Volume 67, Issue 3

A Yeshiva Grad Rising to the Top of BMC Software

By Noah Davis

Over the past two years, it would appear that the makot have made their way to the country's fourth largest city, Houston, Texas.  First, "the Great Flood of 2001" transformed downtown pedestrian tunnels into raging rivers and the world’s largest medical center into a twenty block version of “E.R” in just a single night. Then, the First Born of Houston's high tech world, Compaq Computers, absorbed the shock of both anticipated and real layoffs as a result of the the HP merger.  Thereafter, the world turned its attention to the Enron implosion, and Houston experienced a domino effect of Dynegy and El Paso Energy with their uncontrollable tremors. However, there does seem to be one company that has traveled on dry shod, steadfastly continuing its journey of growth and success: BMC Software.

BMC has quite an impressive corporate background.   Founded in 1980, BMC went public in 1988, is a member of the S&P 500 and has 6400 employees worldwide.  Among other achievements, it can claim that more then 80% of Fortune 500 companies rely on BMC Software, and it has alliance partnerships with Compaq, Microsoft, IBM, Oracle, Sun Microsystems, EMC, Peoplesoft and SAP. In addition to its success in the field, the corporate culture has been recognized as being healthy. The company was selected two years in a row as one of the "100 Best Places to Work" by Fortune magazine (1999, 2000) on top of being named by Fortune magazine as one of "America's Most Admired Companies" (Fortune, February 21, 2000).  In October 1999, it was ranked number one on POV magazines list of "The 12 Coolest Places to Work.”

In my current search for successful individuals who manage to combine their business prowess with a religious life, I found, over the chaggim in my own hometown of Houston, a Yeshiva alumnus that has traversed a very interesting path to his current position. Yosef Fried, Vice President of Business Development at BMC Software, is a champion of the Israeli high tech experience, of which he is a part. When I met Mr. Fried, he presented me with an astounding report by Morgan Stanley on the past and present developments of Israeli Business and Technology and why Israel is still one of the best deals for your buck.

Here are some facts published by Morgan Stanley in a recent publication

as to why Israel is still a strong economy.  “In 1991, there was one Venture

Capital firm in Israel.  Today there are over 100.  In 1992, total foreign investment stood at $537 million.  In 2000, the figure stood at more then $4 billion.  Israel is the only country in the world that has free trade agreements with the US, EU & EFTA.  Israel boasts the largest number of university graduates per capita in the world.  Israel has nearly 2 times the number of engineers then Japan and the US.  If Israel were a US state, it would rank 2 or 3 in terms of total Venture Capital investment.” 

On top of all these achievements, Israel's foreign satellite companies boast some of the highest productivity in the world.  “Motorola's Israel facility is the company's largest development center worldwide.  Microsoft built their first R&D center outside the US in Israel.  IBM chose Israel as their first Venture Capital investment.  All Intel x86 chips are produced and shipped from Israel.  Throughout its history, Intel has never missed a shipment out of Israel due to the geopolitical situation.  Israel's high tech exports have tripled over the last 10 years despite regional conflicts such as the Gulf War and Intifida.  The IMF predicts that the Israeli economy will experience 1.3% growth in 2002 compared to 2.3% in the US and 3.8% in 2003 compared with 3.4% in the US.”

Among these spectacular achievements some highly regarded entrepreneurs voiced their opinion about Israel, though you’ll have a tough time hearing them on CNN.  Bill Gates comments, “Thanks to quality education, Israel is one of the most advanced countries in the world.  Israel is advancing in high tech even more then other developed countries.”  “For me, Israel is no longer an emerging market; it is home.  Therefore I am not afraid to come,” voices Paul Otellini, President and COO of Intel.  “Israel has the best engineers in

The world.” “I view Israel as a tremendous source of technologies,” says the President of Lucent Optical Networking Group, Harry Bisco.

I sat down with Yosef Fried over the holiday break to discuss some of his achievements as well as the future of business development in Israel.

ND: "What is your position? And what are your responsibilities at BMC?

YF: I am the VP of Business Development. I run the deal team made up of disciplines like Research and Development and we develop and execute deals such as an acquisition of a company, or we help develop a strategy for either a build vs. buy situation.

ND: You graduated YU in 1988, what has been your career path that has led to your current position?

YF: I made aliyah two months after graduation and attended a masters program in Beer Sheva at Ben Gurion University.

ND: Why did you decide to make aliyah so soon?

YF: Youthful innocence. I had been in Israel for two years at Yeshivat Hakotel.  I didn't want to take the risk of eventually not getting to Israel. In YU I was an economics major and in the MYP program.  In Israel, I attended Tel Aviv University for a masters in Business.  By 1998, I came to New Dimensions software, which, at that time, was a publicly traded company in Israel.

ND: Can you describe New Dimensions?

YF: It was the first software company in Israel that really made it.  They went public in the early 90's on the NASDAQ.  It worked in the area of enterprise software, job scheduling, security management and output management, our three major focuses.  I joined as the director of channel sales.  BMC Software acquired us 6 months later in 1999 for roughly $700 million cash. At the time we were bought, it was the largest high tech acquisition in Israel. I found a job within BMC in 1999 and in March 2002 BMC reorganized into three core organizations.  I was selected to run the Mergers and Acquisitions department in Houston, Texas.

ND: It seems there was a significant part of the New Dimension staff that came over to BMC.  It seems pretty amazing that so many Israelis took over high executive positions in such a large American company.

YF: It's not strange to hear Hebrew in the elevators anymore.  There are about 10-12 Israelis in the Houston BMC headquarters.  The New Dimensions deal is considered one of the most successful acquisitions for BMC.

ND: It is not so common for upper-level executives to wear kippot at work, even in New York City, but it’s unheard of in Houston, Texas.  Why is it so easy at BMC?

YF: Most high tech firms are more diverse then corporate America.  There is a great diversity in the ethnicity among the employees.  There is also a business casual atmosphere that leads to a more relaxed attitude. At the end of the day it is your attitude.  I have worked across Europe and I have never had a problem with a person who did not want to do business with me because of my religion.  People ask more questions about Israel then about my kippah.

ND: For YU students who plan to make aliyah to Israel and plan to make a successful career there, what should they include in their training and studies before they go?  What areas of expertise are useful?

YF: What's going to propel Israel forward are high tech and tourism which gives us a competitive advantage.  5% of the Israeli population is working in high tech which is a pretty high percentage.  As of August 2002, Morgan Stanley said Israel is still a good place to invest.  Some people who have a Wall Street background come to Israel with limited benefits.  I believe long term they are not the pillars of Israeli high tech. To get experience in America that is useful in Israel one can sell software, or manage or develop programs.  Although Venture Capitalists have decreased less than in America, in a bear market it will still be rough. The rewards of a high tech corporate atmosphere are full of top-notch people, a dynamic environment and people who actually enjoy their jobs.  On top of that you generally get paid a higher salary.

ND:  I'm sure another concern is time for your family and time for Limud Torah?

YF: We work very hard, and it really does not end.  There is heavy duty travel and its demanding on my leisure and time set aside for torah and family.

ND: Looking ahead 5 years, what sectors in Israel will offer the most opportunities to the graduating classes of YU?

YF: I think the areas Israel has had a lot of previous success include, telecommunications, chip development and biotechnology.  Every single technology company has a large center in Israel for chip development. Optics is another strong sector.  A lot of investments I see in startups are in Biotechnology.  A lot of development for the army has continued to be a success.  Chips have been very important in being able to spy on our neighbors to the development of faster computers.

ND: At Sy Syms School of Business, the most desired path is of M&A, is it as glamorous and rewarding as we make it out to be?

YF: There is a lot of time put into research and 50% of all deals fail.  What I think is interesting about M&A is that you develop an understanding of a particular business.  A lot of companies seem to have a great product on the surface but deep down they are doomed from the beginning.  But I do believe there are plenty of opportunities in Israel for deal making.  It is not the art of any deal, it the art of the right deal.

This discussion with Yosef Fried is the second installment in my series of interviews that have focused on prominent figures in the business world.  Stay tuned for interesting facts about real people who have succeeded in their careers, and the path we can follow to do the same.

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