It's tempting to think that the politically unstable Middle East is a risky environment for technology. We talk to one author who considers the East as the new West in terms of tech startups.
According to Christopher M Schroeder, in Britain we only know of the Middle East what the television tells us. And what the TV beams into our homes is a litany of political unrest, mass demonstrations and military coups. "We're not really ready to think of the region as a hotbed of technology startups," says the author of 'Startup Rising', a book that sets about defining the conditions under which we are experiencing – as its subtitle informs us – "the entrepreneurial revolution remaking the Middle East".
What is so interesting about Schroeder's position is that he claims that the potential for technological development in countries such as Syria and Iran is the same as in the USA. He says that our views have been shaped by a narrow interpretation of a post 9/11 world, and by the fact that so few of us ever visit the region.'"If I were to ask you who the number one per capita user of YouTube is, would you guess Saudi Arabia?" He asks whether we are aware that the largest audience of women watching education videos is in the region, too. Would we know that the largest technology initial public offering in the first quarter of 2013 was in Iraq?'In the Middle East there is nearly 100 per cent mobile penetration.
Schroeder accepts there are always issues of political instability and unrest. But that, he says, is no different to the BRIC countries. "The Middle East should not be painted with one brush. What we see in Syria for the moment is not what's happening in Dubai. But once technology is in the hands of the majority, things change right under our noses. No one I know thought Egyptian President Morsi would be out 72 hours before he was. Technology enabled the activism, as it is changing the face of business there and around the world."
In his book, Schroeder states that the Middle East is a market of over 350 million people, "with huge consumer bases and remarkable talent". And we need to be sure that in addressing these markets we learn from the sloppy mistakes we made in the past. "Many global and operations executives who sat out the rise of Asia, India and South America sprinted to catch up." The Middle East and Africa are greater opportunities today because there are two decades worth of experience gleaned in investing in other emerging markets.
Bucking the trend
Schroeder wryly observes that a publishing guru once told him that there are only two types of books that never sell: those on the Middle East and those on technology. So he's really in book graveyard territory. But according to Schroeder this completely missed the point, claiming that his treatise is a "powerful new look at a crucial region of the world. It is also a story of where the world is going right now, not in some distant future. Many authors are comfortable writing hand-wringing books. Many people would rather say, 'I told you so' when things don't work out. This book is not for them".
Part of Schroeder's entrepreneurial outlook comes from his origins as a descendant of Italian immigrants to New York. "They never gave up and were ultimate entrepreneurs. I have mixed my life in finance, investing, a brief stint in government, but mostly running entrepreneurial tech companies."
And despite having travelled the world over, and having outsourced technology to every corner of it, even Schroeder admits that he could not have conceived of the potential for startups in the Arab world.
But, as he says, in emerging markets events move in stages. Schroeder describes how we have seen remarkable success from great entrepreneurs employing the technique of making markets relevant to their ideas. He calls them 'improvisers' because they are taking and building. Maktoob is the Yahoo! of the Middle East and was bought by Yahoo! for $200m. Souq.com is an e-commerce juggernaut that has raised capital from some of the top global investors to become the Amazon.com of the Middle East. But there are also 'problem solvers' such as Beyollak in Egypt who are developing apps, while Recylobekia is solving recycling of hardware. "I've seen easily 50 great companies going after the education space."
Meanwhile the group Schroeder describes as 'players' realises they have instant access to manufacturing anywhere, their markets just a tantalising click away. Instabeat is a Beirut-based, Google-glass-like swim goggle, where athletes can measure their vital stats while they swim. Vimov has created the largest paid weather app on the globe. "Other tech companies are solving huge big data companies. Innovation in solar energy, mobile technology and even social networks and video are stunning."
A new outlook
In the 21st century Middle East new cultures are being created from the bottom up. Schroeder describes a new generation of technology savvy people who don't want what their parents wanted for them. "Every aspect of their daily lives is being rethought, re-engaged. You cannot disaggregate the kind of communication, connectedness and sharing that technology is bringing to people, politics and business."
It follows then that the big question is how to get a slice of the action, how to take advantage of a market that is both mysterious and fruitful to those in the West. Schroeder is adamant that this can only come from an understanding, not so much of how to do business, but of the people and cultures themselves. "Go, shut up and learn. Build friendships of reciprocity."
He ruefully recalls how he once met a big American media executive who had opened offices in China because he felt that he had to be there because the region needed his style of product. "I knew he would blow it. He took none of the time to understand the culture: what they need, what they bring to the table. To him it was market cap. He, of course, failed."
Great entrepreneurs anywhere in the world, says Schroeder, rise to the top because they are specifically adept at what he calls co-authoring opportunities. Further to that, he asserts, you cannot engage with a market if you approach it in an abstract or impersonal way. And this is particularly true of the Middle East.