Fareed speaks with Chris Schroeder, an entrepreneur and venture capitalist, about entrepreneurship in the Middle East.
But the states of the Arab world are highly statist…I don’t think of them as places where you would see the growth of entrepreneurship.
One of the great stories about entrepreneurship now is the fact that so much is happening bottom-up, again, enabled by technology. And so as you know better than anyone, all emerging markets have tremendous complexity and histories and legacies to work at.
But all of a sudden, when young people have these devices in their hands and they have the access to technology, they can collaborate, share ideas and solve problems in very, very different ways.
So what have you found going around?
So what I’ve found overall are sort of three buckets of entrepreneurs. And by the way, this is as true in North Africa as in Yemen, in the midst of all the things that are going on. As you see often in emerging markets, you have entrepreneurs who are taking things that have been successful elsewhere and they’re taking it to the Middle East.
So there’s a wonderful company called Maktoob, which was the Yahoo! of the Middle East, which, by the way, Yahoo! bought for almost $200 million. There’s another great company called Souq.com, which is a multi-hundred million dollar company, which is very much like the Amazon.com of the Middle East.
But one of the most exciting things that I see are these young people who look at the problems around them, they use technology to solve them. So traffic is terrible in Cairo, as you know. And so now there are several wonderful apps to crowd share how you can get through and navigate traffic.
I would say as much as 15 percent of the start-ups I see are education. I mean, a lot of people don’t realize, in Egypt alone, that tutoring, supplemental education, is already a $2 billion business. And now technology is coming in to not only bring courses in videos online in Arabic, like Khan Academy, [but can] now can reach hundreds of thousands, if not millions, of more people.
And, of course, everything is one click away, which means that some of these companies I’m seeing are right now reaching American audiences. I discovered, a year ago, that I’d been using, for six months, a weather app. I had no idea it was made by 30 young people in Alexandria, Egypt, but I had it because I can access it in ways you could never before.
And the youth is a large part of your story. We often hear about the youth bulge in the Middle East, you know, whatever it is, about 60 percent of the Middle East…
…is under 35. But you see that as actually one of the advantages powering this entrepreneurial environment?
So it’s an advantage with a caution. So if you compare the youth bulge in the Middle East compared to the opposite in Japan, I’m very, very optimistic about the potential there. But as you know better than anyone, when you have a youth bulge that is unemployed or not working, this has other, very interesting ramifications.
What is important is, as more and more young people have access to technology, they have more and more opportunity to take initiative into their own hands and create things which I think are very, very powerful in the ways I don’t believe government or traditional business will be able to absorb that bubble.