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The dilemma for Timeline and its 35 workers is making the jump from an upstart into a major player in the Western-oriented — and ultra-competitive — realm of video game development. Ahmed Metwally knows one thing for sure: His company can churn out a rollicking video game.
Last summer, Timeline Interactive, of which Metwally is the CEO, released Cell Factor, a carnage-filled romp for Microsoft’s Xbox system that was arguably the most successful video game ever produced in the Middle East.
The dilemma for Timeline and its 35 workers is making the jump from an upstart into a major player in the Western-oriented — and ultra-competitive — realm of video game development.
“Selling to the world from the Middle East, which is not known for its [gaming industry], is an uphill battle,” says Metwally.
That’s why he has turned to Endeavor, a non-profit group with an unusual approach to economic development. The organization helps medium-sized companies grow their businesses, offering an array of pro-bono services, with the ultimate aim of creating jobs and raising living standards in developing nations.
Metwally, along with several other entrepreneurs, sat down with Endeavor officials last month for an in-depth interview, one of the final stages of a months-long vetting process that will determine whether they are accepted into Endeavor’s program.
This is the second round of sit downs since the organization opened its Egypt branch in 2007 — it has offices in 10 other countries — and it has plans to extend its reach. Managing Director Ahmed Ezzat, says it is looking to bring 10 entrepreneurs under its umbrella this year, up from its current stable of four.
The push comes at a critical time for Egypt. The government has estimated that the country will need 700,000 new jobs annually until 2015 to accommodate a growing workforce while lowering unemployment, which stands at 9% according to (much-disputed) official figures.
Endeavor believes investing in employers will spur employment and raise living standards, something that has, for the most part, not happened here despite five years of strong GDP growth.
“We look for companies that can create value rather than those that extract value,” says Ezzat.
Membership in Endeavor is exclusive: Only about 40% of entrepreneurs who make the interview stage, like Metwally, are accepted into the program.
For those candidates who can demonstrate the potential for growth and wealth creation, the benefits are many: Endeavor offers everything from free strategic advice to face time with the country’s top business figures. The organization’s chair is Naguib Sawiris.
A Tough Slog
Vestiges of the country’s socialist past — industrial licenses, an abundance of red tape and an underdeveloped legal system — stifle entrepreneurship, according to experts. While the situation is improving, the World Bank ranks Egypt at number 104 out of 183 nations when it comes to the ease of doing business. That places the country directly between Sri Lanka and Ethiopia.
“The list of barriers is long. It’s almost overwhelming,” says Ezzat. “But we have a long history of entrepreneurialism. There is a natural tendency in people to wake up and want to improve their lives. You have to allow that to happen.”
Few people know the challenges of developing a business better than Hind Wassef, one of the founders of Diwan, Cairo’s leading chain of Western-style bookstores.
In late 2008, the company, whose in-house cafés and immaculate collections were a dramatic departure from most bookstores, was in the middle of an aggressive expansion drive and bleeding red ink.
“There was no model out there for us to follow,” says Wassef. “There was nothing to rely on.”
And so, Diwan began working with Endeavor, becoming an inaugural member of the Egyptian setup in March 2009.
Endeavor poured over Diwan’s financials during a top-to-bottom evaluation that “forced us to look at ourselves,” says Wassef.
Over the next few months, Endeavor and its team of experts, consultants and mentors helped Diwan re-organize its warehouse, draw up a policy manual and talk with retail experts abroad.
Wassef, who has seen Diwan grow from three outlets to 11 since 2008, says Endeavor’s help was instrumental in getting her company over the hump.
While the company declared a loss in 2009, Wassef is looking forward to the future: Two more stores are poised to open in 2010 and the company is branching out to children’s activity centers.
Strong Returns
Three other entrepreneurs were in the same class as Wassef: Nadia Wassef, her sister and Diwan co-founder; Fatma Ghaly, the general manager of Azza Fahmy jewelry; and Khalid Ismail, president of wireless technology firm SySDSoft.
The three companies, according to Endeavor, saw their sales jump an average of 33% and their staffs grow by 10% during 2009. Internationally, Endeavor’s 409 “high-impact” entrepreneurs head companies that employ over 98,000 workers and posted revenues of $3.1 billion (LE 16.8 billion) in 2008. About 40% of those firms grew despite the global economic crisis.
The local branch of Endeavor is hoping to expand beyond offering guidance and into uniting promising companies with venture capitalists, angel investors and other sources of funding.
It will face some challenges, though. A former investment banker and venture capitalist, Ezzat concedes that companies are sometimes skeptical of the organization: Here is a non-profit group that is offering to help for-profit businesses, free of charge.
Hind Wassef was among them: At first she balked at opening up her company’s books, a key part of Endeavor’s evaluation process.
Eventually, though, she was won over by its expertise and mission.
“Egypt needs this,” she says. “When you start up a business you have no money. You’re often operating on goodwill. [Endeavor’s programs] can create organic growth, growth that is real.”
Endeavor is still soliciting businesses, often making cold-calls to potential recruits. (In other parts of the world, offices are flooded with applicants.)
But Ezzat says as the organization’s profile grows, and its message spreads, more companies will come calling.
Metwally, the CEO of video game developer Timeline, agrees.
While he won’t know for a while whether his company made the cut, he’s excited about what Endeavor could mean for the country.
“Fostering entrepreneurship helps create a solid middle class, which we are losing in Egypt,” he says.
The Benefactors
Anon-profit group, Endeavor’s Egypt branch relies on an endowment from its board of trustees, which includes Orascom Telecom CEO Naguib Sawiris and COO Khaled Bichara, Vice Chairman of Arab African International Bank Hassan Abdallah and Elijah Bassily, CEO of IT developer Virgitech. Endeavor declined to reveal its total endowment, saying only that its six board members donated between $25,000 (LE 135,000) and $250,000 (LE 1.35 million) apiece. |
