Skip to content Skip to Search
Skip navigation

Gulf’s ‘copycats’ still attractive to Silicon Valley

Jack Selby says there are many opportunities for acquisition in the Middle East following his experiences with PayPal Creative Commons/Gage Skidmore
Jack Selby says there are many opportunities for acquisition in the Middle East following his experiences with PayPal
  • Buying startups remains a strategy
  • Copycats jump-start the market
  • Careem followed Uber’s model

Copycat companies in the Middle East are still an attractive acquisition option for Silicon Valley giants because the risk of trying to establish themselves in the region is too high, according to Thiel Capital managing director Jack Selby.

The Middle East has been criticised for mimicking startups from other parts of the world, rather than pioneering original innovation. Yet Selby said the approach serves as a catalyst for jump-starting the market.

The former PayPal executive said when they were exploring opportunities in the region they found it “a very complex place”.

“People complain why do we have these copycat companies,” Selby said. “Careem is a copy of Uber [for example]. It becomes a choice, as it does with any large tech company: do you want to buy it or do you want to build it?”.

Selby said the opportunity cost – the result of choosing one alternative and forgoing another – to localise a product for the region was too high.

“For us [at PayPal], we said let’s let someone else try to figure it out and build it here,” he said. 

“If they do build it here successfully, we will come in and buy it at a nice premium. There’s nothing wrong with that because you have to start somewhere.”

Buying the imitation businesses could also trigger a wave of startups, Selby said, much like what experts call the “PayPal effect”.

PayPal was acquired by eBay in 2002 in a stock deal valued at $1.5 billion. After the acquisition, former employees went on to establish a number of prosperous tech firms.

Notable among the PayPal alumni are Elon Musk of Tesla, Reid Hoffman of LinkedIn, and Steve Chen, Chad Hurley and Jawed Karim, co-founders of YouTube.

Peter Thiel, who co-founded PayPal, used his money from the sale to back companies, becoming the first outside investor in Facebook. 

“If you buy that PayPal copycat or you buy Careem, those people then have a great outcome,” Selby said, referring to the millionaires created among the shareholders of Careem after its acquisition by Uber for $3.1 billion in 2020.

“They are young enough that they can go start their own company and maybe it won’t be a copycat at that point. I think it’s a great way to start the ecosystem.”

Several ex-Careem employees have since opened new enterprises, while co-founders Mudassir Sheikha and Magnus Olsson have made investments in startups.

Selby, who is involved with companies such as Musk’s space technology company SpaceX, said entrepreneurs in the Middle East often operate in tightly regulated sectors, making it harder for outsiders to enter.

He believes this makes them attractive acquisition targets for Silicon Valley investors who will come and buy them for “a nice multiple”.

A multiple on invested capital – or MOIC – compares the value of an investment on the exit date to the initial investment amount. It is commonly used in the private equity industry to measure investment performance.

Selby, a member of the advisory council to the Dubai Chamber of Digital Economy, was speaking to delegates at the tech event Gitex Global in Dubai.

Latest articles

Over 400 global food brands are taking part in the SaudiFood Manufacturing show in Riyadh this month

Saudi Arabia’s food factory count rises to 1,300

The total number of food factories operated by the Saudi Authority for Industrial Cities and Technology Zones (Modon) has reached 1,300, across 36 cities. The increase signifies the growing capacity of the domestic food industry and its localisation efforts, the state-run Saudi Press Agency reported. Food industry companies have recorded a growth rate of more […]

Garden, Nature, Outdoors

UAE commits $50m to development fund

The UAE has committed $50 million to the second phase of the Lives and Livelihoods Fund 2.0 (LLF 2.0), a multi-donor initiative targeting sustainable economic development in the Islamic Development Bank’s (ISDB) 57 member countries. The funding will be deployed by LLF 2.0 to support critical projects in health and infectious diseases, agriculture, and social infrastructure in low […]

A square in Cairo

‘Worst is behind us’ in Egypt’s black market dollar war says BMI

The Egyptian government’s priority for 2024 should be to keep the gap between the official and parallel exchange rates for Egypt’s pound and the US dollar as narrow as possible, says BMI Research. In a webinar on Tuesday BMI, a Fitch Group firm specialised in country risk, said that “the worst is behind us” in […]

Oman UAE deals Sultan of Oman president of UAE

Oman and UAE sign deals worth $35bn

The UAE and Oman have announced a host of new commercial and business deals worth a total of AED129 billion ($35 billion). The partnerships were agreed during Monday’s state visit to the Emirates by the ruler of Oman, Sultan Haitham bin Tariq al Said.  Investment and collaboration agreements covered areas including renewable energy, green metals, […]