Why The Majority of Egyptian Entrepreneurs Fail?

In a country like Egypt, the main role of entrepreneurship is to provide an alternative for a whole generation. Looking at the Egyptian youth and you could start wondering what the choices are. The unemployment rate in the 15-29 age range at 27.3% (I would say more than one-third). The government is driving the economy towards a black hole and the political system is already blocking all roads for innovation, creativity, and motivation. We are stuck with only one hope.

Entrepreneurship is the only hope

Taking entrepreneurship to the next level will be the next big thing to do in Egypt. In a country with the lowest rate of education quality and lack of professional training, the role of startups is critical. Startups can create job opportunities, evolve the market, bring technology to the community and change the mindset of the young people by creating role models to follow.

Yet, Egyptian entrepreneurship still falls behind comparing to other countries like Jordan, UAE, South Africa and even Kenya. Even we have a lot of brilliant startups in Egypt that managed to overcome the disastrous business environment and achieve regional and global reorganization. We also had a high record of epic fails. Although, failing is part of the life cycle of entrepreneurs but it is taking longer in Egypt. I’ve seen a lot of close friends not able to move their startups an inch further. I attend events where I see the same startups displays from the last year with the same offering and the same horrible business approach. I decided to investigate more and research the issue. Surprisingly, most of the obstacles were related to the mindset more than anything else. So, let’s discuss further…

Being emotional

One of the biggest issues for entrepreneur could be his own culture. How? Okay, let’s agree that we Egyptians are emotional rather than rational. This is part of our culture and the way we are raised, our families, friends and personal emotions takes a big part of our judgments and tolerance towards our life goals.

Yes, we are distracted by things like how my family feels about my new project? How my stepfather gonna react if I leave my job to have a startup? How I would get to convince my mom that I am doing something that actually has a value? This is such an example of how emotions can disturb our mindset in a long road full of uncertainty towards dreams.

Another example of how the emotional mindset is not helping: In the last 7 years I met a lot of Egyptian entrepreneurs that co-founded their startups with their best friends. It is not a bad idea to start your business with your friends but the question is: Are you going to confront each other at critical situations? Are you going to fire him for his shitty work? Don’t take it emotionally and fire him. Sorry but startups is a business where the right decision should be sharp, firm and taken. Most of the co-founder friends I know are together because of their friendship relations only. I call this type of business “bel7ob business model”.

Understanding the basics

Once a wise guy said “When you have an idea, try to examine it with the most embarrassing questions. If you manage to provide accurate answers then you have something”. A lot of startups are sometimes approaching the market or pitching venture investors with raw ideas. Here is my formula:

Idea + Creativity = Idea

Idea + co-space + Coding + Business Card = Just another app at the app store

Idea + Research + Strategy + Business Plan + Hard Efforts = A Startup

Idea + Research + Strategy + Business Plan + Hard Efforts + Experience = A Brand

Before you start to sail with your idea you need to understand the rules of the real business world. Some startups approached me for digital marketing consultancy and my first questions to them were: What is the role of marketing? What are business objectives for you? Do you have a business plan? The answers were usually no, none or soon.

Filling a business plan template with figures to pitch the investor is not enough!  Understanding business concepts and models is more important than filling some papers or website pages. Egyptian entrepreneurs are usually living in the bubble of Entrepreneur magazine and Forbes, reading motivation stories and thinking this is the kind of knowledge they only need.

The lack of understanding branding is reflected quite obvious in the marketing materials I see for startups. Conversations going on during events are showing that many co-founders have Zero market research, difficulty to understand the difference between B2B and B2C, confused vision for the business model and pinky dreams for their growth rate and cost per acquisition.

Let me just say it out loud: “Reading books about branding fundamentals is more beneficial for you than reading Steve Jobs bio”. Learning about marketing strategies, business models, profit margin, cash-flow, direct sales, project management, buyers’ life-cycle, and online consumer behavior are essential for every single entrepreneur.

It is about time to admit that we need to spread the knowledge and sciences in the community of startups. In other words, we need to inherit and adapt to business knowledge.

The Management of Ego

Startups in Egypt are very profitable business for print houses. The business cards of co-founders are much more than the humps in the circle road. Some Egyptian entrepreneurs are extremely hard to handle. I’ve met few of them who had a great start but because they were not flexible or reliable they lost that success.

A very smart guy who launched his venture-funded content creation startup and it was very successful at the beginning. I approached him as a friend offering an opportunity for a project with a big brand. Before he even knows the brand or the deal size, he replied me with “Nope, busy”. This short answer made me send the 120k USD deal to an agency at Lebanon. I would say that was very expensive “nope”. Or in better words, it was a very expensive cost of a moment of ego!

Egyptian entrepreneurs need to work on their leadership qualities such as quality judgment, emotional intelligence, reliability, and above all the management of ego.

Lack of management skills and weak competition

Egypt suffers from a lack of talents and with talents; I don’t mean only creative talents. The talents that matter the most for startups are the human capital that can build proactive teams and lead it further.

Going through a lot of interviews with investors who are insisting on taking advantage of the Egyptian entrepreneur skills, I usually used to state one big obstacle: Lack of management will kill your potential ROI. After few rounds of trying, they will eventually come back to me with the same feedback “The Egyptians are creative but they don’t deliver on time, they are not providing quality and they lack teamwork ethics”. I advise to hire none Egyptian manager and suddenly the improvement started to show up.

The lack of professional management skills is killing a lot of brilliant startups in Egypt. Apparently, some people might have great ideas but without having managerial talents to maintain the success of business objectives.

Competition would always provide a healthy environment for startups. If you manage to visit Indonesia one day, you will notice how creative they are with their coffee shops interiors. The more those young people compete with each other the more you see innovative cafes in every street you go to. Coffeeshops startups in Egypt are boring to death. This is just one simple example of how the environment could push you towards innovation and creativity.

We live still in the era of single projects. In each category of apps or service startups, you will find one startup (you might see a couple more under this category who are actually copying this one and yet they helplessly believe that they are different). In travel startups for outbound trips and adventure traveling, all startups are copying each other. They copy destination and activities and you will hardly notice any difference besides a logo. Let’s not get further with the long list of examples, but a quick visit to the campus or a couple of startup events and you burst into the scene of poor local competition.

Finally, we are not done with this list as there is major factor related to the lack of appropriate laws, the shitty internet infrastructure, stupid banking and online payment systems, crazy and ignorant venture capital investors, a fear of risk-taking community and the list goes on and on.

I believe that there are things that we can start with. I listed them and I hope to get your feedback. If you are one of my friends with startup so don’t call me bad names in the comments. Keep the insults for private messages. Pretty please.

Note: If you are one of my beloved friends, don’t call me bad names in the comments. Private messages for insults. Pretty please.