This Article is written by Shashi Menon who is a web/media entrepreneur, int’l management consultant and works within the strategy and business development at twofour54 (Abu Dhabi Media Zone), where he focuses primarily on identifying strategic business opportunities for twofour54. Recently, he was instrumental in the formation of Comedy Central Studios Arabia. Before joining twofour54, Shashi founded two successful startups in the U.S., the most recent of which was SaaS collaboration tool that was acquired in 2008. Shashi also worked for Oliver Wyman, consulting for a range of emerging markets clients, with a specific focus on telecom, media and technology.
This article is the second in a multi-part series about entrepreneurship in the MENA region. In my first post, I laid out the five key attributes that I believe to be necessary for a sustainable and flourishing start-up ecosystem: infrastructure, talent, investment capital, mentors, and a culture of adoption.
You can also follow me on twitter: @shashimenon.
What does infrastructure mean? No, I’m not going to use the dictionary definition of it.
For a start-up, what type of infrastructure do you really need? Assuming that you’re not working from home, you’ll need an office or a desk somewhere, internet access, and fuel. You might need servers. And you’ll need to be registered as a legal entity in order to do business. Ancillary service providers such as lawyers, marketers, or PR professionals — while nice to have — may not be immediately necessary (note: don’t take legal advice from a blog post).
And for start-ups, cash is king, so affordability is a key concern.
Now, to what extent do we have that here in the MENA region? We have some of it, but it can be pricey. And for a start-up, that can be difficult to stomach.
If there’s one thing that the region is known for, it’s buildings. Large, iconic buildings. But the office space in these buildings is, and will remain, largely out of reach for start-ups for financial reasons. To be fair, there are shared or virtual that exist in certain places. The U.S. has seen success with this model (see Plug & Play Tech Center, for example, which has hosted notable companies such as PayPal), and in recent years a number of such work spaces have launched. Organizations like The Shelter — a UAE-based venture led by twin Emirati brothers — are offering comfortable, individual desks to mobile workers. I think that this is a step in the right direction. And then there are the free zones…
Free zones (in Dubai or Abu Dhabi, for example) have certainly taken steps towards reducing the barriers to setting-up shop, but I think that it can go much further. Qatar has its Science & Technology Park. Lebanon has its own Beirut Media City project (admittedly, it is still in its infancy). The process of setting-up a business can still be very slow and tedious at times, but it’s improving — in some places. In others, not knowing the right people can be a deal breaker. There are still some other challenges, too, including copyright protection and a properly functioning courts system, but progress is being made. Definitely an area to watch.
Unfortunately, it’s a different story with technological infrastructure.
Internet in the region is generally slow and expensive. Two strikes. Some countries in the region don’t even have true broadband yet. Yeah, that’s a problem. This year could be the year that 50 Mbps internet drops to $50 in the U.S. We still have a ways to go here. Du currently offers 24 Mbps for $200, but my connection is still slow and unreliable (and I’ve memorized the waiting music from having to call customer support so many times). But further competition within telecom markets around the region should drive improvements, thereby shrinking the lag time between the region and places like the U.S. Or so we hope.
Another big problem area. Bandwidth is prohibitively expensive and server response times are slow. Consequently, most companies I know host their services outside of the region. Fortunately, on-demand services in the internet era are plentiful and affordable – but none of that exists yet in the region. Definitely something to fix.
There are plenty of law firms, marketing/advertising agencies, and PR firms in the region. But are they any good? I’ve had mixed experiences. From those in the profession, I’ve heard that legal work in the region can generally be described as fairly shoddy and not good value for money. In other service areas, large agencies can offer reasonably quality work also can be out of reach for the typical start-up. Around the region, though, a growing number of independent agencies are gaining recognition for quality. Picking the right service partners can be tricky and is an important decision in the life of any start-up. Clearly, quality is better than quantity, but in the absence of a suitable method of assessment, greater quantity (i.e. choice) will have to suffice.
Where does this leave us? My opinion is that infrastructure is improving, but is not at a level that I’d consider truly conducive for start-ups. Not yet, at least. A number of places within the region have singular or multiple benefits, but the total package does not yet exist – there are work-arounds, yes, but not full solutions.
The next few years will be telling.
Next stop: Talent (human capital). Stay tuned.