Endeavor is pleased to make public the following transcript and video from a presentation at the 2011 Endeavor Entrepreneur Summit in San Francisco. The event, which assembled over 450 entrepreneurs and global business leaders, featured dozens of entrepreneurship-related presentations by top CEOs and industry experts.
On building SySDSoft and getting acquired
First off, I appreciate Endeavor. I was selected as the first Endeavor Entrepreneur selected from Egypt, even before the Endeavor Egypt office opened in 2007 and it was a turning point for us at that time.
Our story started very simply in 2002 with a very small, incubated, four-engineer start-up in Cairo University and grew to a 125-engineer organization in the course of eight years. We became one of the leaders of building the software that transmits wireless communication systems and even some of the chip sets that do that. By wireless I mean WiFi, WiMAX, all kinds of different flavors of wireless technologies.
If anyone asked me when we started if that was my dream I would be lying if I said yes, because there was no clarity about what we would achieve. It was actually impossible for me to dream that big in 2002 that we will create this small entity inside Cairo University and it would become one of these leaders in high tech, globally. But it did happen and I owe it to the Egyptian engineers, some of them extremely young. Ninety-five percent of our engineers we took fresh out of college, without any experience except for what they learned at college, and they managed to sit and compete with people worldwide who had ten years more experience than they had. So that speaks for this team. They freed me to do the business development because I relied on them to do the technicalities and they did very well.
In 2007, when we were selected as an Endeavor Entrepreneurial company, people asked: how much did Endeavor help you? And I say the most valuable part was the selection process. We had interviews with people from Cisco, IBM and the like, we had an international selection panel of people from venture capital and from the industry and all of those interviews were great eye-openers to me. At that point we decided to switch from a company that was a local design service oriented company to a company that had ambitions. To a company that could build products, build intellectual property and compete. So that turning point was a matter of confidence that we gained, that I gained, through the interview process with very valuable people who came through the Endeavor network.
Then came the challenge, like every entrepreneur, to reach some level of maturity. As an entrepreneur in my case, maturity meant an exit toward a bigger company. A company that can take us really into products. Not just IP, but real products. We had several companies talk to us and it wound up being Intel, one of the most well-known, and the one that gave us the hardest time during the due diligence. But it was an interesting process, we learned from it a lot and we managed in the end to sell the company.
Interestingly enough, the price was the shortest discussion we had. It took five minutes. And the whole process took three months, so you can imagine there are a lot of things besides the price that come into an acquisition like that — legalities and technicalities and so on. But it was a good process and we hope that it was an eye opener for technology-oriented companies in the Middle East to seek out exits like that. I think it’s become possible now. Our conditions were not the best, because we’ve also had the revolution in Egypt. We had our exit while the Egyptian people were looking for Mubarak to exit. Happily enough, both exits did happen and take place.
On entrepreneurship in Egypt
One of the problems of the previous regime, and it’s very common in the developing world and in the Middle East in particular, is an extreme focus on the capital, on where the regime is. It applies to entrepreneurs, to businesses as well. So every entrepreneur is in Cairo, every business is in Cairo, while in Egypt we have some 60 million people who don’t live in the capital and don’t belong to the elite group of the country. My dream is to go out of Cairo and particularly to upper Egypt, to the Delta region, since there are good people everywhere in the world — you just have to go out and talk to them, to find them, and to encourage them. I don’t want to just feel happy picking up five, six companies every year from Cairo for Endeavor. I’d like to see Endeavor select hundreds of companies out of areas as remote as it gets, even the countryside, even in villages. I believe that there is an entrepreneur everywhere. I believe in that.
On MercadoLibre.com and going public
Going public was not a goal in itself. When we started the company we wanted to start a sustainable company, a business that was going to add value. We were studying at Stanford in 1999. As many of you remember those were very particular years. The incontinuity the internet was creating in business practices, in consumer practices was a great opportunity for us to try to start a company, use all that capital that was available at that time to try to do that, that would impact the lives of many in a short period of time. That was the real objective that we had.
Obviously, the fact that MercadoLibre is a public company reflects in a way that the company has accomplished several milestones. Clearly the performance that the stock has gone up illustrates that the company has done well. We’re well positioned to capture growth gowning forward. It was not an objective in itself. The number one objective was to create a sustainable company. The things that we’re more proud of is that, for example, today according to Nielson there are more than 50,000 people who live on what they make with MercadoLibre, and we have 2,000 employees. Those are the things that really make us proud. Being a public company has helped us. We have been able to raise capital that we could then reinvest in the business, but it has not been an objective. I think it’s an objective that all of you should try to pursue, but not as a final goal, just as an objective way to keep on growing. Just as when you maintain the company’s independent as you continue developing your business, developing your community, continue developing the region.
On starting a venture fund and supporting the next generation
I have been with MercadoLibre for 12 years. Those were 12 fantastic years and we’ve accomplished a lot, but I wanted to move on and do something new. In these 12 years almost every day, I would have an entrepreneur call me asking for advice, asking for capital. Really in the region there is nowhere to go for help, for support. We wanted to get involved with those entrepreneurs, but obviously MercadoLibre was a full time job; I wasn’t able to help them all, but in a way we tried to help them. So decided to help those entrepreneurs in a more active way in a sense, with experience, with capital, to help them through the path that MercadoLibre went through, but in a faster period of time and making less mistakes than we made. I think there’s a tremendous opportunity for technology at this time and with a little bit of mentoring and a little bit of capital we will see many great companies like MercadoLibre coming up in the next five to ten years.
On entrepreneurship and Endeavor in Latin America
Endeavor has played a terrific role in Argentina and in the region in general. We got inspired by what we saw here in Silicon Valley where you have great education institutions that really push for innovation, push for risk taking, push for entrepreneurship. That is not what you have in Latin America. Here you get a lot of entrepreneurs together and every single entrepreneur here has a friend or a family member or a colleague who is an entrepreneur, so you don’t feel alone in trying to change the world. You have lots of engines who are helping them fund their businesses, and lots of very professional VCs that help them take their businesses to the next phase.
That’s something that is not present in Latin America. The typical entrepreneur feels very alone. They feel like are crazy because no one else is really trying to do something different. I think Endeavor has done something amazing in putting together entrepreneurs, in training them, in making them feel like they have done something right, helping them raise funding. I think it’s terrific, and all the entrepreneurial activity in the region is pushed by Endeavor. Today every entrepreneur in Argentina who is thinking about a new business plan, is thinking about starting a new company wants to be part of Endeavor because they understand the value of the network.
In a way, with Nico Szekasy, with Kazah Ventures, we’re trying to fill one of those gaps for the financing and the guiding of entrepreneurs and hopefully in ten years when we do the 14th conference of Endeavor we should see a completely different scenario in Latin America with many entrepreneurs talking about their companies and how successful they have been because of Endeavor and because of the ecosystem in the region.
On entrepreneurship in the Middle East
We are in a new phase: not just Egypt, but the whole Middle East. It is in the news, but the news doesn’t tell everything. Living there makes you really believe that there is potential, hope, and the young generation is now in charge. I hope they keep doing that, because those are the new entrepreneurs. I would like to help in any possible way. I was lucky with my venture. I started actually two more in the last two months, now that I know how to do it. I think that everyone who has enjoyed the Endeavor experience should give back to his system and I’m very interested to that through Endeavor or any other means. I’m very hopeful for Egypt and for the Middle East after these changes that are happening. It may take a few months or even years until full maturity or full stability and democracy, but we’re on the right track.