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Egyptian technology startups stand on the shoulders of giants

Source: Techcrunch

Mike Ducker

CONTRIBUTOR

Mike Ducker is the founder of the Ecosystem Forum, a platform to share effective practices to build ecosystems in emerging markets. He also mentors for Accelerate Baltimore. He earned his MBA from the Ross School of Business at the University of Michigan, is a former Certified Management Accountant, has finished 7 marathons and reached the summit of Mt. Kilimanjaro

 

For a young Youssri Helmy, it was a Tandy Radio Shack (TRS) 80 that first piqued his curiosity in technology. For Wael Amin, it was the Commodore 64 that he received when he was four years old. Indeed, Youssri and Wael developed a passion for using technology to solve some of the world’s toughest problems, and put that passion to work by founding an Egyptian technology company called ITWORX, a firm that would grow to employ more than 800 people with eight offices worldwide.

For Youssef Aly, it was an MSX computer he programmed to show his brother he was the dumbest guy in the world and that Youssef was the smartest. For one of his co-founders, Hamdy Khalil, it was his Atari 2200. They founded eSpace as one of the MENA region’s original “hacker firms.”

As a young PhD student at MIT, Dr. Khaled Ismail was motivated by the engineering challenge of designing the smallest devices possible. This drive led him to create Egypt’s first chip design firm, SySDSoft.

To the concern the parents of 16-year-old Waleed Khalil — the founder of several electronics firms — it was his interest in electricity and the products that use it that launched his journey to develop Olkya, the first electronic products company in Egypt.

A young Alaa Agamawi got his start working for his family business in 1979, which re-sold western computers into Egypt. There, his desire grew to develop Arabic software that could reach the masses in the Middle East and to build an Egyptian technology industry that global markets would notice.

With technology and curious minds, these founders not only built great products and companies, they created the foundation for a strong and resilient technology sector that has been an economic driver and job creator in a country looking for stable footing.

Founding fathers of Cairo’s technology sector

The technology localizer

Alaa Agamawi is one of the pioneering founders of Egypt’s IT sector. Though his family business re-sold western computers in Egypt, he knew that software, not hardware, presented the best growth opportunity. The family business was slow, as English-based software had a small market in Egypt in the mid-1980s. The problem, Alaa saw, was that the operating system DOS did not work in Arabic.

This sent Alaa down a path to lay the foundation of the Egyptian technology industry. In 1982, Alaa founded Arabic Information Systems (Info Arab), which created the first Arabization utility for DOS. He later developed a simple Arabic word processor. Slowly, multinational software companies started to see the Arabic language countries as a viable market and started to approach Alaa to localize their software. In 1986, he developed an Arabized spellchecker for Apple, which was the first systematic Arabic analyzer.

There were several spin-offs from Info Arab from some of the incredible engineers he hired. One of those engineers was Youssri Helmy, who was very interested in graphics applications. Alaa knew Youssri’s curious mind was limited at Info Arab and supported him in his next endeavor.

Putting Egypt’s’ IT solutions on the global map

Youssri Helmy has always been a man ahead of his time, with incredible technology insights and vision. He went to Cairo University at the age of 17 to learn electrical engineering. Youssri thought the classes were a waste of time, so he started to learn about software development on his own at night. While working at Info Arab, Youssri was responsible for porting accounting software to an Apple computer in Arabic. He loved writing software and wanted to know what software Egyptians wanted.

So in the late 1980s, he created an Apple user community called “Apple Pie” in Egypt. He met all 1,000 Apple users in Egypt to understand how they wanted to use their computer. He found that people wanted a bilingual drawing package, and thus his first startup was born. He developed a low-end graphics program that Apple loved, and soon he had a licensing agreement with Apple. Unfortunately, the royalties stopped in 1992 and he had to make important decisions about his future. He was 30 years old and married with a daughter. Luckily enough, he met Wael Amin and they went on to create the largest software outsourcing company in Egypt.

The company was impressed and asked if there were other Egyptian software developers.

 

Wael Amin was also an overachiever, and at a very early age he saw the power of technology and wanted to harness it. He went to the American University in Cairo (AUC) at the age of 14 and graduated by the time he was 17 in 1993. He then started with Microlabs with two partners, developing software products for the Middle East. Youssri meet Wael and was excited about Microlabs because it was developing Microsoft Windows applications and he thought it would complement its Apple applications, so he bought the company. In a year, they were bankrupt.

One week after the bankruptcy, Youssri and Wael started ITWORX together to use technology to solve problems. A former employee of Youssri’s found a job at Corel in Canada. The company was impressed with this engineer and asked if there were other Egyptian software developers. Soon Youssri was on a plane to Canada and ITWORX had its first customer. The relationship with Corel was not typical for software outsourcing in the 1990s. Corel wanted to produce ideas from ITWORX, which included a video editor that won several awards. ITWORX grew to 1,000 engineers at its biggest in 2001, and was able to launch a couple of spin-offs in the U.S. and Egypt.

The big dreamer 

Dr. Khaled Ismail has always been driven by engineering challenges. Although MIT wanted him to stay on after he graduated with a PhD, he wanted to work for IBM research labs and wanted to push the limits of making chips faster. At IBM he developed about eight patents and set a world record on the speed electronics could move on a chip.

Although Ismail was very successful in the U.S., he wanted to return to Egypt and develop technology products. He founded a couple of companies, including in 2002 SySDSoft, which designed wireless technologies on chips. This type of technology was not heard of in Egypt. Ismail’s goal was having a team of 1,000 highly skilled engineers. In the first week of business, SySDSoft had customers on five continents. In three years he was able to hire 100 amazing engineers. Once they focused on developing the intellectual property based on LTE technology, things really took off for SySDSoft.

In 2010 as consolidation was happening in the industry, Intel approached SySDSoft to acquire them, to which they agreed. In fact, Ismail was negotiating with Intel in the United States as the 2011 revolution was happening in Egypt. Although the revolution slowed down the negotiations, it did not stop it and terms were reached a month after the revolution, even with the lack of Egyptian government creating massive political risk and weekly protests.

The Egyptian hackers

The first computer science program at the university was not in Cairo but at Alexandria University. There were two groups of friends who went to Alexandria University in the 1990s and worked on software problems. One group had Youssef Aly, who would go to the MIT website and look for computer problems to solve; the other group, lead by Hamdy Khalil, would do weekend-long hacker events at his house. During this time, in late 1990s-2000s, an agreement with Microsoft and the government of Egypt was put in place to get rid of illegal software downloads at the universities. Youssef and Hamdy were upset about this and started an open source software and web development endeavor; they called the company eSpace in 2001 with 10 co-founders (not the smartest move at the time).

For the founders of the Egyptian tech sector, their leadership is shown by the future generation of business leaders they help to empower.

 

In 2004 they got a big break — an important contract from Unilever that requested a sales automation solution. eSpace decided to do the project at cost, but was able to resell the software; this turned these hackers into a real business. During the next seven years different founders came and went as eSpace grew its reputation in open-source programming. Soon after the 2011 revolution, the government needed to communicate to the citizens about an upcoming referendum and wanted an IT company to do it for free and in two weeks. eSpace took up the job and utilized its hacker culture to complete the platform in a week, for free. eSpace then got eight more election projects from the government as they became the go-to firm for open-source technologies.

Electronics is not just for Asia

At the age of 10, Waleed Khalil took a course on being an electrical technician and fell in love with electronics. In the late 1980s, Waleed would take apart electronic devices and build electronic circuit boards. After high school, Waleed went to Cairo University and studied electronics, but the courses were not interesting; what was more interesting was building products. He was so good at this many of fellow students would ask him to build their electronics graduation projects for them.

Electronics was new to Egypt and he and a couple of students developed the electronics club, in which students with a common passion built sophisticated electronics products in their free time. This group of students had a vision, but most other students just made fun of them, calling them “Einsteins.” This particular Einstein was fortunate to meet with Ahmed Bahgat, who was the founder of a major industrial group. Ahmed gave young Waleed the large task to manage some of his major electronic manufacturing processes. He then joined a company called Metra, which wanted to design and manufacture local circuit boards in Egypt; Waleed became the factory manager and this helped him move toward his passion of building products.

The U.S. company Mentor Graphics then hired Waleed, and he learned how to design software. Waleed knew he was a great engineer but wanted to be a stronger business person. He was fortunate enough to receive the Yousef Jameel Scholarship and earned an MBA at the American University in Cairo. After he graduated in 2007, he started his own company, Oteena, in 2008 which became a distributor and retail consultant for electronic companies in Egypt. After visiting an R&D Center in Korea, Waleed wanted to be the first company in Egypt to design and build electronic parts and sell into Africa. So in 2010, he created Olkya, which produced flash drives and smartphones, and later designed and built the first Egyptian tablet.

This was just the beginning of the Egyptian tech ecosystem

Getting the tech industry working together

One of my favorite quotes about leadership comes from America’s sixth president, John Quincy Adams. He said: “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” For the founders of the Egyptian tech sector, their leadership is shown by the future generation of business leaders they help to empower. For example, Alaa had a much bigger vision than Info Arab; it was important for him not just to build a business but an industry.

So in the 1980s he and a couple of other Egyptian technology founders created the Software Board, which later became the Software Association, of which he was the chair between 1996-2011. He wanted the industry to work together to demonstrate to the international market the power of Egypt’s technology sector. His vision was to get the industry to work together to present its ability to develop cutting-edge technology that would provide value to global markets.

ITWORX, the startup spin-off machine

ITWORX hired the best and wanted employees like Wael and Youssri — engineers who had a curious mind and wanted to solve the world’s problems with technology. To do this they had to create a culture more unique than most traditional Egyptian companies, a culture where it was OK to make mistakes. Engineers at ITWORX had unique opportunities developing different technologies for a diverse number of industries around the world. Whenever an employee wanted to experiment with their own business idea on the side, Wael and Youssri gave them the freedom to do this — and were even willing to give small loans when these employees left to start their own businesses.

This growing and reliant industry would not have happened without the original technology founders from the 1980s and 1990s whose DNA was to solve problems with technology.

 

Because of the culture, there are 48 spin-off tech companies that came from ITWORX, according to a study by Endeavor Insight. This includes Mohamed Rafea, co-founder of Bey2ollak, a crowd-based traffic app that launched during the revolution. Wael and Youssari are no longer part of ITWORX, but continue to support young founders, like Wael Amin, who is now a partner in one of the Middle East’s premier venture capital firms, Sawari Ventures.

Tech startup investor and champion

For more than five years on most Thursday afternoons you could find Dr. Khaled Ismail at his favorite coffee shop on the island of Zamalek mentoring a new startup. Since he sold SySDSoft to Intel he felt obligated to pay it forward and became a full-time mentor and a serious angel investor. For example, one of his investments was in young founder Mostafa Hemdan and his startup RecycloBekia, which is helping to solve the huge waste management problem in Egypt. Like ITWORX, SySDSoft has been a major source of spin-offs, with 23 tech companies being spun out. Ismail has moved from angel investor to venture capitalist and one of the founders of Algebra Ventures, which is the largest VC fund in Egypt.

The development of the startup hacker culture

In many ways, eSpace revolutionized how product development was done in Egypt. For that reason, so many of the people who leave eSpace are some of the most important parts of the startup ecosystem in Egypt. This includes Ramez Mohamed, the CEO of one of the most successful accelerators in the Middle East (Flat6Labs), and Ziad Mokhtar, who is a long-term Egyptian venture capitalist and founded Algebra Ventures with Ismail. Several startups founders were spin-offs from eSpace, like Sabrine Assem and her firm Untap, which is an innovation agency leveraging crowd sourcing.

Super mentor

There is no better mentor for startups than Waleed Khalil. For him, guiding startup helps him. “It helps your business when you help others. Good things and challenges sheds light in other areas, it doesn’t need to be the same industry or the same product. You become smarter.” About 10 of his employees have spun out different firms with Waleed’s encouragement.

Egypt technology sector — a resilient economic driver

The technology sector in Egypt has been a reliant shining light in a country that has had gray clouds since the 2011 revolution. While national GDP growth has been stagnant and only picked up in 2015, the ICT sector has been growing 13 percent per year from 2012 to 2015 and currently is the fastest growing sector in Egypt while growing employment to more than 200,000 people. This is important because Egypt has one of the highest rates of unemployed college-educated professionals in the world, and the technology sector is one of the only industries able to employ these graduates.

This growing and reliant industry would not have happened without the original technology founders from the 1980s and 1990s whose DNA was to solve problems with technology. They ensured their passion and DNA was downloaded to their employees and other founders they mentored. The leadership of Youssri, Wael, Alaa, Youssef, Waleed, Hamdy, Khaled and several others have to lead to the development of an industry that provides economic viability and hope to a country that has struggled to find stability over the last couple of years.

 

 
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