ArabNet The Quarterly Issue 4 | March 2015 by ArabNet The Quarterly

The Blossoming of Arab

Issue no 4. March 2015

Hardware Innovation Invented in MENA, Made in China, Sold Everywhere

The 2015 Mobile Landscape

Key Trends to Look Out For

Understanding Programmatic

Decoding Automated Advertising

Coworking Spaces in MENA

A Comprehensive Guide by ArabNet

lEttEr froM thE Editor

The InnovaTIon effecT

Lara Chaaya Managing Editor

@ChaayaLara lara@arabnet.me

In March, 2014, Paris-based Webedia acquired majority stake in Diwanee for $12.75 million. Four days later, South African Napsers Limited placed $75 million in Souq. com. Then, in November 2014, Shahiya made a landmark exit when it was acquired by Japan’s Cookpad for $13.5 million. But it was on February 11, 2015, that the Arab world woke up to the news of the largest purchase of a digital company ever made in the region when Berlin-based Rocket Internet bought Talabat for $170 million. So much has happened over the past 12 months. Four foreign giants bet millions and millions of dollars on our young local companies. Two big acquisitions. Two big investments. It’s actually a big deal. The fact that our companies are able to attract businesses beyond borders speaks volumes about their potential and tenacity. And most importantly, it means our region truly does harness innovation. Yes, innovation, for an idea does not have to be radical or monumental to be innovative. Peter Drucker, the Father of knowledge economy, once said: “Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.” And indeed, digital startups in the region are using the resources available to them to create wealth amidst all setbacks of a missing infrastructure and an unstable economy. Innovation is powerful, and the best innovators in the region are growing fast. More than anything else, The Quarterly is a magazine about innovation. In each of our issues, we try to showcase innovations that will drive our region forward, one step at a time. Perhaps the article that reflects this best is this issue’s cover story. In it, we dissect the process that hardware startups in the MENA go through to bring their ideas to life—ideas that have been acknowledged internationally as innovative. We walk with them as they recount how they toiled night and day to build their first prototype and how they flew to the ends of the world just to give their idea a tangible shape. It is a testament of how much potential we have. I hope you enjoy reading this issue. And as always, I’d love to hear from you. Until next time!

CoNtENt issue 3 Apps for TrAnsporTATion UsefUl A Round-Up of Taxi-Booking Apps for Residents in MENA Industry storIes

Industry news

BusIness

Co-existence or Survival of the Fittest?

teCHnoLoGy

the Blossoming of Hardware Innovation in MenA

26 30

transportation in a digital Age d

What It takes for retailers to Go online

eyes on the 2015 Mobile Landscape

10 Key Trends to Look Out For

A Mobile Game Conquers the MenA

Tribal Rivals Ushers In a New Generation of Game Development

34 18

An Engaging Experience Designed with Users, for Users

Keep Customers satisfied Across the Board

Using Service Design to Deliver on Your Promises

Meem takes online Banking to the next Level

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entrePreneursHIP

dIGItAL MedIA

What you need to Know About Big data

The Heavy, The Messy, and the Misleading

Futureproofing the Creative Agency with Agility

What Hollywood taught Me about Pitching

talabat.com Acquired in $170M Landmark exit

How to develop Better Blogger outreach? We Ask the Bloggers

Corworking spaces in the Arab region

7 Lessons to Sell the Dream More Efficiently

From Campaigns to â&#x20AC;&#x153;Always Onâ&#x20AC;?

understanding Programmatic

Decoding Automated Advertising

dave McClure Gives Arab startups 7 tips for success

new Middle east startups that should be on your radar

March 2015 The QuarTerly

Industry storIes

UsefUl Apps for TrAnsporTATion

industry news

A Round-Up of Taxi-Booking Apps for Residents in MENA

uAe-Based Careem raises $10M, Challenges uber...

Careem, a leading Middle Eastern car booking service, raised $10M in a second round of investment led by Al Tayyar Travel Group, along with its existing investor, STC Ventures, and other regional investors. This amount represents almost 6 times the $1.7M the company had initially raised in a first round led by STC Ventures (Saudi Telecom’s Venture Capital arm) in 2013. Careem is present in 14 cities across the region, serving more than 1,600 government and corporate clients as well as retail customers through its branch network. The company employs 70 people (excluding drivers) and is witnessing 30% growth month-on-month. It will use the investment to grow its fleets and introduce its technology-compatible service to additional cities. Uber (US) offers similar services in the region and is virtually Careem’s only competitor. “Uber following our footsteps only further proves and validates that there is value to be won in the market. It’s also great for the customer because it helps educate the market with different options,” said Magnus Ollson, co-founder and Managing Director of Careem.

Careem Acquires enwani – Plans to overcome Pains of Cod Abdallah Elyas, CEO of the KSA-based home delivery service Enwani, became a co-founder of the well-established UAE car booking service Careem after his company was acquired by the latter. “Everybody in Careem has equity in Careem, because we believe in building an organization where employees behave as entrepreneurs,” said Careem co-founder Magnus Olsson. With this acquisition, the company added a new line of services with a proven model - along with the talent behind that success. “We need talented people on board, and Dr. Abdallah Elyas is a rockstar,” Olsson said. Careem also plans to introduce “Careem Cash,” a cash collection service by the company’s drivers that could prove more attractive than COD transactions while making up for the low penetration rate of credit cards in the region.

rocket Internet Buys talabat.com for $170M

ArabiaWeather raises +$2M in Investment round Led by silicon Badia Silicon Badia’s venture capital arm, Badia Impact Fund, closed an investment round last December of over $2M for ArabiaWeather, alongside existing investors Jabbar Internet Group, Dash Ventures, MENA Venture Investments, and others. Founded by Jordanian entrepreneur Mohammed AlShaker in 2006, ArabiaWeather is a full-service weather company with proprietary technology providing tailored products to businesses in vertical markets like oil and gas, agriculture, media, insurance, and aviation. ArabiaWeather will extend its services to additional enterprises while catering to the needs of its 20M unique visitors. “The company has done a great job showing us that they have the potential to build a large business in weather especially in the B2B segments we plan on going after aggressively in 2015,” said Namek Zu’bi, Badia Impact Fund Managing Partner. 4

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Germany’s e-commerce group Rocket Internet has just acquired Talabat.com, a leading food delivery platform in Kuwait, for around $170M, which is the largest MENA tech acquisition since Maktoob. This came shortly after Rocket Internet spent several hundred million Euros to increase its stakes in the grocery service HelloFresh and takeout service Delivery Hero, launching its new Global Online Takeaway Group. CEO Oliver Samwer said, “The Middle East is one of the most attractive markets with significant growth potential and highly attractive EBITDA margins. The acquisition of Talabat.com is another important step in our long-term global Food & Groceries strategy.” Earlier, the group’s 50%-owned Foodpanda had purchased 24h. ae (UAE) for an undisclosed amount. Talabat. com currently has around 1,300 participating restaurants in the Middle East.

Industry storIes

UsefUl Apps for TrAnsporTATion

Investment in Beam Wallet: Arzan VC Invests in 3 startups First A Round-Up Mobile Commerce of Taxi-Booking Venture for Majid Apps Al Futtaim for Residents and in MENA Hungry for More Majid Al Futtaim Ventures made its first entry into the technology industry this December with a landmark investment in the UAE-based Beam Wallet, a mobile commerce and rewards platform. Investing in the entrepreneurship landscape complements Majid Al Futtaim Holding’s (MAF) position in the shopping, retail and entertainment industries. The partnership will give Beam Wallet subscribers access to MAF’s wide range of brands including VOX Cinemas, Najm, Carrefour, etc. Majid Al Futtaim Ventures will have an equity stake in the platform and will bring new shopping experiences for its customers thanks to Beam Wallet’s unique proposition. Beam Wallet’s smartphone app has over 100,000 users and 1,100 retail outlets. Co-founder Shezan Amiji said they expect to reach 5,000 stores by end-2015 as they implement their expansion strategy. “We will be rolling out initially in the GCC and MENA, but we are also looking at countries outside the region, with Sweden and Australia both at advanced stages of planning,” he said.

Mobily Ventures Invests in dokkan Afkar e-Commerce Platform Mobily Ventures announced in midJanuary its investment in Dokkan Afkar, a Jeddah-based e-commerce platform. “Investment talks with Mobily Ventures started through an introduction by one of our angel investors, whom we met during ArabNet Riyadh,” said Ammar Waganah, co-founder and CEO of Dokkan Afkar. Listed among ArabNet’s 10 Favorite Startups of 2013, Dokkan Afkar offers a wide variety of products, focusing on local suppliers. The KSA e-commerce market is expected to reach SAR 9.9B in 2015 (around $2.7B) according to the PayPal Insights E-Commerce report for the Middle East. “With our investment in Dokkan Afkar we demonstrate Mobily’s strong commitment to finance and support young talented Saudi entrepreneurs and contribute to the development of the local startup ecosystem,” said Karl-Michael Henneking, Chairman of the Board. This marks Mobily Ventures’ fourth investment after Anghami, Easy Taxi Middle East and Hellofood Middle East.

Mannai Corporation Participates in $14.5M Funding round for nexthink (sW) Mannai Corporation has recently participated in a Series D funding round led by Auriga Partners for Nexthink, a Swiss provider of end-user IT analytics, alongside VI Partners and other participants. The $14.5M raised will help develop additional solutions in the mobile and cloud segments in Nexthink’s existing markets (UAE and KSA) before expanding to other Arab countries. Nexthink provides real-time analytics to help IT organizations improve end-user productivity. The company’s customer base doubled over the past 2 years to reach 500 customers, of which 100 are from the Middle East. 6

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Arzan Venture Capital, part of Arzan Financial Group (AFG), has started a $5M fund in January to invest in early-stage startups and SMEs. Three Koweiti companies will be the first beneficiaries with investments between $50,000 and $1M. Future investments could range from $3M to $10M with the participation of other VC funds or angel investors. The fund could grow in the future, considering AFG’s majority stake is owned by International Financial Advisors (IFA), a leading group of Kuwaiti companies with a total market capitalization of $6.6B. The company also signed 4 MoUs to select startups eligible for funding with MENA accelerators and incubators including Eureeca, Flat6Labs, Oasis500, MENAapps, in5, i360accelerator and FashionTechnology Accelerator.

uAe “drones for Good” Contest Announces Bright Future for uAVs The UAE Drones for Good competition received 800 submissions from 57 countries, highlighting civilian applications of unmanned aerial vehicles (UAV) in the private sector. The International Award of $1M went to a search-and-rescue drone developed by Flyability (Switzerland). The National Award (AED 1M) went to New York University Abu Dhabi students for their monitoring project of the country’s Wadi Wurayah National Park. Etisalat was the winner in the Government Entities category, fielding a drone able to expand its wireless network. Companies like Amazon and Google are already exploring logistical applications of drones. According to UAE government estimates, the drone industry’s economic impact could reach $8B-10B and create over 100,000 jobs globally by 2025. However, fundamental issues of privacy, safety and national security still need to be addressed.

Funding secured for sawerly’s new Platform - Launching summer 2015

elbotola.com raises $400,000 to expand sports Coverage across MenA Elbotola.com, a Morocco-based leader in sports news, has just raised $400,000 from an investment round led by the Moroccan Numeric Fund (MNF). Elbotola.com will use the funds to reinforce its position locally and expand to serve Arabic readers in the MENA. Elbotola.com stands out among local and regional competitors thanks to its ergonomic superiority and its rich technological platform (web, mobile and smart TV) that proposes different engaging applications for sport fans. Elbotola.com has an average of 700,000 daily visitors and over 40M page views every month. “We have a portfolio of clients representing more than 50 big brands [local and international]. We offer innovative publicity formats and complete technical accompaniment to ensure maximum engagement,” said co-founder and General Director Oussama Benhammou.

dubai’s HolidayMe secures $4M Investment from Saudi Investment Group In January 2015, HolidayME announced it has secured $4M in a Series A funding round from Al Sanie Group, a Saudi investment group. HolidayME offers travel packages to 300 destinations worldwide with over 100,000 hotels, 8,000 activities, and additional services. The startup expects to break even by early 2016. For now it will focus on the Middle East before expanding globally. “Saudi Arabia and the UAE is a $15B outbound travel market, with a clear demand for customized holiday experiences. The market has seen a sudden exponential increase in e-commerce and online activities, placing HolidayMe in a prime position to capture the market at this stage,” said co-founder and CEO Geet Bhalla.

telly-telfaz 11 tandem Increases MenA Access to Premium online Video Telfaz 11, one of KSA’s primary internet television network, teamed up with the video site Telly to bring its popular online video entertainment to subscribers in 23 MENA countries. Video content from top internet talents in the region will be available to Telfaz 11 fans before it is published on YouTube or anywhere else. Users will also have access to Telly’s library of multilingual TV shows and movies from Sony, Miramax, Lionsgate, Weinstein Co. and other features licensed through third-party distributors for the region. As a bonus, the Telly service provides Arabic subtitling for films. Telly premium service is available on web and mobile (Apple iOS and Android apps) for a monthly subscription of $9.99 only.

In December 2014, Sawerly, an online platform linking professional photographers to clients (corporate and individual), announced it received a seed fund of SAR 800,000 (around $211,000) from QB Co, an angel investor in the Oqal Angel Investment network. After undergoing acceleration by Flat6Labs Jeddah (Qotuf al Riyadah), the startup met with success in different competitions including the MENA-wide Ideathon Competition by Arabnet Riyadh 2013, the National Championship “Get in the Ring” hosted by STC, and the Startup Demo Competition in Riyadh (2014). The investment will serve to redevelop and redesign Sawerly’s website and app for improved user experience. The new platform is scheduled for the summer of 2015, from which Sawerly will expand into the UAE and Egypt.

Bahraini table reservation App raises $400,000 in Investment Bahrain’s newest table reservation application, Eatapp.co, raised in the beginning of 2015 a total of $400K in 2 investment rounds led by Tenmou. Initiating a second round was a first for an internet company in the country. Eatapp. co is the Middle East’s version of the very popular OpenTable in the US, and was the first such service in Bahrain. The app synchs client reservations with Eatapp. co iPads installed at listed restaurants covering more than 30% of Bahrain’s eateries. Since it launched in March 2014, the app has seated over 200,000 diners. Eatapp.co plans to use the investment to expand its user base in Bahrain, Dubai, Abu Dhabi, and Kuwait. March 2015 The QuarTerly

TECHNOLOGY

UsefUl Apps for TrAnsporTATion

the Blossoming of araB hardware innovation A Round-Up of Taxi-Booking Apps for Residents in MENA

by Lara Chaaya | @ChaayaLara

The QuarTerly March 2015

omething is happening in hardware in the Middle East. Arab hardware startups are raising over $170,000 on global crowdfunding platforms. Roadie Tuner became the first startup from the region to be accepted into Haxlr8r, the hardware accelerator program in Shenzhen, and they have already released 3000 units to the public. Lebanese engineers made headlines in international technology news as Alexandre Asseily’s brainchild, Jawbone, prepares for IPO, and Sarjoun Skaff ’s personal robot, mObi from Bossa Nova Robotics, dazzled tech savvies. Even public sectors have become interested in hardware innovation. In February 2015, the UAE government awarded 1M AED to students at the New York University Abu Dhabi to continue developing drones for monitoring the country’s Wadi Wurayah National Park. Nevertheless, hardware startups continue to look daunting to investors in the Middle East, as opposed to the less-needy and more market-proven digital startups. The only known regional investment in hardware happened in January 2014 when Instabeat, the heart rate monitoring goggles for swimmers, announced that is has raised a Series A round from Wamda Capital, Jabbar Internet Group, and angel investors. The lack of local investor interest in hardware stands in stark contrast to the surge in available capital for hardware startups in other international markets. Take the US for instance. In 2013 alone, venture capitalists in the country invested more than $840M into hardware startups. That is nearly double the prior record of $442 set in 2012. With the abundant availability of money and support in international markets, it comes as no surprise that only local hardware innovators who, at some point, move all or part of their value chain outside the MENA region are the ones most likely to succeed. the Hardware startup: from Idea to Mass delivery The journey of hardware startups differs from that of digital startups on multiple levels. As Benjamin Joffe, General Partner at Haxlr8r, puts it, “Atoms are not like bits.” Getting products made at scale and in the hands of people

Benjamin Joffe, General Partner at Haxlr8r

require much more time than deploying a website or a mobile app. “To get there, hardware entrepreneurs need to validate a potential market, prototype, test, manufacture, and fund all this,” says Benjamin. In fact, it usually takes about a year to go from the first idea to the final shipped product. Let’s walk through the steps in more detail. Idea Every successful product starts with an idea that solves a problem. Priscilla Sharuk’s forgetful grandmother used to call her granddaughter every time she needed to type in her passwords. Realizing that she needed a better solution, Priscilla raised the issue to her friend Antoine Jebara, an engineer. “He came back to me a few weeks later with a workinglike prototype, similar to a USB, that my grandmother could just plug into her computer, and it will securely log her into all of her accounts,” explains Priscilla as she recounts how she and Antoine began their journey with their startup, Ki Inc. Another point in case is Roadie Tuner, an electronic tuning device for string instruments developed by two Lebanese engineers and music lovers, Hassane Slaibi and Bassam Jalgha, out of the sheer need of a device that could tune the 13 strings of their lute autonomously.

Customer Validation and Works-like Prototyping (a.k.a Proof of Concept) According to Benjamin Joffe, before hardware startups spend a dime on creating a works-like prototype—a prototype that serves as a proof of concept and focuses primarily on the functions of the product—they need to make sure there is a market need for the product in mind. “Customer validation is one of the most challenging steps in the journey of hardware startups,” says Benjamin. “Many creators don’t do it well or at all. They end up building something nobody wants.” Prior to working on 1Sheeld, the ingenious idea of Islam Mustafa to replace all Arduino shields with a single shield using a smartphone, the Egyptian team of 8 spent many months working on another hardware project only to realize that one component used in the product’s manufacturing cost $500,000. Faced with the option of either shutting down the startup, called Integreight, or coming up with a new project, the team decided to adopt Islam’s idea. “We didn’t want to make the same mistake of the first product,” says Amr Saleh, CEO at Integreight. “We wanted to go out and test the product and the market to make sure we are not wasting more time.” With the help and mentorship of Karim Hussein, a leading investor in Cairo, the team created 5 samples of their first works-like 1Sheeld prototype and built the module application. With the proof of concept ready, the team decided to validate that there’s a market for their product by launching a crowdfunding campaign on Kickstarter. They started with a modest fundraising goal of $10,000 and ended up with more than $85,000 and almost 1500 backers. Customer validation? Check. Adopting a different approach for customer validation, the founders of Creative Bits did two rounds of works-like prototyping based on initial customer feedback. Creative Bits is the Egyptian startup that designs software applications integrated into hardware robots to educate children about programming. “[Customer validation] was an incremental process,” explains

March 2015 The QuarTerly

TECHNOLOGY

UsefUl Apps for TrAnsporTATion

Hesham Abdelmohsen, CEO at Creative Bits. “One of the prototypes had a fixed remote control, but the people we talked to wanted it movable, so we edited the second prototype accordingly,” he says. The system that the Creative Bits team developed was a complicated 6-part matrix: the hardware device, the sensor, the mobile applications, and the website version. Creating two versions of the hardware prototype based on customer feedback was not cheap. It cost the team $500,000—all self-funded. But that is not always the case. Building workslike prototypes is relatively affordable for most hardware startups. The first 1Sheeld prototype cost $100. The initial

the final product, from the aesthetics and

Jalgha from Roadie Tuner had to turn

working on the first prototype, you don’t care about aesthetics,” says Antoine from Ki. “All you care about is that it works.” Hind Hobeika, the founder of Instabeat, concurs saying, “The first prototype is always ten times bigger than what you want it to be.” The 26-year-old Lebanese engineer did several prototypes to make her product as slim and sleek as she imagined it to be. “I also needed to make the product waterproof, to put it in a plastic shell, so it would look like a product not just a circuit board,” states Hind. During that time, Hind was participating in the Stars

work with designers from Lebanon, but because the country didn’t have a robust manufacturing industry, we couldn’t find what we were looking for,” says Hassane. “Eventually, we worked with a mobile app designer from Italy, and industrial designer from Holland, and a designer from Portugal who took care of the branding and the visual language of the product,” explains Hassane. This phase took six months and was very expensive for the Roadie Tuner duo team. Up to this point, they had spent two years and nearly $300K to reach a prototype that is fully functional and

Hesham Abdelmohsen, CEO at Creative Bits

Ali Lakrakbi, Co-founder at iMote

Antoine Jebara, Co-founder at Ki Inc.

Ki hardware that Antoine created for Priscilla’s grandmother cost $75. Ali Lakrakbi, CEO of Morocco-based iMote, spent $60 to design a hardware prototype that allows users to control several functions of their smartphone with a simple gesture.

of Science competition, and she had access to designers from the Netherlands who helped her with the product’s design. “They took the circuit board, the dimensions, and the mood board that specified what colors and look-and-feel I wanted, and they came back to me with a 3D design,” explains Hind. “We 3D printed the prototype in Amsterdam. And even then, we realized we needed to do different iterations because sometimes you have to change the plastic to better fit the electronics, or vice versa,” she continues. Finding a local product designer is a challenge for many hardware startups in the region. Just like Hind Hobeika, Hassane Slaibi and Bassam

that looks nice—but on the screen. The next step is to make it manufacturable.

materials to functionality. “When you are in MENA to designers in Europe. “We wanted to A Round-Up of Taxi-Booking Apps for Residents

Look-like Prototyping Between the proof of concept and the looklike prototype, hardware startups will most likely create many versions. Ali produced 11 iMote prototypes before he had a look-like prototype, a full simulation of

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designing a Prototype for Manufacture A functional prototype most often uses expensive components, from Arduino boards to 3D printed parts. It would be too costly to manufacture it this way, which is why hardware startups need to work on a design for manufacturability (DSM). The DSM takes into account the manufacturing processes in order to lower costs without compromising quality. “Manufacturing

can go really wrong if creators don’t spend time with the engineers making their products at the factory,” points out Benjamin Joffe from Haxlr8r. “The most visible and costly failures happen there.” Many hardware startups turn to China in this phase. At first, the Roadie Tuner team were not keen to follow the rest of the world to China. “We explored Eastern Europe, the US, and many other markets,” states Hassane. “However, we realized that no market matched the high manufacturing experience available in China.” “It was during our search for a manufacturing firm in the far east that we came across Haxlr8r,” continues

arise from lack of due diligence, poor communication, and not spending enough time on the factory floor.”

Amr Saleh, CEO at Integreight, the company behind 1Sheeld

Hind Hobeika, Founder at Instabeat

Priscilla Sharuk, Co-founder at Ki Inc.

Hassane. “We applied, got accepted, and spent the next three and a half months in the program. What we learned in this short period of time was invaluable. Our startup was really accelerated.” Hassane and his partner got access to mentors specialized in hardware manufacturing, as well all the raw material they needed to complete the DFM. In order for hardware startups to ensure they have the right DFM that will ease the manufacturing process later on, Benjamin advises entrepreneurs to take the time to find the right partner. “Shotgun weddings rarely end well,” he says. “The problems generally

don’t do crowdfunding, you would need at least $100k to make a first batch of products, depending on what you make,” he says. Crowdfunding is a good idea for hardware startups to secure the money they need to manufacture the first batch of products while testing the idea in front of real potential clients. Arab hardware startups are finding great success on crowdfunding platforms. Instabeat went on Indigeogo and successfully raised $59,374—more than 161% Hind’s initial fundraising goal. 1Sheeld launched a crowdfunding campaign on Kickstarter and secured $85,210. They reached their fundraising goal of $10,000 in the

on advice and recommendations from their mentors at Haxlr8r. 1Sheeld tapped into the Do-It-Yourself community and asked for help. They contacted 10 manufacturing companies and chose the most responsive one. Hind Hobeika didn’t care about where she would manufacture her product as much as who she would manufacture it with. “I was trying to look for a partner that has worked on a similar product, was quick to respond, and was friendly to work with,” she says. “I finally met our manufacturer at the Consumer Electronics Show.” Today, the different parts of Instabeat are manufactured in different countries.

Funding The amount of funding hardware startups need vary depending on what they are building; nonetheless, they require more capital that most digital startups. Working with over 50 hardware startups from all around the world, Benjamin observed that some of their startups were able to go to market with just $25,000 of initial capital, combined with crowdfunding or pre-sales. “If you

first six hours. Roadie Tuner also chose Kickstarter to crowdfund their project. They raised $178,613—300% more than they had planned. With hopes to share the same success as his peers, Ali is preparing to launch a crowdfunding campaign for iMote in the near future. First Factory run With the pre-orders made and the funding secured, it’s time to go to the manufacturer. Some hardware startups, like 1Sheeld and Roadie Tuner, decided to manufacture in China. Roadie Tuner chose their manufacturer based

March 2015 The QuarTerly

TECHNOLOGY

oP-ed

UsefUl Apps for TrAnsporTATion The electronic boards and the waterproof coats are done in the US, while the plastic, testing, and packaging is done in China. “Each market has its advantages and disadvantages. You have to find the right balance,” states Hind. Contrary to most Arab hardware startups, the founders of Creative Bits and iMote decided to manufacture their product in their home countries, Egypt and Morocco, respectively. “It is more cost efficient for us at the beginning to control the production when it is next door rather than flying to Asia,” explains iMote’s CEO. The manufacturing phase is not only about building the parts of the product. Most often, it also involves developing the tools and molds that will be used for mass production. For instance, one of the first units that the Creative Bits team manufactured was a quality control device that would ensure all units are flawless and functional. It cost the team around $2000 to produce it.

distribution channels adopted by Arab

to pay for a product when it costs less

through Amazon or their own website, or offline through key distributors and retailers in the US, Europe, and the MENA region, or a mix of both online and offline. “For distribution, a startup has to be careful about its cash flow and scalability,” says Benjamin “This means distribution, payment terms and cash to finance inventory matter more than getting volume.”

had to work on our DFM and squeeze the costs as much as possible to reach that target,” says Hassane.

hardware startups are either online than $100. “Our target was $99. We A Round-Up of Taxi-Booking Apps for Residents in MENA

shipment At this stage, the product is ready to be packaged and shipped. The main

other Considerations: Pricing Pricing is a very important considerations that hardware startups need to think of early on. According to Benjamin, there are two ways to pick the right pricing. “You can do it based on costs and multiply the bill of material by 3x or 4x, or you can base it on value; that is, what people are ready to pay,” he explains. “Both have to account for how you compare with competitors. Offering a similar product with 10% or 20% price advantage over a market leader is often insufficient. You have to be much better, cheaper or different,” he continues. Following Benjamin’s advice, Bassam and Hassane found out that people are psychologically more willing

the Bumpy road in the Middle east Prototyping speed is one of the biggest challenges facing hardware startups in the MENA due to lack of access to components and equipment, as well as slow shipment and high customs. “The problem in our country is that something that should cost $20 in the US might end up costing you $70 for shipment and taxes,” says Antoine from Ki. “And it takes 10 to 15 days to arrive, so we lose a lot of precious.” This big drawback was the main reasons Antoine and Priscilla decided to shift their product Ki from a hardware to a software. Hassane and Bassam spent two years working on their prototypes before they moved to China. “It used to take us between 15 to 30 days in Lebanon to do one iteration,” recounts Hassane. “In China, the same process took between 3-4 days. So imagine how much time we lost.” Another challenge is lack of

Q&a with JawBone’s founder alexandre asseily Jawbone is a massively successful company. Why would you go out and launch State.com? It’s a philosophical question, really. At a point in my life, I wanted to go off and start a new thing that I was passionate about. I wanted to move back to London. I continued to feel very passionately and positively about jawbone, and have had in many ways the luck and privilege to be involved in both. It’s a nice place to be. What inspired you to create State.com? I wanted to solve a need. One that I felt passionately about. It was different from what we were doing in Jawbone. It was, you know, connecting people around the world through opinion rather than social relationships and empowering people to share their views and feel like their views are having an impact. So in a way we are creating a true democracy of

The QuarTerly March 2015

thought which does not really exist yet. Tell us more about sentiment analysis and how you see it developing. People express themselves in all sorts of ways, and very often, all things are obvious. For example, if I were to say “ISIS is evil,” that would be relatively easy to decode; whereas if I were to say: “Obama is strong very rarely but generally inspirational,” it would be really hard to figure out that I mean he’s not strong. That’s generally the problem with sentiment analysis. When people try to understand what it is that people are saying on Twitter using Social Media Monitoring, you most probably get an accuracy that is maximum 70-80%, which isn’t enough. With State, we are creating a system by which we help users be more specific about what they’re talking about so that they can clear up any ambiguity or imprecision before “our machine” can take a look at it. We

manufacturing knowledge in the region, which makes it tough to find the right talent and the right mentors. “The manufacturing industry is nearly nonexistent in the Middle East,” says Hind. “As a result, the region doesn’t have enough engineers and designers who have been through the process and learned from their mistakes. It’s really hard to start a company without the right people on board.” Ali was in great need for mentors and advisors to help him in his entrepreneurial journey. When he couldn’t get access to any, he had to turn to professional people and pay them for consultancy. Invented Anywhere, Made in China According to Benjamin, both challenges—prototyping speed and manufacturing knowledge—can be solved by going to Shenzhen, China. “That’s where most global hardware startups end up anyway, so you might as well go early,” he says. Alexandre Asseily, Founder at Jawbone, agrees with Benjamin: “It’s mostly in China where your product is going to be built. People think it’s because of cheap labor, but it’s not. It’s because they have a unique set of capabilities all in

Hassane Slaibi and Bassam Jalgha at Haxlr8r

one place that you can’t get anywhere else. The Americans, the British, the French… none have it. Sure, you can build these things in your country, but it will cost you 5-10 times as much and most often you will not have the supplies. This is good news for the Arab region. It means

also got some clever systems to collect and aggregate like-minded people around similar topics. And this is a statistically-run thing. We look for coincidence of certain things. For example, if you walk out of Alexandre Asseily, Founder at Jawbone the movie and say, “it’s slow and inspiring,” and I come out of the movie saying, “it’s moving but long,” then we probably mean the same thing. By seeing that these expressions live amongst each other, we can gradually figure out statistically that they mean the same things, and then a human comes in on top of that and says, “yeah, that makes sense,” and then the system learns from that. So it’s a big machine learning exercise in practice.

that in some respects, it’s no harder to make these things and have them made in China if you’re based in Beirut and Amman than if you’re based anywhere else. The challenge is finding local talent, local investors, and local mentors,” concludes Alexandre.n

Let’s talk about smart hardware. How will it look like in the near future? Let me refer to one specific hardware to answer your question, and it’s Instabeat created by Hind Hobeika. For a bunch of reasons I think the device is interesting because it serves a very specific purpose for a very specific segment of population. There’s almost no downside; anyone who swims a lot is going to be investing time and energy and money into the infrastructure and the equipment they use. So it’s a very elegant solution made possible by great capabilities within manufacturing and the availability of new sensors and wire technologies that make such small devices with such great capabilities. And I think that that is where there’s a lot of opportunities, in specialized purpose-specific wearables. What are the challenges in working in a smart hardware startup? First you need a great product. I think it’s getting harder and harder to get people to buy things that are mediocre. Another challenge is reliability and consistency. All units should work the same way and should be functional for a reasonable period of time, say 1 or 2 years. People take it for granted but a lot of work and effort goes to make that happen.

March 2015 The QuarTerly

TECHNOLOGY

UsefUl Apps for TrAnsporTATion A Round-Up of Taxi-Booking Apps for Residents in MENA

a moBile game ConQuers the mena Tribal Rivals Ushers In a New Generation of Game Development by Alexis Baghdadi | @GuerrillaWriter

lone combat strategy game for mobile is effectively conquering the MENA. Developed by Lumba, a young San Francisco-based game developer for the Arabic-speaking world, Tribal Rivals (‫ )فزعة‬is setting all kinds of precedents for apps developed for the MENA or by companies from the region.

The QuarTerly March 2015

Like other games in this category, Tribal Rivals invites players to start their own tribe, develop their village and train troops to defend against enemies and fight other players. Users can also speed up their progress with in-game cash purchases. This is standard practice for such games, and at least a dozen titles

currently vie for top position, including Clash of Clans, Jungle Heat, and Kingsbridge. But Tribal Rivals managed to stand out from the crowd and rake in unmatched profits for a MENA app. A quick look at mobile gaming monitoring websites reveals that Tribal Rivals scores an estimated daily revenue of +$10,000

from in-game purchases only, ranking #185 among Top Grossing Apps (Source: Think Gaming online gaming consultancy and marketing services website). Sensor Tower, a data collection and analysis service for apps, estimates the game to be worth approximately $800,000. The biggest challenge for Lumba at the onset was getting a good sense of the Arabic-speaking market’s size (users, dollars, etc.) and convincing investors, developers and platform operators of its potential. The market had certainly evolved by the time Tribal Rivals was released, but it still presented size constraints. “It was only a matter of time until there was scale in the market. So I guess the most difficult part was having the patience to wait it out - which we did, thankfully,” said Abdullah Alzabin, Founder and CEO of Lumba. The game is available for free download on iOS. There were periods during which it recorded some 30,000 downloads per day, reaching 1M downloads (90% of which were from the GCC) only a few months after launching. With no advertising revenue, income figures from in-game purchases stand witness to the game’s huge popularity. So how did it do it? nothing Beats a Good History There is no shortage of combat strategy games available on social networks, but a foolproof formula for guaranteed success remains elusive. Because each new game draws inspiration from its predecessors, originality is not a major factor in overcoming the competition. So is success a fluke? No, according to Alzabin. “It is by design—rather than by coincidence— that the game’s tribal theme is playing a critical role in its success,” he said. What makes the game unique is its authentic identification with its target audience. “We take pride in our culture, and we genuinely believe that no one can portray it in its deserved light other than Arabs themselves.” First, Tribal Rivals is set in the Arab Peninsula. The inspiration for the characters and stories is drawn from actual chapters in history, then re-imagined and designed to fit the lighthearted world of mobile games. And that has made the difference. “Much of what shapes our culture is its rich history

Abdullah Alzabin, Founder and CEO at Lumba. Abdullah Alzabin is an investment and equity consultant with experience in the GCC, the UK and the US. In 2012, he founded Lumba, a game development studio for the MENA region based in San Francisco. Lumba has developed two free-to-play games for mobile: the city building Desert Tycoon, and the megahit Tribal Rivals.

“Tribal Rivals scores an estimated daily revenue of +$10,000 from in-game purchases only.”

of storytelling, which unfortunately has been dying as of late. We set out to revive this tradition in the form of a new interactive experience that is a mobile game,” said Alzabin. Lumba also took the time to study Arab males aged between 16 and 24 to understand their interests and aspirations. It took these insights into consideration when crafting the story and putting its elements together.

delivering a Great experience across the Board While the differentiating factor for Tribal Rivals is the localization in the story, characters, and language, Alzabin believes it is critical that the game be on par with games developed by international studios. “Our audience is smart and sophisticated. They enjoy playing games that are highly polished visually and technically, and they will unquestionably discriminate against games that do not meet a certain quality threshold,” said Alzabin. Online reviewers of the game seem to unanimously agree that its visuals are truly gorgeous, calling it an “awesome game,” and their “favorite game ever.” Alzabin and the team are continuously continuously updating the game to keep things interesting and improve performance. Lumba is currently working on further boosting the game’s frame rate speed and server-client connection, but these do not constitute major issues for players right now. A recipe for success? Although it focuses on the MENA region, Lumba started out in San Francisco and had a good vantage point from which to tap into the tech and gaming ecosystem of the Bay Area and Silicon Valley. Their connections with the gaming industry allowed Alzabin and his business partner and angel investor, Ali Diab, to rapidly ramp up their operation and avoid common pitfalls. As soon as they understood their target market and the constraints linked to its then relatively small size, they were able to start operating at a much better rhythm; investing the right amount of time and money in areas that were necessary for growth, such as server architecture, user acquisition, new content development, etc. Tribal Rivals’ success is a combination of the right people and the right attitudes. Putting together the right team is a prerequisite for any successful enterprise. Lumba seeks out individuals that are the best in their domain (software engineers, 3D artists, character illustrators, music and sound effect composers, etc.). “They should be genuinely interested in the Arab culture, and then we do whatever it takes to get them to work with us,” said Alzabin.

March 2015 The QuarTerly

TECHNOLOGY

UsefUl Apps for TrAnsporTATion

Each team member has demonstrated their superior craft with different personal projects in the gaming industry or other fields: “The uniqueness of every team member contributes to our ability to build fun and beautiful games.” The combination of all these elements has put Lumba alongside top players, spearheading new trends in the industry.. But it’s not just about dollar figures. As with all free online games, a significant number of players do not make any actual in-game purchases, but each of these players plays an important role in the game developer’s operation and overall strategy. “As long as there is a strong, vibrant community around our games, we are happy because it means that we are aligned with our mission to build fun and beautiful Arabic mobile games,” said Alzabin.

taking It to the next Level

understandably from the Arab world;

Alzabin certainly hopes so. The game’s success hasn’t gone to the team’s head. “If you were to ask the team, they’d tell you that there’s still a lot to do before it can be hailed as a success,” he said. Immediately after it launched Tribal Rivals, Lumba set about retooling and improving their art and engineering development process to make the game better and also prepare for new projects in the pipeline. “We always strive to build games that are an order of magnitude better than the last one we built,” said Alzabin. On that note, a new game has been in the works over the past year in partnership with a popular YouTube show. Details about this new release will be announced soon. For now, the majority of players are

mobile penetration rate and a thriving gaming community. The game has the potential to appeal to players outside the MENA, especially those of Arab origin living abroad or those interested in Arab culture. According to Sensor Tower, the US already accounts for 44% of Tribal Rivals users and is responsible for 65% of its estimated revenue. However encouraging this may be, the developer recognizes the importance of staying focused on its target market and doesn’t plan to extend the game’s user base beyond the Arab World immediately. The company is currently in the process of setting up a new studio in Dubai from which to create and launch new games for the region.n

after all, the region has a very high Has Tribal Rivalsfor set the bar too high? A Round-Up of Taxi-Booking Apps Residents in MENA

The QuarTerly March 2015

teCHnoLoGy

Using Service Design to Deliver on Your Promises by George Khabbaz | @UxSoup

The QuarTerly March 2015

ervice design is the tipping point that determines whether your customers will return and use your product or services. This extends beyond traditional user experience enhancement and addresses every single touchpoint that

users might come across, from human and digital interfaces to infrastructures and communication messages. Service delivery needs to be rethought to accommodate new business models. Consumers are not hard to please; they just want what they

have been promised. The two most common goals of service design are a) increasing customer acquisition and b) increasing loyalty and creating brand ambassadors. Ultimately, it all comes down to increasing profit.

A Comprehensive user experience Service design is typically concerned with three main events related to a product or service: the pre-service, the service, and the after-service periods. To illustrate how good service design functions, I will relate a personal experience I had a while back when I bought a new car at a dealership. Pre-Service Phase Let’s start with the pre-service phase. My mind was already set on the car I wanted so I accessed the manufacturer’s online platform. The website proposed an attractive user experience which included a nifty comparison tool with competitors’ cars, developed specifically for the car of my choice. This was the dealer’s way of succinctly pointing out that their car was better than their competitor’s.

Now that I had gathered all the information I needed, I visited the showroom to crunch down options and extras. Finally, I was assured that my car would be ready for delivery within 2 days. At this stage, the touchpoints of service design I interacted with included the information available on the dealer’s website, online reviews and videos, as well as my in-store experience, leading up to my purchase of the car.

Service and After-Service Phase When my car was delivered, I entered the service and after-service period. After a certain number of miles, the car notified me it was time for its maintenance checkup. I started by looking up my dealership’s number online; and ended up on the manufacturer’s website for the region and found a page labeled “Car maintenance.” I was presented with comprehensive information about the car parts that get replaced and tested at this scheduled maintenance. The information also came with the pricing and mileage details for each checkup. This was a great example of online user experience at work, and I admit it was a first for me back then. I made an appointment with my dealership and when I came in, I was politely greeted by a staff member who

helped me deal with the paperwork. While I was there, I noticed an interactive display that listed the maintenance schedule and pricing for every car scheduled for that day. As I was about to leave, reassured that my car was in good hands, the service crew informed me there was a cab at my disposal if I needed a ride.

A couple of hours later, I received an SMS and a phone call to notify me that my car was ready. When I returned to pick up the car, it was cleaned, the seat and seatbelt were back in their original positions and the pricing was exactly as stated on the manufacturer’s website. Flawless! You can see how service design covered different aspects of the afterservice period from the in-car notification to the alignment of the message on the website, in-store and by SMS notification (primitive though it may be, it did its job).

March 2015 The QuarTerly

teCHnoLoGy

Walking through service design

A Round-Up of Taxi-Booking Apps for Residents in MENA

Before you get hands-on with service design, you have to keep in mind the end you are working towards: increasing profit by increasing

customer acquisition and loyalty. Now the question is “How?” the next time you are planning a new business, application or service, it would be

useful to keep the following elements in mind, which involve both internal and external processes.

1. Framing: Set objectives that will frame the whole direction of the business based on both internal and external factors. Identify the objectives of the product/service you are offering based on the company’s objectives (internal consideration) and market research (external consideration).

3. Personas: After gathering and analyzing all the necessary data, you will need to create “personas”, i.e. profiles of key persons involved at all levels of the supply chain process within the organizations, from the GM up to consumer. This helps outline their wants, needs, and restrictions more clearly.

5. Ideation: At this point, you would be ready to design the processes. While designing, you will come up with a lot of ideas to solve problems or make the process more streamlines. It is crucial to prioritize those ideas: what constitutes a must, what would be a nice addition to your offering, what could wait until later, etc.

2. user insights: Make contextual inquiries involving both your employees and your users. How are employees handling the business flow? How are consumers using your product, why are they using it, and are they using some workaround that you might add to your offering?

4. user requirement: Define who does what and why from both the business and consumer side, and cover the rational and emotional goals while setting KPIs.

6. service concept: Document the “user journey” comprising the whole process of the service from supplier to consumer. Then identify key points that can be fixed, changed or excluded, and key touchpoints to be enhanced or created (in-store, mobile app, social media, website, proximity marketing, etc).

The QuarTerly March 2015

7. Prototype and testing: Start with a demo of your service concept; test it, analyze the collected data, and tweak the process for optimal results.

8. Implementation: This is where service design starts to come to life. You have understood pre-service, service and after-service behaviors from both the users and suppliers, and you have set your priorities, so start implementation.

9. Iteration: Your work does not stop at the implementation phase. Service design involves a continuous cycle of data collection and analytics, with constant reviewing, recommending, and re-adapting.

George Khabbaz is a digital consultant who has headed digital strategy departments and managed user experience for local, regional and multinational agencies covering different verticals. He is currently the Chief Digital Officer of Dress Code - Converse, which he also co-founded

March 2015 The QuarTerly

BUSINESS BusIness

oP-ed

UsefUl Apps for TrAnsporTATion A Round-Up of Taxi-Booking Apps for Residents in MENA

ransportation in MENA is being disrupted. The region’s size and growth rates have attracted global players and local startups in the digital transportation industry. Some of the cities in the Middle East are on a growth curve that is unmatched around the world. A case-in-point is the Kingdom of Saudi Arabia (KSA), where the latest estimations value the transportation market at USD 3B. The rest of the GCC is somewhere between USD 5B and USD 6B. Hundreds of thousands of cab orders are made on a daily basis in KSA. In the region, some companies have managed to take center stage, becoming the go-to services in the transport field. Two Roads Diverged in a Wood Transportation apps in the world adopt one of two models: some, like Uber and Careem, work with private cars; others, like Easy Taxi and Mondo Taxi, partner with existing cab systems.

The QuarTerly March 2015

Uber, valued at a net worth of about USD 18B, is one of them. The company is in over 230 cities around the world and in 6 cities in the Middle East. Uber does not hire drivers. Instead, they partner with local licensed limousine and rental companies. According to Jambu Palaniappan, Regional General Manager at Uber MENA, the company is making thousands of trips per week. Like Uber, Dubai-based Careem is another entity providing tech solutions and working with licensed transportation providers. In 2014, it raised $10 million investment in a round led by Al Tayyar Travel Group with STC Ventures, as well as other regional investors. “It’s not all about fancy cars for us, although for sure, in the markets where this is what people want we offer a business and first-class service,” said Mudassir Sheikha, Careem Co-Founder and Managing Director. “It’s more about meeting genuine consumer needs around ground transportation and

using technology to make it efficient for both the customer and the drivers.” Careem has access to over 4,000 drivers across the cities it operates in. The company has an up-and-running call center receiving thousands of calls every day, mostly for manual bookings and general inquiries when users do not have network access or prefer not to book via the app or online. Careem is now present in 12 cities across the Middle East. Easy Taxi, the Rocket-Internet backed company present in the Arab region in Egypt and Saudi Arabia so far, has more than 10,000 drivers, with thousands of daily orders and a MENA team of about 50 people. It has been growing at a steady rate of 25% a month and in 2013, it landed $7M from iMENA Holding. According to Dr. Mahmouz Fouz, Easy Taxi Middle East CEO, the company estimates that a taxi driver who is using their service can make up to 40% more revenue by increasing

Jambu Palaniappan, Regional General Manager at Uber MENA

choose not to do so today because they find it impractical and unsafe,” said Troels Andersen, Mondo Taxi Arabia CEO. “We have a proprietary segmentation of our customers ranging from businessmen who use taxis to avoid parking in the city center to women who want to go shopping during the day when they do not have access to a personal driver.” Similar in its business model to Easy Taxi, Mondo’s approach is different than that of Uber and Careem whereby Mondo targets the mass market through licensed taxis.

his efficiency and reducing roaming time. “Easy Taxi offers a beneficial alternative to passengers, too, not only because we offer a very convenient way of ordering a taxi, but also because we are imposing quality standards on the drivers to ensure a good user experience. The only one who loses are bad drivers who are not permitted into the service,” Fouz further added. Easy Taxi monitors drivers’ performance through a set of key performance indicators (KPIs). In case of complaints, bad drivers are warned, and ultimately blocked if they do not improve their service. Romanian-born Mondo Taxi is another company providing tech solutions to the transport field. Relatively young, Mondo operates out of Saudi Arabia only from the MENA region thus far, and is present in 6 cities around the world. “Our target market is anyone who is currently a taxi customer as well as those people who would like to use taxis but

Challenges for Mobile Transportation Apps in MENA With success rates matching those of international locations, demand for transportation services does not seem to be an issue. “Challenges for us are about maintaining quality as we rapidly expand,” said Sheikha. “What we have built here in Dubai as our launch city is for us a powerhouse and a model we aim to replicate across our operating terrthe fitories both in terms of the talent we have turning the wheels in the back office and the drivers we have on our books behind the wheel and the face of our brand to our customers,” he continued. There is also the challenge to fulfill the rising demand for a sturdy, techpowered transport system in the GCC. Another challenge is trust. In light of recent events in the region, trusting a taxi driver has become all the more challenging. “Based on bad experience, it’s become hard for me to trust taxi drivers easily, even if they are employed by a respectable taxi service company,” said

Canadian-Iranian Mehrnoush Shafiei, who lives and works in Beirut. This is where companies’ responsibility lies. They are to ensure people trust them, and the drivers they work with, by improving the average quality of their partner taxis and cut down on shortcomings such as the haphazard use of taximeters. Another challenge that must be overcome is the fact that most streets across the MENA are not numbered, which makes giving directions a demanding and time-consuming task. One must depend partially, and sometimes solely, on landmarks. To overcome this challenge, Careem acquired Enwani—the cloud-based technology system that offers a solution to share addresses in the MENA region. According to Sheikha, Careem’s acquisition of Enwani offered Careem a valuable database of locations and a platform that can power potential opportunities in the future. Yet another challenge is the cash logistics. For example, the Uber app needs you to input credit card information when you sign up in order to make the experience as seamless as possible. Nevertheless, in some parts of the MENA, credit card penetration is not that high. What is more, throughout the region, the GPS mapping system is not very accurate. In both cases, though, companies are constantly exploring ways to adapt their models in order to find solutions. Most drivers working with Mondo Taxi in Saudi Arabia are expats who form close-knit communities of their own. “We had to understand their culture to better meet their needs. The same is true about the unique Saudi culture,” said Andersen. “We continue to learn new things about the market and our customers with great support from our Saudi employees.” The market’s unfamiliarity with new, innovative means can also be a core reason for dissatisfaction and cancellations. Unregulated markets and some people’s conviction that adamant negotiations will lead to paying less are only a few examples. “At the same time, this is a great opportunity for us to improve the service level by enforcing standards on the drivers, which benefits the user experience,” said Fouz.

March 2015 The QuarTerly

BUSINESS

UsefUl Apps for TrAnsporTATion Where do We Go now? The success of smart taxi services and the positive response to them is encouraging, but does beg further questions, mainly pertaining to the future of a large market where it is not clear if the equation is a zero-sum one or if harmonious co-existence is a realistic possibility. “Contrary to an outsider’s perspective, there is absolutely no ‘one size fits all’ solution and that has really pushed us to grow and develop,” said Palaniappan. “[Smart taxi services] is not a ‘winner-takes-it-all’ service since the market is so large and fragmented. We like competition because it educates the market and keeps life interesting. Besides, it is proof that we are in an attractive market,” said Andersen. Companies seem to be vying to get the biggest market share, offering services such as pre-scheduled booking, call centers, payment options, and through scalability, global availability and better customer service and user experience. To raise its competitive barrier, Careem has been tapping into services other than transport, per se, such as delivering goods, thus moving in a logistics direction. “We will adapt and create variations of our

A Round-Up of Taxi-Booking Apps for Residents in MENA

Headquarters

Dr. Mahmouz Fouz, CEO at Easy Taxi Middle East

Mudassir Sheikha, Co-Founder and Managing Director at Careem

product to suit local market needs and where we see a fit for us to fix a hassle in our customers’ lives, we will go create a solution,” enthused Sheikha. Competition as it is now seems to be a healthy one, goading everyone to up their game, and ultimately, the customers–the riders, and the drivers– seem to be winning. Is the market ever going to be saturated, though? “In [the focus on public taxis] segment, we are already the market leader. That said, we believe that only few dominant players

will survive in each segment,” said Fouz. The future of smart taxi services in the MENA looks promising, based on the numbers and the entrepreneurs’ words of testimony. No passenger likes to wait for a ride of unexpected quality, for an unknown amount of time, on the street. Will one victor reign supreme at some point, and might water transport and aviation see the innovative advances sometime soon? Watch this space, as these remain questions only time will answer.n

Uber

Careem

Easy Taxi

Mondo Taxi

San Francisco

Dubai

Brazil

Romania

Number of cities

250

160

Number of cities in MENA

$11.7M USD

$77M USD

Not announced

Rocket Internet, iMENA

Money raised

$2.8B USD

Main investors

Google Ventures, Goldman Sachs, Benchmark Capital, and others

The QuarTerly March 2015

STC Ventures, Al Taayar Travel Group

BUSINESS

WhaT IT Takes UsefUl for Apps for TrAnsporTATion A Round-Up of Taxi-Booking Apps for Residents in MENA retailers

To Go onlIne

An Interview with Exotica’s CEO by Lara Chaaya | @ChaayaLara

Ziad Nassif, CEO at Exotica.

he year 2015 carries big promises to online businesses in the Middle East. According to PayFort, B2C ecommerce sales in the region are predicted to reach $15 billion this year, up from $9 billion in 2012. This is a significant figure, yet we still have a long road ahead of us. For point of comparison, eMarketer forecasts retail ecommerce sales in the US to reach around $270 billion in 2015. The local industry is still struggling with internet and credit card penetrations, and the key online players are still too few. Only 15% of local businesses currently have an online presence. One of the very first brick-and-mortar businesses in the region to go online is Exotica, a renowned flower boutique based in Lebanon. We interview Ziad Nassif, Exotica’s CEO, to learn more about their journey online. How did you set up to become an ecommerce business? We first established the back office, which is the most important element of our web solution. The back office allows our seven point-of-sales (POS) to communicate easily with one another. It contains all our businesses information, from product description to pricing, readily available to all our POS. Every order we receive online is prepared in the back office before being sent off to delivery using our own fleet of cars. After developing our back office, we invested in our front office, which handles all types of communication with our customers. We recently developed our Magento platform that made it

The QuarTerly March 2015

easier to group products by color, occasion, price, etc., which significantly improves the user experience. What are the initial investments you had to do to create an online presence? We had to upgrade our server, first and foremost. We also had to buy a unit that allowed us to take high-end pictures of our products from all angles. Furthermore, we had to invest in our people and give them proper training in order to run the new platform. Today we have a professional in-house IT team who is able to integrate all of our systems together and ensure that we can service our customers properly within the right bandwidth and the right hardware. In short, we invested a lot incrementally to ensure that our product is easy to access from anywhere around the world. What is the biggest challenge of setting up an ecommerce platform in the region? The timeline. Projects are difficult to bring them online on time: you have finish the setup up, test it, and get it live in a short period of time. Unfortunately, the capabilities in the region make it difficult to meet deadlines. Based on our own experience launching new platforms in 2010 and 2014, every time we wanted to order a specific hardware and integrate it with a specific software, we always got delayed. Who is shopping online? Being online has allowed us to target a bigger audience that was otherwise beyond our reach as a brick-and-mortar business. We certainly attracted a younger, tech savvy crowd. The age of our online user is lower than the age of our typical customer in the store. Our online business attracted people as young as 18 years old. The minute they have a credit card, they become interested in our product range, which also caters to a very wide range of consumers. Our prices start from $20 and can go beyond $1000. Our typical audience ranges between 18 and 55 years old. Our average is around early to mid-30s. How does the online user compare to the offline user? The average basket size online is close to what we get inside our stores. In Beirut and Dubai, it averages $125 per product. What are your biggest markets? Beirut and Dubai are by far the “heroes” of our online business because they host a young, tech savvy crowd with a comfortable income. As you go north of Beirut towards Kaslik, Jal El Dib, and Jounieh, you start seeing orders averaging $100 per product, which is good, but not as high as in Beirut. n

ECOmmERCE BEST PRACTICE TIPS fROm ZIAD NASSIf 1. Don’t wait till you have a platform that is 100% ready. Launch when you are 85% or 90% ready because you will learn as you go.

3. Use the online platform most importantly to boost and reinforce brand awareness, not only to increase sales. Through our online presence, we are able to reach a wider audience and get their feedback almost instantaneously, unlike in the past when we had to wait for the survey results to come in to know how a particular campaign performed. We are also able to communicate with them in real-time, thus reinforcing our image.

2. Your online presence should include both your ecommerce platform and your social media. Social media allows you to interact with your customers and know their interests. Based on the insights you gain from social media, you will know what to offer your customers through your ecommerce platform.

2000

Laying the foundation

2007

Gaining traction

2010

Hitting critical mass

2014

Beyond the 1 million dollar mark

4. Invest as much as your budget allows you, even if it was a small amount. You cannot afford to wait till you financially able to build the ideal platform because technology is changing so rapidly.

5. Use all the analytic tools available to you to track in realtime your customers’ interactions and ecommerce purchases. In our back office, we have built a customized analytics to track our customers’ behavior. We also use many analytics tools found online, including Google analytics, Facebook analytics, and Social Bakers. Monitoring tools help us know which of our 100 products available online are bestsellers and, accordingly, update our welcome page, especially during the short high season period when we need to make the best use of our online presence.

6 online orders per day Internet and credit card penetration was very low in Lebanon and the UAE. 12-15 online orders per day The year 2007 saw the first major change in consumer behavior as more people accepted the concept of online purchases. During high seasons, such as on Valentine’s and Mother’s Day, Exotica began seeing online orders in the hundreds. Most of the online customers were living in Europe and the US. In 2009, Exotica began investing in a new platform, which was launched in 2010. 20-25 online orders per day Technology was now easier and more accessible to users in the region. The first time online orders reached the 1000 mark was on Mother’s day in 2011.

More than 30 online orders per day Exotica launched a brand new Magento platform and invested heavily in online advertising. It is now running a multi-million dollar online business between the UAE and Lebanon. High seasons attract more than 3000 orders.

March 2015 The QuarTerly

BUSINESS

UsefUl Apps eyesfor on TrAnsporTATion the 2015 A Round-Up of Taxi-Booking Apps for Residents in MENA

moBile landsCape 10 Key Trends to Look Out for by Wael Nabbout | @fulmtlColumnist

hereâ&#x20AC;&#x2122;s no question that mobile is here to stay. In this rapidly evolving sector, early insight is of the essence to developers and entrepreneurs steering their business in the right direction. MEF, the global community for mobile content and commerce, recently released a report outlining the 10 key mobile trends that could determine the face of the global mobile landscape in 2015. The predictions are based on diverse expert

The QuarTerly March 2015

insights from MEFâ&#x20AC;&#x2122;s global board of directors, as well as the findings of its recently published fourth annual Global Mobile Consumer Survey. The survey gathered and analyzed data from 15,000 consumers in 15 countries to put together a clearer picture when it comes to major mobile content and commerce trends, from wearables and mHealth to mobile payments, consumer privacy and trust.

research report

1. Vertical market ecosystems will drive the adoption of wearable technology The MEF report predicts that 2015 will be the year when wearable sensor technology will underpin major vertical sectors, including mHealth and personal safety. Still, the report does concede that “the single killer app that breaks wearables out of the companion category will remain elusive”. Niche sectors growth will be attributed to the volume of the ensemble of devices and services rather than one single device or service dominating. Sure, Google Glass may have failed. Companies such as Atheer Labs are fine tuning their smart glasses to cater to specific industries such as field services, healthcare, warehousing, oil and gas, etc. Instabeat currently offers smart goggles for swimmers, and might look into extending this technology to other sports.

2. direct carrier billing will continue to grow except in the us Advancement in technology, along with improved commercial and regulatory conditions, means that direct carrier billing in all markets except North America is set to witness greater growth. This billing system will enable consumers to experience greater ease of service when purchasing additional digital goods, such as apps, streaming content and software. It will also usher in advances in physical retail, in particular vending items and transport tickets. The report singles out Latin America as a special area of focus where 60% of the population remains unbanked. Direct carrier billing will definitely gain momentum there, taking advantage of its cashless convenience and accessibility.

3. nFC will finally take off The US’s Near Field Communication (NFC) technology will finally break through “after years of false starts.” The report attributes this gear change to both the development of new applications - such as use in transit systems - and changes to regulatory infrastructure in the country. The report then states that other countries will follow. Perhaps Apple finally deciding to embrace the technology captured the zeitgeist of NFC best. After having refused to integrate it in any of its previous phones, the technology giant gave way with the iPhone 6, making it the first in its family to support NFC functionality.

4. Mobile 3.0 will consolidate its hold as consumers interact with fewer apps for longer periods When MEF defined Mobile 3.0, it had talked about the rise of “super apps” - apps such as Spotify and Netflix that replace hundreds of individual downloads. Accordingly, the report states that in 2014, mobile media users became more selective about the number of apps they engaged with, with 57% of respondents in the US and 53% in the UK citing a few favorite apps they consistently use every day. This trend will persist into 2015 as the market continues to shift toward Mobile 3.0, with streaming services replacing millions of discrete downloads and transactions thanks to one recurring tariff.

5. new business models will erode net-neutrality As early as the 90s, and all through the past decade, the issue of net neutrality has been debated extensively, giving rise to concerns over protecting the internet. MEF predicts there will be noticeable growth in the use of non net-neutral services from mobile network operators by content providers in 2015. This will include a higher quality of service and zero-rated data to consumers. This trend will be particularly prevalent in growth markets such as Africa.

March 2015 The QuarTerly

BUSINESS

6. Consumer trust will be a key differentiator

A Round-Up of Taxi-Booking Lack of consumer trust remains Appsthefor biggest Residents barrier to purchase inanything MENA via a mobile device and the

issue has grown more pressing over the years. The percentage of mobile media users that cite trust as an obstacle to purchases rose from 27% in 2011 to 35% in 2012 and 40% in 2013. That number dropped to 34% in 2014 but remains disturbingly high. By comparison, only 11% of users cited poor network speeds as an obstacle. “Mobile businesses that put consumer trust at the heart of the user experience will mark themselves out against their competitors.” Tokenization in transactions, transparency and consent, parental controls and plain English privacy policies will all be under the spotlight in 2015 and will have a strong impact on how companies build consumer interfaces.

7. Mobile services in growth markets will drive social inclusion and transform infrastructures and economies The increasing proliferation of smartphones in growth economies will drive “mobile-first” markets where a significant number of users rely on their mobile phones as their first window to the web. Initiatives such as Wikimedia zero, a project by the Wikimedia Foundation to provide the open encyclopedia app free of charge on mobile phones (with a priority to developing markets), will accelerate this trend, and so will mobile wallets. Moreover, according to the report: “2015 will see the rise of innovative companies disrupting traditional verticals to solve real world problems around health, transport and agriculture.”

8. the automotive sector will lock in on the mobile ecosystem Car manufacturers will increasingly incorporate 4G connectivity as an option on new models in 2015, becoming the newest vertical sector to fall in line. This means they will seek partnerships with mobile content companies and open up the sector to a wave of in-car mobile content and commerce.

9. europe will take the lead in mobile security and privacy The new European Data Protection Regulation will greatly impact all data-dependent companies within and beyond the mobile ecosystem. Mobile devices will introduce trusted identity as a new service, which will contribute to improved consumer security and confidence. Accordingly, we will witness a wave of new applications that exploit mobile’s native functions such as authentication. Europe will take a leadership position in this domain, driven by new regulations from the European Central Bank, governments and data privacy regulators.

10. Latin America, not the Middle east, will have to navigate through shifting market dynamics Smartphone penetration in Latin America will continue to be driven by Brazil, Mexico and Peru, but in 2015 Chile and Colombia will have more smartphone users than feature phone users for the first time. Mobile network operators will consolidate their position and form new strategic partnerships, particularly around niche verticals. The continent will witness innovation and revenue streams opening up from mobile money, new content business models and mobile ad revenues.

The QuarTerly March 2015

BUSINESS

UsefUl Apps for TrAnsporTATion

meem takes online Banking to the next level

A Round-Up of Taxi-Booking Apps for Residents in MENA

An Engaging Experience Designed with Users, for Users by Alexis Baghdadi | @GuerrillaWriter

anks and digital companies in the MENA have their eyes and ears open since meem, the first fully online and mobile retail bank in the region, was officially launched on January 9, 2015. Increasingly, banks around the world are moving away from brick-and-mortar branches. They are recognizing the benefits of keeping customers “off their premises” and—more importantly— satisfied. All banks in the region offer at least some sort of online banking services. But Gulf International Bank (GIB) set a precedent when it redesigned its entire retail arm as meem. The online bank was developed first and foremost by users over a period of research and engagement spanning more than 3 years. When the social media community spoke, GIB listened to it and incorporated it in meem’s development process. Like many online banks worldwide, meem is still taking its first steps and needs to develop its portfolio. However, its approach laid the groundwork for further growth service improvement as the bank plans to expand into the GCC. Born and Bred by social design “From the beginning, meem was planned and programmed to be social by design,” said Sakhr Almulhem, Acting Head of Retail Banking and Executive Vice President of GIB. The development team did not simply set out to design an interactive user experience; they made users an integral part of that experience, involving them in the creation process right from the onset. This association with a vast pool of collaborators in the public domain was at the heart of meem’s conception. GIB started by establishing a presence on various social media some 3 and a half years back. It set up a community serving account called “‫”نظرتي للبنوك‬ (my view on banks) to gauge some 50,000 people’s opinion of banks in Saudi Arabia. Questions focused around the current situation in banks, customers’ expectations and their suggestions to make life simpler. A fourth thread specifically explored GIB customers’ satisfaction with the bank’s products. The developers recorded responses and followed through with participants to expand on the survey’s

The QuarTerly March 2015

results. “The reason for this approach is the crucial understanding that meeting the needs of the customer is contingent upon the customer being heard in the first place,” said Almulhem. Undertaking an enterprise like this one on such a scale is a first for a corporation in the KSA and the region. Social media was instrumental in driving the process and engaging users in dialogue and free exchange of ideas, bridging the gap across the traditional business-client relationship. When GIB initiated meem’s soft launch in the summer of 2014, it rewarded all participants by making them the service’s Beta testers—they became the first “meemers” and their consistent feedback led to meem’s official launch in January. drawing the Blueprint for online Banking... Before meem was born, GIB looked at online banking services proposed by all local providers and many international ones. Analyzing how these services functioned, how they were designed, and how customers reacted to them helped the bank constitute a broad overall picture. Clearly, there was a gap that needed to be filled between users’ expectations and existing available services. The meem team identified a number of issues that could seriously disrupt operations in banks still adhering to traditional systems. Among these, poor customer experience was the most common and recurring concern. In Almulhem’s opinion, the underlying cause of these problems could be traditional market segmentation in the KSA along

demographic or socioeconomic parameters. According to him, this segmentation doesn’t necessarily lead to a closing of the gap between what customers need and what they get. “We believe the industry should not continue to segment people into wealth buckets and should realize that, in fact, even people within the same economic band act and behave differently, and they are emotionally and intellectually driven by factors other than just their net worth.” Unlike other banks’ long-winded call center protocols or arduous button-pushing for phone banking, the meem experience proposes a direct 24/7 connection to its customers and regularly interacts with them, person-to-person. The guarantee of success for a banking service anchored in technology lies in an original user interface to truly empower users and deliver solutions that are convenient and easy to use. Achieving this requires hiring the services of providers specialized in digital media. GIB chose to collaborate with digital innovators Cleartag to design meem’s website and online banking platforms. ... and the Banking Products to Go with It An innovative and efficient support platform coupled with a great user experience are crucial assets for online banks, but at the end of the day, it is all about how the banking products themselves rate with users. The top online banks should ideally propose a full range of banking services and offer the same level of security as traditional banks. They also make it easy to monitor your transactions and access your money. Online banks’ added value is that they are able to offer more attractive interest rates since they do not have the expense of operating and staffing branches. It follows that online services should also entail lower or no fees. Because this is still largely uncharted territory, many international online banks have to contend with issues linked to customer fulfillment. The most frequent grievances include limited product range and network coverage—even for top US banks according to the 2015 Best Online Bank Reviews and Comparisons report. Additionally, some online banks still charge monthly fees or offer low interest rates. The comparatively low adoption rate of mobile payment services by retail or hospitality businesses is also a considerable hurdle in expanding online banking products— particularly credit products. For now, meem proposes only three debit products—albeit attractive ones: the meem OnePack, the Currencies Card, and the Murabaha Deposit. The Meem OnePack is a current account with the features of a savings account giving users the flexibility to manage their own funds for purchases (debit) or to earn interest (savings). The Currencies Card enables users to link up to 4 accounts in different currencies in real time and avoid additional fees or high exchange rates. Finally, Murabaha Deposits allow customers to invest as little as SAR 10,000 (just under $2,700) in Murabaha funds with the option to liquidate up to 20% of their investment on the spot without incurring any withdrawal penalties. The meem website mentions that the next products in the pipeline are a credit card and personal finance services. Know your Customer (KyC) An online bank is user-centric by definition. Therefore, understanding customers’ needs goes beyond filling the traditional KYC form. Typically, customers looking for online

Sakhr Almulhem, Acting Head of Retail Banking and Executive Vice President of GIB, during meem’s launch event.

banks are comfortable with technology. They are also quick to recognize its benefits in different service applications such as online travel or restaurant booking. More to the point, when it comes to online banking, customers look first for the convenience of conducting their transactions on their own terms and on their own time, rather than making the trip to their branch and queue for long hours. “That was our focus at meem: to optimize web and mobile service channels and bring our customers as close as possible without the need to visit our branches all the time,” said Almulhem. Customers only need to visit a meem branch once to open their bank accounts.

“The industry should not continue to segment people into wealth buckets and should realize that even people within the same economic band act and behave differently.”

24/7 customer service accessibility or extended customer service hours are an important consideration for customers when selecting an internet-only bank. Online banks’ main advantage are their availability beyond traditional banks’ opening hours and even on holidays. Meem’s 24/7 customer service operates from the center in Dhahran and offers interactive interfaces that facilitate contact between customers all across KSA and service agents beyond traditional ATMs and even smart ATMs. Users can contact customer service through social media, email, by phone, or through chat and can also enjoy a fully remote experience with the meem app to execute all their transactions transparently and flawlessly. As a next step, the bank will seek to enlarge its network coverage in the KSA. It is reasonable to assume GIB will adopt a similar bottom-up approach in its plans to bring meem to the UAE, Qatar, and Kuwait.n

March 2015 The QuarTerly

DIGITAL MEDIA

The Heavy, the messy, and the misleading by Piet Hein van Dam | @pietheinvandam

n 1941, the first TV ad ever was broadcasted. It was a 9-seconds still of a Bulova clock with an impressive voiceover: “America runs on Bulova time.” This is a nice example of what happens when you have one medium—print magazines—and another one comes in— TV. The first primitive TV ads are just a reproduction of the existing print ad, plus the new feature of TV added: voice. Voice + print ad = new TV ad. Back then, it cost $9—for 9 seconds. Recently, the 2015 Super Bowl ads were shown at a price of about $4.5

The QuarTerly March 2015

million for a 30-seconds spot. A quick calculation would say that from 1941 to 2015 the value of TV advertising has increased from $1 per second to $150,000 per second. It has grown a tremendous 150,000 times in 74 years. That growth went not by itself. Obviously, it was a huge industry effort, by advertisers, agencies, networks, and researchers, to make sure that every spot is delivered to the right target group and that every second of exposure counts and has impact. In October 1994, the first ever online

banner ad was launched to the readers of Hotwired.com. 44% of those who saw the ad actually clicked on it. It was sponsored by AT&T. Today we are 20 years further down the road. We may ask ourselves: are we on the right track? Are we in the process of multiplying the value of an online banner ad by 150,000 in 74 years? Well, we’re not there yet, but something tells me we are not on the right track.

drilling for oil

At the ArabNet Digital Summit last year

DIGITAL MEDIA

UsefUl Apps for TrAnsporTATion

I spoke with a statistical analyst. We both happened to have a PhD in statistical physics, so we ended up talking about pretty nerdy stuff. He had an interesting question that to date I still cannot answer. Drilling for oil is an important process in the Middle East, and he had been involved in real-time calculations on the probability of hitting a new oil well while drilling for it. Supposedly, when the chance of success is below 85%, they quit this expensive search for a new well. He asked me why we don’t do the same in online advertising. “Isn’t it about a lot of money?” He asked. “Yes, around $140 billion in 2014,” I answered. “Can you measure at all? Do you have real-time data?” “Actually, yes we have.” “So what are you waiting for?”

mathematical and statistical skills, and

substantive expertise. A Round-Up of Taxi-Booking Apps for Residents in MENA

Big data

So here is our solution: big data. We, the players in the online advertising ecosystem, can measure anything we need: the visibility of an online ad, the amount of effective exposures, the reach in the target group, and the direct and indirect responses of people. We can track their purchase and their GPS location. We can get anything needed to measure ad effectiveness. And most of the data is near-time or real-time, so we can adjust our campaign on the fly. In theory. In practice, we don’t do that much. That may be caused by general industry resistance to certain innovations, or because “we” represent a very fragmented group of people, including advertising networks, agencies, publishers, and measurement companies. The truth is big data is not the ultimate solution. It is heavy, messy, and misleading. Working with it is a human problem, not a technological one. Below are some of the lessons I have learned first-hand from working in this area for the last five years.

How to organize

First, you have to organize yourself. Get the right data sources, the right technologies, the right expertise, and privacy. If you are looking for available data sources, think of active or passive data (surveyed, measured, or a combination of

The QuarTerly March 2015

Think of privacy: is there any personally identifiable data? And if so, is it obtained in a way that obeys existing privacy legislation? Also, think of possible biases in the data (was it measured) and representativeness (does it cover the whole population?).

Ground rules

To implement big data in your organization, you have to think of these 5 rules, derived from practice:

Piet Hein van Dam is CEO of the Amsterdam-based internet startup Wakoopa. With a PhD in nonlinear dynamics, Piet Hein evolved to business developer type CEO. He spent more than 10 years at Unilever and KPMG Consulting, in international business development functions. In 2005, he became the managing director of Motivation International, a Dutch market research company. In 2011 he joined internet start-up Wakoopa. The company provides user-centric online audience measurement technology to international market research agencies, advertisers, publishers and media agencies. Piet Hein is a regular speaker at conferences and author of several articles on behavioral data collection.

both). Think of the server side (the side of the advertiser), which is available in more volume and less depth, and think of the user side (the side of the receiver), which is deeper and usually panel-based. If you think technologies, think hardware and software systems for storage and analytics. Big data is voluminous and presented in real time. It needs to be analyzed fast. Its storage and analytics requirements are volatile, so you need be able to scale up (and down) fast. The people that work with the data— usually data scientists—have to have the right combination of hacking skills,

1. Combine methods: never trust only one data collection source. Always try to have two more, then you can triangulate your results and obtain the most probably answer. 2. Start small: typically in big data is that you get more than you have asked for. When you work with it, start with a small sample, or even just one person, to understand what the data is saying. If you want to eat an elephant, do it bit by bit. 3. Test and kill: after your first analyses, derive as many hypotheses as you can, and then start testing them. Kill them as soon as you cannot verify them and work on the others. 4. Team above tool: the way your team collaborates is far more important than the tools you have. Make sure every data-scientist working on a project is discussing his or her ideas and hypothesis with an industry expert and with a technologist. 5. Accuracy starts with you: big data may contain big errors. Big data is not representative. Big data is about correlations (not causalities). There are no statistical and methodological frameworks to back your findings. When data comes from everywhere, the accuracy is not in the data, it comes from you! I hope these lessons contribute to the learning curve of online advertising. Let’s see if we can beat the curve of TV-ads.n

dIGItAL MedIA

UsefUl from Campaigns Apps for TrAnsporTATion to “always on” A Round-Up of Taxi-Booking Apps for Residents MENA futureproofing the Creative Agencyinwith Agility by Tom Roychoudhury | @tomroydigital

or creative agencies, there’s a positive side to technology and a less positive one. The good part is that technology is allowing us to embrace innovation and come up with “new-improved” ways of reaching the consumer. On the other hand, quite often today’s creative agencies lag behind when it comes to adapting to these light-speed changes and have to push themselves on just to stay in the race. The thing about technology is that it follows the “change is a constant” mantra to the letter. At times, the pace of change is simply too fast for a profession that some describe as the second oldest in history. Now that “word of mouth” has become “word of mouse”, and clicks and swipes have blurred lines of engagement, agencies have to refocus, remodel and recontextualize to adapt and face the future.

Advertising 2.0 Beta Version

Adapting is not a new concept for ad agencies. They are the ones that coined the phrase “new and improved” and slapped it on everything from detergents to decongestants, electronics, etc. Changing agency structure, setting up new divisions, re-thinking HR strategies and revamping business strategies have always been integral to managing an ad agency. But when it comes to “adopting” technology (one step beyond adapting to it) agencies find they need to do some serious introspection and re-evaluate everything from the ground up. The creative agency today is really a content agency. The business is a hybrid of “Campaign” and “Always On”. Most creative agencies are used to the Campaign mode. They are familiar with the modus operandi of brand building through research and insight revolving around a singular idea - the unique selling proposition (USP), for those who remember. Such a model centers on high production values and reaches consumers via a media plan that is container driven

The QuarTerly March 2015

A new Breed of Creative People and Agencies

Tom Roychoudhury is the Chief Innovations Officer of the Dubaibased Middle East Communications Network (MCN), one of the largest groups of advertising, marketing, media and social agencies in the MENA. and focused on a brief. In other words, it is boxed in. Today, agencies have to focus on experience building via an Always On mode. This is replacing one-way communication with dialog that involves listening to consumers, responding and interacting with them. Ads are making way for content windows where the key is lightweight distribution, i.e. the ability to publish and distribute in a timely and effective manner. Creative agencies are racing to adapt to this shift from one-way communication to a world where the brand and consumer engage in a dialog. The old 4-step AIDA model (Awareness, Interest, Desire and Action) is being replaced by one that is social mediadriven and Always On. Multiple stages of brand and consumer locked together in shared interest and action, loyalty, advocacy and beyond. At the core of this new order is content. Every bit of brandconsumer interaction is a bit of content, so no wonder creative agencies today are re-positioning themselves towards the creation and delivery of content.

Adapting to change entails an entirely new look at how the business operates. Integrated offerings are becoming key in the new world. To ensure their survival and the survival of the products they deliver, agencies require more than just evolutionary change; they need a radical revolutionary, disruptive model. Today, creative agencies that are planning and implementing consumer engagement strategies need to ask all the right questions in order to build a complete picture. Hiring creative talent today requires deep diving to discover how aware that talent really is when it comes to technology’s possibilities, new avenues, behaviors changing on a day-to-day basis, etc. Agencies are looking for a new breed of “creative technologists” who can harness the power and prowess of technological advances to create endearing, entertaining experiences. Specialized staff is recruited on a continuum, based on niche ability and adaptability when it comes to new emerging platforms. For instance, in the new hybrid generation, copywriters need to understand SEO, art directors need to have a handle on UX, and production staff have to understand file formats and sizes like never before. Some agencies are diving into the deep end of the talent pool to seek out the best “digital pure plays” specialists by specific genres such as the Vine generators, the Instagram creators, the Twitter warriors, etc. And the road to change doesn’t stop at recruitment. It reevaluates the way agencies are structured and the environment in which employees are nurtured and grown to retain this new breed of talent. Internal structures need to be liquid so that technology and content-related exchanges flow freely. Of course, there is the risk of going overboard and believing that technology is a solution in itself. To avoid this, all agencies need to keep in mind that,

dIGItAL MedIA

UsefUl Apps for TrAnsporTATion at the end of the day, technology is merely an enabler, a connector. There’s no need for agencies to become tech companies overnight, but each and every one of them does need to understand technology and be comfortable in procuring and using innovative solutions and platforms. Creativity in this digital age is still about recognizing target audiences’ behavior, their environment, their interests, passions, etc. While it is becoming ubiquitous, technology should remain self-effaced, as if “hidden in plain sight.”

A Round-Up of Taxi-Booking Apps for Residents in MENA

Futureproofing the Ad World

The focal point for a creative agency remains - and will always be - connecting the brand to the consumer. Its fundamental mission is to add value to a client’s business and solve problems. Everything else is a means to that end. In this context, technology lends increased flexibility and agility for an agency to meet its core requirements. In other words, it becomes futureproof. 1. Structure: Creative agencies have to be open to a versatile structure. At the center of the call for innovation, there needs to be a right mix of people, set up and operations to develop and deliver the end product. This means having all the right people with the right skill sets in the right places, and having a liberating, open structure and business model where they can stay on-course, be inventive and thrive. The way of the future is a malleable structure equipped with a genuine setup that converts data - often large data - into clever insights. It is crucial that everyone should be 100% comfortable in this new structure. 2. Business models: A new business model will entail a long hard look at billing procedures, revenue, remuneration and contracts. If digital-driven engagement today is asking for a Cost per Acquisition or Cost per Lead model, are agencies stuck with retainers? Should creative agencies bill on successful engagement patterns? Should they compare volume and depth of dialog with the number of print ads rolled out? Some relationships are moving from retainer models to project-based billings. Others

The QuarTerly March 2015

are moving from lump sum project fees to views generated on YouTube (True Views, not robot views - and yes, one can tell the difference). In short, there is a move to a startup behavior with openness to whatever comes - and goes. 3. People: It is not enough to continuously hire new talent to keep up with the demands of the new age. Nor to keep letting people go because their skill sets are not aligned with the latest trends and technologies. People need to be nurtured so that they are keen and willing to stay up to date. For that, they need to have the right resources and leadership that will guide them into the future. 4. Product: This factor is ever changing, ever evolving, always following trends and analyzing consumer patterns to determine what’s hot and what’s not. There is no room for second guessing; agencies need to go with the tide and ride the waves to generate the maximum impact and reap the highest benefits for clients’ brands. Even within individual platforms like YouTube, the possibilities are always increasing as technology introduce new ways to engage consumers. Who could have predicted that the

5-second video would emerge as a powerful marketing tool? And only a few months ago, Snapchat or Vine were still not considered viable marketing streams. The future holds tempting promises with IoT, wearables and quite a few more innovations. To navigate these waters, agencies will need insight and people within their structure who can spot the potential ahead of the crowd. 5. Clients: Getting clients on board is important because if they don’t share this vision of things to come in advertising, agencies cannot be truly futureproof. There’s no point in building up a structure, capability and talent if a client does not believe in it. The success of this enterprise requires shared learning, shared data, some guidance and a lot of convincing arguments when heralding the future. In short, heralding the future is how agencies will stay ahead of the competition. They need to take a courageous stand when visualizing and actualizing tomorrow, today. And to make it happen, they will need to boost their resources qualitatively and increase their agility so they can swim, not sink.n

by Nour Nasser Al Dean | @nournad13

Khaled Akbik, Absolute Geeks, uAe @AbsoluteGeeks / @Khaledtron

najib Mitri, Blog Baladi, Lebanon @Lenajib

Identifying the best and most suitable blogger for your brand is not an easy task. Plenty of factors need to be taken into consideration, including but not limited to credibility, reach, social clout, relevance to the brand, and consistency in tonality and activities. Businesses should carefully identify the right blogger based on these factors, ensure his/her activities are well aligned with the marketing strategy at hand, set up a thorough contract and work closely with them on the activation calendar. In turn, the business must ensure that whatever activity the blogger undertakes with the brand must add value to the blogger’s offering one way or another. It’s a mutually beneficial relationship whereby both sides benefit from what the other has to offer.

Blogger outreach is all about building strong and ongoing relationships, not just a one-time mention or collaboration. If you wish to make the most out of your blogger’s relationship, be genuine and respectful, and personalize your approach. Show an interest in the person and don’t just promote the product, as this is key to getting the blogger interested. More importantly, do your best to connect the blogger to your product in order to receive an authentic and honest feedback. After all, authenticity is everything!

Manal Assaad, the Manalyst, KsA @theManalyst

Patrick Chemali, Chemali, Lebanon @chemali

Although there have been a few successful cases in the region, blogger outreach is far from being a mainstream marketing tactic, and most brands are still not aware of the power of blogging, bloggers, and blogger outreach and how to leverage it. It’s important for these brands, and the social media professionals managing them, to understand that bloggers are different from traditional journalists and should not be managed like the typical press media. So my advice for them is to properly research and know the bloggers they want to reach out, what they blog about, what interests them, who their audience is, and, if they complement the brand strategy, to use the learnings to create and maintain a long-term relationship with the bloggers beyond just seasonal campaigns and one-time events. Having a few strategically influential bloggers as brand ambassadors on the long-run will be far more impactful and rewarding to both parties.

When reaching out to bloggers, brands must understand that not everyone’s opinion is up for sale in exchange for a meal or a freebie. Blogvertising popularized by some, by simply becoming a mouthpiece for brands, has made it a common practice to suckup to brands in fear of being kept out of the loop on interesting events. Many brands are using partisan-bloggers to reply to critics by means of “one of your own thinks differently” when they fail in stifling a post. Anyone is free to endorse anything; the hypocrisy in pretending not to do so, is what is turning blogs into tabloids and undermining the credibility of other more serious bloggers. To brands I say, reach out to bloggers, let them evaluate your offering, and hear them out. Maybe that feedback might just help you improve your product or process.

rita Kamel, rita Kml, Lebanon @ritakml

Farah Berrou, Bambi’s soapbox, Lebanon @farrahberrou

Bloggers outreach in the Middle East is still in its early stages. Companies and advertising agencies are often overlooking its potential. They are still relying on the cheapest alternatives like press releases and invitations to public launching events that are not interesting to bloggers. How to overcome this? Two words: STAND OUT. In my opinion, the most important tip, based on previous experience, would be creating a memorable, personalized product/ service experience to credible bloggers with different specialties who would share different aspects, angles, and opinions as well as recommendations with their community, both online and offline. I think it has a long-term impact and pushes towards creating diversified yet authentic new content related to the product/ service in question in all possible formats across various platforms for a wider audience to interact with. New angles and perspectives bring new insight, which makes the experience richer, more engaging, and more meaningful.

The best way to pique a blogger’s interest in what you’re sharing with them is to be familiar with their style and their existing content. The way they write their posts is a big part of why people read them. Every blog has its own unique way of telling a story or expressing a perspective that, in turn, talks to people who read the blog for that authentic voice. It feels good when companies and/or social media professionals have read your content, know what your blog is about, and show consideration for the time you put into it. Personally, if you want me to put time and effort into writing a post about a subject, then put some time and effort into finding out if I’m the right person to do so. I appreciate it when I’ve been selected for my voice, not my reach.

Alex Malouf, uAe @alex_malouf My advice is simple – good outreach is all about understanding, relevance, and quality. Firstly, understand what interests the blogger and his/her audience, and whether they’re commercial or not. Secondly, if you’re going to engage, make sure that you, your product, and brand are relevant to the blogger. And finally, if you’re going to share content then share something that is meaningful and that adds value to the blog and its audience. A lot of us bloggers write out of a passion about a certain topic. We blog in the evenings and weekends, so bear in mind that if you’re going to reach out to bloggers think about when is convenient for them. And finally, let’s leave the press releases behind. Bloggers want fresh content, especially videos or images. If you don’t know the best approach, just ask. We’re here to engage and talk, so don’t be shy.

DIGITAL MedIA dIGItAL MEDIA

UNDERSTANDING PROGRAMMATIC UsefUl Apps for TrAnsporTATion A Round-Up of Taxi-Booking Apps for Residents in MENA The most common types of programmatic buying within exchange are: • Real-Time Bidding • Programmatic Direct • Private Exchange

Publisher 1

How does each work?

Supply- Side Platform 2

Private Exchange

The exchange is done in a private marketplace, with the potential for publishers to invite only select advertisers to bid, and to set the minimum price for impressions.

Private Marketplace

Ad Exchange Open Exchange

Programmatic Direct

Direct Deal

Demand- Side Platform Real-Time Bidding

The QuarTerly March 2015

92% of programmatic is RTB

Agency

Advertiser

The advertiser and the publisher set the ad price and volume and use the SSP and DSP to execute the deal.

The transaction begins when a user visits a publisher’s webpage. This triggers the publisher’s ad server to generate an ad bid request. To place the bid request in the open market, the publisher’s ad server connects to the supply side platform (SSP), and send the relevant data about the ad and user, including any information about gender, age, location, and other behavioral data it has collected

The SSP interprets the ad request and sends it to the ad exchange market.

The exchange connects and communicates with potential buying systems, letting them know that the ad is available for bidding. This includes demand-side platforms (DSP), as well as other ad exchanges and networks

Advertisers enter the conditions of their bids into the DSP, including specifics about the target audience demographics and behvior, as well as a maximum bid per impression.

The ad exchange evaluates all the available bids for each impression, and selects the highest bid. It then collects the relevant ad creative from the advertiser and delivers it to the pubilsher’s ad server.

GROWTH TREND LINE

Worldwide programmatic ad spending reached $12B in 2013 and is expected to leap to $32.6B in 2017 according to Magna Global.

US Display Ad Spending Share, by Type, 2011-2017 % of total

76%

24% 2011

27%

21%

17%

47%

36%

43%

54%

73%

79%

83%

2012 2013

2014

2015

2016

2017

62%

38%

Programmatic

Non-Programmatic

TOP DRIVERS OF PROGRAMMATIC ADOPTION AMONG ADVERTISERS

More effectively target consumers across digital media

Effeciently value and transact digital media

Improve operational efficiency

49%

55%

33%

TOP DRIVERS OF PROGRAMMATIC ADOPTION AMONG PUBLISHERS Improve operational efficiency

Effeciently value and transact digital media

Expand yield from owned inventory

63%

61%

FORMATS SOLD PROGRAMMATICALLY

Video

Native

Rich Media

Mobile

Standard IAB units

DIGITAL MEDIA

What is the core benefit of programmatic? Utilising technology and data to increase the efficiency of transacting addressable media at scale.

BENEFITS OF PROGRAMMATIC FOR CAMPAIGNS FOCUSED ON BRAND-BUILDING

Premium inventory: low frequency and high impact ad units.

Brand safety: working with trusted partners and sites ensuring that your ads are only shown in complementary environments.

Cross Screen: ability to target your audience wherever they may be and on an array of devices.

High quality and/or exclusive placements: gain access to bold and larger sized inventory to maximize exposure.

Video: construct a brand story with an engaged audience and environment

x x

Transparency: know and control where your ads were shown.

BENEFITS OF PROGRAMMATIC FOR CAMPAIGNS FOCUSED ON PERFORMANCE AND CONVERSION

Scale: access to incremental audience and ad units beyond traditional reach.

Maneuverability of budget: can shift budget to where optimal performance is achieved.

Real-time optimization: readily available in depth performance data can drive informed decision making.

Reduce wastage: increase the relevancy of your advertising by only purchasing relevant audiences

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Re-marketing: isolate the audience with highest probability of interacting with your advert.

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UsefUl Apps for TrAnsporTATion xxxx what hollywood taught me aBout pitChing 7 Lessons to Sell the Dream more Efficiently by Paul Papadimitriou | @papadimitriou

he definition of pitching is to aim at a particular target. Aim at it, seek it, pursue it and achieve your goal. “Infecting others with the dream,” as the Asianbased entrepreneur Mario Berta would skillfully put it. In short, it is about selling a dream. Selling is not only an art, it is a process. One that can be taught. I won’t pretend to do justice to the various excellent existing methodologies, so allow me to use a different approach the Hollywood approach. If all those hours spent watching movies helped me structure my thoughts to address audiences of thousands, they might for you too. After all, which industry can claim “selling the dream” as its core model more than Hollywood? #1: Wow your Audience I remember sitting next to my Dad to watch “The Spy Who Loved Me” on a top-loading VCR tape. That should give you an idea how old I am. But all joking aside, I think we all agree that we’ve moved on and that audiences are increasingly sophisticated. Cable, VOD, YouTube, MobileTV, etc. We live in a on-demand world with a remote control for everything. We’re checking Twitter while the TV is on. And the more movies we watch, the higher our expectations for the next ones. Sophistication is an evolution of choice. Pitching has moved on, too. With the incredible increase of pitching opportunities, the more clients or investors hear pitches, the higher their expectations for the next ones. Also, the more we hear, the more decision fatigue sets in. Wowing us gets harder. It’s no surprise we are checking Twitter while attending pitching events, so you need to get in, grab our attention and give

The QuarTerly March 2015

a story. Faced with increasing choices and a lower attention span, Hollywood perfected the art of movie trailers. It sells us the dream in only 90 seconds. “Take our money!” We really want to see the movie and can’t wait for it to come out. Give your pitch the same purpose: sell the dream in 90 seconds so your audience really wants to invest or become a customer. “Take the money!”

Paul Papadimitriou is the founder of Intelligencr, an innovation scouting firm based in Tokyo. He advises companies and startups by architecting strategies shaped around a new augmented, nomadic and tribal consumer - most recently for the launch of a mobile ecosystem in Europe and China. Organizations like Microsoft, Bell Labs, Fujitsu, Canonical, SABMiller, Criteo, Siemens, Tumblr, the European Union or the International Telecommunication Union have trusted him to challenge them. He has given keynote speeches on four continents, co-hosts the LeWeb conference, appeared on The Economist, ABC, TF1, ABS-CBN or the Japan Times. us a really interesting and thought-out proposition - and you need to do it creatively. #2: Leave them Hungry for More A pitch is just like a movie trailer. It is never the full story; it is a story about

#3: start with a Bang Those early James Bond trailers (the originals, not the remastered ones) are a marvel to watch - if you can afford the time. Spot the difference though: “Dr. No” waits 30 seconds to get to an action scene, “Skyfall” only takes 8 seconds. Modern trailers start with a bang. It’s an efficiency play. The excitement and attention have to be front-loaded to make the trailer memorable. The first scene also sets the stage by giving out one crucial piece of information that grounds us, the audience, in the story. A place, a number, a question. Good pitching also starts with a bang. It grabs the attention and sets the tone: Introduce an unreachable place, a startling number, a contentious question; something that will have your audience say “Aha!” #4: Be Brutally efficient Old trailers are filled with a constant voice-over narrating an often-slow linear storyline. Modern ones use fast-paced cuts. Building from the bang, they pick a road - often via a music score - that builds towards a big idea. All is fair in love, war and trailers, even if it means mixing up scenes from the original movie. What matters is the story about the story. Nonlinearity enhances efficiency of the trailer. Similarly, a modern pitch should pick a

entrePreneursHIP

UsefUl Apps for TrAnsporTATion

road, maintain the pace relentlessly and give out key elements at the most fitting moments - irrespective of their place in the actual product narrative. Brutal efficiency in the name of the big idea. Note that brutal doesn’t mean lacking heart. In the “Skyfall” trailer, we see a broken Bond, appealing to our sense of compassion. Remember, we have become a sophisticated audience that wants more than a compilation of gunshots and explosions. Likewise, your pitch should be more than a compilation of industry numbers.

#5: don’t name, name-drop Whereas old movie trailers used to list name after name, after name, modern movie trailers mostly do away with credits. Only A-list actors or previous famous movies the filmmakers have released will be mentioned. A modern pitch only mentions a high-achieving entrepreneur, a targeted career milestone or an industry-defining product, excluding everything else. Remember that slide with the names of all members on your team, your advisors and their bios? A movie trailer would spend a split second on it.

#6: end on a High note Take the “Skyfall” trailer again. It starts fast, picks a road, stays brutally efficient, and ends big. No movie trailer ever goes into an extended “Thank you” at its end. An efficient ending both triggers our memory of its beginning (we want to see the trailer again) and leaves doors open (we want to see the actual movie). A “Skyfall” pitch would end with a bang that takes us back to that unreachable place, that startling number or contentious question. The 90 seconds in between gave us the keys to understand it. Now we see opportunity, we want more. #007: the trailer Is not the dream Both Bond trailers and movies alike are fantastic - at least to me they are, as you can tell by now. But we’ve all seen great trailers that don’t translate into great movies though. So let’s not overstate the importance of trailers - or pitches. They are just that. They are essential to sell the dream, but they are not the dream itself. The dream remains the product itself with its linear story, the research behind it, the hard work of all the team, etc. So go out and dream. The world is not enough!n

he MENA is off to a promising year; it has already recorded its largest exit ever as Germany’s e-commerce group Rocket Internet recently acquired the Kuwait-based food delivery platform Talabat.com for an unprecedented €150M (approximately $170M). The acquisition of Talabat.com broke the record of biggest exit previously held by Yahoo when it acquired the Jordan-based web portal Maktoob for $165M in 2009. Talabat.com covers over 1,400 restaurants in Kuwait, Bahrain, Oman, Qatar, the KSA, and the UAE. The website claims it recorded 3.8M orders across the region in 2014; that is around 300,000 orders per month. Its order volume more than tripled in the past 18-month period to cross the bar of 9M orders since its foundation in 2004. the Boom of online Food ordering in MenA, and the Big exit Convenience - both for customers and restaurants - remains the most attractive benefit of online food ordering. Competition is strong, and in order to stay in the game all major players are focusing their efforts on making their platform as easy to use as possible, while beefing up their sales teams. Other factors that come into the equation include geographic coverage and cuisine choices. Being global certainly lends credibility to a platform, but in local markets, the size of a platform alone does not necessarily entail a competitive advantage. In the

The QuarTerly March 2015

KSA, for instance, Foodonclick has partnerships with over 2,000 restaurants, while HungerStation is limited to 600 so far. But, whereas Foodonclick is present in 2 Saudi cities (Riyadh and Jeddah), HungerStation operates in 18. HelloFood covers 9 cities in 4 MENA countries, and Otlob.com covers 5 cities in Egypt. In real terms, what exponential growth comes down to is a combination of sound entrepreneurial practices in the region and the rise of VC investments. Back in early 2007, a Kuwaiti entrepreneur, Abdulaziz Al Loughani, had bought out 90% of Talabat.com with two co-investors in a bid to become the dominant player in the GCC. In three years, they radically transformed the company, improving its SEO and investing in Google AdWords and basic content marketing via a newsletter. The site managed to engage a larger number of users by introducing gamification elements and awarding valuable cash prizes. But tapping into the site’s full potential required capital. In 2010, Al Louhgani sold the site for 4 times his initial investment to Mohammed Nabil Jaffar who will remain the CEO of Talabat.com after its recent acquisition. At present, Talabat.com sees over 25,000 page views a day and has more than 400,000 registered users.

an internet company in the Middle East to date. Rocket Internet CEO, Oliver Samwer, said, “The Middle East is one of the most attractive markets with significant growth potential and highly attractive EBITDA margins (earnings before interest, taxes, depreciation, and amortization). The acquisition of Talabat.com is another important step in our long-term global Food & Groceries strategy.” Rocket Internet’s avowed ambition is to become the largest internet platform outside of China. It has been operating in the Middle East since 2012 when it was instrumental in the launch of the shopping site Namshi. Talabat.com’s acquisition came shortly after Rocket Internet spent several hundred million Euros to increase its stakes in the grocery service HelloFresh and takeout service Delivery Hero, launching its new Global Online Takeaway Group. Through its 50%-ownership of Foodpanda, the group already has its boots on the ground in KSA and Jordan with hellofood.sa and hellofood.jo. Foodpanda has also recently purchased the UAE’s online food delivery site 24h.ae for an undisclosed amount, extending its presence to a total of 40 countries. Rocket Internet is reported to be raising a further $650M to scale in its expansion strategy.

rocket Internet’s expansion strategies The deal marks the largest purchase of

talabat.com Is not the only Acquisition to Mark this year Besides Talabat.com, the MENA region

has witnessed several acquisitions. Careem, a leading car booking service in the Middle East recently raised $10M in an investment round and acquired the KSA-based home delivery service Enwani, thus effectively adding a new line to its service range. In November 2014, Cookpad, Japan’s leading recipe site, acquired the Lebanon-based Shahiya.com, a Middle Eastern culinary website, for $13.5M. The fact that foreign companies are recognizing the value of acquiring stakes in successful platforms like Talabat.com, Maktoob, Namshi, Shahiya. com and others, should be a clear sign for Arab investors to focus their attention on tech startups in the region. A number of Middle Eastern governments have already come on board. According to The Wall Street Journal, Dubai will invest $1.23B in building an innovation community of offices, incubators and investment funds over the next 10 years. Lebanon’s Central Bank has agreed to guarantee 75% of startups funding by banks via venture capital and seed funds. In Kuwait, following a logical evolution, Talabat.com’s former managing partner, Al Loughani, has now become the Vice Chairman and Executive Director of the $7B Kuwait National Fund for SMEs Development. The fund will provide seed capital for 9 startups in 2015, covering 3 sectors: light manufacturing, media and design, and ICT. The VC industry is definitely on the rise and budding MENA entrepreneurs today definitely have more funding options than Talabat.com ever did.n

March 2015 The QuarTerly

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UsefUl Apps for TrAnsporTATion dave mCClure gives araB A Round-Up of Taxi-Booking Apps for Residents in MENA

startups 7 tips for suCCess by Romeo Chalfoun | @RomeoChl

ne of our favorite presentations at ArabNet Riyadh 2014 was presented by world renowned entrepreneur, investor, and founding partner of 500 Startups, Dave McClure. Those familiar with Silicon Valley’s most successful people will recognize his boldness, good wit, casual cursing, and ability to build amazing digital companies. In this presentation, Dave talks about how technology startups are being built and how these methods can be applied to emerging markets in the MENA region. Here are the seven main takeaways from his talk. 1. you need a validated product rather than massive traction The first stage for any startup should be to validate that the product has demand. Dave says it’s a must to test the MVP (minimum viable product) and to get at least the minimum required functionality to solve someone’s problem.

The QuarTerly March 2015

This is difficult for a lot of entrepreneurs, but they must accept the truth that a great idea won’t bring any revenue without customers who want it. Otherwise, their whole business model would be based on assumptions that haven’t been translated into marketvalidated ideas. Dave confirms that entrepreneurs don’t need a million-dollar-worth of traction to validate the idea. They only need a functional product that someone actually used and paid for to win negotiations with investors. 2. Business plans are less relevant to startups than established companies While business plans are a must for every established company, they are a hindrance to startups. Unlike companies that already have a static process that solves a known problem in an industry, startups often don’t know what the solution is to their problems, and they often don’t even

know the problem they’re trying to solve. Traditional companies can benefit from business plans based on budgetary cycles and known cost structures. A startup must have an open minded and variable approach, not limiting itself to its first set of assumptions. “You can’t predict 2 years of business plan trajectory; you can’t predict revenue going up into the right. We all like to see those hockey sticks going up into the right, but when you are in the middle of a startup trying to figure out what’s going on, you may need to test a lot of different things, change a lot of assumptions,” says Dave. 3. test your product and re-think its application The biggest mistake startups can make is focus on building the right product for too long without showing it to their potential customers. Here Dave emphasizes the importance of getting

out of the building and presenting the product to the public, even if it means getting rejected. At least you would know that if your assumption isn’t backed up by the real world, then you need to change that assumption and re-think your product, over and over again until it brings your customers the desired result. Be customer-focused.

hours or days,” explains Dave. Dave’s advice is to make assumptions based on what you learn and test them out constantly. Take a scientific approach by building a hypothesis around cost and revenue, and think of how you can optimize that financial equation. This should go side-by-side with getting functional prototypes out.

4. estimate unit cost of customer acquisition on product delivery Dave states that you need to know your market, and know it well: how big it is, what it costs to get to your customers and get your product out into their hands, how this process generates revenue, and how much you profit after each operation. In other words, it’s important to understand the unit economics of what drives customer acquisition. You may always feel like you want to test and change your product offering, which isn’t bad, but without customers you end up with your products and no resources. What you really want to do is understand different customer segments and scale customer acquisition with marketing and change the mindset around how you acquire customers profitably. “Then, when you have some financial metrics and estimates on customer acquisition, you have a shot on making money at least on a unit economic basis. L ater, you p ut the big do llars in,” says Dave. A venture investor will want to see that the business scales and grows through search marketing, affiliates, and even offline methods. Dave then addresses the investors saying: “All investors want to see are companies at this stage, but you can’t get there before passing through the steps before. If you want to see opportunities particularly in emerging markets, you have to fund the earlier stages of growth and incremental efficiency. It’s important for the growth of ecosystems to have lots of little checks.”

6. don’t spend money offline; focus on online marketing There is a huge number of people online available on multiple channels. Businesses get to market on Google, Facebook, YouTube, Instagram, and many other widely used channels, and today’s modern marketers know they don’t have to spend money on a television ad or magazine to get decent exposure. According to Dave, digital businesses can and should market directly to the customer through search engines, on mobile, social media, through online video content, and through whatever platforms that reach hundreds of millions if not billions of people around the world. You don’t need to have connections to start a business; you can build them online, but you do need an interesting product and an overall description of your customers. Then, test digital marketing campaigns to see if you can get those customers to notice the product you’re offering, to interact with it, and to pay for it.

5. optimize your unit economics through feedback loops Today we are able to get almost instant feedback on the entire cycle that the customer goes through from first learning about our product to eventually buying

Dave McClure is a frequent investor in consumer Internet startups, investing in and advising consumer internet startups, including virtual goods monetization and payments platform Jambool (acquired by Google in 2010) and US online education directory TeachStreet (acquired by Amazon in 2011). 500 Startups is a seed accelerator and related investment fund McClure founded in 2010. As of July 27, 2013, 500 Startups had invested in over 500 companies, including Safe Shepherd, Markerly, Fileboard, myGengo, and others. Of current investments, more than 20% have participated in other incubators, 10-15% are international, and 10 have been acquired.

it. This represents a phenomenal force driving digital business and a serious advantage over offline or traditional businesses. It is thus essential to build a continuing testing framework to see if customers are using the product, engaging with it, and buying it. Use the feedback loops to optimize your unit economics. “Can I run out of cash? Does this customer segment work better than this other customer segment? The great thing about building products online is that feedback loops are pretty immediate, unlike businesses where it might take you 6 to 12 months to bring a product to market and where you are unable to understand what types of marketing are working. Online you can see these changes almost in real-time in a matter of

7. stay positive According to Dave, Silicon Valley entrepreneurs and investors are optimists and opportunists at heart, even though they know most are going to fail. However, what they tell themselves is: “It’s not going to be me.” It’s really important for entrepreneurs and investors alike to think that way. Dave then continues by saying: “It’s relatively cheap to get startup ecosystems off the ground, and far less expensive than building a hotel or a formula race track, but most importantly it impacts the economy and the growth of countries to a more productive end.” He then proceeds to challenge the audience to think about how they can provide capital and supporting services, which will increase jobs, and the availability of Arab products and services.n

March 2015 The QuarTerly

ENTREPRENEURSHIP

UsefUl Apps for TrAnsporTATion A Round-Up of Taxi-Booking Apps for Residents in MENA

by Wael Nabbout | @fulmtlColumnist

The QuarTerly March 2015

hile entrepreneurs keep springing up across the Arab region, it’s been hard to keep up with the latest and greatest startups around. To keep you up to date on the most innovative minds and their newborn endeavors, we have compiled a list of 10 recent startups that you should keep an eye on.

An in-app advertising platform with potential to disrupt the industry, RedTroops was designed to remove the need for a middleman between app developers and advertisers. Through the platform, advertisers create their own ads using a simple drag and drop ad builder and interact directly with developers on the RedTroops MarketPlace. Building the ads requires zero knowledge of code, and the service promises better terms and tangibility for both the advertisers and app owners. Red Troops recently secured $100,000 in seed funding from MENA Ventures Investments and a few other individual investors and plans for a bigger round soon. Country of origin: Jordan Date of launch: July 2014 Category: Advertising

mrUsta is an online marketplace that links residents with different service providers in the UAE; a web 2.0 yellow pages service. It lists builders, plumbers, mechanics and the likes and provides people with a space to read and write reviews. Usta is the Turkish word for master, and there are currently 2900 such individuals available on the platform,

spread over 200 categories. The site currently attracts over 17 thousand page views per month and has witnessed a 32% increase from Q2 to Q3 of 2014. Right now the service doesn’t cost ustas anything, but plans to charge a fee starting April: 2 to 3 AEDs for every call they receive. To do so, the company will work directly with local telecom providers which would deduct the fee directly from their phone bills. Country of origin: UAE Date of launch: January 2014 Category: Online marketplace

Short for ‘location’ and ‘name’, Locname is a web and mobile service that creates a name and a corresponding URL such as ‘www.locname.com/name,’ for addresses. Just like Enwani and Makani, Locname aims to mitigate the pains of giving directions in the Arab region. Visiting the URL reveals the address, an embedded Google map, a description, and contact information. In addition to the URL, users can use a generated QR code to share that info. The service can also give out directions to a specific destination, or conversely, guide others to a user if he or she so desires. The idea is to simplify typing out long, complicated addresses, which are particularly frustrating when they are spelled in a foreign language. E-commerce is an area of interest for the creators; the company offers an API that companies could use in their delivery and shipping operations. Mourad Alashry, Locname’s CEO, claims that 8% of commerce is lost because of inaccurate information on location. API use will remain free for the first year. The service has already been featured on Gizmag and Wired. The company received seed funding from Flat6Labs and gathered 1400 users in its first month of activity. Country of origin: Egypt Date of launch: February 2014 Category: Utility

Kotobna is a web and mobile publishing platform that aims to help young Arab authors publish and monetize their work, all while offering readers with affordable e-books and easy payment methods. Similar to RedTroops, Kotobna is cutting off the middleman, who in this instance happens to be traditional, picky, and expensive publishing houses. Authors upload their content in pdf format; Kotobna says that it handles promoting the work. The service employs a rather peculiar pricing scheme; the first 25 downloads are free, the next 100 would cost 5 Egyptian pounds (EGP) after which the price settles on 10 EGPs. They have no investments announced yet. Country of origin: Egypt Date of launch: June 2014 Category: Web publishing

Our pick for most ambitious is Aodle, a language agnostic social network. The idea is to break down language barriers and enable users from different parts of the world to communicate with one another. When you type in your message in your native tongue, or any language for that matter, the system automatically translates it for the person reading it. The service also supports voice recognition, which makes communicating easier and more engaging. The service claims that is has more than 600,000 users worldwide. Country of origin: Yemen Date of launch: June 2014 Category: Social network

March 2015 The QuarTerly

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UsefUl Apps for TrAnsporTATion 2014, they have packaged the solution as

inexpensively. Co-founded by Adil

inventory to make it ready for use to the public. Country of origin: Egypt Date of launch: July 2014 Category: Financial management

and discovery platform for business tools available on the web. It has over 1000 tools so far in its database, all handpicked by the Maqtoob team. The startup was featured on Forbes as best new startup to help entrepreneurs and SMEs. It is currently in the final weeks of the Oxygen Incubator program and has been in “beta” launch for the past three months. Country of origin: Singapore / England Date of launch: 2014 Category: Application discovery platform

a POSApps with integrated accounting and Gherib, Maqtoob is an online directory A Round-Up of Taxi-Booking for Residents in MENA

Targeting another niche marketplace, Elymu is a platform for anyone looking to hire coaches or mentors. Elymu is a Swahili word that originates from the Arabic word ‘‫’علم‬. The company, founded by Lebanese entrepreneur Layla El Zein, develops tailored content and tools targeting individuals, coaches, and corporates, to help make coaching and mentoring more efficient and effective. Like mrUsta, Elymu is part of an ever growing pack of online marketplaces dedicated to a specific service or group of services. The most popular and successful of the bunch has been online doctorpatient interaction platforms, which hold great appeal for investors that lust over their data. Others are not as lucky and are inherently weaker in this aspect. Elymu, on the other hand, could generate valuable data from its clients, notably corporates. Country of origin: Lebanon Date of launch: February 2015 Category: Online marketplace

Nazamly is an online financial management tools suite dedicated to SMEs. The company, founded by Mohamed Zaki, offers online POS and data security solutions, features automated accounting and inventory, delivers ready-made and customizable Chart of Accounts with real time sales, and can generate sales and warehouse reports. The system is also able to control sales and inventory from multiple branches. It differentiates itself in the market by adopting the RemedyERP solution that the team has been working on since 2006. The solution has been stable and tested since 2013, and has more than 180 users and over 3 million rows of data. As of 64

The QuarTerly March 2015

B8ak is an online services marketplace aimed at homeowners and landlords in Saudi Arabia and provides access to handymen and service providers. This type of service seems to be gaining increasing popularity among entrepreneurs. The Arab region already features several similar services, each targeting a specific country, such as the Lebanese-based M3allem.com, the Moroccan M3alem. com, and the UAE-based mrUsta. B8ak tries to differentiate itself by not automating all human relationships. Once a request is placed for a specific service, a B8ak representative contacts the user and handles the request. The service also includes customer care, which is unusual for online services platforms, in addition to a maintenance scheduler. Furthermore, the company claims that it can help users with smart automatics maintenance, and energy and water conservation recommendations based on their service data history. It is set to officially launch soon this year. Country of origin: Saudi Arabia Date of launch: Coming soon Category: Online marketplace

Maqtoob is a treasure trove for entrepreneurs looking to get their businesses up and running quickly and

Our list ends with El Wafeyat, an online obituary page. A normal obituary in the newspapers can cost up to $1500 and yet lasts for only one day. El Wafeyat charges a measly $50 for an online equivalent. So far, the service has had about 200,000 customers use it, with a 30% month over month growth. Although the platform is similar to Khoolood.com, the company managed to steal the spotlight away from competitors by attracting a number of renowned investors, including Dave McClure. It was incubated by Flat6labs in Egypt, received funding by Cairo Angels and Fawaz Al Gosaibi Holdings, then later joined 500 Startups where it received an additional $100,000 in cash. Country of origin: Egypt Date of launch: 2014 Category: Online obituaries and condolences

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