Do you take the leap? If you’re Dave Morin and crew, you already did. And I’ll tell you why (I think).

People are seriously bashing the new “photo-sharing app” Path that launched the other day. Check all the hate in the comments on TechCrunch. The reason all these dudes just comment on blog posts rather than start companies is because they don’t get it. Path will be much more.

Morin didn’t assemble the 1927 Yankees equivalent of investors for a photo-shairng app. He hooked them in because he pitched the concept of creating meaningful networks of close friends – the people who you would actual share baby photos, traval pics and tips, invite to dinner, buy xmas presents, miss when you don’t see for a while, get advice from, take shopping, and general have in your life. “Path allows you to capture your life’s most personal moments and share them with the 50 close friends and family in your life who matter most.”

Facebook is not that right now. I am testament to this. I logged in two days ago and ripped through my ‘friend’ list. It was easy for me to un-friend over 100 people because frankly I didn’t even know who they were. Add to that, a lot of my friends and family aren’t on Facebook, and I get a social network that is more like a place to broadcast data to acquantances while I continue to email my actual friends and family the things that are meanignful…like pics of my young son.

So is there room to take a different tack? There is, but it won’t be won in a “size matters” contest. Facebook is on its way to 1 billion and there’s no stopping that train.

The answer: start small and keep the circles small and real. Try to end up with a group of close friends and family who pass the bikini test, and force people to triage that group so it continually reflects there current inner circle. To use the name of this new startup, we don’t stand in a ‘path’, we move along it, paths diverge and converge, and so it makes sense that this innner circle changes. My inner circle and my wife’s inner cirlce will be similar but not the same. There will be connection points, as there will be between our innner circles and the close friends and family of those in our group…and so on. But this graph isn’t really so much a ‘social graph’ since I’m more than simply ‘social’ with this group. It’s more of an ‘intimacy graph’.

Path is potentially so much more than a photo-sharing app, but the early reaction is seriously short-sighted.

So, I’m Path and I want people to end up with a small group of connections that bears a strong sense of intimacy…but again, isn’t the value in the size of these groups? Nope.

The most valuable connections for me are those that I’d share info with, travel with, dine with, party with, laugh with, shop with, etc. These are my inner circle, or my 50 as the Path team has decided. Lots of people are bitching about Path limiting connections to 50, but I’d think that in many cases, 50 may even be too many. Take a picture of your new son, or your family at a brithday party, or your girlfriend at the beach. Now think about who you’d want to send this to. Doubt you got more than 50 people on your list.

This intimate group of connections will have far more relevance in a FB Connect-style implementation since its the people are care to see what I’ve bought or where I’m going. Anything above that group size means sharing is simply vanity and voyeurism.

Imagine the social dynamics of limiting a contact list to 50. List triage would be ongoing. Your list is full, but your mom wants in…so someone has to go. You are forced to decide who is most meanignful in your life at that moment, and who you want to keep a close connection with. Think of high school kids jockeying to be on people’s 50-list. I’ve had best friends through various stages in my life who wouldn’t be in my current 50…and its because our paths have diverged and we don’t keep in touch…and don’t really want to. My inner circle has changed, so why shouldn’t it be natural that this list changes, too? This inner cirlce as reflected in a “personal network” changes.

So let’s make a lot of assumptions about the value of a small intimate group of connections on a platform where I can comfortably share content without simply watching and waiting for one of the big boys like google or facebook to figure out how to do it like some kind of online benefactors, and let’s assume that people actually want an alternative to joining a beheamoth of a social network, and really just want to stay in touch and connected on a meaningful level in a way that is best accomplished by email right now. How do you bring people onto this netowrk? How do you sell them on the value?

I know. Create a network, ask people to join and build a profile, and then fgure out some things for them to do…maybe update their status. Share a link. Uhhh…..fail.

Creating a profile for the sake of creating a profile is the idiots guide to social networking…or any kind of applicaiton that wants to build a userbase. A job site doesn’t ask you to build a CV and then look for jobs. It presents you with interesting opportunities that you can only apply to if you have a CV on their site. Facebook doesn’t say build a profile and that’s it. They ask you to add more info about schools attended or jobs held, for example as a way to find people you may know. There is utlity in the action and a proper carrot motivating you to do it.

Path started with a carrot: Think about the most intimate thing you could share with you closest 50. Its not a link or status or events or questions or game results…its images. Giving me an app to take and then share those images only with the 50 most important people in my life provides a utlity (obviously one not currently exclusive to Path) while also making the explicit statement that these images will only be available to a small group. Therefore, group size informs content, and conversely the content will influence who is in this group. If I want to use the app, and I’ll only be able to share the images to 50 people, then I might as well add the most important people in my life, and since they’re the most important people, I’ll likely use the app to take more intimate photos of my family, experiences, friends, vacations, special moments, etc.

Boom! I now have a ‘personal network’ that holds a snapshot of the most important people currently in my life. I add them to this network since the level of intimacy of my content will be higher, and as an accessible (less clutter, smaller, not kitchen sink-ish) place to join, they are more likely to join.

Great. An photo-sharing with some exclusivity…then what?

Path (probably) laughs at all the people who thought they were another photo sharing app. Now they turn on the smart. Give me more to share with my 50 like travel plans, content, links, video, purchases, wish lists etc. Remember, early access to path showed it as a list aggregator. That’s still probably coming, since who better to add context to lists of wants, favorites, dislikes, etc then your inner circle. Similarities across these lists are very meaningful ie. 7 of my friends all want to travel to a certain place some day, 4 of my cousins all want the same gift, 2 of us love the same recipe, none of my friends share the same taste in food as me but they all think a certain place is a top 5-er…so worth checking out. And so on…

Think of the power of Path Connect. If I’m logged in to Amazon this way, I may not so much see what people like me tend to like, but I’ll see what’s on my 50′s wish lists, and imagine the co-shopping possibilities. There won’t always be someone online with you, but when they are, it’ll be meaningful and interesting, since you likely value their advice. At GoNabit we use Facebook Connect, but Path Connect would be far more meaningful since people less likely to share to the Facebook crowds that they bought a massage voucher, but much more likely to co-plan events through buying vouchers on GoNabit and share these purchases to their 50. The relevance, intimacy and value are much higher with Path.

Look for Path to get some adoption, less from the early-adopter app crowd, and more from the people who actually want to find a way to send baby pics without always sending out group emails, and aren’t interested in creating some FB group. That said, as with any new business, getting scale is the challenge that makes or breaks. Over time, I’m sure they’ll add meaningful features to the photo app, but also flesh-out the utility of connecting with your 50. The photo app will become a part of the overall mix, but the only element by any means.

…or, it could just be another photo-sharing app.

The honest answer revolves around some variation of the fact that there really isn’t much to buy online in the region. I contend that the reason is not because those of us here don’t have credit cards, or don’t feel comfortable buying  online, but that there is dearth of opportunities to buy online here and this is fueled by the challenge is setting-up an e-commerce platform rather than the resistance from the consumer.

Why do I say that? Let’s look at some numbers in no particular order:

I’ll use an example that I know well: Bayt.com is one of the most-visited websites in the region with roughly 1.5+ million monthly unique visitors. One of the greatest sources of that traffic is the UAE. While Bayt does have an e-commerce element (job seekers and employers can purchase either CV services or recruitment services online respectively) it is not an e-commerce webstie per se. One would argue that it gets this much traffic because it is not an e-commerce website, since no one here uses ecomm and the site would get less traffic if it did. However, looking at Google trends shows us that Amazon.com gets more traffic from the UAE that Bayt.com. People are shopping online from here to the other side of the planet in greater numbers than they are looking for new opportunities here. The Shop & Ship guys can attest to this. Similar-ish numbers hold true when comparing souq.com to ebay.com. The apples-to-apples comparison is that clearly there is a strong interest in online shopping from this region – even to the extent that people are willing to cross the hurdle of shipping fees and currency conversion to make that buy.

Recently I conducted some research on credit card usage in this region.

• 80% of respondents have a credit card
• 70% of respondents use their credit card for online purchases
• 40% of respondents buy online once per month or more
• 56% of respondents are somewhat to very comfortable buying online from Europe, 59% from North America, but with the largest group of respondents from the GCC and Levant saying that buying from this region just hasn’t even been an option
• 49% of respondents site the chief reason for hesitation or lack of online shopping from this region is the lack of options
• and when asked what would increase their confidence in buying online from the region 55% said trust that the site would run error-free, 53% said clear signs of audit and verification, and 50% said clear transparent customer care

When a similar question to the last was asked on Bayt.com that limited respondents to one answer:

• 26% of respondants will always remain sceptics
• but that means 74% of people are open to measures to increase that confidence – primarily to the tune of 27.5% agree with the need for clear signs of audit and verification (in other words, that the gateway looks and operates as it should and because someone else says it does)

So let’s round this out with what I can buy online here with a credit card:

• airline tickets
• hotel bookings
• event tickets
• flowers
• CV services
• recruitment services
• auction items
• anything else…?

Some preliminary conclusions are that:

• people have credit cards – google the recent MasterCard info on credit card penetration in the region
• people are shopping online – but primarily from outside the region
• people are open to shopping online in the region given trust that the gateway will work, its safe, and that they can contact someone if there’s an issue
• that there must be a huge opportunity for new e-commerce plays that are limited only by our imagination, initiative and implementation….

Wrong!

Go start an e-commerce site today based in the region and you’ll quickly find that the main issue is not your will, building a site, incorporating (could be easier and cheaper), or the consumer. The biggest challenge is the difficulty in securing an inexpensive – globally-leading – payment gateway.

Let’s compare regions:

UAE provider:

• link-out only gateways – no API usage to integrate payment into a seamless experience for the user
• choice of 2 gateway providers
• serve all Middle Eastern markets including Egypt and Lebanon
• ~$85,000 of collateral on account as a deposit with the merchant account provider (subtract from your operating capital)
• $1,000 setup fee
• $5,000 yearly maintenance fee
• 3% and 2aed on every transaction

North American provider:

• link-out or API gateways plus e-wallet services (can carry a balance on account to use later)
• choice of many gateway providers
• serve most all Middle Eastern markets, often not including Egypt and Lebanon
• $0 of collateral on account as a deposit with the merchant account provider
• $199 setup fee
• $420 yearly maintenance fee
• 2.6% and $0.25 on every transaction

You tell me which is easier for an entrepreneur to swallow at start-up? I understand that its difficult to setup internationally given the issues around residency and tax requirements, but this is an opportunity for making the local ecosystem more attractive for local and international entrepreneurs…

Oh can you imagine…..with a tax-free business climate, great central geography, access to existing and emerging markets, great weather, multicultural workforce, a fairly liquid environment…and combine that with a real interest in making it both easier to setup a start-up PLUS working with global payment gateways providers to maximize options for e-commerce start-ups and you end with even more reason to launch a tech start-up here.

What’s your experience as an online consumer or trying to enter the ecommerce space in the region?

Funny how some guy already squatted the url.

[youtube]http://www.youtube.com/watch?v=YXVCmYCSA-E[/youtube]

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Image via Wikipedia

Big thanks to the crew from GeekFest Dubai for the chance to speak last week. The crowd is super-switched-on and made for a great – and intimidating – group to present to that night. With so many people who really ‘get’ stuff you know that you have a great chance to really spark some interesting discussion and get some amazing input on your ideas. That said, the flip side is that this is also the group that will quickly see through your crap if you don’t bring your A-preso.

It’s also great to see that the Geek-sters are branching out with a pending Beirut event. Go figure that Alexandra Tohme has her hand in this. She seems to be emerging as a bit of a social superstar.

I’ve add my deck below and here is Alex McNabb’s take on my preso:

Dan Stuart’s view of online education and translating formal learning activities into a way of structuring your personal online interests, interactions and engagements was another way of looking at stuff that I, for one, do ‘organically’ – but he tied together these things in a way I hadn’t thought about. For that, alone, I found his talk worthwhile. link

[slideshare id=2756217&doc=personallearingenvironmentsforlifelonglearning-091221004802-phpapp01]

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I’d mentioned in a previous post that one of the key elements missing from the startup ecosystem in Dubai was the ability to fail due to outdated and immature insolvency laws. Good news came out today that just brought us one small step closer to a stronger ecosystem: “New bankruptcy law to be announced in the UAE within months.”

The tone of the release is that this is intended for companies currently under stress because of both the global and local financial crises. However, I think the more positive spin on this is that for new companies – or more accurately – for those people considering starting new companies this law should provided the adequate legal cover necessary to start a business in confidence that the framework for failure does exist. You don’t start and expect to fail, but you want to know that if you do, you can move through a transparent process and move on.

This is a great step and I look forward to this continued ecosystem development to help new entrepreneurs find a great launching pad in Dubai for tech startups.

Summary: Social Media” is a tool and a topic. It is a challenge and an opportunity. It has the strange ability to be all around us but remain elusive to some, and a mystery to many others. The subject of this interactive session will be to demystify social media and answer the question, “How can I use social media effectively to build and promote my own personal brand to start or grow my career through building a Personal Learning Environment – and do so in a way that is manageable and effective?”

[slideshare id=2722532&doc=personalbrandingtostartandgrowyourcareerd-091215071254-phpapp02]

1. Social Media Will Become a Single, Cohesive Experience Embedded In Our Activities and Technologies: “While I do agree that “everything we do will be gathered and streamed together, allowing people to view their world of activities as if it were projected in front of them, open to change, review and input at any point in time from any device or online tool,” this applies only to those people that actually opt-in to multiple services that then aggregate that activity. Otherwise, as the majority who seem to confine their social media activities to Facebook, their activity will be aggregated and collectively streamed in totality based on the structure of the site. Facebook has recently defaulted to open this means that more and more people will be publicly sharing, and since Eric Schmidt doesn’t give a damn about people’s privacy, then the Google behemoth will also exert publication preference on people as well. We will be more open whether anyone asks us or not. The statement that, “Users will access content from any device or platform, co-create and mashup their photos, videos and text with traditional content while interacting with each other” is wishful thinking since the majority are not creators and remixers, but viewers and perhaps commenters. Social Media in the Middle East is even further behind in terms of the participation hierarchy, so interaction around mashups will just be inching into the region by the end of 2010 for early adopters.
2. Social Media Innovation Will No Longer Be Limited By Technology: 2009 saw the emergence of Twitter and the maturation of Facebook. Any business owner or marketeer would have to have dug a serious hole in the sand to avoid talk of social media marketing, new ways to listen to your customers, engaging with users, going to the where people are interacting rather than trying to attract them to corporate sits, extending the brand, etc. 2010 will be the time to “[turn] information to wisdom and insight to action.” If not a single new social media tool was developed in ’10 we’d still do alright with keeping ourselves building social media competencies. If we use these tools 50% over the year then the online landscape for companies, brands and users will be remarkably different. In the region, we are behind. There is less online voice, the voice is fragmented, and the channels for the voice that does exist are technologically archaic. In the developed world, there is talk so people seriously need to listen. Here, the more and more ‘people’ make it clear that they are listening, (hopefully) the more people will talk – and use the channels that enable discussion and engagement (read: kill all forums).
3. Mobile Will Take Center Stage: Are you listening my Middle Eastern friends?! “IDC predicts the number of mobile web users will hit one billion by 2010. As the technological barriers come down, people will increasingly use their phones on-the-go to access social networks, search, read content and find location-based information.” Start building…!
4. Expect an Intense Battle As People and Companies Look To Own Their Own Content: “Instead, content relevance and quality will become the key focus.” Given that Demand Media, Associated Content and AOL and are all churning out huge amounts of content, quality will be an issue in 2010. These companies are selling content to other sites and trying to win the search battle putting relevant, long-tail content in front of users, and wrapping this content with relevant ads. it’s less about finding great content, and more about winning the battle to be best positioned to be found in that search, and then monetizing that discovery space. A new flight to quality could empower niche site owners. In this region we are content-poor. Any good, localized content is great content. A content factory like Demand Media could seriously disrupt the Arabic online world and take the online landscape forward and drive usage = opportunity!
5. Enterprises Will Shape the Next Generation of What We’ve Called “Social Media”: as much as your mom will have an iphone, social media will grow-up and companies will increasingly make it their own…bringing social media platforms into the enterprise and empowering companies to adopt social media tools to grow revenues. As the enterprise takes on social media do the young rebel from ‘the man’ and fragment into ‘underground’ social networks away from brandization? Watch for it…
6. ROI Will Be Measured — And It Will Matter: In a region like the Middle East where Social Media is a bit of buzz in international media when someone sees Twitter on an international broadcast of Oprah or Colbert, ROI for social media is a long way off. The airlines are using social media, but they tend to lead the vanguard of tech adoption in areas like ecommerce anyway. Ultimately, clear ROI will accelerate social media adoption here moreso than elsewhere. Adoption is happening outside the region in Europe and N.A. We need ROI to encourage adoption – and this could tip usage in the enterprise.
7. Finally: Real, Cool and Very Bizarre Online-Offline Integration: Given that mobile penetration is 197% in the UAE, it is easy to see how the potential in regional versions of American inventions like Gowalla or Foursquare (and yes, I think we need Middle Eastern innovations in this area rather than just borrowing the tech from elsewhere especially to manage poor addressing and language needs) can quickly grow into a platform that can accelerate the ROI of #6. What better way to make some sense of this new fangled social media contraption then to make money for y’all?
8. Many “Old” Skills Will Be Needed Again: Well, uh, since all we really have – with a few exceptions – in the Middle East are old skills then we’ll be ahead by being behind.
9. Women Will Rule Social Media: Fine. I could wait, so I skipped ahead to this point. You didn’t hear it here first, but never ever forget: “Women make 75% of all buying decisions for the home, and 85% of all consumer purchases.” If you can combine #4 and #9 in a manner that brings eyeballs with quality content and leads to the growth of an affinity community for women that respects their unique needs and online behaviours…then let’s talk. The opportunity to cater to women in the Middle East online is an opportunity diverse and comprehensive. There will be many winners here, but very few players here. A year from now we will see some winners…will you be one of them?
10. Social Media Will Move Into New Domains: You know where I think we can all see the integration of social media? Education. Many people are active on many sites in a form of self-casting. We all will migrate to creating our own Personal Learning Environments. I’ll be giving a preso here in Dubai on Tuesday on this topic and post the deck afterward.

Some add-ons:

1. Catching-up
2. Homegrown innovations
3. Crossing borders and connecting the region
4. Mobile
5. Mobile
6. Mobile
7. Did I mention “mobile”?

What’s the biggest trend in social media that will take hold in the Middle East in 2010?

The Gumley House Convent School — a small, Christian School for girls ages 11 to 18 — in London has laid out its plan to use give Apple’s smartphone to a select group of 30 students as a test educational measure. … The girls will have free access to all of the phone’s features with the exception of actual calls, and the trial will last until the end of the school year.

So assuming that the school has wifi, the students are basically getting an iPod Touch that can browse and use apps. Since I am a BlackBerry user its hard for me to evaluate the role the iPhone could play in education. Of course, a mobile internet device with some doc support can certainly play a role in terms of access and before domain aptitudes using new tools. Also, I’m sure the school is looking to buy some love from the students by giving them all a hip device. That said, it is always a question of balancing the benefit of using a tool and facilitating work and discovery, versus spending time building domain knowledge and expertise with that tool so that is a facilitator rather than a hurdle. Which is faster: great mental math skills, or digging out an actual calculator or booting up the calculator on your computer?

Given the huge number of iPhone apps there must be some great tools to support learning through collaborative and cooperative learning pedagogies over and above simple tools. A quick search for “best iphone apps for education” yields lists of 50 and 100 apps. Given the size of the list required to pare it down and still have 100 apps means a lot of choice. It will be interesting to see the experimentation with apps by teachers, and the self-selection by students to support learning.

I think I’ll have to cave in and get an iPhone so I know more of what they speak. Oh, the day!

What is your top 5 of iPhone apps for education?

I won’t steal too much of the thunder from reading the article for yourself, but the key point is that you could short-circuit the long development process to create a replica of Silicon Valley. Given the money it could be done.

Dubai and the rest of the GCC are great examples of franchise cultures. Rather than wait and build local brands in retail, commercial, education and manufacturing, it has been licensed from abroad. Much of the local wealth has been built by Emiratis serving as the local vendor of foreign brands. The local 51% partner of any major international brand: Toyota, McDonald’s, Sony, etc is without doubt a wildly-diversified family-run conglomerate. We are no strangers to importing best-of-breed here.

Dubai actually has many of the required elements of a great startup ecosystem:

• capital
• good weather
• tax-free
• metropolitan not suburban city
• livable
• safe
• global tech players with local presence
• international, migrant workforce
• entrepreneurial spirit

What we lack is unfortunately vital, but not insurmountable:

• ease of setting-up a business
• low-cost of setting-up a business
• strong research-based university
• innovation and IP development
• more robust insolvency laws

In Paul Graham’s model, rather than try to grow local entrepreneurs without an ecosystem or legacy, Dubai could headhunt startups. We create the local framework where entrepreneurs can start and grow businesses without local partners or being restricted to a free zone. Give them flexibilty. Then local capital finds startups “at the point in their life when they naturally take root” PG so they are less inclined to leave, and

“select startups by piggybacking on the expertise of investors who weren’t local. It would be pretty straightforward to make a list of the most eminent Silicon Valley angels and from that to generate a list of all the startups they’d invested in. If a city offered these companies a million dollars each to move, a lot of the earlier stage ones would probably take it.” PG

As a corporate VC based in Dubai, if I could travel to Y Combinator, TechCrunch50 or headhunt startups funded by prominent angels, offer them money to move here – not just a sales and marketing office – then I could really help build an ecosystem. The startups would attract developers and media. They would inspire younger local entrepreneurs. They would generate real local thought leadership. They would infuse the local economy with high-value jobs and innovation. They would put Dubai on the map and make attracting additional tech startups, and seeing actual local IP a real possibility. As of now, DemoCamps here are like leap years.

The problem: without bankruptcy laws then failing founders will be forced to flee, and without the flexibility to setup anywhere in town without a local partner, and without the flexibility to be choose an office and thereby put downward pressure on office rents, this won’t happen.

Related: Startup Visa Dubai

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You can listen the show here:

• Startup Visa Dubai pt .1
• Startup Visa Dubai pt .2
• Startup Visa Dubai pt .3
• Startup Visa Dubai pt .4

(working on adding the actual files here – not getting it done yet, sorry)

Leave your comments, keep the discussion alive, get in touch and spread the word!