What would happen if we refrained from tunnel vision? We optimize potential. Here’s why investing in high-risk ideas is a low-risk idea.
Last month, I shared my cynical yet realistic portrayal of how a company like Twitter would end up if it had been created in Bahrain. This month, I will try my best to showcase some of the numerous reasons why we are unable to have nice things over here (such as the Twitter company, for instance).
During the ill-fated investments and property bubbles of the last decade, investment houses and the business elite invested an obscene amount of money on things that didn’t exist, buildings that weren’t built, projects that never saw the light of day, many of which happen to be in the remotest places of this planet. The “business elites” put their trust in men wearing expensive suits or Gucci “Ghetras” and threw their money into a bottomless pit until the warm summer of 2008.
During this excessive spending frenzy, not a single penny was invested in some local startup or crazy idea with high-potential that can possibly revolutionize this region. Strangely, there were attempts to invest in overseas and mindless startups that eventually ended up like the Dodo bird: extinct.
“Most startup ideas were repetitive, stolen and wrongfully applied without a sensible approach.”
On the other hand, local entrepreneurs and startups lacked the vision, creativity, and spirit to shoot for the moon. Most startup ideas were repetitive, stolen and wrongfully applied without a sensible approach. Most entrepreneurs in the region lack the pretext to realize the full potential of their ideas. As we have seen, time and time again, startup after startup lose the battle, halfway through their journey. If a local faced what Evan Williams, the founder of Blogger faced a decade ago, we won’t see the service today. When Evan encountered difficulties, he kept the revolutionary service alive by running it right from his kitchen, until it was snatched by Google for an undisclosed amount.
The business mindset has an obsessively intimate relationship with the status quo. This irrational intimacy causes unnatural rejection of new ideas, technologies or techniques that can change the hard-coded commandments of doing business. This mindset seeks to see the money rolling even before services or products are out. Investors are unable to realize the potential of an idea without being driven to see traditional business plans that can showcase when they’d be able to double or triple their investments.
Larry Page and Marissa Mayer wanted to scan every single book in the universe. This challenge started by the couple scanning a 300 page book manually from start to finish within 40 minutes. The idea was later on developed by utilizing more hands and machines until it became Google Books, which hosts over 30 million books today. Just amuse yourself with the reaction you’d hear if a Bahraini startup tries to experiment with a crazy idea like Google book scanning experiment, self-driving cars or internet balloons.
We witnessed thousands of acquisitions and investment decisions made in this region that were based on solid, financially proven formulas failing, one after another. We also witnessed Google’s acquisition of YouTube, a company that knew nothing about making money for $1.6 billion and Facebook’s acquisition of Instagram for US$1 billion. Why? It’s simple: potential!
“Just amuse yourself with the reaction you’d hear if a Bahraini startup tries to experiment with a crazy idea like Google book scanning experiment, self-driving cars or internet balloons.”
The venture capital system, or whatever exists of it, in this region will have to be redone to focus on the potential of startups and to help entrepreneurs organically develop their disruptive ideas without the stress of making money from day one. Any successful business, service or idea will have to be sustained to gain some market share, get big and develop without having someone nagging over their head about their payback period.
We need to see a financing and investment system that can spot a winning opportunity that can make a dent in the universe, instead of looking for an electricity bill and financial statement.
