T

This is an interesting article from HAARETZ about the strength of the Israeli internet start-up market and specifically Relegence an Israeli company recently acquired by AOL. A little about Relegance according to their website:

Using proprietary technology, Relegence simultaneously monitors, indexes, and filters tens of thousands of live content streams - local and international newswires, television and cable networks such as CNBC, regulatory feeds such as EDGAR and RNS, corporate and information web sites, bulletin boards - and puts on a user’s desktop only the information which is relevant to his or her individual search criteria. Additionally, Relegence can integrate all of a corporation’s internal content streams, such as research, with external content and create a powerful tool for corporations and their employees to manage and utilize mission-critical information in their day-to-day activities and enable them to make more timely, accurate business decisions.

AOL can definitely use all the help it can get…

From HAARETZ:

Will AOL find its salvation in Israel?

By Lior Haner

Every new Internet startup’s wildest dream is to clock its millionth registered user. This magic number usually indicates a critical mass that will help spur advertising and sales revenues from services and will attract large companies that are considering acquisitions. An Israeli representation of an American giant and a blogger who makes it big can, it seems, increase the magic number a hundredfold.

AOL, the Internet dinosaur from the 1990s, acquired Israeli startup Relegence in November 2006 for between $50-100 million. The company’s headquarters and its 60 workers remained in Israel. This was only AOL’s second acquisition in Israel. The first was the giant deal involving Mirabilis, the developer of the ICQ instant-messaging software, for $407 million in 1998. ICQ’s development center is also in Israel.

AOL’s new Israeli representative was not purchased only for the search technology it developed, which quickly became the American giant’s rejuvenation engine, but also for blogger Orli Yakuel.

A world-renowned Israeli Internet personality, Relegence added her to its ranks in a surprise move. Over the past few years Yakuel has made connections with all the key figures in the new world of Internet - those of a variety with which AOL is not so familiar.

“We recruited Orli in an effort to understand what is happening on the Web, as an Internet researcher and a talent scout,” explains Edo Segal, CEO and founder of Relegence and currently a vice president at AOL, who reports directly to that company’s product manager. “[Orli] understands users and can recommend important services that will benefit the company.”

Most Internet experts around the world will use any opportunity to complain that AOL is about as good as a dead horse.

The company, which built itself as a powerful American entity that provided Internet services to tens of millions of subscribers on a narrow band width, has not been keping up with subsequent technological advances.

While other companies hastened to provide broad band connections, AOL restricted users to the narrow band and provided them, for a fee, with many services they could get for free on the outside, at sites such as Google.

Recently the company decided to change its direction and offer its services to everyone, free of charge, and to add advertising.

“The realization that a fundamental strategic change was necessary resulted from the danger associated with $9 billion a year in revenues,” says Segal. “The change was accomplished successfully.”

Ever since AOL’s services became free, user traffic has increased significantly. AOL bought Relegence for the instant search ability developed by the company, but that is no longer its only activity.

“We are currently focusing our development efforts on the search experience,” explains Segal, “and we view it as the gateway to the new Internet experience we are trying to promote. We will talk about other products when we launch them.”

Segal adds that Relegence is trying to harness its research to revamp AOL. Each week the local firm, aided by Yakuel and other consultants around the world, publishes a report summarizing the new services throughout the Web that can assist AOL.

“When Edo approached me I was sure he had found out about me from the newspaper articles written about me, but it turned out that he found me via the blog. There I was doing what I really love, searching for information and reporting on new services, but now I am being paid for it,” says Yakuel.

“I never tried any of AOL’s old platforms because they looked obsolete. AOL was busy with dial-up [Internet services] for much too long. Only in the past few months has it become a real Internet company.”

“We do not want to see the world through the eyes of regular Internet users,” says Segal, explaining the addition of Yakuel to the company’s team.

“We want to know today what will be the next big hit tomorrow,” Yakuel explains. “Everything that already exists has a lot of mimicks. Out idea is to find out what’s coming next. Our reports are distributed to all AOL executives.”

In addition to researching Web 2.0 worldwide, Segal has charged Yakuel with being a local matchmaker.

“There is tremendous potential in Israeli Internet, but most of the companies don’t have the resources to generate a critical mass, and we are interested in these companies,” says Yakuel. “There are a lot of companies here that I didn’t even know existed.”

“We are interested in meeting these new companies,” adds Segal. “Just last week I met with a few entrepreneurs. The current surge on the Internet is a positive thing. Some new ideas will work and others will fail, and we are trying to build a mechanism to shorten the way to success.”