‘The startup cycle is finally taking off’

Omar Christidis – founder of ArabNet – on Lebanon’s entrepreneurship growth

Omar Christidis is the founder of ArabNet

Omar Christidis is the founder and CEO of ArabNet, the leading online platform for everything startup and tech in the Arab world which hosts annual events in Dubai, Riyadh and Beirut. In anticipation of the ArabNet Beirut conference that will be held next week from March 4 to 6, Christidis spoke with Executive on ArabNet’s scalable business model, the Lebanese market’s strength and new developments within the startup space in Lebanon.

 

Does ArabNet fit the traditional Lebanese business model — where you test your product in Lebanon and then scale to the region?

I think that Lebanon has tremendous competitive advantage when it comes to the conference business. People love to come to Lebanon when times are good. If the political situation had not deteriorated the event could have grown to be much bigger here.

Expansion is definitely natural, and taking it to new markets — and the region’s biggest markets — is something that our attendees wanted.

Each event that we do has its own distinct character and leverages the strengths of the local market. The Saudi event we are holding is focused on the Saudi market, which is quite difficult to crack, so it’s much more local than any of our other events; it’s our only event in Arabic. We hold the entire event, from marketing to promotion to actual speeches, talks and panels, in Arabic. It’s also more focused on Arabic media.

The Dubai event is less focused on the entrepreneurial angle, and more focused on the big business angle. Dubai is all about big business, multinational corporations and industries. So the things that we do are around travel, tourism, education and healthcare. We also find that that’s the place where a lot of marketing and advertising budgets are located. Even if they are spending region-wide and managing brands region-wide, it’s usually centralized in Dubai.

If Saudi Arabia and Dubai focus on different things, what’s the focus for the Lebanon conference based on the Lebanese market?

We see Lebanon, Egypt, Jordan and the Levant as a production hub for content, development and design. If you’re sitting in Dubai and you’re running an agency, you’re most likely either sending your production to the Levant or India or Pakistan. But you’re most likely not doing it in-house in Dubai. The same goes for Saudi. We see an opportunity for this area to become a real production hub. We’ve got great talent, creative talent, we’ve got a good educational system and we’ve got competitive labor prices. There’s a very competitive value proposition there.

The other place we see Lebanon really shining is in the creative sectors. When it comes to fashion, for example, it’s pretty amazing how quickly some of these Lebanese designers have become renowned.

In terms of ArabNet’s business model, where are you taking it and how are you developing?

We’ve got our website where we write news and analysis about the web and mobile industry. And we’ve got a startup database which today holds more than 800 startups from around the Arab region; they’ve all posted themselves, which is a pretty amazing resource. We see an opportunity to grow that side of the business. We are investing more in it, and we see a lot of clients who are interested in engaging us in that side of the business as well.

How is Arabnet monetized?

Mostly through sponsorship and also fees for people to participate.

How much more profitable is the conference getting as the years go on?

We’re still in a phase where we are investing in the growth of the team and investing in new markets that are not immediately profitable. When you go into a new market, you have to build new relationships with partners and clients and attendees and all of these things. So we’re still in that growth phase.

There are a little over 40 companies announced to exhibit at ArabNet this year. How much has the conference grown in Lebanon?

I would expect it to be around the same size as last year. I don’t expect to see massive growth to be honest.

Has it been difficult to bring speakers from outside of Lebanon?

We’ve had some speakers who have declined because of the political situation. I expect that we will see less traffic from Saudi Arabia and the Gulf Cooperation Council in particular. Although we are still seeing people sign up from those countries, which is more than I expected.

But I anticipate the event will be slightly more local this year, although we are pushing really hard to continue to attract lots of people from outside the country. We definitely expect to see still a lot of people coming from Jordan and Egypt. Egypt particularly because its close, and they have a similar political and security situation there — it’s no different from home.

One huge boon for the ecosystem, which ArabNet has always promoted, are the partnerships between smaller startup companies and market leaders in ICT. Outside of ArabNet, how well is the Lebanese market fostering these partnerships?

We’re seeing a lot of Lebanese businessmen now investing in startups. People from traditional sectors, such as consulting and telecom, are now starting to invest in the next generation of startups. This is critical, because in Silicon Valley that’s one of the key things that builds this virtuous cycle. Successes invest in entrepreneurs who become successes that invest in entrepreneurs. I think that the Lebanese diaspora is playing a very key role in this today. Top consulting, media, advertising and telecom guys from around the region are investing directly into startups.

How recent is this phenomenon?

About a year to 18 months. Quite recent.

Last August, the central bank released a circular to incentivize banks investing in startups. Now that banks are starting to invest in venture capital funds that will be deployed into an ecosystem with a weak deal flow, should we be concerned about a venture capital bubble?

That has become a question of supply and demand. I think that a key challenge for the circular is that it allows investment into Lebanese startups alone, so there will be more inflation on the Lebanese deals because there are only so many startups that are going to come out of Lebanon. Hopefully this initiative will encourage more Lebanese to begin startups.

But I think we are also seeing a lot of new entrepreneurs, and moreover a different type of entrepreneur: those who are mid-30s, mid-career professionals, who worked in consulting, banking or advertising, left their day jobs, and are now starting their own businesses. They have contacts, money, relationships, and know how to sell and manage. These are more mature entrepreneurs who, in my opinion, are more likely to succeed.

I cannot imagine how a freshly-minted college graduate is going to understand not only how to build a business — to come up with an idea, and sell it to clients — but also how to close a deal if they’ve never even seen what a deal looks like. I think there is a myth of the 21-year-old entrepreneur that is not realistic.

Livia Murray

Livia covers business, finance and economic policy for Executive.

Joe Dyke

Joe has extensive experience covering the Syrian crisis, oil and gas, and Lebanese government and regulatory authorities, among other topics. He was Executive's online editor from 2012 to 2014, and led the Economics & Policy section from 2013 to 2014.

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