Tech's Badia Boy
Namek Zu'bi / Investor
Namek Zu'bi is the founder of Silicon Badia. In the last few years, he's raised two funds: one US-focused fund targeting startups that are utilizing technology to solve inefficiencies in traditional 'offline' markets and one Middle Eastern focused fund -- Badia Impact -- for investment in entrepreneurs building category leaders in the region. These funds have invested in over 40 companies, creating thousands of jobs, over the last three years.
We sat down with the 'Badia boy' himself to hear this under 30 Jordanian's tale about breaking into the exclusive club of Silicon Valley investors and how he's shaking things up.
Where do you hail from?
I was born and raised in Amman, Jordan: a small country in the Middle East made up of some very good people, but surrounded by a ton of hostility and wars.
How would you define your profession?
Building great companies and working with people that are smarter than me to help them build big companies.
Do you have a favorite tradition from growing up?
The Jordanian dish called “mansaf.” It is rice, lamb and pine nuts with a very special yogurt sauce. You take the rice, make a ball with your hand and then eat it with the lamb right out of your hands.
How did you get into venture capital after Carnegie Mellon?
My uncle was the Minister of ICT in Jordan in the 90s. He was tasked with creating a technology ecosystem in the Middle East, starting with Jordan. He told me ‘if you want to be successful and have an impact in the future, go into technology.’
The education system in Jordan was not well equipped when it came to coding. But I thought sounded like fun to learn how to talk to computers, so I applied to the most prestigious schools in the field. Carnegie Mellon was the only school crazy enough to accept me with no prior computer experience.
I graduated top of my class and landed a job on Wall Street working in tech. I was working at Deutsche Bank with the global market equities group building programs for their equity and derivative trading desks. That opened my eyes to what tech can do when applied to the real world. I quickly moved from analyst to associate. My boss’s boss took me out to lunch at Cipriani for my promotion. To my surprise, he asked me why I would waste the next twenty to thirty years climbing this bureaucratic ladder that is both tedious and lacks impact. Why not go somewhere else and try to build value and make an impact? I quit Deutsche Bank two weeks later.
I met with my professor of entrepreneurship (a serial entrepreneur himself) from Carnegie Mellon. He told me about his friend who was starting a venture capital fund in New York. At that time, I did not even know what venture capital was. I met with this tobacco-chewing, just totally crazy guy from Texas.. He had no idea about tech, but I liked him. He offered me a job and we launched a venture capital fund called Clovehitch. I’ve been in venture capital since 2010.
How long after that did you launch Silicon Badia?
I stayed with Clovehitch for a year and a half. I left to join one of our portfolio companies called Rapid Ratings. It rates private and public companies purely quantitatively. I joined them to get operations experience. This job opened my eyes to how far behind technology still was in certain niche industries in the US and more so how far technology was generally behind in the Middle East. People in the Middle East need the same technology and services as Western people, but it was taking a lot longer for this region to innovate. I thought: “how could I take what I was doing in the US and apply it to a region with a hunger [for technology] and plenty of raw talent to help build a sustainable startup ecosystem?
My partners and I eventually found two models that stuck: raising a seed stage venture fund in the US (to target the niche industries) and creating a venture capital fund to invest in the Middle East. It’s been two and a half years now that we launched these two parallel funds and we’ve helped create thousands of jobs through our 40+ companies.
What does “badia” mean?
Badia is the Jordanian word for “desert." It’s extracted from the word “bedouins” which means “desert dwellers.” “Bedouins” is extracted from the word “bidaya” which means “the beginning.” The bedouins thought they were the first people on Earth. The name fit because it signified that we were at the beginning of technology in the Middle East.
Did you receive any lessons early on that stuck with you?
Two weeks into venture I was trying to negotiate a $5M Series A out in Seattle in the Silicon/semi-conductor space. The lead investor is somewhat of a legend and I am negotiating a term sheet, while reading the book on term sheets, against a 20-year veteran. I traveled to Seattle to do due diligence on the company and he sat me down over dinner and told me, “hey, I like you .. you are aggressive and you have potential, but you are fucking this up. Here are the mistakes you are making… this is how you should be doing it.” That was a friendly tap on the shoulder: slow your role, learn, ask questions when you're not sure, and take it one step at a time. Because if you invest $5M and your wrong it can be a career-ending move.
What are some of the challenges of being young in this highly competitive space?
I actually think being young and not coming with a lot of baggage is an advantage in this space. I was just speaking with one of our entrepreneurs and she forwarded me responses [from other VCs] and it fucking pisses me off how these VCs treat seed stage entrepreneurs. A few of our companies are out there raising rounds. I am making intros to the usual suspects: funds here, funds in the valley. At the end of the day, most entrepreneurs are putting everything on the line to build a huge company, [and the VC] is usually sitting there riding off their success. Even if some of these business ideas are crap, they are putting their life on the line, they are really passionate, so the least you can be is humble and respectful as an investor.
Funny, as we speak, I just received another email from one of our entrepreneurs speaking about this exactly and saying we run our fund differently. The rules we follow are: 1.) Don't be an asshole. 2.) Be transparent: if you think a company is crap or entrepreneur is bad, tell them. Don't be rude about it, but tell them why. 3.) Be decisive and value an entrepreneur’s time. People are trying to make it, so if you don't think they are a fit, don't mess with them for a month just to tell them they aren't a fit.
Is there a certain person or exit that you are particularly proud of from this process?
My partner Emile and I met two random guys -- one from Jordan, one from Gaza -- in 2011. These two guys were developing video games and ‘middleware’’ for gaming platforms like Unity. They had never been to the US and they were not your usual fast-talking tech entrepreneurs. They were low on resources, just doing all this for passion. We brought them to the US and introduced them to some mentors and other talented individuals before deciding to invest and help them build the company. They were the real deal. After nearly shutting down the company three or four times, and dealing with your typical startup growth hurdles, these guys now have a growing startup in Silicon Valley called MXD3D. They just raised $3M seed round from three prominent Silicon Valley VCs. This story sums up what Silicon Badia does: helping real entrepreneurs build real value in the US and Middle East.
What was your biggest challenge in raising capital for your funds?
"You are really going to invest in one of the most hostile terrains in the world?"
When we were raising our Middle Eastern fund a couple years back, we used to go into meetings and people would just laugh at us. “You are really going to invest in one of the most hostile terrains in the world?” ISIS was forming, there’s a war in Syria, the Arab Spring was happening - Egypt was being toppled. And you want to raise a fund in Jordan surrounded by all this stuff and invest in tech companies? It was an uphill battle. End of the day we convinced them of the opportunity...best time to go in is when no one else is looking.
What do you think is one of the trendy segments of the market that is overvalued?
A perfect example is a company like HomeJoy. They raised a ton of money and they went under. I'm a firm believer that on demand is here to stay, but a lot of the unit economics don't work. They were hoping to upsell for higher margin services later or eventually hoping to lower cost through technology. HomeJoy met the end of the line before they were able to raise more. You can't have negative gross margins for forever. Ask a middle school kid if a company like that is going to succeed. A lot of the time it’s simple math to identify the companies that are going to make it.
What is the toughest market segment?
We have an e-commerce company in the Middle East. E-commerce is hard. Don't start an e-commerce company unless you deal with someone who has done it before. This is especially the case in most emerging markets where the logistics suck and cash on delivery is the major form of payment. It's been a tough ride but most importantly we have made our investors aware of that before taking on this challenge.
Who are your mentors?
My father and mother are my mentors. My father started his company three decades ago and turned one factory into a serious global player. He manufactures and trades irrigation products throughout the world. Seeing him build value in his idea influenced our model at Silicon Badia. Growing up, he showed me how to create real value, real influence, real impact [in a business]. Men like that don't come by too often these days. My mother keeps me grounded and focused on the things that matter in life.
Alex Greer &, Paul Prentice / Breakout