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This article was published on October 24, 2011

Espace: A catalyst in the Egyptian entrepreneurial ecosystem

Espace: A catalyst in the Egyptian entrepreneurial ecosystem
Nancy Messieh
Story by

Nancy Messieh

Lesotho-born and raised, Nancy Messieh, The Next Web's Middle East Editor, is an Egyptian writer and photographer based in Cairo, Egypt. Fol Lesotho-born and raised, Nancy Messieh, The Next Web's Middle East Editor, is an Egyptian writer and photographer based in Cairo, Egypt. Follow her on Twitter, her site or Google+ or get in touch at [email protected]

While the entrepreneurial scene in the Middle East has been gaining momentum in the past couple of years, Espace is one Egyptian company which has been forging a path in the tech industry for far longer than that.

Based in Alexandria, Espace was founded over 10 years ago by 8 fresh college graduates. They were soon joined by two of their own professors from the Computer Science Department at Alexandria University, and Espace has since grown into a team of almost 30 designers, developers and testers.

An interview with Espace co-founder and CEO Youssef Aly

Speaking to one of the co-founders, Youssef Aly, The Next Web learned a little bit more about where the company started, and what they’ve been up to lately.

The story goes back to 2000. We had just graduated and we wanted to start our own business. Why? Because most of the IT companies were working on programs that just needed programmers. They weren’t technically challenging. Back then web apps weren’t that famous and you had to work on big enterprises where you write desktop applications, and we were excited about web applications. So we started a company on our own.

They started out working on websites, starting with a real estate company, and always keeping one step ahead of the times, ventured into mobile apps long before the craze hit not only the region, but the world as a whole. Espace’s first mobile app, Sales Buzz was developed in 2005, before mobile apps, as we know them, existed. Created for the PDA platform, Sales Buzz digitized much of the salespeople’s work at Unilever, Procter and Gamble, Cadbury and 4 other corporations.

And keeping up with the times, the company is now focusing most of their efforts on services, and startups.

Our focus is mainly in services, but lately for the last 3 years, we’ve been developing services for startups.  When you work with startups, they don’t have too much cash, so we usually negotiate our rates. We decided to go with partnership deals – working with reduced rates, and we get some equity out of it.  So for example, we’ve partnered with Egyptian news aggregator, Akhbarak and Marginize.

(You may remember Marginize as one of 15 Middle Eastern startups we think you should be watching.)

A cultural barrier against entrepreneurship is slowly being tackled by a number of fresh graduates who are taken the alternative route, choosing to ignore the comfort of a 9 to 5 job, regardless of family pressure and obligation. But Youssef does point out to some of the weaknesses in the educational system that still need to be tackled:

Most graduates are strong in the technical background but they’re not good at thinking of a good business model. They come up with a really cool idea but how are you going to monetize?  What is your revenue generation model? How are you going to get customers? they don’t think of these things but this is what will keep their idea running. That’s what we lack in our education.

Having been in the industry for over 10 years now, Youssef and his colleagues have the luxury of hindsight and are sitting comfortably in an arena filled with a younger generation that is just getting started. The advantage that they have is something that Espace is keen to pass on, ensuring that the entrepreneurial torch, so to speak, stays lit throughout Egypt.

It’s very exciting because even just 2 years ago, it was all about services. When we started our company 10 years ago, everyone told us “You’re crazy, you’re inexperienced and you probably won’t last longer than 4 years.”

So what was the secret of Espace’s success?

We managed to keep up because, we didnt stick to a single business model. We changed courses in many situations. And now after the revolution [in Egypt], the young generation believes more in their own ability to do great things, and we see a lot of startups coming up in Alexandria and in Cairo as well, and this will be a challenge for us.

We decided, why don’t we start to empower these young guys. If they have an idea, we can help them develop it inside Espace and we can help with our experience and network. We can come up with more products that way.

Youssef and his team have been at this for a while, and we would have been remiss not to ask him what he thinks budding entrepreneurs should keep in mind when getting started:

The lessons that i’ve learned is that you have to fail fast. You have to start quickly, and you have to deliver as fast as possible. And you have to test your market. You go ahead in a small iteration, have a beta or prototype ready. If it doesn’t work, try other things, and if it doesn’t work, go on to your next idea.

An example of Espace’s latest work

Akhbarak, Egypt first news aggregator was launched in 2003. Founded by MIT graduated Othman Ahmed Othman, it started out as a sports news aggregator, but quickly expanded to include all news topics. Espace recently partnered with the founder to launch a brand new revamped site, in an effort to maintain its number one spot among news aggregators in Egypt.

Mahmoud Said, the man behind AsTweeted is a Senior Software Developer at Espace, and is also the Team Leader on the Akhbarak revamp. He gave us an idea of what went into the latest changes at Akhbarak, which went live last week.

A year ago, Othman came to Espace and wanted to make a new version that is more feature rich and more competitive, more scaleable.

Akhbarak has enjoyed an 18th place ranking on Alexa for Egyptian sites, putting it at number one spot for aggregators, and for good reason. It is the country’s largest news aggregator not only in terms of traffic, but also in terms of sources, providing news from90 Arabic sources, including both local and international sources.

Explaining why the revamp was a necessity, Mahmoud told us:

There are other news aggregators but their ranking and quality isn’t as good as Akhbarak. But with more competitors trying to attack this business, we decided to sustain the rank by building new features.

Akhbarak’s new features include a new classification engine which can identify stories about on-going news items, collecting each of these items and grouping them under one section. They have also implemented a ranker, which decides what news is important using an algorithm which takes into account the number of sources, how many hits each source receives, and much a news item is shared through social media services.

Espace has also implemented a new auto-tagging feature on Akhbarak, a feature which is an absolute must when it comes to the Arabic web, as Mahmoud explains:

Most Egyptian news sources don’t tag their content, so we started to build an engine which takes the Arabic news article and extracts tags from it, and it’s fully automated.

He goes on to tell us what other features they’ve folded into Akhbarak:

We have a main component called Instant News – something like the new Facebook feed block which scrolls automatically with the latest friends’ updates. But I’m proud to say that we thought of and launched this before it showed up on Facebook.

We have also built an API which was not included in version 1 and can be used by any clients or other applications or websites to build on us. LinkDotNet recently built an Android mobile application for Akhbarak using that API.

With this API, Espace is now able to build news aggregators for any international location, and have already done so in Saudi Arabia.

We launched Dar al Akhbar – a Saudi news aggregator using the same engine, and we’re planning to launch several other instances for other countries. The basic idea is to have the aggregator localized which is valuable for the users. We have been thinking about launching an English instance in other countries as well, with local news.

Espace is one company that clearly has its finger on Egypt’s entrepreneurial pulse. The company’s client list includes impressive names like Vodafone, Yamli, Google, and Microsoft, but at the same time, commitment to new startups, and the local entrepreneurial ecosystem is very much a part of their ethos, and clearly it’s paying off.

Espace has certainly proved to be a breeding ground for successful entrepreneurs. At Startup Weekend Alexandria, Espace was not only an official sponsor. As it turns out,  two of the winning ideas were in fact pitched by Espace employees, namely third place winner AsTweeted and first place winner Sweet Heaven.