Entrepreneurs should start using the economic barriers surrounding the MENA market to their own advantage.
By Robert Carroll
Sometimes I feel like there’s a high wall surrounding the Arab world. Not literally, of course, because people come and go all the time. And not in a social sense either, because it seems that in our increasingly connected age, people in the MENA region are perhaps more plugged into the global community than anyone else. The wall I speak of is an economic one, keeping Arab companies in and global companies out.
This wall creates a dichotomy, leading us to believe that Arab startups can either operate inside or outside of the wall, but never both.
It’s true that many Arab startups have tried, without success, to scale beyond the region. After expending all efforts, the founders usually choose to either up sticks and leave or simply shut down their operations. They offer various reasons: The culture isn’t ready, the urban infrastructure isn’t there, or too few consumers have enough disposable income.
But while these reasons are valid, they only tell half the story. What those founders aren’t saying, or perhaps not seeing, is that the same wall that keeps Arab startups confined inside also keeps global competitors out. While Arab startups unsuccessfully try to escape the MENA region, global companies sit helplessly outside waiting to get in. Meanwhile, the 422 million people living in the region are overlooked and continue to live in a desperately underserved consumer environment.
This massive oversight is nothing short of a missed opportunity. Perhaps as startups and investors in the Middle East, we’re too focused on what our region lacks and not focused enough on what we already have.
Some Arab entrepreneurs aren’t caught up in the madness; they’re identifying unmet consumer needs and building solutions that are localized to the region. For example, my friend Fouad Jeryes runs a startup called CashBasha. Because credit card penetration is very low in the region and proper home addressing is even more dismal, Fouad built a portal through which consumers can browse Amazon.com, make purchases, and have their goods delivered straight to their door before paying anything. Cash isn’t exchanged until a local delivery guy shows up at your door to hand over the purchase. It’s an intuitive solution that perfectly meets local needs.
Other startups are completely disregarding the looming global competition in order to meet local customer demand—and it’s paying off. iFood, for example, operates in a crowded food delivery market. But even with limited funding and a small team, they’ve been able to expand across Jordan at a rapid rate. The startup’s remarkable success was recently noticed by a Turkish competitor that decided to acquire a large portion of the company. Seeing that the MENA market can be too difficult to enter, the Turkish company opted to acquire a startup that was already succeeding “behind the wall.”
These startups may have their sights set on the global market, but they understand the value of mastering a smaller market first. Peter Thiel, the founder of PayPal, teaches entrepreneurs to “find a small target market, become the best in the world at serving it, take over immediately adjacent markets, widen the aperture of what you’re doing, and capture more and more.” The secret to capturing a large market is serving a small one first.
Global markets are appealing, but they’re not the be all and end all. The goal should really be to serve a sizeable market as best as possible. The Arab world is certainly sizable. If you can meet consumer needs within the walls of the Arab world, you’re already more successful than 99 percent of the startups out there.