Angel investor, entrepreneur and founder of The SmartStart Fund, Prashant Gulati, has grown his share of MENA startups over the past years. He’s also grown intolerant to repetitive business concepts in the regional entrepreneurship scene – with a “What’s Not Next” list to match. The list goes something like this: “Don’t come to me and start with, ‘I’m developing an app’. An app is not a business. If you come to me and say, ‘I am developing a service that uses an app,’ then it’s a different thing. Do not come to me and say, ‘I’m developing a deals site’. Do not tell me, ‘I’m developing a music streaming service’, because I’ll start asking you about where you got the rights from, and then you’ll say, ‘I’ll get them’ – but that’s not good enough. Also don’t come and tell me, ‘I’m developing a location-based service which tells you what to do, where to shop or what to eat’. Don’t come and talk about another restaurant table-booking application site. Don’t come with another food delivery app or service. Don’t come and talk about another social media network, of any kind – [such as for] doctors, elephant owners etc. Don’t come to me and talk about a dependent-upon-an-existing-platform service, such as a Twitter app or a Facebook client – because you don’t have control and tomorrow they’ll switch you off.”
Funnily enough, Gulati’s list perfectly profiles MENA startups for which the funding, but certainly not the lifeline, has, so far, been extended by regional investors. “Staying around and being profitable are two different things. There’s an opportunity in creating small, vertical and niche, businesses,” says Gulati, particularly “around social media monitoring and analytics”. As far back as 2008, Gulati invested in his first India-based monitoring company, which was then sold to the Dentsu network. “I do think that there is an opportunity for a company that does listening and sentiment analysis properly in the Middle East region to then be acquired by a global company,” says Omar Christidis, CEO and founder at Arab entrepreneurship hub, ArabNet.
For regional entrepreneurs in social and digital media, such opportunities usually came in the form of gaps that, a couple of years back, giants such as Google, Facebook and Twitter had failed to fill with incomplete tool sets, products and services.
Owned by UAE-based news management company News Group International, SocialEyez is not technically a startup. It has, however, kept the profile of one over the years, positioning itself as an agile social media monitoring and analysis hot shop, particularly finding its niche in those hit the hardest during the UAE’s economic downturn. “During that time, well-established companies [in the UAE and the region] wanted to know why people were no longer working with them or asking for their products and services. There were a lot of conversations on social media at the time and while everyone was losing business, we were winning it,” explains Maher Sarieddine, business development executive at SocialEyez.
Similarly, Khaldoon Tabaza, founder and managing director of iMENA Holdings – which invests in, builds and partners with companies in the online industry – says the company has built its proprietary social media business, iMENAsocial, around a very focused offering of social media management, tech development and CMS for the largest 500 companies in the MENA region. “The primary focus is on strategy and advanced technical development, as well as on building the in-house capacity of companies in terms of training and processes in social media,” he explains.
While big groups, such as iMENA Holdings and News Group International, have a bird’s eye view on their online offerings, the region’s individual digital and tech entrepreneurs entered through very narrow loopholes left by the global giants in the late 2000s; and they have stories to show for it.
In 2007, Elie Khoury, then a college student, was running online businesses using Google analytics. “However, I found that I needed analytics that, one, were real-time and, two, showed me the behavior of individual users. I looked for a service that would do this for me and when I couldn’t find anything, I decided to build it myself,” explains Khoury. He took the idea to his now co-founder, Jad Younan, “and that’s how Woopra was born,” and is now based in San Francisco.
Joseph Noujaim, a computer engineering graduate, had started in the web space as early as 1997 in Lebanon, when he set up Virtual Gates, a company that developed websites, before leaving to France. Noujaim then had several stints in IT and consultancy companies, working mostly in software development. It was in 2009 that, along with his friend George Ghalbouni, he realized that “hardware had become a commodity, and that “there was a gap and complete separation between clients’ Customer Relationship Management (CRM) software and web channels. Even when we pitched for clients, CRM would fall under the IT department and web under the marketing department. We decided to create our own case study as to how they can be integrated”.
He then founded Bloomerangs, the company behind BLOOOOM – marketing and audience relationship management software that plugs CRM programs into the web, social media measurement and listening tools. Bloomerangs initially started with website creation, the thinking behind which was that clients’ online properties would be used for lead generation. “We started preaching something called audience relationship management, which wasn’t a common concept at the time. We were building our own content management systems, which allowed us to introduce audience measurement and data collection features within the website,” explains Noujaim, adding that BLOOOOM has since grown to integrate mobile and SMS within its platform.
Also in 2009, at a much younger age and in the developed, fast-paced San Francisco bay, Mo Al Adham built his startup, Twitvid, around Twitter’s mobile video shortcomings. “Twitvid was the first app allowing people to upload mobile video on Twitter. Within the first month, it had garnered more than one million users. NBA players and celebrities, such as Justin Bieber, were using it,” says El Adham, taking credit for the discovery of supermodel Kate Upton, who he came across “doing this really cool dance on Twitvid. I thought she was gorgeous. Within a few months, she was on the Sports Illustrated cover.”
El Adham, however, had to expand on Twitvid’s one offering, as Twitter did; in 2012, Twitvid became Telly, a platform allowing users to share and discover videos, aggregating them from their friends’ social media feeds, from Facebook, Google+ and Twitter, among other networks. “We didn’t want it to be a stand-alone platform for people to just upload videos and we didn’t want to rely on just the social networks,” explains El Adham; which is why in 2013, he joined hands with Mohammad El Saadi, another US-based entrepreneur who was “obsessed with Netflix”, and fixated on bringing the concept to the region, starting Sha-Sha Entertainment in 2012. By 2013, El Saadi had gained traction with content owners and distributors, and merged his venture with Adham’s, leading to the launch of Telly Plus, a premium video-on-demand service only for emerging markets.
While Wajdi Saoud was working at regional TV channel MBC on making talent show The Voice more integrated into social media, it occurred to him that he could do the same for the whole channel and its advertisers. And so, Saoud turned his seed of an idea into Veez, a platform that was to “offer an easy-to-use solution to curate social media, whereby clients can monitor and analyze the most popular and trending social media bits,” he explains. There’s just one catch: Veez’s platform, which is mostly aimed at serving media and TV owners, in particular, is highly dependent on its relationship with Twitter, which, although offers it access to data that goes back to 2010, could just as easily and abruptly cut it off.
“The problem is that the analytics for that data are pretty finite and can’t be patented. If you’re building a service which is 110 percent dependent on Twitter giving you data, what do you do when it cuts you off?” says Gulati, referring to Twitter’s announcement of a new set of API (application programming interface) rules in August 2012, tightening the grip around its third-party ecosystem.
Gulati speaks from firsthand experience, when a company he funded, UAE Tweets, offered a dashboard on trending topics in the UAE, before Twitter “geographically started dividing the tweets”. Amir Farha, managing partner at BECO Capital, says the glitch in business models such as Veez’s is in that they make for “feature products to platforms, such as Twitter, and not stand-alone ones. Twitter will never allow people to monetize of it anyway.”
Meanwhile, Tabaza says that the MENA region’s deficiency in technical talent and sophistication – which, if available, are fairly expensive – concedes to “building barriers of entry based on technology.” “I’m not sure an Arab company has a specific competitive advantage in running an audience engagement platform over a company like Wildfire, which has big teams and can build scale across the globe,” concurs Christidis. He gives the example of SocialEyez reportedly using online media monitoring software-as-a-service company Meltwater for its business as proof that MENA companies cannot necessarily build “better listening tools just because they are based here”.
Indeed, SocialEyez utilizes third-party monitoring tool SDL SM2 and global social media monitoring platform Socialbakers in its services.“SocialEyez has no space in the non-Arab world. It’s following and trying to create a narrow regional play,” says Gulati.
In the highly competitive space of social media monitoring and analytics, BECO Capital’s Farha says MENA entrepreneurs can only differentiate themselves by either “building a unique product with competitive pricing or offering extensive sale and aftersale services.”
In this regard, Sarieddine says SocialEyez differs from Facebook Insights and Google Analytics in that its scope of monitoring covers all social media, “including thousands of sides, platforms, blogs, news articles and message boards on forums.” Moreover, the company has built a complementary community management unit – comprising account and creative managers, as well as app development teams – to devise social media campaigns and marketing for clients. “Since we have an analysis unit in place, it allows us to do successful community management,” he explains, adding that the manual work done by the SocialEyez team offers added value, in comparison with the likes of international social media marketing and engagement programs Meltwater and Radian6 – now Salesforce Marketing Cloud – which provide access to listening tools, but not in-depth analysis of the monitoring results.
However, “as far as I understood, SocialEyez stopped planning their own tools,” says Christidis. Unlike SocialEyez, which depends on a larger structure to sustain operations, entrepreneurs whose business concepts and competitive edge lie in proprietary innovation and development cannot get away with using only third-party tools. Saoud says that Veez offers the “screen” to clients, whereby MBC, for example, can view the tweet count, messages, manually moderated timelines, trending topics, follower count changes, leaderboards for most active tweeters and general sentiment on Twitter, all for one episode of Arab Idol, and do so by several variables such as country and device; “which allows MBC to effectively display the most popular and relevant Twitter messages during an Arab Idol live show on TV, for example. They can also set a hashtag against another for contestants and track these hashtags through the platform,” explains Saoud.
He admits, however, that “until now, most TV stations use other platforms for exact analytics data, such as Topsy [a certified Twitter partner and social search analytics company, which was bought by Apple in December 2013]. Analytics are part of our package. We focus on other things”, such as accompanying gadgets; the Veez team recently built a physical prototype of a “cloud, which lights up every time the brand is mentioned on twitter,” explains Saoud.
Confronted with the multiplicity of international, as well as regional video-on-demand platforms available in the MENA region, Telly’s Al Saadi and Al Adham say that the concept of their venture revolves more around solving the problem of “figuring out what to watch in the first place. We’re taking that water cooler conversation to the Telly platform.”
Meanwhile, Khoury says that although Woopra had no competition when it first started, companies with similar offerings that have mushroomed in recent years had it refocus its USP. “The one thing that has always differentiated Woopra, and still does to this day, is not the real-time nature, but the ability to get a deep view of customer behavior,” he says. BLOOOOM’s Noujaim, on the other hand, saw an impending threat when talks of software-as-aservice first emerged and companies flocked toward building CRM online services and plug-in tools. “Then there were the likes of Woobox, which, for $50 per month, offered brands voting, polling and couponing services for their Facebook pages.”
He insists, however, that BLOOOOM’s strength resides in a “tailor-made plarform for each client, even though the back end is the same”. Initially, BLOOOOM offered a user-friendly interface for clients, allowing them to segment their audiences and accommodating the integration of loyalty programs, couponing systems and point-of-sale activities. “Then we made this loyalty program more interactive and gamified, switching from purchase-based to engagement-based loyalty. Bascically, BLOOOOM was positioned as a platform to analyze all of the consumer data deriving from clients’ websites and social media activities.”
Although, in 2011, “competition would have to be a consortium of three to four companies”, for his company, Noujaim says, Adobe’s Marketing Cloud, which does “exactly what we are trying to do, on a bigger scale, in a more structured and organized manner, for as low as $50 per month,” is the main competitor.
For now, Noujaim rests assured that Adobe’s competitive solutions are yet to take off in the market and is focusing on positioning Bloomerangs as a software agency that worked in the shadows, its product, BLOOOOM, being a plug-in product for digital agencies. “This strategy saved us because, at first, we had a conflict of interest with some agencies that did not want to tell clients that they were using BLOOOOM,” he explains.
Set against “US products that are built around US mindsets,” Noujaim says BLOOOOM’s second strength point is localization, whether in back- and front-end technicalities, understanding of clients’ needs or simply market know-how and exposure. “It takes a lot of effort to integrate these international products into the regional clients’ systems; the language is different, not to mention the actual human communication is difficult. When clients call customer support that is located somewhere in India for an Adobe product, it is hard to communicate,” he explains.
Saoud says Veez’s natural language processing (NLP) software, developed in Arabic, allows clients to read and analyze users’ Arabic communication on Twitter; an option he says is currently unavailable on any Twitter analytics platform. Similarly, Sarieddine says that SocialEyez’s team of 120 people across the GCC allows the company to do monitoring and analysis in Arabic, while Telly is working on “Arabizing” the platform.
“There’s opportunity in Arabic content and it’s a space where none of the global tools have succeeded. Then again, it’s a space where none of the local tools have succeeded, as it’s not easy,” says Christidis.
“In the US, everything can be done remotely for clients, because the latter understands the value proposition of these kinds of products, whereas in the region, they [clients] need to be educated about them. To build a competitive advantage means to create enough of a footprint of salespeople in the region that are able to build relationships with customers on a direct basis. And I think it is something that is culturally important,” says Farha. He gives Zawya and Bayt.com – a company initially founded by his cousin and now partner at BECO Capital, Dany Farha, which has grown into the biggest regional job portal – as examples of how market knowledge and localization from product, sales, marketing and relationship perspectives can shield regional entrepreneurs from international competition.
“Bayt.com has more than 70 percent market share in recruitment in the region and sales offices in eight or nine markets. LinkedIn has not threatened its presence in the region.”
However, the expansion within the fragmented MENA region remains a daunting task for entrepreneurs, requiring a thorough and costly understanding of the cultural and business specificities of each country. “The legal framework is tough to crack and it’s time- and effort-consuming. As a holding company, we created a service and representation platform in key countries in the MENA region – the UAE and Saudi Arabia – which enables our companies to do business in this region right away,” says Tabaza.
Gulati adds: “If you are incorporated in the UAE, you can’t use the same incorporation for Qatar. You have to repeat the process for each country. These are overheads that startups can’t take, and that’s why their growths are stunted. In Silicon Valley, you introduce something, it percolates all across, because you have an almost homogeneous market of a few hundred million people. Then the talk becomes on how can you target. Here, it is how can you actually become legal.”
The Saudi market, which, due to its sheer size, is considered a cornerstone for regional expansion, is particularly challenging for entrepreneurs, says Farha, “because it’s hard to find good-quality engineers and sales guys who want to live and work in Saudi Arabia”.
Noujaim, however, has found a way out of the expansion conundrum by establishing partnerships across the region that would resell BLOOOOM. Meanwhile, SocialEyez’s Sarieddine says: “We feel that we have an advantage over other agencies, because our 120 staff members are distributed across the MENA region, in Morocco, Egypt, Lebanon, Jordan, the UAE, Saudi Arabia and Kuwait. They have a clear understanding of dialect, culture and social media in these markets.”
Today, SocialEyez counts 100 clients across categories, working with the likes of Etisalat, Canon and the Ministry of Labor, as well as with agencies. BLOOOM has worked with JWT, Leo Burnett, Interesting Times and Rizk Group, and Woopra has grown to attract large enterprises and businesses. Having recently launched, Veez is working with two media agencies, is tapping into direct business with brands and is looking at extending its services to Europe. “I like that these businesses monetize from others, which make for pretty high profit margins,” says Farha.
Still, Gulati says that the MENA market is finite, both in size and in clients; which, perhaps, explains Telly’s introduction of the paid Telly Plus service and BLOOOOM’s elaborate three-fold pricing strategy. “First, there’s licensing fees for each of the activities the company undertakes, then, professional service fees for the platform’s customization and, then, optional hosting fees that include security compliance plans,” explains Noujaim, adding that, on average, a project with a website and a mobile app running on BLOOOOM costs approximately $20,000 in Lebanon and $60,000 in the UAE, “which still amounts to fourth or fifth of prices charged by the likes of Microsoft”.
Woopra, on the other hand, based its business model, which it still uses to this day, on a monthly subscription fee. Noujaim believes his company’s prices are set at just the right level, positioning it as a local player with global quality and competence; and, in this regard, he’s done quite a lot of branding for Bloomerangs, its logo initially “giving the impression for some people that we were an American company based in Beirut”.
Gulati says: “I personally believe that this part of the world is very brand-conscious and this is true in many places. We don’t give as much credence to regional brands as we do to global brands,” which is why Woopra’s Khoury says he and his team were “lucky to gain a lot of initial traction, thanks to great press coverage from all the major tech media firms”.
Telly’s El Adham says the platform has gained popularity through sheer word-of-mouth, and zero paid marketing and advertising. “If one of the Arab companies was able to crack the Arabic language listening, in particular, I don’t think that it can be a global player, but would rather be acquired by a global player in this space,” says Christidis. Indeed, Noujaim says Bloomerangs is at a crossroads; it can either grow into a regional powerhouse or getting bought out by a global powerhouse, “the same way Yahoo did with Matkoob. The day Adobe will get to the market, it will look for a well-established local company to arabize its systems,” he says. However, his personal ambition is to take BLOOOOM to other regional markets, through a consortium he’s assembled with two like-minded and single-minded companies, social media company, Alternative Character, and strategic consultancy, Johnson Luke. “Whenever one of the three pitches for a client, they pitch on behalf of the three and this consortium is paying off in big accounts, where we’re competing with the likes of Leo Burnett.”
Sarieddine says SocialEyez has become a fully integrated social media agency, with plans to expand both the team and market coverage across the GCC region, the Levant and North Africa. Now that he’s based in San Francisco, Khoury plans to spend the next several years “taking advantage of the ecosystem here. We have waited for this for a long time, so we’re excited about what the future holds.”