How a kibbutz wound up on the Nasdaq,
In 1988, a lovelorn David Leach dropped out of university to work on a kibbutz in Israel. He was part of a movement of thousands of young travellers drawn to the communal, back-to-the-land promise of volunteer life. They were ‘chasing utopia.’ Leach wound
As a volunteer, I read the Jerusalem Post every morning but usually flipped past the business pages. If I’d paid attention, I might have read how kibbutzes were struggling with debts even then. One story I did remember hinted at the woes. It was a fairy tale with an ambiguous moral.
Once upon a time, there was a kibbutz that fell into financial trouble. Bankers circled like jackals. The future looked grim. Then a bright kibbutznik had an idea. He liked to tinker and asked fellow kibbutzniks to invest their dwindling shekels in his latest invention — an electric tool to remove hair from women’s legs. His fellow members were skeptical at first. This was their best hope? Still, with the poorhouse looming, they figured: Why not? They had little left to lose, so they bet the farm — literally. And won. Big. The gadget sold millions around the world. The kibbutz became the richest in the nation. Members bought Mercedes and BMWs, added extensions to apartments, and erected a flashy new sports hall and hotel. And lived happily ever after.
In Tel Aviv [on a return journey], I’d mentioned the parable to a director at the Kibbutz Industries Association, a lobby group for the 350 companies and 40,000 employees managed by Israel’s kibbutzes. He laughed and blurted out, “HaGoshrim!” The story was true. The kibbutz was HaGoshrim, close to Shamir. They’d produced a device called the Epilady in 1986 that had made the kibbutzniks rich — for a time. “Do you know the rest of the story?” he asked. I didn’t.
Remington, the shaving industry’s corporate Goliath, designed and released an epilator of its own. Kibbutzniks didn’t want to see their golden goose plucked, basted and cooked by an American conglomerate, so they launched a series of lawsuits. And lost. HaGoshrim spent millions fighting the patent only to become a business school punchline. Lawyers still cite the case and debate if the judgment was fair. The kibbutz went from bust to boom and back to bust again. It was a tough lesson for kibbutzniks to learn. Capitalism gives and capitalism takes away. Even if you’re a kibbutz. I wondered if Shamir had learned that lesson.
I didn’t recognize the old optical factory at first; it had been swallowed by renovations. A white-sided twostorey addition with tall windows offered an entrance to the corporate offices. A huge warehouse branched off the side. As a volunteer, I hated the optical factory, and I wasn’t alone. A shift in the factory was hot, noisy, messy, repetitive, boring. It spoiled the romantic image of kibbutz life — fieldwork under the hot sun, the lowing of cattle, the garden beds of vegetables and decorative flowers, a pocket Eden in a dry land. Few of us came to Israel to operate a row of machines.
The optical factory made glass lenses; our job was to polish them. Each shift, we checked in with the factory manager, popped a mix tape into the cassette player, and for the next sev- en hours, we line-danced between four or five machines like oversized toaster ovens on metal legs.
We grabbed pairs of lens blanks from trays, positioned the raw glass in ceramic housings within the mouth of each machine and locked the lenses against grinding stones. A few minutes later, the door popped open, and we rinsed off the mud and placed the transparent lenses in a new tray. Polish. Rinse. Repeat. All day long.
Nobody knew what the lenses were for. One rumour said the factory was a military supplier crafting laser sights for guided missiles. Why the air force would subcontract the nation’s defences to hungover volunteer labour didn’t trouble our conspiracy theories. The truth was more mundane. We were making glasses for grannies — simple bifocals. In fact, the original factory had been built in 1972 for grannies; it supplied jobs for aging kibbutzniks too frail for fieldwork. For years, Shamir’s optical factory operated at a loss so that aging founders could feel like they were still contributing. The old optical factory would have never survived on the open market. Its shabby building, cranky machines, lubricant-slick shop floor, sullen managers, cacophony of grinding and shunting and shouting seemed antiquated and inefficient even in 1988.
And yet after I left, the Little Optical Shop That Could turned a village of Romanian socialists into a gated community of high-tech millionaires. By the 1990s, factory managers knew the future wasn’t in bifocals but in progressive or “multifocal” lenses with gradations of intensity. Engineers finessed software for a new method of manufacturing lenses. “It’s like sitting down at your laptop and thinking you’re going to be the next Microsoft Windows,” Dagan Avishai, the vice-president of marketing, told me on a tour of the labs. “You have to be courageous. You have to have chutzpah.”
Shamir did. Its new lens fared well against products by Nikon and Zeiss, and kibbutz leaders attended to the lessons of the Epilady. The optical factory held patents, but managers knew their advantage lay in designing new lenses and capturing new markets. Constant innovation. Get big or die small was the law of the jungle.
In March of 2005, a Chicago investment house shepherded Shamir onto the Nasdaq. It wasn’t a Facebooksized billion-dollar IPO — the factory raised $5.5 million — but it felt like a huge step.
Dagan and the CEO rang the closing bell at the exchange before posing for pictures in Times Square as Shamir Optical scrolled across a digital screen. “Here we are, two nobodies from a little hole in Upper Galilee,” he recalled, “on the most famous board in the world!” Kibbutzniks received an annual dividend — often in five figures — and now tracked the company’s stock price like a pulse. Investing in high-tech bifocals had made Shamir the envy of Israel. But at what cost?