Former Head of Microsoft Israel Dreams of Billion Dollar Israeli Startups

Photo of Moshe Licthman from

By Ben Bakhshi

Moshe Lichtman, the man once in charge of all of Microsoft’s technology development in Israel, says that the time has come to build a billion dollar Israeli company. In this post I break down an article by about Moshe Lichtman, and why he is one of few men or women capable of leading an Israeli startup to global billions.

Moshe joined Microsoft in 1991 as a product manager after a career as a software developer. He worked on his MBA at MIT’s Sloan School of Management (leaving in the middle for a job at Microsoft in Israel) and received his computer engineering degree from the Technion in Haifa, Israel. He worked his way up the corporate ladder; in 1998 he became VP of the Digital TV platform strategy, which did not pan out, and in 1999 he found an opportunity in Microsoft Internet (MSN) international. He led the department to 400% growth : MSN became the number one portal in Europe, Canada, Australia, New Zealand, and numerous Asian countries.

In 2006, Moshe was promoted to corporate vice president and head of Israel Research and Development. Among Microsoft’s 20 worldwide R&D centers, there are only three “strategic centers”: in India, China, and Israel. His ability to lead large teams of engineers had made him one of the most influential executives at Microsoft and the world. His name is often associated with other successful Israelis such as: Shai Agassi, Better Place founder and CEO and former next-in-line to become CEO of SAP, Safra Catz, CFO and co-president of Oracle, and David Perlmutter, an EVP of Intel and GM of Intel Architecture Group. He is a technology all-star, so let’s find out what he is envisioning for the future of technology, business, and Israel.

Moshe says that the Israeli economy is in good shape and has momentum, yet has a cloudy forecast ahead of it. He says that while the cost of hiring an engineer in Israel is nearly the same as in America, there are taxes and overhead that don’t exist in America, making it harder to compete in Israel. He says the combination of South-Africanization of Israel (those who call Israel an apartheid state), business overhead, the rising cost of engineers in Israel, and the breakthrough of other emerging markets, is very worrying. If this continues, he claims, we’ll see a hit in the economy.

Being a practical man, and a Zionist, Moshe wants to make a positive impact on the Israeli economy. He continues: “I am thinking of initiatives to startup hi-tech companies with annual sales turnover of over $1 billion a year. [emphasis mine] In the last 15 years, the Israel economy didn’t succeed to make many companies like this. The base of our industry is weakening. Venture capital, the money that is invested into startup companies, is shrinking. At the beginning of the year 2000, there were 133 venture capital firms in Israel, today there are less than 30. The challenge is to raise capital for global VC funds, and this is more challenging than raising capital for Israeli VC funds. One of the reasons that institutions are not investing in Israeli venture capital funds is that they never saw billion dollar exits. This situation, combined with the fact that VC funds are heading East because you can do amazing things in local markets, created a dynamic that hurt Israeli startups.

“Beyond that, there is also a cultural issue. A culture that is ‘set-up’ among entrepreneurs the feeling that if you made a startup and sold it to a big company for tens of millions of dollars – you did it. In America, no one gets excited from exits like that. There aren’t enough entrepreneurs here that want to start a company worth a billion dollars.

“Another problem is that in Israel we are lacking capital that invests in technology companies through maturity, what is known as the ‘growth stage.’ The whole risk capital industry aims towards what is known as ‘early stage investments,’ sprouting new companies. But when those same companies reach 10 million dollars in sales and need more money in order to grow, they don’t anyone to get the money from. So for Israeli entrepreneurs there is no alternative: sell their startup for $20 million.”
He admires men like Erel Margalit, a VC who has gone into politics. He believes that Israeli politicians behave very tactically and lack vision. “I plan to invest my time in order to prevent a situation where we become isolated from the enlightened world, because if this happens – there will be a bad impact on the economy.”

Moshe dreamt of being an astronaut and exploring the stars, discovering new planets. But opted to study computer engineering, instead of aeronautics like his brother Arik. Moshe says that success is not about headlines, but about the smiles on the faces of the people who use his products. He is proud to admit, for example, that Microsoft’s Kinect video game system, uses PrimeSense’s technology at its core. He craves to make an impact, which is what kept him at Microsoft for so long. Leading global projects from his home country, and being able to take on new ones every few years.

“[The Microsoft R&D Center in Israel] has helped draw Jews back to Israel – high-tech people who couldn’t see how they might realize their potential in here.” He admits that one of the reasons that he helped expand Microsoft’s R&D was his pride in his home country. “It may come off as odd that all of the giant global corporations establish R&D centers here. There is something very special here and it must be preserved.

“I’ve been an angel investor in private companies since the late 1990s, and I invested in eight start-ups. Three of them were sold.” It sounds safe to assume that after a brief vacation from work at Microsoft, Moshe will be back at the hitech game and try and startup the next Israeli billion dollar company.

Benjamin Bakhshi