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 

 

Failure: The Cornerstone of a Successful Startup Community

This article appeared in Khaleejesque Magazine, ECONOMICS Issue, published March, 2015. A PDF copy of the article is available here. 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

Print Artwork: Khaleejesque Team

4 min read.

I paused momentarily as I stood outside the meeting room, took a deep breath, tightened my left hand grip on my laptop briefcase, exhaled, and slowly turned the door handle to enter what I knew would be the last-ever meeting for our startup. There was only one item on the agenda: shutting down.

Even as I took my seat at the meeting table and drew a sip out of what seemed to be the blandest cup of coffee I have ever tasted, I thought one more time about reversing my decision to end our startup venture. In truth, I had spent more than a month agonizing over this decision. I fully understood the cold facts: our e-commerce platform for small businesses was not gaining enough traction or engagement, we were out of money, and we had little to show for after three years of trial and error.

But I also understood that shutting down our startup meant that I had to publicly admit failure and live with all the ramifications such an admission entailed. That, above all, was my source of agony.

In the Gulf region, thousands of startups founded by ambitious entrepreneurs have to deal with facing failure. Failure, after all, is the more likely scenario for a startup, statistically speaking.  This fact is fully embraced in developed startup ecosystems, where failure is celebrated and thought of as a rite of passage for entrepreneurs. In Silicon Valley, for example, “Fail Fast” is a divine mantra meant to encourage startups to rapidly try everything possible to make an idea successful, admit failure if it doesn’t work, learn from the experience, and take those lessons forward to the next venture.

This definition is a stark contrast to how failure is perceived in the Gulf region. Abdullah Asiri, founder and CEO of Saudi based startups ShopMate and Waqood Tech, remarks: “In global tech hubs, true failure is defined as stopping after the first unsuccessful try. If you don’t learn from the lessons of your first experience and apply them to the next startup (or the one after that), it renders the first attempt pointless. In mature startup economies, there is a lot of encouragement to openly discuss your failure in order to dissect it and learn as much as possible from it, and then try again.”

Asiri believes this encouragement is absent in the Gulf startup scene because there is a heavy punishment for failure.

“Here (in the GCC), it is very difficult for entrepreneurs to try again in a new startup because the backlash they confront from society after their first failure makes it unbearable to take another chance and risk facing such societal pressure again,” Asiri continues. “Moreover, investors here become much less inclined to invest with you if you have previous failures. In short, this pressure and punishment inhibit an unsuccessful attempt from becoming a learning experience. It makes failure permanent.”

Asiri’s comment on investor behavior in the Gulf region is critical. Venture Capital (capital invested in new or expanding businesses in which there is substantial risk) is the bloodline of any startup ecosystem. While society plays an important role in encouraging a tolerance of failure, venture capitalists (VC’s) and angel investors (an individual investor who invests in high risk, high growth businesses) have the biggest impact. If investors refuse to invest in a startup because of the past failures of its founders, then those investors are tangibly punishing failure.

In order to further understand how investors in the GCC, both corporate and individual, react to past failures from entrepreneurs, I spoke with Mona Al-Mukhaizeem, co-founder of Kuwaiti startup accelerator Sirdab Lab, and an angel investor herself.

“Investors in the Gulf are accustomed to low risk investments, such as real estate or debt bonds. They have limited tolerance for failure,” Al-Mukhaizeem remarked. “A strong Venture Capital firm or angel investor must possess a different mentality; one that is more realistic about the risk of failure for startups. Without such investor mentality, capital will never flow into the GCC startup economy.”

However, Al-Mukhaizeem, who has experience with VC’s in Silicon Valley, believes that there’s a gradual shift in the way investors in the region evaluate startups: “There is a new breed of angel investors and VC’s in the Gulf region who understand that nine times out of ten startups will fail. But the impact and reward from that one successful startup more than makes up for the shortcomings of those unsuccessful ventures.  Thus, this new generation of investors is willing to give promising startup teams multiple chances to succeed. It’s a very important change towards building a successful startup community.”

Al-Mukhaizeem has also noticed through her heavy involvement in Sirdab Lab and the GCC startup scene that founders who fail are finding more support and encouragement.

“In the past, we saw founders clinging on to floundering startups because they did not want to be portrayed as failures by their friends, family, and peers. However, as a sense of community and togetherness fosters in the startup community, more people are sharing their experiences with failed businesses. An optimal learning curve is only achievable if entrepreneurs have the chance to learn from their own mistakes, as well as the mistakes of others,” concluded Al-Mukhaizeem.

Fundamentally, startups are experiments of innovation. As is the nature of innovation, there must be multiple attempts before success is realized. For multiple attempts to occur, society, investors, and entrepreneurs have to perceive failure as a step in the learning ladder. As the Gulf community gradually shifts towards a “fail well, fail fast, try again” mentality, a more impactful and inventive startup community will thrive. Lest we forget, Edison burnt a thousand light bulbs before one finally lit up the world.

This article appeared in Khaleejesque Magazine, ECONOMICS Issue, published March, 2015. A PDF copy of the article is available here. 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 

Ephemeral Messaging: A Trend That Won’t Disappear

This article appeared in Khaleejesque Magazine, POP Issue, published January, 2015. A PDF copy of the article is available here. 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

Print Artwork: Lulwah Al-Homoud

6 min read.

When Reggie Brown walked into Evan Spiegel’s room at their Stanford fraternity, Kappa Sigma, little did the then 19 year old Spiegel know that he was about to hear a statement that would kick start one of the most important trends in software technology this decade.

Brown had said back then: “I wish there was an app to send disappearing photos.”

Over the following three years, Spiegel and his team developed Snapchat into the leading mobile application for sending disappearing messages (or, as they are more technically referred to: ephemeral messages).

Today, Snapchat processes over 400 million disappearing photos, videos, and text messages on a daily basis. The application boasts approximately 100 million monthly active users, and sits comfortably among the top ten apps both in the App Store and in Google Play (US).

Snapchat’s soaring popularity has caused a stir in the world of technology.  Everyone wants to build an ephemeral messaging app and serve it up with a twist. In the past year alone, three semi-popular ephemeral messaging startups raised over $43 million (namely: Wickr, Frankly, and Cyber Dust) while Snapchat alone raised $200 million. “Blink” is another startup in the same category that was acquired by Yahoo for an undisclosed amount; Facebook introduced its second attempt at an app for disappearing photos; and Apple is rumored to be introducing a self-destruct feature for its native messaging app, iMessage. The ephemeral messaging trend has also infiltrated the GCC startup scene, with one startup in particular gaining traction. That startup is “Vonce”, an application that allows users to send 14 second voice notes that disappear after being played once. Vonce was created in Kuwait by Saleh Al-Musallam who has previously developed an Instagram analytics application called “Instafan” which has over two million downloads  to date.

In short, an obsession with sending disappearing multimedia messages has taken over the world of internet software technology. However, some experts still maintain that communicating via disappearing messages is a fad that will unlikely continue beyond a few years of popularity.

Don’t be fooled. The signs point towards a clear conclusion: ephemeral messaging is here to stay.

The first sign is Snapchat’s latest valuation. Snapchat garnered investment at a value of $10 billion dollars this year (in other words, investors believe that Snapchat is worth $10 billion); a valuation that clearly reflects the tremendous confidence that Silicon Valley elites and venture capitalists have in the future of ephemeral messaging. In the past four decades, every startup that has been valued at ten figures or more has gone on to establish a new field in technology. Take, for example, Facebook, Google, Yahoo, Twitter, and Amazon; Silicon Valley rarely gets such big bets wrong.

The second sign is in the reason claimed by most people as to why they use ephemeral messaging services. Users believe that ephemeral messaging is the form of cyber communication that most closely resembles the characteristics of “real” in-person or over-the- phone interaction. Uttered words are seldom recorded, and the images we perceive with our eyes are rarely saved and replayed. They are fleeting moments. Ephemeral messaging apps, like Snapchat, transmit the temporary, unrecorded nature of real life interactions to the digital world creating unaltered moments captured and shared in real time. This in itself spells a valuable proposition in this age of social technology.

The third sign is apparent in the technological up-build around ephemeral messaging applications. For any new communication platform to prevail, technology must be built upon a platform that allows a more diverse usability.  Extensive horizontal features, such as video, captions, commentary, and event streaming are being developed on ephemeral messaging platforms. Additionally, new areas of integration are being explored on apps in this category. For example, a few months ago Snapchat announced “Snapcash” (in association with payment service provider, Square), a feature that allows Snapchat users in the United States to transfer money with a simple “money text” via the texting feature.

The possibilities of ephemeral messaging are vast and diverse.

“Snapcash” has sparked a debate as to what the next big step for ephemeral messaging might be.  It is my opinion that electronic commerce is the logical upcoming destination. The temporary nature of disappearing messages could strongly encourage “quick deals” and impulse purchases. Given that most users of ephemeral messaging apps are college and high school students, the platform has the ideal demographic looking for coupons, deals, and promotions.  In fact, a study conducted by Sumpto, a marketing company that surveys 50,000 influential college students on social media (as described by renowned business website, Business Insider, who have also quoted the study) shows that 58% of US college students would likely purchase a product from a brand that sent them a Snapchat coupon. The same study also indicates that 67% of the college students would most want to receive brand promotions on Snapchat. It is therefore not surprising to find that brands like Taco Bell, MTV UK, and 16 Handles have already effectively executed Snapchat based coupon campaigns.

There were two missing links for commerce to be viable on Snapchat: payment processing, and a checkout process. The former seems to be ready for integration with Snapcash. The latter is simple enough for the Snapchat team to develop. Thusly, Snapchat might lead the way in what could be dubbed “the new e-commerce”, Ephemeral Commerce. Perhaps it would be centered on the concept of taking advantage of a deal and clicking “buy” within ten seconds, or the deal disappears forever. There are, of course, many wrinkles to be ironed out before such an idea becomes a reality, but the foundation for it already exists.

The GCC market could be a perfect fit for “ephemeral commerce”. The GCC has a young population (54% of the population are under the age of 25) that is heavily engaged with social technology and e-commerce. In addition, relative to the Middle East in general, the GCC has an above average consumer purchasing power. These factors have made the Gulf an enticing opportunity for discount-deal startups such as Yabila (Kuwait) and, more importantly, Groupon (Dubai). Groupon is a group discount website based in Chicago. Groupon launched in the Emirates in mid 2011, and has been growing exponentially in that market ever since. Groupon’s success in the Gulf will encourage other deal-based startups to launch in the region. As such, if an existing ephemeral messaging giant like Snapchat develops an “ephemeral commerce/ deals” application, the GCC can be a market in which the concept can thrive vastly.

If electronic commerce is seamlessly and properly integrated with ephemeral messaging, it could create a new exciting angle for varying fields and activities in commerce. Effectively, such a move could cement ephemeral messaging in the technology framework for many generations to come.

Whether it is in commerce, marketing, communication, or otherwise, ephemeral messaging has the potential to disrupt existing fields of technology. Industry giants are beginning to fully understand that potential. It is not a hidden fact that in late 2013, Spiegel had a closed door meeting with Mark Zuckerberg, CEO of Facebook.  Zuck, as he is commonly nicknamed, made Spiegel a $3 billion cash offer for Snapchat. Spiegel turned down the offer. Had he said yes, he would have netted $750 million in cash, at the age of 22. It takes more than guts to turn down such an offer; it takes remarkably strong conviction in the future of your technology, supported by a plethora of data and quantitative analyses.

To most aptly conclude: ephemeral messaging isn’t disappearing any time soon.

Khaleejesque-POP Issue- Jan 2015 Artwork credit: Lulwah Al-Homoud

Khaleejesque-POP Issue- Jan 2015
Artwork credit: Lulwah Al-Homoud

Khaleejesque-POP Issue- Jan 2015 Artwork credit: Lulwah Al-Homoud

Khaleejesque-POP Issue- Jan 2015
Artwork credit: Lulwah Al-Homoud

This article appeared in Khaleejesque Magazine, POP Issue, published January, 2015. A PDF copy of the article is available here. 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 

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