“This is nothing short of a sea change for the region,” says Faisal Ghori, a principal at strategy consultancy Middle East Ventures.

the Middle East has become an “increasingly important” market, says Faisal Ghori, principal at Middle East Ventures, a Washington-based business strategy consultancy focused on the Middle East and North Africa.

“In the next five years, you’re going to see people taking risks on both the entrepreneurial and the invest- ment side,” says Ghori.

Hope is often in short supply in the Middle East, but that may be quickly changing, at least for the region’s entrepreneurs. On August 25, Yahoo!, the Internet giant, announced that it will acquire Maktoob.com, the Middle East’s largest web portal and online community founded and operated in Jordan. As the very first acquisition of a Middle East-based technology company by an American technology giant, this is nothing short of a sea change for the region. Overnight it has bolstered the region with instant credibility and given its entrepreneurs reason to hope that they too can succeed in creating companies. The acquisition, in short, has fundamentally altered the technology landscape in the Middle East.

Earlier this week Yahoo! announced that it will acquire Maktoob.com (read the press release here).

Below, we speak to Samih Toukam, CEO and founder of Maktoob.com; Emile Cubeisy, Managing Director of IV Holdings; and Khaldoon Tabaza, Managing Director of Riyada Ventures.

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MEV: What does this means for you and your organization?

Samih:  This is a great success story for me and the maktoob team. We have worked hard and proved that it is possible to create something good out of the Arab world. We are all proud of what we have done.

Emile: IV Holdings congratulations Yahoo! on its acquisition of Maktoob.com, which opened up broader opportunities for Arab online entrepreneurs and firms.  For Accelerator and IV Holdings, this strengthens our conviction in what we have always believed, that Arab entrepreneurs will play an important role in shaping the global internet and interactive landscape.  An industry and an opportunity that has always sought validation has found it.  For IV Holdings, this is an important milestone, in that it proves to Arab entrepreneurs that if you focus on building true value in your businesses, execute patiently and with professionalism, and go through the full stages of growth, real exit opportunities will emerge.  It proves to the wider investment community that real opportunities for value creation does exist in the knowledge-based talent pool in the Arab World, and validates the existence of quality entrepreneurs that can pull it off.

Additionally, Maktoob’s history of working with regional VCs to build itself up towards global relevance validates the importance of our industry’s role in helping Arab entrepreneurs achieve their full potential, something that IV Holdings is a first mover in committing itself to.

Khaldoon: The Yahoo! Maktoob deal is an inflection point for the Internet industry in the Arab world, a milestone that indicates that the online market in the Arab world has reached critical mass, and the start of a new phase for start-ups, VCs, and the industry at large in a region that remains largely untapped in terms of its potential, and that will be one of the key drivers of growth in emerging economies in the years to come.

MEV: What does this means for Jordan and the region?

Samih: It’s a success story for Jordan and the region and a message that we can build something big and strong in the Arab world and this is where we should be focusing our investments, in the talents and brain power that we have not in real estate and buildings.

Emile: This reaffirms Jordan as a regional beehive of technology and dot.com entrepreneurs.  In a journey that started in 2000 with Jordan’s focus on its human resources as its differentiator, and its emphasis on global economic relevance, not just local and regional, Maktoob, as one of the first pioneers, has confirmed this belief.  We should expect to see many more such success stories from Jordan, especially due to what they have already proven they can accomplish.  We are ripe with entrepreneurship, and the Yahoo! acquistion of Maktoob will only shed more light on the innovation and the entrepreneurs in Jordan.  The ripple effect to entrepreneurs in neighboring countries will be felt as well in the coming years.

Khaldoon: This will no doubt encourage investors from the region to be more proactive and aware of venture investments, and most importantly, it will encourage international investors to pay attention to the Arab world as a source for deals (rather than just capital). It should also encourage accomplished expatriate Arab entrepreneurs to look towards their home countries for their next venture, as well as encourage experienced Arab talent at home to take the step towards creating new start-ups.

MEV: What does this mean for entrepreneurs throughout MENA?

Samih: It’s a message to all entrepreneurs out there that hard work and innovation will pay off.  Maktoob is just the beginning for many success stories to come.

Emile: While entrepreneurs in the Arab World have always believed, it will be hard for the mainstream to neglect what they have always felt…the region will firmly be entrenched as part of the global internet landscape much sooner than many believe.  For these entrepreneurs, it allows the spotlight to be shifted towards them a little, as they now have a proof point that innovation, perseverence,  passion, and relevance, if effectively executed, can yield globally relevant businesses.

MEV: What does this mean for foreign investors investing in tech. in MENA?

Samih: It means that its time to invest in the Arab world. The market is ready and has huge growth potential and there is good talent and brains out there and also good exits for your investments.

Emile: We’ve had our early entrants in our market, most notably Intel Capital, Microsoft, Cisco, among others that should be recognized.  Foreign investors, while their focus may be on China and India, will now take notice of the MENA Region as a viable market in which innovation and value does exist, and where realistic exit opportunities are emerging.  The stars are aligning for the Arab tech and internet industry, a fact global investors are sure to notice more and more over the coming few years.

Khaldoon: As an acquisition that is a first of its kind, all eyes will be on Yahoo!/Maktoob to test the chemistry on the long-term between Yahoo! and the Arab culture and community. On the shorter term, the industry will be closely watching to monitor the integration of Maktoob’s team inside Yahoo!, the delivery on the promises to Maktoob’s employees in terms of their stock options and benefits, and how will Yahoo! deal with many border-line intellectual property issues on Maktoob especially with regard to video music, and software, which made up much of the recent growth of Maktoob as a result of acquisitions in the past few years.

In fact, the quality of the investors may be the main advantage of startup hubs. Silicon Valley investors are noticeably more aggressive than Boston ones. Over and over, I’ve seen startups we’ve funded snatched by west coast investors out from under the noses of Boston investors who saw them first but acted too slowly.

I was talking recently to someone who works on search at Google. He knew a lot of people at Yahoo, so he was in a good position to compare the two companies. I asked him why Google was better at search. He said it wasn’t anything specific Google did, but simply that they understood search so much better.

And that’s why startups thrive in startup hubs like Silicon Valley. Startups are a very specialized business, as specialized as diamond cutting. And in startup hubs they understand it.

This has significance for the Mid East for a few reasons:

1. There are a tiny handful of investors in technology, and most couldn’t tell you the difference between web 1.0 or 2.0 and having learned the buzzwords of today (UGC in particular is a favorite one) they’re keen on participating. To put it simply, there are very few investors in tech., and most are not of high quality and couldn’t come in and give meaningful advice to a startup. Though, they’d love to take a board seat. And that’s the problem.
2. Startups are a “very specialized business” and most in the Middle East have no clue to that. That’s as true for entrepreneurs as it is for investors. In that sense, to some extent, it’s a case of the blind leading the blind.

Having said that, the region is changing quickly. We are now seeing more sophisticated entrepreneurs. Unfortunately, and, for obvious reasons, investors still lag behind in being as tech. savvy. In the Middle East, the closest thing to a tech. hub remains Amman, Jordan. It’s the only place where there is a tech. startup community, an incubator, an entrepreneurship center, and some investors.

The region is still far, far behind the Valley, and the gap will only be shortened when we see the alignment of clever entrepreneurs and investors that are willing to fund them.

The event was attended by startups old and new: Maktoob, Jeeran.com, Ikbis, Kindisoft, Albahith, Akhtaboot, Minerets, Ketab, easyinfo, and many more. There were consultants, bankers, investors and students, all there to discuss there companies, businesses and tech. Princess Sumaya made a surprise appearance as well. Ahmad Humeid has written about the event (here).

This is hopefully the beginning of things to come. Change is not borne overnight. And must be birthed, in Jordan and the Middle East. Over time, we’re going to begin seeing some incredible technology companies emerge and compete not only in Jordan or the region, but globally. And some have already started.

See you all at the next TechConnect!

Plastered all over Amman these days are logos of Zain, the new corporate identity of mobile service provider Fastlink. (You can read the history of Fastlink here.) Fastlink was Jordan’s strongest brand, as pointed out by Ahmad Humeid. It’s disappointing then that Jordan’s strongest brand image, which was fairly nice, was replaced with the ghastly Zain logo. While arguments could be made about the swirl or font, the coloring of the logo is simply grotesque. (Greater details on the logo are here.)

To make matters worse, the ad campaign in Amman until very recently slightly revealed the full logo. So all one could see were images such as this:

Or other images which showed the logo cut horizontally. Many consequently know of Zain as “Zoin,” since the letter “a” was cut by half making it appear as an “o.”

Congratulations to the design firm that is responsible for making Amman slightly more ugly. Clearly the folks at MTC never came across Hans Christian Andersen’s tale The Emperor’s New Clothes. If so, they would have asked for their money back.

Akhtaboot.com is not the first company to begin addressing the online job market in the Middle East. Bayt.com has been doing so for quite sometime and is the undisputed leader in the field in the Middle East. Akhtaboot.com is currently focusing primarily on the Jordanian market and hopes to expand in the region over time. The Company’s business model focuses on two revenue streams: 1) Paid job listings (posted by employers); and 2) Online resume searches. Both of which revolve around potential employers posting job listings and searching for potential employees. The Company is heavily marketing itself in Jordan through radio and and online advertising, mainly through Google Ads and they now also appear on Facebook.

The pricing structure is as follows:

The Company was co-founded by Yousef Shamoun, a graduate of McGill University with an MBA from Georgetown. I had a chance to sit down with him and discuss the tech. startup environment in Jordan and the Middle East, and his plans for Akhtaboot.com

Part 1: The Technology Environment in the Middle East
Part1.mp3

Part 2: Running a Startup in Jordan
Part2.mp3

Launched to the public a few weeks ago, mecca.com, aims to be the portal of choice for Muslims online. Headquartered in Amman, Jordan, the Company was founded by Ibrahim Al-Husseini and has Sami Al-Taher as its CEO. Both of whom have spent considerable time working in technology and were educated abroad.

Mecca.com, estimates that there are “approximately 28mm” Muslims online the Middle East” and “about 100mm Muslims globally.” (There are an estimated 1.4bn Muslim globally.) The Company hopes to develop “the mecca.com website as a prestige online service and destination, with offerings related to the city of Mecca, Muslim identity, and travel.”

The home page isn’t all that much as of now, and unlike other portals in the Middle East, e.g. maktoob.com, will not give you access to any features till you register for membership. This will clearly limit their membership base as there is no compelling reason to register, unless you want a mecca.com email address.

In bolstering its visibility in the Muslim world, the site was briefly affiliated with Reza Aslan, but is no longer.

You can listen to the podcast below.

Part 1: Technology Businesses in Jordan and the Middle East
Part1.mp3

Part 2: Mecca.com
Part2.mp3

In its simplest form, this could mean that one simply doesn’t have access to the requisite essentials for connectivity: a computer, a modem, Ethernet or other wireless card, and a working connection to the internet.

To some extent the theme of connectivity and its impact on development has been explored in a similar vein by Iqbal Quadir, founder of GrameenPhone, a company that enables micro-loans for mobile phones to assist indigent Bangladeshis to get phone access. The Company was founded with the realization that the Bangladeshi economy was missing out on economic growth because of a lack of communication amongst those that represent the “bottom of the pyramid” in Bangladesh. You can view Iqbal Quadir’s talk at the TED conference here – definitely worth seeing.

Now that’s just the phone, the internet however in its most robust form represents far more than simply being able to make a phone call in terms of representing its economic impact upon developing economies.

Access to the internet is greater than just having the requisite technology to get online.

Amongst the greatest hurdles for internet access is literacy. The language of the internet, and as such of the digital revolution, is indisputably English. This gating factor has a significant impact upon the global South, where literacy even in native tongues is no where near as high as it should be.

In addition to basic literacy, then there is the issue of technology or internet literacy. While a user in the developing world may be able to get online and be proficient in English, does not mean that the user will have the same internet “know-how” as a user in the West, especially as it relates to the latest and newer developments in internet technologies. For example, we should not expect users in the South to necessarily know or be familiar with what Facebook applications are. Users may be well acquainted with social-networking and even Facebook, but the understanding and use of newer technologies remains behind (primarily in the area of what are commonly grouped as web 2.0 technologies). Although, that gap will soon be filled with time as users form the South grow increasingly web competent, it would be naïve to expect users from the South to be as internet savvy as their counterparts in the North.

To summarize briefly, fundamentally, there are three factors to access (not exhaustive):

1. Connectivity
2. Language literacy
3. Technology / Internet literacy

In America and Western Europe there is no shortage of paid or free wi-fi hotspots. In Jordan, last week, I visited over 7 hotspots, paid and free, to gain access to the internet. I visited both the high-end Western hotels, restaurants and cafes, every single one of them was down. Whether or not that was a function of colossally bad luck – I’m sure it was – is in some ways irrelevant, when examining connectivity. If users can’t get online, they are left behind. While acknowledging the internet culture – if I can even use such a term in Jordan – is vastly different than in America or Europe, as most users in Jordan get online either at internet cafes or at home, it is a larger indicator that the internet is not nearly as significant in this part of the world as it is elsewhere.

As such, my posts for the next few days will be intermittent given my lack of fixed connectivity.

Petra, Jordan
August 28, 2007