Reflections from my Ramallah High Tech Hub Trip

A few months ago, Feras Nasr, contacted me to come and speak in Ramallah about entrepreneurship to the tech community and in particular students. I was humbled by the request, and also thrilled at the opportunity because I have a passion for speaking to aspiring entrepreneurs.

I have not been to that part of the world in approximately 20 years, so it was truly exciting to go back and see how things have changed. Ramallah is a modern Arab city. It reminded me of Amman’s hilly landscape. It was bustling with healthy activity. Tourist tip: be sure to get Rukab Ice Cream.

The first High Tech Hub meetup was a world class affair. It had great organization, great sponsors, over 500 students attended, and 10 startups presented their companies to the audience. These are signs of a healthy tech community. I came back very optimistic for the prospects of the Palestinian youth. The energy and engagement I saw was typical of a place where people are eager to learn and be impactful.

From my perspective, entrepreneurship in the MENA and in particular Palestine is critical for the economy. The statistics are very clear. The Arab World needs to generate 80 million jobs in the first 20 years of the 21st Century. That is more jobs than have been created in the entire 20th Century. So the youth need to know that the culturally expected journey is just not going to work. Expecting the government to solve unemployment through job creation is going to lead to nothing but frustration for all.

I strongly believe that entrepreneurship is a key ingredient to getting our youth contributing positively to their societies. What I saw during the event was impressive. Many of the startups were thinking big and the quality of their work was on par with what is generated in the West. For example, X-Bugs was one of my favorite Palestinian startups created an impressive mobile game. The quality and complexity of the animations was awesome! It even got featured in the Google Play store. Another impressive startup was YaMsafir, which got 1 million dollars in VC funding after building their service on a shoestring budget. Yes, these stories are Palestinian startup stories!

The Palestinians have what it takes to build great companies. In many cases, they just need to do it. They have the intelligence, stamina, aggressiveness and creativity to do things with little resources. Attributes necessary to be great entrepreneur.

As a tech community, inside and outside the MENA, we need to help these young startups grow. Support does not have to be in the form of money, but can be in the form for advice, exposure, and support. Many just need to be helped to realize they can walk the walk. So startups, wherever you are, reach out to the diaspora. They really want to help.

Confessions of a Tech Entrepreneur – Fortune (Arabia)

This is a translation of an article posted in Fortune (Arabia) – October 2011

Taking on entrepreneurship is one of the most life changing events any person can embark on; it not only impacts the individual, but impacts the community and even the world. An entrepreneur is someone who just does not accept the status quo, but has a vision for the future and makes the impossible happen to arrive at this vision.

Entrepreneurship is not easy anywhere in the world. Each region has its unique challenges, and in the same ways has its unique opportunities. The Middle East and North Africa (MENA) is in transition. All market indicators whether it is around consumer usage patterns, infrastructure availability, business demand or overall business and political disruptions indicate the MENA is ripe with opportunity. Things are moving quickly and it is clear that it is a major and growing world market.

What does this growth mean for MENA entrepreneurs? We are about to enter the age of MENA entrepreneurship. MENA Entrepreneurs are going to be the life blood of all MENA economies. If you have what it takes, now is the time to act and take that idea you have always wanted to do and just make it happen. Only good will follow!

In my journey as an entrepreneur, I too started with a desire and an idea. This idea took me to unexpected places and taught me plenty of lifelong lessons that I will share with you in a list of 10 confessions:

1. Be your #1 customer

I have always found that the greatest products service the needs of those that create them. Solving a real personal pain point makes you passionate about the space, and solution. Being your #1 customer makes you use your own product everyday and forces you to keep improving it before the rest of the world asks you to. Your problems are potentially business opportunities.

2. Beauty though real things, not business plans

I always tell entrepreneurs when starting out not to focus too much on the business plan. That is a poor use of time. Spend your time building a prototype and make it look beautiful. Many early stage detailed business plans I have seen are not worth the paper they are written on. A beautiful user experience that solves a real problem get most users and investors excited. It also proves that the team behind the idea can actually deliver, which is usually the biggest wild card with early stage entrepreneurs. So ask yourself, would you invest in a business plan or a real working service that looks great?

3. People like to do business with people they like

One of the best pieces of advice I got when I was starting out was to not be so serious or take myself seriously. When working with customers, investors, and partners, it shouldn’t all be about business or technology. Human nature gets people to gravitate towards people they like. I have seen it time and time again, and all over the world, people like to do business with people they like, plain and simple. Do not forget that. There is no harm exposing your cool personality during these important business meetings and presentations.

4. Fail fast

Failure in the MENA is a huge taboo, sometimes the kiss of the death. If you read the research, second time failed entrepreneurs double their chances for success. At a more tactical level, I have found that it is far more important to get to a working prototype as fast as possible, so you can identify what is not working and fix it. In most of the products I have worked on, the first prototypes validated that the initial ideas needed evolution to work for the market. This is especially the case with new products, new markets, or new ideas. Ideas need time to bake, and it is best to bake them by allowing the bad ideas to fail as quickly as possible so the good ones fourish. So, don’t be afraid to have failed ideas under your belt, just make sure you do it quickly. In fact, the more bad ideas you have under your belt, the closer you are to having a good solution.

5. Build a lean mean machine

One common mistake I have seen in many startups is scaling and hiring a lot of people quickly. I think that it is a bad idea when you do not know that you have a product market fit. The less money you spend at the beginning, the longer your runway to figure out if you have a business. Start to scale only once you see traction, otherwise it is a poor use of money. Find the cheapest path, time and money, to test the solution.

6. Put everyone, including yourself on a vesting schedule

One of the most challenging problems with most startups is figuring out who owns what. I have a simple rule, all employees and founders must be on a vesting schedule from the start. Vesting is when people get their equity in increments over an allocated period of time. For example, if you own 40% and are on a 4 year vesting schedule, you get 10% every year for 4 years. If you leave early, then you get what is vested. There are many schools of thought, but I generally like to pick a vesting schedule of 4 to 5 years. This is such a critical concept because it protects everyone. If anyone wants to part ways early on, then it does not destroy the business. Further, it also tests if everyone has the resolve to stick with the business. A business is a multi-year affair and those that stick with it should be rewarded more than those who do not. This topic has a lot of other subtleties that I will not go into, but the principal should be set forth from the start.

7. Great teams rule

When starting a business it is important to find people to work with you that complement you. It also allows you to scale as a person and creates an environment of healthy dialog. The most important advice I got in the start of my career was when I figured out how to get others to help me. I have a better chance of moving faster and having broader impact. Further, innovation is a process and not an event. Working with others helps put that process into hyper drive. When picking people, make sure they are rock stars at what they do. The first group of people you work with will define your corporate culture and be role models for everyone else. Never compromise on people because one bad apple will bring the whole team down.

8. Plan in small measurable increments

I am a strong believer that attacking problems should be done in small increments. It makes things manageable and achievable. I generally like to set my goals once per quarter and then every week set a weekly plan to support my quarterly goals. Especially in technology, planning beyond a couple of quarters is the equivalent of looking in a crystal ball. This does not mean that there shouldn’t be a strategy; a strategy is a direction, not an execution plan. Execution should be focused on measurable deliverables. If you do not measure what you do, then how do you know when you are done or if you have succeeded.

9. Always get out of your comfort zone

I have a personal rule, if I am in my comfort zone I am doing something wrong. When you are in your comfort zone, then you are not learning. Getting out of your comfort zone, means you are learning new skills to close a gap. I ask myself always, am I doing something new? If the answer is no, then I need to change things so I am uncomfortable again.

10. When starting out, sell to anything that moves

A common thing I hear from many entrepreneurs, especially in the MENA, is their fear to share their ideas with others. The logic just shocks me. First, if an idea can be easily copied by just a conversation then it is an indefensible idea. Second, actually executing on an idea is really hard work. The likelihood of someone doing this is very low. On the plus side, when you share your ideas with others, then questions they will ask you will help it grow and flourish. The more people who talk about what you are doing the more you are likely to get visibility in the community and industry.

In closing, entrepreneurship is the most exciting thing I have ever done. It has helped me grow as a person because of the things I had to do and all the great people I met in the process. I am sure you will too. The hardest part is always taking that first step, so what are you waiting for?

Fortune Arabia – Interview

Sami Shalabi – Fortune Arabia – Career Coaching

English translation found here

Venture Magazine Interview

Sami Shalabi Venture Magazine Interview

MENA Entrepreneurship: Challenged Opportunity

During my trips to the middle east I try to capture new thoughts about things I observe. My previous post on the topic covered my early observations. This summer I had the privilege of hanging out with some Jordanian entrepreneurs and listen to their heroic journeys. Here are my observations:

The opportunity is significant, but opaque.

On the ground it is clear the opportunity is significant. You can see how peoples lives can be impacted by technology. The things we use everyday in the West, such as online shopping, online banking, LBS, e-commerce, etc are still not mainstream, but it is clear the region is at an inflection point. Internet access to spreading like wildfire. There is a desperate need to local solutions.

However, the opportunity is still very opaque for people not on the ground. As part of some due diligence I was doing, I had a very difficult time finding any concrete data about market size, the flow of money, the major players, etc. Such information is easily found for other markets. Information appears to be shared anecdotally, and once pieced together does not always add up. Candidly, people like me, who have short stays, walk away not feeling comfortable investing.

Recommendation: We need to capture, document and publish real market data to showcase the opportunity. It is a critical piece of bootstrapping the investor/acquisition ecosystem.

The flow of money is a serious challenge

This appeared to be a universal problem for everyone I talked to. Getting money into their bank accounts is difficult.

Investors: Getting money from investors is a challenge. There are not many early stage investors. If they do exist they offer ridiculously low valuations only viable to the desperate.

Business-To-Consumer: Lots of startups complained about something we take for granted, the lack of a payment gateway. Most complained that they can not find a bank willing to offer them an online payment system. Therefore, collecting any money from consumers that scales and automatically goes into their bank accounts is just MIA. Options like paypal, etc just do not work. They need to get creative, but this issue really hampers the local startups from succeeding.

Business-To-Businsess:: Another complaint I heard is that money collection is real challenge. You can do a lot of business on credit, but payments become an issue. I was told that bartering is a common means to pay for things when money and credit are tight.

Exits: Exits are hard anywhere. In the US, large corporations understand that acquisitions are an important tool to infusing talent, create new businesses, and get access to new technology. The acquirers in the region are lacking, unless they are from the outside. As someone who has been through an exist it is a tough journey and does not happen easily. Therefore in the region the odds for exists are very limited. This is a tricky problem since you run into a chicken and egg. You need big corporations to acquire little guys. However, there aren’t that many big guys around. So we need to help the little guys become giants.

Recommendation: Embrace the realities since these problems will take a while to get solved. Governments should take the flow of money issue head on since it will require legislation to address this huge gap.

Exposure outside the MENA

I asked everyone I met how they want from the Diaspora to help? This was in part to ask how someone like me can help and how organizations I am involved with such as YallaStartup, and MIT Arab Alum Association can help. The most common thread I got is more exposure to the US. When I go back I will look for ways to bridge this gap, but my advice to these startups is that exposure is a full on contact sport. Get out there, make it a priority.

Recommendation: You should try to goto the conferences, make it a point and mingle. Whenever you visit someplace new, reach out to people you know and do not know. This is standard procedure for us in the US. People like to do business with people they know and like. Just do it!

MENA Entrepreneurs are warriors!

The entrepreneurs I met are real warriors. They are leading the pack with their risk taking. I salute them all for what they have achieved given the difficulties they talked to me about.

Finally, the Arab diaspora really wants to help. if you have ideas for how we can help, please do contact me at [sami at samishalabi.com]

My blog now has a new look

A much overdue make over has finally made it! Lots of behind the scenes plugins! My favorite is “lifestream“.

Why Internet Censorship in Jordan is Bad for Business

Last week I read the sad news about how an existing Jordanian law related to anti-defamation got applied to Internet websites. As I understand the details of the law is that it links defamation with Jordan’s press and publications laws, making the publisher liable to ensure all content is within the requirements of anti-defamation (See Eyas’s excellent article to get the background). When a website is treated like a publisher, then site owners become responsible to make sure that all content adheres to the law. This means that if I am based in Jordan, I need to ensure the comments on my blog are good. If I create a website that has user generated content, I need to make sure everything is in compliance.

There is a lot of discussion (here, here and here) about how this is bad from the perspective of human rights and freedoms, but I want to look at this issue from the perspective of business impact.  These kinds of laws are just plain bad for business. Let’s look at things from multiple perspectives:

Entrepreneurs

As an entrepreneur, I need to make a decision about where to incorporate and how to ensure my company is in compliance with local laws. Based on this law I need to hire staff to monitor all content on the web site. This costs money. Also, I would need to change my terms of service and privacy policies to meet the requirements of the law. This also costs money. I will need to build controls in my software to moderate and monitor content. This costs money. Surely I can pay for all this, but if I were smart, I would just incorporate elsewhere. What a headache! So, all employment, taxes, and IP benefits will get exported. Not good for Jordan!

Investors

As an investor, I am always looking for ways to maximize my investment and reduce risk. Having such laws introduces more risk to any investment, because the startup has to do additional work and needs to allocate a legal budget to deal with any issues not in the control of the startup. To make matters worse, for Internet startups investors make their money though an exit to a larger company. Would a large company want to buy a liability that would suddenly poison their assets? It is hard enough to get acquired. The law makes things harder. Further, an acquirer will probably relocate the business to a location that is more friendly. Bad news for Jordan!

Large Corporations

Think about it, would a large company setup shop in Jordan if there were other options that did not come with the baggage of censorship? Given the risks, most large companies would just setup shop in a nearby location to avoid these issues. The Jordanian market is small, but is an ideal location and has an amazing talent pool that would serve the entire region. However, when weighing the options, especially around complying with censorship laws, it just does not make sense. Bad news for Jordan!

Creativity

Anyone who has worked with creative people knows they are generally eclectic and do not always conform to the norms. Any successful Internet business is based on its in house expertise and creativity. Having censorship rules, just makes it difficult to innovate because artificial walls are put up. Creativity and innovation is one of the keys to building a successful business. How do we expect people to be creative and push the envelope when they are surrounded by virtual walls. Lack of innovation makes a business less competitive and less likely to succeed. Bad news for Jordan!

Access to Information

I worry that such laws will introduce new kinds of controls for the access of information into the country. Imagine a world of firewalls, and censors scanning the web for inappropriate content. The occurrence of such things may trigger the blocking of information. Access to information is critical to our success. Surely there is bad content out there, but there is far more good and useful content. The Internet has changed how we learn. You can not only search for content, but today you can engage with experts to learn more. For example, a non-profit I co-founded has created a Q&A platform (http://answers.yallastartup.org/) for people to learn and engage with one another.  Let’s not take that away.

My view is that anti-defamation laws just need to be separated from the medium that delivered it. Mediums will come and go, and we should not impose restrictions on the innovations that will create the next knowledge economy in the region. I love Jordan. I believe in Jordan. I want it to be great! Let’s change these laws. Our future depends on it!

UMen Interview: Standing Tall

Sami Shalabi UMen Interview

MENA Entrepreneurship: Observations

I had a great time in Abu Dhabi and Amman for both the MIT Pan Arab Conference and Amman Global Entrepreneurship Week. It was really an educational trip since I have not been connected with the entrepreneurial scene in the MENA. I saw two different approaches with regards to entrepreneurship in both Abu Dhabi and Amman. In general things are very positive, with innovation and creativity being at the forefront.

In Abu Dhabi, there is a lot of money floating around. People use billions more than they use millions. The scale of projects in play are a totally different level. Some of the key businesses emerge around relocating large industries to the UAE through government intervention. The bulk of the opportunity for startups lies in the ripple effects of these government led macro events.

In Amman, I saw a more of a bottoms up approach to entrepreneurship that is less tied to riding government led initiatives. You could feel the energy and excitement around starting new businesses and in particular I saw a large focus on solving problems using the the internet and mobile.

This might have been a function of who I met in both places.

However during my trip I saw a few common themes emerging from the many discussions I had with all the great people I met. Some of this might not be new, but I wanted to capture my reactions and recommendations for how to make things better.

1.
Talk to each other people! - during my visit I met a lot of entrepreneurs. What surprised me was that I was sometimes introducing people in the same country to each other. People have a genuine fear that their ideas might get copied. That is crazy! If your idea will get easily replicated then you are not solving a hard problem and thus do not have a competitive advantage. A big part of my success resulting from socializing my ideas with others and this helping me think through the problem. Also, sharing ideas/needs/issues can help you solve things faster and even connect you with the people you desperately need to support you to make the business successful. One thing I learned from a good friend is that people like to do business with people they like. The only way to break these barriers is to build relationships. Have more ways to connect with one another!

2.
When thinking about risk, think of the upside not downside - Joi Ito wrote a wonderful blog post about this topic that you should read. His view clarifies why early stage funding (hundreds of thousands to a few million dollar investments) needs a different way of thinking about risk. Investors please read this before talking to 2 guys working out of their homes.

3. Think open – I was a little surprised to hear that most of the technical work in the MENA startup world was .NET. What?! Not to diss .NET, but in the US startup world .NET is far from the norm. In my talk, I emphasized that at Zingku and Google we made a heavy investment in leveraging open source software. A lot of great innovations happen as open source and it is FREE! You should seriously consider open source as a technology choice and even a model for your business ideas. Keep an open mind.

4. Fail Fast
- This is sometimes counter intuitive, but your odds for success improve the quicker you fail. In the MENA culture, failure is the kiss of death. That really needs to change. If you read the research about this, the odds for success improve with failure. When starting a business, you are solving a problem. First, is the problem real? Is your solution the right one? Knowing the answers to these questions quickly helps you tune things quickly so that you can figure out the right formula. Failing fast and iterating is a key step when innovating.

5. Talk to the Diaspora
– There is a lot of folks outside the MENA that genuinely want to give back and share their expertise. They just need a mechanism to do so. Be bold and talk to them. Give them ways to get involved with what you are doing. It could be as simple as asking a question. Things that might not be obvious to you might just be an obvious best practice elsewhere.

6. Focus - A few entrepreneurs were describing what they were doing and described several ideas they are working on simultaneously. My view is that when you start you need to find your focus. Your biggest cost early on is opportunity cost since you do everything. When I was doing my startup we always said that we needed to keep focusing until we found the niche that loved what we are doing and then grow from there. If you are not thinking in this way it is hard to find who cares about your solution and thus not able to really nail the problem and solution. This does not mean your focus will not change over time, but a quest to focus will help you find the problem and solution at hand.

7. Get your hands dirty – Folks see personal career growth as getting away from the technical aspects, such as coding. Stay versatile and do not think that any job function is below your pay grade. Till this day I still code. It keeps me connected to the realities of what my team is doing. It also helps me make important triage/product/feature decisions since I have visibility to all the other aspects of the business, and more importantly exposes me to new things that get my creative juices flowing.

Finally, I wanted to close with some stats about the MENA:

  • 60M Internet users (17% of population)
  • >2000% user growth (2000-2008)
  • ~90 cellular subscriptions per 100 inhabitants
  • 5% of the world population are native Arabic speakers, but only 1% of internet content is in Arabic

Wow! YallaStartup!

Jordan Business Magazine Interview

Sami Shalabi Jordan Business Magazine Interview

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