Entrepreneurship In The MENA Region: Fact Or Fiction

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Unless you are isolated in a distant dark cave, in which case you won’t be reading this anyway, you must have heard the terms: entrepreneur, startup, TNBT (the next big thing), funding and investment. Of course, these are not new terms but they have been gaining extensive popularity in a do-it-yourself fashion in other parts of the world over the past few years. The focus in this article is on a sensitive geopolitical area of the world – MENA (Middle East and North Africa).

Entrepreneurs are not those who simply run their own small businesses; they are those who come up with great ideas and turn them into high impact products or services. The MENA region has been on the entrepreneurship dealers’ radar for sometime now but we are not seeing great examples of high growth companies or any considerable success stories – at least nothing to justify the strength of the PR campaign and multiplicity and enthusiasm of players.

MENA is a huge market with great potential. Apart from a few exceptions, it shares the same culture, language and market dynamics. A simple geopolitical comparison may suggest a similarity with the European Union and hence a similar approach and similar business results. The story is totally different.

Entrepreneurship requires an enabling eco-system and infrastructure to flourish. Some of the basic ingredients may exist in this country or that, but from a holistic perspective, the situation is far from assuring. There are various reasons, and manifestations, as to why entrepreneurial system in MENA is not working thus far and is not likely to bear fruit in the near future.

There were several success stories in business in the region both locally and regionally but these were traditional businesses most of which were built as family endeavors over several years with unique recipes of success. One can easily spot empires of real estate, construction, distribution, retail and franchise, media and entertainment, to name just a few. However, recent entrepreneurs emerged as hobbyists influenced by companies that survived the dot com bubble effect and western literature and media that gave entrepreneurship a special focus over the past decade.

Early MENA entrepreneurs were picked up by foreign embassies and other missions in various countries to serve two distinct purposes: find new markets (or capital) for home entrepreneurs and use related activities and their inputs and outputs as a catalyst of security and stability in the region (economic prosperity leading to political stability). Thus, there were no initial initiatives to establish and cultivate entrepreneurship at the official level. Like governance systems, business systems are centralized and well defined (and protected).

With geopolitical boundaries, and despite recent developments ranging from introducing reforms to changing regimes, the MENA market remains fragmented and faces more challenges than one can think and it can cope up with. Geographical and political barriers reflect badly on the business climate not only from a logistical point of view, but in terms of rules and regulations (if any), restrictions, currencies, transfer of funds, payment gateways, marketing and customer support.

With seasonal official support and lack of local or regional planning, entrepreneurial activities and institutions remain dependent on, and affected by, external institutions. Such institutions normally come with their own agenda, priorities and cultural perspective that are usually incompatible with local or regional interests.

The other major concern for the region’s entrepreneurs and startups is funding and investment. Angel investors are very hesitant and lack technical expertise to evaluate ideas and projects. Venture capital and bank loans are usually inappropriate and demanding. Other sources like crowd-funding and crowd-investment, including their regional adaptations, are prohibitive to most entrepreneurs in the region. This is not to include ideas that tend to solve major problems that require initial resources and capital – only one or two person projects where a minimum viable product can be built with personal funds.

To add insult to an open injury, political turmoil is not likely to end soon and several countries in the region are either witnessing major activities of unrest or suffering from full scale war close to home. It is not clear when the curators of entrepreneurship will pack their suitcases and leave, or focus on more demanding issues, but it will leave the region’s entrepreneurs with more to do on their own and with little experience and minimum official support.

It is easy to spot the size of the dilemma from observing the same known people and projects applying to every accelerator, workshop, incubator, show and competition or pitch. Most universities have established centers of excellence and technology parks that simply compete with local commercial training shops. You see activities, speakers, media reports and PR posters but almost zero impact on the ground. Too much ado about nothing!

Unless entrepreneurship is seen as a strategic initiative in the region and adequate resources and attention are allocated at the highest level, local markets will continue to be characterized as consumers of foreign products and services as well as copycat business models at best. With increasing threats to traditional economy and business practices, what is seen now as emerging economy may soon become a submerging economy. It is not easy to float in such a hostile environment.

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Customer Surveillance, Not Service

Once upon a time (1994 to be exact), browser cookies were introduced. They were accepted by default, as a means to preserve state, and almost no body knew about them. In February 1996, the Financial Times revealed the cookie secret and third party cookies were considered a privacy threat. Third party cookies were soon put to use by the advertising industry and it took three cookie specifications to establish the current standard of 2011. In fact, third party cookies were accepted by default in some major browsers until recently and many users may not know how to disable them. People are still encouraged to accept cookies to personalize site navigation and improve browsing experience.

It is true that cookies, as encrypted plain text files, are unable to infect your device with viruses or malware, but they can profile your browsing habits, store and share them. Some cookies are now essential for a site to function normally (ex. authentication cookies), so you are forced to accept them.

With HTML 5, browsers added local storage for persistence and even recreation of deleted cookies. Geolocation was also added and if you are logged in or using a portal or a service, you are known by identity and location, you are profiled and your data is stored and shared. Data mining is used to extract knowledge for advertising companies, research labs or synthesized as contact databases of various interest groups.

Enter social media and smart devices – you are not only known by name and email, but by exact location, face, friends, events, preferences and beliefs. What you say, search for, do, watch, like or dislike is either data or metadata – collected for analysis either for commercial or safety/security purposes.

Of course, you always have options (short of staying away from technology). What if you decide not to login to use Google search (your location is known, though)? What if you decide to cover your cam lens – not because you have something to hide, but because you are entitled to some privacy (and you know that cam and mic can be switched on without any indication to that effect)? I have bad news for you: this is meta data and meta data is being collected by big brother. Google may read your Gmail using a robot to display relevant ads, but the other guys read its meta data and keep a full copy of your messages aside, just in case. So does Facebook, Instagram and Twitter – just to name a few. Facebook even conducted experiments on its users and there is nothing to stop others from doing the same.

Now that smart devices are widespread and with the introduction of wearables as well as adding interactivity to appliances and the spread of monitoring devices in public places and availability of access points, information generation, analysis and sharing is becoming the norm. Your group picture on Instagram today could identify you the moment you enter a local store and you may receive an endorsement to buy a certain item from the same friend you talked about it or discussed with earlier. You are not the only source of information about yourself, your friends and acquaintances can tag you and talk about you without you even knowing (your opponents as well!).

Do not be surprised to learn that entity X can trace your whole life and play back a movie of your daily activity – when you woke up, what you had for breakfast, what TV channel you watched, whom you talked to, what you searched for, where you tweeted from or updated your Facebook status or uploaded a short movie, where you took that Instagram picture and where you went for shopping. Of course, you did nothing wrong, but does this entitle an entity because it has the capability or access to your personal life to invade your privacy for whatever reason?

Encryption and open source are usually mentioned as a workaround but neither can protect you. Encryption standards are made to be broken for those who have the resources and when the backdoor is built into the operating system, there is little to do – not to mention the need to install an app or a game you need but may not trust.

Basic rights, including privacy, are protected – not granted – by constitutions. Privacy cannot be traded for money (marketing) or security. Those are important concerns but should be addressed in a more innovative and dignifying ways. Universal justice, for example, is much cheaper, and more effective, than universal sniffing. Being able to do something does not entitle one to do so. After what we saw about recent leaks, imagine personal data falling in the hands of criminals!

And one last thing to remember: if you sacrifice your privacy today, you will be more prepared to give up the rest of your rights tomorrow.

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ISIS – A Brand Exchanging Hands Overnight Through Social Media

Until recently, ISIS was nothing but the mobile wallet – a free app that lets you pay with your phone or – if you dig deeper – an ancient Egyptian goddess. Not any more. Try to search for the term ISIS and you will find the first few results are related to the events in Iraq.

Ever since the group drove the regular Iraqi forces out of the city of Mosul in record time, the media forgot about the world cup – let alone ISIS Wallet – and was caught in acronym confusion that gave the group further publicity. ISIS stands for Islamic State in Iraq and Sham (the Levant) – hence the recent use of ISIL by some media outlets.

Apart from developments on the ground, who fights with ISIS and the group ideology, several reports are focusing on how ISIS (nicknamed Da’esh in Arabic) is employing social media alongside military boots (or sandals as seen on TV). The quote describing ISIS online activity as “a calculated campaign that would put American social-media-marketing gurus to shame” has been aired on CNN (Middle East edition) and is widely found online. Their media clips were compared to Hollywood’s productions. What is behind the ISIS ‘brand’?

Here, we try to examine this campaign through a business lens. Can we apply what we learned in marketing courses? Is social media an appropriate platform to build and sustain a brand in record time with minimum resources? Do you need to introduce drama to build your brand overnight? How important is brand loyalty? And how dangerous is dissatisfaction? How do you win support and how do you deal with competition?

Some may still recall the famous Superbowl commercial “1984” introducing Apple Macintosh. By the way, Steve Jobs is half Syrian (DNA-wise, at least). Did ISIS plan the assault on Mosul and their online campaign at the start of the world cup or was it just by accident (campaign timing)? Were they as lucky as Jobs who could borrow the Orwell novel “1984″ in the year 1984? How much did the media assist because it could not resist in both cases?

It is not a secret that Apple users are truly loyal to the brand, sometimes even extra-loyal. You do not find this among users of other brands. Apple does not even maintain an official Facebook account. Brand loyalty is a great asset in sustainability and the first line of defense against competitors who try to get a bigger bite of the market share. Dissatisfied customers who desert other brands are even better: they know what’s wrong in the other camp and can help target points of weakness. It seems this is what is happening with ISIS. Oppression is beyond dissatisfaction and people who fight for a paycheck are no better than paid forum members promoting a certain product. We are not talking about bad customer service, but complete marginalization and disappointment with both regimes and controlled opposition (ex. Arab Spring).

What about market share and market penetration? And, can you work with your competitors? We are not comparing Apple with ISIS on the basis of ideology or status (so, you need not get rid of your Mac or iPhone – ISIS app was said to be Android only), but it is worth noticing that market share and penetration is widely utilized in business. American schools were key to the survival of Apple being the early adopters of their technology. Apple and Microsoft fought each other in courts and media but worked together to develop products at the same time. Apple’s tough standards, discipline and centralization contributed to its trademark. ISIS has a central point of reference (the Emir) and strict rules with a strong foothold. One can even stretch imagination to the innovative nature of each as a result of faced challenges, diverse skilled recruits and experience in context. ISIS used its ground gains to rally its supporters and deter its opponents by relaying a message of others talk, we do.

Endorsement is another way to rally supporters for an idea and this is what winning brands do. Some enlist sports or cinema stars to speak in their favor in flashy media outlets and many ‘convince’ experts to bless their features and write testimonials in their favor. ISIS is using both supporting religious figures teachings as well as opponents and enemies pitfalls to endorse their doctrine and gain supporters (or at least leave potential opponents on the sidelines).

The psychology of fear is usually used in business marketing, especially when it comes to security and safety. Marketers use both real and thought scenarios to support their claims. ISIS footage (both real and edited) is fueling its brand growth and nobody has time to verify a rumor during difficult times. At the same time, ISIS is spreading footage of control, security, stability and local support in captured areas to win further support and new recruits – remember the feature lists of competitive brands? Campaigns under related hashtags are trending and marketers have even used them to promote their own businesses. Some are planned as weekly trends (ex. #One_Billion_Muslims_Campaign_to_support_the_Islamic_State and #CalamityWillBefallUS) to show support, warn opponents and spread promises to entice and inspire people in neighboring countries. Even US official Twitter accounts can be seen engaging in arguments under these hashtags.

What’s in a logo/slogan? ISIS logo/flag design and wording is derived from Islamic literature (specifically from the first pillar). The lower part is said to be the stamp of prophet Muhammad and its black background is mentioned in a prophecy about later times. Depending on the viewer, the design looks either familiar or frightening both leading to brand spreading. It is probably as recognizable now as brands over hundred years old.

Will this work for another brand? In some cases, it is likely. But probably not for traditional products or services. For example, sports teams are similar to a certain extent. Basically, where a brand becomes akin to an essential identity (and major threat) with dramatic introduction into the market. We already saw some attempts to capitalize on the Suarez bite during world cup as a desperate commercial, but it is unlikely that Toyota will use ISIS images to promote its trucks nor would ISIS Wallet try dramatic measures to re-capture its brand.

Why Twitter and YouTube in particular? It is not obvious if ISIS turned to Twitter due to Facebook rules on post visibility and other related tactics to squeeze money out of users pockets. However, it is worth mentioning that both Twitter and YouTube are more popular in the target areas of ISIS activity and more suitable for disseminating updates and posting pictures and movies. Twitter is also more mobile friendly, mobile being widely used for social media followers in the region, and accounts easier to maintain and reproduce under different names if closed.

And what if social media platforms become a threat? You may prevent someone from using state TV or official newspapers, but you can’t restrict access to main and public infrastructure. In fact, Iraq shut down social media in areas under ISIS control, Google removed its Fajr Al-Bashaer (Dawn of Glad Tidings) app, Twitter closed several accounts, and Egypt’s NileSat cut the transmission of three channels accused to sympathize with ISIS, but it doesn’t seem to have worked – in fact, it worked as an indirect endorsement. ISIS supporters used workarounds and alternative Internet providers, not to mention that these supporters are all over the globe. What will happen if ISIS becomes a global threat? Will social media sites be shut down completely? What will be the fate of the Internet? And now that ISIS merchandise is sold online (Daily Mail Report), what will social media outlets do to stop ISIS branding? Are we also about to see new related releases in the gaming industry? Or did those guys play bloody and violent games, or watched horror movies in the past?

The sudden rise of the ISIS brand is an extreme case study in business marketing. It is too early to tell if the brand will last longer, spread further or reproduce in other areas. Market dynamics and visible indicators suggest there is a high probability of further techno-social and geopolitical clashes and unrest.

Update (July 8, 2014): ISIS, the mobile wallet, is planning to re-brand. It is worth mentioning that the other ISIS has already re-branded as IS (Islamic State) in late June. If the media is fully synched, mobile wallet could probably keep its brand.

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