This is how most of my conversations with a grad school friend of mine start.
What would your answer be?
My answer was to be an on the deck observer so I could maybe warn the captain ahead of time to watch out for the iceberg.
Apparently- the most common answer is to be the ship’s captain, so you could steer away from the iceberg. (also, a lot of control freaks out there)
But what if you can’t steer away that fast? What if the ship was not built for agility in record speed?
The answer my friend was hoping I would say was: the ships’ ARCHITECT.
In retrospect, you would want to be the architect of the ship. Why? Because with the knowledge you have now, you would want to go back in time and design the ship not just to be the most luxurious ship on the ocean, but you would make sure it can turn at record speed should unforeseen incidents occur.
So what does this have to do with Venture Capital? And specifically in the Middle East?
The Gulf States are in a time of transition now, adjusting to the new reality of lower oil prices. The iceberg in our Titanic analogy.
Here is what I see happening in the region. The current trend in startups has been to take on western startups, and to modify for the Middle East market. (see Careem). I see this as the first wave, where innovation is low, but infrastructure adjustments to allow for these products in the market are high.
Next will be the second wave, which will mostly be service companies that will emerge to facilitate the new economy. In this stage, I see the most job creation, as with the infrastructure for new industries underway, new services will need to be provided.
It is only in the third wave where I see real opportunity. These are the company’s that will revolutionize the startup space in the Middle east; as they will not be copycat products, they will not be service products (2nd wave); but they will be the foundations for the future.
To startups: Don’t create a product that caters to the current market, create a company that will SHIFT the market toward your product. The concept of Shared Economies moved the market, as initially we did not see the need for it, but once the concept started, the market SHIFTED toward this new reality.
To PE Investors: Invest in the foundations of the new economy
To VC’s: Invest in the next frontier