Digital Boom

Category: Opinion

  • Why Middle East marketing and politics don’t mix

    Why Middle East marketing and politics don’t mix

    Growing up in the region, I was (and still am) far too talkative. To keep me from getting into trouble, I was told, in no uncertain terms by my late father that I shouldn’t talk about politics, religion and sex (this always made me laugh as he’d proceed to do exactly what he advised me against).

    His words should have been heeded by the marketing team at Pizza Hut’s Israel franchise. For those who haven’t yet read the story earlier last week. the fast food chain’s Israeli branch doctored a picture released by Israeli police allegedly showing Palestinian prisoner Marwan Barhgouti breaking his fast by eating a chocolate bar. In Hebrew, Israel’s Pizza Hut marketing team wrote: “Barghouti, if you’re going to break a strike, why not pizza?” The chain also Photoshopped a pizza box onto the floor of the prison cell along with a slice of pizza in the sink.

    Unsurprisingly, the stunt backfired and caused a backlash on social media. Pizza Hut International moved to limit the damage by posting an apology and announcing that the marketing agency behind the initiative had been fired (there was no mention of what happened to the person on the client side who approved the image’s creation and posting).

    Pizza Hut has learned the hard way that marketing and politics don’t mix, especially in the Middle East. There’s a couple of basic points that marketers need to take from this debacle:

    • Politics polarizes to the extreme: Few brands would want to touch any issue relating to Israel and the Palestinians, due to the intensity of emotions on both sides. By appealing to one audience, you’ve essentially alienated the other side, no matter what your content or message is.
    • Digital is borderless: This concept may have worked before the internet, when advertising was restricted to TV, print or radio, and didn’t go viral. However, there’s nowhere for bad advertising to hide in a digital world where billions of eyeballs can see your content. Advertising intended for one audience can – and in this case did – spread to an audience who have a contrasting opinion. Likewise, calls for a boycott are no longer local, but are regional or global in nature.
    • An apology only fans the flames: Pizza Hut’s apology on such a controversial issue may have only made the situation worse. Whilst the original post alienated Palestinian activists and their supporters, the apology would have upset many Israelis who are opposed to the Palestinian prisoners on hunger strike. The chain would have lost fans, and sales, on both sides.

    Politics can be leveraged in a manner that can build brand equity – Heineken proved that with its latest #OpenYourWorld ad which attempts to promote debate and dialogue between people with differing political persuasions. However, for every Heineken, there’s a dozen Pepsis. A marketer will to use Middle East politics in his or her content would be a much braver soul than me. I’ll continue to follow my father’s advice, at least when it comes to advertising, and keep away from politics, religion, and sex.

  • Maadi under destruction, how to stand up for your heritage?

    Maadi under destruction, how to stand up for your heritage?

    Would you stand for your Identity?

    It was a story like no other, Brits and Egyptian Jews came in, bought some land from the Khedive himself along the Royal (now military) train tracks and then Maadi was birthed.

    With a vast array of different architectural building styles, interesting people and stories to keep you entertained till the end, Maadi has morphed into a relaxed green compound that is any architecture student’s dream.

    Disclaimer: Pictures courtesy of Samir Raafat. www.egy.com

    I have lived in Maadi all my life, from schools to friends’ places to clubs, cafes, sidewalks and trees, Maadi was and remains part of the family.

    Maadi is beautiful, safe and breathtaking. Maadi is home, Maadi is family, Maadi is the haven.

    Maadi was the birthplace of the suburb/compound concept in Egypt and Cairo. Being at the south and by the Nile, Maadi is enclosed within very clear boundaries and is governed by a very strictly urban planning and architectural strategies.

    When one, in the early days, went to Delta Land company to purchase a house in Maadi, he/she was obligated to keep safe distances from neighbors, not to exceed a certain height and to, more importantly, dedicate at least a third of the land to gardens/orchards.

    All roads are a specific width and all building have a specific height, doesn’t seem very hard, does it?

    Maadi managed to keep its traditions of safety, greenery and privacy like any other self-respecting compound until the 90s with occasional tearing down of villas and trees by 2nd and 3rd generation owners who fail to respect the identity of Maadi and want a quick buck. Which is fine, if you live in Maadi, you learn the peace and serenity of letting go and choosing your battles wisely.

    Speaking of battles, back in 2003 I believe, the District of Maadi made two large mistakes, one I managed to win and the other I sadly lost.

    I managed to preserve the trees of Canal road, the trees are at least 130 years old and were the sight of several iconic films such as Abd El Halim Hafez’s Banat El Youm, that is heritage for you if you can define heritage.

    I lost the battle of Egypt’s first and only automatic hydraulic water pumping system based by the Virgin Mary Monastery and Church by the Maadi Nile. This system extended all through Maadi and is responsible for watering all trees and gardens with unprocessed and unfiltered water directly from the Nile, preserving the greenery while being cost efficient and environmental friendly.

    The head of the Maadi district back then tore down the main water pump for no reason whatsoever and now the trees are watered with filtered processed damaging water that costs a lot of money.

    Maadi is under destruction

    Now, in 2017 we are faced with the tearing down with many gems of Villas and Mansions in blatant disregard to Law number 119 for the year 2008 that declares Maadi a district of special architectural and urban heritage thus making the Prime Minister the sole person authorized to issue building and tearing down of any zone in Maadi in accordance with aesthetic guides and historical importance withstanding.

    I hear accusations of racism and classism towards residents of Maadi requesting their hometown being kept the way it always was, my question to you is, if I come into your home, tear it down, make it cluttered, noisy and change it completely, can I call you a racist then?

    Take Action

    If you care for beauty, greenery and Egyptian heritage, support the cause here with your signature and make it clear that we want Egypt to remain the way it is.

    If you have buildings, you think are in danger of being torn down and you feel are heritage of our rich country please let tweet me or email me. I will help you preserve your identity.

  • 6 Personalities of Successful Founders

    6 Personalities of Successful Founders

    What makes a successful founder? Many in the startup ecosystem have stepped in to answer this question, which is constantly being asked by founders and — not so publicly — by other VCs. A few days ago, Dave McClure just answered a similar question here (disclosure: 500 Startups is an investor in our startup, Aingel.ai)

    Given what Aingel does with predicting startup success based on founder attributes, and considering that “What makes founders successful?” is the number one question we’ve been asked by every VC we meet, we decided to share some of our findings here.

    We analyzed the digital footprint of more than 3,600 founders and used AI to transform this data into 50 personality attributes. One of the most interesting discoveries we made was that — contrary to popular conceptions — startup founders’ single traits could not conclusively be linked to their success. However, when you start to pair personality traits, the ability to predict success changes quite dramatically.

    Out of many pairs of traits, here are six that tell a strong, instantly recognizable story of personalities of successful founders.

    Type 1: Slow to Trust and Very Altruistic

    Founders of this type appear shrewd and skeptical, and are less likely to take people — or even data — at their word. However, while they may require concrete evidence to make that initial buy in, they also are concerned about other people, and take the time to help when others are in need.

    Hypothesis: In building their startup, these founders are constantly getting feedback from employees and customers, looking at data and hearing a variety of often conflicting opinions, while also supporting and providing a positive environment for employees and customers. Alone, the traits can be a recipe for disaster. We believe that when paired together, these traits are beneficial because they balance each other out. These founders don’t take anything at face value, and their efforts to be truly helpful to others keeps them well informed of different perspectives, while growing a supportive, trusting following.

    Type 2: Achievement Seeking with High Self-Awareness

    These are founders who have the drive to keep pushing towards success and are motivated to give maximum effort. They also possess high degrees of self-awareness and emotionality. They are able to experience both their own and others’ emotions at a profound level. They also tend to be very good at expressing their emotions. In our research, Scott Dorsey (ExactTarget) ended up in this group.

    Hypothesis: When combined, this pair of traits is beneficial because launching a successful company requires continued determination over time that is tempered with an ability to reach out and connect with people. Sometimes, individuals that are achievement-oriented can be seen as overwhelming, single mindedly focused only on results. But achievement-seeking founders who also possess high emotionality are able to experience and project their emotions, allowing them to communicate on a deeper level the benefits of achieving the best possible outcomes, and maintain a high level of support as they drive toward their goals.

    Type 3: Highly Empathic but Not Agreeable

    Founders of this type tend to be disagreeable but are skilled at monitoring and reacting to the feelings of others. In other words, they stand up for what they believe in and are adept at discerning what others are thinking, which allows them to either bring dissenters to their own point of view or simply disagree without alienating themselves. In our research, Amr Awadallah (Cloudera), landed in this group as a good example of one such founder.

    Hypothesis: We’ve found this to be a winning trait pair because individuals who are less agreeable are often considered aggressive or hostile, which can drive employees, customers or even investors in the opposite direction. Being high in both traits allows these founders to be assertive while maintaining positive and productive relationships. They are skilled at reading emotions and beliefs in others, and are more adept at managing the push-pull aspect of working in a business environment.

    Type 4: Highly Anxious but Low on Immoderation

    Founders of this type are very anxious but focused on long term results and consequences. Short-term gains are secondary when not in line with the big picture. They seem to channel their anxiety and fear of failure towards a longer term goal.

    Hypothesis: This seems to tie in with the concept of “healthy paranoia” we’ve heard about many times before. Alone, it can lead founders to take short cuts that can hurt them and the startup in the long run. Coupling anxiety with the focus on the long run seems logical and absolutely necessary for enduring success. Constantly thinking about long term market changes, internal operations or competitive positioning are bound to prepare founders for the future of their startups.

    Type 5: Very Moody but Slow to Anger

    Founders of this type tend to react easily to life’s ups and downs. They readily experience a range of emotion, with the exception of anger. This moodiness includes positive emotions such as joy and excitement, as well as negative emotions such as sadness. They do not display any forms of anger with their negative emotions.

    Hypothesis: Expressing and communicating emotions, such as joy, excitement, and even sorrow leads to a deeper connection with employees. It can be a source of inspiration and drive for their teams. Founders with expressive personalities that are reactive to the world around them, while maintaining control over their anger, can build stronger, more durable connections.

    Type 6: Highly Imaginative and Empathic

    These founders possess high levels of both imagination as well as empathy. Their imaginative minds lead to creativity and innovation, which are skills of immense importance to the founder, while their empathetic nature gives them invaluable perspective. In our research, Reid Hoffman (LinkedIn) ended up in this group, and you can easily see these traits present in the way he speaks about industries in years to come.

    Hypothesis: Founders with only empathy tend to simply focus on solving for the short-term needs. Yet when coupled with a strong imagination, this pair of traits becomes a keenly effective combo to founders because they can easily read where their business or industry is heading and position their startup for success based on the reality that many others do not necessarily see. Creativity and a deep understanding of their customers and industry also means that they tend to outpace their competition on product features and roadmap.

    Successful founders come in different shapes and forms. We know from our work at Aingel.ai that you can’t predict a startup’s success on individual traits of a founder. But when we begin to pair those traits, we start to see how they work together and complement one another to bolster a founder toward startup success. If there is enough interest, we will work on some helpful tips on how both investors and employees should handle working with these types of founders.

  • Fallout of the Careem – Fakharany Saga

    Fallout of the Careem – Fakharany Saga

    It started so well. One of the most respected Egyptian IT executives, a 3Com and Google veteran (disclaimer – I briefly worked with Wael when he was at 3Com in 2005), Wael Fakhrany announced he was to leave his senior role in Google to join Careem, the app-based car booking service that had been founded five years ago in Dubai and which had become only the second tech unicorn in the region.

    In a Medium piece written to explain why he’d be leaving one of the most respected companies in the world, Wael wrote that:

    “For me, Careem represents more than a dream, it represents a promise. The promise that a local company, from this region, created by people who grew up here and understand our problems can cater to those issues. The idea is that it wouldn’t cater to them the same way your average multinational does — not by applying some sort of all-encompassing global law and calling it their mission or values and not caring what the users want. It was about compliance with local laws to the fullest, ensuring that we are integrated and part of the community. Ensuring we are providing an unrivaled caliber of service; and that all the stakeholders — whether us, the government, the captains, or the customers all came out as winners.”

    The match seemed to be ideal; Wael would lead the organization in Egypt as its Managing Director and Senior Vice President Government Relations. Careem would benefit from Wael’s decades-worth of experience in the tech sector as well as his brand image in Egypt.

    This partnership ended on Sunday this week, in dramatic fashion. As you’re all aware, Careem announced that Wael was leaving, in a rather haphazard fashion, with the following: “There are times when a great mind in a great role at a great business does not necessarily make a great fit”. There was no hint of why he’d left, after only six months with Careem, and no explanation as to whether he’d been let go or left of his own accord.

    Taking to Twitter the day after to refute the claim that he’d left of his own accord, Wael wrote that, “I didn’t resign from Careem, I was fired in a humiliating and abrupt way. God knows how hard I’ve worked. I am heartbroken, but I know that justice will be done.” That tweet, which was Wael’s last activity online, has been shared over 1,200 times. It has also spurred a backlash against Careem in Egypt, with thousands of Egyptians using the hashtag #DeleteCareem to show their support for Wael.

    Lessons to be learned

    It won’t be the first time that a seemingly perfect match ends in such a manner. The public reaction is easier to understand, however. Careem has handled the situation poorly. It seems that the announcement was made without Wael’s input. And the language used in the release was vague at best, leaving many to wonder if Wael had left of his own accord only months after leaving Google for Careem. Wael had himself written that people who ask why he’d leave Google for Careem. What would they think of him for leaving Careem six months after quitting Google?

    Wael’s response wasn’t surprising. In the age of social media, it’s never been easier to put out a message online that can reach millions. It also underlines another lesson for Careem, namely that a personal message will always trump corporate speak. In hindsight, it was wrong to use a press release and ambiguous language, and not ask one of the partner founders to step in and give their own voice to the reasoning behind the decision for Wael to leave.

    For many of those Egyptians who responded to Wael’s tweet, he was Careem in Egypt (the visual of Wael next to Careem is the one which has been used by many online as well as traditional media). The fact that he’s now leaving means that they’ll take their business elsewhere. They knew Careem through Wael. It says a great deal about both that the personal brand of Wael Fakhrany is stronger than that of Careem’s brand among the country’s online community.

    Finally, there’s the Careem story. Wael wrote about wanting to work for a local start-up that supports local communities and is in tune with local values, and much of Careem’s narrative has been about it being from the Middle East and for the Middle East. This episode reminds me of similar issues that UBER has recently faced regarding its CEO. Narratives are great for engaging people, but they must fit with the facts.

    Whatever the outcome of this saga, I do hope that both parties come out learning lessons for the future. Wael is a remarkable person, who has done more than many to support the local tech start-up community in Egypt. Likewise, Careem is a tech success story of what can be done regionally with the right investment and strategy. Nevertheless, a company without values is simply a shell. Careem’s management would do well to learn that values are lived through actions, and not just words.

  • You work in PR? Read this!

    You work in PR? Read this!

    PR is dead – how many times have we all heard this in the past couple of years?

    Yes, social media is becoming more important than ever but don’t forget- when crisis hit (and they will hit you for sure) it is your PR pros that will come and help you clean up the mess, most probably, created by the same people that continuously claim that our profession is dead. Let’s be honest – PR pros are the guardians of a (your) company’s reputation. Without their input, existence and advice, even the smallest of crisis can and will lead to your brand’s demise.

    I recently had the privilege to spend a day with some of the world’s most innovative PR professionals and everyone pretty much agreed on one thing – in some ways everything has changed for us but in some ways, nothing has changed at all.

    So, how do we continue guarding and protecting our companies’ reputations in times of constant crisis? Below are some of my most favorite tips by some of the people shaping today’s rapidly changing PR world.

    1. Be clear about what we do as PR professionals! Remember these 3 Ps

    we position, we promote, we protect

    2. Be brave and ask why! Don’t assume everything has been thought through. Have a quiet word with your CEO and have the courage to ask him WHY? Why things are done this way? Why are we doing this?

    3. Educate your colleagues on data leaks and cyber-crime. 42% of companies have been hit by cyber-crime and $315 billion of revenue was lost last year due to data leaks. Many hacks that happen nowadays are due to human failure, not technology failure. More importantly, majority of cyber vulnerabilities come from employees who clicked on the link or opened the attachment.

    4. While on the topic of data leaks, remember: communication can be recovered. If you don’t want it to be revealed don’t write about it in the first place!

    5. When you are writing a press release or creating a content, don’t just think of your target group and your customers, also think of the most unfriendly eyes who could be reading it!

    6. OK, so crisis hit! What do we do? In a crisis, the simplest questions are the ones a child would ask (why did this happen?) As a PR pro and as a corporation you must be able to answer this.

    7. The earlier you say sorry, the earlier people will settle with you and they will settle for less.

    8. While on the topic of saying sorry! Sorry is often the hardest word… but if it’s delivered with authenticity, it’s the right word.

    9. The key to crisis management is survivalability – you need to come through as a better organization

    10. Finally, always keep this quote by Christopher Penn in your mind: brand power makes people search for you, reputation makes them convert!

  • Chipsy Egypt Manipulates Disgruntled Customer Using Mortada Mansour’s Meme

    Chipsy Egypt Manipulates Disgruntled Customer Using Mortada Mansour’s Meme

    We’ve all seen it happen, but we rarely see a brand does it so well in Egypt.

    Chipsy Egypt got a particularly disgruntled user, their agency OMD handled it like a boss.

    It all started when Chipsy Egypt posted a photo with four models sitting inside a car to promote Chipsy’s latest “25% extra” offer, and a Facebook user deliberately decided to cause Chipsy some trouble with a comment phishing for likes and attention but the page’s community manager had other plans for him and turned it all into his favor.

    How? Here’s what’s happened

    Photo: Facebook

    And fans reacted as Chipsy planned

    Photo: Facebook

    We’ve all recently seen Mortada Mansour’s memes floating all over Facebook, but Chipsy Egypt’s Facebook page community manager has taken Mortada’s Meme to a higher level.

  • 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.

  • F*** Being a Founder, Be a Follower

    F*** Being a Founder, Be a Follower

    Everyone wants to be a founder. We’re getting international appraise for being so creative and innovative within the entrepreneurship ecosystem in Cairo. Forbes wrote about us, BBC, heck we even wrote a book about it! It’s not a shocker then, when everyone wants to jump on the wagon, and become a founder; someone who can solve a problem, create a good amount of income and become a PR sensation: sounds like a good deal to me!

    It became a dream that turned into a phantom that would haunt you during your stressful nights. I should quit and become a Founder. A founder of what? I don’t know, a Founder I tell you! I want to be a Founder!

    We’ll I’m writing this article to tell you that the best people out there are not the founders, but the followers, specifically the first follower.

    It is the person who came to know about an idea or startup in its initial stages, pumped it into their energy, money, time and devoted their life into making it grow. They are not called a co-founder, a founder, and maybe they won’t get the PR attention that desire any words and pictures of these people.  However, without the follower, the startup is nothing, and it will fall and crumble. Without them, the team falls and without them there is no startup, but no they don’t get to be interviewed.

    “Without the follower, there is no entrepreneur.”

    A few years back I saw this video called First Follower: Leadership Lessons from a Dancing Guy

    “There is no movement without the first follower.”

    The best way to make a movement, if you really care, is to courageously follow and show others how to follow. When you find a lone nut doing something great, have the guts to be the first person to stand up and join in.

    Let me tell you something, if we consider entrepreneurship in Egypt as a movement, then thank the first followers for standing up and joining in, turning the lunatics into leaders.

    It is because of the first followers it became a widespread phenomenon. It is because of the first followers that we all one day had the dream of becoming a founder.

    It is because of the first followers that Egypt became an entrepreneurial sensation.

    It is because of them we got the international appraise and attention. You shouldn’t dream of becoming a founder.

    Let the phantom that haunts you while you work at your desk job tell you,

    Join a startup, don’t create one.

    Create the movement, be a follower.

    Find a lunatic and make him sane.

    Be a follower, not a founder.

    Have something to say on this? Share your views in the comments box below or join us on twitter & Facebook /adigitalboom.

    If you have a news story or tip-off, drop us a line at [email protected]