For 34 days in the summer of 2006, the world’s attention turned to Lebanon, where a bloody war erupted between the country’s militant group Hezbollah and longtime enemy Israel. But for Habib Haddad, who was hundreds of miles away from family at the University of Southern California, searching for local-language updates was almost impossible because he did not have access to an Arabic keyboard. Enter Yamli, the online transliteration service he invented that allows searches in Arabic using phonetic English.
When, in 2012, Yahoo acquired the company’s licensing rights, Haddad joined the ranks of an impressive group of industrious Lebanese entrepreneurs who have dominated multiple global companies across industries — telecoms, logistics, automobiles. In total, the 35-year-old Haddad has been involved as an engineer, angel investor or founder in no fewer than 10 companies in the Middle East. “Things that don’t work excite me,” says Haddad, speaking over the phone from Beirut. “It’s the same reason I live in Lebanon. A lot of things are broken in this country.”
Among the approximately 15 million people of Lebanese descent who live outside of Lebanon, that doer attitude seems ubiquitous, if we are to judge by the success of the business community. (Carlos Slim, the telecoms tycoon and the richest man in the world, is Lebanese-Mexican. Ely Calil, whose father, George, founded an oil empire in Nigeria, is one of the richest men in Britain. Carlos Ghosn, who is French-Lebanese-Brazilian, is the chief executive of French carmaker Renault and Japanese carmaker Nissan.) But increasingly, a slice of this highly successful community is turning back toward their place of ancestry. It’s good news for the motherland, which is home to fewer than 5 million people, ancient infrastructure, shaky internet connections, and, these days, increasing startup activity.
Habib Haddad at the World Economic Forum.
Source: Chris Ratcliffe/Getty
Just a few million dollars can go a long way in Beirut, Cairo and Amman, says Walid Hanna, who runs Middle East Venture Partners, a venture capital firm based in Dubai with $120 million of assets under management. “Mideast companies tend not to need a lot,” he says. “Their plan is to become Middle East and North Africa leaders, not global market leaders, so they don’t need $20 million; they need $5 million.” In 2014, invigorated by a predominantly Lebanese staff, Hanna, who is Lebanese himself, created a $70 million Lebanon fund aimed at startups in the country — but he didn’t find enough good deals at first, he said. In 2013, Lebanon’s central bank decided to set aside $400 million to guarantee investments made by local banks in startups. It created a highly competitive landscape where there are dozens of entrepreneurs to one investor, says Hanna. Rather than vie for business within the country, Hanna reached for his Rolodex and began calling the diaspora to convince them to bring their companies, or at least their back offices, back to Beirut.
This new generation of business leaders is, in many cases, imbued with a sense of mission about “fixing” the region. Haddad, now a venture capitalist at Wamda Capital, which is backed by Dubai-based Abraaj Capital, the biggest private equity fund in the Middle East, estimates that most of the projects he backs are companies tackling regional issues. He helps oversee a $75 million regional fund, launched last year, which has since backed multiple promising tech startups, including United Arab Emirates–based tech support company Geeks; regional Bitcoin wallet and exchange service BitOasis; and Jamalon, the Middle East’s largest online Arabic and English bookstore with more than 9.5 million titles.
For some who have lived outside the country, returning to Lebanon is just smart tax maneuvering. Ahmad Bizri, the founder of Domcontrols, a home automation system that remotely controls and monitors multiple electronic devices, was born and raised in France but moved to Beirut when he realized setting up a company in France would cost him thousands in taxes.
However, all hasn’t gone smoothly when it comes to talent, Bizri says — a bit surprising, given that in 2013, Lebanon was ranked globally as the fifth best country for math and science education, and as the 10th best overall for quality of education by the World Economic Forum’s 2013 Global Information Technology Report. It slipped to 28th place last year, a reflection of the less than 7 percent of public expenditures that went to education. Which makes hiring tough: “Lebanon is a consumer population,” Bizri said. “It’s been hard to find the right electrical production and the right hardware engineers.” As a result, Bizri has spent two years traveling back and forth to France to complete an initial prototype.
So it’s not surprising that only one regional company has reached the coveted “unicorn” status: Souq.com, proudly described as the “Amazon of the Middle East” and valued at $1 billion.
But just because it’s hard to get there doesn’t make it impossible, says Tarek Dajani, Lebanon resident and founder of web consultancy and design company Cleartag, which was just acquired by marketing giant J. Walter Thompson. “It’s not something that you try for a year and see what happens,” says Dajani, who founded his company in 2000. “I see a lot of impatience among the young people in Lebanon, but it’s rare to have an overnight success. Except with Arabs, it’s in our nature — we are very impatient.”