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 

 

Coverage of the 8th MIT Enterprise Forum – A few pictures

A few pictures of the participants and judging phases of the 8th MIT Enterprise Forum Arab Startup Competition that took place in Kuwait, April, 2015.

Credit and special thanks to Mariam Al-Rayes and the MIT EF Pan Arab organizing team for the pictures and for putting together truly inspiring, thought provoking, and informative event.

Coverage of the 8th MIT Enterprise Forum – Day 2: How We Move Forward

The agenda for the second (and, unfortunately, final) day of the 8th MIT Enterprise Forum in Kuwait promised a wealth of ideas, speakers, and inspiration.

I can safely report that it did not disappoint one bit.

The morning session kicked off with the ever ingenious Dr. Naif Almutawa, creator of “The 99” (the first group of comic superheroes born of an Islamic archetype). Dr. Naif seldom ends a talk without leaving the crowd thirsty for more, and this time was no different. The clinical psychologist’s talk highlighted the importance of mentorship as it relates to leadership. In essence, he delivered the message that “every leader needs a mentor”. From the onset of this forum and the Arab Startup Competition, this idea has been the undisclosed theme of the event. Dr. Naif’s talk helped resonate that idea even further.

 

Following Dr. Naif was a panel on the role of private business in supporting the startup ecosystem. Zain Group’s CEO Scott Gegenheimer and Ericsson VP Patrik Melander led the panel. I was pleasantly surprised to find out about the initiatives both Zain and Ericsson were working on to support connectivity in rural areas; something that will have a big impact on the potential market for any startup. I was also surprised to find out that Zain had an initiative in Jordan that acted as an accelerator for statups (called ZINC), and that they were planning on rolling it out in more cities across MENA. In the QA, a few members of the audience voiced their opinion that these private companies have benefited from government support and public infrastructure, and it was their duty to support startup initiatives even more. I completely agree.

 

I was looking forward to the panel on Access to Capital in MENA, which hosted leaders of the VC industry in the Arab world. The panel discussion was thought provoking. The panel’s message was heard loud and clear, “there is a lack of capital flowing into the tech scene in MENA”. There was one stat in particular that I found surprising: in the US, 5% of capital is invested in technology and startups, compared to 0.1%-0.6% in MENA. The panel called for more openness to startup failure, and a shift in risk assessment in light of the dwindling opportunities in traditional low-risk investment vehicles such as real estate. The discussion was an important insight into the availability of capital for startups.

 

The other two panels I would like to highlight were on creating a knowledge economy and the long-term energy outlook for the region (attended by Mr. Nizar Al-Adsani, CEO of KPC). The goal of both panels was to look forward and see where the Arab world was heading. The falling oil prices has been a topic of debate among participants, and it was intriguing to find out what perspective Mr. Al-Adsani had to offer. One sentence Al-Adsani mentioned struck me in particular, “Oil at $60 is an opportunity”. Perhaps now more than ever, the technology sector has a chance to prove itself as a true cornerstone of a thriving economy. With oil continuing its fall from grace, there is room for new sectors to shine and show the way forward. Ultimately, the technology sector is about the entrepreneurs who are courageous and talented enough to take a chance on creating the next global giant.

 

The Arab startup community needs to rally today more than ever to showcase the plethora of original ideas and abundance of ingenuity to pave the true alternative to an economy overly dependent on oil. That was the message and call of action for the way forward.

 

As MITEF came to an end, I couldn’t help but feel a renewed optimism coursing through my veins. I am now sure, more than I have ever been, that leaders on all levels and across all segments are embracing the need to support the startup ecosystem in the Arab world. My hope is that this continuous drive will reap it’s rewards in the very near future.

 

Special thanks to MIT and the organizers for putting together a terrific event. And special thanks to Mariam Alrayes for allowing us the pleasure of covering the forum.

 

(Reminder: pictures of the entire event will be posted soon… stay tuned!)

 

 

 

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