Why Do Startups Fail In The Middle East

Start-ups are in a nascent stage in the region. There are some great success stories and many failed ones. There are quite a few problems faced by  start-up entrepreneurs across various stages. Weak teams, little knowledge of the customer, lack of access to cheap institutional finance, dealing with regulations, change in business model are some of the many reasons why start-ups fail at different stages.  This is nothing unusual for any region where people are trying to experiment and learn from their failures. Middle East has the potential for start-ups in long run considering the demographics, and need for good products and services. Recently we came across a resignation letter dated 24 Feb 2013 from a co-founder of a Dubai based Business Intelligence and Performance Management Start-up, which is worth sharing. The letter has some really interesting learning shared by the co-founder.

“Dear all,

The time has come for me to leave [company name]. It’s very hard for me to leave the start-up I always wanted to build, the place where I found my passion, but let’s face it, with the current circumstances, people, attitude, and structure, this company is not going anywhere. Unfortunately, [company name] has failed before it even started.

Even if we take a project or two, it’s very unlikely the company will magically become a real and solid company. Projects don’t build companies, a vision does; commitment, dedication, passion, understanding, cooperation, and leadership build companies.

Mistakes have been made, but over and above we lacked the very basic requirements of any startup:

  • Not investing financially with even 1 Dollar or at least searching for investors—except for the mandatory licensing cost that we had to pay. I don’t know how on earth a business will have return if it doesn’t initially have an investment. RON: Return on Nothing.
  • As a result of the aforementioned, it was impossible to have full time employees or to recruit one sales person as a basic necessity.
  • Pursuing monetary return in all ways available by engaging/discussing various and widely unrelated business opportunities as opposed to focusing on what we do best and doing it right regardless of the financial return at this early stage.
  • The very obvious detachment from reality and the unrealistic excitement and overconfidence in targeting—or the attempt thereof—business opportunities that are completely out of hand which led to confusion, disappointment, and loss of time and resources. Additionally, there was a huge gap in partners’ understanding of [company name]’s value proposition and what we can offer better when compared to the market and what we cannot.
  • The gap among partners’ commitment and sense of urgency towards [company name] which might be due other commitments, limited time, or lack of interest—with all due respect to all partners but this is the sad truth.
  • Lack of visionary and experienced leadership that can steer [company name] to the right direction. Leadership is not about being strict and having control—while management is; it’s about being flexible and enforcing trust and inspiration, it is leading people versus managing work, having followers versus subordinates, seeking a vision versus objectives. It is about personal charisma versus formal authority, being friendly versus being formal, risk taking versus risk minimisation, and taking blame versus placing blame.

Please consider this as my official, final, and irrevocable resignation from [company name]. This resignation is effective immediately and I release myself from any liabilities or responsibilities of or to [company name].

From now on, I don’t have any relation with [company name] and will not engage any activity, meeting or project for the company. Please don’t associate my name with [company name] in any way and remove it from any documentation/company profiles available.

In the end, it was a pleasant journey, I personally enjoyed the majority of it, and learned a lot particularly from the mistakes that have been made. And I’m really happy to have worked and got to know each and every one of you and I wish all of you the best of luck and who knows, [company name] might come to life and become something someday.

My Warmest Regards”

Letter Source: Ambitious.me

2 Responses to “Why Do Startups Fail In The Middle East”

  1. Ali Safarani
    March 5, 2013 at 12:42 pm #

    Great letter. Love the firm and professional language.

    Many problems haunt entrepreneurs in the Arab World while funding being the biggest.

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