Vineet C. Nambiar
There is hardly a day that passes without a new major initiative, announcement or bold proclamation by the Gulf economies of United Arab Emirates, Kuwait, Oman, Qatar, Bahrain and Saudi Arabia to promote tech startups in the region. Be it incubators, investment funds or free zones, you name it and they have it.
Gulf countries have been trying (without much success) for the last few years to develop a startup-fueled digital economy — primarily to create another engine for growth to offset the dependence on oil and gas. Secondly, to create more avenues for private-sector job creation for its citizens who are presently almost exclusively employed in the government sector.
What’s Holding Up The Gulf Startup Revolution?
When we visualize an Internet economy, the obvious image that the mind conjures is Silicon Valley!
With all the multi-billion dollar surpluses, you would be forgiven to believe that a Silicon Valley was around the corner or just waiting to happen. Even the names of many of the projects undertaken seem to be Silicon Valley-inspired.
But far from that, Asian neighbors like China, India, Korea or even Indonesia seem to have a much more vibrant and dynamic startup scene. So what exactly is holding up the Gulf startup revolution?
First and foremost, to spark the fire of innovation you need a steady supply of quality engineers and entrepreneurs. Let’s start with the key ingredient — “engineering talent.”
Engineers are the backbone of the Digital Revolution. Some of the most powerful Internet companies have been built by engineers, but that isn’t a rule etched in gold. Alibaba founder Jack Ma was an English teacher in his previous avatar. But it is simply not possible to develop globally competitive tech ventures without having top-notch engineering talent!
Where’s The Local Tech Talent?
Gulf countries have practically very little, if any, engineering talent available locally. So there is a desperate need to devise policies that encourage the migration of high-quality young engineering talent from the likes of India, China or Southeast Asia.
Developing local talent in parallel is definitely a positive thing, but it’s going to take significant time given prevalent attitudes toward engineering and science education!
So the best way to go in the short to medium term is to target high-quality international talent. And find a way to make them stay. A constant sense of insecurity created by short-term visas and barriers to jump jobs will most definitely inhibit highly skilled professionals seeking to develop a rewarding career. More on the global war for tech talent later.
Let’s discuss the second key ingredient — “tech entrepreneurship.”
A culture that fosters entrepreneurial drive is vital to crack the digital economy. The region has traditionally been a hub for traders, but tech entrepreneurship is a completely different animal. A trading-business approach toward tech entrepreneurship will never succeed.
Understanding the nuances of building a venture from the seed stage and investing the time and resources required for it to blossom requires an entrepreneurial mindset and knack peculiar to the nature of tech-powered digital ventures.
Facebook did not make a single penny for six years. It invested its energies in developing a loyal user base before it devised a strategy to monetize. Now it’s clocking a billion dollars annually. The same holds true for Twitter. In fact, Instagram was sold for a billion dollars without any revenue whatsoever to show for.
Tech entrepreneurs need to understand priorities at different stages of a venture’s evolution and the support ecosystem needed for it to thrive!
Venture Capital
Yes the region has a lot of capital going around, but almost none for seed-stage ventures. If you’re a budding entrepreneur, your best shots at raising capital are “angel investors,” but that’s more a case of luck, and “Wasta,” as they call it here, certainly not by design!
Sophisticated investors who understand new-age economy is the need of the hour, not wealthy individuals with a trading mindset and, worse, a trading attitude.
Young entrepreneurs need “adult supervision” and guidance at different stages of the development. VCs still aren’t showing much interest in the region. That will only change when they see the right conditions for incubation.
Archaic Laws
The legal system has to be the most difficult one to contend with. You can’t exactly build a company in your garage and hope to bootstrap your way to success if you’re doing a startup in the Gulf!
No startups can rent exorbitantly priced office space or have the luxury of $50,000 paid-up capital for incorporation. What they need is to have the smartest and brightest of minds to easily incorporate without too many regulations encumbering them.
Startups thrive on dynamism. Non-compete clauses stymie the movement of bright professionals from one firm to another. Startups should be allowed to fire and hire when they need, and at will. That’s what makes them dynamic enterprises.
Laws governing digital business are still in their infancy, and any regulatory framework should keep the Internet economy by and large out of its clutches. Patent laws definitely need a thorough study. Tax-free schemes need to be looked into, and need to be not just on par with but way better than global standards to make up for lost time.
For example, U.S. laws insulate Internet companies, website hosts and ISPs from legal liability stemming from content posted by users. It’s hard to imagine the digital revolution, especially social media networks like Facebook and Twitter, happening without these laws.
Research-Focused Universities
Some of the smartest minds are budding in the region’s universities, many of them international, with top-notch faculty members from the West and elsewhere. I found my calling in one such Tech Entrepreneurship Program offered by Carnegie Mellon University.
This is one area that is beginning to show promise, but a lot more needs to be done. International universities are being welcomed to set up shop, but they need to have a lot more research focus. Silicon Valley owes a lot to Berkley and Stanford for its technology development and army of technologists.
The primary school system in the Gulf just isn’t up to the mark. This translates into fewer locals actually enrolling or getting selected for engineering and tech courses.
Work Culture: The Global Talent War
The industrial-age mentality of recruiting assembly line workers who time punch their way in and out of work every day just won’t cut it in an Internet economy.
Globalization has resulted in a plethora of opportunities for talented young men and women. They need to be inspired by a work culture that stimulates their creativity and imagination!
Secure government jobs with fat compensations and a false sense of security creates a bubble that will burst at some stage! A culture that rewards mediocrity and discourages out-of-the-box thinking can never develop entrepreneurial minds burning with the desire to disrupt the status quo! We need to celebrate excellence.
Fat pay and bonuses are all great, but if you want to breed long-term, loyal team assets you need to give these smart men and women a share of the pie. They have to feel a sense of ownership; a sense of belonging is vital for them to give their best. Leadership should recognize this and find ways to make them stakeholders.
“I did my work and don’t give a damn about what happens to the company” — this attitude, which plagues many enterprises, is a byproduct of a lethargic and insensitive management that fails to value talent and their retention. And half-baked superficial initiatives won’t do.
The fact that Talabat.com, founded by a Kuwaiti entrepreneur, was successfully acquired by Rocket Internet holds a candle of hope for the future of digital ventures in the region. Now is the time to make things happen.
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