An Iterative Path into the Middle East: Dubai’s Four Million, the Gulf’s Hundred Million, Then Four Hundred Million

I listened to Silicon Valley 101 on the Middle East today. Startups seeking overseas markets may want to hear the latest episode. Beyond our image of overflowing oil wealth—even Masayoshi Son sought Middle Eastern oil magnates’ money for the Vision Fund—the region offers a market reaching 100–400 million people. ---- Dubai looks very small. If you secure investment from its government, do you expand throughout the Middle East? Does that funding help you enter other parts of the region? Yes. The UAE itself is small, perhaps ten million people, with Dubai, its largest city, perhaps four million. Entrepreneurs are not targeting only the UAE or Saudi Arabia in the traditional sense. The Middle East has cultural and economic definitions. Commercially, we usually mean the Arabic-speaking Middle East and North Africa: roughly seven or eight countries—the transcript says ‘Taiwan’ here—plus North Africa, including Egypt, Tunisia, and Morocco. Gulf states include the UAE, Saudi Arabia, Qatar, Oman, and Bahrain. Also called GCC states, they are the wealthiest countries. Starting a business there essentially means addressing the whole region, given shared language, culture, and similar governmental mechanisms. You can reach 400 million people directly. Unlike Southeast Asia, where countries differ in language, culture, and even religion, the broader Middle East is a unified market of 400 million. Whether money comes from Dubai, Abu Dhabi, or Saudi Arabia, prove the model in one country, then move rapidly into the Gulf’s hundred-million-person market before expanding across the wider 400-million-person region. This is the iterative path. ---- So, with Dubai government money, start with four million people, expand into the Middle East’s hundred million, then the 400-million-person Arab world of white robes? Exactly. The hundred million are relatively wealthy, with per-capita GDP around 50,000 dirhams. The other 300 million, including North African countries such as Egypt, are less wealthy, perhaps below US$10,000 per capita. Prioritize the wealthiest hundred million. Entry is easy because Dubai attracts people from every country, functioning like a capital or Shanghai: everyone visits for tourism and holidays. Leaders, investors, and wealthy people from anywhere in the region are easy to meet there. Saudi sovereign funds have been a major force in discussion of the region. What about Abu Dhabi and Riyadh? It is an interesting ecosystem. Dubai is best known, but Saudi Arabia and Abu Dhabi have attracted attention through investment authorities over the last two years. Startup circles initially associated the Middle East with Israel and the ‘Startup Nation’ story. Yet Israel has no presence in the Saudi–UAE context: you do not encounter Israeli founders in those Arabic-speaking circles. Today, discussion more often means Saudi Arabia and the UAE, particularly Riyadh, Abu Dhabi, and Dubai. Simply put, fundraising in Dubai is harder now; its government no longer invests as actively. Saudi Arabia’s Public Investment Fund (PIF) and Abu Dhabi sovereign investors are the active fund and direct investors. Abu Dhabi has two: Mubadala and ‘idea’—the Abu Dhabi Investment Authority. Each is described as managing hundreds of billions of U.S. dollars and investing aggressively. Riyadh and Abu Dhabi have comparatively weaker infrastructure and less advanced regulation and policy than Dubai, but their governments are spending heavily on entrepreneurial ecosystems, infrastructure, policy, talent rules, and subsidies. Dubai’s lifestyle differs so much that many founders raise money in Saudi Arabia or Abu Dhabi and spend or invest it in Dubai. They may maintain huge Dubai teams while locating headquarters where the funding comes from. Some industries need not do this. Dubai is already a self-sustaining ecosystem that needs no strong government direction; even without further public investment, it is robust enough to operate independently. Abu Dhabi and Riyadh remain government-led: stop funding, and the whole ecosystem immediately collapses. Both hope to replicate Dubai because its success is so striking. ----- Robin: ‘I still recommend finding this Silicon Valley 101 episode. You could also head to the Middle East and see for yourself, XDDDD.’