How to build a company that will last forever

Scale is important for startups to put them on the radar of strategic acquirers, which are a more likely route to an exit in MENA than listing on public markets.

But MENA is not a single market so regionalizing your business is a difficult and expensive achievement, although we’ve seen some notable names do it such as Careem, Souq.com and Anghami.

To achieve scale, and attract those strategic acquirers, you need sustainable growth rather than quick wins.

These are the elements that I believe are necessary for a company to get there, and if you don’t end up exiting you’ll have built a solid enterprise that will last forever.

1. Use the right growth metrics
Growth in product use and adoption is key to a startup’s valuation. Regardless of the vertical you’re in, your key performance metrics should always capture that as valuations for technology startups are more correlated to revenue/usage growth than any other financial metric. To put this in perspective, at Talabat a modest week for transaction growth was 7 percent week-on-week, and acquired for a more than 20x revenue multiple, versus market comparables of 10x at that time.

2. Show your regional scale through product adoption
Showing strong evidence of widespread product use and adoption at scale is the only evidence of your position as a regional startup, but it’s much harder to show high growth rates when your revenue/usage are large (when you hit about $5 million per five million users). Product/market fit at scale is how strategic investors gauge a company’s growth prospects.

3. Pick the right investors
To achieve long-term sustainable growth, access to smart capital through multiple rounds of financing is critical. Instead of spending half of your time trying to fundraise, resilient financial backing lets you focus on the business. The best regional example I can think of is Souq.com, whose institutional investors have supported the company’s growth through its different stages.

4. Understand unit economics
Understanding your costing structure and properly allocating your total costs on per transaction basis must be accurately captured in your unit economics. As you reach your Series A and B funding rounds, understanding your unit economics is important in order to have a sense of what your margins could look like when your business matures. Due to different business environments Talabat was operating in, we used separate unit economics for each country we operated in. Such reports gave a better understanding of how much incremental growth directly affected Talabat’s bottom line.

5. Have a large market
Strategic acquirers invest in companies that have a large market. A large market means that the company could reasonably become a large enterprise even without extremely high penetration of that market. At Talabat, the food ordering market size was at least 10 times our daily transactions, even after operating for 10 years when we were growing at over 7 percent week-on-week.

6. Know the competition
When you’re disrupting an industry, competing products should never be ignored. Understanding your market structure and how your startup fits into the broader market is key to building your ‘unfair advantage’ over direct and indirect competition.

7. One vision, multiple products
Strategic investors want companies that aren’t built around one product. It’s important for founders to look beyond the product they’re currently offering, to build a community of products. That’s why market-leading companies such as Facebook start with one core product and end with multiple products that ultimately serve the single core vision.

8. Be community leaders
Strategic investors want to invest in companies with leadership teams that are branded well in the ecosystem they operate in. Beyond the founders, your C-Suite executive team have to be known names in their field, to build the trust of strategic investors when they do reference checks.

9. Hire the right sales and marketing people
Strategic investors will want to see you’ve hired a proven head of product and marketing, and sales. That person/persons is important as you seek to address consumer needs as you scale, and help you develop new features and products in the long-run.

10. Doing good for the community
Make sure you give back to your community. Mentoring entrepreneurs, supporting coding schools and engineering departments at local universities, as well as startup initiatives and many other activities are important. Strategic investors understand the value of a community leader. It’s not a quantitative metric, but a brand value that the community appreciates.

11. Keep your accounts clean
Most startups are deeply involved around the product and often forget that finance is core to ensuring long-term sustainability. Maintaining healthy accounting books and producing financials in a timely manner will prepare you for the fiscal rigour required by strategic investors.

12. Provide the right work environment
It may seem more administration work to build a code of conduct, employee handbook and operational procedures, but is important to create the right environment in your workplace. Communicating the founders’ values and expectations to employees affects the startup’s ability to execute on its plans. During Talabat’s first five years, we always tried writing our playbooks ourselves, which tended to be brief. As we grew, proper policies and procedures were developed to ensure we had the same operational efficiency as when we were a six-member team, and provided new hires with the appropriate context for doing the job. We had a weekly breakfast where everyone from the business could attend which was a chance to embrace the company’s values and vision.

13. Don’t take legal shortcuts
Startups in our part of the world often take shortcuts in complying with the local laws, which is not attractive for strategic investors. An example we see regionally is that business licensing and jurisdiction regulations are often ignored: your startup can be registered in a free-zone that only allows you to do business in that jurisdiction, but your revenue actually comes from other jurisdictions. Taking legal short-cuts might save you some money in the short-run but as you achieve regional scale this will come at a cost to your company’s valuation at the time of acquisition.

14. Responsible governance
Assemble a board from your investors that challenges your vision and governs your practice, and attract experts who could technically and operationally help you improve the business. This strategy paid off well for Talabat at the time of exiting as a member of the board played an important role in negotiating with the acquirers.

 

Abdulaziz B. Al Loughani

aballoughani@gmail.com

twitter: @aballoughani

StartupQ8 Event – 25th of Jan

Hello everyone,

We are kicking off this year with a very special guest, Ihsan Jawad. Ihsan is a managing partner at MEVP and founder of Zawya.com (Bloomberg of the MENA region that was acquired by Reuters).

You shouldn’t miss this event if you want to learn how to build a successful startup and how to raise money in the region. Ihsan is also an investor in FishFishMe, Inc., so you’ll get some insider stories about that as well since I’ll be the person interviewing Ihsan in the event.

Event schedule – 25th of Jan

7:00pm – 8:00pm: Interview with Ihsan Jawad

8:00pm – 9:00pm: Networking

Venue: Global Tower (Kuwait City)

We will change the event structure starting from this event. Instead of having two talks, we will have one talk (something like an interview) and the second part will be networking. I usually hate networking because its always awkward to go talk to someone you don’t know! So we will do something more interesting than just tag names to make sure you get to meet everyone. Really looking forward for this event and it’s good to be back!

startupq8_jan_v0-2

ArabNet Kuwait gathered entrepreneurs around exciting panels and talks

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After lots of announcements about ArabNet conference, the event successfully landed to Kuwait for the first time. Arraya Ballroom was the place to be on October 4 and 5. There were representatives of many respectable companies, such as KNET, MasterCard, Twitter, Careem and many others. We were also there, wouldn’t miss such an event that brings us the opportunity to attend interesting panels and talks.

Well-known speakers and panelists

One of the major conference panels was the opening panel that gathered Kuwait’s leading entrepreneurship advocates – Abdulaziz B. Al Loughani (Vice Chairman at The National Fund for SMEs Development), Essa Al Essa (Chairman at Mefazec), Mohammad Alhajeri (Chief Investment Officer at Impulse International), Mohammad Jaffar (former CEO of Talabat) and Shafeeq Al-Saed Al-Omar, Assistant Undersecretary at Ministry of State for Youth Affairs. They discussed the digital ecosystem and what are the opportunities and obstacles for entrepreneurs here in Kuwait.

2016_10_11_hashim_bahbahani_arabnet_panel_startups

Hashim Bahbahani, co-founder of Coded and a member of StartupQ8 community, participated in a panel that was held during the second day of the conference. Charles Saliba (Founder and CEO at HR Works s.a.l.) and Meherzad Dastoor, (Senior Manager, People Advisory Services at Ernst & Young) joined him on the stage and discussed talent acquisition since that’s one of the biggest challenges startups face nowadays. They were also talking about challenges startups face, outsourcing or doing everything in-house, the best practices for hiring, training and retaining talent, which we all know it’s not very easy.

Who won the ArabNet Kuwait contests?

Aside from all ArabNet talks and panels, there were two contests. One of those was called Startup Demo Competition, where Meddy by Abdulla AlKhenji (Qatar) won the first place for an app that helps people find best doctors based on patient reviews and credentials. SoukDesigner by Kamel Kabbani (Lebanon) took the second place. It is an online platform that enables people to sell products in their personalized online store easily and economically. Third place went to Pricinity by Ahmad Al-Benali (Kuwait). It’s a search engine for products, prices and stores throughout Kuwait and the region.

2016_10_11_jaffer_mahdi_arabnet_ideathon_winner

Ideathon contest was won by Jaffer Mohamad Mahdi, the youngest participant at some ArabNet competition so far. With his idea called MySpot, he could actually help resolving one of the crucial problems in Kuwait – finding a parking spot.

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We would like to thank the ArabNet team who worked very hard for the last couple of months to bring this event to Kuwait and gather entrepreneurs and startupers around awesome topics.

Make sure to be there next year!

Top 3 websites to learn coding

2016_07_03_coding_resources
With all available resources that we are surrounded by today, it’s easy to learn anything you want. Coding or programming, whatever you call it, is much easier to learn nowadays than 15 years ago. Video tutorials, online courses, you name it – knowledge is just a few clicks away thanks to easy access to the information.

Since Hamad Mufleh has been on all sides of software projects; as a client, manager, developer and UI/UX designer, we asked him to recommend few websites that he finds useful for people who want to learn coding.

  1. Codecademy

Codecademy is an online interactive platform that offers free coding classes in 11 different programming languages. Some of those are Python, Java, PHP, JavaScript (jQuery, AngularJS), Ruby, SQL, as well as markup languages HTML and CSS.  It’s free, and difficulty level is easy to intermediate. This website allows you to quickly and easily gain familiarity with a variety of coding languages with little to no prior experience. If you are a beginner, this is a good place for you.

  1. Code School

Code School is an online learning destination for existing and aspiring developers that teaches through entertaining content. Each course is built around a creative theme and storyline so that it feels like you’re playing a game, not sitting in a classroom. They combine gaming mechanics with video instruction and in-browser coding challenges to make learning fun and memorable. Code School offers almost 60 courses covering Ruby, JavaScript, HTML, CSS, iOS, Git, and databases. Their courses are more in-depth to train, they can turn you into an expert with the industry’s best practices. Difficulty level of Code School’s courses is intermediate to hard.

Some of their courses are free and some of them are $29 per month. If you decide to go with an annual plan, it will cost you $19 per month. They also have a blog where you can read interesting pieces of advice and helpful tips.

  1. Stack Overflow

Stack Overflow is a Q&A website site for professional and enthusiast programmers. It’s built and run by the community as part of the Stack Exchange network of Q&A sites. With the help of community members, they are working to build a library of detailed answers to every question about programming. On Stack Overflow you can use the tags or browse the lists of questions, or simply use the search box. It’s pretty sure you will find some solution to your coding problems there. If you don’t find what you needed, you can go directly into the chat rooms arranged according to languages and platforms.

You can start with those resources, or you can apply for Coded’s part-time bootcamp and become a professional full-stack developer in 14 weeks.

Dana Alfaraj: Why did I choose to work in a startup right after the graduation?

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After 23-year-old Kuwaiti Dana Alfaraj graduated from the American University of the Middle East in January 2016, she decided not to go with the flow and take some job in a public sector, but to start her career in a startup. She holds a bachelor’s degree in Industrial Engineering and is currently working as an intern at Ghinwa, a startup that won the first place at recently held MIT Enterprise Forum Arab Startup Competition.

StartupQ8: What (or who) motivated you to start your career in a startup and not in a public sector? When did you decide to do so?

Dana: Ever since I was young, I lived an ordinary life like any other teenager. Half way through college, I had a turning point because I realized that I don’t want to live the routine life anymore since it is not who I am. I have many ideas in my mind that I have the potential to accomplish, but I never had the courage to take action. I shifted my perspective of life and I started liking change and taking the risk of trying new things.

My mentor Mohammad AlMunaikh, who is the CEO of Ghinwa, had a huge role in motivating me to enter the world of startups and stepping out of my comfort zone. Before graduating in a month or two, I made up my mind to go for it. In both cases, if it turns good or bad, I’ll learn something from it. So far, I love it and believe that I fit there perfectly because I’m learning a lot in a very short time and I’m enjoying the experience.

StartupQ8: Since the team is based in Dubai, from where do you work?

Dana: I work remotely in Kuwait, but I fly to Dubai whenever I am needed there. In general, most of our meetings are via Skype. Though, there are few meetings that take place in Kuwait. Eventually, when I get the full time job, I’ll be moving to Dubai.

StartupQ8: What is the most challenging part of working in a startup?

Dana: For me, I think the most challenging part is that we are all in different locations. I find it a bit hard sometimes to communicate with the team through Skype or Slack all the time. Although, it is getting easier by time. I also didn’t meet the entire team yet. I would like to meet them and know more about the people I’m working with. This is my first official job and all the members of the team are well experienced. Sometimes, I find it challenging to catch up and be on their pace. The good thing is that I get to observe and learn from their experiences.

StartupQ8: Is there any piece of advice you would like to share with fresh graduates when it comes to choosing private sector over public sector?

Dana: People have different backgrounds and experiences. Some people might fit in the private sector rather than the public sector and vice versa. From my experience, the best advice I would give is to try new things and give it time to discover what you really passionate about to end up in the path that you love. Simply, choose the job that makes you sincerely happy, because it will lead you to gradually succeed in what you’re doing. Make sure you live the journey that you want and enjoy the ride.

We couldn’t agree more with Dana.

Did The Technology Industry Reach Its Plateau?

The Technology Hype

There is too much hype around staggering technology startup valuations, unicorns, Apple’s cash position, Alphabet’s vision, and many more. Most of what I hear and read is whether or not the technology industry reached a plateau. Partly the reasoning is the exaggerated valuations, sometimes lavish life style of few technology entrepreneurs, and whether we really want so much new features in our mobile devices, or augmented reality?!

The Scope of the Research

That’s a very broad subject, and I spent time researching various angles that can tackle some of the questions that arise towards the technology industry. In essence, I decomposed the questions I want to answer based on different stakeholders:

Venture Capitalists: Should we raise a new fund? Should we continue investing in more startups? Is there enough room for mergers and acquisitions activity so we exit our positions?

Entrepreneurs: Should I start a new tech startup? Doesn’t it seem a bit too much crowded now to start yet a new startup? Would the big boys with big bucks have any interest/capital in the next 5 years to buy out my startup?

Executives of tech companies: How much more room we have for growth? Can we still play the acquisition game to grow our market share?

Methodology

Obviously, those questions cannot be answered in a one page blog post. However, a simple yet data driven approach can give us amazing insights into answering them.

Business Consolidations

Industries go through four stages until they become so called “mature” or “stable”. Based on the article “The Consolidation Curve” in Harvard Business Review, the four stages are Opening, Scale, Focus, and Balance and Alliance.

Briefly describing, the article tackles the consolidation curve of industries by measuring the market share of the top 3 players of the industry.

  • Opening: A monopoly that soon vanishes and the top 3 players control between 10% to 30% of the market due to an influx of competitors.
  • Scale: Major players emerge and buy up competitors. Top 3 players control between 15% to 45% of the market.
  • Focus: Top 3 players focus on aggressive growth and control 35% to 70% of the market. Still 5 to 12 major players are around.
  • Balance and Alliance: The top 3 players control about 90% of the market and form alliances between themselves.

Current Market Analysis

So if we take that segmentation as a basis to find out how much the technology market has emerged, and how much growth can it still absorb, then what we need to find out is how the top 3 players of the technology market stack against the entire market.

Unicorns and Listed Companies

My assumptions going forward would be the following:

  1. The basis of the research is the United States market.
  2. Listed Technology companies in the NASDAQ market comprise all the publicly traded technology companies. Link to the list.
  3. Private technology companies that matter are the Unicorns, i.e. startups that reached beyond the $1 Billion valuation. Link to the list.

Total Addressable Market

Screen Shot 2016-05-26 at 10.59.44 AM

Top 3 Players of the Tech Market

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Scale Stage

Sum of the top 3 players’ market shares is: 27.9%. This puts the Technology industry into the second stage of scale based on HBR’s article.

So What Does This Mean?

To answer the questions we addressed at the beginning, we need to take a look at the scale stage. Here’s how it’s described based on HBR’s article:

Because of the large number of acquisitions occurring in this stage, companies must hone their merger-integration skills. These include learning how to carefully protect their core culture as they absorb new companies and focusing on retaining the best employees of acquired companies. Building a scalable IT platform is also crucial to the rapid integration of acquired firms. Companies jockeying to reach stage 3 must be among the first players in the industry to capture their major competitors in the most important markets and should expand their global reach.

This describes the rapid M&A activity by large players trying to acquire as much good startups as possible to ensure their own survival. In summary, the answers to the questions would be:

Venture Capitalists: Should we raise a new fund? Should we continue investing in more startups? Is there enough room for mergers and acquisitions activity so we exit our positions?

Answer: In short: Yes. There is still room. However, funds should predict the estimated timing of stage 3 of the market. VCs should focus on growth startups in the industry’s transitioning phase into the third stage. Reason why is that the big players won’t have enough time to buy out startups at early stages and can only accommodate growth startups that will immediately add to their top lines and make fast synergies with their businesses.

Entrepreneurs: Should I start a new tech startup? Doesn’t it seem a bit too much crowded now to start yet a new startup? Would the big boys with big bucks have any interest/capital in the next 5 years to buy out my startup?

Answer: While entrepreneurship is always encouraged, and one should be dedicated to growing his/her company, I think with the tech scene becoming too crowded, tech entrepreneurs should have a solid idea regarding their possible exit strategy to one of the major players in the technology scene. That may seem trivial but from personal experience, I see lots of startup founders tackling legitimate problems but not having an idea about their exit strategy. Also, it does not necessarily mean that the exit synergy should ONLY be with Apple, Google, or Microsoft. Although these three are the giants, other major players are still very legitimate options since the industry hasn’t gone through the third stage yet.

Executives of tech companies: How much more room we have for growth? Can we still play the acquisition game to grow our market share?

Answer: Yes. There is plenty of room to grow. 27.9% of the market is way behind the 90% mark. However, acquisitions should be targeted smartly in various verticals in the sense that not only adds to the top line directly, but also makes it harder for the competitors to join that specific vertical. In short, release products and acquire startups revolving around the product to make the barriers for entry in that product’s vertical harder bracing for an aggressive competition in stage 3.

The Rise of “Community”

5 years ago, there were a number of entrepreneurial initiatives in Kuwait that large sums of money were allocated to but were operating independently of each other. A few governmental programs were servicing funding needs through both debt and equity instruments but nevertheless did not cover other building blocks of the entrepreneurial ecosystem, to name a few here is a list:

  • Kuwait Small Projects Development Company
  • Industrial Bank of Kuwait
  • AlRaeda Enterprises
  • KAMCO

 

Half (approximately) of the allocated funds for these programs were earning interest from deposits and the other half typically funded traditional businesses, with no focus on knowledge based economy. However, the SMEs scene in Kuwait was still quite active relative to the rest of the GCC and a majority of small businesses and startups were funded by private money (friends & family) through traditional funding terms.

 

On the consulting side, there were a lot of boutiques that offered relatively expensive consultations (to the size of businesses being established) and a few were more entrepreneurial friendly in pricing. Here is a list to name a few:

  • AlMubadir
  • Cubical Services
  • Traditional accounting/consulting firms
  • Manpower and Restructuring Program

 

Challenges

Beyond the abovementioned services, entrepreneurs were very much self-dependent (hustlers) and have been struggling with the following key issues:

  • Excessive regulations: It is very challenging to start a business in Kuwait as the licensing requirements and procedures are quite complicated, they take a lot of the entrepreneur’s time to start and maintain rather than focusing on the business 100%.
  • Attracting and maintaining talent is hindered by the strong benefits that the government offers and by the generous labor law rules and regulations with very restrictive immigrant labor permits.
  • Being the largest procurer, Government business penetration is very challenging and is predominantly taken by large corporations and family offices.
  • Access to private finance is limited as most private financial institutions do not view the SME/Venture asset class strategically and the Central Bank’s interest spread cap of 400 basis points is prohibiting high risk taking.
  • Support programs are nascent whether its incubation services, grant schemes, mentoring, business development services, there are a handful of programs with limited capacity.
  • The mindset and culture stand against encouraging modern entrepreneurship. Entrepreneurs are directly encouraged to take a risk-averse mindset and no sense of community exists.

 

Territory marking

With that said, there were a few startups in different industries that were marking Kuwait on the regional map, to name a few in the technology sector: Talabat, Koutbo6, KuwaitNet and many others in different sectors.

 

Infrastructure & market

During those years, government has invested heavily in telecom and internet infrastructure enabling residents and offices to benefit from fiber optic cabling in most areas around Kuwait. As the price of technology access was also witnessing a significant decline, penetration of internet became much more affordable and the bandwidth was only getting better and cheaper. The Apples of the world were causing huge software and hardware disruptions, making the quality and ease of using technology more accessible/useable than ever. The connectivity and efficiency only drove the world to be more connected through brilliant platforms and hardware and everything around the world was only a click away from everyone. Smartphone penetration climbed up the charts and Telecoms focused more on VAS for their customers, as voice calls became a utility.

 

Changes in Local Landscape

Kuwait LandscapeIn the past 5 years, the Lean Startup school of thought became more global and standardized the startup’s lifecycle, early stage funding methods and tools were becoming more visible. As a result of funding gap challenges we had in Talabat.com, my partner and I started setting up a late stage VC practice in 2012 that evolved into a larger project on a national level (the National Fund for SMEs Development), and several institutions started exploring the rising asset class (Venture Capital) where international private funds started flowing into the ecosystem (i.e. Talabat.com) and incubators/co-working spaces started blooming. Individuals (including myself and many others)/family offices/corporates continued to invest in the asset class and the funding gap is much smaller in size than it used to be. Startup competitions (local and international) were happening and developers/designers became more in demand. Despite not having a tax-break policy for non-profit initiatives in Kuwait, non-profit startup initiatives became very popular and the calendar year started filling up with many events in the startup world. Here is an overview of how the local landscape looks like today.

 

Community

If we look at the above table, a super majority of these initiatives are led by entrepreneurs, not government and not corporates (I‘m sure there are more efforts which I missed in the list). These are striving entrepreneurs who are giving us a sense of a real community that is shaping the future of our country’s startup ecosystem. As Brad Feld repeatedly mentions in his “Startup Communities” book, “entrepreneurs always lead the community” and this is exactly what we’re witnessing in Kuwait. There is a new culture of openness and information exchange between entrepreneurs that none of the earlier generations ever witnessed. Mentoring has become more standard and the notion of protecting your idea is gradually becoming obsolete. With more than 60% of the population less than the age of 35, the landscape is only starting to shape right now with much more efforts being geared for the community. There is a very important role for corporates and government to play but ultimately, the community has to continue being led by entrepreneurs who should streamline other stakeholders’ efforts for their benefit.

20 years ago, our flagship startup was Sakhr and we had Talabat conquering the marketplace model for the GCC in the past 10 years… all of that without 10% of the resources currently available for the community. Can you imagine what the next 10 years can produce for the local startup community? IT CAN ONLY GET BETTER!

 

 

Abdulaziz B. Al Loughani

@aballoughani

Announcing Coded’s Spring Coding Bootcamp

Folks,

We all know how hard it is to find a talented coder to hire or be your co-founder. So sometimes, the best thing to do is to go learn the technical stuff yourself. In the least, mastering the fundamentals of programming helps you  communicate with your technical team, and be more valuable to the product building process.

There’s no doubt that the time and effort you invest in your coding education will pay dividends for your startup in one way or another.

If you’re looking for a place to learn how to code, Coded, Kuwait’s first and only coding bootcamp, has announced earlier this week that they are accepting applications for the Spring coding bootcamp.

Coded Bootcamp Announcement

The bootcamp is aimed at beginners who want to become professional programmers. Coded students graduate as junior level professional coders.

The Spring bootcamp, which starts in March, is an intensive part-time bootcamp with 4 hours of class every weekday (5m to 9m), and lasts 14 weeks. The part-time format makes it easy for those who have a full-time commitment in the day time to join the bootcamp in the evening.

The application deadline is Feb 7th, 2016.

You can check it out and apply on joincoded.com 

 

Good luck!

 

 

 

 

 

When the Oil Wells Run Dry: The Industry That Can Save Us

This article appeared in Khaleejesque Magazine, INDUSTRIAL Issue, published November, 2015. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

Author: Hashim Bahbahani

Magazine Artwork: Reema Motib

5 min read.

On April 15th, 2015 there was an incredibly important global announcement that went unheeded by the Khaleeji mass media and general population. It was an announcement that could propel a series of life altering implications for every Khaleeji citizen.

The announcement, which was kept secret for months, was made by Tesla Motors CEO and founder Elon Musk. Musk revealed that Tesla had invented and commercialized the Tesla Powerwall, a new “home battery” powered completely by solar panels that could potentially power an entire house for a fraction of what conventional electricity would cost.

The goal of the solar powered home battery is to lessen the demand and reliance on petroleum and gasoline. In other words, with Tesla’s Powerwall, the world is a step closer to needing a lot less oil.

While Tesla’s battery on its own will never be enough to completely wipe out the demand for oil, it does signal the start of a realistic and feasible movement away from gasoline and into other more sustainable energy resources. The thing to remember about technology is that it grows exponentially, and there is no reason why that wouldn’t be the case with alternative energy. In fact, since President Obama took office, the United States “has increased solar electricity generation by more than twenty folds”, according to the White House official website. It is not unfathomable to think that the world could start harnessing alternative energy more efficiently, and almost completely move away from a reliance on oil in the course of the next twenty years. That is not as long away as it seems.

So what happens to our Gulf when our oil is no longer needed – no longer pumped – and all the oil wells dry up?

It is a predictable and daunting scenario. The Arabian Gulf is barren of valuable natural resources. The climate is unbearable, and the current infrastructure is unsustainable without a continuous influx of money and natural energy. Deprived of oil, the economy cannot support the current population.

We could be facing impending socio-economic extinction without even knowing it.

But there is still hope; there is still time.

Beyond investing in alternative energy, the Gulf must look to build an industry that is capable of surviving in a post-oil world; an industry that can vitalize an economy without depending on natural resources. But it also has to be an industry that is considerable and substantial enough to provide economic vitalization to the region.

The only industry that fits into that mold is the software technology industry, or as it is more commonly known “the tech industry.” This industry is built fundamentally on human intelligence. When it comes to developing software, there are no substantial hard assets in play, nor is there any significant reliance on natural resources. The rise of any tech sector is almost purely dependent on the capabilities of the people involved in it.

Undoubtedly, a strong tech sector can invigorate an economy. Today, two of the five highest valued companies in the world are software companies, Google and Microsoft; seven of the top thirty are highly involved in software engineering. In the U.S., the software technology sector provides the highest paying jobs, and consistently beats new employment figures for all other sectors, including oil and gas. Jobs in the tech industry are high in both quality and quantity.

But above all else, there is one factor that makes the tech industry our best bet for economic survival: speed. We, the GCC Nations, need to start realizing that time is no longer on our side. The biggest danger we face today is that we are in voluntary oblivion of the ever accelerating possibility of economic demise. If the demand for oil drops significantly, the ramifications will hit us hard, and they’ll hit us very quickly. Will we wonder at that time how we could’ve been so oblivious to our collective fragility?

Successful technology companies can give rise to a strong tech sector relatively quickly. The nature of software products allows technology tech startups to scale and grow at lightning speed. Take, for example, Uber, the real-time ride request platform. After only six years of existence, Uber has reached a valuation of approximately $50 billion. To put that in perspective, Uber is already bigger than gigantic companies that have been around for decades, like Deutsche Bank, Sony, Phillips, FedEx, and many more. Another example is Google, which, only after sixteen years of existence, employs over 55,000 people, providing those employees with unparalleled pay and benefits. The examples are endless.

If the right steps are taken, there is a real possibility that over the next twenty years the Gulf can transform into a new Silicon Valley and a breeding ground for global tech giants. A Khaleeji tech hub will also attract entrepreneurs to establish their startups in the area, and thus increasing the possibility of more successful tech companies blooming out of the Gulf. The main economic value for the region will come in the tax revenue captured from the financial success of these companies. Another important economic value will be in job creation, as large tech companies can provide high paying jobs at different levels and across a wide variety of specialties.

So what needs to happen for the dream of a Khaleeji Silicon Valley to become a reality? The task of establishing a dynamic tech industry is monumental and complicated. But it is highly possible nonetheless. In broad terms, there are three fundamental steps:

–   The current surplus of money from the oil and gas sector must be invested in building a technological infrastructure – internet and network systems, mobile connectivity, etc – to support software innovation. Additionally, governments must systematically invest in startups that might appear too risky for private investors.

–   Governments must revise rules and regulations surrounding software technology companies and e-commerce to allow companies to scale and grow to their maximum potential without unnecessary barriers.

–   Most importantly, the private and public sector must take a proactive approach towards developing and cultivating software engineering talent. In other words, we need to invest in producing better coders. Remember, the success of any tech sector is mostly reliant on human capabilities and intellect. The best way to produce world-class programmers is to provide Khaleejies interested in coding with the right education and training. It’s simple, but imperative. Recently, I co-founded “Coded”, the first coding academy in the Gulf, with a mission of offering world-class software engineering education to aspiring young men and women in Kuwait. Our hope is that Coded is the first of many local coding schools that aim to cultivate a new generation of topnotch Khaleeji coders.

Today, the Gulf is ripe to be a new global tech hub. There is an abundance of private and public investment funds, high consumer purchasing power, and a plethora of market opportunities. But beyond that, there is an ambitious and daring generation that is passionate about turning their dreams and ideas into reality using technology and software engineering. Investing in that generation is our only true hope.

There is a dark cloud hovering on our Khaleeji horizon, edging ever closer to us. We have willingly chosen to ignore it thus far, unconcerned with the storm it carries within it. But if we act purposefully and quickly, we can prepare ourselves for what’s ahead. And we might – just might – catch a glimpse of a silver lining.

 

This article appeared in Khaleejesque Magazine, INDUSTRIAL Issue, published November, 2015. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

 

Announcing: StartupQ8 Event for November 2015

This month’s StartupQ8 Event is jointly hosted with the MIT Enterprise Forum Arab Startup Competition. Our speakers this week were finalists in last year’s competition which was held in Kuwait. Our first speaker is Mohamed Sheikhaldeen, co-founder and CTO of Exo.io, a cloud rendering platform that enables artists and engineers to quickly and cost effectively render their drawings. Our second speaker is Bader Al-Ghanim, co-founder of EasyShippings.com, a platform to discover the best price to ship items to any location in the world.

The event will be held on Tuesday November 24th at Global Tower in Kuwait City. Here is the schedule:

Here is the schedule:
7:00 – 7:05 Welcome
7:05 – 7:45 SPIN Sales Technique for Startups by Mohamed Sheikhaldeen
7:45 – 8:00 Networking break
8:00 – 8:40 The Pivotal Pivot by Bader Al-Ghanim
8:40 – 9:00 Networking pizza

As always, the event will be in English and it is open to everyone (no need to register). Join our Meetup.com page for more details on our upcoming events.

See you there.

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