Yahoo! is the company that brought us web search, and many other innovative tools like Yahoo! Site Explorer (for analyzing web sites for SEO), SearchMonkey, BOSS (Build your Own Search Service), Yahoo! Pipes (mashup and filter RSS feeds). It is also the company that failed to meet revenue projections for the past quarter, and has slowly and then quickly lost search market share over the years to upstart Google, who now holds a scary 65% of the search market.

My how the mighty have fallen. Wait, quite a lot of mighty have fallen lately. There’s the monstrous financial firms on Wall Street that came tumbling down at the beginning of the latest economic crisis. How about Apple overtaking Microsoft in May as the world’s most valuable technology company? Or Blockbuster – remember them (we still have them here – till Netflix comes to Israel…we’re waiting)? Unable to keep up with Netflix their stock was recently delisted from the New York Stock Exchange. And then of course there’s Amazon, the online book store that everybody said would never beat their brick-and-mortar competitors. Etc.

Warren Buffett and Companies with “Moats”

All of these companies were “too big to fail.” And yet they did fail – spectacularly. Why?

Warren Buffett talks about how he likes to invest in companies that have a “moat” around them. What he means is that they are so strong and well defended, their competitors can’t threaten them. These moats should preferably surround a fancy castle, which is run by an honest, hard-working and able duke. If the moat is big and full of alligators, even better. See the video below where Buffett expands upon this idea during a talk to MBA students in Canada (it’s worth watching all 10 videos – Buffett’s awesome):

But note how he says that companies need to defend their moats. Just because you have a moat, you can’t sit back on your laurels and assume you’ve won. Defending the moat involves innovating, and making the right management and business decisions.

Dear Israel: please have mercy on small businesses

Aside from that lesson, there’s one more lesson that I wish governments, particularly Israel’s, would heed: don’t put all your eggs in the big-business basket. Governments and banks tend to favor the big guys – with credit and tenders and good interest rates and overlooking accounting inconsistencies. But there’s no mercy for the small business. Between all the taxes, the lack of financing and the “take-no-prisoners” attitude, it’s a tough ride. And yet it’s known that small businesses employ the most people in our economy.

So elected representatives: please consider going easier on small businesses. We are, after all, the lifeblood of the economy.

Yahoo!’s demise in pictures

To sum this all up, here’s a snazzy infographic depicting the rise and fall of Yahoo!:

Research by Scores.org

In Israel, everyone is an entrepreneur. At least, sometimes it seems that way. Everyone knows someone who has started up some kind of venture, whether it’s related to technology, finance or industry. Sometimes I can’t believe how many people I personally know who have technology startups. Many of these ideas do come to fruition and succeed on a large scale. Look at Teva, Amdocs, and Comverse for some examples of the biggies, and see this list of the top 10 Israeli Web 2.0 wonders for a look at some of Israel’s most promising startups.

But how does Israel rank on a global scale for entrepreneurship? According to the GEM 2007 High-Growth Entrepreneurship Report, an annual report released by Babson and the London School of Business, Israel is ranked 17th out of 53 countries for friendliness to startups. This rating isn’t terrible, especially if you take into account that the only other Middle Eastern countries that even appear on the list are Turkey and Jordan, and they are ranked 33rd and 47th respectively. The top four countries in the survey are New Zealand, US, Canada and Australia.

But if you look closer at the survey, it becomes apparent that Israel is actually very competitive from an entrepreneurial point of view:

• “The countries with arguably the ‘healthiest’ entrepreneurial anatomies…[are] Singapore, Israel, and China.”
• In the comparison of “Adult-Population Prevalence Rate of High-Expectation (Nascent and New) and High-Growth (Established) Entrepreneurs in GEM 2000–2006 Countries,” Israel is rated sixth.
• In the table titled “Relative Prevalence of High-Expectation Nascent and New (20 or more Expected Jobs) and High-Growth Established (20 or More Current Employees) Entrepreneurs,” Israel is rated second.
• “In addition to Singapore, Israel stands out for its high relative prevalence of high expectation and high-growth entrepreneurs. “
• “Of high income countries, the United States, Israel, Iceland, and Canada exhibit the highest adult population prevalence rates of high-expectation entrepreneurship.”

So that explains why it feels that everyone and their mother here are entrepreneurs. But is this thanks to government policies that encourage entrepreneurship? Yeah right. From my own experience, the government makes it anything but easy to survive as a small business owner.

I think that the high levels of entrepreneurship might come down to two things:

• The Yiddishe Kop – this is Yiddish for “The Jewish Mind.” My grandmother always claimed there’s such a thing, and now a few goyim (non-jews) have backed her up. Jews always feel uncomfortable talking about this kind of thing, and the only reason I’m mentioning this is that some goyim claim this is so. While my grandmother is certainly an authority, I don’t know if her opinion is enough in this matter.
• Perseverance – over 2000 years of attempted annihilation and successful genocide, and we’re still alive and kicking. If that’s not perseverance, well, I don’t know…

When Warren Buffett bought Iscar in Berkshire’s first overseas investment, he said that “Being in Israel has a major advantage of having the exposure to a fabulous pool of talent and brains. When we bought Iscar, we bet on brains.” Who can argue with the second richest goy in the world?