Penguins in Tel Aviv

If there’s one thing that highlights the difference between the ritzy hi-tech zones of Tel Aviv or Herzliya Pituach from the rest of the nation, it’s the penguins.

What penguins, you may ask. Did they escape from a local zoo?

No, they’re the visually attractive marketing fiasco dreamed up by the Gitam advertising agency.

Can’t you just see the scene. The creative director of the ad agency turns to the hi-tech CEO with eyes aglow, snaps his fingers and announces, “Boy, do I have an idea for you.”

“Okay,” sighs the executive. “I’m listening.”

“Envision this,” the art director says, waving his arms about. “Two hundred penguin statues, each seven feet tall and weighing two tons. Each will be decorated by a different artist. Then we’ll strategically place the penguins around the country. And the best part,” says the art director, getting his limbs under control and pointing dramatically at the CEO for emphasis, “is that it won’t cost a penny more than a million dollars!”

“Wow,” says the CEO. “Outa sight.” He turns to his faithful human resources and marketing managers. “Waddaya say?”

“Intriguing,” mutters the marketing manager.

“Whee,” the human resources manager helpfully clarifies.

Penguins? A case of DTS or a marketing ploy?
The above scenario sounds about as likely as walking out of a Tel Aviv beach hotel and finding flightless fowl waddling down the boardwalk leaving the aroma of herring in their wake. Exactly what message do 400 tons of penguin sculptures convey about an Israeli hi-tech company that manufactures advanced equipment?

Gentle reader, although we don’t really know the details of their meeting, the bottom line is Gospel. Gitam convinced CreoScitex, of the Scitex Corporation (Nasdaq:SCIX), to scatter festooned fake penguins about the greater Tel Aviv area.

Forget the how. Why? Scitex sells mainly in Europe and the United States. It’s a serious company facing huge challenges and not in the best financial shape. Why should it spend a cool mil on decorating Tel Aviv with penguins? Is it mad?

No, Scitex isn’t mad. Israeli hi-tech is mad. The fever engulfing the hi-tech industry may have gone to Scitex’s head. But most marketing managers at its competitors were probably smacking their foreheads. “Penguins! Cool!” they berated themselves. “How can we counter that? Hey, whaddabout dolphins?”

A new concept of recruitment
Actually, the penguins campaign was meant to address a problem not entirely self-evident from the nature of the beast: the manpower crunch, caused mainly by a cultural change. And most of the hi-tech giants are in the same boat as Scitex. To keep their staff on board, they have to fork over not only profligate salaries and perks, but thrills too. The riches raked in by a few thousand people generated unrest throughout the industry. Everybody else feels they’re missing out, that they aren’t at the forefront, and naturally, they want stock options too to turn them into millionaires, and they don’t mean in 20 years’ time, thank you.

Scitex was hard-hit by the manpower crisis. First of all, it’s a big company in the unsexy printing business. Secondly, its stock has slid 30% in five years. This market cap of the veteran company, with a staff of 3,000, dropped to $400 million while some baby startups are going for billions. The workers for their part are as capricious as the markets, abandoning solid but stolid enterprises for ventures in their infancy, as long as they’re exciting. They tend to stay loyal to the old company only when its stock is powerful, as is the case of Check Point Software Technologies (Nasdaq:CHKP) and _Comverse Technologies (Nasdaq:CMVT), for instance.

Well, do the penguins somehow represent a fundamental change in the jobs market? Ownership and power shifting to workers, maybe? Or do they perchance represent the sick situation of the capital markets, willing to finance only sexy startups?

The truth is evidently somewhere in the middle. Workers will continue to be a scarce commodity, the structure of companies will change, and they will spend fortunes on sprucing up their image. As startups start collapsing, workers will remember the charms of mess halls with 2,000 hi-tech workers stuffing their faces and leaving at five, compared with spaghetti and truffles and working round the clock, only to lose their jobs and join the penguins in the street.

Wouldn’t say boo.com to a goose 
Meanwhile, the paint melting off the penguins broiling under the Middle Eastern sun brings to mind that their rightful place is the South Pole, and that Israel’s globalization includes global problems, which do not include the relocation of fowl. Startups are canning staff the world wide, and it didn’t begin or end with the ultraclassy website boo.com. Last week Israel learned of five local startups slashing staff. The most frightening was Yazam, the startup launchpad, which took over Britain’s First Tuesday. It, for one, is headed by leading figures in the hi-tech and startup industry, but it too is in trouble.

The one aspect that hasn’t changed is that demand for skilled manpower is still strong. Growth is slowing, Israel has plunged back into political turmoil, companies and startups are slashing staff, foreign investors are staying away, yet technology is advancing, research and development must go on and demand for talent far exceeds supply. Classified ads, recruitment campaigns, banner ads, stock options, repriced options in the case of companies whose stock has dived by double-digit percentages: Companies are grasping at anything to grab attention. Even two-ton statues of penguins.