April 14, 2021
Christopher Schroeder, 1998 Class of Young Leaders
Q. In 2013, you released a book entitled, “Startup Rising: The Entrepreneurial Revolution Remaking the Middle East,” which is in its fourth edition. When asked about the source of inspiration for this work, you explained that it “started with your own bias,” saying, “the narrative in the West – especially in the United States – about the Middle East is so based on political instability,” neglecting the region’s entrepreneurial passion and growing technological expertise. What is the state of this narrative eight years down the road? What innovations and developments have you seen spring from the Middle East since you wrote your book, and have you seen a shift in Western perception to match these developments?
What has happened in the Middle East is part and parcel to what has happened globally. Two thirds and more of all people on earth with a mobile phone have a smart device now – more computing power in each of their hands than all of NASA had to put a man on the moon. This has unleashed a level of collaboration, learning, engagement without precedence and bottom up. It is as if billions of new customers have appeared in a matter of years who are looking to buy things, who have access to banking/finance/credit, enhanced education, and healthcare. New generations of entrepreneurs are offering answers and consumers now have choices between local and regional tech innovations, in addition to those rising in foreign countries. The old “American Playbook” was this: if new populations had access to technology, American enterprises would show up and win. The Instagram, Intel, WhatsApp of anywhere was pretty much Instagram, Intel and WhatsApp! Enormous and successful companies are offering services to their populations and are attuned to local and regional cultural dynamics and desires. The Middle East has been this and more. Amazon decided to buy Souq.com for over $600 million rather than launch there. Uber acquired regional ride-sharing leader Careem for $3.2 billion. Fintech and credit leader Fawry is valued over $1 billion in the Egypt stock exchange. The local leader in mobile music, Anghami, just did a SPAC. And each of these successes and many others have spun out gifted entrepreneurs who now know how it is done. Dubai remains a central hub, but Saudi is looking to attract and invest in regional and global talent. The caliber of entrepreneurs in Egypt has never been stronger. It all has moved faster and farther than I had thought when writing “Startup Rising”, and it is all part of a global shift.
Q. Pre-pandemic, you traveled 250,000 miles per year to be with your Next Billion Ventures teams on the ground in the Middle East, Southeast Asia, and Latin America. How, in your eyes, has the Covid-19 pandemic (and subsequent travel restrictions) shaped the global entrepreneurial ecosystem? Do unexpected or hidden opportunities lie in this new wave of widespread virtual communication?
In a word, “acceleration.” Certainly, this is happening in science – bio tech, for example. The amount of innovation coming because of the money and expertise invested in vaccines is truly staggering – from oncology to genomics and more. But as important has been an acceleration in behavior. Millions of people have been adopting technology, as I have noted. But I believe we had a decade of acceleration of those behaviors in a matter of months when we were compelled to have food and services delivered, to pay with a credit card or mobile payments, to take classes online, to meet with doctors online, and so forth. We forget that even in the US, ecommerce represented something like 12% of retail sales. That number is now over 17%. In many parts of the world they went from 2% to figures like ours. It is astounding. It is also astounding to keep in mind that, despite all my enthusiasm about access to technology, two to three billion of our fellow human beings have no access at all. We have talked long about the “digital divide,” but Covid has proven that that divide can be existential. Asking someone to compete in today’s economy without access is like asking each other to go to work and not be allowed to use a road.
Q. You’ve highlighted in the past that, while U.S.-based investors may be reluctant to back start-ups or entrepreneurial ventures outside of the West, American tech giants have been quick to acquire them. You gave some examples recently: Yahoo! bought Maktoub (the “Yahoo! of the Middle East,” as you put it) for $200M, and Amazon purchased Souq (the Amazon of the Arab world) for $650M. Careem, the region’s largest ride-sharing player based in Dubai, was acquired by Uber for $3 billion last year. What are some expected outcomes for these deals, not only for investors, but also for the entrepreneurial ecosystem of the Middle East and its citizens as a whole?
From an investor’s perspective, success tends to breed success. A year ago I would boast that a company like Mercado Libre – the largest eCommerce platform in Latin America – was valued in the public markets at roughly $14 billion. Well, one year later, with acceleration and expansion into services like payments, they are valued over $70 billion now. Investors have learned during Covid that talent is anywhere and wants to live everywhere. So, they are waking up and figuring out how to support and invest in this new globalism. China, by the way, is Exhibit A to all these shifts. Half of all venture capital a year ago was directed at China. That is a historic shift. Now there are “mini Chinas” springing up from Jakarta to Cairo to Nairobi to Sao Paulo. In the Middle East, many governments – especially the UAE, but now also Saudi – are looking to make their regulatory regimes more conducive to tech innovation and to attract and support entrepreneurs. And, as I noted earlier, thousands of new entrepreneurs know how it is done because they worked with other successful companies. In Silicon Valley, we used to call this the “PayPal Effect” – where hundreds of new companies were formed by veterans of PayPal. I now refer to the Careem Effect.
Q. In addition to your roles as a global investor, tech media entrepreneur and CEO, you write, speak and moderate on innovation, entrepreneurship and global economies and markets. What is one piece of advice, knowledge, or information that you repeatedly share with your readers or listeners?
To check their narrative biases. We are literally wired to assume the next five years will be like the last; to double down on our perceptions; to surround ourselves with people who think as we do. It is utterly understandable, and very human. It is also completely wrong.
Q. As someone who mentors young entrepreneurs, what talents are you seeing among these up-and-coming leaders in the start-up sphere that we should look out for?
I start with the obvious – character, integrity and sincerity. Entrepreneurs pitch to me every day, dying to walk through their pitch decks, and I almost never let them do so. I want to talk to them, understand why they care about what they are doing, why they see a problem in their teeth they have to solve. Then I want to understand the business, its potential and size. I want to see if they listen and learn. I look for perseverance – you can slow them down but not stop them – but at the same time in checking their narrative bias they will be flexible enough to learn when they are mistaken and may need to pivot.
Q. You became a Young Leader with the Foundation in 1998 and travelled with your U.S. peers and French counterparts to Paris and Avignon for an annual seminar. How has your relationship with France developed since then, on both a personal and professional level? Are there any fun memories you can recall that you’d like to share?
I have had a life-long love affair with France, taken the kids there several times, and stayed in close touch with many Young Leaders from my class cycle. I don’t invest in Europe per se, but there are remarkable innovators coming from France and many, interestingly, are globally minded and looking for expansion in parts of the world which I do focus on. I’m looking at an investment in South East Asia with a French venture capitalist right now. What stands out about my class was the decency and self-effacing aspects of nearly every one of them. They have reached some of the highest positions in government as well as business and innovation, and they are as curious, hopeful, funny, and humble as I remember them then. My favorite moments were really after hours. We never slept much but went around Paris and Avignon having fun and drinking, but mostly talking and getting to know each other genuinely. It sounds like a cliché but is true that I learned as much or more from these exchanges and these individuals as the wonderful program itself.