“Egypt has one of the most robust economies in the region, buoyed by the largest population,” said Faisal Ghori, principal at Middle East Ventures based in Washington D.C. “This over the years has translated into a real and meaningful economy, driven by real consumer
demand.”

In 2006, Abu Dhabi launched the Masdar Initiative, a $15bn project that seeks to “embrace renewable and sustainable energy technologies.”

One of the ways that Masdar Initiative hopes to do this largely through the construction of Masdar City, a zero-emissions, zero-carbon, zero-waste city with a target population of 50,000.

According to VentureBeat:

Although much of that money will go toward construction and infrastructure requirements, Masdar is also becoming a significant force in fostering new technologies. The Masdar Clean Tech Fund has already sunk $250 million into cleantech ventures from its first fund, and is in the process of raising more capital for a second.

The investment dollars are going in large part to ideas for energy generation. The planned power supply of Masdar is to be split between several sources, with solar providing the majority; a 500 megawatt solar thermal installation a 100MW solar concentrator project (which funding has not yet been announced for) are in the works. Research is going into thin film, and the city will play host to a solar photovoltaic manufacturing plant.

However, another 500MW will come from a plant fueled by hydrogen, Al Jaber said in his speech. The new city will provide a rare opportunity to test out utility-scale use of hydrogen, which is estimated to be decades away in this country.

The initiative has also launched an eponymous Masdar Clean Tech Fund that seeks to invest $250mm .

Neither of the cable operators have confirmed the cause or location of the outage but some reports suggest it was caused by a ship’s anchor near the port of Alexandria in Egypt.

As Middle Eastern businesses continue to come online, issues such as this reinforce the desire of others to remain offline. Worse yet, it harms the regions image of having reliable infrastructure for ICT development.

The tool shows a total of 42,966,780 members in the top 31 countries. The U.S. leads with just over 18 million users, followed by the UK (6.8m), Canada (6.7m), Australia (1.9m) and Turkey (1.6m).

Forty percent of U.S. users are male, compared to 36% overall. Men looking for love may want to try Ireland or China, where 73% and 72% of users are female, respectively. Other than the U.S., which has the highest percentage of males, the lowest percentage of female users is in Saudi Arabia, Pakistan, UAE and Egypt. (Italics are mine.)

Of MENA countries leading the list of Facebook users is Turkey. To some extent that can be explained by the fact that Turkish, like English, is written in the Latin alphabet.  Following behind Turkey, are Egypt, the UAE and Saudi Arabia. Again, unsurprising given that the aforementioned countries remain the largest markets for technology companies targeting the Middle East.

There are a few take-aways that can be extracted from the data:

1) Facebook has shown tremendous growth in the greater Middle East

2) The largest markets for technology in the Middle East remain Egypt, Saudi Arabia and the UAE

3) As can be observed globally, the ME is no different when it comes to the demographic slant of women on Facebook

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The Middle East nowadays doesn’t evoke a sense of technology development, and innovation or much of anything else unrelated to a few things in the imagination of most: Iraq, oil, terrorism, and increasingly the question “will the Bush administration or the next American government bomb Iran?” Over the next few days and weeks, this blog, will seek to change that (to some extent), and provide a fresh perspective on the overall technology landscape in the region.

As the inaugural post, I’ll begin with a few starting observations that are important when considering technology (or most other businesses). More than half of the region’s population is under 25 and internet penetration is increasing rapidly. Purchasing power in on the rise with the introduction of readily available credit. In short, the Middle East over the next few years will have a key target demographic, that is widely sought by most everyone, and with money to spend.

The MENA region extends from Morocco in the West to Iraq in the East, including wide swathes of Asia and Africa. To simply say the “region is this” or “the region is that” would be to oversimplify the complexity of various histories, peoples, cultures and religions that reside in it. Yet, to some extent it becomes necessary to have some general observations as a starting point for discussion. As such, please pardon any generalizations from my end, and I encourage readers to please participate in the comments section to share their views and opinions in keeping my perspectives grounded in the various realities that comprise the Middle East.

Having put that disclaimer out there, let’s continue. In this post, I hope to provide a general overview of the region’s technology landscape that will frame future posts, and assist in understanding the region. As such, I offer the following points of observation:

1) Technology is widely misunderstood in the region. If you’re talking about a technology business in the region you might as well be talking about Jack and his beanstalk. With the exceptions of familiarity with Google, and to a lesser extent YouTube and Facebook, very few people know what a technology business is. As such, building a successful technology business in the region is particularly challenging.

2) The greatest success in the region with tech. has been in IT services. The largest private players in the region have been outfits providing support, sales and consulting services for the region’s various large industries and companies. This is an area that has shown considerable growth and success. It remains largely privately owned. The largest global software and hardware players (Microsoft, Oracle, IBM, Sun, etc…) have all played in this space.

3) Funding? Fuggetaboutit. Investors in the region are loathe to invest in technology businesses. The region has experiences a real estate boom where itinerant Bedouins that had land once considered worthless have emerged as the landed elite. As such, investors in the region look to investments with “guaranteed returns.” There is no such thing as early or seed stage investing. Angels remains a religious phenomenon, very few to be found as investors. And those that do exist, entrepreneurs view as their piggybanks with no rational reason as to why.

4) The Tech bubble also burst in the Middle East. Many individuals don’t know or have simply forgotten that investors in the region lost billions in the tech. bubble. The largest investors in the Middle East invested across the board in some of the world’s most known venture funds and lost a great deal of money, in companies that evaporated as soon as they went public (think WebVan). This is a memory not easily forgotten.

5) Politics? Who said anything about politics? As I mentioned earlier this is a region known globally for things that go bump in the night. It’s often known for its wars, its instability and horrific acts of violence that either happen here or originate from it. Some refer to it as an “unfriendly neighborhood,” quite the euphemism. It would be naïve to ignore the region’s global politics and those of respective nations that make up the Middle East.

6) There is a nascent public financial market. While the possibility of IPO’ing was non-existent a few years ago, the Dubai stock exchange has provided the ability for companies and investors to have meaningful liquidity events.

7) We’re still at the very beginning. Although the technology sector is fairly mature in the U.S., particularly in Silicon Valley, it remains in its infancy in the Middle East. While this may strike some as self-observant, I can’t overemphasize this point. It’s often said that Europe is 2-3 years behind the U.S., and Asia 3-5 years. If that’s to be believed the Middle East is a good 5+ years behind. Bearing in mind that those time gaps are shortening over the years, the region globally lags behind. There remain abundant markets to be served and opportunities to be found for the plucky entrepreneur, it just means getting accustomed to the region’s particular uniqueness which isn’t without its perks.

Saudi Arabia doesn’t enjoy a reputation as being a hub of intellectual achievement. On the contrary, the Kingdom is widely regarded as being backward, even by its Arab neighbors. King Abdullah want’s to change that by creating the Kingdom’s own M.I.T.

As the NYT reports (here) King Abdullah will be investing $12.5bn for the creation of a university, known as Kaust (King Abdullah University of Science & Technology) devoted to bridging the gap in technology and science in Saudi Arabia, and the Middle East.

Saudia Arabia has become famous for all the wrong reasons: women can’t drive here and are generally treated as second class citizens, there’s a religious policing body that has become infamous for its brutality, non-Muslims are generally not welcome, and perhaps the most well known reason for the Kingdom’s inhospitality is that limbs are amputated in accordance with the Saudi interpretation of Islamic law. That doesn’t excactly scream “Welcome to Saudi Arabia.” While King Abdullah can’t change the reasons for the Kingdom’s infamy, he’s hoping to stem the decline in Saudi Arabia when it comes to education in the sciences and technology by literally throwing money at it, an all too common strategy in the oil-rich gulf.

Qatar realized early on that it needs to invest its educational infrastructure and is now home to Georgetown, Cornell, Carnegie Mellon who maintain campuses there. Shaykh Mohammaed, the ruler of Dubai, recently established the eponymous Mohammed bin Rashid Al Maktoum Foundation which has a $10bn mandate to assist in the education development of Dubai. (In classic Middle Eastern fashion – the website for the Foundation is still not up. You’d imagine $10bn could get you a decent website). Saudi Arabia is certainly the wealthiest of Middle Eastern nations and the most populated. So it’s not surprising that it is investing in its educational infrastructure. Some may say its a bit late in the game, but better late than never.

Universities are built upon its academicians. If Kaust can get world-class faculty it has a shot at catching up; if not, they might as well give up. Many of the best American universities were founded by poaching start faculty from other universities, the most notable of which is probably the University of Chicago, which over a very short period of time established its reputation as an intellectual powerhouse. But moving to Chicago is a lot easier than moving to Saudi. As an advisor to Kaust has explained:

“Getting the faculty will be the biggest challenge,” said Ahmed F. Ghoniem, a professor at the Massachusetts Institute of Technology who is consulting for the new university. “That will make it or break it.” Professor Ghoniem has advised the new university to lure international academics with laboratory facilities and grants they cannot find at home, but he also believes that established professors will be reluctant to leave their universities for a small enclave in the desert.

“You have to create an environment where you can connect to the outside world,” said Professor Ghoniem, who is from Egypt. “You cannot work in isolation.”

He admitted that even though he admired the idea of the new university, he would be unlikely to abandon his post at M.I.T. to move to Saudi Arabia.

For all the freedoms being promised at the university, Kaust will not be allowing any Israeli academics to visit, which is a step in the wrong direction. If there’s any one nation that Middle Eastern nations would be wise to model themselves after, it’s Israel. It boasts some of the brightest minds the world over, in the humanities and the sciences, and has top-notch universities. Technion is widely recognized as the best technical university in the Middle East and is often thought of as being superior to M.I.T. There is a robust tech. industry and eco-system in Israel which is found nowhere else in the region. Kaust is in some ways shooting itself in the foot by ignoring what Israel has to offer.

Kaust is a step in the right direction, hopefully it can achieve some of its promise. But Saudi Arabia and the other Gulf states would be wise to realize that one can’t simply create education institutions just by throwing money at them, there needs to be greater incentives than simply money. Universities are places of the mind and unless that type of freedom is accompanied with the hefty endowments very few will come.

Jordan is home to some of the most well known technology companies in the region. Chances are that if there’s a technology company that is well known in the region it originated or was incubated in Jordan. But for a region as condensed as the ME and for country as small as Jordan there’s never been a meetup…till now.

It’s been a few years in the making but with the support of the QRCE, I’m very happy to announce that we’ll be launching TechConnect – The Middle East’s First Ever Tech. Meetup in Amman. Details can be seen on the flyer below. Thanks also to Jeeran for sponsoring the event.

The event is invite only, so if you’re interested in attending please send me an email.

Doing business in the developing world is not without its own unique set of challenges. Lack of proper roads, internet access, other essential infrastructure, are just some of the problems that entrepreneurs face. Yet entrepreneurs brave these uncertainties to capture a growing market that is no harder to find in America and Europe. As we all know the upside of increased risk, is increased return on investment – or that’s the way things are supposed to work anyway.

I recall when I was in university Bill Draper addressed a conference on investment in China and India. He commented that he thought that over 90% of all investment in India would be lost. If that happens there’ll be quite a few disgruntled LPs. While it is important to be cautiously optimistic of developing markets, it would be foolish to dismiss opportunities in the global South as throwing money away.

One thing that I’ve learned after having traveled to parts of the world where most people recoil in fear after hearing the name of the country, the region or the city, is that there are plentiful opportunities that are worthwhile and should be pursued. And despite the appearance of instability, the situations is always more stable than it may appear at first glance; and certainly more stable than the way it is shown in the press. Things are never as bleak as they seem. Ultimately, no matter what part of the world you may find yourself in, the language of economic empowerment is universal; it is the same for a financier on Wall St. or a child selling roasted corn on the streets of Karachi.

The Maktoob.com portal is held by the aptly named Maktoob Group, which also owns the following internet properties: Bentehalal.com – a matrimonial site, Sport4ever.com – a sports oriented online community, Araby.com – “the first Arabic search engine”, Souq.com – an eBay for the Middle East, and CashU – a PayPal-esque site for the region.

Of all the startups in the region, Maktoob has certainly received more media attention that any else, both locally and abroad. In part this has to due to Maktoob’s age; it was one of the earliest internet sites catering to the Middle East and has seen its share of ups and downs in the global internet life cycle. Samih Toukan, CEO of Maktoob, still refers to this time as the beginning for Maktoob, which then begs the question where is the end?

Maktoob has been profitable for quite some time and given its age, it’s lived the average of two startups in Silicon Valley. It remains to be seen what the exit will be for Maktoob’s investors. IPO’ing is not really in the picture, either regionally or in Europe or America, so that leaves open the door to getting acquired and that’s about it. If and when Maktoob has a liquidity event will not only be good for Maktoon and its investors, but could be the first tech. startup success story in a region where if you have some extra money lying around you invest in real estate.

To date, Maktoob has been backed by EFG Hermes (~$2.5mm), Abraaj Capital ($5.2mm) and Tiger Global ($5.25mm).

I had a chance to chat with Samih Toukan, CEO of Maktoob. The conversation follows below:
Part 1: The Technology Environment in the Middle East
Part 1.mp3

Part 2: Running a Startup in Jordan
Part 2.mp3

Sept 7, 2007. Ramadi, Iraq: Iraqi and American flags decorate the body armour of US ambassador Ryan Crocker
Photograph: John Moore/Getty Images

It should come as no surprise that the Middle East remains embroiled in conflict. The Israeli-Palestinian conflict has been a constant source of turbulence (at least from 1948) and since 2003 the American occupation of Iraq has led to greater regional instability. And then of course there’s the occasional violence or bombing (Algeria in the past week), or wars  that breakouts periodically (Israel v. Lebanon 2006). Which is to say nothing of the region’s historic instability (see here).

It’s no wonder then that Western investors are hesitant to invest in the region. To a large extent it is a matter of perception: the Middle East in its entirety is viewed as unstable. Yet, much, if not most, of that perception is not anchored in facts on the ground, but rather in sound bites and images. It is foolhardy to dismiss the entire region as not being suitable for investment. Clearly, the beta is higher in the region, but then so are the potential returns. Investing in the region necessitates a balanced perspective. While there are certainly areas where the risk profile would render investment foolish if not downright stupid (e.g. a tourist resort in the Golan Heights or Falluja), there remain sectors and geographies where significant returns can be realized (as evidenced by the boom in private equity investments in the region by firms based in the Middle East and elsewhere).

Jordan’s stability, relative to the region, and its neighbors – a testament to the Hashemite clan’s excellent politicking (with the notable exception of the whole incident with the British) – makes it very easy to forget that the country is squeezed in-between Israel/Palestine on one side and Iraq on the other. It would be naïve, however, to forget that Jordan is intimately tied to both, a good fortune borne of geography. And both conflicts have significantly impacted its own historical trajectory and its present state. There has been much ink spilled as to the economic effects of the large Iraqi refugee population – I won’t add further here. And the same can be said of Jordan’s relationship with Israel.

In spite of misperceptions, Jordan is arguably the most stable country in the region, in terms of its governance and economy. Walking through the many glitzy malls, shiny hotels, American restaurants  and trendy cafes in Amman it’s very easy to forget that one is in the Middle East. That is until you see the ever-present photo of King Abdullah and/or the royal family adorning a public or private space smiling at you.

While Jordan is not Western Europe, it is certainly not Darfur either. When considering the Middle East its behooves the investor to have a balanced perspective of the particular nation of the investment and the region. While the two are intimately linked, none so clearly as Jordan, there are oases of stability where returns remain to be found. And Jordan is one of those locations.