Selling Experience

The Airbnb of Home-Cooked Meals

Want an authentic dinner with a local on your next vacation abroad, far from the overpriced tourist traps? EatWith—the latest in a parade of wildly popular Israeli startups—can help.

11.03.14 10:45 AM ET

At T-minus zero, Yariv Gai, a 42-year-old businessman from Tel Aviv, and his wife, Nakarin, a 33-year-old native of Thailand, are scrambling to get everything ready for their big night. Nakarin has been preparing a special four-course meal for days, going to the market several times and spending hours dicing vegetables, marinating meat, and sautéing exotic mushrooms. Even their 2-year-old son, Tom, helped with some of the preparations before going to bed.

As the guests start to arrive, Yariv hands them a tiny cup of warm lemongrass tea while greeting them with the traditional Thai “Wai” and a slight bow, his palms pressed together.

The visitors are then treated to a beautifully prepared meal, along with personal anecdotes from the couple’s life in Thailand and fun facts about each dish.

But while Yariv and Nakarin have had plenty of their friends over for dinner, this is no regular get-together. Every person sitting at their dining-room table is a complete stranger.

The dinner guests are all customers who booked a dinner reservation through a new startup company called EatWith. Dubbed the “Airbnb of food,” the site allows individuals traveling abroad to try authentic home-cooked meals. All they have to do is go on the site, pick a dinner, and enter their credit card number. For the most part, it’s cheaper than going to a restaurant, but the experience is the selling point.

“We can’t compete with the big restaurants and their huge resources,” says Yariv. “What we can offer is that human touch, and a very full stomach.”

At $37 per person, the couple isn’t expecting to get rich. But they do hope to earn some extra cash and perhaps meet some interesting people in the process. “Nakarin loves to cook and I love to entertain,” says Yariv. “It was a win-win for us.”

EatWith is the brainchild of Israeli entrepreneur Guy Michlin. On vacation in Crete, Michlin and his wife were looking for a good, hearty meal. They were tired of the fare at restaurants catering to tourists and were craving something a bit more authentic. When Michlin asked a Greek acquaintance where the locals ate, he was told, “What do you mean, where? We eat at home!”

Michlin, who was looking for ideas for a new startup company, says he felt a lightbulb switch on over his head. “I was invited to his house, and it ended up being the highlight of my trip,” he recalls. “It was right after the economic crisis in Greece, and everyone was talking about it. I sat there listening to their stories in awe. It was fascinating.”

When Michlin got home to Israel, he decided to do a little research. After asking his friends about their trips abroad, he realized the only meals they could remember were those prepared by ordinary people: “One friend told me, ‘When I went to Vietnam in 1998, the tour guide took us home and cooked us this amazing dinner.’ His eyes sparkled as he recalled every dish, every little detail of that night. But when I asked him what restaurants he went to, he couldn’t think of a single one.”

After spending four months and most of his savings putting the site together, Michlin managed to secure a $1.2 million investment from a local venture capital fund. Today EatWith is available in 30 cities, including Barcelona, Berlin, Paris, London, New York, Los Angeles, and Miami. The company makes money by adding a 15 percent surcharge to the price of the meal. Hosts are vetted carefully, both for their cooking and entertaining skills. EatWith already has thousands of applications from more than 110 countries.

Interestingly, what was supposed to be an alternative in Israel for tourists in search of an authentic experience has become a fad among Israelis looking for an out-of-the-ordinary night out. At least half of EatWith’s customers are Sabras.

“It’s something different,” says Daniela Bleishtein, an Israeli who tried EatWith for the first time with her husband. Bleishtein heard about the site through friends and thought it would be a great idea for date night. “We loved it,” she says. “There was something adventurous about the whole thing. We’d definitely try it again.”

EatWith is just one of thousands of new startups popping up in the Holy Land in recent years. A small country of roughly 8.2 million people, Israel has been dubbed the “startup nation.” Although it’s tiny, barely the size of New Jersey, it is home to about 6,000 startup companies, more than any other country per capita, and second only to the United States in absolute numbers. Israel also leads the world in venture capital invested per capita, attracting $170 per person, compared to $75 in the United States.

In February, Fast Company, an award-winning tech magazine known for its annual report on the world’s most innovative sites, included a list of the top 10 most innovative startups in Israel.

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“Israel has more companies on NASDAQ than all of Europe combined,” says Dr. Shlomo Kalish, CEO of Jerusalem Global Ventures, one of the top private equity firms in the country, observing that Israel’s lack of natural resources has been the driving force in its quest for innovation. Israel’s dominance in the world of startups, he says, is nothing short of miraculous. “In the last 10 years,” he says, “there were $10 billion in acquisitions of Israeli startups, $2 billion in the last year alone.”

Last year, Google set its sights on the Israeli mapping service Waze, acquiring it for $1.2 billion in what was then the most expensive buyout of any Israeli consumer app. Although there have been two other non-consumer Israeli unicorns (companies achieving an exit of more than $1 billion), as part of the deal with Google, each of Waze’s 100 employees received an average of $1.2 million, representing the largest payout to employees in the history of Israeli high tech. That windfall is what made headlines in both Israel and around the world—so much so that Waze’s CEO, Noam Bardin, famously received a phone call from Israel’s prime minister, Benjamin Netanyahu, the night the company was sold, to offer what seemed like a well-intended pun and congratulate him for putting “Israeli technology on the global map.”

Waze is a GPS-like smartphone app that provides drivers with up-to-the-minute, real-time updates on road conditions. More than 50 million subscribers use it to warn fellow drivers about traffic jams, accidents, and even the presence of nearby police. It’s become so ubiquitous that one out of three drivers in Israel is on Waze at any given time.

“Waze really established Israel as a force to be reckoned with when it comes to mobile application technology,” says Edon Ophir, a former marketing manager at Waze (and no, he wasn’t one of the 100 people who made $1.2 million; we asked). “Israel’s technology has always been amazing, but people were skeptical about the country’s ability to create applications that a mass consumer audience would use. Waze proved that with one of the largest mobile exits of all time. It’s really phenomenal.”

Ophir may have a point. Although Israel has had incredible success with Waze and other apps—such as ICQ, which was acquired by AOL in 1998 for $407 million and was the basis for the AOL Instant Messenger—it’s been slow to break into the billion-dollar club. The Holy Land’s total number of startups is second in the world, but it has only three unicorns on its résumé, while the United States has had 39 and Europe has had 30. Now that the word is out, experts say, that’s all about to change.

Since Waze, Soluto and Onavo, both Israeli startups, have had great exits in consumer tech, and Wix “unicorned” through its IPO. Experts say many more are yet to come.

One reason Israel is so successful in the startup world, says Ophir, is because its citizens are known for speaking their minds. “They don’t see arguing as something negative,” he says. “If anything, they see it as a necessity.” Ophir, an American by birth, says he experienced a bit of a culture shock when he moved to Israel. “I had to throw out all of my American conditioning toward the workplace.”

Then, of course, there is the whole army thing. Israel has mandatory military service. Instead of heading to college, every 18-year-old must serve in the Israel Defense Forces first.

“The military has become a good breeding ground for leadership and teamwork,” says Tal Brener, CFO of GetTaxi, the über-successful Israeli mobile app for ordering cabs. The military experience, he says, fosters a sense of fearlessness that’s essential in the startup world. “They’re not afraid of making tough decisions and they are extremely resourceful,” he notes.

Brener should know. GetTaxi is another one of Israel’s blockbuster stories, with annual revenue of more than $100 million, according to the company.

Earlier this year, GetTaxi’s CEO said on Facebook that the company is growing at an annual rate of more than 400 percent, the same rate as its arch-nemesis, the San Francisco-based Uber. Company executives predict $500 million in revenue next year.

Interestingly, many of Israel’s startup legends got their big break in the military’s 8200 unit, the commando regiment of coders and computer engineers. Getting into the 8200 is akin to a letter of acceptance from Harvard; the unit’s graduates have been recruited by Google, Apple, and Microsoft, all of which have offices and R&D centers in Israel’s “Silicon Wadi” (Arabic for valley), concentrated around the Tel Aviv metropolitan area.

But perhaps Israel’s biggest asset when it comes to startups is its tolerance for failure—and resilience. “Israelis are not afraid to try and try again,” says Avi Seidmann, a professor at the University of Rochester’s Simon Business School, which sent students to Israel in March as part of an innovative new independent study program. As for EatWith, whether it “unicorns” anytime soon is anyone guess. But if it does, no doubt it will give global investors more food for thought.