Sunday, January 30, 2005

Now and Then

When we moved to Israel, we moved into an apartment, we got a car, we bought toys, and clothes and we fit right in fairly quickly. I just finished Iris's uncle's book about his parents life and when they talk about coming to Israel the diffrence is staggering. They spend weeks and weeks getting from Kabul to Teheran, and then they spent 6 hours on a closed cargo plane flying to Israel.

When they got her, they faced tent cities, and pasta that was shaped like rice, and frankly a life that is harder then anything I can imagine. What is so amazing is that when you look at Iris's extended family they really are just amazing people. They walk and talk and really are the real thing.

Life is a circle, and the things we are doing with books in Israel are the same thing that Iris's grandfather would have done with Cloth in Kabul. The apartment we live in Iris says feels like her grandparents house, but I must say I am not sure that I have quite the same love for oil and fat. You read about some of the things that they ate and you think wow, that is like 8,000 calories an once.

When I want the streets of Israel, I am coming to respect the short term history of this state. It has its problems, but frankly it is better then no state and it is getting better with time. Some days I am proud to say I live here.


Wednesday, January 26, 2005

We are launching


Six months ago almost to a day we had an idea for a new type of store in Israel. A book store, but not only any type of book store, but an English book store with prices that are similar to what to expect in America. In a country where a new novel costs 50-60 NIS, we aimed to launch a store where we would get the average price to 13 NIS, or including 18% of tax. $2.88.

Now the moment of truth comes out to play, do we stand a chance or not, we are launching the first store tomorrow night.

It is so great to be working on projects where we get to revenue in under 1/2 a year. It is even better that we have a team that might be able to pull it off. It still amazes me that we can walk into the store with it 90% stocked and priced and see what an amazing thing has happened.

I love seeing an idea come from my mind and get onto paper, it is even more amazing to see it come to live. I so hope this works, but win or lose I frankly am learning a lot.


Saturday, January 22, 2005

I love to write

Wow, for me that is a powerful statement. I am not someone who is known for his love of writing, but the fact remains I love to write. I am also very good at it in some narrow ways. I can not for example write dialog, but I can take my ideas and put then to paper.

That is why this blog is important for me. I love Israel and I am enjoying writing about it, frankly it is cheaper then therapy which I would need if I was not writing.

Now the trick is going to see if anyone is reading my writing, but that is a whole other issue.


Thursday, January 20, 2005

Retail in Israel

I spent a summer when I was 16 with a guy named Forest, now Forest is not a rocket scientist, but he sure knows retail. One can learn a lot about how to walk stores, look at spacing, look at image and look at style to figure out how to do retail right from a guy like Forest. Frankly I learned more from Forest then I learned in a bunch of marketing classes.

Forest, built competitive matrix in his head, he did it naturally for retail. All business school did was teach me how to take those matrixes and put them into excel and be able to share them. Now without the formal education I doubt I could do as well as I can, but with it I can do very well.

The fact is no matter what you are selling there is a right way and a wrong way. In Israel they do it the wrong way.

First rule of thumb:
You care about Revenue per square meter not Inventory. If you have stock that is worth $500 per square meter, and it moves 10 times per year, that is a much better business then getting $2500 in stock and moving it 2 times per year all other things being equal. In reality you can not get 6 times the stock into the store, but in Israel they really try to get in 2x what the store should hold and I frankly think that reduces sales.

If you design right you can get the maximum stock into the store but that takes design and keeping with some rules. For example the ADA made some rules in America on how wide store isles had to be, these rules have been a god send for good retail business because 3 foot wide isles makes for happier customers and better business.

If you have a product that is 8 inches deep and your store shelf is 16 inches deep, on a 3 foot long shelf you are left with two choices, the first is to double stack, this works well with Cherrios, and coke, but it does not work well with wine and other things where each product is more unique and when you stack people have to move to get at the stuff in back. So many stores, consumer electronic stores come to mind quickly make this mistake and frankly end up with a stuffed turkey look, where not only is the store feeling like it is going to fall down on your head when you open the door, but it takes a store clerk to help you find the AA batteries.

Your other option is to go for the stark look, but lets say that you have 20-30 cabinets and they each have 5 shelves and each other is 8 inches to deep, and you pay $2 per square foot per month, you are going to pay for this extra look $1000 per year in rent on unusable store space, you either eat that or you do the over full look, and giving the choice I would go stark, but given the choice make the shelves fit the product and throw out the old shelves when you have new products.

Second Rule of Thumb:
Profit per square meter is driven by three things, COGS, and overhead vs revenue. My favorite eatery is in a space that can not be more then 800 sq feet including the back room. It sells a product that is roughly flour and water, and it sells a lot of it, for about $4.5 per meal. The fact is the margins are huge, the overhead is low, and the guy who runs it probably makes more money then any other in Ra'anana. It is hard to compete with someone who makes a food for 40 cents (This is high) in ingredients and gets $4 for it. He does 100-200 NIS per hour in revenue when it is slow and when he is busy he does 400-600 NIS per hour. He is grossing easily 100,000 NIS per month and he is netting probably over 1/2 of that. He is the only food company in Israel that I have noticed who does it right, and what is so funny is that his model is really limited to one store. He could never build a chain, but for him his model is probably ideal.

Third rule of thumb:
Ignore your competitors if they are flawed. Please build a competitive matrix, if there are five shoe stores, and none of then cater to kids and teens they you have a niche, do not let people tell you that there are too many shoe stores. When I did a look at the top 10-15 companies over the last 20 years, names such as Dell, Home Depot and Citi Bank came up. All three of these has 100's of competitors, but frankly it does not matter, they just have sat down and serviced their market better then the competitors. They have managed their 5 forces better and they are kicking ----- because of it.

Fourth rule of Thumb:
Know your knitting, do not go into a business unless you know it, I do not mean that you have studied your competitors business plans, but that you truly know the business. You also should love what you sell. Frankly that is key in a country where you have Israelis who speak bad English selling English books, and white guys trying to make Chumus. Somethings are genetic and unless you can tell good business from bad business do not get involved.

Israel is like every other third world country, and frankly because of that it is ripe to get rich in. A few people own most of the means to wealth on a retail scale and frankly they are not doing as good of a job of keeping competitors out. I must say that they are learning on many grounds, but the number of stores, where they have not stuck to good retails rules and are paying the price is huge. They have played every game in the book to compete without inovating on their store models.

In 5 years this country will have completely changed on a retail level and a lot of these old line stores will be out of business, but for the next five years building retail in Israel is ripe with opportunity, but please do not open another women's shoe or clothing store, and also we have enough bad places to eat.

Have a good Shabbat.


Sunday, January 16, 2005

First Hebrew and Now English

The three year old mind is very limber, when we came to Israel we were concerned with how hard it would be to get the kids to speak Hebrew, we put them in Hebrew only Gan, we bought them movies in Hebrew and we worried that they would not speak Hebrew.

Now five months later, we are starting to understand that we had better start to invest in English as the kids are fluent in Hebrew but not in English as much. They only want to watch movies in Hebrew and when I talk to them in English they respond in Hebrew.

What a funny problem to have, and one we can work on, now we just have to get American TV and videos and other stuff where they get English as well.

The fact that we are starting an English book store should help, and the fact that I am horrible in Hebrew should also help.

When unpacking books, I found 4 destroyer Books, all you in the know, know how cool that is, the rest of you just do not matter.


Saturday, January 15, 2005

Kosher and Super Kosher

Israel is the land of outreach. Their is a Rabbi on every street corner to save your soul and you can do one of two things when you come to the land. You can go up to a higher level or you can settle down to a easy level.

At most super markets EVERY thing is kosher, but not LaMahedrin. In Ra'anana every store on the main street is under the vad of Ra'anana. Heck these Rabbi's are more educated and religious then me who does the kashurit for the vad. It is kosher. But some people can not take the concept that keeping kosher is easy and push for the next level.

For me if being Jewish is easy, enjoy, it is hard enough around the world to keep kosher you might as well enjoy the one place where keeping kosher is easy.

Israel is a hard place to live, but to make it harder is just insane. You have limited budget and limited time and space and just everything is limited so why limit even more.


Thursday, January 06, 2005


I love gan, okay I do not go to gan, but it is the best thing that has ever happened to my kids. Avi speaks Hebrew, Sam is learning how to work with other kids and frankly they are both getting socially adept in ways that are really neat. Yes we have our problems, like sharing and attitude, but that just requires us to still spend time with them even though they are getting lots of time spent at Gan.

Both kids get two square meals a day, both kids get attention that they need and both kids are learning Hebrew. The fact is that I am also learning Hebrew from them, Ode anyone.

It is important to write about the good stuff the days that you want to go crazy due to the not so good stuff, like the carburetor on the Volvo being clogged, or the mountain of laundry to be sorted and folding from this week, or the........

Israel is not an easy place, and we have to make sense out of it before we can say if it will work for us.


Monday, January 03, 2005


What a complex word, absorption. I am probably the least absorbed person in this country, but that is part of the problem. Thinking about living in Israel still brings tears to my eyes and I live here, it is not as easy as it is in America, in fact it is much harder, yet I am still not absorbed.

There is a certain amount of willing suspense of disbelief needed to live here, I am not sure I have it, but I am trying to build it. First off Israel makes no Finaincial sense, in the last 4 months I have learned that. But I have also learned that what I expected to be spending to live each month is shrinking as I am here and learning on what to spend and what not to spend.

The fact is we do not drive as much as we did in America, it does not make sense most weeks to drive to the supermarket as the local store on things like bread, veggies and milk has the same prices and you do not have to pay for the car use.

The other thing is I am making sense of what it takes to live on. The fact is a family of 4 living in Ra'anana assuming no outside debt (we have 150k in student loans) should be able to live on 10,000 NIS per month including rent, food, car, clothes, gan and excluding travel. Assuming the normal tax rate that means that they should be able to live on 2 average salaries, or one good salary.