Digital Boom

Author: Abdelrahman Wahba

  • What MENA startups still lack to achieve their potential

    What MENA startups still lack to achieve their potential

    A few weeks ago, my friend Hendrik Jandel wrote an article about the potential he saw in the Beirut startup scene and how it can become a tech hub in the region. Not surprisingly, his article stirred a lot of debate and opinions about the subject.

    Being a tech entrepreneur from the region, I shared my opinion, yet I did it my way (no reference intended).

    I had a private in-depth discussion with him detailing the logic of how I’ve built my opinion based on my first-hand experience and network in the MENA tech scene.

    This article is the summary of my thoughts as discussed with Hendrik after some cleanup and embellishment.

    The vibrant tech scene

    What would the tech scene in a country/city in the MENA region look like, if it had a strong and vibrant tech sector?

    For non MENA people, please note that in this case city and country are quite exchangeable due to the centralized nature of big cities in the region.

    This has led me to start defining some quantitative KPIs – to help describe this relative utopic case in a measurable way. Here goes; a vibrant tech city achieving its potential would contain:

    1. 35-80 revenue making tech companies with healthy unit economics and a total “real” (i.e. post accelerator) valuation of 400-700 million USD.
    2. A healthy mix of B2B vs. B2C tech companies skewed towards the B2B sector. (I understand this is not quantified, but it doesn’t matter to the assumptions. It will be clear later.)
    3. An 80/20 split in revenue between local and regional – local being 80%

    For the sake of argument and the logical path I’m moving along. I will focus on the 1st point as the underlying line of thought arguing my point.

    How would such a tech company look like?

    The total valuation of 35 companies at 700 million USD means a 20 million USD valuation each on average. Which means, said companies would have achieved most if not all the following:

    • Positive unit economics
    • Cash flow positivity
    • An aggressive growth trajectory in revenue, traction and/or brand value
    • Attracted serious regional and/or international investors

    Even at the other end of the scale of 80 companies valued at 400 million USD in total gives an average of 5 million USD valuation per company.

    Those numbers still make the case. At least in MENA where the cost of living is inexpensive per international standards, like Cairo or Alexandria (5 million USD ~ 100 million EGP, i.e. a lot of money).

    Also, continuing the example: a valuation of 400 million USD is ~8 billion EGP. Which makes the sector comparable to other traditional business sectors in the Egyptian economy. And that’s the lower end of the suggested range.

    The higher end of the range is rather applicable to more expensive cities like Amman, Beirut, Dubai, Jeddah, Tunis, etc…

    Let’s keep the math simple and work with the following numbers as averages that are to be adjusted per city based on its own dynamics:

    • 50 companies
    • Total valuation = 500 million USD
    • Average company valuation = 10 million USD

    How do we get there?

    So, how does one reach the above assumed state of startups? Well, assuming VC company success rates of 10% (i.e. 1 out of 10 companies actually succeeds). There needs to be a series A investment in 10 times the above number of companies (i.e. 500 series A investments). This means:

    • Series A Ticket size in MENA: 200k USD – 1 million USD
    • Total number of investments = 500;
    • Total (min) investment = 500 * 200k USD = 100 million USD

    So this means that a total of 100 million USD should be invested in series A alone to reach the mentioned state.

    We can also calculate it “backwards” to see how much angel/accelerator money is needed to create 500 investible companies ready for series A investment. Also assuming 10 percent hit rate, here are the numbers:

    • Angel/accelerator ticket size in Mena: 10k USD – 50k USD
    • Total number of angel/accelerator investments = 5000
    • Total (min) investment = 5000 * 10k USD = 50 million USD

    Although the numbers seem to stack up, let’s put it into perspective:

    • Total investment = total accelerator/angel investments + total series A investments = 50 million USD + 100 million USD = 150 million USD
    • Total valuation of all “successful” companies post series A = 500 million USD
    • ROI = 500 million USD / 150 million USD = 3.33x

    Which is a nice ROI in general, albeit not so nice for VCs who expect >10x. But, for jumpstarting an ecosystem into a powerful existence, I would say this is a very good ROI if anyone can achieve it.

    One more important factor

    Those would be the theoretical numbers that you would find in high-level market studies done by international consultants and VCs.

    There is one more aspect that we tend to ignore along with everyone who tries to make reason out of the MENA region’s “special” way of functioning.

    A lot of investors come to the region with “readiness” to risk series A size tickets but claim that there aren’t so many options worth their money or valuations they are asking. Which is to some extent not completely out of this world, though I wouldn’t advocate for it. Yet, here is the situation:

    • There are a lot of companies who graduate accelerators seeking series A investments
    • Series A investors look for more proven traction (and revenue) than is achievable via accelerator money
    • Result = accelerator grads need Series A money to be ready for series A money, i.e. circular references or chicken-egg-problem

    What investors call “Series A investible” is not only the state of the company, but also the state of the entrepreneur behind the company.

    Before Series A, an entrepreneur isn’t only lacking the money, but also the experience that comes from spending Series A money on growth.

    There is a phenomenon I have experienced myself and observed in cases of fellow entrepreneurs. Which I would like to call the post-million-EGP-entrepreneur (this is in 2016 pre-EGP-floating numbers. Feel free to adjust them in your head or via back-of-the-envelope Math).

    Spending 1-2 million EGP in Egypt (~50k-100k USD) on building a company opens up some experiences that transform you as an entrepreneur. From an amateur to someone with actual experience (the numbers should now be higher. Also, those numbers don’t apply in more expensive cities, but the concept stands).

    This hurdle isn’t surpassable with accelerator money that is designed to be the least possible to enable you to build an MVP and business case on paper. But no real product-market-fit testing or proof of real traction.

    Here are some examples of experiences you cannot go through with accelerator money (even if you get creative) and definitely need Series A money for it:

    • Proper marketing campaigns to test market response and build acquisition pipelines
    • Hiring top talent to lead the company
    • Acquiring top tools that help reach product-market-fit
    • Be in the market long enough to actually prove market fit
    • Make proper mistakes in their first venture that fuel their next venture’s success
    • The list can go on…

    This also applies to investors

    Investors also need to build up their experience and quiet their risk aversion with their money when investing it in series A tickets. This will only happen if they have their own failures behind them. Which lines up quite with the need for building prior experience for entrepreneurs.

    We’ve seen lots of inexperienced investors approach the market and of those who have learned from their mistakes as well.

    Here are a couple of examples that new investors will only learn if they spend series A money many times:

    • Achieving an appropriate and fair level of complexity on the term sheets that doesn’t create bad blood between the shareholders
    • Adjust their expectations of market performance and valuations (applies to entrepreneurs too)
    • Adjust their speed or slowness of executing an investment deal to the benefit of the company
    • Balance their own benefit with the benefit of the company and entrepreneurs and think win-win rather than maximize their gain from the deal and go for win-lose
    • This list can also go on…

    The market is young on both sides, not only on the investors’ or entrepreneurs’ side. Both sides need to build real experience by trying, spending, failing, learning and adapting.

    So, what’s the final tally?

    We should add an extra USD 100k per company of the 500 series A investible companies, in order for those 500 entrepreneurs and their investors to throw away the first pancake which will contribute to their next ventures success odds. This brings the tally to:

    • Total theoretical investment = 150 million USD
    • 500 sunk series A tickets: 500 * 100kUSD = 50 million USD
    • Total investment = 150 million USD + 50 million USD = 200 million USD
    • Total ROI = 500 million USD / 200 million USD = 2.5x

    2.5x is still good ROI in my view, although I know that VCs would differ.

    Reality check: How & Who?

    The next question would be: how can this be done and who could/should do it?

    Concrete answer: I don’t know exactly. I’m not a finance guy. But, here would be my general thoughts:

    • The money needs to come from a source that is OK with the 2.5x and a probability of less return, but with a longer-term focus.
    • It could be a combination of International Institutions, VCs, International Funds, Angel funds, Governments…. Don’t know exactly how though.
    • The money needs to be spent even though chances of corruption or at the very least misspending would be relatively high. This is a given factor in this journey and it is there by design. Thus, some level of due diligence is needed, but there should be high awareness to avoid overkill in such processes.
    • It also doesn’t need to happen all at once. It could be phased but with the awareness that each phase on its own is only building up to the end-goal. Lots of lean and agile principles can be applied in the actual execution strategy to reach the above goals of spending and 35-80 strong tech companies of a total valuation upwards of 700 million USD.
    • Then money on its own is not the solution. There are some other factors that contribute to the success and/or failure of the ecosystem. But the money catalyzes the effect of everything else. If it is not there, all other factors have very limited effect.

    Finally…

    All the above are my thoughts, ideas and opinions. I am happy to discuss them and to have a meaningful debate around them to challenge them or discuss them in further depth and details.

  • The Entrepreneurship Opportunity in Egypt  (5): The Advertising Value Chain

    The Entrepreneurship Opportunity in Egypt  (5): The Advertising Value Chain

    Hell is just a sauna 

    Here is how I described it in my 1st article in the series:

    “The value chain in the real [Content Publishing] world consists of: the Publisher — who creates the content, the publishers’ agency — who buys the ad rights to said publisher’s content, the media buyer — who buys ads on behalf of brands because he has ongoing deals with publishers’ agencies and buys from them in bulk, the media planner — who puts together a media plan for the brand, i.e. which ad slots to buy where, in order to achieve their sales targets. This value chain is extremely weak in Egypt and it is very, very hard for new publishers to enter the scene. Smaller digital publishers who made it had to navigate through this messy value chain, and sometimes compensating for its gaps — e.g. selling to brands and media buyers directly.”

    Entrepreneurship Opportunity in Egypt, The advertising value chain, or the market hierarchy if you will
    The advertising value chain, or the market hierarchy if you will

    What makes the advertising value chain weak and unreliable?

    Here are 9 somewhat related reasons in my opinion, not in a particular order:

    1. Publishers Agencies are too few, while Content Publishers are relatively many

    In a decent world, the Publishers’ agency buys the ad inventory from the Publisher — either in bulk on in tranches coupled with certain traffic targets. This enables the Publisher to focus on Content Creation and user traction. However, the imbalance of this layer in the market enables the agencies to impose better cash flow terms for themselves onto the publishers; e.g. only pay for traffic they get paid by the brands, 90+ days invoice collection periods, etc. While this serves the agencies short term, it keeps content publishers from growing neither their business nor their traffic and user base.

    2. A slow economy means budget slashes

    Among the first budgets to get slashed are marketing budgets. Cuts happen at the top of the pyramid to the brands’ budgets, and trickle all the way down to the publishers. Therefore, publishers agencies have been facing severe challenges trying to sell their existing inventory. Consequentially, it becomes difficult for them to be interested in representing new Publishers and buying more inventory, which would basically choke their business operation to death.

    3. Network sale vs a value sale

    In the grand scheme of things, digital advertising isn’t much differentiated. Yes you can segment and target. Yes you can choose publishers based on their audience’s personas. But at the end of the day, it is a comparison between impressions and clicks. And at some point, publishers of the same genre are hard to distinguish by value. So, this transforms the sales process into a network sale, where you rely on your network to sell, rather than the your product’s differentiation. So, you have to be IN with the advertising community to tap into the network and sell regardless how much value your product adds.

    4. Advertising efficiency vs Brand exposure

    Digital advertising offers budget efficiency and targeting as its core value proposition — you know exactly how many people see your ads and how many take actions based on each campaign your run. However, it is still not officially considered an Above-The-Line channel, which are still the go-to channels for big budget advertisers, as it is still perceived as the main driver of brand exposure. Think TV and high-way billboard ads vs. FB ad campaigns.

    5. Tough targets reduce risk appetite

    Achieving tough sales target in a slow economy is very hard, which makes advertisers stick with what they know. Therefore, Brands & Media Planners have become too risk averse to allocate budgets for experimenting with new channels, unless an earth shaking disruption had happened and this new channel is a sure thing.

    6. Impressions over actions

    For some reason foreign to me agencies mostly sell and brands mostly buy impressions (page-views) more than actions (Clicks, acquisitions, purchases, sign-ups, etc.) — generally 90% vs 10%, if not more. In light of the previous point, an explanation would be that impressions are a “guarantee-able” deliverable by the publisher while actions are not. It becomes more plausible when you know that CTR (Click-Through-Rate) are generally low in Egypt. But nothing in Egypt is logically explainable anyway, so whatever.

    7. Agency consolidation

    Sometimes the three middle layers in the figure above are either fully or partially fused together; e.g. the media planner additionally does the media buying; or the creative agency also does the media planning; or the media buyer cuts an exclusive deal with the publisher, etc. This creates a challenge for anyone who wants to penetrate this fort of an agency to reach its brand, and the sale becomes more challenging — especially for new comers.

    8. Every brand has its marketing operations set up differently

    With respect to the agencies above: Some brands cover the whole value chain themselves and deal with publishers directly. Others have people who take care of that for them. This is not public knowledge, and you have to gather this information through market intelligence activities — the ethical and the dirty ones.

    9. Publishers’ agencies are infamous

    For under-performing their sales targets and not paying their dues and invoices in Egypt. This is not a generalization and this is just me repeating a general reputation in the market which may or may not be true. Be that as it may, I’m trying to say: CAUTION!

    Google Ads

    Theoretically, the easiest path to avoid this ordeal would be to rely on ad networks like Google Ads. Not surprisingly, such networks require massive traffic, i.e. millions of impressions and unique/active users per month. Not just that, it also forces you to run a very small content operation relative to the traffic. This is because the money you get from those networks isn’t really much for a company. On average, Google takes away 70%-90% of what the advertiser pays to display ads on your site, and you get the rest. The tiny, tiny rest.

    As a rule of thumb, you need about 1–3 million impressions per month for every member on a team based in Egypt, and even then it doesn’t guarantee decent money.

    Otherwise, you need to master your way around the aforementioned value chain — one way or another. Only then will you be able to sell ads locally at better margins.

    Conclusion 

    Most conclusions relating to this article are already mentioned in the previous article about selling advertising. However, here are a few bonus advice:

    1. Bottom line, to build a tech product (website or app) that relies on ads, you need to have the right connections along the advertising value chain, find yourself a sizable unique niche, build the traffic, sell it. Way easier said than done.
    2. Know the brands you plan to sell to and figure out one way or another how they are spending their budgets. You will have to have (or build) strong relationships and allies in the market to gather this intelligence.
    3. Know the people behind the budget allocation decisions and play to what makes them tick.

    Next stop: B2C Tech Products.

  • The Entrepreneurship Opportunity in Egypt  –  4: B2C Tech products: Selling Advertising

    The Entrepreneurship Opportunity in Egypt  –  4: B2C Tech products: Selling Advertising

    It is really easy to decide to base your product’s business model on Advertising. However, making it happen is anything but.

    The first step is understanding how this business works.This is mainly comprised in 2 main questions:

    1- How is advertising quantified? Is it sold by the kilo, pound, impression, hit, click? Basically it is the question of how much advertising costs how much money.
    2- What does the sales process and value chain look like? who are the decision makers? what companies are involved? what leverage do they have? This is the question that handles the steps to actually sell your advertising inventory.

    How is advertising quantified

    Advertising is generally quantified by how much it costs the brand to achieve the marketing campaign objective. I’m keeping it general because the objective can vary from branding, awareness, engagement to sales. All advertising media follow this rule regardless whether their performance is reported by direct analytics or by disconnected market research. However, as a rule of thumb, the more advanced the market is, the more it relies on accurate data to evaluate its ad channels.

    In the digital world, it becomes more specific than this. You basically sell one of 3 things:

    1- Impressions — which are sold by buckets of thousands, aka Cost per Mille (CPM).
    2- Clicks — priced per single click on a Cost per Click (CPC) basis, i.e. the advertiser pays you for every click on his had that takes your user to his web-page of choice.

    3- Action — price per specific action (aka CPA) that relates to the campaign in question. The action can be sales, qualified lead generation, subscription to a newsletter or anything else for that matter.
    4- Views — price per view or cost per view (CPV); basically applicable only to video due to its pervasive and engaging nature, where 1 single view can be roughly (heuristically) worth 5–10x more than static impressions. This is slightly irrelevant to this article, unless you are planning to start a video publishing platform monetized by video advertisements — in other words, youtube. This I highly recommend against, and wish you the best of luck on your suicide mission, should you choose to go down this path.

    5- Native Advertising/Branded Content — where you create content that adds value to the user and is sponsored by a brand or has certain products placed within it. In publishing it is called advertorials; in video production it is called… well sponsored videos 🙂

    Prices of Ad Products

    Now that we’ve pinned down “What” is sold, let’s talk a bit about how much this “What” actually costs — in ranges of course.

    First of all, all prices are subject to demand, supply and purchasing power, which varies a lot with geography. Therefore, I will restrict my numbers to Egypt with some hints about the costs elsewhere.

    CPM

    CPMs in Egypt typically range from 5 EGP/CPM to 80 EGP/CPM. As you’ve noticed, it is a very wide range, which corresponds to the wide range of offering. Here is a bit of an explanation:

    • 5 EGP — 10 EGP is the price range of (more or less non-branded) Arabic comic pages and websites (e.g. asa7by, egypt sarcasm society, forums, etc.)
    • 10 EGP — 20 EGP is the price range of general and sports news websites, also in Arabic (e.g. youm7 ~10 EGP, almasryalyoum/elwatannews ~15 EGP, Shorouknews ~20–25 EGP)
    • 20 EGP — 35 EGP is the price range of relatively more niche websites, like Arabic women’s websites, vertical interest websites — cars, motorcycles, hard-core technology websites, specialized medical/health, investment banking, etc (e.g. supermama, Fustany, arabhardware, etc.)
    • 25 EGP — 45 EGP is the price of range English websites targeting Egypt — English news, English content, etc. This also intersects with sites that address the A-A+ class (e.g. ragel.com)
    • 45 EGP+ is the price range of sites addressing the A-A+ class in terms of content, fine dining, partying, (e.g. scoopempire, cairoscene, cairozoom etc.)

    Judging by the above list alone would rather drive you to develop an English website targeting the A-A+ class. But, like everything in life, nothing is quite that simple. True, if you target this segment, you will have valuable merchandise to offer advertisers. However, there is another variable at play that can break this entire unidirectional equation, which is your traffic volume.

    You need to cross a certain threshold of traffic in order to be taken seriously by advertisers. Before crossing this threshold you are basically still to small for them to advertise on your platform.

    The threshold is around 1–5 million impressions a month created by 350,000 to 1,000,000 unique visitors. I realize that the range is a bit wide especially for a threshold. The reason it varies so much relates directly to the type of audience you have access to. It is the same reason the CPM prices vary; i.e. the more you can offer segmented, targeted and premium audience, the higher your CPM and the lower your sell-ability-threshold and vice versa.

    The same concepts apply to mobile apps, but with a relatively different set of terms and values. Here are a few pointers:

    • The sell-ability-threshold is a bit lower on traffic if you are an app that does something other than present content to the people.
    • Unique visitors are replaced by Active Users. And their threshold is also rather lower — somewhere around 20%–40% of their web counterparts’ values. This is due to a couple of vague and heuristic reasons/assumptions. One of them is: when the user downloads the app and is actively using, it indicates certain level of commitment and loyalty which raises the quality of the audience. Another, is that the kind of data you can provide per user is more qualified, since almost all apps require some kind of login (FB, Google, email, etc.) that enables the app owner to generate richer analytics, user behavior reporting and user segmentation.

    CPC

    CPC’s prices typically range from 1 EGP to 15 EGP per click — following a similar spectrum as in the CPM. However, roughly only ~5% of the ad campaigns in Egypt are CPC based while the vast majority does CPM. This goes for buyers and sellers alike — for some obscure reason that for the life of me I cannot figure out — so far.

    CPA

    It becomes very hard to put a price on CPA because of a lot of things, but mainly because it is very case specific, and I don’t have direct experience with this. It isn’t a mature model in Egypt yet, although the food ordering and real estate sector actually have some guidelines, where they pay a fixed amount per qualified lead (Real Estate) or pay a percentage of the order generated by your platform (Food ordering). Food ordering percentage ranges from 8% to 15% off the top.

    Native Advertising & Branded Content

    It is typically priced by production, i.e. price per video, per advertorial/article, per comic, per episode, per story, etc.

    Here there is no fixed rule, because it really depends on what you are planning to do within the content, how much it costs you and how much it is currently worth in the market. Also, the prices vary quite quickly because the diversity of open publishing platforms (Youtube, Facebook video, medium, etc.) made it relatively easy for production firms to focus on production and push the material onto platforms with existing traffic. Therefore, part of the entry barrier was torn down.

    Another important concept: Click-Through-Rate (CTR)

    CTR basically measures the effectiveness of the advertising material and the channel it is placed on, i.e. your website and/or app. It is usually measured as a percentage, and is calculated by dividing the number of clicks on an ad over the number of impressions said ad generated.

    It is a very long and detailed topic, so I will refer you this article instead.

    Conclusion

    Should you consider to base your product on an advertising business model, you should make sure of the following while productizing your offering:

    1. Know your target segment — not just know them, but can prove using analytics that you are actually capturing their attention for decent spans of time, and that they are returning users of your product.
    2. Know your numbers — look at them every day. Know the industry’s numbers. Know your competitors numbers albeit roughly. It’s a cut-throat game and you need to be on top of the market to succeed.
    3. Build enough traffic — to be advertising worthy, you need to pop up on the radar of advertisers with your numbers.
    4. Do your pricing homework — the numbers I’ve shared might be outdated, as said numbers change frequently. Make sure you know the whole market and that you’ve priced your stuff correctly
    5. Stand out, but not too much — you need to differentiate yourself somehow (by target market, by engagement, by click-through-rate, by whatever), but not to the extent that you become an odd-ball and cannot be easily and stupidly bench-marked. The Egyptian market likes what it knows after all, and that is not something you tamper with.
    6. Optional: Find a unique and monetizable niche — it should be unique enough to enable you to clearly and distinctly define the segment you are targeting; yet, it should be big and “important” enough to be attractive to advertising money. Content that addresses certain “rich” verticals can be interesting and full of potential, especially if said verticals don’t have much digital access to their target segment, except through you.

    Finally, if you are entering the advertising realm, you must know that you are going to be competing over digital marketing budgets. This means, that you will be fighting over money to be spent on content websites, Facebook, Google Ads, Instagram, Twitter and mobile apps.

    This has to be always in the back of your mind when you define your target segment and pricing, because Facebook and Google ad products in general are way cheaper than local websites.

    This shall be addressed in greater detail later when tackling your next step, once you have your product ready for sale: Maneuvering the advertising value chain.

    See you in the next article.

    Acknowledgements

    Special thanks to Abdelrahman AboSreea for pointing my attention to including CPV and CTR in the article
    Special thanks to Ahmed Galal for complimenting my lack of updated numbers, and for reminding me of the gap between Facebook/Google ad prices and local networks.
    Thanks to Sherry Kilany for correcting my numbers on ScoopEmpire (one of my favorite guilty pleasures by the way).

  • The Entrepreneurship Opportunity in Egypt   3: B2C Tech products: are they free or sell-able?

    The Entrepreneurship Opportunity in Egypt   3: B2C Tech products: are they free or sell-able?

    Tech products are hands-down the most over-hyped and over-advertised as the high-risk-high-reward ticket to fame and riches through company exits. I started a tech product company based on a similar premise. I should know.

    The rumors are not exactly false — tech products are A source of riches and company exits, if “done right”. What’s wildly outlandish is the presented odds of success and the tales of its smooth-sailing journey.

    Many people naively and mistakenly think that once you launch a product that “everybody needs”, it will market for itself. It will break the internet. It will take a round-trip through all the accounts on Facebook.

    While a miniscule set of products actually do create said kind of viral traction, for the majority of products, nothing could be further from the truth. You have to hit a very painful nerve in the market at the most opportune moment in time, in order for your product to market for itself completely by itself. And this cannot be something that happens with every product released into the market — at least out of sheer statistics.

    My simple answer would be: pick a suitable vertical.
    The keyword here is suitable, it shall be cleared up later.

    So you are initially faced with one of 2 major directions: B2B or B2C tech products. Each direction has its merits and challenges. This article is about B2C tech products. B2B products are another story to be told in a future article.

    B2C or consumer tech products

    B2C tech products perhaps promise the most riches and glory. In fact, its promises are not entirely unfounded: B2C products have the potential to grow really big and build a massive brand with massive success. In addition, despite not being statistically representable, most unicorn tech products we hear of are B2C (a more objective overview here).

    However, building a B2C product in Egypt does have its requirements, which are mostly tall orders. Here is the 1st one:

    Don’t rely on app sales

    A friend and fellow veteran entrepreneur — Mostafa Ashour, founded a company and created the app Boximize. It was on the top 10 apps list in the US for a while and got them a decent amount of sales — in the range of thousands of US Dollars. When its fame trickled down to the MENA region and it made the top 10 most popular paid apps list, their sales in Egypt, KSA and UAE never exceeded 300 USD total. Don’t get me wrong, Boximize is a success in the US, where they have launched it. It just didn’t do well in MENA.

    Another example is Edukitten — which I’ve mentioned in a different context in my 1st article in this series. They started out in developing Arabic edutainment apps for kids of the age 2–4 years, targeting Arabian expats in the west and Arabs in the Gulf. Each of their apps had 2–5 stories and/or games and cost about 2 USD per download. While they suffered painfully to sell their apps, the noticed that parents were ready to pay 2–5 USD (or equivalent) per story to buy their kids physical/paper books and/or toys. The same parents were very reluctant to pay the same (or less) amounts for apps that did the same job, arguably even better. Even when their apps offered more value for money, it didn’t manage to change the mainstream parents’ position. And when they managed to sell their apps, they eventually lost due to the insanely high cost of acquisition they had to afford to advertise in the developed markets.

    The list goes on. However, to maintain the integrity of my writing, there is an example that made it against all odds. It does have a pretty exceptional story that is really very difficult to replicate: iPhoneIslam.

    iPhoneIslam started as an Arabic blog about iPhone related issues and Islamic iPhone apps. Back when it was incepted, there were hardly any blogs that curated similar content in Arabic. It built its audience upon stirring interest in KSA and among the Arabs in the USA by leveraging the fact that it was more or less alone in the market. The rule of thumb says that virality basically reduces your cost of acquisition, and all they had was vitality.
    They have maintained a very high level of content quality and built a very cool app around it. The app is free, but they used their audience to push other paid apps of their own development onto the market. The large and very unique traction they had in their region was and still is the main reason enabling them to sell consumer apps to the public. iPhoneIslam is a combination of a set of unique unfair advantages that breaks my rule, and makes selling apps in MENA possible and profitable. However, if you are starting a company, it is extremely difficult to obtain iPhoneIslam’s unfair advantages, unless you are in fact, iPhoneIslam.

    If you want to build an app and sell it, your best bet is to sell it in the USA and Europe. And to afford this, you need to build an app with killer UX and know the ins and outs of getting free publicity and exposure for it. Which speaks to the “unfair advantage” condition I’ve highlighted in my 1st article in this series. Otherwise you are screwed.

    It has been brought to my attention by Muhammad A. Ali that the decline of the paid apps business model is a global phenomenon, not just an Egyptian or an Arab one. There is in fact a global expectation that apps are downloadable for free, and then you pay for other stuff, if any.

    To anticipate the smarty-pants who will be reading this article, and will post some certain comments suggesting other business models, here is a quick disclaimer:

    1. I realize that there are multiple business models that can be deployed to keep an app free while having someone pay for other stuff. It shall be tackled in later articles
    2. The Freemium model can be interesting for apps (offer a limited version of the app for free and a full version for a fee), and it shall be part of a future article.
    3. Subscription models are a world of their own and they have their own dynamics — also part of a future article.
    4. Selling Digital goods basically makes you enter the realm of ecommerce — you guessed right, part of a future article.
    5. Advertising based business models — no you guessed wrong, it is not part of a future article, it is the next article 😀

    Advertising has a lot of hidden dynamics that I will share with you next time 🙂

    Stay tuned!

  • Services Companies, a Story and Opportunity

    Services Companies, a Story and Opportunity

    Part of my Egyptian Entrepreneurship Opportunity series  –  check out Part 1 if you haven’t.

    In Egypt (and perhaps everywhere), early startup cash is king and early startup profitability is divine. Any company you start in an industry where you generate cash as early as possible, might give you a fighting chance in Egypt. The quickest cash generating company/industry with below average barriers to entry is the services industry.

    It is in fact one of the probably straightforward ways to start a company that has “some” chance to survive in Egypt. Here is why:

    It is a very simple business model and process:

    • You attract a client one way or another.
    • You promise/sell them a customized deliverable to suit their needs.
    • You work on it, deliver it and collect your money.
    • You move onto the next client.
    • Wash, rinse and repeat.

    Service companies are interesting to start and build, because the are mostly cash generators from day 1. You can start them as a one-man-freelancing-company, or in larger setups as needed and/or desired/required.

    Once you are operating, life keeps moving forward in a way you can manage: you get more projects, you slowly expand your team and the projects you get keep growing in size and volume. Then the market opportunity gets discovered (if you were an early entrant), and if it has a low entry barrier, more companies enter the scene. Usually, if it is a real market need, other clients discover that they want some, and the market grows with the growth of the competition. If you are lucky enough and have started suitably early in this market you will have a good place in it, should you manage to define it.

    Let me throw in some examples to juice up the story a bit. The “classics” where this cycle has happened and is still happening are:

    • Management Consulting firms
    • Training & Development companies
    • Social Media and Digital Marketing services providers
    • Web and Mobile app development agencies

    The first two are maybe towards the end of their cycle now, while the latter two are perhaps mid-way. And the cycle I’m referring to continues like this:

    The Services Company Lifecycle

    Upon your early validation and success, you reach the typically unavoidable defining crossroad, where you think and feel…

    • “I want to get significantly bigger projects.”
    • “I want to be more strategic about what I do.”
    • “I need to operate less in catch-the-next-breath mode, and more in grow-the-business mode.”
    • “I need to figure out how to scale up my operation to grow the company.”

    Here is where you need to shift your strategy from dovetailing projects to maintain your cash-flow, to seeking the balance of wheel-turners and profit-makers. Wheel-turners are bigger projects that cover your monthly/annual costs (more or less) and give you room to breathe. You seek a few of those per year to keep the lights on and the bills paid on time. Then, there are the relatively smaller and quicker projects, that actually make your company profitable.

    Obviously there are overlaps between the wheel-turners and profit-makers in terms of which pays for what items on your company’s expenses. Tarek Fahim was the one who described this concept to me in this clarity and simplicity.

    However, at some point one of many things happen that shift you from high-energy mode to semi-frantic-somewhat-adrenaline-filled mode:

    • Too many competitors enter the market and your proposition becomes more of a price war than a differentiated service.
    • Out of every five 7amadas on the street, 1 decides to enter the market and ruin your sector’s reputation, by trying to exploit the “sabbouba” (=Egyptian colloquial term for a quick relatively unsustainable hustle closing in on a scam).
    • High turnover happens within the staff, since employment opportunities become “abundant”.
    • Consequently, part of your staff quits to start their own gig offering what you do but cheaper or freelance — a very Egyptian thing by the way.
    • The market slows down , and the first item on any client’s cost cutting list is outsources services — this too is very Egyptian.
    • The client starts thinking “what the hell does the [service provider] do that is worth the money I’m paying them?”, and thinks/decides to do it in-house — super Egyptian!

    How do you confront this kind of shit hitting the fan?

    Well, let’s observe a couple of examples across a couple of industries:

    1- Digital Republic

    It is perhaps one of the first — if not the first — digital marketing company in Egypt. It started out when Facebook was for geeks and A+ class. They have managed to forge their name as the one firm trusted by a lot of big brands. They maintain very high quality of service; and hence, their brand remains at the top.
    Karim Khalifa is in fact one of the visionary people in the digital marketing industry in Egypt. He had the vision, tools and guts to move early enough and hone in on the market opportunity. And through his strategic savvy and strong execution, he managed to maintain his company among the market leaders serving premium brands.

    2. Robusta Studio

    Robusta is one of the now seasoned mobile and app development agencies in Egypt. The are among the few who have their clients trust in this cutthroat-sabbouba market. They have changed their offering multiple times within the digital services sphere: developing mobile apps, websites, enterprise solutions, digital marketing services and all of the above. However, they managed to find a couple of verticals where they maintain a strong competitive advantage against the market. They specialize in developing e-commerce sites and apps to their clients, with references from the biggest retailers turning to e-commerce. This is a growing niche that requires a lot of specific knowledge of e-commerce technology and workflow, which they have managed to build. Now this sets them apart from the rest in their domain.

    3. The Fooodies

    A rising new business consulting and marketing management company that specializes in turning around restaurants. Despite starting in a largely trod field, they have managed to secure their place as a new-age food and beverage business, Operations and marketing consulting firm. They have successfully found a niche within the F&B vertical: The fusion of increasing restaurant sales through digital media and managing customer retention through revamping restaurant proposition and operations. This very unique mix has been fueled by the founders’ unfair advantage being massive foodies with large consumer influence, and their marketing and consulting backgrounds. They have even taken it a step further by innovating a business model that generates revenues for them on their clients’ upside and based on the actual value they provide their restaurant clientele.

    4. Edukitten

    Edukitten started out as a company that develops Arabic edutainment apps for young kids (3–5 years old) targeting expat Arab families living in the West. Sounds like a slam dunk right? Well, it isn’t; not by a long shot. I will dedicate another episode in the series to developing tech products targeting the West in general and its Arab population in specific.
    Anyway, along the way, they have built very specific knowledge in developing interactive edutainment apps for kids and videos that comprise a lot of animated graphics. They pivoted later to do app and web development as a service. Naturally, they chose to specialize in offering their services around either edutainment and animated videos. They are alive so far and doing business, despite all the odds being stacked against them.
    Again, a certain specialization and/or a focus on a vertical within a very wide service industry is a winning game-plan.

    5. eSpace

    eSpace is one of the most successful web and app development services companies in Egypt and the MENA region. They started in the era of Microsoft client-server dot.NET dominance, the time when building corporate websites was beginning to become a commodity. But, they decided to go a different path. They were fresh blood to a market of outdated techniques and — back-then — cumbersome technologies: Waterfall Software Development Model and Microsoft Enterprise development tools.

    They took a showered and different turn: New-age software development techniques — Agile Software Development, and technology that enables rapid development and deployment — Ruby on rails (needless to say, that said approach and tools are now among the market standards).

    Moving past their initial success and growth, they did however deploy 3 interesting models:

    • They employed university staff from the computer engineering/science departments. This was a two-fold win: 1. They were smart guys and gals who delivered high quality work on one hand, and 2. They had access to raw potential in their classes. The teaching staff working there added credibility to eSpace in the eyes of fresh grads. So, they managed to find a way around a crucial item in the scaling problem: finding good talent.
    • They also dared to venture into unknown territories that usually scare off similar companies. They partnered up with up-and-coming hot products as their technical arms — like Akhbarak.net. eSpace offered them reduced pricing of their services vs. some equity, which paid off later upon Akhbarak’s acquisition by Sarmady. This is a risk not many services companies are willing to take.
    • They have also managed to slip themselves into getting government projects, initially in a very specific domain: government websites offering services to the public. This domain has been only implemented crappily by previous providers, to the extent that said websites were absolutely and painfully useless. eSpace, among very few others, were capable to deliver said projects very quickly and smoothly. This secured them a place as THE main player in this domain. And their shit actually worked; it was stable, scalable and user-friendly enough to become usable by the Egyptian population — examples include all the election websites delivered in 2011–to-date.

    I’m not saying that those were the only success factors of eSpace. Not at all. I’m just trying to give a glimpse on their canny ability to tackle longstanding and seemingly unsolvable problems with new approaches. Not just that, they even managed to transform said solutions into competitive advantages and items of defensibility.

    Back to the defining questions…

    Now, the defining questions we set out to tackle become at some point existential chicken and egg problems, which all service companies face in their lifetime:

    • Do I hire more people to be able to take on bigger projects? What happens if I hire the people but don’t get the projects and end up not able to pay them?
    • Do I take on big projects then hire people? What happens when I get the big projects but lack the muscle to deliver it and lose the client and my reputation?

    This dilemma is basically about managing cash flow and balancing the payment terms with your invoices and employees salaries, while maintaining decent quality of your service delivery.

    There is no right or wrong answers here; and it is pretty much a case by case thing. In all cases, companies that survive, manage to hack their way to a happy balance that floats their boats. It is an iterative process with a lot of screw-ups though, and — again — there is no one-size-fits-all solution.

    This is where investors can become an interesting option. They can infuse your company with cash that enables you to comfortably grow your team and finance new projects. Sadly enough, investors in the tech sphere and outside it aren’t really that interested in services companies. Truly enough, they usually don’t feel that it is something unique with potentially high ROI. Their public reason for their lack of interest is basically the non-scalability of the company’s proposition. In other words, the more business you get, the more people you need to hire. Both are directly proportional, which puts somewhat of a cap on how much and how fast you can grow.

    There is a lot of truth to said opinion. However, some services companies manage to figure out the magic potion that enables them to scale:

    The right pool of talent + Resources + Flow of projects + Defensible Competitive Advantage(s) = Growth

    It is not the general rule though, nor is it by any means easy to achieve.

    I can’t really tackle all the market dynamics leading to the rise of every services business out there, but I can say that they do work in Egypt. Its cash is present if its offering is highly needed by the market.

    Bottom line: is there an opportunity to start a services company in Egypt?

    Yes, provided you manage to achieve and/or obtain the following:

    1. Unfair advantage: for example, deep understanding of or very strong strategic connections in an industry; very specific non-replicable know-how or IP that differentiates your company in ways your competition cannot mimic; really killer and/or veteran founding team combination; some loyal followership or influenceable audience of sorts; etc.
    2. Early mover advantage: pretty self-explanatory. Just make sure that you don’t move too early in order not to run out of steam before the market opportunity materializes.
    3. Build a defensible competitive advantage: preferably in a certain vertical within your domain. It helps even more, if you manage to enter a service domain that already has high entry barriers. For example, automotive embedded software development and hardware design are service domains that require very specific know-how to enter. But, most companies acquired from Egypt are in fact from this domain (e.g. SysDSoft & SiliconVision). Avelabs is a shining and growing example in this domain.
    4. Provide an essential service: while social media management has become an essential service in the eyes of its clients, energy efficiency management and consulting hasn’t, despite the actual but overlooked dire need for it. Alleviate a pain, don’t offer efficiency or optimization (remember the previous article in the series?)
    5. Keep updating your offering: develop the skill to read the market quickly enough to adjust your services to suit its changing demand. This is a strategy few can muster. But the surviving Training Services Providers cannot live without it. This shrewd strategy can give you a leg up on competition (I’m not going to say innovative) — courtesy of Hussein Mohieldin
    6. Hack the scalability problem: If you manage to figure out your way through the scalability barrier, you are golden.

    In a nutshell…

    Service companies are easy to start, but they become an all-out-war against the odds when you start to scale it. Yes, the technical know-how required to deliver the service to a client can be available in abundant resources. On the other hand, the true know-how of the services companies (account management, project management, cash-flow management and team management) isn’t something you learn in school or online (courtesy of Hussein Mohieldin).

    You have to find your area, make it defensible and figure out your path to scaling your company.

    Once again, If you manage to figure out how to scale it successfully, you are off to something big.

    Next stop is Tech Products: do they work in an Egyptian context?

    Acknowledgements

    1. Thanks to Tarek Fahim for his early comments and pointers as included in the article (part of the eSpace details, paul graham’s blogpost, hardware and embedded software verticals)
    2. Thanks to Hussein Mohieldin for his feedback as included in the article.
    3. Thanks to Eman Hylooz for her continued encouragement and public sharing of my content.

    Whoever else will give me valuable feedback and/or sincere public thanks, I will acknowledge them here. I keep updating this section.

  • Is There a Real Startup Opportunity in Egypt?

    Is There a Real Startup Opportunity in Egypt?

    This is a question everyone answers to their own bias. The fault doesn’t lie in the question, but in whom it is usually directed to: People with skin in the game.

    Therefore, getting an objective answer from them is only fabric of imagination. Sadly, this can be as good as it gets; there aren’t really other people whom you can ask this question and expect an impartial response. Here’s a subset of those usually tasked with tackling said question:

    Entrepreneurs in the scene. They can have working companies making them profit of sorts and getting them some validation (personal, social, prestige, money). They would lean naturally into seeing it through what they’ve achieved so far. If things aren’t really going well for them, their answers would possibly be relatively different.

    Startup Accelerators usually have the better end of their investment deals and they need to keep filling their pipelines with new infant startups, in order to buy the most cost-effective equity possible — in bulk. So, it’s only good business practice for them to promote the heck out of the startup opportunity in Egypt.

    Grants and their management staff are appraised by the number of startups/initiatives/events/activities they have managed to “make happen”. So, the quantity of their work outweighs its quality by default, and their main objective becomes churning out as many startups as they can, or else.

    Service providers to startups and their surroundings have interests harmonious with those of accelerators and grants (lawyers, accountants, designers, video producers, printing houses, etc.). Hence, they must preach to the rapid creation of “large” numbers of startups typically requiring their services. They are basically looking after their business and sustaining their own livelihood.

    Investors working in high-risk-high-reward markets always have a different risk tolerance and appetite than the average man. Nonetheless, they do express the investment opinions relatively positively while discarding their differently calibrated risk sensors. Understandably, high-risk-high-reward markets usually offer relatively cheap investments, especially if they sourced their money in USD/EUR and invest in the local currency. So, it must be expected from investors to speak positively about the markets they invest in.

    Perhaps it is becoming obvious now why the startup opportunity is being marketed as the road to salvation in Egypt. More so, when you observe who is pushing this message, huh?

    Although the above phrasing might seem a bit patronizing, I do clearly confirm, that I’m not of divine, infallible and undeniable logic or wisdom. I do in fact revere the above groups’ respective points of view. Putting your “money” where your mouth is to back your position and grow your “success” deserves major respect, regardless.

    Having said that, I’ve had skin in this game as a founder of a growing tech company operating in the Audiobooks space for a decent while; I still do to some extent. It has, however, taken a relative backseat to where I am now. Be that as it may, I will try to put together an objective point of view, while acknowledging and embracing my biases. After all, like it or not, you are your biases. Period. Otherwise stated is an act of lunacy in my book.

    So, back to the question: Is there a REAL startup opportunity in Egypt?

    My answer is: A Conditional YES.

    Yes, because believe it or not, there are people who are actually making it work, albeit ranging from hardly to successfully.

    I know first hand, that it is exasperating, herculean and every breath along the way involves a lot of insurmountably insignificant and infuriating trifles.

    I know first hand, that truckloads of manure — both metaphorically bovine and miscellaneously literal — are constantly catapulted directly at industrial fans strangling you and everyone involved, which makes fire-fighting THE national startup sport.

    I know first hand, that talents are scarce and Gen Y are running for their lives from Egypt to any place that would harbor them under any conditions, instead of fueling the growth of local startups. Hiring in general be it for skilled or unskilled labor of any shape or form is a never-ending-zombie-apocalyptic-vampire-feeding-frenzy-nightmare in Egypt.

    But, fact of the matter is, there are brave souls who are actually making it happen — successfully and profitably. This is evidence we cannot ignore.

    Obviously, a lot rides on the team, their capabilities, their unfair advantage, their business idea/model, its conceptualization, their financing and execution. I’m not discussing those things here. I’m more inclined to observe the external factors that can catalyze or hinder a company’s existence and growth in Egypt. Factors that relate to early on decisions in your choice of startup, vertical and proposition.

    In the end, this is my attempt to highlight the choices that can increase your prospects of success, and how said choices can affect you and your company.

    I decided to turn this into a series detailing each condition where a startup opportunity exists in Egypt, because as I started writing, I found one article won’t be enough, without exceeding 10,000 words.

    As a warm-up and to set the tone, here are some general pointers before the deep dive:

    1- Egypt is a land of pyramids, not rocket-ships. The market likes what it knows and shies away from what seems weird or not “validated”. Validation usually means: already successfully profitable, reached cash-flow positive, has large traction and/or brand recognition; also, when someone in the market has already had success in the space while there is seemingly some room in the market for new entrants. Case in point: Uber & Careem (“successful” in the space), then Ousta, then Pink taxi, then whatever (new entrants). The on-demand-chauffeur market can still encompass more for now. A company at any stage before that is very rarely considered validated. If you are going to start a company, think of validating it quickly by generating cash and profits early enough through solid unit economics. This is a relatively sure-fire way to succeed.

    2- Innovation is a stranger to the Egyptian market, one that faces sever racist push back rather than skeptical welcoming. I’m from the innovation sphere and it took us blood, sweat and tears to push iqraaly to the market, and it is still an uphill battle, even after product-market-fit. Just keep this in the back of your head. Innovating a new product isn’t necessarily the way to go in Egypt, because it requires serious funding, risk tolerance, patience and perseverance. It is a fully fledged marathon, and if you manage to push through the end game, you face a very happy ending. People seldom finish though. Very seldom. I’m not saying that you should not innovate. NO. I’m saying that if you are looking to start a company in Egypt, offering an innovative value proposition isn’t always the sure-fire way to go; in fact, it is the opposite. If you want to innovate, make sure your innovation solves a very real pain for your market, and expect it to take a lot of time, effort and push to get the traction you need.

    3- Optimization is a merchandise rarely appreciated in the Egyptian market, unless it provides drastic sales/profit/revenue increase to its users. Optimization tools/services reducing costs and increasing efficiency are fine and dandy, but unless the client’s costs are staggering and eating up profits like piranhas on a piece of meat, said offering is always considered an unaffordable luxury. Case in point: how many times is an Egyptian street dug up and repaved after it was asphalted for reasons that could have been avoided if efficiency was a virtue? Yes… I know; very efficient and well optimized. It is a common work culture by the way even in the private sector, not just within the Egyptian bureaucracy that exists to mess with you. We Egyptians, generally work only to get paid and maintain our payments, not to actually achieve something. So, there is hardly room for optimization or efficiency increase here. If you want to offer some value proposition based on optimization, tie it directly to massively increasing the clients’ revenues and help them reach their sales targets, rather than cost reduction or efficiency improvement. Bottom line, optimize to double or triple sales and revenue, not to save time or money.

    4- The raw benefits of using technology and programmatic processes are NOT blatantly obvious whatsoever in most industries in Egypt. Most businesses and people are more-or-less “happy” and/or comfortable with doing things as they always have. Using a Japanese ass-cleaning-system controlled by an app to clean one’s behind instead of regular switch-on-switch-off Shattafa and toilet-paper won’t really cut it for the Egyptian market. Unless technology puts real money in the users’ pocket, it becomes a nice-to-have, and no business is built on being a nice-to-have. This is magnified in Egypt where disposable income is mostly a figment of imagination for people and businesses. Remember: experimentation to reality is like Egyptian scientific research’s to “Higher Education” — a slide at the end of a shitty presentation targeting only self-preservation. Again, if you offer technology that is very cheap to the client and can drastically increase their revenue, you might have a shot at a business.

    5- Egypt is a wasteland of infrastructure and a zombie-land of value chains. The existence of EVERY single business in the world relies massively on its enveloping value chains and underlying infrastructure. So, starting a business in Egypt has to respect the value chain it is in. The Management team needs to make absolute sure they can navigate and orchestrate their business around the crap they will find in their respective value chains. Because no matter how innovative your idea is, or how strong you build your core team, if it is missing the value chain, and you are not planning to go full-stack (I’ll get to that further on up the road), you are definitely and absolutely screwed. And in case I’ve said “value chains” too much, once more: value chain. Look it up if you have to. I’ll give the example I’m most familiar with: Digital Content publishing and Advertising. The value chain in the real world consists of: the Publisher — who creates the content, the publishers’ agency — who buys the ad rights to said publisher’s content, the media buyer — who buys ads on behalf of brands because he has ongoing deals with publishers’ agencies and buys from them in bulk, the media planner — who puts together a media plan for the brand, i.e. which ad slots to buy where, in order to achieve their sales targets. This value chain is extremely weak in Egypt and it is very, very hard for new publishers to enter the scene. Smaller digital publishers who made it had to navigate through this messy value chain, and sometimes compensating for its gaps — e.g. selling to brands and media buyers directly. I will write a separate piece on it to give it adequate elaboration, but you get the gist.

    6- Marketplaces and multi-sided business models are a nice dream الحلم الجميل. They are cool to own once they are big and some snowballing is taking place. But building them up from scratch is extremely tricky and needs real strategy, skill, implementation and resources to overcome the chicken and egg problem. In case you are wondering, which chicken and egg problem I’m talking about, here it is in a nutshell: In a market place, you need to attract buyers and sellers to your platform. But no buyers will come to your marketplace unless a decent variety of sellers/products/services is sold. On the other hand, no seller will give you their attention unless you have decent traffic to make selling on your platform/product worth their time. More often than not, it really costs an arm and a leg to build such a platform and ramp up its usage, because you will have to pay for having either the chicken or the egg. OLX (back then it was dubizzle) burned through insane marketing budgets to generate listings upon launch to get over the threshold where it becomes a go to place for buyers of 2nd hand merchandise. However, if you manage to grow one, you are basically building a gold mine. But Rome wasn’t built in a day. If you are going for a platform and/or marketplace, you need to account for a massive marketing and content/sellers acquisition budget in your plans. You will need to overcome the chicken and egg problem, and it is a problem that you will most probably need to throw money at. I’m not saying it doesn’t work. It does and it has. And it can work without throwing money at it if you have an unfair advantage or some partnership that enables you to overcome it. But, it is not as easy as it is presented to the public. In fact, way, way tougher. I will cover this in greater details in a separate piece later.

    Those were some initial pointers on the conditions to start a company in Egypt. Conditions you can actually influence by making the right choices.

    Here is my advice: to increase your chances of success, keep the above in the back of your mind despite what optimistic BS you hear in the startup events. The above content and what shall follow in this series is in fact tried and tested by me and by my direct acquaintances. But it is your choice what to do about it.

    The next stop is one of the interesting verticals, where starting a company just might make sense in Egypt: The Services industry.

    Acknowledgements:

    • Thanks to Mohamed Hamada for your valuable and detailed feedback.
      Thanks Cornelius James O’donnell and Moataz Kotb for continuing the discussion and adding your two cents.
    • Thanks Ameer Sherif and Mai Medhat for being surprised in my thoughts not being as dark as you expected, and thanks for sharing your two cents.
    • Thanks Mustafa Raslan for your kind words; they are really humbling.
    • Thanks Ahmed Soliman for your solid gratitude.
    • Thanks to my dear friend Ayman Naguib for your continued discussion of the shared thoughts.
    • Thanks Eman Hylooz for your offline comments. Looking forward to seeing them in details here on medium. Update: Thanks for your invaluable comments and discussion here on medium.
    • Thanks Ahman Rashed for your comments. I will try to make the language easier. Not sure I can though. Also, thanks for directing my attention towards Egypt requiring more focus on non-tech companies.
    • Thanks Omar Maher for your big set of comments. I have gone through most of them, as it is a bit tougher to go through audio comments. I will let you know of my feedback.
    • Thanks Tarek Fahim for your pointers on marketplaces. Noted and edited.
    • Thanks Dalia Al-Said for your comments and encouragement as well.
    • Thanks Abdulrahman Khedr for your interesting discussion on the subject.
    • Thanks Mai El Zeiny for your nice pointer and discussion as well.
    • Thanks to Ahmed El Alfi for his detailed comments and discussion of the article’s premise.

    Whoever else will give me valuable feedback and/or sincere public thanks, I will acknowledge them here. I keep updating this section.

    This article first appeared on Medium and the author, Abdelrahman Wahba has authorized us to use it.