I bet you are thinking to your self you already know the answer to this question. If I was a betting man, I would wager that you didn’t, or at the very least it would not be your first guess any way.
Saudi Arabia doesn’t come off as easily as MTV(Mountain View) or SFO(San Francisco) or Bay Area, but you cant be blamed for it just yet. What you are seeing in the news are select choice public placements in the news.
Allowing women drivers to drive, the re opening of theatres . These items have been in the making since MbS took an active role in things. (MbS you ask ? or as lovingly referred to as HRH.Mohammad Bin Salman the Crown Prince of Saudi Arabia). None of these news items are accidental; there is a massive transition about to happen, the jury is out on the what and how and when. It has been in the works for quite some time. These are not reactionary moves to say the very least. This is the time of MbS and in line with Vision 2030 which was formally ratified by the Saudi cabinet as the National Transformation Program, it provides a blueprint for a kingdom that offers less charity and more austerity. It calls for Saudi Arabia to reduce its dependence on the energy sector, privatize state-owned enterprises, and cut state largesse. A lot of players in Saudi Arabia, want to do the following
1) Create Quick Jobs for Locals but meaningful jobs
2) Create diversification away from oil
3) Encourage locals to get involved and out of their comfort zones
4) Create Education and vocational opportunities
5) Divert subsidies to building long term human capital as opposed to a young population reliant on the state
No one in Saudi Arabia it self wants to talk about this stuff, internet crack downs and mis-understand on both ends of the aisle. The trust deficit and wholesale non police state image will be a tough sell, albeit it has to start.
Here comes the other force in this game, not lesser known by any stretch of the imagination but clearly not as famous as MbS but an equalizer in the dynastic politics when it comes to social/economic reform. Mr Adel Fakeih the honorable minster of Economy and Planning.
He clearly does not have an easy task. The kingdom is on an Uber ride to modernization and diversification and we all know whats going on with Uber.
Under the belly of the beast are some phenomenal items, that you can be forgiven to have missed but the sheer importance of those is a definite sign in the changing of the guard. It is good for the Muslim world and for the world at large. Imagine your rich cousin all of a sudden had a change of heart and opposed to sponsoring or funding its brand of politics its funding startups. Three cheers.
So did you know Saudi Arabia just had its first-ever YouTube FanFest in March 2017, Pakistan it is my estimate has roughly between 30-32M Monthly Active Viewers yet we dont get that kind of love from YT. Pakistan is considered a “security risk” yet Saudia isnt, let me not get into the politics of it all. But Google understands the value of having a friendly government in place as these restrictions ease of and is putting in bucket loads of concessions and resources to make YT work in Saudi Arabia.
Based on public information peppered in press releases by the best PR Machines on the planet, Google. This is what the YT data looks like :
The number of YouTubers in the MENA region have tripled in the region in the last three years. In Saudi Arabia, watch-time has grown by 50 percent and by 65 percent on mobile in 2016. More than 50 channels in MENA have more than one million subscribers, more than 20 of those in Saudi Arabia. Last year, the kingdom witnessed a 100 percent growth in total uploads coming from Saudi Arabia. The kingdom contributed a third to the total watch-time of the MENA region in 2016.
The key stat buried in this presser is essentially this. 1/3 total watch time in the entire mena region comes from Saudia. Any surprises, there are literally no activities in the kingdom pertaining to entertainment, culture, theatre etc. With the vast majority of population being young and no access to open television either, YT is filling the void.
A nation whose young are diabetic, Saudi Arabia has the second highest rate of diabetes in the Middle East and is seventh highest in the world, according to the World Health Organization (WHO).The prevalence of diabetes is in Kingdom is at an alarming level Over 25 percent of the adult population is suffering and that figure is expected to more than double by 2030. Half of the people over 30 years of age are prone to diabetes.
You cant brush all this stuff under the carpet, these are life style diseases and the lifestyle must change.
So what about the worlds biggest startup and incubator and what not have you?
Look around you, Saudi Arabia is doing startup building, funding, large scale growth at state level funding with 2$T to back its ambitions. The country is both incubator and accelerator and its own largest market as a burgeoning young population emerges. In a society like Saudi Arabia, there is no real middle class, when these startups disrupt the status quo, create jobs, it will create new wealth, which will create a self sustaining ecosystem outside of the compounds of Aramco.
They have started without you and me really knowing. They are launching a massive scale global PR effort to fix their global image. As time has told us, with enough time and money you can fix any ones reputation, look at how people were mourning Hue Hefner, living and dying on his own terms. *Go back click the reputation link and see what a reputational fix means.
So where is this opportunity for Saudi Arabia and others who want to get in on the ground floor of this soon to explode startup ecosystem? But their startups may be bigger than your startups, may even be bigger than the GDP of some countries. It will be interesting no less. Here are some things that come to mind as an outsider looking in.
- Al Jazeera is done in Saudi Arabia, content and news aren’t. Saudi Arabia needs its brand of news dissemination services. It is already late to that party.
- With such prevalence of diabetes, if the population is too sick to do shit, thats all they will do in the end, so the stage is wide and clear for innovation in life style products that capitalize on the geographic terrain of Saudi Arabia.
- People are watching YouTube because its content created by their own, so a huge content play is missing in Saudia, the first person to build and dominate a Saudi brand of teen /adolescent engagement via video will rule the airwaves in any format. Digital, OTT, Linear, what ever. People are dying for content.
- Tech, will win big, here is why. Have you ever been to a mall in Saudi Arabia? go to a GAP, select an item, go try it in on. Oh you just realized there are no changing rooms. So what you must do is you go to the malls bathroom and try it on. So how does tech fix this, e-commerce and last mile brings products to home. TV, home shopping, ecommerce they creates massive back end employment.
- An other one that baffles my mind is a huge huge play on street numbering and maps + a SaudiEx like FedEx , there is no street naming to enable parcel deliveries(At large) most of it is PBOX driven and even on google maps and other data is sparse. The national address system a good effort in the right direction only has 3M customers and 4.5 Million registered addresses for a population of 33M people. So the journey has only started. Again there is no innovation there, its state run and bland.
Heres what wont work and why
- Just importing talent (many years of that already evident) since the average person cant even get to Saudi Arabia without a hassle free visa process and further immigration nightmares its not the default location for the best talent to show up. America for all its quirks works because for most of the world it is still easy to get in and stay in.
- Launching actual incubators and accelerators for tech alone, because who will run them? who will be part of them? where is the ecosystem, will you import your muslim brothers startups from say Pakistan or Indonesia? Then what happens? There wont be any shape shifting till Saudi Investors and investment funds go out and invest in the startups of these great nations and build investor confidence. Much like the American who then repatriate their best talent using L1 Visas. Saudis need the same, also No ITS NOT cool to hold on to my passport when I come to your country. So a lot of that has to change too.
- Move away from Branch Plant mentality. Look around you, every thing Saudia has is a branch plant of some big company, Toyota, Honda, GE and many more and then you add the franchises and the whole country is the SUM of other people innovations. Every entity is just a surrogate. That has to change, dollars can help change that, but it cant fix it over night. A lot of systemic change has to happen for this to really become effective. No amount of money can fix generational items over night the right strategy can fix it, no less in time.
- They need to be able to have outsiders operate out side of fear. Hence perception must change, people must be free and able to discuss things. That will be the first step towards building a startup culture. Saudi Aarabia doesnt need any more yes men or consultants, its already spend 1.5bn$ in 2015 on consultants.
Mckinsey already does that job really well there. According to the Financial Times, Saudi businessmen have sarcastically dubbed the Ministry of Planning as the “McKinsey Ministry.” If the pattern seems familiar, it is. The company teams up with young heirs to the throne, who are eager to make their countries’ economies conform to their vision of the future. A less palatable similarity for someone like Prince Salman is how many of the countries who drank the McKinsey Kool-Aid became epicenters of the Arab Spring. Bahrain, Egypt, Libya, Yemen — each was convulsed by demonstrations, often animated by economic grievances.
McKinsey’s approach to reforming foreign governments is dangerously flawed. The company’s school-lunch approach to economic reform — one size fits all, regardless of appetite and culture — makes no effort to consider each country’s unique history or social background. It also fails to consider whether the recipient’s political structures are robust enough to withstand the unrest that often emanates from job losses, privatization of state-owned enterprises and social services, subsidy cuts, and increases in the cost of living.
Coming back to point 2 above. Ecosystem and Startups, you can be forgiven for missing the news of a 100bn$ fund that the Saudis have setup up along with SoftBank out of Japan. So there will seemingly be a best buy moment for Saudi Arabia and Softbank they can go to the tech candy store and make more investments like the 3BN$ one the Saudis did earlier in UBER. This is the new reality and they are the new investors in town, they will need to look beyond their shores to fuel long term growth within their shores. The initiative they have kick started to amounts to future shock for a conservative society. Specific targets include tripling non-oil revenue by 2020, to roughly $141 billion, and the creation of 450,000 jobs outside the government sector.
So my question to Pakistani entrepreneurs is, are you ready because a funding revolution is coming to a city near you.
“The race is not to the swift or the battle to the Strong but time and chance happen to them all”