Interview with Christopher Schroeder

  • by Amal Ghandour
  • August 22, 2013

A Q&A with the author of Startup Rising: The Entrepreneurial Revolution Remaking the Middle East


About Christopher Schroeder and Startup Rising


The Arab world has never been for the faint of heart. War, civil strife, sectarian conflict, oppressive polities, harassed religious minorities, harangued women, extreme poverty in the midst of mindboggling wealth … These are just some of the stark images that usually impose themselves when most foreigners — experts among them — are asked to conjure those landscapes.

It takes guts — perhaps even a touch of madness — to pitch the region, especially now when, from all appearances, every other Arab country is in the throes of yet another heartbreak. But serial entrepreneur that he is, Christopher Schroeder, in Startup Rising: The Entrepreneurial Revolution Remaking the Middle East, does precisely that, declaring it his business to alert U.S. entrepreneurs and policymakers alike about a region teeming with can-do, tech-enabled, creative youth forging forward in the shadow of chronic turbulence. He canvases technology’s reach in the area, spends time in its budding entrepreneurial ecosystems, maps out the relevant problems and barriers, identifies the opportunities, and pronounces the sector, caveats in mind, well worth the West’s investment.

The blunt statistics alone stagger in their sheer suggestiveness. By 2014, the number of Arab Internet users is expected to reach an estimated 140 million out of a population of 350 million. Among Arab youth 15 years and younger, 83 percent use the Internet daily. In Saudi Arabia alone, mobile penetration has hit 200 percent and smartphone adoption is close to 30 percent. With over 180 million monthly video playbacks, the very conservative kingdom boasts the highest YouTube per capita usage in the world. The biggest constituency of viewers? Women. The topic most viewed? Education. In resource-poor Jordan, a clear policy commitment a decade ago to the promotion of the technology sector has seen it grow into a notable 14 percent of the country’s GDP.

Even where the numbers are not particularly impressive by U.S. standards — the preset day dollar value of e-commerce is an apparently modest $1 billion — the potential is immediately apparent: the offline retail market stands at $425 billion.

But what makes Schroeder’s sell intriguing — and all the more compelling because of it — is the sober attention he gives to the broader realities that bespeak of a youthful population fed up with stagnation and complacency; that is hungry for change and up to the challenge of making it happen. It might well be that the author places too much faith in the power of technology to transform societies long smothered by astounding state failure at almost every level. However, his argument derives confidence from emerging trends that are converging to push positive transformation in the Arab world from the realm of the possible to that of the inexorable.

For Schroeder, not to mention those who populate the sector itself, it is no longer a matter of whether but when. The only “unknowable,” as one of the region’s most renowned investors put it, is “Whether governments and institutions will embrace these realities and trends.”

Towards the end of the book, Schroeder invites his country to eschew the obvious and the familiar, to second-guess conventional wisdom and bet on the generations to whom the future belongs.


The Interview with Chris Schroeder


 

Startup Rising is downright passionate about entrepreneurship in the Arab world. Why? Why this region? Why not, say, Africa, no less inspiring and counterintuitive in that way?

Easy access to software technology — and technology that works and is affordable to deploy — is changing the world around us. People almost everywhere, bottom up, are using technology to solve all sorts of problems thought unfixable even within the past few years, and reach large markets hard to reach until recently as well.

When people have access to technology they have unprecedented transparency, ability to communicate, share and collaborate. They see how others live and want the same. They see what others create and have the courage to create on their own. This is happening everywhere — Latin America, Eastern Europe, Asia, Southeast Asia and absolutely now in Africa. The largest mobile payment country on earth is Kenya, and it has fostered an entire ecosystem of other related startups that can now easily consummate transactions.

The Middle East is comprised of multi-thousand-year traditions of entrepreneurship; the bigger question is why any of us are surprised that when these tools became available, they would rise as well.

When you were writing this book, the scene in countries like Libya, Egypt, Yemen and Syria was revolutionary and hopeful all because of it. It seemed to fit very well into your storyline that technology promises not only to disrupt the Arab world’s moribund economics but its politics as well.

Now mayhem is queen. How do you think technology will continue to surprise a status quo desperate to reestablish its political dominance?

Mayhem is often queen, and especially in emerging growth markets where the pace of the rise of the middle class is faster than most older institutions can keep up. I was reflecting earlier today that when I was in business school, Japan was unstoppable; India was in the midst of terrible riots (hundreds if not thousands killed or injured); and Tiananmen Square made most analysts think China was lost for a generation. None of this was discussed less than a decade later. With the precedence of the rise of emerging markets elsewhere, and now easy access to technology, things can move fast today in places like the Middle East.

What would you say to those who might be thinking now that you have already lost the argument?

Anyone who thinks there are final arguments in where the worlds are going never entered the argument to begin with.

I can’t tell you what will happen tomorrow, but I can tell you with near 100 percent certainty that within a decade there will be five billion people with smartphones — two-thirds of humanity with literally super-computing capacity on their person. New technology has always brought its dark sides, but the net effect has been profoundly positive overall. If anyone wants to bet that this is somehow bad, that having essentially all of the world’s knowledge at one’s fingertips essentially for free won’t spawn great innovation and problem solving to solve problems seeming insurmountable right now — I’ll bet them any day.

You deploy statistics well in the book. The impression the reader walks away with is that of Herculean problems (Cairo’s notorious traffic costs Egypt’s economy around $8 billion annually, 4 percent of the country’s GDP) and remarkable opportunities (less than 10 percent of Egyptians have a bank account) in a region where governments seem to have essentially abdicated their role as problem solvers.

 

Do you think that among the three categories of Arab entrepreneurs you identify — the improvisers, the global players and the problem solvers — it will be the latter (the social entrepreneurs) who might turn out to be the most successful and transformative over the long run?

 

One of the most interesting things I’ve seen with tech startups pretty much everywhere, but especially in emerging growth markets, is that the lines between entrepreneur and social entrepreneur blur. Every woman and man I meet is very aware of the kind of company they build from a sustainability perspective, and many want to solve societal challenges. Traffic, clean water, solar energy, education, health — all are being jumped upon with vigor by amazing entrepreneurs.

One of the more significant dynamics you describe is the tug of war between overbearing states most comfortable with top-down governance, and youth pushing for and with bottom-up solutions. Towards the end of Startup Rising, you ask: “The real question is which group do we want to bet on going forward?”

 

“We” as in …?

 

All of us. Whether we are a political or business leader, or we form our own purviews of the world at our dinner tables — we have a choice. Do we take comfort in our narratives, in a box of what has been, or do we push ourselves to ask questions of what might be different going forward? The past is never prologue until we write about it afterwards. 

What I found most interesting about Startup Rising is the audacity of the narrative in operating at different levels — rather unusual for a somewhat slim, highly focused book that purports to concern itself singularly with the issue of entrepreneurship in the Arab world.

 

At the most basic level, it pitches a long-neglected, often misunderstood people to a seemingly unimpressed entrepreneurial class in the U.S. — and that it does well. But, intriguingly, the book dares to wade into the outer regions of the very complicated politics of the Arab world and make a very strong stand there. You’re challenging your colleagues in Silicon Valley and elsewhere to take another look and engage, but you’re also egging on U.S. policymakers to recognize the moment here and reimagine their involvement in the area.

 

What specifically are you encouraging D.C. to embark upon?

 

If thought leaders, policymakers and business leaders here — even a few — start to think differently, start to act differently in their purviews of excellence, then I made some impact.

 

Silicon Valley has a multi-decade history of expanding operations and investment in emerging growth markets. They have invented most of the software that has allowed what I have written to happen. And yet even they think of new regions as are they large (i.e., I’ll lose money in China as it’s so big one day I just have to be there) or they think of them as opportunities to outsource cheaply or sell product. These are fine, but I suspect they will be surprised by the opportunities to co-author new and interesting innovation — global innovation. The big players like Google, Facebook, Microsoft, Intel, Cisco, Twitter, LinkedIn and PayPal all get this. More will follow. And crucially, my colleagues who have visited once invariably return. It is about co-authorship on the ground, helping each other — not a one-way street.

 

Most policy leaders will talk about what I’ve written here, give speeches lauding the importance of entrepreneurship and their operations are given little financial support to execute. At one level that is fine, because they are not equipped to invest. But there is so much they can do — like in making even temporary visas for young people to come here for great gatherings — but they love big aid programs and grand bargains. Candidly, I’d prefer they not talk about it at all unless they are willing to make this central to our engagement in the world. The entire budget for these issues I bet would barely be a USAID program in Cameroon (not to pick on Cameroon).

So, it turns out that some Saudi women in niqab are an empowered bunch and that women constitute an estimated one-third of Arab entrepreneurs. Beyond the obvious message to your countrymen to abandon, and very quickly, their stereotypes, is there anything specific you’re trying to tell us Arabs as well?

Absolutely. I don’t pretend to be any expert in this region I have fallen in love with — but I can tell you that every time I address a gathering of business people, funding and supporting and mentoring this new generation could be done in a heartbeat. One investor there told me: “The good news is we have plenty of money. The bad news is we keep it in our pockets.” There is not a tradition of risk capital for tech — and yet all of Dubai we know today barely existed then. Government and business commitment of that level to making the region ready for the changes I’ve described is paramount.

I will add that great new economies flow in societies where there is limited regulation, no demand to follow hierarchy and embracing all the talent regardless of who and where it comes from. I’m not saying that a country that wants to be heavy-handed in regulation; requires a new generation to follow lockstep their mantras in politics, culture and religion; and puts at bay the amazing talent of women will fail. But I am saying that scenario will not be competitive where the world is going, and it is very hard with technology to catch up if you’ve fallen behind.

That and your best will leave.

 

You identify the rise of communities as a trend that is sure to challenge “hierarchy in business and in politics out of necessity and desire.” In this way, the city becomes more or less master of its fate …”

 

Do you think Dubai is well on its way to becoming such a city-state? And if so, how do you reconcile this shift with the Dubai government’s tendency towards top-down governance?

 

Where else do you see such trends already taking hold in the Arab world?

I believe the potential in Dubai is near limitless, but the kinds of decisions you refer to can have a chilling effect on the best talent and ability to compete globally.

A friend who knows much more about emerging markets than I noted that we in the West tend to be overly purist on this. Firstly, that we have plenty of regulatory and infrastructure challenges, albeit still being better here than near anywhere Secondly, that maybe other models work differently elsewhere.

He wondered aloud: if China in all its hyper growth — if they try to control their economic car, take it from moving 150 miles an hour to 130 miles an hour with their controls, and most of the world is moving at 90 miles an hour — who is to say that may not be plenty good?

I noted that China is having enormous challenges now, and we really don’t know how bad they may be (in terms of political unrest, corruption, economic challenges like a real-estate boom, etc.) because transparency is so low.

More importantly, a region like the Middle East (forgive me for painting with one brush) technologically is moving at 60 miles per hour. I don’t see a lot of value in clipping what is effectively the future platform of growth and economic engagement around the globe.

Two very compelling moments in the book: when a young entrepreneur tells you “The biggest change that has to happen here has been our absence of imagination”; and the banner on the wall of an incubator, cautioning, “No politics, no religion.”

 

Final insights for the skeptics among us?

You should be skeptical to the degree that we live in times — everywhere, not just in the region — where political, institutional and economic/business leaders are making choices. I believe a ton will happen bottom-up regardless, but ecosystems (education, infrastructure, rule of law, etc.) matter. These amazing young people I meet face terrible and unnecessary headwinds from bad decisions — in the region and across the globe.

But overall, I bet on them.

Amal Ghandour is a communications strategist, author and the blogger behind Thinking Fits. She lives in Beirut.


 

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