All posts tagged Khaleejesque

When the Oil Wells Run Dry: The Industry That Can Save Us

This article appeared in Khaleejesque Magazine, INDUSTRIAL Issue, published November, 2015. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

Author: Hashim Bahbahani

Magazine Artwork: Reema Motib

5 min read.

On April 15th, 2015 there was an incredibly important global announcement that went unheeded by the Khaleeji mass media and general population. It was an announcement that could propel a series of life altering implications for every Khaleeji citizen.

The announcement, which was kept secret for months, was made by Tesla Motors CEO and founder Elon Musk. Musk revealed that Tesla had invented and commercialized the Tesla Powerwall, a new “home battery” powered completely by solar panels that could potentially power an entire house for a fraction of what conventional electricity would cost.

The goal of the solar powered home battery is to lessen the demand and reliance on petroleum and gasoline. In other words, with Tesla’s Powerwall, the world is a step closer to needing a lot less oil.

While Tesla’s battery on its own will never be enough to completely wipe out the demand for oil, it does signal the start of a realistic and feasible movement away from gasoline and into other more sustainable energy resources. The thing to remember about technology is that it grows exponentially, and there is no reason why that wouldn’t be the case with alternative energy. In fact, since President Obama took office, the United States “has increased solar electricity generation by more than twenty folds”, according to the White House official website. It is not unfathomable to think that the world could start harnessing alternative energy more efficiently, and almost completely move away from a reliance on oil in the course of the next twenty years. That is not as long away as it seems.

So what happens to our Gulf when our oil is no longer needed – no longer pumped – and all the oil wells dry up?

It is a predictable and daunting scenario. The Arabian Gulf is barren of valuable natural resources. The climate is unbearable, and the current infrastructure is unsustainable without a continuous influx of money and natural energy. Deprived of oil, the economy cannot support the current population.

We could be facing impending socio-economic extinction without even knowing it.

But there is still hope; there is still time.

Beyond investing in alternative energy, the Gulf must look to build an industry that is capable of surviving in a post-oil world; an industry that can vitalize an economy without depending on natural resources. But it also has to be an industry that is considerable and substantial enough to provide economic vitalization to the region.

The only industry that fits into that mold is the software technology industry, or as it is more commonly known “the tech industry.” This industry is built fundamentally on human intelligence. When it comes to developing software, there are no substantial hard assets in play, nor is there any significant reliance on natural resources. The rise of any tech sector is almost purely dependent on the capabilities of the people involved in it.

Undoubtedly, a strong tech sector can invigorate an economy. Today, two of the five highest valued companies in the world are software companies, Google and Microsoft; seven of the top thirty are highly involved in software engineering. In the U.S., the software technology sector provides the highest paying jobs, and consistently beats new employment figures for all other sectors, including oil and gas. Jobs in the tech industry are high in both quality and quantity.

But above all else, there is one factor that makes the tech industry our best bet for economic survival: speed. We, the GCC Nations, need to start realizing that time is no longer on our side. The biggest danger we face today is that we are in voluntary oblivion of the ever accelerating possibility of economic demise. If the demand for oil drops significantly, the ramifications will hit us hard, and they’ll hit us very quickly. Will we wonder at that time how we could’ve been so oblivious to our collective fragility?

Successful technology companies can give rise to a strong tech sector relatively quickly. The nature of software products allows technology tech startups to scale and grow at lightning speed. Take, for example, Uber, the real-time ride request platform. After only six years of existence, Uber has reached a valuation of approximately $50 billion. To put that in perspective, Uber is already bigger than gigantic companies that have been around for decades, like Deutsche Bank, Sony, Phillips, FedEx, and many more. Another example is Google, which, only after sixteen years of existence, employs over 55,000 people, providing those employees with unparalleled pay and benefits. The examples are endless.

If the right steps are taken, there is a real possibility that over the next twenty years the Gulf can transform into a new Silicon Valley and a breeding ground for global tech giants. A Khaleeji tech hub will also attract entrepreneurs to establish their startups in the area, and thus increasing the possibility of more successful tech companies blooming out of the Gulf. The main economic value for the region will come in the tax revenue captured from the financial success of these companies. Another important economic value will be in job creation, as large tech companies can provide high paying jobs at different levels and across a wide variety of specialties.

So what needs to happen for the dream of a Khaleeji Silicon Valley to become a reality? The task of establishing a dynamic tech industry is monumental and complicated. But it is highly possible nonetheless. In broad terms, there are three fundamental steps:

–   The current surplus of money from the oil and gas sector must be invested in building a technological infrastructure – internet and network systems, mobile connectivity, etc – to support software innovation. Additionally, governments must systematically invest in startups that might appear too risky for private investors.

–   Governments must revise rules and regulations surrounding software technology companies and e-commerce to allow companies to scale and grow to their maximum potential without unnecessary barriers.

–   Most importantly, the private and public sector must take a proactive approach towards developing and cultivating software engineering talent. In other words, we need to invest in producing better coders. Remember, the success of any tech sector is mostly reliant on human capabilities and intellect. The best way to produce world-class programmers is to provide Khaleejies interested in coding with the right education and training. It’s simple, but imperative. Recently, I co-founded “Coded”, the first coding academy in the Gulf, with a mission of offering world-class software engineering education to aspiring young men and women in Kuwait. Our hope is that Coded is the first of many local coding schools that aim to cultivate a new generation of topnotch Khaleeji coders.

Today, the Gulf is ripe to be a new global tech hub. There is an abundance of private and public investment funds, high consumer purchasing power, and a plethora of market opportunities. But beyond that, there is an ambitious and daring generation that is passionate about turning their dreams and ideas into reality using technology and software engineering. Investing in that generation is our only true hope.

There is a dark cloud hovering on our Khaleeji horizon, edging ever closer to us. We have willingly chosen to ignore it thus far, unconcerned with the storm it carries within it. But if we act purposefully and quickly, we can prepare ourselves for what’s ahead. And we might – just might – catch a glimpse of a silver lining.

 

This article appeared in Khaleejesque Magazine, INDUSTRIAL Issue, published November, 2015. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

 

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by hashimkb on December 3, 2015  •  Permalink
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Posted by hashimkb on December 3, 2015

https://startupq8.wordpress.com/2015/12/03/when-the-oil-wells-run-dry-the-industry-that-can-save-us/

Building Your Startup Clan: Three Traits to Look for in Early Employees

This article appeared in Khaleejesque Magazine, CLAN Issue, published September, 2015. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

Author: Hashim Bahbahani

5 min read.

“Would you take this job if you had a medical diagnosis that says you only have a year left to live?”

If you were asked that question during the job interview you attended for the job you currently hold, what would’ve been your truthful answer?

Brian Chesky, co-founder and CEO of $20 billion lodging rental website AirBnB, directed the “one-year-to-live” question to candidates for the first few core job openings at AirBnB.

The question, while perhaps disturbing and extreme, aims to gauge the candidates’ passion and dedication for the company. It might be incomprehensible to expect that anyone would answer “yes” to that question given the miniscule size of AirBnB at that time. However, after four years of running a startup myself, I can understand the importance entailed in the answer to that question.

In the startup world, where there’s always a ceaseless debate on the validity of every step towards success, there is a rare consensus on founders hiring the first few employees: get it wrong and your startup will fail. It is that bluntly unforgiving. That is because the first batch of employees will have the biggest impact on the longevity and future success of any startup. At such an early stage, their contributions and shortcomings can make or break a company.

There are several factors to consider when hiring the first few members of your startup clan, mainly: domain expertise, education, professional background, and personality. But because startups are unique organisms with specific requirements for their survival and growth, there are other more fundamental character traits that early employees must possess. In my own startup experience, I progressively became more aware of which qualities in a candidate truly matter.

The following three traits are what a founder should look for in an early employee:

 

Dedication- belief in the startup’s mission

Think back to Chesky’s question. What he’s really asking is “do you believe in what we’re trying to do here passionately enough to dedicate your life to it?”

No matter how trivial or profound the purpose of your startup might seem, every member of the team must wholeheartedly believe in the venture’s ultimate objective. Often, founders are tempted to look for “hard working” employees. But I don’t believe that there is such a thing as innately hard working individuals. Rather, hard work is an organic result of pursuing a grand mission. Therefore, it is more fruitful for a founder to identify individuals who fully share their passion for the startup’s vision and goals.

Honesty- belonging to the clan

A startup is more than just a group of individuals working on a project. A startup is a family, with shared values, beliefs, and objectives. As it is true with any family, honesty is the backbone of collaboration and teamwork.

And while honesty in communication is imperative, there is an equally important form of honesty that cannot be understated: honesty in self assessing work-product. In a highly pressurized setting such a startup, it is easy and tempting for a team member to compromise the quality of their work because founders do not have time to check over every nook and cranny. Therefore, founders must hire individuals who share their standards of quality and excellence, and who have the integrity to autonomously hold their work to those standards.

That kind of honesty is what allows trust to thrive among members of a startup clan.

Curiosity- a willingness to learn

By the time I hired my sixth and last core employee at my e-commerce startup, I valued curiosity above all else in my team members.

True curiosity can often be mistaken for passing interest. There is a simple way to identify a sense of genuine and potent curiosity: look to see how much work and effort has been exerted in pursuit of an interest.

One of the people I was considering as a co-founder told me he was interested in becoming a triathlete. He had no experience whatsoever in the sport. He simply thought it was something he could do well. I was skeptical, and asked what he had done to pursue that interest. He told me he had already dedicated himself to a rigorous workout program, hired a personal running trainer, and had pinpointed a local triathlon in which to compete within a few months. I knew at the point that this person would not shy away from a challenge, and that he had the desire to constantly explore new opportunities.

Fortunately, I wasn’t mistaken. He led our business development team successfully, and has recently competed in an international triathlon competition.

In the ever-changing and dynamic world of startups, a willingness to learn new things becomes a team’s greatest asset. Founders must look for individuals who thrive beyond their comfort zone.

A founder is best advised to never compromise on any of the aforementioned traits when hiring, especially at the early stages of a startup. Those traits are always associated with highly motivated and talented individuals. A startup’s success hinges, above all else, on the core team; and a tightly knit team of dedicated, honest, and curious individuals is a force to be reckoned with.

Although it was spoken in completely different context, I can’t help but recall Margaret Mead’s famous quote:

“Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it is the only thing that ever has.”

This article appeared in Khaleejesque Magazine, CLAN Issue, published September, 2015. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

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by hashimkb on October 7, 2015  •  Permalink
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Posted by hashimkb on October 7, 2015

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The Science of Passion: Finding Lasting Motivation for Entrepreneurs

This article appeared in Khaleejesque Magazine, SCIENCE Issue, published JULY, 2015. A PDF version can be found here. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

Author: Hashim Bahbahani

Print Artwork: Rami Juma

5 min read.

Consider the following experiment in psychology: a group of randomly selected students are asked to try two cups of coffee from two different coffee stands set up purposely by the experimenters. The cup of coffee is identical at both stands. However, Stand A sells only coffee, while Stand B sells both coffee and sandwiches. Stand A clearly advertises itself as a “coffee specialist”, while Stand B identifies itself as a “coffee and sandwich shop”. After tasting a cup of coffee from each store (and nothing else), the students are asked to rate the overall quality and taste of the coffee.

 

From a strictly rational perspective, there should be no discrepancy between the ratings, as both beverages are in fact identical. However, the results show that the students clearly thought that the cup of coffee from Stand A, the coffee specialty seller, was substantially better than the coffee from Stand B.

 

This experiment is a variation on several tests ran by prominent University of Chicago behavioral science professor Ayelet Fishbach to prove a theory she calls “Goal Dilution”. In short, Goal Dilution theory states that people are more likely to perceive something that does one thing, and only that thing, as better than something that does that same thing plus something else. This has been tried and proven time and again by Fishbach and her team.

 

Although Goal Dilution theory has mostly been used to explain consumer behavior and irrationality, I think it has an equally important application on self-motivation, especially for entrepreneurs.

 

We’ll get to that in due course.

 

One of the most important steps that many founders are afraid to take towards startup success is dedicating themselves to their business on a full-time basis (the optimal term being “full-time”).

 

Founders believe that full-time dedication to their startups is a matter of time management. However, I consider it a matter of mental and psychological dedication. Let’s go back to Goal Dilution and think of how it would apply in terms of self reflection for a dedicated startup founder versus a part-time startup founder. For the “full-timer”, he or she will perceive himself/ herself as a startup specialist in their relative field. They consider themselves a cup of coffee from Stand A. The “part-timers” are unlikely to hold themselves in the same esteem.

 

The point being that full-time dedication has an intangible psychological effect on how confident a founder is in his/ her ability to be successful. This is not conjecture, but rather a factual statistical likelihood.

 

That is the first part of the motivation puzzle.

 

Now consider the following question: is passion predisposed within us?

 

It is certainly the assumption people make when they give the advice “follow your passion”. As a startup founder, this was the main advice I received from mentors; and most people interested in entrepreneurship will hear it as well.

 

It’s very bad advice.

 

Georgetown University computer science professor and best-selling author Cal Newport puts forward the idea that no person is born with predisposed passion, and that passion is in fact conceived through effort and focus.

 

My interpretation of Newport’s idea is that passion is not something to be followed, but rather created. That is a fundamental distinction.

 

According to Newport, studies show that passion is created by believing you are especially good at one specific thing. It is a two part equation. The first part is related to self-perception, which is where the previous discussion of Goal Dilution and dedication becomes relevant. The more dedicated you are to something, the more passionate about it you will become; not the other way around.

 

The second part is related to actively developing an extraordinary skill set through effort and devotion. That effort is rewarded with consistent improvement, which pushes a person away from mediocrity and closer to excellence. The closer a person is to excellence in a certain activity, the more passion they will feel for said activity. That passion is translated into motivation to dedicate even greater effort, which leads to further improvement, and so on. That is the flow of the “passion cycle”.

 

In practical terms, this means that a prospective startup founder is better advised to empower themselves through education and training with the tools necessary for them to explore a market opportunity they believe is feasible, scalable, and attainable.

 

I like to think of the passion cycle as a massive boulder that requires a lot of grit and push to get it rolling, but once it does so it gathers unstoppable momentum.

 

That is part B of the motivation puzzle.

 

Finally, consider the following behavioral experiment: Three groups of students are given the same challenging cognitive tasks to perform. The only variable between the groups is the level of reward promised for completing the tasks (Group A will be rewarded highly, Group B moderately, and Group C the least). The rational model of economics will have us predict that Group A will perform best, followed by Group B, then C. But the results show the exact opposite. The group with the highest reward expectation performed worst, and the group with the lowest reward expectation performed best.

 

This is a stripped-down summary of a series of experiments done by Duke and MIT professor of behavioral economics Dan Ariely form which he concludes the following:

 

For highly cognitive tasks, monetary reward often has no effect or an adverse effect on performance. But applying meaning to the same tasks had a very positive effect on performance.

 

That is the key word: meaning.

 

While monetary reward should be taken into deep consideration, it cannot be treated as a factor of motivation. This notion doesn’t stem from a utopian portrayal of what startups are meant to achieve. Rather, attaching some underlying meaning to your business activity is a strategic decision that will reflect positively on performance.

 

Meaning doesn’t have to come from a grand objective. It can be something simple, but ultimately impactful. A videogame startup can strive to “immerse users in a different reality”; a media platform might aim to “provide an outlet for people’s creativity”; an e-commerce website could plan to “connect people to the things they love”.

 

A sense of mission is the most valuable intrinsic motivator for a startup founder, and it trumps any extrinsic reward. Once again, this is not conjecture. It is a fact of behavioral science.

 

That is the third and final piece of the puzzle.

 

It is undeniable that true motivation stems directly from a passionate pursuit of a goal.  But we have contextualized passion as an elusive holy grail to be searched for and, ultimately, stumbled upon by a lucky few. In this article I tried to challenge that fundamental assertion. It is my conviction, based on factual findings in psychology and behavioral science, that passion is created methodically, no matter how oxymoronic that may seem. Passion is a result of dedication to systematically and purposefully developing an extraordinary skill set in pursuit of accomplishing a meaningful mission through a type of venture. Such is the science of passion: demanding, systematic, and unconcerned with chance.

 

This article appeared in Khaleejesque Magazine, SCIENCE Issue, published JULY, 2015. A PDF version can be found here. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

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by hashimkb on July 29, 2015  •  Permalink
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Posted by hashimkb on July 29, 2015

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A Khaleeji View on Work-Life Balance

This article appeared in Khaleejesque Magazine, WELL-BEING Issue, published May, 2015. A PDF copy of the article is available here. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

Author: Hashim Bahbahani

Print Artwork: Anjana Jain

5 min read.

 

From underneath the warmth of his blanket, Abdulrahman Al-Terkait, eyes half open, stretched out his arm to tap “snooze” on his smartphone screen to silence the incessant nagging of the alarm clock app. It was 4:07 a.m., which meant he was already seven minutes behind schedule.

 

By 4:30 a.m., Al-Terkait was in his car, driving on an empty street with the windows down in the hope that the chill of the brisk December air would awaken his senses. His usual cup of coffee (double cream, no sugar) awaited him in his newly opened breakfast diner, The Breakfast Club. By 4:45 a.m., he was at the doorstep of the restaurant. As soon as he opened the door, the clucking of the kitchen clutter crashed the short lived silence he had enjoyed so far.

 

For the next nine and a half hours, Al-Terkait would have time to sit down for a total of fifteen precious minutes (on a light day) before the final order came in at 2:30 p.m. A quick pop into the kitchen to help with the cleanup was the final task of the day, and by 5 pm or so, Al-Terkait was driving back home. A snack preceded the daily phone conference with his partners, which was seldom kept brief. Before it was even 7 in the evening, Al-Terkait was already lying in bed, his alarm clock set to 4:00 a.m.

 

Such is the typical day in the life of a startup founder: hectic, overwhelming, and uncompromising.

 

It appears that the sixteen hour work day has become the paraded mantra of successful entrepreneurs. Work hard, work smart, and work some more. An entrepreneur must not let superfluous luxuries such as relationships, hobbies, or even sleep obstruct the unremitting march towards success. In the startup ethos, a balance between life and work is a myth: unattainable, nonexistent.

 

It is a philosophy driven by pressure. The startup world, especially in technology, moves at a relentless pace. Everyone wants to be first to market, fastest growing, highest selling, most downloaded, most engaging, and so on. It is competition at its most ruthless; blink, and you might find yourself behind the pack and obsolete. The pressure never ceases to accumulate, and it pushes founders to sacrifice every aspect of their lives in the quest for success and validation.

 

But that philosophy is fundamentally flawed. The most common and yet most unaddressed reasons startups fail is founder burnout. Founding a business is a marathon, and working eighty hour weeks is ideal for a sprint, but detrimental in the long run. A quick glance at startupanonymous.com (a support community that allows founders to post and ask question anonymously) is sufficient to grasp how common the “burnout and crash” problem truly is in the global startup scene.

 

In the Khaleeji world, however, there is a natural remedy for this problem. Khaleeji culture places high value on participating in social events, sustaining close relationships with family and friends, and being part of the community. It is a culture unbefitting to host the 80 hour work week philosophy championed by Silicon Valley et al. But it is that aspect that makes the Gulf a healthier setting for both businesses and their founders.

 

This has proven to be the case for The Breakfast Club’s founders, the Al-Terkait brothers and Bader Al-Omar, who exemplify an almost perfectly struck balance between life and work. I caught up with Abdulrahman Al-Terakit at The Breakfast Club’s downtown branch a month after his wedding to find out how he and his partners have been able to arrive at work-life equilibrium while continuously growing their venture.

 

“Three years ago (December, 2011), we, the founders, were working fifteen hour days, from 4 in the morning to 7 at night. It was exhausting. We started going on long stretches without seeing family or friends, and our social lives were quickly diminishing,” began Al-Terkait. “We therefore set and executed a plan around hiring and delegating to create a structure that allowed us to retain control without compromising quality. Building that structure effectively is what has allowed us to balance work and life.”

 

According to Al-Terkait, the cornerstone of an operative delegation structure is a strong and “synergetic” partnership.  In the early days of a startup, founders (often without a partner) might be tempted to bite off more than they can chew in order to retain as much equity (defined as stake or share of the company) as possible. It is a common founder cognitive bias to overestimate the amount of work that can be accomplished during a single day, which is often the catalyst that gradually pushes the work-life scale in the “work” direction. Hence, the burnout cycle is initiated, and such founder will often end up owning a very large stake in a startup that has crashed towards a value of zero; in other words: a large ownership of nothing.

 

To avoid such seemingly inevitable fate, an entrepreneur is best advised to seek, at a very early stage, partners that offer valuable complementary skills and expertise. Beyond the business benefits of having a diverse and multitalented team, a well-delegated partnership allows each founder to avoid the pitfalls of over-working. And upon that partnership foundation, founders can build a structure that allows them to delegate more duties as the company expands. Hence, the burnout cycle is avoided, and the founders might end up owning a significant stake in a startup that is growing towards a substantial value. (For advice on choosing the right partners, I strongly recommend reading Noam Wasserman’s “The Founder’s Dilemma”.)

 

Back at my meeting at The Breakfast Club with Al-Terkait, I asked him what he thought of the sacrifice-all, work-around-the-clock entrepreneurial approach.

 

“Forget the unavoidable burnout, and let’s assume that there exists an entrepreneur who can work 18 hour days without ever tiring. Even in that case, I still maintain that failing to have a social life is detrimental to a business, especially in the Gulf.” He pushed his half full cup of cappuccino to the side and leaned in before continuing, “Khaleeji culture is all about tightly knit communities, where everyone knows everyone. That in itself is a fantastic marketing tool for any business. As such, a healthy and active social life can immensely help a founder publicize their business, and I doubt that there is a place in the world where that is truer than the GCC. But if a founder works 24/7 on a business, they’ll end up killing their social lives and ultimately sacrificing a powerful publicity tool.”

 

That opinion, however, is not entirely shared by Kuwait based technology entrepreneur Mohammed Faris, who believes that attending to the Khaleeji social lifestyle is incompatible with the level of dedication required to start a thriving technology venture.

 

Faris, who is currently the lead programmer at mobile payment startup Next Payments, comments, “At some point, for an entrepreneur, the strain and time commitments of having a social life (to the Khaleeji standard) start to outweigh any tangible business benefits. I fully agree that there needs to be ample time allocated to close friends and family, and perhaps some recreation. But beyond that, real sacrifices must be made.”

 

“In technology startups, you are live 24 hours a day. It’s different; there is no time when you are truly “off”.  Regardless of how much work is delegated, startups in certain fields require a relatively higher level of dedication,” continued Faris, “The problem here [in the Arabian Gulf] is that people want to start a tech startup while still going to “Diwaniyas” five nights a week. That lack of dedication is the main reasons technology startups fail here; not founder burnout.”

 

It is valid that Khaleeji culture does create a social environment that can act as tempting (and rational) distraction for entrepreneurs. On the other hand, through societal and familial pressure, our culture works hard to prevent entrepreneurs from dedicating every minute of their waking lives to their businesses, no matter how strongly those entrepreneurs believe it will help them. In reward, our culture has set itself perfectly to allow business owners to enjoy a healthy work-life balance that is ultimately beneficial to the owners personally and to the business itself.

 

It is an advantage of building a business in the Gulf that is often mistook for a hindrance.

 

This article appeared in Khaleejesque Magazine, WELL-BEING Issue, published May, 2015. A PDF copy of the article is available here. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

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by hashimkb on May 28, 2015  •  Permalink
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Posted by hashimkb on May 28, 2015

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Failure: The Cornerstone of a Successful Startup Community

This article appeared in Khaleejesque Magazine, ECONOMICS Issue, published March, 2015. A PDF copy of the article is available here. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

Author: Hashim Bahbahani

Print Artwork: Khaleejesque Team

4 min read.

I paused momentarily as I stood outside the meeting room, took a deep breath, tightened my left hand grip on my laptop briefcase, exhaled, and slowly turned the door handle to enter what I knew would be the last-ever meeting for our startup. There was only one item on the agenda: shutting down.

Even as I took my seat at the meeting table and drew a sip out of what seemed to be the blandest cup of coffee I have ever tasted, I thought one more time about reversing my decision to end our startup venture. In truth, I had spent more than a month agonizing over this decision. I fully understood the cold facts: our e-commerce platform for small businesses was not gaining enough traction or engagement, we were out of money, and we had little to show for after three years of trial and error.

But I also understood that shutting down our startup meant that I had to publicly admit failure and live with all the ramifications such an admission entailed. That, above all, was my source of agony.

In the Gulf region, thousands of startups founded by ambitious entrepreneurs have to deal with facing failure. Failure, after all, is the more likely scenario for a startup, statistically speaking.  This fact is fully embraced in developed startup ecosystems, where failure is celebrated and thought of as a rite of passage for entrepreneurs. In Silicon Valley, for example, “Fail Fast” is a divine mantra meant to encourage startups to rapidly try everything possible to make an idea successful, admit failure if it doesn’t work, learn from the experience, and take those lessons forward to the next venture.

This definition is a stark contrast to how failure is perceived in the Gulf region. Abdullah Asiri, founder and CEO of Saudi based startups ShopMate and Waqood Tech, remarks: “In global tech hubs, true failure is defined as stopping after the first unsuccessful try. If you don’t learn from the lessons of your first experience and apply them to the next startup (or the one after that), it renders the first attempt pointless. In mature startup economies, there is a lot of encouragement to openly discuss your failure in order to dissect it and learn as much as possible from it, and then try again.”

Asiri believes this encouragement is absent in the Gulf startup scene because there is a heavy punishment for failure.

“Here (in the GCC), it is very difficult for entrepreneurs to try again in a new startup because the backlash they confront from society after their first failure makes it unbearable to take another chance and risk facing such societal pressure again,” Asiri continues. “Moreover, investors here become much less inclined to invest with you if you have previous failures. In short, this pressure and punishment inhibit an unsuccessful attempt from becoming a learning experience. It makes failure permanent.”

Asiri’s comment on investor behavior in the Gulf region is critical. Venture Capital (capital invested in new or expanding businesses in which there is substantial risk) is the bloodline of any startup ecosystem. While society plays an important role in encouraging a tolerance of failure, venture capitalists (VC’s) and angel investors (an individual investor who invests in high risk, high growth businesses) have the biggest impact. If investors refuse to invest in a startup because of the past failures of its founders, then those investors are tangibly punishing failure.

In order to further understand how investors in the GCC, both corporate and individual, react to past failures from entrepreneurs, I spoke with Mona Al-Mukhaizeem, co-founder of Kuwaiti startup accelerator Sirdab Lab, and an angel investor herself.

“Investors in the Gulf are accustomed to low risk investments, such as real estate or debt bonds. They have limited tolerance for failure,” Al-Mukhaizeem remarked. “A strong Venture Capital firm or angel investor must possess a different mentality; one that is more realistic about the risk of failure for startups. Without such investor mentality, capital will never flow into the GCC startup economy.”

However, Al-Mukhaizeem, who has experience with VC’s in Silicon Valley, believes that there’s a gradual shift in the way investors in the region evaluate startups: “There is a new breed of angel investors and VC’s in the Gulf region who understand that nine times out of ten startups will fail. But the impact and reward from that one successful startup more than makes up for the shortcomings of those unsuccessful ventures.  Thus, this new generation of investors is willing to give promising startup teams multiple chances to succeed. It’s a very important change towards building a successful startup community.”

Al-Mukhaizeem has also noticed through her heavy involvement in Sirdab Lab and the GCC startup scene that founders who fail are finding more support and encouragement.

“In the past, we saw founders clinging on to floundering startups because they did not want to be portrayed as failures by their friends, family, and peers. However, as a sense of community and togetherness fosters in the startup community, more people are sharing their experiences with failed businesses. An optimal learning curve is only achievable if entrepreneurs have the chance to learn from their own mistakes, as well as the mistakes of others,” concluded Al-Mukhaizeem.

Fundamentally, startups are experiments of innovation. As is the nature of innovation, there must be multiple attempts before success is realized. For multiple attempts to occur, society, investors, and entrepreneurs have to perceive failure as a step in the learning ladder. As the Gulf community gradually shifts towards a “fail well, fail fast, try again” mentality, a more impactful and inventive startup community will thrive. Lest we forget, Edison burnt a thousand light bulbs before one finally lit up the world.

This article appeared in Khaleejesque Magazine, ECONOMICS Issue, published March, 2015. A PDF copy of the article is available here. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

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by hashimkb on March 31, 2015  •  Permalink
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Posted by hashimkb on March 31, 2015

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