Twitter Wars, Turks, and Tipping Points: Where We Are After ArabNet
Over a week after Beirut tech conference ArabNet, I’m still reflecting on the event. While managing editor Maya and I together conducted around 40 interviews in the Aramex-ArabNet-Wamda booth, barely stepping foot in the main hall of the event, it was clear that ArabNet was a different animal this year.
Last year, Wamda captured most of the startups pitching in the Ideathon and Startup Demo, including those like e-tendering platform Monaqasat, which this year, with over $1 billion in construction contracts tendered on their platform, was almost doing too well to attend. That’s the thing, tireless founder Omar Christidis pointed out- many of the startups pitching this year- including Startup Demo winner Qordoba- were announcing new rollouts rather than seeking funding.
Arabnet itself has also arrived. Christidis pulled out the stops and it showed. With five days (something for everyone, but one too many?), a slew of models introducing flash sales site MarkaVIP’s talk (a welcome dose of theatre?), and moderators that directly questioned dissatisfied Twitterers about their opinions, the event had a sharper set of teeth.
But just as a sense of arrival set in, the community’s self-realization of just how young it is immediately pervaded. The region’s fledgling successes confessed their critical issues to us after the camera stopped rolling. Investors confessed their hesitations. Startups acknowledged the nascence of their markets and the weight of their struggles.
Over the two Forum Days, a few things became clear:
1) Egos are at war.
The tech space in the Arab World is very young, and not yet saturated, even in the daily deal space. But early players are jockeying fiercely for dominance anyway. A few Turkish investors that I spoke to kept commenting that the tech space in the Arab World is much like Turkey was 3-5 years ago. “But,” said one, “It’s a lot of large egos fighting.” (Hm- which competitive spaces aren’t?). With only two or three major players in some spaces, it can get personal quickly.
Take the Istikana/ Cinemoz Twitter war.
Both companies operate in the Video-on-Demand (VOD) space. With their only other primary competitors being MBC’s Shahid.net and Yahoo Maktoob’s VOD channel, Cinemoz and Istikana are the most well-known, if not the only, established startups in the space currently. After a year of iteration, Samer Abdin of Istikana admitted that his team was cautiously confident that, yes, there is a market for VOD in the region. While the size of the market remains to be seen, Istikana entered ArabNet with a bang, announcing a partnership with Arab Radio & Television (ART), one of the largest sources of Arabic films.
Not to be sidelined, Cinemoz circulated the event plastering stickers in various locations. It was a subtle yet oddly meticulous marketing campaign. “Did you put that sticker on your water?” a friend asked me, certain that no one would tamper with my opened bottle just for branding.
The two company leaders present at the event seemed unlikely foes. Istikana’s Abdin squints with fond amusement when describing his company’s iterations, while Karim Safieddine of Cinemoz exudes energetic confidence when discussing his passion for the industry.
Their products are also different. Where Istikana can appear studied, Cinemoz is decidedly scrappy. Where Istikana is going mainstream, adding a trove of classics, Cinemoz is recently showcasing original documentaries and independent films.
But no matter- the building tension between the two teams erupted on Twitter, ArabNet’s oracle, on the first Forum Day.
During Cinemoz’s Startup Demo pitch, the @Seeqnce, @Cinemoz, and @SamerKaram twitter accounts began tweeting simultaneously, slighting the ART deal. The never-shy Mohamad Shawash (@Moeys), who works on Istikana’s social media strategy, immediately retorted, “Sorry #arabnetme too many copycats today! @istikana is a year older and has the same content Cinemoz is claiming to have,” while web designer Khaled Hakim and Ronza Ayoub jumped on the bandwagon and even the ever-polite Christos Mastoras of Yahoo! Maktoob (not tweeting for his company) resisted Cinemoz’s claims to primacy.
Not to be outdone, a few minutes later Cinemoz/Seeqnce/Samer tweeted “Its one thing to sign the Only Privileged Partnership with ART (10,000 titles), & another to license 1 Title a week,” insinuating a slothful pace at Istikana.
A couple of hours later, the @Istikana channel itself diplomatically shut down the war (“Istikana would like to welcome @Cinemoz to the Arab online video scene. Best of luck! :)”), while Cinemoz quietly reiterated its claim to first mover (“Arabnet Database - Cinemoz is the first premium VOD platform for & from the Arab World http://bit.ly/GVjV7x). (For the curious, that link positions Cinemoz's launch at August 2011, while Istikana launched at last year's Arabnet in March. Does this matter?).
The crowd buzz about the back-and-forth illustrated the power of Twitter to entertain and distract at ArabNet (both needed functions). While it was mostly just unremarkable drama, and this is, in reality, one of the tamer rivalries in the web space, it did make Cinemoz seem a bit shrill, illustrating a general mandate in the space: appear to lead at all costs.
A little jockeying is good. But ultimately, if there’s a market for VOD in the region, there will be room for both players, and there’s no need to duke it out to the point of drowning out demonstration of the products themselves. The lesson clearly applies to other sectors: less swagger, more do.
2) The Turks aren’t completely invading. Yet.
As we interviewed and chatted with Turkish investors and those who had worked at Turkish companies, we heard mixed opinions on the relationship between Turkey and the Arab World. One gaming expert was adamant that Turkey was now looking to the Arab World as a ripe, open market that’s more culturally contiguous, linguistically monolithic, and far less crowded than Europe or the U.S. After seeing the rise of Turkish-investment-backed companies like MarkaVIP, and the entrance of Peak Games into the region, the fact that some Turkish investors were at ArabNet for the first confirmed the trend.
Yet, countered another, please. I can count the number of Turkish tech companies and investors entering the Arab World on one hand. Most of our tech companies in Turkey are still focused domestically or completely globally, he pointed out. It’s far too early to call us “one region.”
3) E-Commerce is at a tipping point.
Several e-commerce startups, from the year’s big players who were announcing progress to shiny new promising platforms, confessed, along with their investors, that one major issue threatened to take them all down: cash on delivery.
Why? Customers are returning packages. E-Commerce companies are eating the costs of shipment and return. In countries with high import duties, this is especially devastating. If companies are generating 80% of their revenue via COD, which is not uncommon when including Saudi and Egyptian markets, they can’t afford to cut it out as a payment option. But they can’t afford to have, say, 25% of their packages returned with no payment either. Something has to change, quickly. More research has to be done- is this primarily a delivery coordination problem, as some accuse? Or is it a poor quality merchandise issue (and customers simply don't want what they receive)? Watch Wamda for more exploration of the COD conundrum soon.
4) Honesty is on the rise.
One of the most effective and incredibly simple devices that Arabnet began using this year was the quick show-of-hands crowd poll. Show-of-hands questions punctuated the panels and brought about a few powerful moments that illustrated the state of the ecosystem more definitively than any speaker, comment, or slew of tweets could.
Wamda contributor Fernande van Tets described moderator Ben Rooney, Tech Editor of the Wall Street Journal Europe, asking the audience if the venture capital industry in the region was really doing what it's supposed to do. Not a single hand went up. Wamda board member Chris Schroeder was touched by a similar moment that he recounted in person, in which a moderator asked who in the crowd had failed. Over half of the room put a hand up, he recalled.
While some I’ve spoken to argue that failure in the tech industry here is not actually all that taboo, the gesture of 50% of attendees admitting to a variety of failure leaves us with a tangible marker of progress: honesty and solidarity, in the name of changing the status quo, are on the rise. And we have ArabNet to thank for making it visible.
[photo from iloubnan.info]