Silicon Arabia (Part 3): The Talent Equation

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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 third 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.  In my second post, I explained the various components of infrastructure: office space, legal/regulatory framework, internet, servers, and support partners.

I’ll now discuss the issue of talent.  And in a start-up, the talent equation is a critical one.
You can also follow me on twitter: @shashimenon.

Technical Talent

When I think about Silicon Valley and the talent equation, two words instantly come to mind. Stanford. Berkeley. Sure, some of the brightest technical minds in the world relocate to Silicon Valley in the hopes of striking it rich, but two premier universities are located in Silicon Valley’s backyard, constantly seeding it with bright, hungry talent. Other established or emerging hubs of entrepreneurship are in similar situations. New York? NYU. Columbia. Seattle? University of Washington. Los Angeles? USC. UCLA. India? IIT.

In the MENA region, Beirut is widely believed to have the best technical university. Amman has another. Cairo has another. But where are the others? I’ve heard good things about Sharjah. There aren’t too many others, though, and so it’s no surprise that the best technical talent comes from Beirut, Amman, Cairo, or from outside of the region.

To be fair, some countries are trying to build similar environments, including Qatar, whose Technology and Science Park is gaining recognition. I’d love to see this develop more in the region, though. And it will.

It’s not just about technical talent, though.

Let’s take a step back and ask an important question: do people in the MENA region really want to be entrepreneurs?

In June of last year, Silatech, a Qatari government organization tasked with creating new employment opportunities for the youth, published a lengthy research document called The Silatech Index: Voices of Young Arabs in partnership with Gallup. The study surveyed 8,597 “young people” (defined as ages 15-29) between February and April 2009. It’s too long to read in its entirety, but I recommend skimming through it.

One of the most telling results of the study came from a question about where youth would prefer to work, assuming equal pay and working conditions (results posted below; click to open the image in a new window).

What do these results show? Across much of the region, and particularly the GCC, people aspire to work in government jobs. Clear and significant majorities of at least 60% of those surveyed in the GCC are looking for government jobs. Attitudes in Levant, Egypt, and Maghreb are more mixed, however, with larger numbers of youth interested in self-employment. As the study notes, this suggests a waning faith in government jobs in these regions and growing enthusiasm for entrepreneurship. But I think there’s still a lot of development that needs to take place, and it has to start earlier in the academic cycle.

One doesn’t have to look far to see these attitudes in practice. Virtually all of the well-known MENA region start-ups originated from outside of the GCC, and many of them from Jordan. Maktoob? Jordan. Jeeran? Jordan. Kooora? Jordan. And there are more.

There is a shift in attitude that needs to take place. To some extent, I believe it’s already happening, and I’d venture a guess that in the 2010 and 2011 versions of the Silatech Index, this shift will be more visible. Those of us born in the 1980s and 1990s are part of the internet generation, and it is now easier than before to launch a start-up. Still, I’d like to see this shift in perception accelerate.

Sure, it’s not a fair comparison, but back in the United States, I can safely say that most people do not aspire to be government workers (for a variety of reasons, but let’s take that at face value for now). The American Dream is to run your own company; maybe the new MENA region dream will be the same, too.

Entrepreneurs have unique DNA

Mark Suster, a two-time entrepreneur turned venture capitalist, writes a blog that has quickly become a mainstay on my RSS reader. Any entrepreneur or aspiring entrepreneur should be reading his blog. My favorite series of his is about entrepreneur DNA and what it takes to be an entrepreneur (condensed versions: part 1, part 2, and part 3). Suster correctly notes that it takes a very different type of person to be a successful entrepreneur, and in this era of globalization, being successful on a large scale is even more difficult.

As Suster puts it in a separate post, the four letters that define an entrepreneur: JFDI. I’ve taken this to heart and made my own version of this graphic – with all of the words spelled out (sorry, Mom – I’ll go wash out my mouth with soap now).

TechCrunch Europe recently published a post on this topic. It was written by an anonymous European venture capitalist about the European work ethic and how it leaves something to be desired, especially when compared to the Silicon Valley work ethic. The key quote:

“As anyone who’s ever been there or visited will attest, in Silicon Valley everyone is working *all of the time*. And while this might seem unhealthy, not scalable, obsessive, manic or simply ridiculous, from an ecosystem perspective it’s basically unbeatable. If you want to build companies and ride the wave of innovation, it’s a 24/7 preoccupation — not just a lifestyle business.”

Sure, it might be slightly controversial, but I agree with it completely.

Does that kind of drive exist in the MENA region? It almost certainly does, but I think it’s still relatively few and far between. Moving forward, I think it’s going to be increasingly difficult for start-ups within the region to compete without that kind of mentality. The MENA region is no longer quite as insulated as in years past. With companies like Yahoo!, Google, and News Corp. expanding their operations quickly, the competitive landscape is only going to get more challenging.

Where do we go from here?

And so, where that leaves us: progress is taking place, but there’s still a fairly steep uphill climb to be made. Yes, there’s technical talent in the region, and it’s going to grow, but a cultural transition begins at the ground level – a grassroots movement, so to speak – and that simply takes time. The wave of entrepreneurship-focused government programs sweeping the GCC will surely help, but there’s a delicate role that governments need to play in this game – supporting and facilitating, but not driving. I don’t think you can make people want to be entrepreneurs unless they want to themselves — you can only give them the tools. In the long term, I’m fairly certain that governments in the region will take a very hands-off approach. And that’s a winning strategy, but only if the private sector steps up to fill that void, which means more communal support for entrepreneurs. And I think that’s coming, and soon.

Next topic: investment capital.

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6 Comments

  1. Shashi, I would like to start by saying this is a great piece and very accurate, and in whole, I agree with it. Now, to start with this attraction to government jobs, I have two things to say about this; 1) Government jobs in the region offer so much more job security, benefits and attractive retirement schemes in comparison to the emerging private sector, in the levant region especially. In the GCC, most of the respective countries wealth is accumilated from oil or energy resources revenue, and this spills into the private sector, so the attraction here is, why not just work for the government, as a national, its my given right that I work for my government, let the expats work in the private sector and leave after 5 years of accumilating wealth. It's the same in the levant, however the governments are less wealthy but offer great job security and benefits. All across the region, governments are feared by their people, the lack of democracy dictates this, and to work within the governmental sphere offers a sense of prestige on many fronts. 2) there is a culture of what we call in Arabic 'wasta', where even if my fellow applicant is more qualified and experienced, if daddy knows the boss, then I'm in!! this is both for the private sector and government. So in many countries, you see the youth and the young relying on such a culture, and hence, we see a lack of innovation and determination. This will continue and there are little ways to stop it, it's like a snowball effect.

    The comfort of a government or even a private sector job makes or breaks the region as a hub for entrepreneurs. I disagree to some extent to what the European venture capitalist you mention that has described entrepreneurship more as being a workaholic – I have come to realise entrepreneurship is more about getting out there in the world, speaking to people, listening more, spotting opportunities, seeing where the market is heading and going the opposite direction, finding that needle in the haystack, taking over your business and not letting your business take over you! Either way, whether workaholic or entrepreneur, your average Arab would say, 'screw this, I'm comfortable and secure where I am at present'.

    I see the GCC as talent and content consumers, while other areas in the Middle East as talent providers, these technological parks you mention are and will be packed with western expats and also Arabs from the levant. Even these initiatives seem to be government initiatives masqueraded as private sector initiatives, if you dig deep enough, you will see that they are owned by government holding companies. Nevertheless, they are there to support start-ups and encourage entrepreneurship.

    I agree with Suster when he says there are a lack of popular success stories in the region, and furthermore I would say there are lack of motivational examples. Take the life of a journalist or media professional for example and how its glamorised by hollywood over the years, hence you see a booming media industry in the West in parallel with that, its just not the case over here in the region! It's the American dream factor you mentioned, it's more in your face in the west.

    Education, society, and family upbringing plays a big role. Risk taking and following your own path rather than your family's expectation is frowned upon, society is still very, very conservative in general, politics dictates, and therefore dictates education and family values, traditions are still very much ripe.

    Consider everything above, and add to it a pinch of corruption, a dash of lack of direction and lack of promotion of funding and investment bodies, a handful of self-pride, and bake under the heat of political and economic uncertainty in the majority of the region, you're left with a lack of motivation and education about entrepreneurship….In general, that is!!

  2. Nice article Shashi. It is very impressive that youths like to work for gov! I never thought of it.
    Let me share some info from Iran as a part of M.E.
    There are 3 main technical uni and with 70M+ population and 30M+ internet users who are well educated, I do hope and plan to see and start some entrepreneurship activities there.

  3. I love your article :)

    It also made laugh that you mentioned Amman University as the lead technical uni of Jordan. This particuluar piece of infroamtion is extremely inaccurate. Please correct it before i kill myself!

  4. That's very interesting. I would like to refer to the Middle East Youth Initiative (http://shababinclusion.org/) which was launched to better understand and respond to the specific needs of the youth. In one of its publications, entitled "Missed by the Boom, Hurt by the Bust: Making Markets Work for Young People in the Middle East", the main recommendations for the emergence of strong Middle Eastern economies is expanding the role of the private sector, and reducing the appeal of government employment (Dhillon et al, http://shababinclusion.org/content/document/detai… Another interesting study quantified the cost of youth exclusion as high as US$53 billion in Egypt (17% of GDP) and US$1.5 billion in Jordan (7% of GDP) (Chaaban, http://shababinclusion.org/content/document/detai… which is to say the least a big foregone figure.
    Hence, start ups can be a great medium for youth inclusion, but we still lag the enabling environments, access to finance, and as you've mentioned in part 1, a change of culture. This will not only benefit the youth, but will also trickle down to the economy which will have a stronger more lucrative entrepreneurial class.

  5. Thanks for the comment, Mark, and I think the answer lies in my upcoming posts. I think the angel funding community has spurred innovation in the U.S. — such a community is markedly absent in the MENA region. I also think mentors in the region are quite rare compared to the U.S. Fred Wilson recently wrote a great post about role models ( http://www.avc.com/a_vc/2010/01/role-models.html ) and gave an interview for Fast Company ( http://www.avc.com/a_vc/2010/01/why-you-should-st… ) in which he said that second- and third-time entrepreneurs are real drivers of change. Accordingly, I'd posit that harnessing more effectively the leaders of the various success stories originating from the MENA region could really make a big difference.

  6. Thanks for the mention, Shashi. Super interesting findings. I would have never guessed that so many people in the GCC countries aspired to work for the government. I'm sure that youth everywhere aspire to work in the professions that are seen as most lucrative financially and from an interpersonal fulfillment perspective. To chance the views of the youth there need to be more success stories. In Silicon Valley there are so many people who want to be the next Jerry Yang / David Filo, Larry Page / Sergey Brin or Mark Zuckerberg. I think the real question is – what can we do to make these success stories of self-made people successful in the Middle East. Right now it would appear to many in the US that people tend to acquire wealth in the GCC through oil, real estate and exports of any raw materials. These are all businesses that favor people who come from wealth already. How do we change that?

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