Some are starting to see it. As the world moves to the web and mobile, leaders of industry are beginning to see changes happening from their vantage points at the top of the chain of command. They also see threats to their positions. The term ‘burning platform’ refers to the idea that traditional industries can’t stay immobile because the platform under their feet is on fire. As the world moves from non digital to digital, leaders of traditional industries are beginning to adapt and innovate in this space in a bid to remain competitive in their markets and stay relevant.
The transformation has had an impact on many sectors globally, ranging from the media — with the onslaught of social networks, videos and new forms of content — to transportation which is starting to see a violent disruption from Uber, to banking which has seen a proliferation of financial technology companies and vertical accelerators focused on banking. Some giants are starting to move into this space, such as the partnership between financial giant Barclays and startup accelerator TechStars in London.
[pullquote]CEOs of traditional industries in Lebanon are not yet fully cognizant of the degree of change the digital revolution will bring[/pullquote]
This change has been slower in the Middle East. As Executive caught up with Omar Christidis, founder and CEO of tech conference business ArabNet, in the leadup to the sixth ArabNet Beirut conference, he claimed that CEOs of traditional industries in Lebanon are not yet fully cognizant of the degree of change the digital revolution will bring. “I think that is going to certainly reshape the industry. I think that it is going to have a more drastic impact than most CEOs expect — on all industries,” he says.
Corporates in the crowd
But to some, the change is becoming increasingly evident. Already, we can see the lineup of this year’s ArabNet Beirut integrating many more corporate elements than in previous rounds. Among the speakers representing the traditional industries are Neemat Frem of Indevco and Nayla Tueni of An-Nahar, who are coming to speak about how the shift to digital is changing their industries.
While some of them may be there due to the pull factor — i.e. Christidis and his team’s enthusiasm to welcome corporates to the digital world — some are legitimately starting to see their industries change under their feet. “The industries that have been disrupted harder are the ones where the CEOs have had more of a burning platform and have had to figure it out. And I would say media is one of those sectors, I would say it has been one of the fastest transformed of all the sectors.”
Having more speakers from traditional industries interested in web and mobile has been a key focus for Christidis in Lebanon, as having big players in traditional industries as potential clients for web and mobile companies would naturally be a boon to the sector. “They’re the biggest spenders in our economy. So if we want to move dollars, budget, into digital — whether that’s services, advertising, whatever — we need to get these guys to focus more on their digital platforms.”
[pullquote]“The extent of the disruption is bigger today than anyone imagines it”[/pullquote]
And looking towards the future of disruption in traditional industries, Christidis points to banking as the next big sector to witness an overhaul. The Lebanese banking sector in particular is the perfect potential client due to its size and profitability. While banks have always made heavy investments in tech — from the first core systems to ATMs to online and mobile banking and digital trading technology — Christidis claims that awareness about the transformations in banking is still shy. “We’re only seeing the tip of the iceberg in terms of the disruption in this space,” he says. “The extent of the disruption is bigger today than anyone imagines it.”
ArabNet goes corporate
The panel speakers at the conference are not the only things that have become more corporate. ArabNet itself has grown considerably since its first conference in Beirut in 2010 when it was itself still a startup. Five years later, with conferences in Saudi Arabia and the UAE under their belt, it has turned into a successful conference business of regional scale that, according to Christidis, has been profitable since day one.
The company has grown 30–40 percent per year over the past three years and recorded revenues of over $1.5 million in 2014 according to Christidis. Saudi Arabia is its biggest market in terms of revenues, followed closely by the UAE then Lebanon, he says. Saudi is also the fastest growing market and represents about one fourth of its revenues. This is in contrast to three years ago, when Lebanon represented 100 percent of business. Today the country represents about 25 to 30 percent, according to Christidis.
[pullquote]ArabNet has also branched into media both through online content and most recently with a quarterly print magazine[/pullquote]
With the events the most profitable business segment, currently making up 95 percent of revenues, ArabNet has also branched into media both through online content and most recently with a quarterly print magazine, which the company hopes to keep investing in. It is certainly no dull time to invest in media: the landscape is seeing a massive overhaul as outlets are either drastically changing to adapt to the digital space or dropping out of the race entirely. Christidis, however, is confident that the print magazine can be a sustainable business, citing still existing large budgets for print advertising.
ArabNet’s most recent business endeavor, however, is still for the most part in its ideation phase. The next venture, says Christidis, is in business intelligence, including industry reports and business matching. While Christidis notes that the model for commercialization is not yet clear for this segment, he sees great opportunity in this domain as the web and mobile industry is severely lacking in data.
This would also be a great boon to the sector. “For us, to move the industry forward, I think this is one of the key challenges. We need to have industry level data. We need to chart our own growth as a sector.” In line with these initiatives, the company is currently fixing up its database, cleaning its data and investing internally in knowledge management.
Last summer, ArabNet joined the Endeavor network, a nonprofit that helps businesses scale their growth through mentorship and access to market, through which the company hopes to further grow and institutionalize the business. Christidis explains that the decision to pursue business intelligence was partly informed by the Endeavor process, which encouraged ArabNet to see the added value their insights, understanding and relationship with the market could bring to a business intelligence operation. Endeavor also pointed out that this would be a highly scalable segment of the business.
With great growth, however, also comes greater need for institutionalization. As the company has never raised external funding, it remains in the hands of Omar Christidis and his mother Anbar Nashashibi, with a fifty–fifty partnership. Christidis explains that while legally they are not required to set up specific corporate governance practices, they see the institutionalization of the business as being important for the positive connotations that good governance entails.
[pullquote]”Family businesses have a bad reputation, especially among the younger generation”[/pullquote]
“Family businesses have a bad reputation, especially among the younger generation. They see them as kind of nepotistic and places where you can’t advance, places where there are no clear systems or policies, kind of chaos,” he says. “It’s really important that the company not be run like a family business … It’s an important thing that we have continued to invest in — to make sure that we have the systems and structures and policies, the staff feels that they are empowered to make decisions, that they’re not going to get whimsical decisions from family members.”
Family involvement in the business includes Christidis and his parents, Nashashibi and father Theodore Christidis. Nashashibi serves as the chair and supports them with VIP and government relations, while the elder Christidis advises and oversees the financials. Prior to ArabNet, Christidis was involved in Nashashibi’s event management company International Business Alliance Group (IBAG) as vice president.
The company is currently in the process of setting up a board of advisors with the guidance of Endeavor, says Christidis, and also hopes to have a board or directors within the year. With two legal entities in Lebanon and one in the UAE, it is currently in the process of structuring its corporate holdings in a way that makes sense for an investor or partner to come in.