Israeli entrepreneurs see U.S. economy as early warning system

I spent Wednesday afternoon in Palo Alto at the public portion of the weeklong IsraelWeb Tour. The event, organized by the California Israel Chamber of Commerce, takes Israeli companies to various Silicon Valley counterparts as they look for advice, insight, and deals.

Shuly Galili, executive director of the CICC, told me that the economic crisis is definitely affecting the companies on tour. The U.S. and Israeli entrepreneurial economies act similarly to a large extent, she said, although there's a lag of a few months before whatever is happening in the U.S. affects Israeli start-ups.

The standard plan for Israeli tech companies, Galili said, is to leave their development resources in Israel but open field offices in the United States for sales and marketing as soon as possible. Due to the softness in economy, that step is being delayed. "It's not good for consumer companies," Galili said, because the U.S. is the target market for almost all Israeli start-ups.

Still, the slowdown in Israel, as it is here, is forcing companies to adopt more robust business models earlier in their lives. It's building stronger companies, although they're having to be less aggressive in how they address the U.S. market.

I was impressed with the nine companies presented to the public at the event. All were showcasing relatively mature technology, although not all of their business outlooks were as bright as their technological innovations.

Some highlights:

Semantinet showcased Headup, a clever Firefox add-on that lets you discover a trove of information using any word on a Web page as a key. It takes into account the context of the word on the page to show you relevant links from sites like Wikipedia and IMDB, as well as content from people in your particular social networks. Info and related links are popped up over the page you're on. I used it briefly, and it appears to be a very useful product. But I always have reservations on businesses based on browser add-ons. Hopefully, the company will be acquired so its smart semantic technology can live on.

Another semantic technology company, ContextIn, showed off its advertising technology, which gleans the meaning or context on a Web page to find the correct display ads for it. So, for example, a news story about an airplane crash would not get ads for an airline or a travel agency (I've seen this on news sites). A Web page about hotels in Berlin would get travel ads, but won't get pitches to buy music from the band, Berlin. CTO Yoav Naveh said the technology has a material and positive effect on advertising response. His company is working with existing advertising networks.

Superfish is also about context, but visual, not semantic. It's a tool that Web retailers can apply to their servers to give visitors a way to find products that look like each other. See a shoe you like but want to see variations of it? That's what this product will do. This has been tried before (see Like.com) and is purely a challenge of technology. If it works, it's likely that retailers will buy the technology.

Two companies had video products: EyeView Digital is an end-to-end video creation service. Publishers can contract the company to create a video product demo. EyeView also offers continual refinement of the video based on A/B testing of different versions of it, as well as analytics on the videos.

SundaySky also creates videos, but its system is automated after a point. The system digests Web pages and then, on the fly, makes snazzy videos from the content on them. In the demo I saw, the founders took content from CNET.com product comparison pages and showed how a user could get a custom video comparing the reviews of two competing products. The videos SundaySky creates don't contain any new info, but they sure do make it pretty.

But it's the social network for soccer fans (complete with sports news and stats) called Footbo that's most likely to make real money first. There's an audience, there's an advertising market for sports nuts, and there's the World Cup, which starts June 11.