Why Google loves Israel

Reviewing the Google – SlickLogin deal as a metric to understanding the tradition of American firms buying Israeli start-ups.

Google Inc. (Nasdaq: GOOG) has purchased SlickLogin, a start-up born in Israel. Financial details of the acquisition were not publicised, but the buy is thought to be based on an “acqui-hiring” process, meaning Google is paying for the staff and the company’s knowledge, with the possibility of paying a very small additional fee for the acquisition’s completion.

There is sound reason that the world’s biggest search engine bought an Israeli start-up aiming to make computer log-in systems simple and secure, and intends to keep buying more companies founded in Israel.

Eran Galili, Ori Kabeli and Or Zelig, the company’s founders, made the announcement. The three, who created SlickLogin just last Summer, had initially conceived to make computer login security simpler. The company has yet to sign up any customers and they have no market-ready product as of the announcement of the acquisition by the California web services giant.

On Monday morning, the founders of SlickLogin published a statement saying, “We started SlickLogin because security measures had become overly complicated and annoying. Our friends thought we were insane, but we knew we could do better. So we set out to improve security while still making it simple for people to log in.”

“Today we’re announcing that the SlickLogin team is joining Google, a company that shares our core beliefs that logging in should be easy instead of frustrating, and authentication should be effective without getting in the way. Google was the first company to offer 2-step verification to everyone, for free – and they’re working on some great ideas that will make the internet safer for everyone. We couldn’t be more excited to join their efforts.”

This purchase, coming on the heels of the Waze buyout by Google just months ago, continues the trend of the Internet gorilla from Silicon Valley buying up start-ups from Silicon Wadi. And it puts a bold spotlight on the small Mediterranean nation’s best natural resource: its brains.

It is no small coincidence that Google, among others, sees Israel as a powerhouse for attracting investments when it comes to R&D innovations. Beset on two borders with hostile enemy nations, and on two more with divided, hostile populations, Israel has long relied on its brainpower to come up with technological solutions to overcome its massive disadvantages of population size and material resources. In order to succeed in its mission of defending the people and the State of Israel, the IDF itself acts as a national incubator of R&D breakthroughs. So at this point, you should not be surprised to know that SlickLogin’s CEO, Or Zelig, served in the IDF, developing advanced military computer security devices.

This reliance on tech to improve national security concerns has led to an almost inevitable establishment of a culture of engineering and problem-solving with leading-edge creativity in invention. Additionally, the unique blend of the population, stemming from so many nations on Earth, include the prowess of Russian engineering and American business know-how. On top of that, you have the subtle, more nuanced business acumen coming from Israelis of a European background.

Of course, these are gross over-generalizations and stereotypes which offer no iron-clad guarantee of success for any ventures tried first in Israel. And in fact, most Israeli start-ups do not succeed with the grandeur of these highly public success stories. Plus, Israel is not the only nation on Earth to be a melting pot. Indeed, the world’s largest melting pot is the United States.

On the other hand, with the sheer number of businesses with an Israeli birth certificate selling-out to US corporate behemoths, the facts speak for themselves. Silicon Wadi is highly desired by outside investors, because of their performance year-to-year, and much of that is driven by the critical components which Israeli companies offer thanks to the major mix of their Developmental Nerd Assets, in other words, their DNA.

Who will be the next big players in a US-Israel company buyout? Well, if you know the answer to that, you should probably consider investing in that deal.

Full disclosure: In addition to cartooning and attempting to put wit to pen, Yasha Harari has worked for a number of start-ups and large companies in the U.S., Europe and Israel.

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