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(© Muhammad Hamed / Reuters / Corbis)

Why the Next Silicon Valley Will Be in the Middle East

Venture capitalist Christopher Schroeder sees the Arab Spring giving rise to a new innovative center in Egypt and beyond

What effect has the Arab Spring had on entrepreneurship in the region?

I went to this gathering in Dubai in 2010. So, it was shortly after the young man lit himself on fire in Tunisia, but was three months before things really heated up in Cairo. It is no surprise to me that the Arab uprisings happened when they happened, and it is no surprise to me that that which has driven people to want a new expression in politics and society also wants them to have a new creative expression in art, in music and in building businesses.

To be an entrepreneur, you have to be a little crazy, to believe you can build something that was never there before. I think in the Arab uprisings, there were a lot of people that said, “Holy cow, if Mubarak can fall, anything can happen. Maybe I can really build a business where it was never built before.” But, secondly, I think a lot of them very movingly feel that in building a business they are actually building a better society, that they are solving problems with technology in their day-to-day lives. It could be traffic, it could be crime, it could be education, and it could be creating jobs. The Arab uprising really pushed people to feel like what they were doing was not only great for themselves but also actually great for their communities, their countries and the region.

Investors and entrepreneurs are always, as you know, asking about the next “Silicon Valley.” So, is the Middle East it?

Every so often a geographic location becomes something that really changes the global dynamics. But, I think the wonder and the awesomeness of technology today is that we are going to be seeing hubs of technology and innovation all over the world. That isn’t to say that being in an ecosystem where you have a lot of smart people and people who inspire you around you doesn’t matter. You may see more of it in some great centers where people like to live and therefore great talent want to aggregate. But, I think around the world you are just going to be seeing ecosystems of innovation pop up on a regular basis in multiple locations because people can connect better and better with technology.

I saw unbelievable entrepreneurs and innovators in Egypt. I saw unbelievable entrepreneurs in Amman, Jordan, because I think the government and the young people there are really focusing on it. And, at the same time, I have seen them in Beirut and other places as well. I think the idea of there being one hub that rules it all is just not going to be as much in the calculus. Silicon Valley is the exception and not the rule.

Which heavyweight tech companies are investing in the region, and how?

A lot of the major tech companies for a long time like Microsoft, Cisco, and Intel have been in the region. The Arab world has 350 million people. A lot of growth is happening in mobile and other technologies. But what I loved and was very excited by is that some of these players and newer ones like Google not only are building their services there, but they are actually embracing the ecosystem and helping entrepreneurs to develop.

For example, Google sponsored one of the largest startup competitions in Egypt. They literally hired a bus to travel up and down the country to encourage entrepreneurs not just from Alexandria and Cairo but all around the country and gave a huge award of money. In the last six or nine months, LinkedIn and PayPal have opened up operations in the Middle East. They view their jobs as not only selling and marketing and developing their services but as really doing what they can to educate the markets about the use of e-commerce and about how to find great talent and employees.

Can you tell me about Internet, cell phone and smart phone penetration in these countries?

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