How a Great Power Falls Apart
Decline Is Invisible From the Inside
Mohammed al-Halimy, a 13-year-old Gazan entrepreneur and game programmer, is known by the Electronic Intifada news publication as the “Youngest Geek in Palestine.” Earlier this month, at the finale of a weeklong start-up boot camp, he pitched Filmer, a freelance photography marketplace, to a group of international and local judges. Along with dozens of other Gazans, ages 13 to 56 and half female, Mohammed was vying for an invitation to incubate his start-up at Gaza Sky Geeks, the war-torn region’s first tech accelerator. Only around a quarter of the 46 teams made the cut, and nerves ran as high as on the Shark Tank television series.
Gaza has both the highest literacy and the highest unemployment rates in the Arab world. With roughly 75 percent of the population under the age of 25, the resulting opportunity gap is getting only worse with time. In a place that is blockaded by sea and virtually sealed off by land, the Internet is salvation. Although most Gazans can’t physically travel, their minds—and entrepreneurial activities—can.
Entrepreneurs tend to play a more minor role in the Arab world’s wealthiest countries, particularly in Saudi Arabia—a popular entry market for Gazan start-ups. Small and medium-sized businesses account for less than a quarter of the kingdom’s GDP and jobs. Meanwhile, many Palestinians are “necessity entrepreneurs,” who start businesses as a refuge from unemployment. That’s why small and medium-sized businesses constitute 98 percent of the Palestinian private sector and employ almost half of the total work force.
Gaza’s start-up ecosystem transforms those who are otherwise “necessity entrepreneurs” into “opportunity entrepreneurs,” driven by inspiration—not only desperation. According to Mohammed, until recently, “the siege and other economic restrictions” prevented a start-up community from forming in Gaza. But now, with an ecosystem in place, “entrepreneurs can innovate, knowing that there are people who believe [in] and support them.” Among those supporters are Ibtikar, a West Bank–based fund for early-stage Palestinian start-ups, and other international investors. Start-ups incubated at Sky Geeks that have investor backing include an Airbnb for office spaces called Maktabi (“My Office” in Arabic) and 5QHQH (“Laugh Out Loud”), a mobile app for sharing jokes, comics, and other humor.
When investors evaluate opportunities in Gaza, they aren’t necessarily looking for new technologies. Rather, they seek teams that innovate by localizing existing business models for the Arab market. Pitches at Sky Geeks’ boot camp included a TripAdvisor for the haj pilgrimage, a mobile app for new mothers, and an Arabic DIY online community. Only 0.8 percent of online content is written in Arabic, even though Arabic speakers represent over five percent of the world’s population. For Mohammed, “[this] is a gap that has to be filled.” Gazan start-ups, by establishing a foothold in Arab markets before competitors enter, can gain a first-mover advantage.
At the boot camp, Dario Mazzella, a European venture capitalist and mentor to the organization, told the teams that when he makes an investment, he “bets on the jockey, not on the horse.” For early-stage companies, products (the horses) are likely to change after customers get involved, whereas teams (the jockeys) stay the same. And Gazans, he said, have the potential to be successful jockeys. They are often too educated for a besieged market that is unable to absorb them. Last year, Gaza’s Engineering Syndicate even issued a press release urging students not to specialize in engineering given the market’s oversupply. Gaza’s four engineering schools graduate 800 students a year in a market that needs about 50 engineers.
In turn, the only option for many skilled Gazans is to become freelancers. Over 1,500 of them are registered on Upwork, the world’s largest online workplace for freelancing. Local organizations, such as Work Without Borders, also empower Gazans with teleworking tools and other ways to connect with remote clients over the Internet, their only remaining route to the global market.
But even the virtual world is not without its obstacles in Gaza. Collecting payments for e-commerce sites is difficult for Palestinians. PayPal operates in 203 markets worldwide but currently doesn’t work for Palestinians in the West Bank or Gaza. The #PayPal4Palestine social media campaign waged by Palestinian activists is making waves, but it has yet to convince the world’s de facto online payment service to enter the market.
In Gaza, moreover, Internet speeds are among the slowest in the world, and Israel hasn’t yet extended 3G frequencies to the area. With 2G—fast enough only to send and receive text messages and download basic ringtones—building and operating an Internet-enabled start-up calls for heroic levels of patience. Mohammed laments that “no 3G connection, slow Internet speeds, and travel restrictions together make Gaza, on paper, the worst place ever to launch a start-up.”
More fundamental than 3G, electricity is available for only four to eight hours a day without a generator. Real estate for office space is also hard to find or afford. As the most crowded place on earth, land prices in Gaza City have gone up between 40 and 50 percent the past few years. The most desired beachfront locations reportedly cost up to $20,000 per square meter. Without coworking spaces such as Sky Geeks and the South Korean–funded GHub—which provide reliable Internet, electricity, and other amenities—“entrepreneurship would be near impossible,” according to Saed Habib, a freelance Web designer from Shuja'iyya, the most damaged neighborhood in Gaza City from the 2014 war.
The Gazan entrepreneurial ecosystem is small, but it is collaborative. For instance, representatives from other incubators—namely, the Business and Technology Incubator at the Islamic University in Gaza and the Oxfam-funded University College of Applied Sciences technology incubator—served as judges at Sky Geeks’ latest boot camp. But in broader society, start-ups tend to be nurtured neither materially nor culturally. On a personal level, tech entrepreneurship requires comfort with (at least temporary) instability. Financial rewards are not guaranteed now or in the future. Given societal pressures to get married and provide for a family, the stability of a bureaucratic government job is often more alluring than the gamble of a start-up. On a national level, foreign aid, totaling 30 percent of Palestine’s GDP, has created a stagnating mindset of economic dependence. The government has neither the drive nor the means to support entrepreneurs—unlike Israel, the country with the highest concentration of both R&D spending and start-ups in the world.
“It is easy to despair about Gaza,” said Robert Turner, the former director of the United Nations Relief and Works Agency in Gaza. Every day, 36 Olympic-sized swimming pools’ worth of raw or partly treated sewage is dumped onto Gaza’s Mediterranean shores. According to the World Bank, the blockade and three wars in six years have left the country’s GDP four times lower today than it otherwise would be. Last year, the United Nations even warned of Gaza’s Armageddon: the international body predicted that the area could become “uninhabitable” in less than five years if current economic trends continue.
But Mohammed and hundreds of other start-up co-founders refuse to accept that fate. Gaza’s resilient entrepreneurs, who have the most to lose from the status quo, are giving the world the best reasons to be optimistic. They are looking to the borderless, virtual world to build opportunities—ones that are closed off in their besieged, physical world. In a place starved of hope, Gaza’s start-up ecosystem frees entrepreneurs to think in terms of opportunity rather than just necessity.