The Arab World’s Innovation Ecosystem

Chris Schroeder writes a fascinating account of the startup and innovation scene in the Arab world and its potential long-term impact on the Middle East.

Walking into Nazareth’s Saint Gabriel Hotel felt like entering the Star Wars cantina. People were playing Hacky Sack, flying drones and jumping out windows onto large air cushions to test their velocity. I half expected to see Jabba the Hutt. A few years ago Yossi Vardi, one of the godfathers of Israel’s high-tech revolution, invited me to his annual Kinnernet retreat, a gathering of tech entrepreneurs known for bringing together Israeli Jews, Christians and Muslims, as well as Palestinians from the West Bank. I met some of Israel’s – and the world’s – leading minds and was exposed to many of the innovations coming out of Israel. As I look back, that served as the beginning of my journey to understand why so much innovation was happening in Israel. But there has also been a gnawing voice in my head: Could there be an innovation culture just beyond the country’s borders?

And there began another journey. I crossed the Green Line, the border created after the 1949 armistice between Israel and its Arab neighbors. A man I will call Ahmed, who attended Kinnernet, had invited me to see for myself what was going on in Nablus. There, I learned to my great surprise about a startup scene in the Palestinian territories. Israelis and Palestinians are grappling with land disputes, water rights, refugees and a host of painful issues, but many of the entrepreneurs I spoke to believe innovation can serve as a powerful bridge between two groups that have been fighting for generations. Ahmed then came to visit me and my family in Washington. He introduced me to a few of his friends in the Middle East tech scene. “Have you read Chris Schroeder’s book?” they asked. “It will blow your mind.”

I wasn’t fully prepared for the narrative in Schroeder’s book, but I should have been. About twenty years ago, I lived in Cairo as a young graduate student and witnessed the very beginning of the Arab world’s exposure to the Internet and cellphones. If you followed the news only casually, you might think daily life in Israel and the Arab world is nothing but violence – war, suicide bombings, stabbings, car-rammings. True, the region does suffer its share of turmoil. But anyone who has spent time in Israel knows there is another country – the startup nation. What I didn’t fully appreciate until I read Startup Rising: The Entrepreneurial Revolution Remaking the Middle East (St. Martin’s Press, 2013), is that a different reality is beginning to take shape around the Arab world.

Schroeder does not shy away from the big problems facing the region, including political corruption, government brutality and the status of women. He begins his book by describing a challenge that anyone who has been to the Arab world knows well: wasta, meaning insider connections, particularly in government circles. Schroeder makes a compelling argument that people throughout the Middle East/North Africa (MENA) are yearning for a better reality, and with increasing internet and smartphone use, this is already playing a role in changing attitudes. According to the GSM Association, a trade body representing the interests of mobile network operators worldwide, in 2017 there were 365 million unique subscribers across the MENA region, accounting for 63 percent of the population. The Internet and smartphones are providing more equal access to information and global opportunities, thus reducing reliance on wasta. Thishas allowed many people to circumvent the system and enabled Middle Eastern countries to begin the long journey toward cultural change.

The book exposes readers to Fadi Ghandour, founder of Aramex, an international express, mail delivery and logistics company based in Dubai and the first Arab company to be listed on the NASDAQ. It also features Samih Toukan, cofounder of Maktoob, the region’s first Arabic-English email service provider, purchased by Yahoo! in 2009 for $175 million. Like Israel’s Vardi, Ghandour and Toukan are using their wealth to support the next generation of innovators and spawn a more entrepreneurial ecosystem.

Startup Risingtakes readers through a journey with three types of actors: One is the improvisers, like Maktoob, that have used models that worked elsewhere. The second is problem solvers, who tackle local and regional challenges, often with a social mission, which Schroeder attributes in part to the Arab revolution’s attempt to change society. legacy of changing society. Examples of problem solvers are Bey2ollak, an app trying to solve Cairo’s traffic problems, and RecycloBekia, which recycles electronic waste. Last are the global players, building ventures to try to impact the entire world, such as Clear Day, a weather app, and Instabeat, the first goggle-mounted performance trainer with real-time visual feedback.

Schroeder also describes the various platforms giving entrepreneurs the tools to succeed. This includes investors, such as the Jabbar Investment Fund, Egypt’s Flat6Labs and Jordan’s Oasis500 accelerators; conveners who connect the ecosystem physically and virtually, like ArabNet, which organizes major tech conferences throughout the region; and, which provides news and insights on the Middle Eastern tech scene. Startup Risingalso delves into some of the trends allowing women to create businesses, voice their needs and express their concerns. In addition, Schroeder addresses Islam, primarily in the context of how companies choose to invest, and specifically, the system of sharia-compliant finance. He also delves into technology’s impact on how Islam is practiced, and platforms that allow for open discussion of many of the challenges facing the region and adherents of Islam.

I have to admit that I was skeptical as I read the book. I kept thinking that it could not possibly be true. I started a Google alert for innovation and various countries in the region. I checked out the websites of the companies Schroeder discussed. I kept going back to to try to get a handle on this part of the world, and I had to remind myself that just as Israel is more complex than any single narrative about it, the same holds true of other countries in the region. Many observers of the Middle East view the region through the lens of terrorism, corruption and radical Islam. While keeping in mind the challenges these issues present, viewing the Middle East though innovation and entrepreneurship is not only more inspiring, but could be a key to helping bridge the divide between Arabs and Israelis seeking peace and prosperity. Six years after Schroeder published the book, many of the trends, companies and individuals he featured are reshaping the region in meaningful ways.

Schroeder isn’t your typical author. A successful entrepreneur, advisor and investor in interactive technologies and social innovation, his interest in the Middle East began in earnest after the attacks of September 11. A member of the Young Presidents’ Organization (YPO), a discreet network of ultra-successful executives, he began his look at the region through a YPO subgroup that seeks to build connections between US and Middle East CEOs. After reading Startup Rising, I had a much more hopeful vision of what a new Middle East could become in the coming decades if those featured in the book can succeed and eventually take the reins of power. If nothing else, the book gave me a ringside view into a world beyond my current imagination.