You are listening to an art media podcast.
So, Yonathan, what's your number this week?
My number is $100 million. This is the annual rate of revenue of a very cool company called Top Gum. It's a 25-year-old company that was started by a mini market operator born in Dimona in Israel, which is one of the fastest growing companies in Israel today. They make gummy bears that are actually supplemental food and vitamins. They doubled their market cap. They are now a 1.5 billion shekel company and are one of the biggest drivers of the growth in the Israeli stock exchange this year. So I love the story. I love the reporting of 100 million in topline revenue per year for this kind of company. Kudos to the founders, to the CEO. One of my favorite companies in Israel these days.
Okay. That is different. I love it. I'm sticking to more of our status quo. My number is $9 billion. Israeli cyber security company Sierra's reported valuation. That's up from 6 billion in May, which was a doubling in valuation in just 6 months from the valuation before that one. It's been reported that this new $400 million funding round is being led by Blackstone and again will raise the cyber security company's valuation to 9 billion. I'm going with yours as the winner here though. It's just gummy bears that just makes me happy automatically.
So we're in agreement.
All right, it is close to noon here in Palo Alto.
It is 9:00 p.m. here in Israel.
Jonathan, here in the US, as you know, things are really slowing down as they always do this year. I want to get just super quick thoughts on New Year's and kind of what you're hopeful about, what you're not hopeful about maybe, or we could just keep it to optimistic because we have an incredible interview to get to. Love speaking to Michael Eisenberg. We'll get to more of that later. I will say just on my end real quick, I had a really funny slash kind of disturbing weekend because we went up to San Francisco. I'm in Palo Alto, which is just 45 minutes drive south of the city. For anybody in the Bay Area listening, you've probably heard about this. There was a massive power outage in San Francisco. Waymo cars did not know what to do with themselves. It was kind of funny, but also disturbing because this is such a high-tech city. This is where OpenAI and Anthropic and so much happens and is being developed. There was something very ominous about seeing a city just kind of brought to its knees like that. Luckily, it's not terrorism. Everything's getting resolved, but it was a little bit disconcerting. That's kind of top of mind for me as I'm getting into 2026 vibes. But, what about you?
Yeah, by the way, this was a big deal in Spain a few months ago, if you remember. Same thing. And it took longer to recover. Honestly, I think we've been talking about this over the last few weeks since the release of the living hostages, mainly the dynamic here has been very positive. It's been going on for quite a while. I think things are on the up. The rejuvenation of thought and vision for Israel is incredible and I'm super excited to talk to Michael. I think his piece of a vision for a trillion dollar economy that's more or less doubling the Israeli economy within a decade is inspiring and it is reflective of what you're seeing in Israel and it's very infectious in a good way. Infectious optimism and I'm part of that. I believe in that. So, I'm overall excited and as usual optimistic.
Good. I'll put my pessimism to the side and forget about the blackout here in the Bay Area. You just said a few things about Michael that are really critical here. One of which is the importance of someone who can really clearly articulate a vision. We need that. We really need that today. I know you do a lot of that as well. Michael did this through a piece. He's a prolific writer. He recently wrote a piece in Superior titled 'Building Israel's Trillion Dollar Economy'. All about how Israel can and must double its GDP over the next 10 years. Last week's episode was very kind of backwards looking, grading the Israeli 2025 economy. This week we're looking to the future and we will talk to Michael about a bunch of things related to his piece which is not just about high-tech growth, although that's a necessary part of reaching this goal, but a lot more went into it. Before we get to that, let's get to our latest update on the Windex. The last one for the year. This is the 'What's Your Number' index that tracks the performance of publicly traded Israeli based or founded companies. Okay, Yonathan, last update of the year. How is it looking?
So, are you ready for the numbers? Because these ones are annual year-to-date YTDs. Windex is up 20.78%. The S&P is at 15.77. That is almost 5% below the Windex. The NASDAQ is also below the Windex at let's say almost 1%, 20.1 compared to 20.8. So I think we have proven numerically and empirically that Israeli founders whether they are in America or elsewhere and they choose to IPO in New York outperform the two most important indices, the S&P 500 and NASDAQ. So we'll ask our team to add some sound effects to this declaration. I will announce my retirement of our podcast at this point. I don't think you know best performers of significance of the right market cap. Lemonade with 125% more than doubling this year. Elbit which we discussed doubling this year. Nova measurements with the whole AI rise, highly correlated with Nvidia and so on. 64%, kind of itching on the $10 billion market cap and we didn't really notice this was a slow climb on a weekly basis but steady. Teva is now a $35 billion company, it went up 24.5% this year. Our giant Palo Alto Networks, which is responsible for a big share of the Windex market cap, is up 2.7% on an annualized basis. Checkpoint a modest 1.3%. I think that the cyber companies did not see as exciting a year as the AI or other companies saw this year. The one sort of negative is that our Windex babies, the 'What's Your Number' index babies, that's eToro and Via, really didn't perform well on an annualized basis following their IPO. The IPO weeks were positive but then both eToro and Via, eToro losing almost half of its market cap, 46.6% in the red, and Via 32.74%. There are a couple of companies being challenged by AI, that Wall Street is at least getting shaky. These were the two market leaders in Israeli founders trailblazers, it's Monday.com and Wix.com. Monday losing 35% on the year and Wix cut in half. So I hope that 2026 we're going to see these companies climbing into where they need to be. They are critical employers in Israel. They are inspiring companies both Wix and Monday with incredible entrepreneurs who are still at it. The founders are still at the helm, adapting and growing. So, I'm a big believer in those companies. I believe we'll see them bouncing back and leveraging AI in the service of their growth as much as Lemonade did this year. So, that sort of wraps up Windex for the year. Should we do this California style and everybody gets a participation award?
Even Wix and eToro.
Even Wix. Okay.
We're happy to have them all in the mix.
Yeah.
Today we are speaking with friend of the show, investor Michael Eisenberg, about how Israel can and must double its GDP over the next 10 years. The subject of a recent piece he wrote in Sepil. Michael, welcome back to What's Your Number.
Mikall and Yonan. Thanks for having me back. I guess I couldn't have upset too many people the last time, but at least this time I'm not sitting in a mall recording this.
Yes, very much an upgrade. Your recent piece again was just really interesting and we thought it was a perfect way to end 2025 and kind of look into the both near end and far future for the Israeli economy. So let's start with this question. This is the way you started your piece in Spir, this striking paradox that exists which we've talked about quite often on the podcast of the last two years. Israel's stock market hitting all-time highs in the midst of a multi-front war. So start there. What does this resilience tell us about the existing strengths of the Israeli economy and how did it shape your thesis here?
First of all, ready back, I think it was in November 2023, I wrote a piece about the resilience of Israeli entrepreneurs in the Israeli economy and society. This actually builds on a piece I wrote years ago. It's called 'Optimism and Resilience', which are like the core characteristics of Israel and the core characteristics of entrepreneurs, particularly startup entrepreneurs. And I suggested then that this was going to be okay. I'll give a caveat to that as we get further into the show. Israelis would double down on their efforts. And you saw incredible things. I mean, we saw 15 to 20% of every company almost going to reserve duty, certainly across our portfolio and our own venture capital fund and people pitching in and covering. We saw people doing board meetings and investor pitches from bomb shelters. We saw on the 30th day after October 7th, I signed a deal to invest 20 plus million dollars into a company called Dream. The CEO was on reserve duty. He signed it on the Gaza border. And I think these are all indications of an incredibly resilient economy and country. But more importantly, this is at a high level what a friend of mine and friend of Yonas Dimadsky has taken to calling a national security entrepreneur. This doesn't just mean people engaged in defense or defense tech. These are people who believe patriotically that part of my duty when my brothers and sisters are at war is also to help build the economy. And I think that spirit caught Israel. And at the same time, we had a record year of M&A in the country. Wiz obviously acquired by Google being the biggest one and this incredibly resilient Tel Aviv stock market. And I think when everyone decides to unstick the wagon from the mud and try pushing it forward and do ever greater things, you do it there. I think the other thing that's happened is the bar has gotten higher. Hey, if my friends are going off to battle in Gaza and in Lebanon, I got to raise my bar. If what I'm doing is the home front and whether it's called producing taxes or jobs or innovation, I got to do better. And then the last thing, and you've heard me say this before, we had the greatest hackathon ever in history of humanity happen in this war. We brought people from decades of experience to brand new young people together to hack real time problems using the most advanced technology on planet Earth and doing real problem solving. Sprinkle this with a little of the AI accelerant in the world and poof or boom, it's working.
Because I don't do the work. I just spread the money. It's guys like Youngton and Ron Gura and Rowey Adler and my Walter. They're doing the hard work. I always give the money. The thing I picked up from the piece beyond the nuance on how to get there and so on is providing the vector, putting that marker out there, the target that's achievable, that is ambitious but attainable. So I think our role as leadership, you as an investor and you do a lot more than investing, is to also keep this kind of clean horizon out there. Can you take us back through the process of writing the piece? What drove you to write this piece? And why trillion? Why not two? Why not 800 billion? Like what's the sort of because you're putting a target there that's been missing in the Israeli discourse.
First of all, Brett Stevens asked you to write a piece. You just say yes. That's coming out. Look, I'm going to try to find a diplomatic way to say this. There is a shortage of vision right now in the world generally. You've said this many times, Yonatan. We are in a particularly chaotic period with a lot changing in front of our eyes. I'm in the middle of writing our olive annual letter which I do every year and I keep coming back to four themes which is war is back. Everybody's arming itself to the teeth. The geopolitical world is changing. AI, democratic governments can't get their act together. They're a mess everywhere. And the social welfare state is collapsing globally. Israel is actually in the best shape on that front by a long shot. And I think we need to start talking about what does the world look like a decade from now. And the reason is we're in for a very messy decade. I met with somebody yesterday, a young fellow. He says, 'You know, for the first time in my life, I feel like I'm not sure what the world's going to be like tomorrow.' And I think October 7th played a large role in that. I think the return of wars played a large role in that. And I think the lack of leadership and I think leadership, what it does in general is it posits achievable but ambitious goals. So I've spoken about, you've heard me speak about this before, Israel is a regional superpower. That is a plausible, achievable but ambitious goal. A trillion dollar economy requires about 7 plus percent growth a year. That is ambitious. The Asian tigers grew at that rate in the era of the Asian tigers. Israel is not growing at that rate right now. It's a stretch goal within a decade. Other people have talked about 20 years. I think that is too long a time horizon. And then the last part is when you set the goal, it's a forcing function in and of itself. We got to get a lot of crap done in order to get to that trillion dollars in a decade. And that includes streamlining our bureaucracy. That includes getting our debt spending under control or spending it, if we're going to increase the national debt load, it must be invested in growth. If it's not investing in growth, instead invested in welfare, we're never going to hit the trillion dollars in a decade. There's no chance in hell. It means we need to embrace our regional partners because we got to get trade up in the region. It means we got to get the IMEC built. We got to get the train tracks that need to be rebuilt for IMEC. We need to get the trucking connections. It's got to get built and it's got to get built fast otherwise we don't hit the goal. So a trillion dollars in a decade when you work it backwards implies the annual growth rate. If we fall behind on it in the short term we're going to have to do a lot more fast pedaling in order to catch up. So that's why I think in general we need to be setting goals like that.
I think the crux of it is also that this is a direct quote from the piece. By the way, we'll put the link in the show notes for those who haven't read it, but this is the quote. 'The growth drivers that produced the startup nation over the past three decades basically won't work to achieve this next goal' as you've outlined it. So maybe I'm putting the cart before the horse here a little bit. We keep going back to wagon analogies. I don't know why, but explain to us what those growth drivers can be as you see them.
Yeah, maybe I'll change the metaphor for a second. We got to get from the horse and buggy model that we've been talking about for the last 10 minutes to the full self-driving mode model of Elon Musk's Teslas. You think about the car metaphor. We got the manual, shift gears, and then we got the automatics. We got to get the full self-driving mode, which means if I'm an entrepreneur of any kind, this needs to be easy. Which means if I want to come set up a hedge fund and this is one of the growth drivers. How do we create a financial services industry in Israel where people set up their hedge funds in Tel Aviv and not in London? They set them up in Tel Aviv and not in Dubai which by the way is accelerating rapidly. The Emirates are doing just an incredible job of attracting talent and capital by getting into full self-driving mode. There was just a picture today on Twitter of Elon Musk doing full self-driving mode FSD in the Emirates with one of the leaders. I think it was the son of MBZ. And that's a metaphor for a welcome economy that says, 'Okay, turn up. It's going to work. We're not there yet.' And we need to get there for things that require bureaucracy, such as energy. It's got to move a lot faster. For IMEC, that requires bureaucracy. We've got to be able to lay those tracks yesterday to build the trucking routes that go via Jordan and Saudi Arabia yesterday. Same thing is true with finance. We got to get the tax rates down and we got to get the regulatory environment to be permissive right now. It's a pain in the neck. Now, this is all being worked on. It's not fast enough and we have to get it to full self-driving mode. It cannot take a decade to approve a new airport. By the way, it's been two decades and three commissions as you stated. It cannot take a decade to bring new power online. It's not okay. So the goal together with the prescriptions basically say the following. We are in a global war for talent and capital. If we want to be a trillion dollar economy, it needs to be the friendliest place on planet earth to come be an entrepreneur, a steward of capital or somebody who wants to build something. Now, we're not going to be able to build everything, but we got a lot of advantages. While everyone was sleeping a week and a half ago, my good friend Jacob Hellberg hosted something called PACIA, and it's an agreement that everyone signed upon. And Israel, which now has a national AI directorate headed by Lieutenant General Arez Ocal, another incredible human being who was there to sign on PACIA. Israel is one of five or six countries in the world that's got like full stack for the semiconductor supply chain and we need to take advantage of that and become this irreplaceable totally strategic hub for AI supply chain and AI development and semiconductor manufacturing which we also have in Israel as a partner to the US-led PACIA initiative but we need to be the senior partner there because there's only five or six countries in the world: Japan, Korea, the United States, China, Taiwan, and Israel. They've got the full stack and we are a US ally and we also sit on the key trade route. If you go whether it's IMEC or what comes through the Red Sea, we're pretty critical place to Europe. So, we got to lock that in. Make this super easy to do and get the politicking out of the way so that we can grow this economy because our enemies are not going away. Yan talks about this all the time. Turkey is a serious adversary that is not bashful. I mean, they called Prime Minister Netanyahu Hitler. Erdogan did. They claim Israel committed genocide in Gaza. They're very expansionist, very Islamist, and they're on their way. Yantas pointed this out as well. They found $20 billion or so worth of oil off of the coast of Somalia. And they have ambitions and they view us as an adversary. I don't know what we did to deserve that, but nonetheless, we got to move faster. We cannot have this bureaucracy. The operating system of the 20th century government will not succeed today. It won't. Sovereign companies will run it over because they're running at AI clock speed. Sovereign individuals will run it over because they're running at AI clock speed. Sovereign algorithms by companies will run it over because they're running at AI clock speed. Israel cannot afford to have a, you know, mai socialist central party that le could clock speed when all this is going on. We just can't. It won't work.
Let me ask a question to both of you here. It's not even an elephant in the room because I think you both address it in different ways, but the political willpower to bring about these kinds of reforms that you're talking about, Michael, where does that willpower come from? Who else is pushing for it? I know the two of you do, but we've been talking about it for so long. What needs to happen?
Look, I think Prime Minister Netanyahu in 2003 when he was the finance minister unleashed what effectively was the capitalist revolution in Israel. He did all the right things and got a lot done in a short period of time. So, we know this can be done. Yatan's better suited than me to talk about this. He's talked about it a lot. What happened when Paris had to come save the economy in the 80s and then finance minister I believe Perez later prime minister and president Paris so he can relate to that. This is a question only of focus and willpower and candidly capable enough people. Israel has a lot of capable bureaucrats. You know how we know that? We know that because we have bomb shelters in our homes, what is called the mamad in Hebrew. We know that because we're best in the world in water recycling and in water desalination and water preservation. So we have some capable bureaucrats but we need some technology enabled business people I think to really influence this. We have the greatest civilians on planet earth and the most motivated civilians on planet earth. And what we saw since the war is civilians take a lot of control and have developed a lot of solutions over the last two years for critical problems. From underequipped soldiers to Gaza the day after to economic solutions to AI directorate and a bunch of other things. And so civilian pressure and civilian activism is critical to make this happen faster.
I will say though that if you look at it from a comparative point of view, if you read the Draghi report on European competitiveness which is a dire indictment of how Europe has lost its competitiveness. And if you put yourself in the seat of leaders in Europe and some other big countries in the Western Hemisphere, in Israel, all you got to do from a government perspective is move fast and unlock, remove the lid because the pot is bubbling. In other countries in the world, you remove the lid and nothing happens. The thing I'm concerned about, and that's what I'm dedicating my years to, is that we already have a big enough group that benefits from the status quo. That's what I'm worried about. It's too big at this point. It's across media. It's across industry. It's across government. And so, the thing that I'm worried about, and I think what we need to crack is that I think I'm seeing good signs that the Israeli labor union group is now starting to open up. So, I think two layers here. One is what Michael's talking about, the sort of lift the lid. And from that perspective, I'm super excited because it's bubbling. I'm not worried. We're in the best situation out there in the Western Hemisphere. But that thickening layer of people who enjoy the status quo is a risk and has to be dealt with.
By the way, for over a decade, I've been writing about the terrible benchmark called the OECD. The last thing I want Israel compared to is the OECD. Actually, that's not true. The last thing I want Israel compared to is Europe because that is a low low low bar for what it takes to be a competitive economy. I mean those guys know how to regulate their own way out of competitive existence. And so I want to make sure that we're setting the bar high so that we aspire to that. You had said to me Mikall before we came on a little bit about Hanukkah. So I make one observation that I heard when I was 21 from Rabbi Michael Rosenwag and I think it's really an important one. So for this we got to get into a little Jewish minutia. So today everyone knows you light the menorah and it's 1, 2, 3, 4, 5, 6, 7, 8 but the core commandment, the core mitzvah is actually only to light one candle on every night. The original way they kept the holiday was one candle every night. This lighting one for every day of Hanukkah is called the best of the best, what's called in Hebrew Mahadrin Min Hadrin, the best of the best. And Rabbi Rosenwig asked a very simple question: why on Hanukkah of all holidays do we have the best of the best? And his suggestion was that what the Hellenists wanted at the time was institutionalized mediocrity and therefore the antidote to institutionalized mediocrity is that we do the best of the best on Hanukkah. And I think our aspiration needs to be to be the best of the best. Israel cannot be mediocre.
We cannot afford institutionalized mediocrity. Maybe other places have the strategic depth for that. We do not. And so Hanukkah, which by the way is probably the most celebrated holiday in Israel, and it's not an accident. It's because the aspiration to be the best of the best, whether people understand it or not. And I think that insight, we got to strive to be the best of the best in all these things and unleash all the human creativity and problem solving that exists here for economic growth, for defending ourselves, for providing safety for the Jewish people who are under attack right now. We cannot settle for institutionalized mediocrity. And so if you are mediocre, get the hell out of the way. I'm going to use that institutionalized mediocrity line on my kids and see if it helps.
My mom, who Yonathan's met, okay. My mom used to pray to have mediocre children and always bothered me, but she said that the line between excellent and super and crazy was very, very thin and it used to bother me. But in the end I think she's right, by the way. As a parent to kids, you should pray for mediocre children. As a country, we cannot afford this.
I'm still going to use it on my kids, but thank you for that. I want to meet up with my mom.
I'm shooting high. I'm going to write that little threshold before crazy. That's what I'm aiming for. All right, so you, Yonathan and Michael, you both brought up this notion of who is benefiting from the status quo, and I want to ask about the demographic question which you also get into in the piece. There is this incredibly robust population growth that Israel enjoys. The annual rate is around 2%, which you point out in the piece has some obvious economic advantages. But you also say in your essay that these benefits depend on whether society's newest members will contribute to the continued growth of the economy or merely feed off of an ever more burdened welfare state. What proposals do you have there? This is something that has been very top of mind for a very long time but is coming to a head, I think. So talk to us about what you have in mind there.
Yeah. In a book I wrote about 20 months ago called 'We the Heroic Israelis', I suggested a new framing for how we think about this problem which I called the median Israeli. Instead of talking about averages or poverty lines, the state can only invest in the median Israeli. There it is. He's got my book. We know what the median Israeli is roughly. It's a husband and wife. By the way, they have like three to four kids, not one to two kids like in most places. They are somewhere on the traditional to religious spectrum, pretty broadly. Both spouses have served in some form of national service or military, and they're a two-income household for the most part. But we know what this person looks like. He's not complicated in this country. And the argument I make in the book is that Israel, since this is a very defined group and by the way it's 80% Jewish so it's reasonably homogeneous with a defined minority population, needs to invest in the core population. The welfare state needs to be for those who serve the country. The country should serve those who serve it. At the beginning of the draft law debate that's been going on here, I authored a piece with member of Knesset Moshe Saada from the Likud party which said: if you serve, you get; if you don't serve, you don't get. The welfare state, except for very basic things like basic healthcare, needs to only serve the population that serves it. And by the way, I think this should be a model for Europe as well because part of what's happened over the last 20 plus years, 25 years of progressivism, is the fringes have taken a larger share of the pie that has both eroded the cultural character of many countries and eroded the basic economic pyramid that every country depends upon to keep the welfare state alive. And so we are actually disenfranchising from a financial and investment perspective the core citizens that every country depends upon, in Israel in particular. So what Israel needs to do is get off the fringes. Say we're going to invest the welfare state. Investment, investment, investment, not spending. Investment goes to this core serving population. You want a piece of it? Come join. You don't want a piece of it? Sorry, you can get basic healthcare and that's it.
