About the Author
Rami Al-Karmi is the founding partner of Arcoten Holdings - the pan-Arab entrepreneurship development and venture foundry. He is a venture partner at Startup Labs where he primarily focuses on early-stage investments across the Middle East, a mentor at 500 start-ups and a regular lecturer at the region's leading universities and entrepreneurship centers. Al-Karmi currently serves on the boards of trustees at Elia Nuqul Foundation and as a partner at FastForward Accelerator in Palestine. He acts as a mentor/advisor to management/board member to more than 30 successful ventures in the region. Previously, Al-Karmi served as the CEO of N2VLabs (the web, social, and cloud accelerator, investment and engineering arm of the N2V Group - the largest internet investment holding company in Arabia).
Rami Al-Karmi is the founding partner of Arcoten Holdings - the pan-Arab entrepreneurship development and venture foundry. He is a venture partner at Startup Labs where he primarily focuses on early-stage investments across the Middle East, a mentor at 500 start-ups and a regular lecturer at the region's leading universities and entrepreneurship centers. Al-Karmi currently serves on the boards of trustees at Elia Nuqul Foundation and as a partner at FastForward Accelerator in Palestine. He acts as a mentor/advisor to management/board member to more than 30 successful ventures in the region. Previously, Al-Karmi served as the CEO of N2VLabs (the web, social, and cloud accelerator, investment and engineering arm of the N2V Group - the largest internet investment holding company in Arabia).
A rising entrepreneurially driven generation across Arabia and a burgeoning age of digital commerce could deliver the next billion-dollar start-up. Although 'entrepreneurship' has become to an extent - a cliché term used widely across the Arab world, often mixed with 'banking-based' tools for small-to-medium (SME or SMB) development, which I call the "ponzi job creation" initiatives, I have to be frank before claiming that I know anything about the topic. The first time I was introduced to the term 'entrepreneurship was while reading an invitation I received from the US Department of State back in 2010 to attend the Presidential Summit on Entrepreneurship as part of a delegation of 13 Jordanians. The letter back then addressed me as a "serial entrepreneur" and it was quite enjoyable to figure out what the meaning was of the title they decided to bestow upon me and how I have been involved in 'entrepreneurship' since I was 19 years old. However, with two loosely connected entrepreneurship ecosystem landscapes going on for some time in the region: one suffering from severe scarcity in resources and the other, on the contrary, pouring tons of resources on it, both hoping to land a 'silicon valley-adapted' job-creation model that works. Add to that, the Arab Spring-related action taking place in the region. Therefore, some question the urgency of resolving the gaps and maturing the entrepreneurship ecosystem of Arabia and debate whether it should be a priority against all other pressing matters or not. This rising entrepreneurially driven Arab generation has proven and clearly acknowledged that they find it difficult to simply sit down and wait for things to happen, governments to act and ecosystems to begin maturing. As entrepreneurs, I believe that the only viable path for us to building a viable entrepreneurial ecosystem is to go 'entrepreneurially' about it. We are at an extraordinary point of time where this generation is what Gordon Gekko (played by Michael Douglas in the movie Wall Street: Money Never Sleeps) describes as: "You are the 'NINJA' generation... You have no income, no jobs... no assets." To spice this interesting phase up more, no less than a handful of start-ups have their minds set on being the next billion-dollar start-up out of Arabia. [Note: Author is involved in some of them in different capacities ‑ without mentioning examples ‑ and some are still in stealth mode]. However, going back to the basics of a start-up, as Steve Blank (author and creator of Customer Development model) states: "A start-up is a temporary organization, designed to discover a repeatable and scalable model. Start-ups are not small versions of large companies and there is no such thing as a founder with 'vision'. It is all 'hallucination' until the founders get out of the building and validate their business model by being engaged with customers." For example, building the next billion-dollar start-up should never be the goal itself. Since Arabia.com in 2000, many advertising-supported business models emerged in the region. They either failed or are now struggling as consumer usage shifts to mobile, where advertising rates are dramatically lower. It is known that building sustainable consumer engagement on mobile is difficult. Even Facebook is still trying to figure this issue out today. While most of the viable activity in this space is what can be classified under ICT Business to Business (B2B), or "unsexy business models" as referred to by Dave McClure, founder of 500 start-ups Silicon Valley global seed fund and mentorship-driven accelerator program [Disclosure: Author is a 500 start-ups mentor]. What most people do not understand is that the best way to create a consumer Internet company worth a billion dollars is to build a digital transaction business where buyers and sellers connect and a better environment for the transaction to take place is facilitated.
If we look at the 24 publicly traded US Internet companies worth more than USD 1 billion, 16 of them are companies built around a digital transaction business model, while 15 of those firms do not deal with physical goods. Amazon ‑ company 16 ‑ is the only exception, dealing with physical goods. Almost all of these companies started around facilitating digital 'information-led' commerce. They have built category-defining platforms that manage to attract large communities of either businesses or consumers, in addition to providing them with value against a pain they used to suffer from. As for Arabia, we now have a region with one of the highest Internet and smart-phone penetration rates in the world, with Arabic declared as the fastest-growing language online and Saudi Arabia being the record-holder of the highest replay rate of YouTube videos on mobile in the world for at least a couple of years now. Arabic consumers equipped with the mobile-first mindset is expecting a lot: They will plan a trip, buy a ticket, a gift, a ride, a meal, make a reservation or a hotel booking, organize a night out and, in the UAE at least, they are expecting to do all of their government transactions 24/7 through their phones by 2015. The best of these digital transaction companies will seamlessly integrate consumers' interests, social network presence and context to deliver a super-relevant mobile experience, directing most of their spending habits with comfort and addictive ease. Taking into consideration all the major points mentioned above, if now is the time to build the next generation of great digital transaction businesses, Arabia is the best market for launching it. The time has come for the Next Billion-Dollar Startup to be building out of Arabia.
