Jordan - the cradle of internet start-ups

Jordan has tapped a rich legacy of modernisation and entrepreneurship to create the most exciting community of technology companies in the Middle East.

Thinking outside the box: driven by a need to create jobs for an educated young population, the heart of technological entrepreneurship beats fast in Jordan.

If you spend a lot of time reading about start-up internet companies in the Middle East, the same country pops up time and time again: Jordan. It is one of the smallest nations in the Arab world, lacking the population of Egypt, the wealth of the Gulf or the history of Syria. But what it has, without a doubt, is the most exciting community of technology start-ups in the region. When King Abdullah II ascended to the Jordanian throne in 1999, he quickly began work on sweeping reforms in business and education, winning his country praise from international institutions. The moves by King Abdullah were similar to those pushed by other modernisers in the region. The Nazif Cabinet in Egypt, the Hariri family in Lebanon and reformist governments across the Gulf have placed entrepreneurship, ease of doing business and the move towards a knowledge economy among the pillars of public policy. Fawaz Zu'bi was the minister of information and communications technology in King Abdullah's Cabinet during the reforms of the first half of the decade. Mr Zu'bi says the changes were driven by a need to create new, quality jobs for the country's booming population of educated youth. "The king understood from day one that jobs would be his number one challenge," he says. "And 10 years on, the language has not changed. He still sees it the same way - not just for Jordan, but the whole region." More than 40 per cent of Jordan's university-aged young people are enrolled in tertiary institutions, almost double the regional average. And like the rest of the region, youth make up the major part of the country's population. These two facts mean the country needs to create tens of thousands of new skilled jobs every year. While Jordan's reforms are mirrored across the region, there is now a visible movement of entrepreneurial technology ventures in the kingdom. Ask members of that movement why Jordan appears to have succeeded where others are still trying and you will be treated to a host of different theories, mostly complimentary. Culture, many will tell you, plays a far more important role than public policy. Hazem Malhas, the chief executive of Optimiza, one of only two publicly traded IT companies in the Arab world, says Jordan's business culture is in many ways the last man standing among the great ancient merchant cultures of the Levantine region. "The people of the Levant, Egypt, Iraq - they are history's entrepreneurs, the traders of the world," Mr Malhas says. "The Silk Road and the Frankincense Road met here, in Petra and Aleppo. The culture of the area is entrepreneurial by nature. "But then Egypt, Iraq and Syria were nationalised by the military-socialist regimes. They came to the oldest commercial centres in the world and nationalised them. Without any understanding of what that meant, they took over farms, companies and lands. "Here in Jordan, we didn't go through that. If your father bought a bank or cement stock in 1950, you still own it today. If your grandfather bought land or started a company, you still own it. That gives this place a unique character." Ahmad Humeid, who at 38 jokes of being a dinosaur among Amman's internet community, says a relatively open culture is an important precursor to the success of content-driven internet start-ups. "It's about freedom, especially in the media and internet," Mr Humeid says. "There was a real tolerance for a culture of blogging, which was where a lot of the initial excitement about the web came from. People are relatively at ease in starting their own things and speaking their mind." Mr Humeid was involved in Arabia, one of the Arab world's first dotcoms, in the mid-1990s. Since then he has seen Jordan's entrepreneurs take to the technology in waves, coinciding with periods of economic difficulty. "What we need for activity in this space to grow is oil prices to stay low and the financial crisis to continue," he says. "What killed the IT drive was high oil prices, which flooded Jordan with petrodollars and corrupted the economy. "Every time there is an initiative for self-reliance - to rely on our nation's best resources, which is our people and their minds - you get easy, cheap money coming in from the Gulf and building skyscrapers. And this is no way to build a knowledge economy." The Jordanian government's biggest contribution to entrepreneurs has been to "get out of the way", says Emile Cubeisy, who runs the venture capital fund IV Holdings. But the success of opening doors and removing red tape is dependent on those willing to take advantage of a better environment for start-ups, and the recent property bubble had many of these people looking in other, easier directions. "It's all about expectation of return," Mr Cubeisy says. "Who on earth would think of backing some risky technology company when they can just buy the plot of land across the street and watch it double in value in a year?" But Mr Cubeisy, who worked under Mr Zu'bi in the years of government reform at the start of the decade, says Jordan's ecosystem of entrepreneurs is having a multiplier effect that will become increasingly visible in the years to come. He says that in the offices of Jeeran, one of the companies in which he has invested, many of the young staff are already working on new projects in their spare time. "There are 43 people working for Jeeran right now and I wouldn't be surprised if 15 of them don't either have a venture on the side, or are building one right now," Mr Cubeisy says. "It's that catalytic effect that is making Jordan so exciting these days." Laith Zraikat, Jeeran's co-founder, says companies like his, founded at the start of the decade, represent a wave of technology entrepreneurs that were coming of age before the government's reforms. Mr Zraikat believes the second wave of start-ups, emerging from the staff of companies like Jeeran and Maktoob, the Arab world's most popular web portal, will be the real fruit of Jordan's reforms. "We'll see the impact of these actions in the next 10 years," he says. "We [Jeeran] were well on our way long before those policies came out. Don't mistake all the examples you see today as the result of those policies." In the meantime, Mr Zraikat says, companies are building up their services and realising that the dream of creating the next Microsoft or Google is more exciting than the practical work of running a technology businesses that can make money in the Arab world. But the sense of energy and excitement surrounding Jordan's technology drive has faded, many say. Omar Koudsi, Mr Zraikat's partner at Jeeran, says this is because the country's entrepreneurs are now engrossed in the tough, slow, less glamorous work of converting big ideas into real businesses. "The hype has disappeared, but it has been translated into real companies," Mr Koudsi says. "When you move from hype to real work, the ratio is like 100:1." [e-mail]