Israeli AI specialist hits big time with McKinsey & Company
Management consultancy firm McKinsey & Company acquired Tel Aviv-based Iguazio to help unlock the potential of AI to create a real impact for businesses
McKinsey & Company acquired Israeli AI company Iguazio earlier this year, marking its first acquisition of an Israeli company. The deal is not only testament to the start-up nation’s tech prowess but signals the huge potential value of AI for businesses.
Based in Tel Aviv, Iguazio is a leader in AI and machine learning, which aims to plug the gap between this potential and its actual business impact by helping companies to manage, accelerate and scale their AI deployments, something many companies have struggled with.
Ben Ellencweig, senior partner and Global Leader of McKinsey & Company Analytics Alliances and Acquisitions, explains: “According to McKinsey research, more than $490 billion was invested in AI by organizations around the globe from 2012 to 2021. But most business leaders are still struggling to translate these investments into concrete returns, with only 10 percent of AI projects actually emerging from the lab and succeeding in real business environments.”
This is where Iguazio comes in. With Iguazio, companies can run AI models in real time, deploy them anywhere and bring to life their most ambitious AI-driven strategies. Business across a range of sectors use Iguazio to generate business value faster with AI, by accelerating the path to production and continuously rolling out new AI services in a fraction of the time and resources.
Ben Ellencweig, Senior Partner and Global Leader of McKinsey & Company Analytics Alliances and Acquisitions at McKinsey says it plans to use the startup’s technology platform and team of 70 data scientists & AI experts to bolster QuantumBlack, McKinsey’s AI arm, driving further impact for clients.
“We analysed more than a 1,000 AI companies worldwide and identified Iguazio as the best fit to significantly accelerate our AI offering — from the initial concept to production, in a simplified, scalable and automated manner,” adds Ellencweig, who is based in New York.
Iguazio was founded eight years ago by Israelis Asaf Somekh, Yaron Haviv, Yaron Segev and Orit Nissan-Messing. It has since added dozens of well-known companies to its portfolio, including NetApp, Ecolab and LATAM Airlines Group, which selected the Iguazio MLOps (machine learning operations) platform to operationalise a large scale, cross company successful AI innovation project as part of their post-pandemic innovation strategy.
Asaf Somekh, CEO and co-founder, says: “As a start-up, we had a limited reach in terms of our availability to get to the kind of clients and projects we wanted but working with McKinsey will mean access to a wider pool of clients than we could have ever dreamed of, and more resources.”
Somekh says: “McKinsey’s experience and QuantumBlack’s technology stack and expertise, now coupled with Iguazio, is the ultimate solution for enterprises looking to scale AI initiatives in a way that directly impacts their bottom line. We’re thrilled to join the McKinsey family and embark on this next chapter for Iguazio.”
And the partnership is “extremely meaningful” for McKinsey too, says Ellencweig. “This is one of the first product companies we have acquired and our first acquisition in Israel, with more to come.”
The deal pretty much doubles McKinsey’s presence in Israel from an employee perspective, with the opening of a QuantumBlack Labs R&D Center in Israel – one of now five global hubs. “It shows the huge potential and talent of the start-up nation and we are very proud to have one in Israel.”
To thrive in today’s competitive market, harnessing the power of AI is essential. It is transforming the way we live and work.
Working with Iguazio, QuantumBlack will be able to immediately provide clients with industry-specific AI solutions that are five times more productive, eight times faster from proof-of-concept to production, and twice as reliable.
“We analysed more than a 1000 AI companies worldwide and identified Iguazio as the best fit to significantly accelerate our AI offering – from the initial concept to production, in a simplified, scalable and automated manner,” says Ellencweig.
Iguazio’s founders; –Somekh, along with CTO Yaron Haviv, COO Yaron Segev, and VP Architecture Orit Nissan-Messing – have been working together since 2001, both in their own start-ups and across multiple organisations, and have developed some of the core technologies of enterprise analytics and AI.
Somekh says: “So far AI has been seen a luxury of the tech giants (Google, Facebook etc) but it can go far beyond this.
“It can enable enterprise level and mid-market businesses to be more efficient and there is also huge potential for it to be used for tech for good, and other good causes.”
And he is not alone in seeing the potential. Iguazio is backed by prominent investors including Pitango, JVP, Magma VC, INcapital Ventures, Kensington Capital Partners, Verizon Ventures, CME Group, Bosch, Samsung and Dell.
The McKinsey deal is a further huge nod to Iguazio and the wider Israeli tech ecosystem, which had a difficult 2022 – investments in Israel’s tech sector dropped by nearly half in 2022 amid the global economic slowdown.
Somekh says: “Israel is part of the global tech industry and sees the same trends that you see all over. 2022 was tough and 2023 started tough. You can see some recovery but when you look at funding for start-ups, it’s still super tough. It’s not as it was in 2021 when people were standing in line waiting to invest.”
But Iguazio, which managed to keep its entire team in the acquisition, is excited about the future. “The potential is huge and we have now access to the top clients.”
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