Creating a Tech Hub in Gaza

Matthew Campbell, Saud Abu Ramadan

Originally published by Bloomberg Business on June 30, 2015.

When Iliana Montauk moved to the Gaza Strip in 2013, what most struck the former Google staffer and Harvard graduate wasn't the poverty, the rubble from decades of conflict, or the lack of reliable electricity. It was the drive and focus of the citizens.  

"I had never seen such hard-working people except at Harvard and in Silicon Valley,'' Montauk recalled. "People just want to lead a normal life."

Montauk is seeking to harness that energy with Gaza Sky Geeks, a startup "accelerator" she runs in Gaza City. Backed by Google and operated by the U.S. charity Mercy Corps, it nurtures business ideas and connects entrepreneurs with investors. The native of Berkeley, California, is convinced Gaza's young population and adaptable spirit can create unlikely tech success stories in the Philadelphia-sized territory, which is ruled by the Islamist group Hamas. 

So far, four GSG companies have secured outside investment from Arab-focused venture funds. Tevy lets television viewers chat about shows as they're broadcast; Datrios is a social network for Arab soccer lovers; Wasselni is a carpooling and taxi app for traffic-choked Middle Eastern cities; and DWBI Solutions automates data analysis. Montauk aims to secure funding for another four GSG startups this year.

While Israel's eight-year blockade of Gaza limits imports of materials like concrete and chemicals out of concern they could be used in battle, computers and smartphones are widely available. And young Gazans are as addicted to Twitter and Facebook as youth anywhere. Gaza's unemployment -- the highest in the world at 43 percent, according to the World Bank -- means the tech sector faces almost no competition for bright minds.

At a five-day 'bootcamp' this month in GSG's offices by Gaza City's harbor, a once-thriving port that's closed to shipping by the blockade, about 40 aspiring entrepreneurs showed off their ideas. Men in jeans and t-shirts and women in headscarves and long skirts perched on multi-colored couches with laptops and smartphones, chatting in English with volunteer mentors who had flown in from San Francisco, the U.K. and Dubai.

Their challenges differ dramatically from those of most startups. A top priority is a business-continuity plan, typically an arrangement with a company in the less-volatile West Bank or offices abroad, to keep operations running if war flares up. And meeting potential partners can be complicated. The Gaza airport has been shuttered for over a decade and locals need permission from the Israeli or Egyptian governments to leave.

Attendee Nawal Abusultan, 32, whose site MENAship aims to connect Arab students with university scholarships abroad, first heard about GSG from a Facebook post. "I had no idea what 'startup' meant," she said. Today, Abusultan has a team of four and a rough version of the site -- which was inspired by her own search for a scholarship -- up and running, but she acknowledges that her location presents major hurdles.  "Electricity is the biggest challenge,'' she said. "We have a lot of time when we can't do anything."

Mohammed Ezzdeen, 27, came to work on Baskalet, a mobile-gaming company that just released its first title, an Arabic-language driving game. He recently quit his day job at an outsourcing company for full-time startup life, and he says he takes the challenges of Gaza in stride. He took time off during last summer's Israel-Hamas war, which heavily damaged his neighborhood (though his family was unharmed), and "after that we started working harder" to catch up, he said.

One of the visiting mentors, Ted McCarthy, who works at tech consultancy ThoughtWorks Inc. in San Francisco, admitted being skeptical before his visit that such a difficult environment could support a real tech scene. “I was actually amazed,” McCarthy said afterward. “A good number of the startup ideas seemed like legitimate beginnings to serious businesses.”

Shifting GSG’s focus to producing viable companies has been the priority for Montauk, who graduated from Harvard in 2006, the same year Facebook founder Mark Zuckerberg would have finished if he hadn't dropped out. She moved on to Google and the consultancy Monitor Group, then made her way to Jordan on a Fulbright fellowship. In 2013, Mercy Corps hired her to turn GSG from a program that mostly educated young people about technology into a place that could help them build businesses.

Though Google provided $900,000 for initial costs, Mercy Corps and GSG recently turned to crowdfunding to help run events and pay for basics like rent, salaries, and Internet access. An online campaign ended in January raised more than $250,000 from over 800 people.

Creating a successful tech ecosystem in the Palestinian territories isn't out of the question, particularly with products aimed at the Arab world and its rising middle class, said Shikhar Ghosh, who teaches entrepreneurship at Harvard Business School.

On a visit last year to the West Bank, "the companies I saw that were really intriguing were those looking into the Middle East and North Africa instead of looking westward," he said, citing the example of Yamsafer, a hotel-booking site tailored for Arab travelers. And costs and valuations are far lower than in established tech hubs, so "it's a pretty easy bet to make'' even for Western venture investors, Ghosh said.

"All they wanted to talk about was their startups."

Gaza's would-be tech moguls have an obvious role model less than 50 miles away in Tel Aviv. Israel's tech sector built the fabled 'Start-Up Nation' and produced a clutch of world-beating companies from almost nothing. But it's difficult for Israeli citizens to get permission from their government to visit Gaza, and Hamas, which the U.S. designates as a terrorist organization, is hostile to co-operation with Israel.

Although there's "a lot of eagerness from the Israeli tech sector to support our work,'' closer ties would be "too complicated" in the current environment, Montauk said.

For now, she's betting on young Gazans' enthusiasm. During the 2014 war, Montauk fretted that the conflict -- in which more than 2,000 Palestinians and 70 Israelis were killed -- would demoralize GSG's entrepreneurs. She didn't have to worry. "When I walked back into the office, there were 60 people there waiting,'' she said. "All they wanted to talk about was their startups.''