Dudley on Powell, Saudi Arabia Tourism, Megapass Skiing

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26:50This is a story about success born of adversity. Israel is known as the startup nation because of all the successful tech companies it has hatched, accounting for more than one half of the country's annual exports.

27:08There are more Israeli companies listed on the NASDAQ than any country in the world outside of China and the United States and maybe Japan. One might have thought that the Israeli tech juggernaut would slow down during the nation's war against Hamas. But it turns out that it's done the opposite. Since the war began in 2023, Israeli high-tech companies have raised more money than ever, some$15.6 billion in 2025, up from$12.2 billion in 2024. The entire tech sector, despite war, has actually grown considerably. Record number of exits this year. For instance, Google made its largest acquisition, not just of an Israeli company, but its largest private acquisition of any company in its history for over$30 billion, where it bought the cloud security company, Whiz, in the middle of this post -October 7th attack on Israel.

28:05Dan Sinor is the author of Startup Nation and The Genius of Israel and hosts the Call Me Back podcast. Israel's number of exits from the tech sector in 2025 will be about 300 percent higher than 2024. In the defense tech sector, which is an area of considerable growth, there are some fewer than 300 defense tech startups on October 6th, 2023. In terms of the number of startups, the amount of private funding coming into Israel, and then the number of exits, it's all kind of multiples higher than we've seen in a couple of years. Israel's tech sector has become one of the largest in the world, accounting for 17 % of the country's GDP, compared to 13 % for South Korea, 10 % for the United States, and less than 5 % for the EU.

28:57So for some time now, Israel has been punching above its weight, highest density of multinationals that have set up operations in Israel, countries that, you know, don't set up R &D shops outside of the United States anywhere in the world. And they're setting them up, many tech companies in Israel. So for some time now, Israel has been what we call the startup nation, this innovation ecosystem that much of the world is depending on. The big changes most recently is more and more cooperation with the Gulf, with the Gulf states, some in very public ways like the UAE and Bahrain, some in not so public ways like Saudi Arabia, where you're seeing more and more investment from these countries into the Israeli tech ecosystem because they realize to really thrive, they need to co-innovate with another tech ecosystem.

29:47There's 450 multinationals that have set up shop in Israel. So when you talk about the maturity, it's not just the companies, it's the overall ecosystem has become so powerful because we've all been working together and figuring out how to develop things that benefit Israel and the world through this ecosystem. Eli Raisin is the chief strategic officer at OurCrowd, an online investment platform based in Israel that connects investors from around the world. We've set up at OurCrowd a super interesting fund, which is a three-part fund, or what we call the tree ponds fund, between the U.S., Israel, and Korea for not just developing or designing deep tech, but being able to produce it in partnership with strong partners in Korea and in the U.S.

30:29And why Korea, particularly? So Korea is a super energetic, highly technologized ecosystem and economy to begin with. It's less well-known because it's somewhat insular. At the same time, though, the U.S. looks at Korea as an incredibly strategic ally. There's all sorts of crossovers for our goals and our capabilities among the three countries where we really see that union as being incredibly powerful. Israel is a good partner for the Korean startup ecosystem because they are very known for the start-up nations. Hyun-Joon Kim is the CEO of NH Ventures, a subsidiary of Nong Hiop Financial Group.

31:09In July, NH joined forces with our crowd to create an$80 million fund to invest in Israeli startups. In Korea, we have a lot of interest about the technology in Israel, but we don't have a lot of chance to visit each other and how to communicate each other. Fortunately, we can establish the venture fund between Israel, our crowd, and NH. That makes a lot of information flow from Israel to Korea, Korea to Israel. We think Israel can be the good partner to support, expand the Korean startup, go to the U.S. market. Israel also, they can find a good partner to manufacturing. Korea can provide good quality and reasonable price.

32:03Israeli tech startups run the gamut, from defense to cybersecurity to biotech to AI. But whatever the technology, it often traces back to Israel's mandatory military service. The military is sort of a bedrock of all Israeli innovation because of a couple of things. One is there are many really fascinating technologies that are both defense in nature, but also civilian in nature that are brought up through the military. And the other, less spoken about, but highly impactful, is the incredible development of leadership and teamwork that happens in the military. And those teams and those leaders transition into roles leading civilian companies.

32:41We invest in defense companies, certainly in cyber, but most of our investments are not. Most of our investments are in things that are commercial or civilian use. Has that line between civilian and defense become blurred as we talk about dual use? Absolutely. So we see that all the time now, both because some inventions are inherently dual use and because many of the entrepreneurs are seeing a real opportunity now to serve the incredibly impactful defense needs that are experienced not only in Israel, but all around the world for the reasons that we all understand. So perhaps it should come as no surprise that the onset of war also opened a new front for startup technologies including those that may have been developed for civilian or dual use from day one we wanted to bring innovation to to the battery sector the battery industry we wanted to integrate our technology into every battery in the world that's still our vision but i think the vision is now even bigger as we see the potential in other markets.

33:45Adionix CEO Mosheel Bitton saw a clear potential for growth for his battery parts company once the Israel-Hamas war started. It's not where we wanted to deploy our technology or if you'll ask me what were our vision or dream is not to be on the defense sector. But we understand now that this is also an obligation, kind of this is our service. That's one of the things that actually shifted and changed during the October 7th. War is never a good thing, and the Israel-Hamas war has been particularly horrific, starting with the attacks on Israeli civilians and followed by the devastation of much of Gaza.

34:26Most of the investors, they were very, they, empathy and lots of supports and asked how we actually manage and ask if we need anything. Of course, there were investors that were silent, and some investors even asked direct questions about the situation, the war. And sometimes it felt a bit awkward when some foreigners are blaming you on things that are not in your control. A private company, business company are not part or represent any government, and they are blaming you. So the war definitely had impact in terms of which companies essentially were newly created or like we discussed, where they leaned into in terms of their customer base or defense use cases.

35:13We also did see through the war investors sort of, in some cases, take a little bit of a step back because mostly because of optics, not because of anything substantive. And now that the war is over, I'll tell you that we've seen this huge pickup in foreign investor interest in Israel. So in the last few weeks, I personally have hosted Japanese, Korean, and I'm about to host a Taiwanese delegation. Minutes before you and I joined this call, hosted a large group of Canadian entrepreneurs here in our office. So what we're seeing is a real pickup in foreign investor comfort with investing in Israel.

35:48Out of adversity has come at least some success for the startup nation. Success involving businesses from halfway across the world. I think most important thing is that Israel always try to go global because their domestic market is not so big. And Korea also needs to expand their market horizon to the global market. But they have their own strength point. We try to combine those strength points. We can raise the global success. It's very physically separated, but our idea with the energy investments and our crowds is making the same thing. So that is a very important thing. Israel and Korea also have a very good relationship with the U.S.

36:40We need to be opening up cooperation with Israel. So that was already starting to happen before October 7th. And then obviously since October 7th, you've seen this incredible flourishing in ways that were completely unexpected. in areas related to defense tech and cyber security that has just gone to another level. So many of those same players, the Gulf states in particular, want to piggyback onto Israel's strength in these areas even more because they've seen how successful Israel has been. And then this startup nation that was buzzing long before October 7, 2023 continues to do so.

37:18Up next, skiing is more popular than ever. despite the lack of snow in some of America's top ski areas. We take a look at the ups and downs of big ski.

37:36I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast. Every week, we bring you fascinating conversations with the people who shape markets, investing, and business. CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, everybody that affects what's going on in the market, whether you own stocks, bonds, real estate, commodities, crypto, you really need to hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob Schiller. Sometimes it's fund managers like Peter Lynch, Bill Miller, Ray Dalio. Sometimes it's authors, Michael Lewis, author of The Big Short, and Moneyball.

38:21Regardless of the conversation, these are the folks that move markets each week. That's the Masters in Business podcast with me, Barry Ritholtz. Listen on Apple, Spotify, or wherever you get your podcasts.

38:40This is a story about what you gain from joining a team and what you lose when you stop flying solo. In the last 20 years, two major players came to dominate the ski industry, turning the sport from a local pastime into a global portfolio. Scarlett Fu brings us the story. This is The View Up at Winter Park. I mean, we are in desperate need of snow. You can see how thin that snowpack is.

39:07In the past year, skiers have dealt with record high prices, record low snow, and disruption on the slopes caused by strikes. Despite the challenges, the industry is booming, with the number of skiers rising almost 17 % from 2016. And for the 60 million-plus skiers visiting U.S. resorts each winter, there is a choice to make. Buy a Megapass before the season starts that gives you access to up to 80 mountains around the world but leaves you at the mercy of seasonal conditions. Our job is really to have a long-term relationship with our guests and so that they feel like they're making a commitment to us year in and year out good weather bad weather.

39:45Or go old school buy a less expensive pass at your favorite resort preserving that hometown feel. It's been a great thing I think for our industry because it's a challenging industry that we have. Ski mountains have to make a similar decision are Are they in with the Megapass or are they out? The one thing that hasn't changed is you get people to come here, they get out on the hill, they go skiing, they have a great time, and they want to come back. Whatever they decide, they have Vail Resorts to thank or blame. CEO Rob Katz introduced the Epic Pass 18 years ago, offering a deal to skiers and shaking up the business of skiing in the process.

40:25It was a massive discount when we offered it at, yeah,$579. But the thinking was, was that we could, at that low price point, we could put many more people in the product. And all of a sudden, that would start to create more of a subscription model to the ski business, rather than just this kind of daily feast or famine model, which was the lift ticket business. Katz's relationship with Vail Resorts, now the largest ski resort operator in the world, goes back to the 1990s, when he oversaw a deal that rescued what was then Vail Associates. Katz joined the board and became CEO in 2006. He left the company in 2021 and returned in 2025.

41:03During his first go-round, he grew the company from five resorts to a portfolio of 37. I think initially the pitch was just, hey, we thought that there was an opportunity for us to really apply better management techniques to these other resorts that we bought. And two resorts that we bought initially were Keystone and Breckenridge, which were right down the road from Vail and Beaver Creek. And so the thought was also we could start actually managing them and doing it more efficiently. We could also offer some things so people could go to these different resorts and market to that in a more unified way.

41:38Vail initially targeted other neighboring resorts in Colorado. The first group of founders at Arapahoe Basin hung on to the place until 72. Another independent guy owned it until 1978. And then in the late 90s, what was called Ralston Resort, which was Arapahoe Basin, Keystone and Breckenridge, merged with Vail Associates, forming Vail Resorts. It wasn't long before Vail controlled roughly 43 percent of Colorado's ski areas by count. In 1997, the U.S. Department of Justice forced a sale on Arapahoe Basin, citing Vail's excessive market concentration. Still, A-Basin, as locals call it, chose to continue partnering with Vail, which meant it was included in the first iteration of the Epic Pass.

42:24The view at that point was that the company's multiple was well below a lot of other travel companies. And there was a real sense that the ski industry was really a feast or famine business, where if it snowed, you did well. If it didn't snow, you didn't do well. And actually, ski resorts had been declining in the United States from like, you know, 720 ski resorts, I think in the late 70s to 550 ski resorts. So the business was really struggling. And the focus was that there was not the stability and the confidence in the future of the industry because of the ups and downs of weather. So the thinking was, how could we stabilize that?

42:58And so what we came up with was really offering an incredible value to our guests by giving them a huge discount on this season pass and trading with them, right? Essentially giving them this great discount, this great value, but then also our guests taking some of the risk of weather for the rest of the season. Before Epic was introduced in 2008, a season pass at Vail Resort would cost you around $1 ,800. With an Epic Pass today, an adult skier has unlimited access to 42 Vail-owned or partner mountains around the world for just over$1 ,000. How did this pass model change how you plan capital expenditures, how you assess risk overall?

43:39It made a big difference. So, you know, historically in the ski industry, you would wait to see how the ski season was. And if it snowed and you had a good year, then you'd make commitments for the following year for capital. But as we started to do well with our season pass business, we all of a sudden started to move back when we were willing to commit. So we started saying, hey, wait, we could commit to things in December or in September or in March the year before. Then came competition. In 2018, Altera brought together Mammoth Resorts and Squaw Valley, now known as Palisades Tahoe in California, and Deer Valley in Utah.

44:13Soon, Altera launched the Icon Pass, its version of the Epic Pass. Here's Jared Smith, CEO of Altera. The premise or the thesis for the business was really that there was some space in the industry for another large player. The introduction of Epic Pass by Vale was a game changer for the industry, no doubt about it. It's one of those unique products that is truly win-win. What we were able to do at Icon Pass was take that core model, which was for Vail of its owned and operated resorts largely, and take that and put together a network of people that didn't have to be owned by the same corporation to enjoy those same benefits.

44:51And in turn, to give consumers the opportunity to have that same exposure and that same cost benefit analysis across a whole variety of other resorts. The two dominant Megapasses ushered in a new demographic of skiers. The new Megapasses, really what it did initially was drive the prices down. It's just that there are ski areas out there, there are companies out there that do want to drive guests to that mega resort pass or that multi-resort pass. And in doing so, they're trying to entice you with that great price point. It's kind of a membership, right? So I think people historically said the only kind of person who could buy a season pass has to be a local.

45:32So the fact that we made the product price competitive for the destination skier, somebody coming from New York or Florida or Texas, all of a sudden they started to feel like they were a local as well. For resorts, climate unpredictability reinforced the case for the Megapass. As the industry depends more heavily on capital intensive snowmaking equipment. As we started to acquire resorts in different regions, all of a sudden the pass provided access to different regions who all have different weather patterns. And so that made the pass even more attractive. Where we're able to make some of the investment in the physical plants here, combined with the technology advancements that you've seen in the quality of things like snowmaking, which uses less energy and uses less water to produce actually more yield and what we're able to put on the hill.

46:22But as demand for the Epic Pass grew, it became kind of a victim of its own success. Two seasons ago, Vail sold a record number of passes. It's too early to tally up this season's pass sales, but Vail said the total number of skiers is down 20 % from the same time last year. The locals don't love the whole Epic situation because of the crowds, because of the prices, because of the concentration on just finances and money. I think there's no doubt that anytime you make something more accessible and more affordable, there's an opportunity that you have too much of a good thing, right? And you have some people who come or lots of people who come as a result of that affordability, and they want to come at the peak times.

47:02So I think there are lots of examples in the ski industry of, you know, peak windows on high holidays with great snow conditions where lots of people want to come out and do the thing that they love that can lead to longer lines. In 2019, A Basin ended its partnership with Vail, cutting off ties with the Epic Pass. Arapahoe Basin opened early. It was one of the first resorts in the country, and the concept of ski resorts was very different back then. How's the skiing? Alan Hensroth is president and COO of A Basin. By 2019, 2018, we felt we could really do this better not being part of Vail. Vail was a great company for us in a lot of ways, but we kind of outgrown that and were looking for something different.

47:47We just thought we needed more control over our pasts, more control of people coming here, more control of the actual experience that all our guests were having. And Vail was such a big, successful company that they brought really more people here than we could handle at one time. So we made a change in our past relationships. In 2024, A-Basin completed its journey from being an independent resort to a partner of Vale, to independent again, to now a partner of Altera. For a ski area that's passed through the hands of companies big and small, A-Basin is hoping for the best of both worlds, an independent feel on a Megapass.

48:26You know, of course, when the sale went down, you know, and it was almost a year leading to the closing of the sale, people were concerned. But as last year went on and they realized we weren't turning into a bunch of monsters, I think more and more people are accepting that A-Basin's going to be okay and we're going to do just fine. You know, the one thing about being part of a family of more resorts is, you know, there are some people that are committed skiers and they want to buy a season pass to one place. And they're satisfied with that. But I think there's another group of people that like some diversity.

49:06They want to try different resorts. They want to ski at different resorts. They want to have choices. And, you know, when we decided to leave Vail, we could have been independent, but we thought people really wanted choices. And we thought we'd have the best future when there were opportunities for people to take advantage of those choices. Today, you know, we have, I think it's roughly two-thirds of our resorts fall into that independent category. Like last year, independent resorts did see an uptick in visitation, which was great to see. And we saw a little bit of a decline in some of our large or extra-large resorts.

49:45You know, it's just the way the pendulum swings is that if you're not happy in one aspect of the sport, maybe you're going to go find something a little bit different. While A-Basin joins a new team and navigates another chapter, there's still the choice to ski the old-fashioned way at smaller, independent resorts like Mad River Glen in Waitsfield, Vermont, which runs on a skier-owned co-op model and is the last remaining slope in the continental U.S. to operate a single chairlift. We really are known for our black trails. Matt Lillard is the general manager. The co-op has 3 ,000 shares, but there can only be 2 ,500 owners of those shares.

50:21So everybody that has a share gets a vote. You can only own a maximum of four shares, but that's still only one vote. So that's one of the key things about a cooperative is you can't have somebody come in, buy up a bunch of shares, and have an outweighed say like you would a normal corporation. What problems did the co-op ownership structure solve that traditional ownership did not? I think what it done is it was able to pull the passion that the skiers have for the mountain into an entity that can take care of it. So it enabled those people to have a say in what was going on here and support it both financially and with their visits.

50:52The shareholders have a bigger say in a cooperative than they will at a publicly traded place like Vail Resorts or something private like Altera. So they get to say that we want low skier density, and that's one of their primary goals. It's written into the bylaws. It's written into the articles of incorporation. So that's basically saying that when you're on the mountain, they don't want it to be crowded. They want to be all the ski. They want their own people whizzing by them. He says the co-op sold out of shares this year, even if that means bringing skiers up one share at a time. So I sit down.

51:21Yep, so you're going to sit down. And then once you get going, you're going to close the safety bar. And that's it? That's it. Oh. That does it for us here at Wall Street Week. I'm David Weston. See you next week for more stories of capitalism.

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