“There’s only so many times you can fake an orgasm” – 10 nuggets of startup wisdom from Yossi Vardi

VentureVillage (one of VentureBeat’s syndication partners) met with Yossi Vardi – the grandfather of the Israeli tech scene and guest speaker at Campus Party on Thursday — while in Israel. Vardi has invested in over 80 high-tech companies and his Midas touch has seen many of his investments sell to global businesses in multi-million deals – including ICQ (sold to AOL), Brightcove, TheGiftsProject (sold to eBay), and FoxyTunes (sold to Yahoo). He has acted as an advisor to the World Bank and the UN. He also tells a mean joke. Here are some of his nuggets of wisdom for anyone starting up in the tech scene.

Got an idea? It’s easier than ever to launch a company

In Israel we create about 600 new startups every year. One of our most active fields is consumer-facing Internet apps and this is a trend you can see all over – the barrier to entry is very low; with a few tens of thousands of dollars, you can create a viable company, but with over half a million apps on the iOS app store, how do you get over the noise?

In order to enter this space, one has to be fearless — and from a society that treats failure in an accommodating way. In many societies, failing is seen as embarrassing and face-losing, but you need to jump into the water to see if you can swim.

Some of my investments have been idiotic, some embarrassing … some both idiotic and embarrassing

I do very early seed investments. So far I have invested in around 80 different companies. Some of them fared very nicely and had very glorious exits – I have sold companies to Microsoft, Yahoo, AOL, eBay, and five of them went public. Some of them also failed equally gloriously. I have a very impressive list of failures, some of them are idiotic, some of them are embarrassing, and some of them are both embarrassing and idiotic.

I have passed on chances to invest in companies that were valued at $5 million that then sold for $30 million. So there’s a whole mix of experience. But if you can’t stomach the risk, this isn’t the game for you.

I had no idea what ICQ was all about. But it made me tall, blonde and good-looking

My best-known success was as initial investor in ICQ – the first Internet-wide IM system. My son [Arik Vardi] was one of the founders. I didn’t have the foggiest idea what they were talking about. Not because I didn’t understand, but because they wouldn’t tell me – they kept all the details confidential, which tells you of the level of trust in our family!

Because of these feeling of guilt typical to the Jewish people, I knew that my son hadn’t finished high school because I was doing something wrong. So I gave them a bit of money and they created this phenomena that they call instant messaging and after 18 months they sold it to AOL in a celebrated deal [ICQ patented IM technology and AOL acquired Mirabilis, ICQ’s parent company in 1998 in a $420 million deal].

This turned me overnight into someone who was smart, tall, blonde, thin and to be asked to talk on the Israeli startup scene to people like you.

Because of my success, I was awarded the title of “The worst-dressed male in Israel”

…by a leading Israeli newspaper. I am now running for the world title. You invest in high-tech and it brings you to all kinds of interesting places.

Jewish mothers are responsible for the Israeli tech scene

What makes Israel the success it is in the tech scene today? Is it the army? Is it the tech academies? All of these are contributing, but I think it is the spirit and upbringing of the young people. If your mother is telling you all the time that you have to thrive and you have to be independent and you have to go and study, then this is the value system.

The Jewish mothers in Israel have a very effective way to manipulate their offspring. My mother used to tell me all the time that I’m an idiot and that all my cousins are really smart, and I’ve spent all my life trying to prove her wrong. I am still trying to prove it to her, even though she died 15 years ago.

She also had a good explanation for why my cousins were so smart and I was such an idiot: “…because they are not contaminated with the genes of your father…”

In Judaism, a foetus is a foetus is a foetus until it became a lawyer. But with the change of scene in Israel now, every mother wants her son to be a dropout and form a startup … so now every young guy dreams of having a startup.

Skateboards, graffiti, fringe culture – startup cities need to have a permissive lifestyle

How do you become a tech hub? You obviously need technology, money, education, etc, but many places that have these attributes don’t become tech hubs. You need the culture of the young person – what do they dream of at night? Working in hi-tech is no longer a job – it’s part of their lifestyle.

Startups are moving to city centers, taking laptops to the coffeeshops. These people are looking for cities that are underground cultural, chaotic cultural. They want cities to acommodate different people, genders, tastes as they bring different DNA into the game, and that’s very important – they want the cities to be very permissive.

Berlin is becoming a very important place in Europe

In cities where you see thriving hi-tech communities, you also see graffiti, skateboards, you see fringe culture – you can see this in Barcelona, Tel Aviv and, of course Berlin.

Right now this is taking over in Berlin – it’s beginning to be a really interesting city… the economy is growing, and it’s going to become a very important place in Europe.

I devised a 400-slide PowerPoint presentation outlining “Vardi’s Law…” of business success

When we got ICQ and sold to AOL, I decided that I wanted to repeat it. I said that if I could decipher why people are attracted to a compelling feeling of user experience then I could replicate it. So I tried to develop a generalised formula of great user experience.

I read and bought maybe 200 books on all facets of UI – design, travel, sex,cooking, theatres, painting – to find a common thread. After three years I had a very impressive PowerPoint with 400 slides and formulated The Vardi Law – which stipulates that the number of slides times understanding of the topic is constant.

In short – there’s no way of knowing what will be a success – if you can reduce success to an algorithm, then it becomes a commodity and the magic is lost.

Business plans are like sausages – if you know what’s in one, you don’t want to eat one

Business plans are like sausages. Only people who don’t know how they are made are willing to eat them.

Never mind what the idea is – the main attribute is talent. If I hear of a talented kid, I want to be associated with him – I go and write him a check and say ‘Go, you can do whatever you want’.

And from there we have a mutual friendly non-existence – you don’t bother me and I don’t bother you. I don’t want to be on your board or get asked questions – just go do your thing.

The most important thing is to be talented, honest, and frugal. By now I’ve read over 3,000 business plans and all of them, without exception, say the idea they advocate is fantastic. So why should I bother??

And there’s only so many times you can fake an orgasm – don’t give me demos either

And you’ll get the guy who comes into your office with his laptop and puts it down on your desk, on top of all your stuff and shows you feature after feature. After feature. And he’s created 100 features, and I have to look at them all and demonstrate enthusiasm, because if I don’t he’ll say ‘Vardi is an idiot, he doesn’t understand what I am showing him’. Or ‘Vardi is conceited, he doesn’t care’. Or he’ll say ‘Vardi is an idiot *and* he’s conceited…’”

But how many times can you fake an orgasm? 1,000 times? 2,000 times? So now I say ‘no laptops’ …

For example, the Gifts Project (an Israeli social commerce platform sold to eBay last year). The guys approached me and I asked what they do outside of work. They told me they volunteered at high schools teaching computing skills. That was enough for me – the fact that you are volunteering says something about your character, I checked their story and found that they were also honest. The team is much more important than the product.

But hey, I’m a simple, idiot guy as my mother would say – what do I know?

This article originally appeared on VentureVillage.

This story originally appeared on VentureVillage. Copyright 2012