Three Necessary Factors To Establish A Qatari Silicon Valley
Two years ago, I moved to Qatar with my family to teach at Carnegie Mellon University in Qatar. I moved here from San Francisco Bay Area, where I had been living for almost 20 years, building a number of tech companies from the ground up in various fields such as B2B e-commerce, healthcare mobile technologies, online education, and crowdfunding. Upon arriving in the region, I started to get involved in the tech startup ecosystem in Qatar and neighboring Arab countries.
I began to wonder how the Silicon Valley success story could potentially be replicated in Qatar and the Arab region. How could we establish a culture of innovation entrepreneurship in the Arab world? What would it take for the next billion-dollar technology company –the next Google, the next Facebook, the next Uber- to come out of this region?
During my brief time in Qatar, I have witnessed the attention the Qatari government has shown towards human capital and its keen desire to provide knowledge and education through renowned universities located in Qatar Foundation's Education City. I have also had the privilege to see the encouragement and support given to Qatar's youth to be creative, inventive and entrepreneurial to help them turn initial ideas into fruitful projects from various organizations such as Enterprise Qatar, Qatar Business Incubation Center, Qatar Science and Technology Park (QSTP) and ICT's Digital Incubation Center.
Despite the great support the Qatari government provides to cement the culture of innovation entrepreneurship in Qatar, there is much more to be done. Innovation is a process that leads to the development of new products, services or processes that change people's lives for the better, and in the meantime, generates substantial economic benefits for the innovators and their backers, or great societal benefits for certain communities. Innovation is a long, grueling and unpredictable process that follows nature's law of the survival of the fittest. In this case, the "fittest" are the innovators who, on the one hand, do have the skills and stamina to endure the "experimental and iterative nature" of the process, and on the other hand, are able to continue to acquire and develop the resources (capital and people) needed to succeed.
The diagram below summarizes the various phases of the innovation entrepreneurship process and identifies the key forces that support it. The culture of innovation in Silicon Valley was spurred through the development -either organically or through government-driven initiatives- of these various forces. The same is now being recognized in various parts across the world from Berlin, Germany to Beijing, China.
Looking deep into these factors, one can easily identify three specific areas which require further development in order to achieve similar results here in Qatar specifically and the Arab region in general.
Firstly, as the diagram shows, the innovation process starts much earlier than the first glimpse of the idea appears –with the development of the would-be innovators themselves– the entrepreneurs who not only can think big but also have enough enthusiasm, passion and perseverance to endure the long and unpredictable innovation process. New research in innovation has identified that true innovators are typically driven by a desire the change the status quo and a healthy appetite for taking calculated risks. An environment where these desires are encouraged and developed will produce more would-be innovators than an environment where they are suppressed.
Silicon Valley, by its very nature, is a magnate of skilled migrants (from inside and outside the U.S.) whose profiles closely match the behavioral profiles of would-be innovators. Qatar, and the Arab World at large, should work on encouraging its youth to develop the behavioral skills required for future innovators. We must influence existing cultural habits that oppose change and hinder risk-taking. Universities also have a role to play in developing not just the technical abilities of their students, but also the behavioral skills that are needed to succeed in the innovation journey.
Secondly, as ideas move from the early-stage startup phase into the scale-up phase, significant follow-up funding is required. Because of the risky nature of the innovation process, this funding cannot be secured through traditional loan-based vehicles of financing (banks, etc.), but through a different financing vehicle known as venture capital. Qatar, and the Arab World at large, needs to develop its homegrown venture capitalists. These institutions are slowly starting to emerge in places such as Egypt, Jordan and UAE. They are, however, much more risk-averse compared to their American counterparts, and they tend to deal only with companies in the "growth" phase.
Thirdly, as the company enters the scale-up and growth phases, and as it hopefully succeeds in raising significant amount of funding to fuel its growth, it needs to acquire the talent necessary to move forward: skilled professionals who have years of expertise working in product development organizations in various roles from administration and sales, to marketing and engineering, HR, etc. In Silicon Valley today, as in other parts of the world, you will find plenty of professionals who have worked for decades in places such as Yahoo!, Google, Intel, Oracle, and the like.
These professionals have the expertise required to organize the teams and establish the processes required to scale-up and grow a startup. Many of them are of Arab descent and are ready to move back to the Arab region and work at promising and well-financed startups, in part due to a strong desire to raise their children in an Arab or Islamic culture. With the absence of established organizations in the Arab world today which develop technology-based products and services, recruiting and retaining these experienced professionals is key to building the innovation ecosystem in the Arab world.
The Role of the Qatari Government
In light of the above, I believe that the Qatari government should continue to establish and support incubation centers to educate entrepreneurs and innovators, and provide them with the needed skills and support to help them succeed. These centers provide needed training, support and funding for innovation experiments in the startup phase. But this is not enough. The government must help build and partially fund capital venture partnerships, staffed with experienced innovation entrepreneurs and investment professionals, who collectively possess the needed expertise and the ability to make investment decisions based on the value-creation viability of a startup and its founders. With the right incentives, these funds will be able to invest in the scale-up phase of the right startup venture, and will be able to attract and recruit the experience required to staff the company's management throughout the scale-up and growth phases of the company.
Today, in countries like China, startup founders and investors are demonstrating big successes and reaping great profits from risky journeys they embarked on when establishing companies like Bidu and Alibaba– companies that generated wealth matching or exceeding most Silicon Valley firms. I believe that the next decade will witness the emergence of similar successful ventures in the Arab world, and Qatar can and should be part of these successes.