Editor’s Note: This is the first installment in a special series on tech startups in Iran, part of a larger theme around global tech and how software — including mobile — is eating the world … and creating new opportunities within it. This post is from guest contributor Christopher Schroeder (a tech entrepreneur, investor, and executive in Washington, D.C., and the author of Startup Rising: The Entrepreneurial Revolution Remaking the Middle East) sharing his observations and insights on the ground from recent trips to Iran.
There wasn’t much exceptional about my recent lunch out with a couple dozen young, aspiring entrepreneurs. It was a typical, crowded, buzzing, Nandos-like joint — good food cheap, easy to pull tables together so we could talk. These were men and women debating the latest technologies, describing their recent ideas, regularly interchanging their physical engagement with checking their SnapChat, Instagram, Twitter and Facebook apps.
I asked one woman how she best prepares for the rigor of building a company. “By doing!” she smirks at me. She pauses, and adds, “Oh, and I read all the top Silicon Valley blogs and take a few classes from Stanford, Wharton and other colleges around the world for free on Coursera.” Several at the lunch put down their forks and show me their smart phones, each open on Wifi to courses like “Introduction to Marketing, “International Leadership and Organizational Behavior” and “Better Leader, Richer Life.”
One young man describes to me his startup. It is a bit like AirBnB for an adventure traveler though more low-tech, more, say, a tech-enabled travel agency. The new generation, he explains, doesn’t just want to “see” a place, they want to understand how people live, think and engage. He has found countless families recently near the area’s beautiful mountain/hiking areas who are happy to open their homes, feed young people, take them to unique cultural sites and gatherings for music and art.
“Where are you taking the next cohort of travelers?” I asked.
“The Kurdish area — it is one of the most beautiful and most interesting parts of our country.”
And that was the one exceptional, or at least unexpected, thing about my lunch: just last month I was sitting with young entrepreneurs in the heart of Tehran, Iran.
Before lunch, I had only met perhaps five Kurds in my life. “The Kurdish area” for me conjured up terror attacks and ISIS, though its long, rich history is split among three countries — Iraq, Iran and Turkey.
“Is it safe?” I asked, “Are you at all concerned being so close to the Iraqi border?”
He smiled and said, “Well, we are fine in Iran but as we got within a few miles of the Iraqi border, our mobile phones started buzzing. I looked at my texts and here’s what I saw.”
I imagined at best some warning, at worst outright threats. I looked at his phone and it read:
“Welcome to Iraq. Feel at home while you roam on Korek Telecom network [the local mobile provider]. For any inquiries please call +9647508000400.”
This is a tale of two Irans. This is, specifically, the tale of the other Iran.
The tale we hear most often focuses on natural resources like oil as their greatest asset or nuclear power as their greatest threat — a narrative frozen in time, stretching back decades with remembered pain on both sides. For many Americans, the reference point for Iran is still centered on the hostage crisis at the U.S. embassy in Tehran over 35 years ago; for others, it has focused on Iranian support for destabilizing regional actors against our interests and costing lives.
At the same time, of course, Iranians have their own version of this tale: Many remember well U.S. support for a coup of their elected leadership, our support for a dictatorial regime and later encouragement of a war in Iraq that cost nearly a half-million Iranian lives.
Politics, power, mistrust: This is one version of how the media frames discussion of Iran. It’s very real, and it has much caution and evidence to support it.
But there’s another tale, one I saw repeatedly in my trip there last month. It was my second visit within the year, traveling with a group of senior global business executives to explore this remarkable and controversial nation.
This tale focuses on Iran’s next generation, an entirely new generation that came of age well after the Islamic Revolution, and on human capital, the greatest asset a country can have. It’s about technology as the driver for breaking down barriers even despite internal controls and external sanctions. People under age 35 represent nearly two-thirds of Iran’s population at this point: Many were engaged in the Green Movement protests against the Iranian presidential election in 2009. Most are utterly wired and see the world outside of Iran every day — often in the form of global news, TV shows, movies, music, blogs, and startups — on their mobile phones.
This is a tale we rarely hear about.
These perceptions — and the complicated details of trust building on both sides — are especially top of mind right now because of the fast-approaching deadline for negotiations around the Iranian nuclear program. The negotiations, of course, will include when, how, and under what conditions to ease sanctions. The outcome of this agreement — and whether it even happens — will impact us in ways that we can’t yet understand, but it will also impact this new generation of Iranians even more.
It’s tempting to simplify these two tales of Iran into a polarizing discussion of “theocracy” versus “technology,” “closed” versus “open,” or even of the tension between “local” versus “global.” All of these simplifications are a huge mistake. For one thing, they grossly diminish an extremely rich, nuanced, and yes, sometimes messy story. Washington in particular and our media in general favors one tale by reducing complexity generally to an either/or (“Is it a good thing or a bad thing?”), when we all know things are much more complicated and contradictory.
Because in reality, Iran is a country where Facebook is banned, yet in the conservative, holy city of Qom a Grand Ayatollah — among the highest echelons of clerics — lamented to us excessive use of Facebook among his grandchildren. It is a country that is home to one of the oldest civilizations in the world, but that has become a magnet to the fastest-growing economy in the world: Possibly 30,000 or more Chinese expatriates are now living in Tehran alone. Many of them speak Farsi.
The analogy that immediately comes to mind here (and that has been applied to the narrative of other countries evolving so) is of a palimpsest, where every layer underneath is covered up by some new truth, but what’s imprinted there also never entirely disappears.
But this analog analogy feels sorely inadequate in an age of digital. Because, as Silicon Valley leader Marc Andreessen says, “software is eating the world”, technology is reshaping all of our societies, and that world includes, not excludes, Iran.
When I wrote a book about startups and innovation in the Arab world last year, Startup Rising: The Entrepreneurial Revolution Remaking the Middle East, it was one of the only hopeful recent books on the region and, as such, has been hard for some to accept. Hard until we stop to consider one of the key differences around the world today versus even five years ago: The rise of mobile.
Such universal access to technology is an utterly new and poorly understood phenomenon in Washington. I cannot tell you what the political or economic situation in Iran or Syria or Egypt will look like in a year, but I can say with certainty that within this decade over two-thirds of the people living in those countries will have a smart mobile device. In the Gulf, they have already surpassed this figure. Remember that this doesn’t mean they will merely have slicker phones: Each smartphone has computer capabilities equivalent to what all of NASA had in 1969 when it put a man on the moon. Two-thirds of people in the Middle East — and, in fact, two-thirds of the people around the globe — will have that same supercomputing power in their hands.
It’s already happening in Iran. Mobile usage already stands at more than 120 percent there since many people have more than one phone or SIM card. Iranians are now using 40 million smartphones from brands including HTC and Samsung. In fact, it is almost impossible to drive a mile on one of the large and heavily trafficked Tehran ring-roads, or to walk a few yards in their sleek new airport, and not see ads for new mobile phones and faster data.
In this nation of 80 million, we were told that there are also over six million Apple iPhones — which, like Facebook, have been banned for years by both global sanctions and the Iranian government. Yet millions of Iranians — not just a few tech-savvy entrepreneurs like the ones I describe here — access sites like Facebook, Twitter, and Snapchat as well as online courses (“MOOCs”) from the many global universities, daily. Everyone, of all ages, accesses this unfiltered internet through Virtual Personal Networks (VPNs). In this way, and in the music they love and video they watch, Iran’s wired teens have more in common with their compatriots around the world than with the stark revolutionaries of 40 years ago.
To put Iran’s level of connectivity in perspective, nearly 65 percent of Iranian homes have broadband access — roughly equivalent to the United States, where the latest Pew survey data shows that 70 percent of Americans too have broadband connections at home. What hit me most compared to my visit to Iran last year, however, is that there was very limited access to 3G data on mobile phones. Back then there were at most one million subscribers. This year we were told that there are now over 20 million.
All of this means Iranians have unprecedented access to the world around them. It means they have much of the same knowledge at their fingertips that we do, practically for free. It means that an entirely new demographic is sharing ideas and digitally collaborating with each other. They see nearly everything about the United States and the world, and see economic opportunity and empowerment in part of the world more broadly once dismissed as “third.” They have less fear of centralized authority, of anyone telling them to “wait a generation” to solve problems they see others like them solving right now. They are, thus, aggregating new truths. Not western truths, but their truths, and in their own context.
Nazanin Daneshvar is part of the new story. She’s an entrepreneur building Takhfifan, a Groupon-like retail offers site in Iran. Not three years ago, in her mid-twenties, she and her co-founder and sister might have been surprised that their dream would today become 60 people crammed into a larger fourth-floor office. Except that little surprises her. She is accustomed to do what it takes to build.
She knew how fast Groupon had grown in the U.S., and how much Iranians liked a good deal. Most merchants at the time barely knew what the internet was, let alone internet marketing, so she visited small shops and restaurants, often those owned by friends, and asked one simple question: how much would they pay for a new customer? She built the technology and began delivering beyond their expectations and to their surprise.
With this success all she had to do was convince some of the largest shopping malls in Tehran — there are many ultra-modern, global brand-selling malls across the country — to strike similar deals. She would show up to meet with the general managers with great respect and a proven track record, her head covered in the government-required hijab. Invariably, however, general managers asked to see her manager — which, in their eyes, had to be a man.
Frustrated she walked out and went to her father (an energy plant manager who knew nothing about internet business) and told him to come with her to every single meeting for a year. Her father would literally open each meeting with a brief greeting: “I am the manager of this new company, but let me turn it over to my colleague to explain more.” And then he’d sit down quietly and not say another word, despite signing every contract and initially being registered as the proprietor of the business.
As before with her smaller clients, performance was so good within 18 months, and Daneshvar received so much press attention, that on my last visit she smiled and told me that her father had now “retired.” Today, Takhfifan has over two million users in seven Iranian cities and has locked up 10,000 merchants.
Mohsen Malayeri also isn’t of the traditional narrative, either. This university engineering grad has hosted dozens of “Startup Weekends” in Iran recently, bringing together hundreds of young people with local investors to pitch and form their innovations at vibrant gatherings on university campuses. Malayeri co-founded Avatech, one of the largest business “accelerators” that offer resources, mentorship, and money to fledgling entrepreneurs—much like Y Combinator or 500 Startups in Silicon Valley, 1776 here in Washington, D.C., or TechStars around the United States.
Avatech is one among nearly 100 accelerators and incubators in Iran — 31 of which are backed by government to help address infrastructure challenges in agriculture, education, and healthcare. One minister told us that Iran spent $4 billion in tech infrastructure last year alone and plans $25 billion more in the next three. They believe that eHealth will revolutionize care for its citizens by the end of the decade. They expect debit cards to be replaced by mobile payments in the same timeframe as well — an ambition faster than we are seeing happening here in the States.
Lest you think any of this is just talk or a far-off dream, let me share the example of Digikala, an ecommerce site whose value has doubled in less than a year (to over $300 million, as several investors told me), has over 700 employees, and ships thousands of orders a day — including same- or next-day delivery in several Iranian cities. Sound familiar? It’s true: the site is known as the Amazon of Iran, and was founded by two brothers who were frustrated because they couldn’t find any camera reviews online in their language.
This is the tale of the new Iran, a generation using technology to solve problems and grab economic opportunity. While these students and entrepreneurs are building versions of software-enabled businesses we’d find familiar in the West, they aren’t just replicating the tech startup successes they see elsewhere; they’re improvising on them and making them their very own. What may have began as workarounds until sanctions were lifted is laying the groundwork — tech infrastructure, tolerance for failure, startups as a “real” job — for the next generation of companies and entrepreneurs.
Is this the early days of a Silicon Valley in Iran? Malayeri dismisses the question as do many of the entrepreneurs in Iran and the Middle East and in growth markets around the world. Silicon Valley and innovation in the U.S. is obviously extraordinary, but unprecedented problem solving wherever there is universal access to technology is happening, well, everywhere. Societies that never knew landlines are leap frogging that outmoded technology with new innovation in mobile payments. Countries struggling with water and natural resources are becoming leaders in green technologies and desalinization. Mohsen quotes U.S. startup legend and investor Brad Feld: “Silicon Valley isn’t a religion.” It seems no one is looking to swap one theology for another. They simply want and expect what works and what makes an impact.
What this means — and what Washington may have the greatest trouble coming to terms with — is that these tech and culture changes, no matter what we label them, are happening in Iran no matter what, and they risk happening without us.
I was struck on this trip by the significant increase in business executives and tourists from around the world, particularly from Germany, Scandinavia and Russia. The most dramatic numbers, of course, were from China. Along with its growing ex-pat population, Chinese business is on the rise. Chinese electronics company Xiaomi — called the “Apple of China” by many and now the third largest smartphone distributor in the world and a company that continually defies what we thought was possible by foreign tech enterprises — is expected to roll out aggressively this year in Iran.
None of this should be surprising because we are now seeing rapid economic change and growth happen regularly, and we often ignore its rise because we were locked in one tale. Who would have thought, even a few years ago, that the largest initial public stock offering in recent U.S. history would be a software-enabled enterprise from China (Alibaba), built virtually without the western market at all? Or that among the biggest U.S. tech startup acquisitions to date was of a messaging company (WhatsApp, by Facebook) — whose primary demographic is abroad? How many, a few decades ago, would have guess that leading hardware and consumer electronics would come from Japan and Korea? Should we expect different from the new generation in Iran, highly educated and wired, graduating some of the best engineers in the world, also perfectly located geographically as a conduit of digital and physical trade east/west/north/south?
The greatest challenge for all of us is not that one tale is right and the other is wrong; it is that both are happening. When and how to engage with multiple tales — and with whom we have viewed and experienced as often brutal, often fatal, adversaries — has vexed policymakers throughout U.S. foreign policy history. Do we sign nuclear deals with Russia while they are funding our enemies in Vietnam? Do we engage with a China at a time when only a few years previous millions had been killed? Was it better to engage with or sanction South Africa during Apartheid? Can one do business with a Gorbachev committed to protecting the Soviet power structures but who also saw a second, more open tale on the economic front?
Without a doubt, the strength and acceptance of a nuclear deal and subsequent lifting of sanctions must be in its details and verification. At the same time, the fact remains that — regardless of what we believe about the narrative of technology as a delivery mechanism for change — Iran is joining a movement across emerging growth markets the West had previously ignored. A majority of humanity is being connected, in a short amount of time, and this movement is helping create new middle classes around the world. The efforts are now nascent, but we have seen in Asia, Eastern Europe, South America and beyond how fast adoption, economic growth and real improvement in daily life can occur.
So understanding and engaging the new generation in Iran on their terms has implications not just for the nuclear and sanction discussions taking place right now, but for a potentially massive new economic opportunity and market creation to better billions of lives. As anyone who has ever been in a negotiation knows, the most successful outcomes go to those who understand the broader context — including how things will play out in the long term.
That there are two (and, in fact, many more) tales of Iran should cause no confusion: the tech-enabled, new generation is not a story of the triumph of technology over theocracy or equating tech with our version of democracy. It’s about the mashup of tech, culture and history. It’s messy, it’s complicated and it’s uniquely Iran’s own. Even the construct of “Iran” is a gross homogenization of an entire country; there are so many differences at the regional level, among generations, among urban vs. rural.
What I do know for sure is that at a time where many of this generation see little hope in their (and our) governments, the new generation in Iran admires the United States and certainly our innovation. They devour our experiences, what we write, the lessons of our mistakes. They adore our social networks and use them on their terms. Repeatedly we were asked how quickly western tech companies and investors would engage should — many said “when” — sanctions are lifted. We were hard pressed to find a single woman or man of this generation across Iran — in fact of any age — who cared about the nuclear discussions beyond their desire to engage in the world and build futures for themselves and their families.
They have great hopes in connectivity and connectedness. Against this backdrop, increased global engagement is the single greatest hope for their — and our — future economic success in the region and in rising new economies globally.
I hope someone speaks for the new generation in these deliberations.
This post originally appeared in Politico.