So far, Startup Rising: The Entrepreneurial Revolution Remaking the Middle-East is one of the top startup books we have read, and that we recommend.
In a dense, 200+ pages, author Christopher M Schroeder not only gives a kaleidoscopic view of an exciting region, he also shares his own journey, started with “a first mentorship experience in the Middle-East in 2010”, up to the technology side of the Arab Spring, and envision a few perspectives for the future.
Startup Rising: why entrepreneurship is bound to rise in the Middle-East
The author and the foreword by Marc Andreessen summarises the situation of the Middle-East, and it’s also worth for the emerging markets by and large:
- Technology brings transparency and connectivity. It brings it even faster in places where governments have been blocking social and poetical mobility for decades. More specifically for the Middle-East, it het rids of wasta, “a display of partiality toward a favore person or group without regard for their qualification”
- Investors become more comfortable with political risk and local specificities. It’s true in the Middle-East, and it’s true elsewhere as well. 500 Startups and Dave McClure can be seen in all major tech events in South-East Asia, and we saw how even investors from emerging markets are now able to put money in other emerging markets in our series on startup in BRICS countries
- The emerging markets are still, partly, blue oceans and untapped regions of growth. Middle-classes and young consumers are growing fast in the MENA region: “In 2008, the GDP of the economies of five of the largest countries in and around the Middle-East – Egypt, Iran, Pakistan, Saudi Arabia and Turkey, with a combined population of 420 million – was $3.3 trillion, the same size as that of India, which has three times the population. The Arab world alone has per capita GDP nearly twice as China’s”
Schroeder stresses justly that what happens in the emerging markets can be inspired by the Silicon Valley model, but applies to local problems. As a result, local solutions rise, which can in turn conquer other markets. M-Pesa, the mobile money born in Kenya, is a good case study as today “it represents nearly half of all mobile payments in the world”
Maktoob is known to be the first big, regional then global success story of the Middle-East. They launched the first e-mail service in Arabic and got about 5000 users in their first month in 1998. By 2000, they had reached 100 000 users, and by 2003, more than a million. They introduced new features such as group rooms, chats, and hosted talks with celebrities and actors, becoming a media of its own. They have been acquired in 2009 by Yahoo, a company which at the time had quite a good intuition as they had also bought 40% of Alibaba for $1bn back in 2005.
Improvisers, Problem solvers and Global players
In Startup Rising, Christopher Schroeder also makes a compelling and useful categorisation of the entrepreneurs he met and read about in the Middle-East.
- The first category of Improvisers addresses “similar consumer needs to Western counterparts”. It’s an easier path to success, in which, by the way, some companies have been specialising into. Rocket Internet, notoriously, is a German incubator now leading e-commerce marketplaces in many emerging markets, the case study we’ve done in with its expansion in Nigeria gives you a good idea of how they work. In the Middle-East, startups such as Souq.com and Marka-VIP were both worth over $100 million in 2012.
- Problem solvers are a second category of entrepreneurs who tackle local issues, creating a market which might not be scalable globally, but still needs to be addressed. RecycloBekia in Egypt is for instance taking care of e-waste coming from unused and disposed computers. They offer to collect electronic waste from where you are, and even offer vouchers for other goods to incentivise people to register on their service.
- Last but not least, Global players are entrepreneurs targeting from day one a global market, and usually benefit from powerful links with diasporas. Hind Hobeika, a professional swimmer from Lebanon turned entrepreneur, is one of them. With her team “in London, France, the Netherlands and Dubai”, she created Instabeat, a smart swimming goggles for swimmers to know their heart rate and analyse their motion underwater for better training. She has launched the product during the CES in Las Vegas in 2013, and the manufacturing is made in China.
Three promising fields for entrepreneurs in the Middle-East: Mobile technology, Solar energy and Social networks
Based on his travels and analysis, Christopher Schroeder is betting on three industries for the years to come in the Middle-East.
- The first one is Mobile technologies, as the MENA countries are often leapfrogging technologies, skipping the PC age directly to handphones, dumb or smart. Mobile Baby, a startup offering a comprehensive mobile maternal healthcare service, is one of them. In 2012, they were serving about 10 000 pregnant women thanks to the help of 500 birth attendants and 26 regional health facilities across Saudi Arabia, Tanzania, the UAE and Nigeria.
- The second one is solar energy, a resource which abound in the Middle-East, and which has so far not been tapped. KarmSolar, from Egypt, is helping farmers to setup solar capabilities for water pumping, and provides a solar management interface. The interesting thing here is that this solar power is off the grid, and does not need a national, large infrastructure to connect to. In emerging markets anyway, central planning by government has proved somehow unsuccessful, so these types of decentralised, off the grid ventures find a positive echo among local populations.
- The third bet of the author is in Social networks, which have been playing an active role in the Arab Srpings. Projects such as 18 Days in Egypt, which offer visual storytelling tools, or CircleTie, a mobile geolocation social network, are among the ones embodying this trend.
Three players to build tech ecosystems in the Middle-East: Investors, Conveners and Recognizers
In yet another three-fold movement in Startup Rising, Christopher Schroeder summarises what it takes to build and sustain a tech ecosystem. His definition of what an ecosystem is stems from a discussion with investor Ben Horowitz: “Ecosystems are about access to an extended community of talents and resources at scale across the spectrum of what it takes to build a world-class product”
- Investors are key, not only because they can fund and help a market sustain (it echoes to the role of intermediary organisations we have been seeing in Coursera’s MOOC on “Ecosystems in Transitioning Economies”. Oasis500, based in Jordan, also brings “their own teaching materials, relevant mentorship, and acceleration”.
- Conveners are individuals and platforms which help entrepreneurs connect with each other, offering network, learning, and new opportunities. A good example is sen with Wamda, the Lebanon-based tech blog for the Middle-East region (for which we have done a few articles). Read by hundreds of thousands each month, Wamda “educates the market” through content, but it’s only “one of the three legs” of the company. They also launched a fund, and work with corporate partners in the region.
- Recognizers, then, organise competitions and help to sort the best in a startup ecosystem. They boost confidence among the winners, and attract investors. The Arabnet conference, which we attended last year, is a good example. Launched in Beirut, this tech conference has now events in Amman, Riyadh and Cairo, helping to bridge ecosystems and create new opportunities for startups and investors.
The role of education in the Middle-East
Educating the vast youth of the region is key if countries want to avoid a repeat of the Arab Spring, as “100 million new people will be entering the workforce by 2012, and another 135 million who are under age 15”.
Emerging markets, with their governance issues, often lack industries able to hire so much people every year. This is why their high GDP growth is not really a record to follow, but rather a floor they should not go below if they want to provide jobs to their own people. Jobless people rarely make satisfied voters, especially when young.
If the primary education is often well done, secondary education doesn’t reach all, and beyond, it’s clearly a big lack for the Middle-Eastern countries.
This where NGOs, associations come in to fill the gaps. Jordan-based Ruwwad, for instance, is a mix of “a school, a health clinic and an after-school program”. Their mission is to empower people to face their own challenge through education. Youth are encouraged “to explore their notion of self, relationships, rights and citizenships, and career and life goals”. After seven years of field work, Ruwwad now touches more than 75 000 people, and has set the Ruwwad Micro-Venture Fund to encourage entrepreneurial initiatives.
In Saudi Arabia, an online tutoring website called Qayrawan is also helping to reach under-served population, such as middle-ages women who stay at home and have the time, and the will, to progress and learn.
Women in tech in the Middle-East
As in many emerging markets – and, we could add, the developed world – women are an underrated population when it comes to work and entrepreneurship, although they garner better result at any stage of the education when young, and often make wiser decisions when at work.
Specific training programs such as Vital Voices help women to master the tools of entrepreneurship, to create a generation able to take control of their lives and create ventures.
And, of course, beyond the mere rebalancing of gender in the tech sector, there are amazingly big and untapped opportunities for goods and services addressing women needs, which men startupers don’t understand so well. Arabia Weddings, Zaytouneh (cooking) or Amourah (underwear) are examples of platforms built by and for women
It’s not a matter of whether, but when
To conclude this brilliant book, in case we needed any more motivation to explore, understand and invest in the Middle-East ventures, Christopher Schroeder urges us to do it now, and not to wait any other sign.
The Western way of talking of the emerging markets in general, and the Middle-East especially, is biased by war and conflicts, and it prevents them to look at the economic opportunities. “Countries like Turkey, Egypt, and Saudi Arabia have been consistently ranked in the top ten growth markets in termes o potential across almost every survey”.
By 2060, there should be 600 million middle class consumers on the African continent alone, and more than impressive figures, the strategic position of the Middle-East between the West and the Eastern regions such as Asia makes it a natural hub.
So don’t wait for the next holiday season to grab a copy of Startup Rising, as it shows the potential – and actual achievements – of an exciting region, and the learnings are worth for other emerging regions.