The Rising: Amazed by Innovation in the Middle East

The Rising: Amazed by Innovation in the Middle East

Published in August 2013, Christopher M. Schroeder’s book Startup Rising is an excellent analysis of how people and countries in the Middle East are taking advantage of technology-enabled opportunities to build remarkable enterprises. In an interview conducted by email, Schroeder, a US entrepreneur and investor, discussed his views on the region.

 

Q. How has the reaction been to Startup Rising since its publication?

A. At one level it has received significantly more attention than many had expected [and] from diverse quarters.  A book — perhaps the only book now — offering some hopeful scenarios for the region has been intriguing to business and political leaders in the States, and the potential impact of technology resonates with Silicon Valley and the like. I have found the young people — college audiences and especially high school — the most engaged and [they] ask the best questions. In the region, the reaction has been supportive, with a touch of "why would anyone expect otherwise!" An Arabic version comes out in April, and I look forward to what I hear then.

At the same time, there have been media outlets and others who simply don't believe it. The story for them is brutality in Syria and chaos in Egypt and nothing else is possible. Of course, those are realities too, and I have no crystal balls of how these play out. But I do assure people that within three years, millions more people in the region will have smartphones and technology on their persons. That will not go back, and it is worthwhile at least asking, "how might that be different?"

By the way, no emerging growth market is for the faint of heart. It amazes me that the doubters see what I've written [about] happen everywhere — despite political turmoil, corruption and other issues — and somehow can't imagine it in the Middle East. 

 

The Middle East continues to be plagued by social unrest and violence as evidenced by the recent events in Egypt and Lebanon. Doesn't that instability act as a roadblock to economic progress, especially foreign direct investment, and can you see any way out of that situation?

Absolutely it does — and, perhaps more importantly, for the incredibly talented young people. This is the most "mobile" generation in history, and by that I don't mean mobile phones, but that talent can move and there are places with open arms for them. As governments and others choose to wage 20th-century battles, they are missing an opportunity of a lifetime — and talent will move. 

Having said this, entrepreneurs want to stay home; they are proud of their homes, their families, their cultures and their lives. They know they are in a historic moment and that economic opportunity in their homes, their regions, the world, are available as never before. They are tenacious in working around challenges. What has amazed me most is how they keep going despite the ecosystem, not because of it.

I will add that when I was in business school in the early ‘90s the conventional wisdom held by everyone was fundamentally:  1) Japan will win it all 2) China cannot have growth without Jeffersonian democracy 3) India was a basket case with hundreds killed or wounded in regular protests around the country.  No one was saying any of this five years later.

 

Which of the countries you studied most excite you in terms of potential or current activity?

The potential is there for all -- and even the best [are] still marred by uncertainty, challenges [to the] rule of law and infrastructure for sure. But Jordan, with some bumps, has both bottom-up and top-down built a relatively friendly ecosystem for technology and entrepreneurship, and Dubai and the other Emirates, while expensive and driven by other factors, is taking this potential very seriously. Egypt is set to become one of the great entrepreneurial centers — the women and men I've met there are remarkable — but will be an enormous unknown through the next year or two of uncertainty. Beirut is a glorious city with amazing talent also under the pressure of government instability and pressure from the terribleness that is Syria on the border. And yet there, and even among the Syrian refugees I've met, the spirit, tenacity, ingenuity and skill is remarkable.

Major global tech players — Intel, Google, Facebook, Microsoft — continue to invest [in Egypt]. LinkedIn and PayPal opened operations in the last year.  International players from Europe to Asia to South Africa are engaged. Local investors are expanding — one just opened the largest shared workspace in Cairo in the old American University of Cairo and another one of the first large funds for A-round investment across the region. I didn't write about Turkey, but the talent in Istanbul is world-class.

 

Do you see any country/city in the Middle East becoming a super-hub for foreign technology or other businesses in the region, and if so where will it be?

I think one of the great stories of the ubiquity of technology is that we will be seeing multiple hubs of innovation across the globe.  Having said that, while I don't think we'll be seeing other "Silicon Valleys"  — as [the original] is so unique — great cities tent to attract great talent that want to live there.  Amman and Dubai are obvious places to watch, but we are seeing real infrastructure investing in Abu Dhabi and Doha. Cairo will be an amazing center at some point, and Beirut. Interestingly, Saudi Arabia is an enormously attractive place for e-commerce companies to open offices as the market opportunities there are so important.  But it offers obvious challenges as well.

 

Israel is clearly a leading technology innovator and entrepreneurial hotbed. Do you see much prospect for improved trading links between Israel and the Arab Middle East?

I didn't write about Israel a great deal because its remarkable story is so well known — it is arguably one of the top centers of innovation in the world today.  Everyone in the region is conscious of it, but the political issues and overhang are substantial. Quietly, bottom-up, as great young talent simply likes to connect with great young talent, there have been some shared learning and small opportunities. But as a Palestinian entrepreneur once said to me:  "You all think there is no wall with technology — and that is true at one level.  But there IS a real wall there, and one cannot forget that."  So, perhaps over time and done organically [there will be improved links]. 

 

What most surprised you in your research/experience in the ME?

I have travelled all over the world, have outsourced technology to almost every emerging growth market, and seeing all the talent and potential in the Middle East the first time just blew me away. It should not have, but it did. We in the West, in the US in particular, have one CNN narrative of the region. There is so much going on beyond that negative narrative. And the changes are not going back.

 

Martin Veitch is Editorial Director at IDG Connect

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Martin Veitch

Martin Veitch is Editorial Consultant for IDG Connect

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