Sender Cohen: 

‍

I’m not a really great investor. What I’m very good at is figuring out a trend or an area to be in and finding the right people to do that. 

‍

A bubble can be a great thing if controlled properly. 

Israel is very good at 30-year out research, winning a Nobel Prize. Israel has not been great about what's needed 5 to 15 years out. 

‍

We all say, you know, democracy is the best system out there. Sometimes it's not. Sometimes, a long-term plan controlled by one person has a greater outcome. It's just reality.

‍

What's happening technology wise in Riyadh is incredible. 

‍

At Harvard, you hear about the jubilation of October 7th, but I come to Saudi Arabia and I hear about the tragedy of October 7th.

‍

Michael Eisenberg:

‍

Why is there nothing about you on social media? 

‍

Sender Cohen: 

‍

I pay a service to make sure there's nothing about me on social media, or Google, or anything, so I was happy to hear that it was hard to find stuff.

‍

It’s like we're sitting here, we're like Statler and Waldorf–has anyone watched the Muppet show? We’re like sitting here, and making fun of everybody and everything. 

‍

[00:00:53] Michael Eisenberg:

Welcome back to Invested. This is going to be a very fun episode of Invested for at least three reasons. Number one, I have a froggy in my throat, and I’m a little hoarse. Number two, I'm here with Sender Cohen. We know each other since we're teenagers, which is a long time. And although he has lapped me a few times professionally, he used to work for me at one point, maybe we'll get into that.

And lastly, we started off kibbitzing off camera about Houthi branding, the Houthi’s Christmas branding, and maybe we'll get to dig into that too and find the clip–because I think we were recording when you were talking about the Houthi branding–and bring it back. 

‍

Sender Cohen: 

‍

Were we? Oh dear, okay. 

‍

Michael Eisenberg:

‍

And this is also Sender's first podcast, so join me in giving him a round of applause for agreeing to do his first podcast. Welcome Sender.

‍

[00:01:43] Sender Cohen: 

‍

Thank you. Excited to be here. 

Michael Eisenberg: 

‍

Okay. So for the audience who doesn't know Sender as long as I do, Sender Cohen is currently the Managing Partner of KH2 Capital and the chairman of Nevo Labs. All that we'll get into. He is also the chairman of Fulbright Israel for the last–eight months?

‍

Sender Cohen: 

18 months. 

‍

Michael Eisenberg: 

‍

Last 18 months. He's the previous Chief Investment Officer of the Schusterman family. Before that, he was the director of research and head of external allocations at Soros. And before that, he worked at Duquesne with the famous Stan Druckenmiller, one of the greatest investors of all time, if not the greatest investor of all time.

He's a trustee of the Harlem Children's Zone, a trustee emeritus of Yeshiva University–at our age, you can be an emeritus already, that's quite amazing–and was a founding trustee of the Birthright Israel Foundation. Did I miss anything? 

Sender Cohen: 

‍

I think you know more about me than I do, so that's good.

Michael Eisenberg: 

‍

So before that, Sender was also the news editor of the college newspaper when I was the editor in chief.

Sender Cohen: 

‍

And then he promoted me to Editor in Chief when he left. 

‍

Michael Eisenberg: 

‍

That is exactly right. No, you earned the right to be the Editor in Chief of The Commentator. 

‍

Sender Cohen: 

‍

I earned the right, yeah. 

‍

Michael Eisenberg: 

‍

So, just for the audience who doesn't know you, I have to say, how did we first meet? Make sure you talk into the microphone.

Sender Cohen: 

‍

We first met, I came to New York from Cincinnati, Ohio. I was born and grew up in Cincinnati. I came to New York to go to Yeshiva. My brother had gone to Skokie, which had a bit of a–

‍

Michael Eisenberg: 

‍

Which is in Chicago. 

‍

Sender Cohen: 

‍

Which is in Chicago, yes. And my parents thought Skokie was a little bit, “nutty” might be the word. It had a certain reputation as a free-for-all yeshiva, so they figured they would send me to another yeshiva's dorm, not realizing they were sending me to what can be best described as a Lord of the Flies scenario at the MTA dormitory.

But when you live in Cincinnati, and it's pre-social media, and pre-iPhones and pre-everything else, that's what happens. So I had a very lovely time in MTA. I met Michael, I met his cousin, I spent much time going to various people's homes, just ‘cause I didn't have much family in New York, other than a sister.

It was great. It was a great experience. Most of my friends come from those high school days like Michael. So it was all worth it, even though I had a C-minus average in high school ‘cause I missed three finals and got three Fs, ‘cause I went to a Billy Joel concert instead of taking those three finals.

Michael Eisenberg: 

‍

All right. So, we always start with the question of like, what is your core personal value? 

Sender Cohen: 

‍

Core personal value? Just being a good person, I guess that. 

‍

Michael Eisenberg: 

‍

Are you succeeding at that?

‍

Sender Cohen: 

‍

I don't know. 

‍

Michael Eisenberg: 

‍

I think you are. 

‍

Sender Cohen: 

‍

I think we’ll find out. There's a great quote at the end of–has anyone here read Middlemarch?

‍

Michael Eisenberg: 

I have not. 

‍

Sender Cohen: 

‍

The last page of Middlemarch has, and I'm not going to remember it to say the phrase, but I love George Eliot, in large part because she wrote Daniel Duranda, which helped create British Zionism or helped, you know, create more enthusiasm for Zionism. But the last page of Middlemarch is a beautiful quote about unmarked graves of people who just make the world a little bit of a better place.

‍

Michael Eisenberg: 

That's very nice. 

‍

Sender Cohen: 

‍

And it's a great end sentence, if anyone's bored and wants to read it. 

Michael Eisenberg: 

‍

So Middlemarch is the end of your life, and Lord of the Flies is the beginning of your life. 

‍

Sender Cohen: 

Yeah, that's a good way to phrase it. Yeah. 

‍

Michael Eisenberg: 

‍

I want to start with the question that was raised. What did you learn most from Stan Druckenmiller?

Sender Cohen: 

‍

What did I learn most from Stan Druckenmiller? I'd say most importantly to be a good person. He's a very good person. He's very shy. He’s not good in front of a room, but he doesn't take credit for many of the things he's accomplished in life, both philanthropically and investing wise.

But he's just, as an investor, he's very good at quickly pivoting when he's made a mistake. 

‍

Michael Eisenberg: 

‍

Meaning cutting his losses. 

‍

Sender Cohen: 

‍

He cuts his losses very quickly. People watch him on TV, and they think he's always bearish, and they think he's like, “Oh, he said this. So therefore I'm short.” And the funny part is thinking he's always bearish and listening to what he says, and trying to do based on what he said in an interview the week prior on TV, is–the man never has had a down year.

And I think he's been investing for 37, 38 years. He's never lost money in a year. So clearly he's not always bearish, because the market's up 95 percent of the time or whatever it is, but also he's very quick to adjust, which is phenomenally hard for a person to do, to take a loss and move on.

And he's exquisitely good at that. 

‍

Michael Eisenberg: 

‍

And when we had dinner with Stan here in Tel Aviv–

‍

Sender Cohen: 

‍

Which was a lot of fun–Michael hosted a dinner for Stan on his first trip to Israel, which was a very magical trip. 

Michael Eisenberg: 

‍

I was blown away by the number of questions he asked over dinner. An accomplished person. And I felt like he was constantly questioning his assumptions.

And then later I heard him say that he gets up in the morning and has a call like at 5:30 in the morning, of like, “Okay, what's changed today?” I thought–is that something you picked up from him? Is that something that's actually real?

Sender Cohen: 

‍

It's real. I wish I'd picked that up from him. He's very inquisitive.

He's constantly looking for new data points, and he's also very good at distilling things down. You know, it's like having a great teacher who knows how to make something very simple. And what I always loved about him is, a macro concept is very simple. You know exactly how he's thinking of what he's doing by talking to him.

And clearly the machinations in his brain are incredibly complex. You know, all my years at Soros, there were always people who would come in with this macro theory, or that macro theory, or wanting us to invest in this macro trade, or that macro trade. The way I'd evaluate things in the first stage was, when people were complicated, was–Stan says something to me and I understand it right away. These guys are talking, and it's taking me a half hour and I still don't understand what they're saying–they're clearly not better than he is, ‘cause they're not. And they're so complicated. Like, it was a great first filter to move on, and it was always right to move on. But he's just very simple in how he approached these things.

But again, it's not a simple brain. It's a simple articulation of a concept. 

Michael Eisenberg: 

‍

And a move and a trend.

Sender Cohen: 

‍

Yeah.

Michael Eisenberg:

‍

I saw him right after the Milei thing. Said, “Okay, I got to buy some stock in Argentina, just to get some skin in the game. I'm going to start and then get going.” It was like, simple. The guy's going to come figure something out here. 

‍

Sender Cohen: 

‍

Yeah. 

‍

Michael Eisenberg:

‍

What's something that you've managed to distill down to something simple?

Sender Cohen:

‍

Well, these simple questions should get a very simple, quick answer. Just trend following. I think the one thing that I've gotten from him is the ability, well, not as well as he does by any way, shape or form is this–I'm very good at looking at patterns. My kids always find it inexplicable that I'm very bad at math, which I am–but I'm very good at looking at numbers and figuring out patterns in a trend or a graph or a model, et cetera, et cetera.

[00:07:55] Michael Eisenberg: 

‍

So what's something that you can distill down now for us into a simple thought? Start with an investment. 

Sender Cohen:

‍

Start with an investment? Just looking at this country, a simple thought is–one of the reasons that I've been coming back and forth is the simple thought of, why Dubai and not Tel Aviv? Looking at what's happening in this country and why more is not happening here in alternative asset management. 

[00:09:14] Michael Eisenberg: 

‍

Which we're going to dig into a lot in a second, but I want to build our way there. So you also worked for George Soros. 

‍

Sender Cohen: 

‍

That's a good segue, right? 

‍

[00:09:22] Michael Eisenberg: 

‍

It was good. It was good. You spent years at George Soros. 

‍

Sender Cohen: 

‍

Yep. 

‍

Michael Eisenberg: 

‍

What's the big thing you took away from him?

Sender Cohen: 

‍

The great similarity that George and Stan have is, they're both able to distill things down to a very simple concept. The big difference between George and Stan, I think it was actually Scott Bessent who said this, to paraphrase him–

‍

[00:09:43] Michael Eisenberg: 

‍

Now nominated to be the–

‍

Sender Cohen: 

‍

Treasury Secretary–and I think you heard Scott at the last, we're about to host something together; at the last one, Scott and Stan started off the day for us, which was a lot of fun.

Scott once said that George can get into the mess. The market's a mess, and he knows to get out, right? And most people don't know how to get out of that mess. Stan never even gets in the mess in the first place. I daresay even on this podcast and I don't know, you know, on the public–Stan is a better investor than George.

He just has a skill that I think is unique and second to none, but that's like comparing, you know, as I say that he's better than George, and I very much think he is a much better investor than George, certainly at size. He's shown an ability that few have shown.

If I knew sports, I'd compare it to when you realize the great nations–

‍

Michael Eisenberg: 

‍

LeBron James and Michael Jordan?

‍

Sender Cohen: 

‍

There you go. LeBron James and Michael Jordan. 

Michael Eisenberg: 

‍

Each person will decide whether George is LeBron James or Michael Jordan, or whether Stan is LeBron James or Michael Jordan.

Sender Cohen: 

‍

Yeah. I like that. But yeah, Stan is a very unique talent. 

‍

Michael Eisenberg: 

‍

I sense also their politics are pretty different. 

‍

Sender Cohen: 

‍

They are quite different. They are quite different. But despite the difference in their politics, one thing that I always think about, especially in today's fractured times, is the way that they're both focused on helping people.

George comes from the far left. Stan, he's not by any stretch far right. I think he's classified, classifies himself as an independent. But he just stepped down as chairman of Blue Meridian, which is one of the most amazing organizations in helping underprivileged people in America that exists today. I mean, it's an absolute powerhouse. You look at the list of multi-cent of billionaires, whatever the term is these days, that are involved in this incredible–that was all Stan's doing, pulling them all together.

Michael Eisenberg: 

‍

Amazing. And how would you describe your investing style, having been both at Soros and with Stan?

Sender Cohen: 

‍

My investing style is a bit different. I'm not a really great investor, and I say that with complete sincerity. It's true. What I'm very good at is figuring out a trend or an area to be in, and finding the right people to do that. That's what I'm good at. I'm not good at underwriting a specific security; I am good at underwriting a person, and I'm good at underwriting a theme or a trend and putting that person together with the theme or the trend.

Michael Eisenberg: 

‍

Okay. So one trend that we'll come back to is Israel–why Dubai and not Tel Aviv. What's another trend?

Sender Cohen: 

‍

Right now? 

‍

Michael Eisenberg: 

‍

Yeah. 

‍

Sender Cohen: 

‍

There are very few trends that are super interesting to me right now, just because of–there are a lot of scary and concerning ones. 

‍

Michael Eisenberg: 

‍

Keep going. What’s scary and concerning? 

‍

Sender Cohen: 

‍

There are also some hopefully pretty optimistic ones, which we can get to. But right now what interests me from an investing standpoint is the next wave, because, you know, from our youth doing this–I started a firm called Hambrecht and Quist–you were at Marttila & Kiley, right?

‍

Michael Eisenberg: 

‍

Well, that was a consulting firm back–you know, when you were having your first job at Montgomery Securities. 

‍

Sender Cohen: 

‍

Montgomery Securities, that was after, yeah. I'm trying to get back to our old CVs. All these tech waves always have a second wave that rises from the ashes of the first wave. And the second wave is always, I mean, historically has always been better than the first.

Maybe this time will be different. But there are certain waves right now that are interesting to me because, as they smash upon the rocks, the second wave will be pretty interesting–those are in areas of like quantum computing, and certain areas of physical substrates for semiconductors, et cetera, that are needed for this next wave of technologies, both software and hardware, but those are the areas that are of great interest to me.

Michael Eisenberg: 

‍

Right, you were also a comms and semis analyst way back in Hambrecht and Quist. 

Sender Cohen: 

‍

I was. Yeah.

Michael Eisenberg: 

Why is that important, if you have been a comms and semis analyst? 

Sender Cohen: 

‍

Because the physical layer is something that A. is so important for everything that occurs, and B. has been so under-invested in right now.

And I think that is the great opportunity set. The investing mindset–it’s like we're sitting here, we're like Statler and Waldorf–has anyone watched the Muppet show? We’re like sitting here and making fun of everybody and everything. They're my two favorite characters on the Muppet show. But investment cycles have shortened so dramatically since we started, right?

The average life of a venture fund and the average life of an investment was much longer. People had a lot more patience, you know, especially in those days when I started out. I think my great claim to fame was I wrote the first Wall Street research report on cable modems. But there were a lot of things happening at the time that took a long time to bake.

And you fast forward to today after that first wave of the internet happened. Everything's, you know, software eats the world or ate the world or whatever the heck the quote was from Mark Andreessen. But the problem is everyone's so focused on the software layer that everything has gotten to a much shorter timeframe.

People expect something. A. The capital investment required to bring a company to profitability is much lower. B. The time expected before that happens is much shorter. So there's less patience among investors and among entrepreneurs, certainly among investors, which I think drives the limit of entrepreneurial patience.

So there's a massive under investment in the technological underpinnings of everything that we do. And you've seen a very negative consequence of that happening, because countries where there's–I'm a capitalist at heart, but–countries where there's top-down control have done a much better job of investing for the long term in these areas, than the U.S. has. Not the areas that make them more competitive on the global landscape in terms of economic growth. And by this, obviously, I mean China versus the U.S. and overall economic growth, but the physical underpinnings of what we need day-to-day, in technology land, which is why we've been so worried about fabs, and all kinds of other physical infrastructure, and why we're so worried about what Huawei is doing versus what's happening with companies in the West. 

‍

But I think we have a lack of patience, and the lack of patience has led to a certain degree of malinvestment.

Michael Eisenberg: 

‍

Even like today, if you look at Jensen at NVIDIA, right? He's sped up the clock on semiconductor releases to a year. 

‍

Sender Cohen: 

‍

Yeah. 

‍

Michael Eisenberg:

‍

I mean, it's insane. And, you know, that's a moat on his business, but these businesses, even the hardware businesses are getting faster today.

Sender Cohen: 

‍

But the ability to create the next generation of hardware to compete with what he's doing still takes a long time. And the problem is very few are investing in that long duration cycle to compete with him at the next stage. So as great as he's done, you look at each decade, which companies are top 10 market cap versus the prior decade, maybe NVIDIA will still be there.

It's usually 80 or 90 percent fallout. So I hope he does. It's great for the U.S., it's great for Israel, it's great for the West. But somebody's in a little corner somewhere and has patience, hopefully, and is building something to be the dominant player in the next decade. But the problem is fewer and fewer. I think, I mean, you're more of an expert in this than I am, but there's definitely that lack of patience in terms of long term R&D.

Michael Eisenberg: 

‍

I think there's also a lot of supply chain lock in. If you look at TSMC, you know, the U.S. thought that they'd build it in Arizona. Turns out it's much harder than anyone thinks, when the Taiwanese don't want to share their expertise that much, and then the other part of it is there's actually a supply chain around it in Taiwan that helps you iterate there a lot faster than you can in the U.S. This is hard to do actually.

Sender Cohen: 

‍

Which is why I'm excited about some of the things that you've been looking at, like using synthetic biology to take control of some of the processes for next generation lithography.

I mean, that's exactly what's needed when you think far out and say, “Okay, here's how the supply chain works today, and here's what's going on. And I, Michael, have this really interesting guy who's worth looking at,”–for those who do use the internet and social media, ‘cause I was just made fun of cause I don't–who's just an incredible entrepreneur, who is thinking about the way to do this with proteins, right, to just take over the current processes for lithography.

That would be incredible if it works, and I hope it works, but think what will happen to all of these current generation companies, ASML, et cetera, if he succeeds–and somebody will succeed, and hopefully it'll be him–but that's exactly what I'm talking about. People like him are rare, and the patience to invest in a person like him is rare.

Kudos to Aleph for doing that, but that's very unusual.

[00:18:31] Michael Eisenberg: 

‍

Thank you. What would it take to get long-term capital to think about investing in this? And in kind of creating these next-gen infrastructure? Your career started when–people don't know, but the Hambrecht and Quist times in the mid to late nineties was all about–you went to Oppenheimer, if I remember correctly. 

[00:18:49] Sender Cohen: 

‍

Right. Which is how I got into Israel, because Oppenheimer was all focused here. I just saw Aaron Stone in New York two weeks ago. It turns out our daughters are going to go to college at the same place in two years, which is fun.

[00:18:59] Michael Eisenberg: 

‍

To close the loop, Aaron Stone and I grew up together on the west side of Manhattan, so I know him forever, and Sender knows him also, even though we were at rival high schools. Sender knows him also from his career, and because the cousin he mentioned earlier also grew up with me together. This is like a small group of people. And then Aaron had a great career at Apollo.

[00:19:17] Sender Cohen: 

‍

A great career, and his father was like the lawyer who opened up Israel at Wallagotcha(?) And I remember my first business trip to Israel was right when I moved to Oppenheimer, and I come to Israel, and Mr. Stone's on my flight. So A. I am not in the back and tower area, you know, seat 47 C. I'm like, this is what the front of the plane looks like. And B., I'm with Mr. Stone. So it's very exciting.

Michael Eisenberg: 

‍

You know, if we're having fun stories. So the first IPO I did, who was the attorney? Mr. Stone, who I grew up with. But everyone's calling each other by their first name. It was a little awkward for me to call him David.

But nonetheless, we go around this U-shaped table at the org meeting, which used to be in person. I think it's all virtual now. 

‍

Sender Cohen: 

‍

Yeah, mine was a Rad Group org meeting. That's why I came to Israel. 

‍

Michael Eisenberg: 

‍

Okay. Mine I believe was the RADCOM IPO. And I'm the last guy at the edge of the U on the table, because I'm operating the presentation on PowerPoint, and I introduced myself as Michael Eisenberg, and Mr. Stone, or David Stone says, “And I was at his bris!” One of those moments where, if I turned red generally–I probably would have been then. 

‍

But back to semiconductors in the late nineties, the mid to late nineties. So this was a time where you had, first HDSL–this cable modem stuff– and then telecom, ADSL. These were companies that don't exist anymore. Paragain, Eastside Telecom here, and others. 

‍

Sender Cohen: 

‍

Yeah, a lot of Israeli companies. Orkit, Tarion, Com21, Libit, for cable modems, which Texas Instrument bought. I mean, the underpinnings of so much of what we have today and what we take for granted today, for telecom and for broader communications come from Israel. It's absolutely amazing.

Michael Eisenberg: 

‍

And that was like a golden era where there actually were these longer lead time hardware plays. And by the way, even today, I don't think NVIDIA becomes what it becomes if it's not for Mellanox and Eyal Waldman. Also a company that kind of pitter-pattered along for a long time. It struggled to get going for a long time, and then it hit a moment.

Almost–I think it was probably seven or eight years as a public company. 

Sender Cohen: 

‍

Yeah, when people realize this is the golden key needed to unlock the speed. 

[00:21:25] Michael Eisenberg: 

‍

Right, InfiniBand, the Mellanox standard that everyone kind of laughed at early on. What was the standard? What does it take to get investors to go back to that underpinnings?

And by the way, it's material science. 

‍

Sender Cohen: 

‍

Material science. 

‍

Michael Eisenberg: 

‍

I remember there were companies here working on chips with gallium arsenide back in the 90s when I started. It's networking, data. I mean, you see how it pays off. I mean, NVIDIA is a 30-year project, right? Mellanox is a 25-year project, but that's how you gain dominance over time and build an industry. What does it take to get people to come back?

Sender Cohen: 

‍

Yeah, it's like old wave division multiplexing companies, you know, back to the days of Chromatis and a number of other companies in that sector, but the ability to more finely parse wavelengths that you're sending over a fiber optic cable, and multiplex and demultiplex those wavelengths, and then translate them from optical to electric are technologies that A. started in the nineties, and B. started with many Israeli companies.

‍

It takes a patience and understanding that, you know, it's kind of your comment about Mellanox. It's an understanding that certain basic research building blocks have to be built, and you don't know when they'll become applied.

And your Mellanox comment reminds me of the Hemingway quote, which I'm sure I'm going to phrase wrongly, but “How did I go bankrupt? Slowly, than fast.” Certain things sit there and they're not necessarily, you don't realize how critical they'll be as a building block, but it's important to invest in them.

You know that they have a great value. You don't know exactly how that will apply, and you don't know when that will apply, but there's something as a national asset is something that a country that has an economic policy, or a technology policy, those being the same thing, that's focused on the longterm, has to invest in, because you don't know when that bankruptcy that's going slowly will go fast, but in the opposite way–that that building block that exists will be so critical, a component of what's needed for the next generation of growth.

[00:23:27] Michael Eisenberg: 

‍

One of the things I was thinking about, as we were talking about all those companies that have kind of come and gone, but their products and infrastructure persist, is maybe actually what's needed is a bubble, right? Many of those companies went public in the internet, or what's actually the telecom bubble of the late nineties. Pets.com became the poster child, but there was all these companies you mentioned, plus a host of others that got bought by Cisco for gobs of money. but all that laid the infrastructure that we're benefiting from today.

[00:23:56] Sender Cohen: 

‍

A bubble can actually be a great thing if controlled properly. And what I mean by that–and I think there's a George Soros quote of, there's always a bubble forming somewhere, in terms of investments–but obviously a bubble is bad for an economy when the bubble blows up and what it does. But you need to create enough of a critical mass in a given industry or sector, which includes failed companies, where scientists, or entrepreneurs, or engineers go off and start new companies.

So, what could be irrational for the individual is very rational for the whole, for the policy of a country or for a large organization that's testing different things and seeing what things do or don't work. But, you go back to your point, right? The Telecom Act finally passes in ‘96 after a few years of failed attempts.

Michael Eisenberg: 

‍

Tell everyone what the Telecom Act is. 

‍

[00:24:48] Sender Cohen: 

‍

The Telecom Act is what deregulated the telecom networks in the United States. And we were, you know, two years or so out of school and better be lucky than smart. We just, we caught the wave, because Michael and I had started working, and we were looking at this area and, you know, kind of figuring stuff out–and then boom, the starting gun gets triggered, and just the amount of investment pouring into the sector just went up exponentially.

And on the one hand, you had a bubble burst, and the bubble bursting in 2000 led to a three year downturn. downturn in the S&P–I think one of only three times in history that's happened–but out of that came, what is what we all look at today in the internet. And these companies that were formed in that first telecom bubble, all the engineers from them, either the companies in and of themselves grew, but oftentimes the engineers went off and started new companies. 

‍

So they said it might've been bad individually for the company, or perhaps for the venture fund that created that company, but the venture funds that actually understood what they're doing and stayed around ended up being great venture funds, and the investors that stayed around ended up being the great investors, and et cetera, et cetera, et cetera.

But that created enough of a critical mass of people and knowledge from the failed and the successful companies that a lot of really interesting stuff happened. 

‍

It's funny, you had Adam on a few weeks ago? 

‍

Michael Eisenberg: 

‍

Yeah, Adam Fisher. 

‍

[00:26:20]

‍

Sender Cohen: 

‍

Who is indeed incredible. There are three great investors in Israel, in my mind. Michael, Adam. I know who the third one is. Michael knows who I'm thinking about. I'm not going to say who it is just so that anyone else doesn't think I'm thinking about them, but I'm hopefully going to see him this week for a little Chanukkah party. But Adam had said to me in terms of an initiative I'm working on with Adam and Michael, and, another friend of ours, Scott Tobin, that–there you have it–that perhaps we should think broader and do more in these sectors, because you need that critical mass that's out there. If you don't have the critical mass of people out there, even if some of the companies will fail, we're not going to create the critical mass, again, needed to create the next wave of growth.

Michael Eisenberg: 

‍

Short term bubbles can be painful. Long term though, they lay infrastructure. And I think the same is true about AI and compute right now. 

‍

[00:27:19] Sender Cohen: 

‍

A hundred percent. I agree with that. 

‍

Michael Eisenberg: 

‍

This is likely a bubble of sorts, although, you know, NVIDIA is not trading at the crazy multiple that Cisco was back in 2000. I think Cisco is trading at a price to earnings multiple of like 120.

[00:27:30] Sender Cohen: 

‍

It's amazing. And NVIDIA also–

‍

[00:27:31] Michael Eisenberg:

‍

NVIDIA’s like at 30.

[27:32] Sender Cohen: 

‍

They report earnings and like, the multiple contracts, because they have such explosive earnings growth. It's been amazing to watch. And I don't think there are any companies, I mean, Cisco at the height was at I remember there were price targets, there was an analyst in 2000 who had a price target in Cisco, which was the equivalent of nine percent of nominal United States GDP. It seemed a little bit out of whack. It never got there. And I don't think anyone has that, quite that euphoric or bubbly perspective. 

Michael Eisenberg: 

‍

I remember when Henry Blodgett said that Amazon was going to be $1,000 a share, and he was laughed at, basically fired because of that. He was right. 

‍

Sender Cohen: 

‍

He was right. 

‍

Michael Eisenberg: 

‍

Unlike in the case of the Cisco analysis who thought there'd be nine percent of GDP. Blodgett was right, but the bubble burst on him, and he was tarred and feathered, but he was 100 percent right. I think by the way, one of the differences is consumer-facing stuff can actually scale pretty infinitely, whereas infrastructure at some point runs up against price erosion in a meaningful way, and changing technologies and need for speed in that case, and other things. 

Sender Cohen: 

‍

Yeah. Cisco had a lot of constraints that Amazon didn't have, for sure.

[00:28:43] Michael Eisenberg: 

‍

Yeah. So we talked about this basic technology and technology policy. Can you tell everyone about Nevo Labs, what you're working on?

[28:51] Sender Cohen:

‍

I'm working on, you're working on–

‍

Michael Eisenberg: 

‍

We're all trying to make it work. 

‍

[00:28:55] Sender Cohen:

We're working on it together. Because of our experience in the nineties, we wanted to kind of, I wouldn't say reset the clock, but kind of reset the stage and say, “Okay, what is it that is needed to help make Israel great in the next generation of technologies?

How do we create an environment in Israel that is like a Bell Labs, where we can get these scientists in Israel with the right tools, the right systems, the right resources, that they can sit and have the luxury of time and colleagues in different fields to develop that which is needed for Israel's next generation of growth?” 

Michael Eisenberg: 

‍

Not just Israel's next generation of growth, the region’s–

Sender Cohen: 

‍

The region, the world. I think, and I don't live here, so maybe I'm going to mischaracterize something, but I think, in my view, looking from the outside, Israel is very good at what's needed for the next one or two years. Because of the military, right? Very good at near term cyber stuff. Israel is very good at 30 year out research, winning a Nobel Prize. Israel has not been great about what's needed five to 15 years out, that middle stage.

So, we all go on about how many Nobel Prizes and Fields Medals and this and that Israelis have won, which is incredibly important. Heck, I could never even win a Fulbright, that's why I was happy I was named chair by Tom because, you know, now I can, like, tell my mom I'm associated with Fulbright.

Michael Eisenberg: 

‍

And your mom was an academic, right? 

Sender Cohen: 

‍

My dad's a professor. So he would have been very happy to see my association. But Israel has not been good at that middle stage. Again, to quote Adam Fisher, who's working on this with us–Israel is very good at the D, but not that great at the R.

I mean, if you look at the R numbers, the research numbers out of Israel, a lot of the research funding here, the foreign share of funding for research in Israel is frighteningly high. It's, I think, seven or eight times that of other OECD countries, which is very scary, especially in times like this.

B, you just don't have these big commercial labs or other sorts of labs with technology transfer that you have in the United States. There was actually an article in Harvard Magazine–Harvard used to be a good word, until a few weeks ago, a few months ago. There was an article last week in Harvard Magazine. I think it's the only article I've ever read in Harvard Magazine. But a few people sent it to me. It came out last Monday or Tuesday,about why commercial labs are taking people from academic labs. And it was a much more articulate version of what I'm trying to say, and I urge everyone to read it who finds this topic interesting.

But it walked through why people are leaving Harvard, and MIT and–pick your other school that we like these days or don't like anymore–but why they're going to commercial labs. And it quoted, it focused on four scientists that left Harvard and went to these different labs, and why they're so much better: A, less bureaucracy, B, the ability to be more flexible in how they research things, the incentives are set up better.

I mean, just goes through all of–like I said, it's the best articulation I've seen of why this trend is happening, why this trend is going to continue. Interesting that Harvard Magazine itself had this. It walks through why this should happen–not in Israel, but why we have to make this happen in Israel.

And the good news is this model exists, right? In the United States, there are multiple of these labs that have been tremendously successful. This article actually focuses on a really cool, innovative new one, called Arena Labs in Boston. And one of the four scientists interviewed is one of the founders of that with an incredible family named Pagliuca that doesn't come up in the piece, but they're the ones who were behind the scenes helping put it all together.

‍

[00:32:46] Michael Eisenberg: 

‍

He was the CEO of Bain Capital.

[00:32:48] Sender Cohen: Yeah. 

Michael Eisenberg: 

‍

And I think the CEO of The Celtics, right?

[00:32:51] Sender Cohen: 

‍

One of the owners of the Celtics, yeah. But they've done something amazing with this. Arena is a great model for this, but Israel's never had this. And the idea is to bring this–there’s nothing new under the sun here.

There's nothing we're inventing here. We're just saying, “Here are the best practices that have worked in the United States very successfully, either as part of a commercial labs attached to a large corporation, AT&T, or a lab that is in private hands, that is addressing the shortcomings of the academy and complementing them, to be sure. It's not to replace them. To help create a “safe space,” to use the term du jour– 

‍

[00:33:32] Michael Eisenberg: 

‍

An unsafe space, actually,  because you can experiment, blow a lot of things up–

‍

Sender Cohen: 

‍

And develop really great things that are needed for the future. So how do we take that model, move it to Israel, and use that model to say, “Here are scientists that are focused on the lower layers of the OSI stack. Maybe some of the higher layers too, but the lower layers that are

underinvested in, and make sure that we're thinking about those layers for the longterm future of the country and the world.”

Michael Eisenberg: 

‍

So one of the challenges with Bell Labs over time, I think it causes it to lose a lot of its luster was actually economics, right? They don't seem to have done a great job of creating a business model that works. So how much money does it take to set up Nevo Labs to start? 

[00:34:10] Sender Cohen:

‍

How much does it take? 

‍

Michael Eisenberg: 

‍

Yeah, capital. 

‍

[00:34:11] Sender Cohen:

‍

It depends how ambitious we want to be in terms of 

‍

Michael Eisenberg: 

‍

Throw out the number. 

‍

Sender Cohen:

‍

The best thing to do is start it with around $800 million. So we can start with four sectors, which are the critical sectors for us. 

‍

Michael Eisenberg: 

‍

Which of those sectors is it going to be? Unless you don't want to say. 

‍

[00:34:27] Sender Cohen:

The only reason I hesitate is because some of the sectors we're still debating, sectors three and four, but we know we're going to do synthetic biology. We know that we're going to do some stuff in the quantum space.

And we know we're going to do some stuff in AI. AI is obviously an overused term. It reminds me of stake.com. Remember the company in Herzli Pitouach, stake.com? Which was a great sign of the bubble then, but in terms of some next-generation underlying technologies needed for AI, but we're still trying to figure out what the fourth one will be. But it takes a great deal of money to do it right and have the patience. It's the duration of capital. And that's a critical thing to address here also. 

‍

And I'm going to go on a tangent to come back to why it's critical to how we set up Nevo, but hedge funds–I'm going to make fun of hedge funds a little bit. A lot of hedge funds, a lot of long, short funds are not all that great at creating strong returns, but they solve for other issues. They solve for the expectations of their investors. They solve for vol characteristics that investors want. They solve for leverage characteristics that their investors want, but, you know, oftentimes there was a great Steve Ballmer interview recently where he talked about how he's just in ETFs and in Microsoft stock. You saw that, right? 

‍

[00:35:50] Michael Eisenberg: 

‍

And the Clippers. 

‍

[00:35:52] Sender Cohen:

‍

And the Clippers. Yeah. I mean, which was not as good an investment as the Microsoft stock, but still a lot of fun. You have to solve for the expectations of your investors and the duration that you have, but just being, simply long the markets–unless your name is Stan Druckenmiller, who can consistently outperform the market (the few that are touched by God, as I sacrilegiously like to call them), then it's better to just be passive and then do things in the private sector, things like Aleph does, where it's talent and access rather than the chance of the public markets. But people invest based on the expectations of their investors. Investors want to make sure you have an up month every month, or an up quarter because you're reporting, then you have to invest that way. If you're investing for yourself and you're not looking for 10 years, you can just be long ETFs and you'll do great.

So it depends what the expectations are, but it's the same thing with basic research. You have to create a pool of capital that's longer duration, like funds used to be, where the investors have an expectation that this will take a longer term to get to fruition. You'll end up in a great return place because investors that did this in the old days ended up in a very good place, but you have to have a lot of patience with that capital.

And let me go back to AT&T and Bell Labs, and what happened there. Bell Labs was a very interesting story, because Bell Labs was fortunate in that it was attached to a very large monopoly. So, and I might not have the full history, but oftentimes the DOJ, maybe not oftentimes, the DOJ would come and want to break up AT&T, because it was a monopoly.

And I think part of what Bell Labs, you know, their offering to the regulatory gods was, this is pre Lena Kahn crazy, they were still crazy, not as crazy as she is, or was, I guess she's gone now, thankfully–

‍

[00:37:48] Michael Eisenberg:

‍

I hope she's gonna be gone. She's a real threat to capitalism. 

[00:37:51] Sender Cohen: 

‍

Disaster. 

‍

Michael Eisenberg: 

‍

So part of the offering to the regulatory gods–

[00:37:04] Sender Cohen:

‍

It was, we're gonna give the IP away for free, right? That'll be the public service. We're not gonna license the IP that comes out of Bell Labs. So the Bell Labs business model in terms of what the IP did for the world was not, okay, we licensed it out, because it was better to have these highly tariffed phone calls on the other side that were minting money.

You know, you'd call New York city, New Jersey, and it was a long distance call. You had these highly tariffed phone calls that were minting money, so better to give away that IP for free that was being generated by the profits from AT&T that were being pushed into Bell Labs. 

‍

Commercial labs these days don't have that monopoly attached to them. Some have excess profits from companies attached to them. I think of Google, although those also get tied up when times are tough. The commercial labs that have done best in times like these are the independent commercial labs that have an investing mindset. They're not philanthropy, which is critically important.

There has to be accountability and discipline. You want to have long term capital. And you want to have the freedom to do what you want. And you know, you want to make sure it's multidisciplinary, but at the same time, you want to make sure it's not philanthropic. There has to be a goal.

But capital that’s set up properly that way, in these commercial apps has done extraordinarily well. It's made a lot of money, had a great impact. 

‍

[00:39:14] Michael Eisenberg: 

‍

So what’s the return that investors are going to get? What's the IRR?

‍

Sender Cohen:

‍

The IRR of these have been very good. If you look at the commercial labs that have come into being in the United States, they've been highly profitable. They've had pretty strong returns that definitely justify the duration of the capital. When I invest, I always think for every year of lockup, there should be a hundred year, a hundred basis points of excess return over the given benchmark. And the best commercial labs in the United States have certainly met or exceeded that hurdle, I think for good reason, because that basic stuff becomes applied really fast overnight and has a lot of value, you know, and what I'm saying also reminds me of another great quote about Bell Labs, that it was an ivory tower. In other words, people could do whatever they wanted with a factory downstairs, right?

So you want to create that ivory tower so scientists can do what they want and explore, but they have to know there's a factory downstairs, and it has to have an output so that it can justify the ivory tower up top. And universities usually are one of one of the two things and other institutions are the other of the two things–the harmony is bringing those together where there's a capitalist accountability, but also with the freedom, read, duration of capital and enough capital, that very good scientists who have an applied mindset are working towards some sort of a goal.

[00:40:33] Michael Eisenberg: 

‍

So if there's a scientist sitting right now, Israeli, Jewish or otherwise, who’s sitting right now at MIT, at Harvard, at the University of Toronto, in, I don't know, Washington University, in Stanford, in Berkeley, in École de Polytechnique in France–make the pitch why they're coming into Nevo Labs.

[00:41:07] Sender Cohen: 

‍

The pitch is simple. First of all, focus on the issue of why they wouldn't come back. And we spend a lot of time meeting with different scientists, but also talking to a lot of people at Bell Labs and at these commercial labs that exist today.

And by the way, the most fun has been speaking to people who used to work at Bell Labs, just fun stories, but also just the magic that happened there. But the problem right now is, you're going to go to the United States for your postdoc nine out of 10 times, I think, because that's where the opportunity is.

And that's where a great scientist is that can mentor you, et cetera, et cetera. You finish your postdoc, you live in Boston. There's not much opportunity to come back to Israel and make what you can make in the United States and have the freedom to make in the United States, because it's a smaller country.

It doesn't have as much infrastructure for this, but also in the fields that you're in–there's none of that. Go back to that mid-duration research for five to 15 years, if that's what you're interested in. So you're making X as a postdoc in Boston, and then you're offered X plus Y to go to some commercial lab or some corporate in Boston–again, read the Harvard Magazine article last week, it does a good job of talking about some of this–and in Israel, that opportunity simply doesn't exist today. So even if you want to come back, it's hard to come back. You're in Boston, you're going to move to Tel Aviv, which has the same cost of living or higher, probably higher.

And you just, you don't have that career opportunity that you have in Boston. So you're going to end up staying. And that's a problem because once you stay, you know, you put down roots and you stay for longer and hopefully you come back at some point, but the opportunity set doesn't exist here to bring them back.

And that's exactly what we're trying to address. 

‍

[00:42:38] Michael Eisenberg: 

‍

Why would it be better than being there though? 

‍

Sender Cohen: 

‍

Why will it be better? I wouldn't say that it will be better from a scientific standpoint right away, but it can definitely be the same. And if it can be the same, and they can live where they want to live and not live where they're going to live because that's where the opportunity is, that I think is equal.

Longer term, I think it will be better because you can create these, to use a corny term, these clusters, these centers of excellence in Israel where they can really be leading the charge in certain areas as Israel has done today in different areas, that will be at the forefront of these technology developments.

Michael Eisenberg: 

‍

If I'm an American scientist, Jewish or otherwise, at Berkeley–what's the pitch? 

Sender Cohen: 

‍

The pitch is, once we have this lab center set up here and you've seen what we've done–we, Israel, I shouldn't say “we,” I'm not Israeli, I'm with Canadian citizenship too–you could be at the forefront of starting the next big wave in Israel, like Israel did in cyber and did in these areas in the 90s that we were part of.

And Israel's in danger of not being at the head of these areas, but Israel could easily be a leader in these areas today. I'm not very good at elevator pitches. Can you tell? We'll leave that to Michael.

Michael Eisenberg: 

‍

You know, by the way, you may need to take out Israeli citizenship, because if Trump has his way, your Canadian citizenship will just be American citizenship.

Sender Cohen: 

‍

I mean, I have always looked as Canada as the 51st state and Israel as the 52nd, sorry guys, but like, you know,

Michael Eisenberg: 

‍

So Ruchama Rusakaminoff said I should ask you–

‍

Sender Cohen: 

‍

She's great. 

‍

Michael Eisenberg: 

‍

She's great. We agree. She's on the board of Fulbright with you, I think, right? 

‍

Sender Cohen: 

‍

Yes. 

‍

[00:44:13]Michael Eisenberg: 

‍

And so she said, “You made a non-trivial personal decision to start Nevo and some of the other stuff you're working on and leave the Schusterman family office to go do this. Why'd you do that?” 

[00:44:25] Sender Cohen: 

‍

Why'd I do it? One of your colleagues here talked about how, after two months working in America after October 7th, felt the need to quit and come here. I wanted to do something, maybe it's because I'm 52–he's much younger than I am–but I wanted to do something a little bit focused and actually do something impactful. I'm not an impact investor. I don't think I'll ever be an impact investor. 

Michael Eisenberg: 

‍

God forbid, that’s a terrible thing to be. 

Sender Cohen: 

‍

I am a capitalist through and through. There's a funny plaque on my desk at home that I think my mother in law made, ‘cause my kids call me “worker man.” Nobody can tell what I do.You know, I move money around. I make money. There's nothing substantial. 

‍

[00:45:07] Michael Eisenberg: 

‍

My mother-in-law also doesn't know what I do. I don't know. It's weird. 

‍

Sender Cohen: 

‍

One day, one day we'll figure it out, you know. 

‍

[00:45:12] Michael Eisenberg: 

‍

Two guys who went to MTA, and they can't figure it out. 

‍

Exactly. When you get three F's in finals, you know. 

‍

I wanted to do something here that actually had a real impact, and there's a gaping hole. And sitting with Scott, and Michael, and Adam, and brainstorming about what needs to be done, somebody threw out the phrase, “a private sovereign wealth fund,” which is an oxymoron, but this country needs a private sovereign wealth fund. Somebody threw out the phrase–somebody being one of those three people, could have been Michael sitting right here–but a private sector subsidy to the private sector.

There are certain things that need to happen here with no comments about government, here or in the United States. I think there's the Ronald Reagan quote, “What are the nine scariest words in the English language?” And I'll probably use more than nine words.”I’m from the government, and I'm here to help,” or something like that.

Like, it's important for the private sector to step in and make a difference, and fill those holes that desperately need to be filled. And the optimistic side says, unfortunately, war has obviously, catastrophic, unfortunate consequences, but wars also lead to great economic booms that can be great for the country, and make sure the country is well-positioned for that economic boom in the right sectors that make sure it is what it is today in the future, compounded by the fact that it has more enemies in the world now, unfortunately.

So we need to offset that. This all came together in my head and said, “Okay, here's, you know, I’m hopefully young enough that there's a great investing chapter ahead. I have great friends in Israel, like these three guys. Let's build something great here where we can have that impact.

And I'm the one sitting in America. So I'm like, I'm gonna quit my job to do it. They're already doing something great, ‘cause they're sitting here investing here, but I want it to just be focused on this country. 

[00:47:04] Michael Eisenberg: 

‍

So on that topic, I asked Stan Druckenmiller what I should ask you. You know what he said?

Sender Cohen: 

‍

What did he say? 

‍

Michael Eisenberg: 

‍

Please explain why you are uniquely positioned to thrive doing venture capital or all this tech stuff in Israel. 

[00:47:16] Sender Cohen: 

‍

Goodwill. I think I have, hopefully, a lot of relationships where I can tie things together in the U.S. and in Israel, because of friends–I made some unfriends also, but friends that I made in the U.S. technology and investing industry, and friends I made in the Israeli technology and investing industry, and friends I made in the Gulf investing technology industries that hopefully we can pull together to create something unique. 

Michael Eisenberg:

‍

So I'm glad you mentioned the Gulf because that was going to be my next point. You have a lot of relationships in the GCC countries writ large.

[00:47:52] Sender Cohen: 

‍

By the way, for my 30th birthday, Stan gave me two presents, which was–one was very, heartfelt, which was a Tanakh from Cologne, Germany from 1709, which was a beautiful, beautiful, thoughtful present. And the second was a belt from a golf club that doesn't have many of us as members, and that was funny.

It was the fact that you saw in the same box, his great sense of humor, and also, a very thoughtful gift. 

‍

Michael Eisenberg: 

‍

A Hebrew Bible and a belt or something you can't open or go to. Alright. Perfect. 

‍

The Saudis are about to normalize with Israel, I don't think that's a great secret. 

‍

Sender Cohen: 

‍

Hopefully. 

‍

Michael Eisenberg: 

‍

Well, I mean, they were before October 7th, and now hopefully they'll come back. You know, Trump's in office. Jared Kushner is back. 

Sender Cohen: 

‍

I've been to Saudi Arabia a few times. It is incredible. It's incredible to see, it's incredible to meet the entrepreneurs there. I spoke at a convening–a friend there who's a venture capitalist, who's a phenomenal venture capitalist, invited me to speak at a convening he had.

I wore a jacket. I spoke publicly to a room, but it was–

[00:49:03] Michael Eisenberg:

‍

For those who don't know you, the fact that Sender’s sitting in this seat now is in itself remarkable. It's his first podcast. A round of applause. 

Sender Cohen: 

‍

Thank you. It's like my wife said, I come from the Middle East and that's where I speak in front of a room since I never do it in America.

What's happening technology wise in Riyadh is incredible. I mean, you just see the green shoots, they said, when the great financial crisis was ending. You see these green shoots of a great technology wave. The demographics are strong. The deregulatory push is strong.

The spirit of investment and entrepreneurship is strong, so a lot of great things happening there.

Michael Eisenberg: 

‍

And I just came back from Abu Dhabi, where there's a sign that says “Capital of capital,” but at the same time, it's not just about money or the sovereign wealth funds there. There is an incredible focus on the AI and you see it from the top down, apropos some of the comments you made about China earlier. It's top down with some real entrepreneurship underneath, and a strategic understanding of the unique place in the world as it relates to AI in real strategy, you know, to your point about Israel earlier. What's the two to 15 year strategy?

Where, if you think about Nevo Labs and, when you said before also, why can't Tel Aviv be the next Dubai? How does the region fit into your plans for what you're planning, both at Nevo Labs and what you're calling KH2 Capital? 

[00:50:29] Sender Cohen: 

‍

The region fits in because there's a lot of interest, I think, and I think you've seen the same thing in regional collaboration because it's good for the region, it's good for the world–it's good for the countries, it's good for the region, it's good for the world.

The sectors that are of great import to Israel are also of great import to these other countries in the region. They're equally, if not more, I wouldn't say more importantly to, incredibly important to the United States of America. That its allies are strong in these areas. But there's a great interest in collaborating in these sectors, I think, from what I've seen and heard. And I think the sectors that we're focused on are sectors where you're going to see a lot of great intellectual capital.

You are seeing great intellectual capital in countries in the region, but also interest from a policy, either top down in these countries or bottom up among the people, to make sure they're focused on the next waves of these technologies, both for independence, security, independence, trade peace. I mean, a whole bunch of good reasons.

[00:51:35] Michael Eisenberg: 

‍

What's the most interesting thing you've heard as you talk about Nevo or KH2 in the Gulf countries that would surprise people listening?

Sender Cohen: 

‍

The deep interest in the scientific exchange, and understanding technology together, and working on technology together. 

‍

Michael Eisenberg: 

‍

For what end? 

‍

[00:51:55] Sender Cohen: 

‍

I think there's always misconceptions out there. I'm full of misconceptions in my head, but the entrepreneurial, and the engineering, and scientific classes, let's call them, have a great interest, from what I've seen, in both sides, in both parts of this region collaborating on these next generation technologies, because again, it's beneficial to all the countries in the region.

[00:52:20] Michael Eisenberg: 

‍

You said, why not Tel Aviv? Why should it be Dubai? What did you specifically refer to there?

Sender Cohen:

Oh, that I was referring to something else that we've been talking about for a while, which is, it's nuts that Tel Aviv has such an underdeveloped alternative asset management sector. Israel has done a great job in the venture industry, phenomenal job, but given the number of our tribe members in the hedge fund industry, and in my industry in New York and in London, the fact that this industry barely exists in Tel Aviv is kind of nuts.

[00:53:00] Michael Eisenberg: 

‍

What do you think that is?

[00:53:02] Sender Cohen: 

‍

Government. Full stop, end of story. The country just hasn't made it a priority. They just haven't made it a focus, which is perplexing. I'm not sure why that is. It doesn't require much in the way of tax changes. It requires certain policy frameworks be put in place to encourage the immigration of people that are in this sector. Somebody said to me, somebody who's not Jewish, who's a very senior executive at one of the banks in New York, said to me that, Dubai, with apologies to our friends in Dubai, is a short-term rental; Tel Aviv is a long term purchase. 

‍

Meaning somebody would move to Dubai to work at a hedge fund because it's a tax-free zone. It's fun. It's this or that–but then they're going to leave, because they have children, their children get older. They want them to go to school. They want them back home.

People who are going to move to Tel Aviv to do this would move to Tel Aviv because they want to live here. You know, it's interesting, you think about, financial service in Israel or alternative asset management in Israel. Nevo is trying to solve for the problem of scientists not being able to come here, not being able to come here if they're American because the opportunity doesn't exist to do what they can do in America, or leaving and not being able to come back, because the opportunity doesn't exist for them to come back post their postdoc.

KHD was dealing with something different. A lot of Americans, and British, and French would happily move here. It's a build it, if they will come, going back to movies from–we're talking about Dumb and Dumber and Jackass, some of my favorite movies from my youth. Field of Dreams? This is generally a Field of Dreams scenario.

If you build it, they will come. If the financial services sector in Israel was hedge-fund friendly, the way the Gulf, Dubai has done a brilliant job of setting up that infrastructure. There are so many people that would move here, from portfolio managers to analysts to securities lawyers that the opportunity just doesn't exist.

But if the ecosystem, to use a word I try and avoid, exists here, they would happily move here, especially post October 7th, and go back to me quitting what I was doing because I wanted to focus on Israel. I keep saying all things being equal post October 7th, a lot of why things would not have happened–the hedge fund industry beforehand made sense, now they make more sense to happen in Israel. People want to live here. More people want to move here because of what happened. And then, can you look at what's happening in Dubai? It's not hard to do. 

[00:55:33] Michael Eisenberg: 

‍

So what does the government need to do here? I tried with crypto here, and we're making some progress, but it's like a nightmare to be honest.

The government can't get their act together. In the meantime, all the Israeli crypto entrepreneurs are going to Dubai. And so what does the government need to do here to–and I'm going to be ambitious. Right now, tech is like 50 percent of exports and 35 percent of tax revenues. And it was 12 percent of the population.

Israel needs a second industry. What would it take to make alternative assets, financial services, fund management, et cetera, the second large industry of Israel, especially with all this talent? 

Sender Cohen: 

‍

So first, your point is entirely about–Israel needs a second large industry, and the great thing about this is you can create a large industry, a high income industry that percolates and creates jobs, has a great multiplier effect to the economy, by simply moving talent over that wants to be in this country, which is great. The other thing that's very interesting about this industry, which we'll start getting to your answer is, it's all accretive to the tax base. It doesn't exist here. So bring people in from all of these countries that are high earners.

It's all accretive dollars. It's not a tax cut for somebody that's existing. I'm not even talking about taxes. You have incremental taxpayers that are coming to the country. Israel needs a clear framework. I'm not a regulatory expert, nor do I have the sheets in front of me, but having a clear framework that meets the standards, because it's important.

I keep saying all things being equal, pre and post October 7th–it's important that the industry here meets all the standards of excellence, of compliance, of talent that exists in the United States. So the talent, that's easy. The talent will move here. That's a build it and they will come. The rest is making sure that the regulators and the policy makers understand what the framework is that mirrors what the United States has done, and I think the Gulf has done a very good job of, mirroring what's happening in other parts of the world, so that standard of excellence and from a regulatory center standpoint exists, and tax and the other policies. But making sure that those frameworks exist, so that institutional investors from around the world are happy to invest in Israel. 

‍

I think right now, there's 22 billion or so hedge fund assets in Israel. And I think the average hedge fund is around 73 million, which, by the way, in and of itself is an interesting number because typically in the U.S. a hedge fund doesn't really start to grow until they hit a hundred, right? And others can come in. So the average hedge fund doesn't even hit that threshold. And I think 80 percent or so of the capital in Israeli hedge funds is from Israeli domestic institutions. I think 70 percent of which, I might be mixing those two numbers, the 70 and 80, from private domestic individuals.

So you just, you don't have foreign capital here in this industry. So you don't have incremental dollars creating more of a tax base, right? And this isn't to invest in Israeli securities. This isn't to invest globally, but in funds that are domiciled in Israel. But all they need to do–all they need to do, but it's really not that much–is create a very clear framework from a regulatory standpoint and a tax standpoint, so that the manager knows in coming here who they can hire, how it's going to work, how they can bring in a foreign investor that won't get trapped by some Byzantine policy, so that they feel comfortable investing in an Israeli domiciled hedge fund.

And then the rest will take care of itself. That’s it. 

[00:58:59] Michael Eisenberg:

‍

Do you have a punch list of what needs to change in the regulatory environment? 

‍

Sender Cohen:

‍

We do. 

‍

Michael Eisenberg:

‍

Can you send that? We'll put it in the show notes. 

‍

Sender Cohen:

Yeah. I think we could. 

‍

[00:59:03] Michael Eisenberg:

‍

Maybe we'll translate it into Hebrew so that the Finance Minister can read it.

‍

Sender Cohen: 

They’re not a crazy ask, and frankly, it's not even an ask for us, it's an ask for the industry. Because the country, you know, this is something that we think that Israel could really use, as you say, another industry besides tech.

Michael Eisenberg: 

‍

Do you wonder whether Dubai's going to be able to do it? Because it's not a democracy, but here in a democracy, it's just hard to do? 

Sender Cohen: 

‍

Absolutely. 

Michael Eisenberg: 

‍

We all say it was the U.S, because the New York Stock Exchange and the NASDAQ and stuff. 

[00:59:37] Sender Cohen: 

‍

Yeah, we all say, you know, democracy is the best system out there. Sometimes it's not. Sometimes, you know, a long-term plan controlled by one person has a greater outcome. It's just reality, objectively speaking. So absolutely. And they have, thankfully, very enlightened rulers there who understand things and are great for their people, great for the economy and they know how to execute.

And we here, we being, I guess, you guys, have a government that's a little complicated. 

‍

Michael Eisenberg: 

‍

We've never noticed that. 

‍

[01:00:03] Sender Cohen: 

‍

By the way, the other great thing about this industry that I'd also note, relative to venture is–when venture started, when was Yozma, ‘96, ‘97?

‍

Michael Eisenberg: 

‍

‘91-’92.

‍

Sender Cohen:

‍

So when the Yozma program happened, when you think about it, it took seven or eight years until you really created tax revenue out of this industry. The great thing about the hedge fund industry is there's tax receipts every year, assuming people make money.

Michael Eisenberg: 

‍

You'd think given the deficit we've built up, given the war right now, that somebody should be focusing on this. I have a post coming today on Twitter about how they're going after what they call “jailed” or “trapped” profits, and what they call personal wallet companies.

It's like these tax deferral mechanisms. You create a company to do it. So they think they get 10 billion shekels out of taxing, you know, these trapped earnings. And I read through all the documents of the finance ministry, and all documents written by the Bank of Israel, and not one of them mentions growth. Economic growth. 

‍

Sender Cohen: 

‍

Amazing.

‍

Michael Eisenberg: 

‍

Not one of them mentions growing the total tax base. It's all, how do we get access to the current tax base that hasn't been spit out yet? And it's like, come on!

[01:01:06] Sender Cohen: 

‍

Can you imagine? I mean, I keep coming back to you build it, they will come. I mean, you know all the people I'm talking about. People will move here. They're phenomenal money managers. You know, the one thing–you talk about tax and in Dubai, it's tax free for a certain number of years or certain zones. We have a very different perspective. We want people to be taxpayers here. We don't want something to be tax free. The whole idea is for people to come here and contribute to the economy.

And it's not just by hiring more people here. It's that the people are moving here and paying taxes.

Michael Eisenberg: 

‍

And so, in order to do that, you're, you're gonna set up a framework to help people get feeder money to get started setting up here, but we gotta solve the regulatory problem. 

[01:00:48] Sender Cohen: 

‍

But the framework also requires somebody to move here and become a taxpayer here.

Because if you're not becoming a taxpayer here, we're not helping the country. And helping the country, you know, there is a tzioni give here. And the tzioni give is, you're moving here and you're not commuting to Spain. Like, we want to be taxpayers here. We want them to be taxpayers here. We want to help the country.

 [01:01:58] Michael Eisenberg: 

‍

You’re gonna be an Israeli domiciled fund and resident. You will give feeder money to these funds to set up. And that will increase the tax base. We want to solve the regulatory issues first, in order to make it a friendly environment. 

‍

Michael Eisenberg: 

‍

So I asked Alisa Mall who runs the Dell Family Office, or part of the Dell Family Office–

‍

Sender Cohen: 

‍

I believe the whole thing, the whole Dell family office. She's great too. You spoke to good people. So that's good.

Michael Eisenberg: 

‍

And she said I need to ask you about a sliding doors moment, which is like, had you taken a slightly different path in life, you would have ended up in a very different place.

[01:02:32] Sender Cohen: 

‍

Well, I wanted to be a history professor when I was in school. And when I first went to Hampton Quist, I thought, okay, I'll work for two years. I think I had like 1400 bucks of Bar Mitzvah money at the time. And I came out of college, and I lived with Yehuda Stark, Zivi Mendelsohn, and Benji Hain. 

‍

Michael Eisenberg: 

‍

All the guys you went to high school with.

‍

Sender Cohen: 

All the guys I went to high school with, all live in Ra’anana now. Hopefully I'll see at least one of them this week. I've been very bad at pre-planning, but I just texted one of them about Motzei Shabbat. So let's see what happens. But, Benji lived on a sectional sofa he found on the street, but I wanted to be a history professor.

I wanted to be, actually a professor of the history of English common laws, very broad field. I'm sure there would have been a lot of readers for my books, had I ever published any. But I decided to try out Wall Street for a few years, and I got hooked. It was fun. And part of why it was fun is, I ended up in the sector that was just growing and fun. Optics, and semis, and all that stuff.

Michael Eisenberg: 

‍

Why is there nothing about you on social media, or Google or like anything else?

[01:03:35] Sender Cohen: 

‍

I pay a service to make sure there's nothing about me on social media or Google or anything. So I was happy to hear that it was hard to find stuff. 

‍

[01:03:44] Michael Eisenberg: 

‍

Is that right? You pay someone for that? 

‍

Sender Cohen: 

‍

Although now is this going to be like, I guess this will be out on something.

Michael Eisenberg: 

‍

Is that right that you pay some people? 

‍

Sender Cohen:

‍

My kids keep saying, “It's the internet. You know, like you should understand how that works.” I have a service that makes sure, you know, it helps keep your picture off, and bios and stuff like that. But I think because of Fulbright, my bio is now on the world wide web.

Michael Eisenberg: 

‍

Wait, so they're gonna like, they're gonna take down our podcast? Can you please tell them not to take down our podcast? I mean, please.

[01:04:09] Sender Cohen: 

‍

It’s a good service. So that's why I'm not…. 

‍

Michael Eisenberg: 

‍

Why don't you wanna be there? 

‍

Sender Cohen: 

‍

Why? I don't know. I should get over that. 

Michael Eisenberg: 

‍

You’re better in person? 

‍

[01:04:19] Sender Cohen:

‍

I'm better in person. 

‍

Michael Eisenberg: 

‍

People should wanna meet you, not just read you? 

‍

[01:04:29] Sender Cohen: 

Yeah, there you go. I don't know. 

‍

Michael Eisenberg: 

‍

Talia doesn't want you–Talia's his wife. You don't want her to be like, “Why aren’t you on social media?” 

[01:04:29] Sender Cohen: 

‍

Nah, I just, when stuff's out on the internet, it's always out on the internet.

[01:04:32] Michael Eisenberg: 

‍

That is true. Is there like a strongly held opinion that you've had in the past that's changed over the last year?

Sender Cohen: 

‍

Yeah. My opinions of many people have changed, just seeing how different people have reacted to what has happened here. People, you know, I know a lot of us in the States have seen this, some people who've been, shall we say, stepping up, to use another term I hate, allies, you know, let's go through all the woke terms I hate, but people who have been very–certain things were troubling me about different worlds that I inhabit in the U.S., and a dear friend of mine in December of last year said, “Sender, let's go out for lunch. I want you to just like spew, you know, what's made you unhappy about hearing about different people's reactions.” And I did, and he was a great friend about it.

He's been a great friend about it all along. But I've been sorely disappointed how some people have reacted to what happened here. And I've at the same time been, incredibly….impressed? Impressed is the wrong word, because that's not a, but incredibly appreciative of the way others have reacted to events that have affected this country, your country, but also the Jewish people as a whole, so.

Michael Eisenberg: 

‍

I find it interesting, by the way, we talked about the Gulf before, and you've been to Saudi. 

‍

Sender Cohen: 

‍

At least a few times. 

‍

Michael Eisenberg: 

‍

At least a few times since October 7th, and it sounds like you're not disappointed with anyone there. 

‍

Sender Cohen: 

‍

No. 

‍

Michael Eisenberg: 

‍

Which is, I think, interesting for people to hear. I haven't been disappointed by the Emiratis. And I think the world is realigning in a pretty meaningful way right now. It’s kind of the Wookiees over here….

[01:06:07] Sender Cohen: 

‍

It is definitely realigning. And I came back from my trip, I'll be careful about what I say here, but we met with some pretty important people when we were there, because of who I was with, not because of me–I was like the, you know, the ugly duckling in the back of the line–but there was one meeting with somebody pretty important, where someone referred to the tragedy of October 7th. And I said to the person who brought me to this meeting after the meeting, that at Harvard, you hear about the jubilation of October 7th, but I come to Saudi Arabia and I hear the comment, the tragedy of October 7th.

They understand. They are rightly critical of a lot of stuff going here, but I think we're all rightly critical of a lot of stuff that's going on here. On the WhatsApp planning group I had for the trip with my assistant–I call it the Aseret Yimei Tshuva trip, cause I went during Aseret Yimei Tshuva–

‍

Michael Eisenberg:

‍

The 10 Days of Repentance. 

‍

Sender Cohen:

‍

Yeah. Sorry, the 10 Days of Repentance. But the trip was a pick-me-up. I went to Saudi Arabia for a pick-me-up. Like it felt really good as a proudly Zionist American Jew to be in Saudi Arabia, to see the moral courage of people there, to see the entrepreneurship of people there, to see the respect they have for people here as people.

I'm not talking government policy here or anything like that, but just, it really felt good. I came home very happy from the trip.

[01:07:42] Michael Eisenberg:

‍

They want me to finish up, but I have to ask you a few more questions. You mentioned Harvard. You've got a kid on an Ivy League campus. 

‍

[01:07:49] Sender Cohen:

‍

I do. 

‍

[01:07:51] Michael Eisenberg:

‍

At Brown University. How do you think about that? 

[01:07:55] Sender Cohen:

‍

Two things. The president there has been exceptional. That kid is here now, and he's very happy to be here. He's, I think, visiting a friend right now. 

‍

Michael Eisenberg:

‍

And a good kid. 

‍

Sender Cohen:

‍

Really great, great kid, that I'm very proud of. That campus has been very good. The president there has been phenomenal. I'd say there are two Ivy League campuses where the presidents have been great, Dartmouth and Brown. The rest, you know. 

[01:08:19] Michael Eisenberg: 

‍

Some were fired. 

‍

[01:08:22] Sender Cohen:

‍

Yeah. The rest should be fired. But Brown and Dartmouth have been great. But it's been a good experience for him, and, you know, last year he was here. He was at Malei Gilboa.

[01:08:34] Michael Eisenberg: 

‍

Which is like a hilltop near the Jordan Valley.

Sender Cohen: 

‍

When everyone talks about the periphery in Israel, I say periphery, like, nothing's periphery. Then the first time I went to visit Roni in Malei Gilboa, I was like, “Wow, this really is the periphery.” It's such a pain to get to.

I went up to take him for dinner in September of last year because I’m here so much, and it took like three hours to get there.

[01:08:55] Michael Eisenberg: 

‍

It’s good. That way when they're isolated there, they can just study and they do what they're supposed to be, rather than coming to Tel Aviv. 

Sender Cohen:

‍

Yeah. But, no, it's been a good experience for him also to see some of the attitudes out there. But on the whole, it's been a relatively sane campus. 

Michael Eisenberg:

‍

You mentioned before about the top-down approach of China and Abu Dhabi as being effective.

We talked about Lina Khan. We talked about that the Israeli government needs to get its act together on regulation. One of the things that struck me is, the Trump administration that's coming together right now has put people we both know into real positions of power, out of the business community, the tech community.

‍

Sender Cohen: 

Really great people. 

‍

[01:09:39] Michael Eisenberg:

‍

Really great people. But this is a new model. I don't recall in my 53 years around, and 35 or so years following politics, a collection of this many successful business and technology people taking roles in government. You know, the flip side of it may be, they may get there and just be totally lost in the bureaucracy and not know how to, you know, be a plumber, an engineer of these bureaucracies, but I wonder what you think about this. 

Sender Cohen: 

‍

No, it's great to see. I don't know what my politics are anymore, to be honest. I'm so confused. I think a lot of people are confused, given events in America, Israel, and the world.

But focusing on individuals, these are phenomenal, phenomenal people that you and I are friends with that are going there, and I wish them great success. It's great for America. It's great for Israel, but I think some of them will figure it out.

I hope they'll figure it out. If any people can figure it out, I think it's the people that you are referring to, ‘cause they are just so talented and they've been talented at doing many different things, which is, I think, what you need. But it's really encouraging to see them.

‍

[01:09:57] Michael Eisenberg: 

‍

You’ve got Frank Bisignano of Pfizer running social security, Scott Besant now gonna run treasury–

[01:10:15] Sender Cohen: 

‍

Yeah. Great, great people. Scott's phenomenal. Having Scott there is just a great thing for the United States. 

‍

Michael Eisenberg: 

‍

Yeah. It's super encouraging. 

‍

Sender Cohen: 

‍

He was an incredible candidate. I'm very happy he got it, and he will be a phenomenal Secretary of the Treasury. I'm very happy for him.

Michael Eisenberg: 

‍

Alright, and the last thing I have to ask you, even though they told me I should ask it first, but I decided not to.

[01:10:23] Sender Cohen: 

‍

I've dodged a few questions, so let's–

[01:10:24] Michael Eisenberg: 

‍

Were you nervous sitting in this seat?

[01:10:26] Sender Cohen: 

‍

Well, I don't see a hundred people. You know, when my kids have their bar and bat mitzvahs, well, let's go back to like when they're born. The deal I had with my wife is, you speak at the Simchat Bat or the Brit Milah, and then you do the final choice of names so I don't have to speak in front of the room.

[01:10:42] Michael Eisenberg: 

‍

You know who told me I had to ask you that? He said you’re a great guy but said you’re probably going to feel nervous. Tom Nides. 

[01:10:47] Sender Cohen: 

‍

Tom Nides. That's funny. Yeah. He made me speak at some embassy convening here, which is why my wife says I only speak publicly in the Middle East, never in New York.

[01:10:58] Michael Eisenberg: 

‍

Sender, thank you very much. Thank you for two things. First, doing your first podcast and two, leaving out the embarrassing stories about me.

[01:11:06] Sender Cohen: 

‍

We'll do those next, in the outtakes. Thanks very much.

[01:11:10] Michael Eisenberg: 

‍

If you enjoyed this podcast, please rate us five stars on Spotify, Apple Podcasts, Stitcher, wherever you listen to podcasts, and please share the episode. There are just incredible insights from Sender here. Because this is his first episode, we need to make it the most popular episode of Invested ever. Thanks.

‍

‍