Many startup founders ask me this question “Should we move to Dubai?” I get it from startups not only in Kuwait, but all over the Middle East, especially since Dubai is now considered the business and innovation hub in the Middle East. Well the answer is not straight forward. For some startups it makes sense to move right away, for others later and for some maybe never.
To be able to answer this question, you need first to know what type of startup you are:
- Pure technology startup (example Google, Facebook, Soundcloud, Youtube…etc)
- Games Startup (Angry birds, Zynga, Dwanya Labs)
- Software as a Service SAAS (Zendesk, Dropbox, Basecamp)
- Marketplace (Airbnb, Uber, Fishfishme, Booking…etc)
- E-commerce (Amazon, Zappos, NetaPorter)
1- Pure Technology, Games and SAAS startups:
For each type of startup you need to be close to different type of people and resources. For pure technology, Games and SAAS startups the most important asset is your programmers, engineers and designers. Basically you need to be close to talented people.
2- Marketplace startups:
If you are a marketplace (connecting buyers to sellers) similar to us you need to be close to your customers and suppliers. Your startup is a balance between business and technology. However, your suppliers is your real product and you need to be close to them and you need to be close to your customers to make sure they are delivered what they are promised. That’s especially true if you are selling an offline product or service such as Talabat.com. It’s less true if you are a marketplace for a digital service such as Odesk.
3- Ecommerce Startups:
For ecommerce startups it becomes very important to handle logistics, inventory and fulfillment. It’s important to have good relation with your suppliers and carrier services. It’s also important to master marketing since the products you are offering it’s most likely provided by many other websites. For Ecommerce websites, you probably need to be close to your customers and to have warehouses closer to them.
Now after you identified in which category you fall then you can make a better decision. Now let’s talk about the advantages and disadvantages of Dubai for a startup:
- Easier to start a business, register a company and get a visa
- Very diversified population. If you can make it in Dubai, you most likely can go global and make it in another places.
- All businesses have head quarters in Dubai. If you are a B2B business you should be here
- Last year 10M tourists visited Dubai. Very good for travel related startups
- Talented people are here. The most talented people in the Middle East lives in Dubai. Here dreams become true
- There are incubators and accelerators.
- Some startups made it big here (Dubizzle and Zawya)
- Most famous investors are either based here or visit Dubai in a regular basis.
- You’ll be away from the social pressure and your family telling you everyday to quit your startup and go back to a regular job at a big company and get married
- Here you meet (sometimes) some interesting people that you’d never meet at any other place in the Middle East
- So expensive to live. Really really expensive!
- Talented people have many options and opportunities to join other startups or companies
I can’t think of other disadvantages. Dubai is so expensive and it’s probably the only reason you should think twice before moving here. Dubai will burn you alive. Office rent, salaries, living expenses you name it, it’s very expensive. If you are a new startup and you move here without raising money then you’ll most probably close in a short period of time, faster than you’d do in your home country. Startups need time and you can buy time with money. Money burns very fast here and so does startups. The life of your startup is much shorter here. I see this happen a lot since I moved here 2 years ago. There is only two startups that survived at In5 since I moved in 2013 that’s us (fishfishme.com) and Snappcard.com. Probably 30 other startups are all shutdown (sorry if there are startups that are still live and I forgot about them).. Why? Because of the expensive life.
For some startups it makes sense to have most of your team in one place and your sales team in Dubai. This is what many startups are doing to save money, and they are doing it the right way.
Don’t move to Dubai to raise money. Don’t move to Dubai because registering a company and paper work is easier here. Don’t move to Dubai because you love living here. If you have traction and customers, investors will find you wherever you are. Find what type of startup you are and who should you be close too, then decide if you should move or not.
If you have any questions about dubai send me a direct message in twitter @a_alshalabi.