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IT & Systems Management

The Middle East: Tech Talent Amid Troubles

The following text is an excerpt from the new edition of Startup Rising, Christopher M. Schroeder’s book on the entrepreneurial spirit of the Arab Middle East, first published a little over a year ago, and now available in paperback.

To watch the major-network news on the Middle East in recent months is to watch one narrative. There is a shared, collective language journalists regularly use that they rarely employ on any other subject—the region is “in flames”, countries are “lost”, and so on.

And to be sure, there is plenty to be concerned about, just as there was a year ago when I wrote Startup Rising. Egypt remains politically and economically uncertain at best. The military has overthrown the government; journalists and opposition voices are imprisoned; many people have been killed. The Islamic State in Iraq and Syria (ISIS), an all-but-unheard-of fundamentalist group a year ago, has seized the second largest city in Iraq and called into question whether that country—and perhaps many of the others in the region that border it—can survive. Syria continues to spiral under its brutal regime, which shows no sign of relenting, and perhaps 40% of its population is displaced.

And, yet, the following is also happening in the Middle East.

Virtually every entrepreneur and startup I described a year ago is not only continuing to fight, but they are succeeding as well. Young Ala Alsallal has recently raised capital from local investors to make Jamalon the largest online book seller in the Arab World. Souq.com is now the largest e-commerce company in the Arab world, and is valued by Naspar’s, the global venture company in South Africa, in excess of half a billion dollars. Mobile payment companies are springing up across the region, and bitcoin organizations are forming online and offline in anticipation of its potential across all emerging markets. Egypt’s Nafham, like dozens of other mobile, video, and online education offerings, is reaching millions. ArabNet, the region’s largest tech conference, has had record crowds now at events in Beirut and Dubai. Startup competitions like Hala Fadel’s MIT Enterprise Forum have become so globally competitive, they just held one in Silicon Valley. Wamda.com has expanded its Mix N’ Mentor efforts around the region, and Aramex founder Fadi Ghandour is about to complete his first closing on a $100 million A-round Wamda venture capital fund. Ahmed Alfi’s GrEEK Campus at the old American University of Cairo is not only being renovated to be the largest shared tech work space in the region this fall, but a thousand or more young people also regularly gather there to share ideas, pitch new ventures and learn.

The Emirates are investing heavily in “tech cities” and new universities. Flat6Labs, one of the leading incubators in the region has opened up offices in Jeddah where nearly half the first classes of startups are women. They have announced an Abu Dhabi office opening in fall 2014. The remarkable founder of Silicon Valley’s 500Startups, Dave McClure, has not only invested in multiple companies in Jordan, but he has also led a delegation of executives across the Middle East last November.

And tens of thousands more are rising and falling across the region every day, as entrepreneurs and ventures do everywhere in the world. By the way, I was one of perhaps 500 Americans to visit Iran in May 2014. Everything I have seen across emerging growth markets in the Arab world and beyond I saw among the young generation across Iran as well.

When I was in business school in the 1990s, there were three conventional wisdoms about the world: Japan had won it all, and would dominate the global economy into the next century; China could not achieve sustainable economic growth in absence of Jeffersonian-like democracy; tech efforts in places like India or Israel were a sideshow. Within five years, it had all been proved false. In 2013, China’s e-commerce and search software juggernauts Tencent, Alibaba and Baidu have all been valued in the tens of billions of dollars. Israel’s global traffic navigation software platform Waze was acquired by Google for over $1bn.   

Marc Andreessen, who kindly wrote the foreword for this book, recently wrote a concurring and brilliant blog post on the ramifications of technology in emerging worlds entitled “What It Will Take to Create the Next Silicon Valleys, Plural.” He noted:

One way of thinking about economic growth is that it’s all about the adoption of new technologies of production. We could say that the introduction of electricity was itself economic growth, or that the adoption of smartphones will be. However, they’re both multiplying technologies: electricity allows more work to be done by replacing muscle power and, through light, enables work or study to be done for more hours of the day. The smartphone opens up the books of human knowledge to those who have never had access to it before. And that is seriously going to accelerate economic growth in just about every other field as well. That peasant farmer trying to manage his acre of maize using nothing but a hoe and a machete: sure, he’s not going to be the world’s greatest user of Facebook… but he will benefit massively from information about weather, market prices, and better farming practices. Because of mobile, removing regulatory hurdles goes from being a potentially vicious cycle to a more virtuous one that can help millions of people climb out of poverty. And the next big companies wouldn’t be built in the US, but elsewhere in the world instead.

This is happening, now, in the Middle East, as it is happening everywhere. In the first edition of Startup Rising I noted that almost every country will soon have over 100% penetration of mobile phones—that number had already been surpassed, as even in poverty-stricken locations many have more than one device. I predicted that almost every country would have over 50% mobile users on smartphones. That, too, has happened.

ISIS must be taken very seriously, and the specter of terrible instability in the Middle East and other emerging markets is real. Mass societal change, the unwinding of generations of poverty and abuse, does not come easily.

At the same time it is worth considering parallel realities, especially when you look at the raw numbers. ISIS, experts believe, is well funded, but represents fewer than 12,000 members—in a region of nearly 400 million.  More people attended one regional startup competition I judged in Beirut, and it represents a fraction of the on and offline attendees at the last TEDX Cairo alone—one of many idea festivals around the world.

We know that there will be more technology, not less, in the hands of millions in the next three years. Is the new, tech-enabled generation of talent worth any less attention than a handful of violent thugs?

It is my most fervent hope that Startup Rising has and will play a small role in opening hearts and minds to look beyond our comfortable, well-worn narratives about the Middle East, and embrace and support these remarkable young people.

 

Christopher Schroeder is a VC, entrepreneur and follower of technology creativity all over the world

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Christopher M. Schroeder

 Christopher Schroeder is a VC, entrepreneur and follower of technology creativity all over the world

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