THE CASE
In July 2009, Zvi Schreiber escaped the heat of yet another steaming Israeli summer day in the comfort of his office and gazed at the framed picture of himself with Israeli President Shimon Peres. The entrepreneur had good reason to feel proud: having sold his previous two ventures for substantial sums, his new tech start-up, G.ho.st, looked set for success.
G.ho.st, short for Global Hosted Operating System, was riding the wave of a new technology trend made possible by the rise of services like Google Docs, Zoho and Facebook. It all began in 2006 when Schreiber noticed his daughter was always sending documents to herself so she could access them at school. That gave him his “eureka” moment. Schreiber decided to develop a Web-based virtual computer (VC), which would make it possible for any user to log in via an Internet connection and manage documents or run applications from any computer anywhere.
But it’s not just his creative use of technology that makes Schreiber’s company so special. In true “ghostly” nature of being able to pass through walls, Schreiber’s workforce is based in the Palestinian West bank while he manages operations from Israel.
New Opportunities for Old Enemies
Ever since the beginning of the 20th century, when Jewish immigration in Palestine increased, there has been no love lost between Palestinians and Israelis. Since Israel became a state in 1948, separate from the Palestinian West Bank, neither side has known peace, and relations have become increasingly strained. When Schreiber started G.ho.st, he wanted to do something to help resolve “the complete mess that we’ve all made of this part of the world.”
Israel, with the world’s highest rate of engineers and scientists per person, was no stranger to technological innovation. Meanwhile, the economy of the West Bank was struggling with high unemployment, and road blockades prevented Palestinians from holding down jobs across the border in Israel. All too aware of the huge costs involved in starting up a new venture, Schreiber eyed this well of untapped talent across the border, who cost a fraction of their Israeli counterparts.
Luckily, Schreiber found a likeminded counterpart in the form of Murad Tahboub, the Palestinian owner of a leading IT outsourcing firm in Ramallah called ASAL Technologies. Tahboub swapped office space and a team of developers on the West Bank for equity in the venture.
And so G.ho.st was born as a unique collaboration between two traditional enemies. Of course, Israelis and Palestinians had always been forced to work together to a certain extent, but the majority of such collaboration was in industries needing cheap labor, such as agriculture and construction. Schreiber, on the other hand, insists that his is a joint venture. Indeed, the IT sector was ripe for collaboration, given that physical barriers don’t pose a problem for product development.
Meeting Halfway
The team meets for daily video conferences, since Schreiber isn’t actually allowed to go to his headquarters in Ramallah, and travelling to Israel is too difficult for staff due to road checkpoints. Despite these odds, company members do all try to make it in person to a weekly meeting at a gas station on the road to the Red Sea. The pastoral setting, with Bedouin shepherds tending their flocks nearby, isn’t the most apt for a high-tech business meeting, but it’s the only option with minimum hassle.
Although the historical divide between Israelis and Palestinians unavoidably affects operations, G.ho.st is adamant that it doesn’t influence working relationships. This can’t be easy, particularly when faced with an incident such as Schreiber attending the funeral of an Israeli soldier on the same day that his marketing and communications manager lost a friend in Gaza.
Do You Believe in G.ho.sts?
G.ho.st had gotten along fine with its peculiar arrangement, and had attracted international acclaim for its efforts to build cross-border ties. But on that day in his office, Schreiber wondered whether G.ho.st could continue this way.
He was fresh from a meeting with potential investors, one of whom had expressed concern about the company’s intellectual property being located in an area of such political unrest. Why not move operations to somewhere safer, like India? At the time, Schreiber had stood by his operational model and social mission. But he couldn’t just dismiss this concern out of hand. As he sat mulling it over, he wondered whether others, particularly in such challenging economic times, might think the same?
Certainly, G.ho.st wasn’t short of competition; other companies were also vying to deliver the first VC, capitalizing on the trend for more cloud computing. Would investors opt for a safer bet? Schreiber had to convince them that they could count on G.ho.st and the peace process, but how? Should he just give in and move operations outside the West Bank? Or should he stick by his dream of a successful Israeli/Palestinian business collaboration?
The case study “A G.ho.st Story: The Challenges of an Israeli/Palestinian Business” by research assistant Assaf Ezov and IESE Prof. Alberto Ribera is available from IESE Publishing.
WHAT I WOULD DO
joan, aymerich
February 22, 2010 17:43:00
Partiremos de la base de que el conflicto árabe-israelí no se eternizará. Ni la comunidad internacional ni los propios interesados pueden permitirse que esa zona de oriente medio sea considerada eternamente como "zona de guerra" y cada vez son mayores las presiones que en ese sentido reciben tanto Israel como Palestina. Señalemos para ello que las últimas condenas de la ONU a la operación "plomo fundido" han señalado a ambas partes como responsables del enfrentamiento . Sobre esa base de esperanza es sobre la que podrá construirse un futuro que permita considerar iniciativas como la que ahora nos ocupa.
De momento, y aceptando la presente realidad de conflicto sostenido, deberán presentarse a los inversores argumentos más sólidos que permitan ganarse su confianza y de ese modo asegurar la supervivencia y el crecimiento de la iniciativa. En ese sentido destacaremos especialmente que una de las mayores fuentes de inquietud sea probablemente la posibilidad de que, ante una escalada del conflicto, la empresa deje se ser operativa y cometa uno de los pecados capitales en el sector servicios, dejar de prestarlos.
Tienen los inversores una gran carga de razón al temer la posibilidad de que la empresa, con toda su área operativa localizada en Cisjordania, pueda verse abocada a una suspensión total de su actividad por obvias razones de índole militar. Una posible solución al problema seria dividir la estructura operativa de la empresa en dos grandes áreas, innovación y servicio, que a continuación describimos,
-Área de innovación. La responsable de las áreas de marketing, desarrollo y testing de nuevas soluciones "on the cloud", encaminada a mantener la ventaja competitiva de la organización en el mercado y por ello clave. Esta función podría mantenerse de forma integra en las actuales instalaciones de Ramallah, ocupando únicamente personal palestino. El efecto de conlictos puntuales sobre la imagen de la empresa seria mínimo y apensa percibible por el cliente, probablemente pequeños retrasos en los lanzamientos de nuevo producto.
-Área de servicio. Aquella orientada a la gestión de clientes, asistencia técnica, actualizaciones, etc. Seria una estructura nueva, ubicada junto al CEO en Israel y por lo tanto con un funcionamiento previsible regular y sin interrupciones. La imagen intercultural de la empresa podría reforzarse además reclutando técnicos entre los miles de palestinos actualmente residentes en Israel.
El que escribe cree que, con una reestructuración organizacional como la propuesta los inversores ya no tendrian razones objetivas para dudar de la viabilidad del negocio y deberian, si la empresa ofrece un producto competitivo, confiar en sus posibilidades comerciales futuras.
Veronica, Segal
March 4, 2010 21:51:07
Hello, I know this problem since I lived in Israel for 8 years before I moved to Spain.
It always surprised me how everybody gets along when going to the "Shuk", which means market. By saying so I mean that when there´s a clear and mutual interest, people do well together. On the other hand, we all know that the higher the risk, the more you can earn. I think there are a lot of advantages for his project: it gives good quality employment (scarce in that area of the world). It avoids conflicts for the investor since he/ she should not take a side (for or against one country or another). It is also good for reputation, if we had more examples like this, I´m sure he situation would be different.