Startups: Silicon Valley Vs. The Emerging World

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Daily Crunch: Hot Stuff

Editor’s Note: Omar Koudsi is a co-founder and CEO of Amman, Jordan-based Jeeran, the largest review site in the Middle East and North Africa. You can follow him on twitter here @omarfk

On my way to attending an Endeavor Summit this summer, I had the following conversation with a customs officer upon arriving in the U.S.:

Immigration officer: What do you do for a living?
Me: I work at a startup, and I’m here to meet people from my industry.
Immigration officer: Ok. How long have you been at your current job?
Me: We started around five years ago.
Immigration officer: Five years! And you still call yourself a startup?!

This interaction has stayed with me because it seems to me to be a great example of the discrepancy between the reality distortion field that is Silicon Valley — and the reality almost everywhere else. Even the immigration officer at the San Francisco airport was of the opinion that five years is too long for a company to consider itself startup.

Being from Jordan and having visited Silicon Valley on a number of occasions, this visit (along with others) continue to show how the realities of the Valley stand in stark contrast with what an emerging world founder, particularly in the Middle East and North Africa, face to start and scale a Web business.

I believe the lack of a well-developed ecosystem (funding, mentoring, risk culture, lawyers, human resources) puts the burden tenfold on the entrepreneur in the emerging world. In many cases, foreign entrepreneurs have to do ten times the lifting of an American startup — for a much longer period of time to boot — in order to succeed.

My company (Jeeran) was lucky to find a VC firm called IV Holdings that had emerged in 2006 — way before entrepreneurship became cool in our part of the world — and it changed everything. Of course, it still took us a whole year to close our first round of funding, and really, throughout that period, there wasn’t any negotiation of terms — it was all just pushing papers.

In the Middle East, few had done this kind of transaction before; we (founders, VC partners, lawyers, gov. departments) were all flying by the seats of our pants, figuring things out as they happened. Not to mention, before we were able to find a VC firm and secure our first round of funding, we had worked full-time on Jeeran for a full three years, bootstrapping, relying on what revenue we created, and additional generosity from our mom/brother/cousin investors. This is true for the majority of startups in the region.

But, back to my trip to Silicon Valley: I attended a workshop at Stanford University given by a well-known human resources expert on the best ways for startups to find top tier talent. One of the tips he gave us was to interview at least 10 people for each position before choosing the right candidate — to take your time and be selective.

I found it humorous, since we barely find a handful of people with enough expertise to make a difference, let alone 10 people lined for the database, UX, and product management jobs we (and so many others) are hiring for. Founders in the emerging world are mostly occupied with building-up talent as it comes along in bits and pieces, not recruiting it.

Like most startups, we wanted our team to feel ownership over what we were building, so we sought to create a stock option pool. We worked with the top lawyers in the region and it took us around eight months to have it ready. In the valley, I got the feedback that such paper work (term sheets, share holder agreements, etc) are template-based and get pushed along by administrative assistants.

Some of this much-sought-after legal framework is so popular they get published on Techcrunch! Of course, I forwarded this link to our legal counsel who found it quite useful.

I found it comforting that many founders in Europe and even the East Coast complain about many of the same issues: Lack of venture funding, lack of talent, and an ecosystem that penalizes risk takers. Of course, this situation has much improved for them and for us, but it made me feel less lonely when I hear tales of East Coast founders trying to convince Wall Street talent to join a startup. We still lack that kind of talent pool (thankfully I guess, right?) to recruit from, but clearly the cultural challenge of jumping ship to a startup is shared.

My team and I will continue to make pilgrimage to the valley and soak in experiences. We will happily put up with the mocking of how long it takes startups to shift to second gear for us to learn as much as we can.

However, here is an invite for the Valley to go out and see how the startups of the world are solving problems in ecosystems void of the many resources taken for granted by the Y Combinator-accelerated generation.