Diary of a Google Finalist: Do Arab Entrepreneur Tournaments Help Startups?
Sarah Wali left the U.S. media scene and returned to Egypt to pursue an idea for a citizen journalism platform for the Middle East. With her business partner Mahamad El Tanahy, that idea became CitJo.com. Within months of its inception, it joined the running in a Google competition for Arab entrepreneurs seeking funding and mentorship for their startup companies.
Recounting the experience for Arabic Knowledge@Wharton, Wali writes about the effort to get the fledgling media outlet off the ground, from making connections and courting investors, to the learning curve she went through getting the business skills she needed.
She also examines the phenomenon of entrepreneurship competitions, which have filled the gap in angel investors and mentorship in the Middle East. Though they bring much needed exposure and knowledge transfer to embryonic companies and entrepreneurs, she writes that the results of these competitions could be discouraging to some startups.
[Wamda Editor's note: For more on CitJo, check out our interview with Sarah at Google's Ebda2 Competition in May.]
Mahamad El Tanahy and I sat in the lavishly decorated Fairmont hotel rooftop in Cairo anxiously awaiting the final results of the Start with Google competition, also known as Ebda2. From thousands of ideas, ours -- CitJo, a Middle East-based citizen journalism portal -- had made it to the last round.
I drummed my nervous fingers against the white tablecloth as Google's Middle East regional manager, Wael Fakharany, told us again that even though there was only one recipient of the single grand prize of US$200,000, we were all winners.
He was right. In the course of the eight months El Tanahy and I had gained invaluable contacts in the startup, business, technology and, most important, investor communities. We were on deadlines that kept us enthusiastic about the project, and pushed us to work harder than we would have without Ebda2.
Entrepreneurs in the Arab region have turned to contests such as this one to give them an initial boost for their startup business, both financially and psychologically. In an ecosystem where low risk investments are the trend, they have become integral components to the initial phase of business development.
"Competitions like this are very useful," said Karim Hussein, co-founder of WebMD, and a mentor in Ebda2. "It's critical in giving a sense of empowerment to young entrepreneurs and show them that things can be built. The prize money comes with no strings attached, and companies that are in the final rounds are also looked at every single VC in the area."
Contestants also get to refine a business plan and gain publicity. Yet seemingly arbitrary judging and no specific criteria for entrance in such contests can sometimes feed the established norm of only growing what is already working, and provide little financial support for high-risk, innovative projects.
A Google Start
The idea for CitJo came to mind when I watched the 18-day spring that ousted long-time president Hosni Mubarak from my desk in New York City. It was exhilarating to see fellow Egyptians using any means necessary to express their views.
Five months later, I quit my job with ABC News and headed back to Cairo. The shifting political landscape created a sense of acceptance to change, especially within media and news. Ideas were racing through me, but I quickly realized that despite the impressive couple weeks earlier in the year, systems and mentalities were still the same. It was disheartening and I was almost ready to give up. Then I met El Tanahy.
He had started his company, Bright Creations, five years ago, and it has grown to become the leading design and software house in Egypt. He has secured contracts with multinational corporations like Google, and local successful startups like Cairo360. His passion was innovative technology projects, making him the ideal technology partner.
By that time, I had spoken to friends and colleagues that started media and internet companies and came up with an idea for a citizen journalism-focused site that lets news organizations place a bid for content, and compensates the citizen journalist. El Tanahy, who drew from his experience in Tahrir during the 18 days, added the integral feature of posting to our site by using the hashtag #Citjo on tweeted pictures.
In the midst of our research on the industry, technology and feasibility of the project, he heard about Ebda2 from his contacts in Google, and immediately called me. According to the website, Google wanted "make business dreams a reality" by funding one technology start-up in Egypt, and providing mentorship and training for at least 50 more.
"To be honest I didn't think we would get that far," El Tanahy told me later. "I was really excited for the competition, but still I had no expectations at the beginning."
Our hopes were further dashed when we found out over 4,000 people had applied for the same competition. So, when we passed the initial phase, we set our goal to becoming one of the 50 companies to participate in the second phase exhibition with a working prototype.
The next eight months were a whirlwind of deadlines and development ups and downs. We had to keep up with every phase by developing our own skills in industries we had no experience in. El Tanahy taught me about startups in Egypt, and I taught him the fundamentals of journalism.
This was probably our greatest benefit from the Ebda2 competition. Both of us were busy with our own projects that were providing us with the financials we needed to support ourselves. We believed wholeheartedly in our idea and the business we were developing, but we needed that extra push to get us to the next level. But, it did work against us.
"With such a short timeline we had to rush things," El Tanahy said. "I don't think initial ideas should be rushed. Be certain of the idea then jump into a competition like this with guns blazing. The only exception is if you are bootstrapping, because then the risk is worth the push you get."
What made Ebda2 stand out from other business plan competitions was the training we received in technology and business for three days as one of the initial 200 companies. We were exposed to new technologies, movers and shakers in the industry and, of course, 200 teams of bright entrepreneurs we never would have had contact with without Google.
But not everyone was impressed with what Google had to offer through the Ebda2 competition. For veteran business plan competitors like Iqraaly, a web and mobile platform to convert written Arabic articles into audio files via human narration, business plans, publicity and networking meant very little. The goal was funding.
"For me it was all about the prize," said Abdelrahman Wahaba, co-founder and CEO of Iqraaly, one of the top 20 finalists. "I had entered contests before and I know what happens. You'll find that the web and tech entrepreneurship community in Egypt is very small. If you have been in two or thee contests you meet everyone. Google had more courses and sessions than most contests, but at the end it was just the prize."
Wahaba admits though that the competition helped pave a meeting with Hind Wassef, founder of Diwan (a popular bookstore in Egypt). "I didn't need the competition, but it definitely paved the way for my meeting with her because it legitimized my project," he said. "She would have had to take a really big leap of faith to meet with me."
Startup or Not?
When Fakharany finally announced the winners of the competition, the excitement came almost exclusively from the group of five young men at my left. The Bey2ollak team (a crowd sourcing application that monitors traffic flow in Egypt) flew out of their chairs with screams of excitement and happiness. Across the rooftop there were only a few scattered slow claps from shocked contestants, mentors, judges and guests.
The name of the competition implied that Google was looking for a company like ours. We began our entrepreneurship path with a basic idea for CitJo, and grew with every phase. Bey2ollak, on the other hand had been around for a couple years, built a large user base and gotten support from Vodafone. It seemed unreasonable to compare the two.
"Compared to us, there's no competition," El Tanahy said. "To a certain extent we kind of assumed that we wouldn't be compared at exactly the same level as the winner (Bey2ollak). I kind of assumed in the finals, especially in the top 20 there would be some points for progress."
That night, many of the Ebda2 finalists left with the same feeling that my partner had. This was a competition for a new startup that was starting its path with Google. Yet, according to Hesham Wahby, CEO of Innoventures, the incubation company behind the organization of Ebda2, Bey2ollak was exactly what the competition was looking for.
"We weren't looking for an idea that is still being formed or something that's already established," he said. "Bey2ollak was right in the middle of this. They had a great business model, and to the judges they were the representation of what we were looking for in the competition. Google was looking for the best Internet startup. We defined startup as any company that is still in the innovation and start-up phase, which by definition could be up to five years."
For the Bey2ollak team, the prize money was as much a surprise for them as it was for anyone else. "I am not convinced we were the best people in the contest, and I didn't think this would be the result," said Gamal El Din Sadek, co-founder of Bey2ollak. "But for us, the money was huge. All the investors we had approached would tell us a large sum of money is not healthy for our business, and we have to have a revenue stream first."
Sadek admits that his product is not where his team wants it to be, and that they have been limited in their innovation. He knows that in the world of cloud sourcing, Bey2ollak has yet to make its mark. But, he says that the prize money was exactly what they needed to take the application to the next level.
But according to Karim Hussein, a mentor and initial judge in the competition, wins like Bey2ollak could be discourage entrepreneurs with initial ideas from entering.
"The competition should not be a fall back for people who fail to get VC financing," he said. "It should be the other way around. That's the thing that really bothers me. It might discourage people from competitions if they don't have a company up and running. It breeds that feeling that I have to be a player and be in the business, which is not the point. The contests should ignite people to get off the couch and do something."
Hussien is an MIT graduate who has two successful start-ups under his belt, and has helped run the annual MIT 50K competition. He says competitions like Google's need to be more refined from the beginning, with clear-cut guidelines on what they are looking for in a business.
"It's more about what is a business model," he said. "Is it unique, where are you going to get your money and how much do you need? This is the kind of information that should be given before the competition. It's not enough to set up the competition, you have to set up the environment around it."
Regardless of the outcome, the competition did succeed in nurturing the entrepreneurship environment in Egypt. It also gave that unique legitimacy to the top 20 finalists, and the Egyptian IT entrepreneurship community. Karim Akram, a former PNG IT manager for 15 years, and an unofficial mentor to the CitJo team, was inspired by the projects he saw and the teams he met.
"I thought I was part of something really big," Akram said. "I was extremely impressed and amazed by the amount of ideas from a generally very young group. The ideas are there and the money is kind of there, and its things like this that are creating a base that is needed in Egypt."
Innoventures project manager and chief organizer Nora Kafafi said for her, the best part of the competition was getting that type of feedback from the mentors of the competition. "The one comment that I got from all the mentors was, 'These startups restored our faith in the younger Egyptian generation,'" she said. "In the middle of all this it showed there is hope for the future."
Published 10/07/2012 in Arabic Knowledge@Wharton