What Silicon Valley is Missing Under their Global Noses
Christopher M. Schroeder
Internet/Media CEO; Venture Investor; Writer on Startups, Emerging Markets and the Middle East
I just had an interesting and provocative exchange on Facebook with the great tech journalist, David Kirkpatrick. His new Techonomy, for my money, is one of the more interesting out there looking at how technology is transforming business and society around the world. Contributor Will Greene on how tech is taking root in the Philippines today is a great example.
Also today there was an announcement from a very different Middle East then we in the States are used to hearing about on CNN. souq.com -- the largest eCommerce player in the region -- just raised $75 mm from the South African investors Naspers at a reported valuation exceeding $500 mm.
This is huge, counter-narrative and a lens to how emerging growth markets are in the early days of changing the global tech landscape. David was impressed, but asked: Why does it take a South African company to recognize a company like this? When will mainstream tech investors in the States become more internationally-minded, especially to open their minds about the Middle East?
I responded that some have long noticed. General Atlantic (out of their London operations) understands this. Tiger Global (who invested in Maktoob, the Yahoo! of the Middle East bought by Yahoo! and subsequently spun out souq.com) puts their money where their mouths are. Operating tech companies (Google, Microsoft, Intel, Vodafone, Cisco, PayPal, Linkedin, FB, Twitter) understand it.
But western (US in particular) VC's are slow. In part this is because the best of the US investors see the best US deals -- and our ecosystem, our rule of law, the network effect of talent that is Silicon Valley and other places here attract dollars accordingly.
At the same time, our internally focused friends also have not quite all figured out how to engage in a coming world of 5 billion smart phones -- where literally billions of people will have super computing on their person in corners of the world we have all but ignored.
Too many western VCs are of the mind set still of: we'll go where there is big market cap ("may lose money in china, but got to be there"); or where we can outsource cheaply. They will have their offices in Israel, China, Brazil, India perhaps, but also believe if they find world class entrepreneurs they are likely also willing to move here.
But they are missing how the world is shifting when there is ubiquitous access to the very software they helped invent! Great entrepreneurs want to stay home and now more than ever can. And market opportunities are springing up around them at scale.
To make it globally in tech, it used to be like the World Series in baseball -- all about making it in the US. This is changing. I see companies now in the Middle East and elsewhere that will make a fortune not thinking about the US as a market because their other markets are so big. Souq.com is all about their region, then Africa perhaps. I doubt Baidu or Tencent in China, or Yandex in Russia, or Mercado Libre in Brazil and Latin America spend five minutes wondering about whether they need the US to succeed.
I'm not saying the US isn't central to the future of innovation, entrepreneurship or venture investing. It will be. I'm not saying these new giants will ignore us. They won't.
I am saying the world is changing dramatically and ideas, innovation, entrepreneurial excellence, market power and investment prowess are already being unleashed bottom up, everywhere.
Head of Marketing & Growth at Mylerz
10 年I totally agree with you and as an Egyptian entrepreneur myself I would love for that to happen. I believe that there is a huge obstacle that we need overcome first before that can happen. The main problem is the general negativity and lack of belief from the person who has the idea and stakeholders around that person. If I have an idea in the US I will be encouraged to pursue that idea whole heartedly plus there is an ecosystem that will help me even further. In Egypt and the Middle East not only do we lack the entrepreneurial ecosystem, but also the lack of an entrepreneurial attitude. We lack the belief that a person with a powerful idea can turn it into a successful company (especially if that person is below the age of 40). I think once this is solved you will see more companies in the region similar to Souq.com. Keep in mind that Souq,com is part of Jabbar Group and the man behind it Samih Touqan already created Maktoob.com and sold it to Yahoo for Millions, So he has the funding and connections to make it happen. However the average Egyptian or Arab has a highly improbable task in front of him/her. But again as an Egyptian entrepreneur myself I hope that US investors keep the region in mind as that would definitely speed up the process of creating a great ecosystem for startups and placing us on the map.
CEO at Cheeze, Inc.
10 年Chris this is a great read. I recently wrote an article for local newspaper here called 7Days, (https://thi.gs/sv) after a recent trip to the Valley as part of the Google for Entrepreneurs programme. During my time there I got speaking to George Zachary (Twitter, Yammer and Pebble Watch) about his views on a Tech startup raising its next round investments from the west coast. Speaking to George was very interesting and things such as knowledge that our working week is Sunday to Thursday was news to him. As an English guy now living in Dubai - I raised a large seed round from a local investor for my new startup Brndstr Inc. Having lived in the USA previously it was clear that Dubai offered more opportunity - people in high places are not so hard to reach out here. Anyway so yeah, The world in my view is becoming a smaller place, and through my various articles for Entrepreneur magazine and Startup Events the goal is to put Dubai on the map and help grow the Startup circuit - trying to create what I call 'The Silicon Valley of the Desert'. After all living in a city built by an Entrepreneur does have a big advantage. Western VC's - we look forward to you're arrival ;)
CEO - Shipa Ecommerce at Agility | Digital Logistics
10 年Thank you Chris...I'd like to build on this excerpt from the same announcement that was published in one of the region's leading industry media portals... and go a bit further, me being your prime ADD candidate: "Although around 90% of online transactions in the Middle East and North Africa are still conducted on sites external to the region, according to PayPal, it's clear that Souq hopes to reverse that trend in a market that will reach an estimated $15 billion by 2015."...the realities on the ground are as follows: 1. Almost a billion dollars was spent 'overseas'/cross-border ecommerce alone in 2013. Note: Souq are trying to achieve 1 billion in a few years from the region (again, 250,000,000 population that are not necessarily online customers...6 million customers is small change) 2. Cash On Delivery (COD): this never scales (in bold) and is not a sustainable business model. If I were an investor, I would never invest in a business that is built on COD...and then again...that's just me. 3. Naspers are smart, adventurous risk taters and have a first-mover advantage over US or European based VC's. US VC's are no longer pioneers unfortunately and still prefer their comfort zones. To build on this, I engaged with Guy Kawasaki at the last LeWeb13 in Paris and he specifically said 'why would I invest somewhere so far away'? seriously? 4. 'It's all about the tech': we're not seeing here any 'wow' tech when it comes to ecommerce out of this region and nothing proprietary worthy. 5. Estimated size of ecommerce 'for goods sold' in 2013 in the region is around 1.4 Billion...ask Souq, MarkaVip and Namshi...they all agreed to this estimate during Arabnet...on stage...wait...I think 2 of the 3 agreed on this figure...to be on the safe side. 6. Any which way we look at it, any which way we turn it, this region was and will always be an 'inbound economy'...this was dictated ions ago...unfortunately....and fortunately...that's where the really, really, really big opportunities will be... Overall: yes I'm happy the likes of Souk and others are finally getting noticed by VC's (US or non-US based)...they are early movers and shakers...and any which way we look at it...they deserve to get rewarded for seeing things early...but 12 years is sure a long wait, compared to how things flow in the good ole USA. This is my opinion and my opinion only.