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A New Egypt for Business and Innovation

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Originally published on LinkedIn on July 15, 2013

To watch CNN – that is to say when they interrupt coverage of the great issues of Hollywood to cover anything else – one would only think Egypt is on the precipice of disaster. And, as I’ll come back to, disaster is a scenario for us all when leadership incompetence rules the day. But most gringos in Washington who know I am about to publish a book about startups in the Middle East, look at me with a slight tilt of sympathy as if to say, “I am so sorry, how can startups happen here.”

Interestingly, I get no such looks from my startup friends both here and in Egypt. They know that in uncertainty lies greatest opportunity to fix problems, to innovate new ideas, to move quickly when others are tied down to their old narratives.

Let me be clear, I'm not arguing that armies stepping into the fray of domestic politics are perfect. The history of such actions is mixed at best. But what is so missed in the discussion here in the U.S. is three things:

First, the Muslim Brotherhood in every action since November made clear they had no intention of creating the political and business climate great, innovative economies require. By November if not earlier, the “elected” government began to systemically, extra-constitutionally seize power -- trying to control the military, abrogate the courts, change the election laws, redraw the constitution. They underestimated how technology made transparent each of their actions; how clear vast numbers of Egyptians knew this path offered no future; and how willing millions were to check them every step of the way.

The legendary global economist, Hernando de Soto, well noted yesterday in the Spectator how Egypt and the region are yearning to enter a real economy if it were offered to them. He writes that in Egypt there are great “Assets that cannot be used to their fullest, cannot be used as collateral for loans or changed for other assets. Seeds that can never grow. Given the chance, they would pull themselves, and their countries, out of poverty. But they are denied the chance, because the rule of law is a cozy club to which only the elite belong.” That the Muslim Brotherhood was caught stealing power and delivered nothing with the power they had was unforgivable. If we have learned anything, we have learned that Egyptians – connected, entrepreneurial, forward thinking – want to enter the obvious world coming. The rules of the 21 century are economic freedom, transparency, and bottom up innovation in the name of better lives. It will not, and I argue cannot, be squashed but for a time.

Second, and whose economic ramifications are often underestimated by the west, is that major global players have just last week effectively said: “Egypt is too big to fail.” Saudi Arabia and the Emirates are pumping massive sums – their $8 to $12 billion dwarfing the $1.3 billion in aide we are debating in Congress. I have never been to a hotel in Cairo which could not have been in Beijing – filled with investors from Asia, Africa and other parts of the emerging world. As Leslie Jump, a partner in Sawari Ventures -- one of the first, great Cairo VC funds and accelerators founded by Egyptian and global investors Ahmed Alfi and Hany Sonbaty -- adds in a fascinating interview in Fortune last week: “The market is still in the stage that India and China were ten or fifteen years ago, and it certainly would help to have outside investors come in and validate certain companies. But is there (even) enough capital inside of Egypt? Sure there is. And certainly within the region.”

Third, and therefore, there is no scenario of earlier elections or some other check on power that makes the future more hopeful than it is today. Egypt simply could not have survived three years of political consolidation that would continue to squash debate, economic growth and the embracing of transparency and inclusiveness of ALL talent that is required in a globally competitive world. One founder of a great Egyptian education startup, who believes millions in the Arab world will use technology to educate themselves despite the poor infrastructure, summed it up beautifully for me: “Look, I was out in the streets and was not going to stand for this. But the little secret is I was building my company regardless of this political bull sh--. Things are happening regardless – now there is a chance of it moving faster. But there’s no going back.”

There is no going back.

If you haven’t seen the viral video of the 12 year old in Egypt explaining all this better than I ever could, it is a must watch.

It was fascinating to learn today in the Wall Street Journal that it has been translated into Chinese and is viral there – and the governments can’t stop it, though they are trying. The Economist has a reasoned, and hopeful series on why we should not write-off the Arab Uprisings too early, how women are rising around business and startups and that the ramification of technology is still in its earliest days: “Although the Arab world is behind other regions in internet use, it is catching up fast, along with smartphone penetration and e-commerce. What is more, cultural and linguistic barriers provide some protection against foreign internet giants.”

Time will tell if this is the beginning of something great or political leaders’ (in Egypt, the region and the West) never missing an opportunity to miss an opportunity.

But economic, business and technology change is happening rapidly and regardless. It is global and on the right side of history. And the tools that empower anyone to build a better life for themselves, their families and the societies will only increasingly be in everyone’s hands and only getting better.

 

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