelis. Magento was bought by eBay,
PayPal’s parent company, and Lavelle was the one sent to break the news
to the employees.
Magento, which was founded in 2001, develops platforms for electronic
commerce. A year ago, eBay purchased 49 percent of Magento for $22.5
million, and at the beginning of June it bought the remaining 51%, at a
company valuation of more than $100 million.
“The acquisition was completed by the MarketPlace division at eBay,”
Lavelle said. “Its goal is to help large and small companies sell over
the Internet.
Magento will enable eBay to provide more services and features for
Internet retailers, such as hosting online stores, improving virtual
shopping carts, and by generally deepening the relationship between eBay
and Internet retailers.”
Lavelle said one of the things that enticed eBay to buy Magento was the
company’s dedication to its extensive community of developers and its
support of an open-code platform. Magento will be assimilated via eBay’s
open-commerce platform under the name x.commerce, which will be
unveiled this fall.
