Contact Links
Ahmad’s LinkedIn account: @Ahmad Takatkah (أحمد طقاطقه)
‍Ahmad’s Website: https://www.vcpreneur.com/
‍VC Evolve book: Navigating the Art, Science, and Future of Venture Capital, in an Ever-Evolving Startup Frontier

Transcript:
Ali Zewail: Welcome. My guest today is Ahmad Takatkah. Ahmad is a technical founder turned VC with background in computer engineering, data science and product management. Over the past 15 years, he's helped set up and operate three VC firms for which he created new deal sourcing, startup evaluation and exit prediction tools. He's built a new AI model based on startups data that summarizes startup pitch decks and prepares investment memos and DD reports, used ML to score companies based on price, market team differentiation, performance, and to predict exit timelines, valuations, and fund returns. Ahmad is working on, uh, several things right now, a fund, as you might expect, his own startup, a podcast, and he's just published a book. So it's a very wide-ranging, interview where he talks about technical to entrepreneurial to active VC investing experience, both in this region and in Silicon Valley.

So without further ado, welcome Ahmed.Ahmad Takatkah: it's Ali Zewail: So Ahmed,uh, maybe we can just start in a few minutes talking about your, uh, path intostartups and, and, and, you know, how you came to be in this wonderfulecosystem of startups.Ahmad Takatkah: Okay.So I started my career after graduation. I studied electronics engineering, bythe way. And after, right after college, I joined the Jordanian TV as a studiosystem engineer. I lasted for barely a year and it was a very boring job. Asyou can maybe imagine, my job was to sit in a very far home from the studio from wherethe action is.And I just watch the devices. If anything goes wrong, I pick upthe device. Take it to the, uh, top to fix it and then bring it back. That'smainly my day to day job. Now, uh, to be fair, in addition to that, uh,engineers in that entity, and we're also responsible for designing the wholestudio system, maintaining it, upgrading it, um, We used to attend lots ofcourses or conferences for us to learn more about the new equipments that wecan use.But in a nutshell, it was on a day to day basis, it was veryboring. So that triggered me to basically say, okay, this is not the future Iwanted to myself for myself. Let me try to do something else. With that, Iactually started looking at other opportunities. One of them was there was abusiness plan competition was not called startup competition at the time.It was a business plan, uh, for princess of my university, theuniversity I went to. So, uh, me and my friend, we applied to that competition.We won the fourth place. And that's meant we got some cash from the reward andthen with that cash, we said, okay, let's start a company. We raised some angelinvestment, very small amount that was in 2000, I would say 2005, 2006.And we started a company train decks, which is again, the namewas, uh, was not that good as well. But anyway, uh, the idea was to create amarketplace for training courses in Jordan. So you're a training seeker. Youcome to our website, you search. And you find every training course that islisted in any training center in Jordan, and then you select the course youwant.You read reviews, of course, about that course, the price, thetiming, everything. Then you go to the training center and register there andpay there. You can guess the problem here in the business model. There is noonline payment. Again, 2005 2006 was really tough to get online payment. So weproved that business model doesn't work and we learned a lot.We used to go and seek advice from everyone and every time weget an advice from someone, we say, Oh my God, this person is the best. He orshe knows everything about this business. We should follow their advice. Andthen before, you know, Taking it to a maturity level, we go to another personand that person gives us a conflicting advice and we follow that person andthen a third, a fourth, a fifth.It was a chaos. But anyway, we learned aAli Zewail: Trial byfire.Ahmad Takatkah: Yeah.After that, after a year, we decided to shut down the company. We actuallyreceived an acqui hire offer from bait. com at the time,Ali Zewail: Oh, nice.Ahmad Takatkah: fromRabih Atayeh. But we were like, no, acqui hire? No, we want full acquisition.We want to go big. Anyway, I wish we accepted that offer. After that, I joinedthe Arab Science and Technology Foundation. And in there, my job was to domatchmaking between founders. Thank you. At the time, we didn't have a lot ofVC investors, we just said investors, and that included both types of angelinvestors and VC firms. That was, I think, 2007, 2008. Until early 2009 andasked if our sense of technology foundation.We were a regional organization. I think the headquarters werein charge, but we did events, matchmaking events and conferences and Egypt. Iremember, and I think smart city or my city.I can't remember the detail. Smart village. Yeah, East. Sorry.West of Cairo. West of Cairo. Yeah, we did events in Saudi, Dubai, Kuwait, andof course in Jordan. And that was kind of my Very first introduction to theactual work of venture capital. And if you, if you know why Combinator came upand maybe late 2008, 2009, early 2009, I learned about that model and I wasfascinated by this model and I, I'm like, okay, we need to create somethinglike that in the MENA region.I didn't have any experience yet. I started the company thatfailed and I worked in, uh, a matchmaking company. Uh, I used to call myself .I find, I find, uh, you know, the companies and the investors. I wanted to, todo something similar to Y Combinator at the time. And I started talking tothose investors. I started to build connections or relations with, and one ofthem was Rashid Lar and he was starting N two V.I dunno if you're familiar with the story of N two V.Ali Zewail: I'mfamiliar with interview, but not the story.Ahmad Takatkah: Okay.So that was in 2009, I think mid 2009, where he said, uh, Ahmed, I don't knowif that model can work as, as in the Middle East region, Rashid's, uh, visionwas, Hey, let's see what's happening around the world, take whatever that fitsus and try to customize what doesn't fit our economics, our culture, ourlimited, uh, resources, et cetera. And he promised me. Experimentation and hedelivered boy. We did a lot of experimentation and at and to be, we started with a few people and we grew thecompany within three years to become, I don't know, maybe 300, 400 people.Four cities in Amman, Cairo, Riyadh, and Dubai. We invested in companies as aventure arm, like we created a venture arm to invest in companies.We created an accelerator for mobile applications. We, um, weacquired some companies, and we built some companies internally. That wecreated a venture studio, kind of a venture studio. The idea was to createsomething like idea lab, a big internet holding company that builds companies,invest in companies or acquires majority stakes in other companies.And provides infrastructure like we have content creation arm,we have advertising arm, payment arm, et cetera, and then take the whole thingpublic. Obviously, that didn't work. It was maybe too early or the model itselfwas not the perfect fit for the market at the time. I think I worked at intothe 2009, 10, 11, and med 12, I think I left by that time, I went to Harvard toattend an executive program on venture capital and private equity. I started myKauffman. Program. Uh, Kaufman Fellowship is a two year venture capitaleducational program based in Palo Alto.Used to, I think now they moved the headquarters. It's one ofthe top VC educational programs. It's not only technical, it's technical andbehavioral. And above all, you build a very big, powerful network of other VCsin the world. I think we're now 700 VCs in the Kaufman Fellows. I don't know,class 27, 28. I was class 17. That was in 2012. So, by the time I left N2V, I Ithought I had enough experience to start my own GC firm, and I called itSindbad Ventures, or Sindybad Ventures. And because of the Kauffman Fellows, Iused to go every three months to Silicon Valley for a week to attend classes inthere. And I developed this relationship with Black Box.The VC, it's, uh, started by, uh, Fadi Bshara, Syrian Americanwho started an accelerator in the Bay area for immigrant founders. And I waslike, perfect. He, uh, I, I can bring you founders from the Middle East regionand you take care of them here. you introduce them to your network ofinvestors.You give them this three months educational program or trainingprogram on how to scale, how to, it's like an accelerator. And it was a perfectmarriage between Cinderbad Ventures and BlackboxVC. And I wanted to raise asmall fund to just do that. I talked to multiple LPs over, I think, a year. Itwasn't really, it didn't really click.Um, maybe I was still too early in my career. Uh, maybe theregion was not ready for that. Again, we're talking 2012. At the time, we hadonly a few VC firms, I can remember. Um, of course, many of them are stillhere. Uh, for example, MEVP, one of the pioneers. Uh, Becker Capital, I think,either started at that year or started a few years ago, or back before, um, Iwanted to start Seldew Adventures. I think we have OASIS 500, of course, andsome others. So at the time, long story short, I couldn't raise the fund andthen after that, I think I was known for, you know, someone who had reallygood, relatively good experience at N2V and someone who started or tried toraise a fund and then after that, I was already in the venture capitalindustry.So that may be a long answer to the question. How did you getinto VC? Yeah.Ali Zewail: Yeah. So,uh, it is, and it's, uh, there are so many touch touch off points that wecould, uh, pursue. But maybe I'll, I'll actually do something different, whichis to jump all the way to the present and, um, ask you to tell me about whatyou're doing these days. Cause there are like several parallel paths that arehappening and, uh, maybe we can talk about themAhmad Takatkah: um,well, to talk about what happening now. What's happening now? It's really hardbecause I'm doing multiple things and I, I don't know which one. Uh, but okay.So, uh, the, the, maybe the main thing I'm, I'm working on right now isreconnecting with investors and founders in the region. I, I emigrated to the US for 10 years, I think, uh, yeah, late 2015, early 2016. And I came back a fewmonths ago and I wanted to reconnect with everyone and make new connections,learn more about the new VC firms here, meet all of the VCs in here, meet morefounders in here. So I said, what's the best way to reconnect and meet newpeople? Of course you can go and attend events and all of that.But I said, why notcreate a podcast? And that podcast was, uh, the idea was, I want to meet thehighest number of people I can. And at the same time, add as much value as wecan, or as I can to the ecosystem, to the founders mainly. And I said,okay, why I'm inspired by all, all end podcasts, of course. I said, okay, Iwill create this podcast where I host three VCs, three different VCs everytime.To react on the startups news of the week, and let's do thatweekly. So at one point or on one side, the founders would see all those VCsand hopefully we'll have as many VCs as we can over the course of the season.One founders will, will see those VCs talking and reacting to news. They learnmore about their personalities, their characters, the way they think. The waythey react to news, and I ask specific questions about the companies and thenews or in the stories, but I also ask generally questions.So this is a good way for a founder. If they watch 10, 15episodes, they can learn a lot about many VCs in the MENA region. And, uh, forme, for my personal agenda, I would meet those new, uh, VCs, uh, and, uh, youknow, build this, this connection. So this is how the, the idea of VC React wasborn, and I noticed a pretty good news aggregator, uh, forward start, uh,started by Jamie and Zoe. Thank you, Jamie. Their co founders and I reached outto them saying, Hey, I'm thinking about this idea for a podcast. Just reactingto news in a very casual conversations like a zoom call.It's just talking about the news and a zoom call. And he reallyliked the idea. I said, you're. You bring the news, we co host together and wehost these VCs every week and we see how it goes. And Alhamdulillah, wereceived really good feedback and that kept us going. Now I think we're episode12, which means It's been three months doing this, this podcast. So that's onething I'm doing. Another thing I'm doing over my, I don't know, 15 years ofventure career. Um, um, I worked as a, an operator. I worked at Carta at King'scrowd. Uh, I learned more about secondaries. I learned about crowdfunding. Ilearned about data science because I took a detour when I moved to the States.So From venture capital to data science and then came back toventure capital through king scout capital. So, I learned a lot of thingswithin that area, not necessarily direct primary VC investments. There areother alternatives, and two of these alternatives attracted my attention when Icame back to the region, and I wanted to focus on them.One of them is secondaries. The other thing is revenue basedfinancing, and I'll talk a little bit about each of these for revenue basedfinancing, because I focused on data and data driven investing and dataanalysis, data science, and so forth. In Carta and in King's Cod for, let'ssay, seven years, I noticed the need for for the science part of venturecapital because, you know, this debate, uh, venture is science, more sciencethan art or more art than science. I say it's both. Um, but I wanted to focusmore on the science part. At least in those years, the data driven part, especially becausewhen I first moved to the U.S. I noticed that the top two VC firms, they started hiringdata scientists. They started having data science teams, and they startedcollecting a lot of data. And there's a lot of examples about that. But I said,okay, I want to become more of a data driven investor. and an operator in acompany in Silicon Valley.So I said, I want to learn data science. I have a technicalbackground. Let's go back to school, but online school, Udacity. I took twonano degrees in Udacity. Each one is six months. First one was data analysis.The second one was machine learning and data science. And during that time, Iwas trying to find a job where I can apply those new skills I'm learning.But not in any application I wanted specifically data onstartups and investors and I kept applying to companies like Carta or e sharesat the time, then they changed the name to Carta CrunchBase, AngelList, CBInsights, DataFox, I think I focus on these five companies started sending themcold emails, spamming them until they replied.One of them replied, which was Carta, and I got an internship.And Carter for a data science or data analyst position, but the good news wasmy manager and there was a PhD data science from Stanford. So you can imaginehow much I learned from that person. Anyway, and I learned more about datascience. I learned more about secondaries, especially towards the end of mycareer in Carter.When we started talking about Carter X and launching cortex.And king's crowd. I applied all of that knowledge and king's crowd. They wantedsomeone with those two experiences, data science and, uh,Ali Zewail: Right.Ahmad Takatkah:venture because Chris, the founder of king's crowd, he wanted to create a datadriven way to evaluate and score companies listed on equity crowdfundingwebsites. Um, anyway, okay. I applied all this knowledge. I created algorithmsto evaluate companies and score them. And then we created an algorithm to, oractually we started a fund, a quantitative fund that's focused on the data thatwe collect on these companies. So it's not a typical VC fund. Again, we call ita quant VC fund because 70 percent of the work is done by the machine.And only the remaining 30 percent is done by us. The fund isdoing very well. Okay. As I mentioned, uh, maybe before we started recording,Zencaster is one of our portfolio companies and that company, the platformyou're using to record now, and we invested in many other companies, butanyway, back to whatI'm focusing on today. Ali Zewail: yeah, Imean, I guess because you're still in King's Crowd. So it's kind of today aswell. So it's a, a different kind of venture, uh, approach. Uh, so if you cantell me more about King's Crowd as, uh, you know, now that since we're, westarted talking about it and then we can go back to D1 and, uh, Uh, revenue.Um, so I mean, how, how does it, how is it different? How, howdo you guys take decisions and, uh, and how big is the fund and, uh, you know,what's the thesis?Ahmad Takatkah: Yeah,sure. So in the US, crowdfunding is much more active or specifically equity.Crowdfunding is way more active than in the region and the regulations help alot as a company. As a startup, you can raise up to 5 million dollars. Uh, fromthe crowds or from crowd investors or retail investors, not necessarilyaccredited investors.So, uh, anyone can invest $200 there, $300 here. So it's, it'svery easy, and you can do this every year, there are other regulations likeRegulation A, where you can raise up to 20 or even $75 million, but that needsaudited financials. It's a longer process, but still doable. And in Kink Scout,we, we did bothand So when you have. regulations, preparing all this forcompanies to raise money and giving licenses to platforms to help companieslist on these platforms, you will get an explosion of platforms. Like there are70 70 platforms that at least I know about. We know what in King's cloud that,uh, for equity crowdfunding on these platforms, you would get anywhere between50 to 60 new companies listed on these platforms every week.So as a retail investor or a crowd investor, when you want toinvest in one of these companies, do you have to, you actually have to go to,or if you want to see everyone, you have to go to all these 70 platforms andlook at all of these companies and dig deeper into the backgrounds of thefounders. Look at the industry, the industries that we're working on, themarkets, you know, there's a lot of work to do, even for a professional VCinvestor.It's a lot of work to do. Right? So we said, we can't really dothis. We need the machine to help us do this. So we started collecting data atthe beginning. Very humble beginnings. We started collecting like, I don'tknow, maybe 100 data points. And then that grew to 200, 300. Now, maybe more.Um, We collect all these data points and we, after collection, collecting them,we feed them to, uh, we started with a simple statistical model. Uh, we startedon Excel or Google sheets, um, to start comparing these companies to eithereach other or to a benchmark. Now to a benchmark, that's really hard becausethey're, they come from all industries. So it was really hard to getbenchmarks, detailed, deep benchmarks for every industry. So we said, let'scompare these companies to each other.So we created a relative scoring mechanism where we wanted toanswer this question out of the companies that are available for me as a retailinvestor. Now, which one is better?Ali Zewail: Right.Ahmad Takatkah: Andthat was the core philosophy behind our scoring system.Ali Zewail: MmAhmad Takatkah: So wesaid, okay, let's start this scoring system and watch the results of how wellthe companies will do after we score them.I think after two years, we started noticing that the companiesthat scored high on our system, of course, our system started getting smarter.We started introducing machine learning, and then CAD JVT came on and westarted introducing AI. But anyway, after 2 to 2. 5 years, we said, Okay, let'ssee the results.And we were really happy to see that if you're in a retailinvestor, and if you have invested according to the highest score companies orthe recommendations of our algorithm, you would have Created an alpha in themarket, the, the average unrealized returns for your portfolio would be higherthan an average investor who's investing in companies without anyrecommendations from our algorithm.Ali Zewail: So as,as, as compared to the market average, right. Or asAhmad Takatkah: ascompared to the market average. Yes. To the market average returns, and it wasa really good alpha, like 30 percent higher than the market average returns.We said, okay, perfect. Let's start a fund. And we announcedthat we at King's route, we want to create a fund based on our, uh, those,those smart algorithms. Uh, and we fill the funds from our own, uh, customers,like in King's child, we have customers who come the business model of King'schild is basically, we're a research company. We provide you with the scores,the research, investment memos, and reports on every company so that you comeand read all this and then make your informed decision to invest. Uh, andpeople would pay us like 30 a month to access all of this data. Of course,there's tiers of subscriptions. There's like 15, 30, whatever.Ali Zewail: Right.Ahmad Takatkah: Butwe announced the fund to our own customers, and we found the fund from our owncustomers, a small fund, 10 million dollars. This this is fund one for kingking scout capital, and we started investing.Now, I think we have more than 40 companies in our portfolioand. There's multiple things in this concepts in this fund that we wanted toexperiment with. The first one is, of course, the quantitative approach.Ali Zewail: Right.Ahmad Takatkah: So,we, we score the companies and any company that scores four and above isconsidered for the fund and then we, the partners meet and the team and atKing's Cloud, we talk to the founders and within a week we make a decision.It's very quick.The other thing is that, um, it's kind of an index fund, butit's not. It's, uh, why? Because we say we want to invest in the top 100companies over the next 3 years. So it's a big portfolio fund, smaller amounts.Ali Zewail: Right.Ahmad Takatkah: to tocover more grounds. And so the two main concept is index fund quant fund again.I can't say it's an index fund because it's not, but it's almost an index onbecause you're investing in the top 100 companies and this equity crowd fundingindustry over an extended period of time of three years. But anyway, so. Theidea here is because we read a lot of, again, we're data driven and the dataand the research in the market stated that the portfolios that have highernumber of startups achieved on average higher overall returns for the fund.Ali Zewail: Okay.Ahmad Takatkah: wewanted to follow that, that approach Ali Zewail: otherfunds. You mean like,Ahmad Takatkah: forother funds. Yeah. And we wanted to follow that approach and see what happens.Ali Zewail: GotAhmad Takatkah: Andwe were very transparent with our LPs who are customers in King's South. Wesaid, Hey, we're, we're going to do this and experiment with all these ideas.And they all loved it. And they said, yeah, we want to invest and participatein this, in this experiment.Ali Zewail: My kindof people. So, okay. Uh, so going back to, um, the present and, uh, secondariesin the region, I'm getting the, this is like secondaries in the region. Not,not, not a global secondariesfund with the UN or is it,Ahmad Takatkah: okay.So,Ali Zewail: tell me,tell me moreAhmad Takatkah: yeah,1, 1 2nd. So in king's crowd, I experimented and I worked and in the datadriven VC, um, passion that I had. I still have now. I left King's crowd thecompany. I'm still with King's crowd the the fund. So King's route capital. I'mstill a partner in the front front one. Um, and I still attend, uh, partnermeetings, uh, almost every week for King's scout capital, but that's the vote.Yeah. Um, and, um, uh, The main compensation for me is thecarry for the fund. So, um, I'm still working with with the partners and kingscout capital. That's that's 1 thing. The other thing I'm very interested in isrevenue based financing. Why? Because. It is data heavy and revenue basedfinancing. It's not like SME financing.You're giving loans to startup companies with high margins.We'll talk, we're talking 50 and above, uh, crossmargins. Ali Zewail: margin,Ahmad Takatkah: Andyeah, and the way to secure the, the, the loan is not by, Hey, right. Uh,personal check or I take warrants like, um, like venture debt. Although thesethings happen in our region because there's no other alternatives, but the coreidea of, of revenue based financing is mainly, hey, I take your data, I studythem, analyze them over the past 6, 9, 12 months and create a model to predictyour revenues for the next 3, 6, 9 months, whatever your loan is, and based onthe analysis I do, the thorough analysis of the data I do based on my models, II decide if I want to give you the loan, that's one.Two, how much of a loan I give you? What's the interest rate onthat loan? How long are you going to take to pay back that loan? Um, and whatpercentage of your revenues should I take? To pay back the loan because ofrevenue based financing. You don't the companies don't pay you a fixed amountof money every month.Yeah, they pay you a percentage of the revenue. So you go upwith them. You get down with them. This can drag for multiple months if. Thecompany's revenues went down or can be shorter if the, if the company grewfaster. So based on, so it's very data heavy and it's working with startups,tech startups, not SMEs or restaurants or anything else.So that was something I really wanted to work on. So I'm, I'mhelping Arzan VC now and starting their debt arm, starting with revenue basedfinancing. Uh, and we called it revenue, revenue. com. We're still working onthe structure, the model, hiring the team. Uh, it's not really. Announced it,or I mean, it's not really operational yet.We're working on all the details. It is now. Yeah, it's notoperational, but, um, yeah, I talked about it in advance. I attended. So we're,I'm working on that, um, as, as a managing partner for that, uh, that fund forArizana, D. C. So this is the main thing I'm working on right now.In addition to my, you know, part time role at King's CloudCapital. And there's another passion that I, um, I wish I can work on in thefuture, which is, uh, secondaries funds, direct secondaries, not LPsecondaries. So in direct secondaries, you buy shares, you buy shares, notinvesting companies. No, you buy shares from shareholders who are either angelinvestors or previous VCs who want to exit like precede seed VCs, or which ismore interesting for me, you buy shares from founders and early employees inthe companies. Uh, the biggest inspiration and example for me is 137 Venturesin the U. S. This is how they started. Other secondaries funds are, forexample, uh, Manhattan Venture Partners. There's Industry Ventures. They manage6 billion of assets under management, and they do both direct secondaries andLP secondaries. But yeah, that's, that's another passion I, uh, I love. Oh, youwanted to push back onAli Zewail: Yeah. Um,yeah. And I also want to talk about the secondaries because I mean, this was,uh, and then we can go back to, uh, revenue maybe, uh, yeah, that was like,this is a big problem. And Carta X, for example, I mean, You've heard, ofcourse, seen the blowback on Carta X and, uh, you know, all the issues thatcame up with that.And nobody's really been able to pull off, uh, in a retailsense, but there have been some great funds, as you just mentioned, that aredoing a really good job of it. For me personally, I would love to have a retailthing. I am. I remember when COVID started. I was like, and, uh, Airbnb got,uh, down round. I was, I thought the best investment would be to, to have, uh,to be able to buy secondaries at that down round, because I knew they were, youknow, Airbnb was already getting ready to IPO and COVID was going to end.And everybody was actually going to travel more probablybecause of what happened with COVID. So I really wanted to get in, but Ididn't, well, I didn't have capital in the first place, but that's the secondissue. Uh, but, but also. I didn't really have a way to, to, to get access asa, as just a normal, uh, person.Um, so I mean, if there's also like some sort of retail playthere, that would, that would, I think might be very interesting for people whowant to, Ahmad Takatkah: yeah,let's talk about marketplaces for secondaries. Uh, that's a big issue. SoCartaX is still there and it's still very active, but they pivoted from beingthis public marketplace for secondaries to the private marketplace forsecondaries. That's a big issue. By that, I mean, you can't go as a retailinvestor to invest in private stock. You can't buy shares of private, privatelyheld companies. They're not public yet. There are multiple problems in thatmodel when you talk about public, not public, but marketplaces for privatecompanies. The one of the main problems is price control. You're a privatelyheld company. You're still raising money. You can't let the public decide theprice of your company by the supply and demand of the stocks of the shares,right? Uh, that's really, that's a big problem for you. You're negotiatingvaluations with VCs on the next rounds.And how can you do that when your stock is being tradedsomewhere else on a different price? The other thing is you want control on whois buying your shares. Ownership. Exactly. You want to control over your captable. There is no regulations to regulate all of these privately heldcompanies when it comes to, you know, ownership and control on the board.And you want to keep control on the direction of the company.So another thing is information rights. So if I'm a shareholder and privatelyheld company, do I have information rights or not? It's not less than the stockmarket. So the CEO should not give me all that information, especially if thereis some sensitive information.Ali Zewail: exactly. Ahmad Takatkah: a lotof problems with the marketplace. But what CartaX is doing now, as far as Iunderstand, and again, I'm not representing Carta here, I'm an ex Carta. Myunderstanding is they're still doing tender offers. Which is private offeringsfor stocks, whether owned by previous shareholders or owned by employees in thecompanies where new investors can come and buy these shares, whether it's anindependent tender offer or a tender offer in parallel to a new round that thecompany is raising. And this model proved to be really good for Carta X.They're doing very well with it. It doesn't.Ali Zewail: Yeah. Butit still doesn't solve my problem with getting those Airbnb shares at the righttime. So Ahmad Takatkah:exactly. Ali Zewail: anyway,going, going back to revenue, um, there's been recently, you know, uh, it'snothing has gone public, but there have been when, when the interest rate, uh,situation changed in the world, uh, a lot of companies that raised venturedebt, uh, had like, uh, major problems.I mean, because Venture debt was always like spoken about assomething that will not dilute your equity, but still get you funding to growand things like that. But, but it turned out that, you know, there werewarrants and there were issues with that. Of course, what you're talking aboutis revenue, uh, shares.So, uh, it would potentially not have the same.Revenue share, uh, yeah, revenue based financing. So it's ashare of the revenue, not a fixed amount. Uh, so that would potentially, uh, beless, uh, risky, but, but how is this like, uh, is this Risk decreased forfounders because that's also part of probably their, uh, because equity at theend of the day, yes, they lose some part of the cap table, but at least peopleare with them on the same boat, so to speak,Ahmad Takatkah: Yeah,so there are some differences, main differences between venture debt and therevenue based financing. First of all, we're talking about very, very shortterm funding. We're talking about 3 to 9 months. So it's mostly below the 12months or the model that we're adopting, at least in revenue. There are someother models, of course.But for Grevinia, the model we're adopting is three to sixmonths, maybe maximum nine months. And the uses for revenue based financing isnot to fund the company when, when it comes to expansion, expansion and growingand scaling and paying for salaries and expenses. No, it's a short term use.There is a season coming up and you need inventory for that season. So you takea small amount of money that could be maybe 1x, 2x, 3x of your monthly revenue.That's it, uh, to, uh, get that, that supply. There's a new product and youneed a marketing campaign to promote this new product. Or there's a big event.That you want to take a lot of team members to and it's very expensive toparticipate in that event or exhibition and you need a small amount of money todo that.Uh, there is an upgrade to your software that you need. It'svery expensive and you need it right now. So to do these small little things.It's not fair to lose more equity in my company to get funded for these, right?So that's the main uses for revenue based financing, or atleast the model that we're we're doing in revenue. And for that, you mentionedinterest rate and it's high. For RBF, it's a standard model now across thewall. It's, they charge the company anywhere between 1. 5. To 2. 5 percent amonth, so let's say, let's say an average of 2 percent and you're taking loanfor three months. That would mean 6%. That's it. That's what you're paying.Of course, if you annualize it, it's a little bit higher thanthe average monthly rate. Bank loan, but hey, go get a loan from the bank. Theywill not depend on your data like we do. They will not predict your futurerevenues. They will need hard assets as collateral. And for venture debt,venture debt is much bigger.Uh, they give you millions of dollars and it's kind ofcomplimentary to venture capital uses. It's not for those small use cases.Ali Zewail: Got it.Yeah. Now I understand more, you know what it's about. Uh, okay. I mean, let'sgo a bit to your personal experiences before maybe we come back again to Numberand VC Evolve. Um, you've been in the ecosystem here. Across like Jordan,Saudi, and you know, you've been all over the place. And then you spent almosta decade in the Bay Area, uh, AKA Silicon Valley.And, um, so, I mean, what have you, what do you feel are themajor, like, cultural differences between the two ecosystems?Ahmad Takatkah: Okay.Um, okay. Let me take you back to 2014 when I moved from Dubai to SiliconValley. I wrote a blog post. I called it from Silicon Oasis to Silicon Valley,and I used to live in Silicon. There's an area in Dubai called Silicon Oasis. Iused to live there and I moved to Silicon Valley. And, uh, the main differencesI found, like it was, of course, I visited Silicon Valley before I moved, butthen when you move and start living there, You, you would expect that it's techsavvy, the area, the region is tech savvy.Uh, the first, the very first time I knew I visited SiliconValley, I was expecting high rise buildings, futuristic cities, everything isautomated, you know, um, no, it's not like Dubai is way more advanced when itcomes to real estate and the use of technology. And day to day, uh, uh, thingsand tasks way more advanced than Silicon Valley. Um, the infrastructure isamazing in Dubai and Singapore and now in Riyadh and those new cities, uh,Silicon Valley is a very old city. Or it's not city, group of cities, San Jose,mainly San Jose, and then San Francisco, the small towns in between, Palo Alto,Sunnyvale, Mountain View, yeah, all of these cities, small cities, Santa Clara.In Silicon Valley, the idea is, hey, I want to. Create the future. I want tocreate the next big thing. I want to create the technology that everyone in theworld would, will start using, uh, at that time in our region, that was, I wantto use that new technology. It's not, we want to create it. So that's the maindifference here.Which is, I mean, both are good. Um, this is futuristic. Thisis futuristic. For me, I value futuristic approaches. So that's, that, that wasone, one main difference. The other difference is, you know, investing in boldideas and, um, moonshots. Zero to ones. And our region, we're still not thereyet. I think, and it's not fair to blame only investors. Um, I would also saywe, we, the founders and including myself, I was a founder for two times.I didn't take about, I didn't talk about the second time whereI was a founder and both of them failed. we we tend to shy away from those big,bold ideas.Ali Zewail: Right.Ahmad Takatkah: Andwe're not maybe, at least talking about myself, I'm not, um, that supertechnical guy who can move mountains. This is a term or an expression they usein the Bay Area, where I can create a new technology from scratch. And we don'thave the same universities they have. We don't have UC Berkeley's, uh, where,where the research of all the new cutting edge technologies are.We have good talents. But we don't have enough support forthese talents, maybe, um, and by support, I don't mean the direct support. Imean the overall ecosystem support to create those new, those entrepreneurs whowould come with those new technologies and those VCs who would invest in thosebold ideas. Um, yeah, that's what comes to mind when I talk about thedifferences between here and there. I mean, there are other cultural,political, economical differences between both regions, of course, who that playa big role and, you know, how people think and react and build for theAli Zewail: And, andI think another thing, and there's a hint of it, like on your LinkedIn profile,where you, and you just mentioned, uh, that you have another startup that, uh,failed decap. And, uh, so you proudly on your profile, you're saying, you know,uh, I had this and it's failed and I tried this one and it failed.Um, that's something that's different from a typical. Personhere in the ecosystem, you know, this kind of embracing failure as a learningand, uh, getting up and starting something new again, and actually almost, uh,understanding that this will bring more experience to the second and third,Try, uh, versus here.It's, it's more, um, it's less forgiving, so to speak. Ahmad Takatkah: wesay, and here are specifically in Egypt, Delta, Napa, uh, Ali Zewail: Yeah.Yeah. Third time, third time's the charm, right?Ahmad Takatkah: yeah.yeah. So yeah, not celebrating failure, by the way. So therewas a big debate a few years ago on celebrating failure or not. I am notcelebrating failure. I'm not saying, Hey, I should fail to learn and I'm proudof my failures.No, I'm proud of my learnings and I'm accepting failure as partof the journey. That's not good. To fail, but, um, it's if it's part of thelearning curve, part of the learning journey, why not? Ali Zewail: Yeah.It's not being proud of them. It's more just being transparent Yeah, Yeah.Ahmad Takatkah:exactly. Exactly normalizing them and accepting them as part of my my Exactly.journey.Ali Zewail: Yeah. The point is not to be happy about it. Thepoint is to, to see it as normal as something that can happen because when you take big risks and big shots, youcan also, you know, have big misses and that's the nature of the beast. So,I mean, going drilling down into decap, according to your profile, I mean, itwas a one year experience, uh, only four months of which was full time and inthe beginning you were still at CARTA.And, uh, so it was actually quite a quick decision to decidethat you're going to close it. And that's pretty hard for many founders to, tomake that decision. So can you tell us more about, uh, what happened and howyou came to make that decision? What's your criteria were for deciding to notcontinue with it?Ahmad Takatkah: Yeah.So multiple things. First, we were three co founders and we created the systemthat would do automatic rebalancing for crypto huddlers. As we used to say, welaunched the product. We tried promoting it. And as you know, crypto is ups anddowns. And when it's an up, everyone wants to invest in crypto. If it's a down,nobody wants to talk about crypto.Not, not even, not invest, not even talk. So I think we, we hada down in the market and it was very tough to get users. That's one thing. Theother things. The other thing was the dynamics between the founders didn'treally work. So we, uh, we had disagreements, um, and Some people acceptedother jobs, um, some people were, um, like, I'm still very good friends withone of the co founders.He's, uh, he got an offer by a huge company in there to get hismaster or scholarship for his master's degree, uh, and work for them. So with,with those two things, master's degree and the full time job, he said, like, Ican't, uh, you I have to accept that offer and I can't work for you guys. Ican't work with you. Um, so yeah, it's, uh, it's, life happens. Um, we tried.Um, and yeah, the decision was, was common between all of the founders. Okay.It's, it's not working and we can't stay together so let's just drop thisthing.Ali Zewail: you gotit. Um, all right. And you joined Carter relatively early. I mean, when it wasstill a high, very high growth. Uh, company as a data scientist, and you grewinside it as, as you said, it was a great learning experience. What was it?What were the key learnings from a growth prospect, uh, perspectives? You know,uh, what's it like to be in a high growth company in Silicon Valley?Ahmad Takatkah: Yeah.I love this question because that was my main goal of joining Carta. Inaddition to, you know, learning more data science on investment data. It'sseeing the dynamics between the founder, the investors, The top executive team,um, I was like number 89, I think in Carta and I was a small screw and the bigmachine, the big Carta machine at the time and it became even much bigger and Iwas like silently watching what's happening and how they think about growingthe company and it was not similar to what I, um, I was used to and, I mean, areason, and, um, Even I'll give you an, uh, an example on the funding grounds.I think I was there for two or three funding grounds to maybetwo funding grounds for the second one. It was so easy. And so quick. I mean,I'm not discrediting the effort that the founders that to raise the round, butbecause compared to the earlier. Days of Carta and Henry, the founder, the CEOtalked about this in a blog post.I think he faced more than 100 rejections for Carta. He, he isAmerican, living in Silicon Valley. Um, uh, he had experience in there. Andstarting a company in Silicon Valley with a really good idea for me at thetime, like cap table management. Yes. It makes sense. We need this. And it'snot just cap table management.It's digitizing that small paper, uh, share book that we usedto have like the green share share, digitizing it on a digital ledger. So hefaced lots of difficulties raising money for Carter at the time because peoplethought or investors thought. That, Hey, it's a small market. How big can thiscompany grow?Ali Zewail: Exactly.Ahmad Takatkah: Buthe persisted and he kept going and the company became one of the maininfrastructure for investment and funding and in the world, not just in SiliconValley and other companies started copying their model in different regions,including in MENA and Europe.So I, I watched that evolution from, it was hard to raise,let's keep all the cash that we have.To a point where no, we need to spend a specific percentage ofour funding. And if we're not good in spending it, we're not good in growing.Right. that was a new thing to me. Like I need to spend fast. Well, that's why, what do you mean I have to spend more and fast?It's not just spending anywhere, but it's like calculated spending, uh, becauseI need to grow fast.That was a new, new, uh, approach, uh, for me at the time. Whatelse? Um, I also started because I felt like I can comment on the way, uh, themanagement is managing the company. We had this, this approach of trifecta,there is the business person, the, which acted as the product management whoacted as a product manager person, and then the technical person, and then thesales person. Trifecta and in inside cars, I don't think we, they still havethat model, but at the time for every product in Carta revenue generatingproduct, we had a trifecta. And yeah, so, um, So interestingly, new, was new, to me they, they have a salesperson. I think that's not acommon thing to have in that typeYeah, it's a SaaS company and you have to go out there and sellthis, this product. And of course, you know, we, we, we kept hearing aboutthis, this concepts before, but I saw them in action. Like for example, acompany and the size of Carta, they would go out there and sell a productbefore developing it. Like for example, when we started offering services toVCs. Like, uh, from the admin, we're still developing the product, but we willcreate those screens and, you know, like screens to create a demo. It's notreally a demo of the actual product because the productis not really, really yet built. And then we, the salespeoplewould go out there and try to sell.And whenever there's a sale, they tell them, Hey, we're stillbuilding this product and we might need your help in building this product. Weneed your feedback. We're still working on it. We might need, for example, twomonths or three months to finalize this and show you a better version. Um, andthen, you know, the, the ball starts to roll.Starts rolling and you get more customers, more, uh, morepeople waiting your product that you already almost sold that sold out, butsold to many, many potential customers and people are waiting for it. Anotherthing that I learned the dynamic pricing, as I remember now. Henry was, uh,still is, uh, kind of a philosopher.He wants to he loves experiment and kind of fit with mypersonality of loving experimenting with things, and I was really fascinated byhis approach. So, for example, for pricing, the dynamic pricing was basically,Hey, I would keep raising the price until I start facing rejections, and thisis Kind of an indirect way to value your product to, um, put a number on yourproduct or two. Find out the value of your product because it'ssupply and demand at the day and people started using this product. They reallyliked it. And then you increase the price, they're still paying, increase theprice, they're still paying, increase the price, still paying until there's apoint where, Oh no, this is not worth the money that we're paying.Okay. No, we, we will object on this pricing now. Thesepricings or this person, so you would reduce. And again, this is the one of hisphilosophies on reaching a pricing point. That is fair in the market and manyother experiments. Again. I'm not speaking on behalf of Arthur Henry. I'm justsharing my experience and there.Ali Zewail: Yeah.Yeah. I think, I think this is a, uh, an important point that theneeds underlining a lot of founders are underpricing their products. Uh, theyjust want to sell, you know, and, and get traction. And, uh, and so they end upgetting a much smaller margin that they could have. And, uh, I think itbehooves them to actually take a big, big risks with their pricing and thenmaybe decrease if if they don't get traction rather than the opposite, becausethe effect on the bottom line is can be tremendous.And, uh, and so I mean, that's that's very important. And Ithink it's a part that's neglected the beginning because People focus on theproduct and the marketing and all that, and they forget that price is actuallythe numbers that that make the business stick. Ahmad Takatkah: A lotof other things, like in Carta, if you want, I can share more about my life inCarta. So, um, the social aspects in Carta, we had a Friday dinner lunch foreveryone in the company. So here's Friday is the last day of the week there. Soon Friday by noon, everyone will start, you know, Getting ready to go out ofthe office.What's happening?Everyone every no, no, no, it's not the end of the day yet, buteveryone will shut down their laptops. And get ready. What's happening? We'regoing for lunch. What? Everyone? Yes, everyone. We all go for lunch. Uh, whenthe company was small, we all go to one restaurant. But when the companystarted getting bigger, like group or clusters of people would group togetherand go to a restaurant.And that's paid by the company. Every Friday. And that startthat that built different kind of relationships between the employees and thetop executives. Henry was 1 of the people who would come with us for the Fridaylunches. We had 1 and 1's every every week. You have a 1 and 1 with either acolleague or a manager or a report.Someone who reports to you or someone from another department.You have to have one on ones and those walking one on ones. You go walk for 15to 20 minutes and talk about whatever, either work or personal or, you know,ask them for advice or mentorship or whatever. So they really wanted to createthis sense of friendship between colleagues.We're not just colleagues, we started becoming friends. Uh,another thing as being and that's that I didn't find here and I'm still notseeing here in the region with some exceptions, the norm and Silicon Valleycompanies is whenever you get an offer to join a company in the offer letter,you see how many shares you will get.The best thing scheduled the value of your share and disclaimerthat, Hey, these are options. You will buy them. You have to pay for them,Ali Zewail: Right.Ahmad Takatkah: on astrike price, and then the value of the those shares might go up. There aresome tax consequences. They explain everything to you. And the idea is theygive you shares from day one.And most of our companies in the MENA region. You join thecompany after a year or two, you start asking for ownership and they will tellyou, okay, we will give you something maybe in a year or two. And then youleave the company before you get anything. Uh, with the exception of maybeKareem, of course, they, they gave offers, shares to many employees there.And I'm starting to see this more and more, but still it's not.A norm in startups. I mean, hey, if you're a startup, you're not paying goodsalaries. You have to retain your employees by giving them shares and givingthem a sense of ownership in the company. In CARTA from day one, in the offerletter, I Right. details.Ali Zewail: Yeah. AndI mean, it's pretty standard, I think, across startups in Silicon Valley and,and it's really founders, uh, in the region here, not, not doing themselves anyfavors because the amount of motivation and alignment and, uh, you know, uh,that you get by offering stock options. is really additive to the pie.It increases the size of the pie. So just looking at, you know,uh, which, how much percentage of the pie you have is really, uh, short sellingyourself and, and quite short sighted. And I agree it's something that needs tobe, uh, more present in the region. And of course there are legal, like, uh,legislative issues, uh, in the region for, for companies that are.based, uh, incorporated in the region to, to do these things,unfortunately, but, but it, it's definitely worth the effort. It, it, ittotally changes the culture. I agree.Ahmad Takatkah: Thereare solutions for all these legal and regulatory issues. But, yeah, if there isa will, there is a way, right?Ali Zewail: Exactly.If there's a will, there's a way. all right. So that's. Uh, that's incrediblyinsightful, your experience, uh, in Carta. And I think a lot to learn forstartups, uh, here in the region, um, going back to your startup that you'reworking on right now, which is a number. Can you tell us a little about it?You know, what's happening there and, uh, what the visionAhmad Takatkah: Yeah,that's, that's the term. Third one.Um, so number is basically, uh, let, let me, uh, let me pushlike a very optimistic agenda here and say it's WhatsApp killer. WhatsApp sucks for me. WhatsApp sucks. Why?Because I have to share my personal phone number to everyone who wants to sendme a message on WhatsApp.I do not want that.Ali Zewail: Right.Ahmad Takatkah: Why,why do I have to like in Jordan? I was surprised when I moved back. I wantedto, uh, print something like I shipped my stuff. I still, I'm still waiting formy stuff, but I needed to print something. I went to a bookshop here and Iasked him, Hey, I want to print this paper, this document. And he said, send itto Hubbard's number. And I was like, who's covered and what number? And thenwhat app? And he said, what's up? This number. Okay, so I sent the document tothat person. His name is Khadr. I don't know nothing about him, but he knows mynumber. And he saw my picture, my profile. It's my personal number. It's my,even the American number.I still didn't have a local number in Jordan. So, all thesedetails, he, I mean, if Khadr is a hacker, he can get somehow, something,right? Uh, that's one thing. It's also privacy. Like, he has my number, he cancall me anytime. Not just Qadr, but anywhere you go, even inside governmentalentities in Jordan, I face the same thing.Send it to this number. Where? On WhatsApp.Ali Zewail: Right. Ahmad Takatkah: Evenfor groups, like school groups. The teachers, all of the teachers here, theyhave groups where they send updates on the students classes and everything onWhatsApp groups. Um, Everyone shares their personal phone number. That's onething. So privacy, the other thing as spam, like I want a way to communicatewith people where not anyone can send me a message or call me at any timewithout, without me knowing them.Like I received so many spam calls and spam messages on myphone, both the American and the Jordanian numbers. And I can of course blockthem. That's, that's the wrong way to think about it. It shouldn't be open toeveryone. And whenever I have someone making me, uh, uh, causing me problems, Iblock them. I will keep blocking people all my life.That should be the other way around. It's a closed system andwhoever I accept and communicate with me. Yeah, exactly. So only people youaccept or invite or send you invite, uh, can communicate with you on number.And also, uh, the third and last main point. Behind starting number as it's thebigger vision for later on.We always say, and on the website, we say it's a neotelecomcompany, meaning just like neobanks. It's a banking system or platform that isbuilt on top of the banking infrastructure, but it's offering services in adifferent way. Same thing for a neotelecom company, or this is what we'resaying. We cannot put this concept on our own, this definition. Meaning, I wantone number as my identification number to use everywhere I go. If I'm inJordan, I use my Jordanian number. If I go to the States, I use the U. S.number, but if I'm in Dubai, or in the U. S., or in Saudi, or in Europe, or inJapan, I Do I have to buy a local SIM card with a local number to start usingit?Yes, I do. But the solution, the most obvious solution is, hey,you don't care about the local number. You care about people who add you onMessenger, on WhatsApp. You can call them there. You can call them on GoogleMeet. You can call them on Zoom, whatever. That's true. I want a future where Ihave this.Global identification number for me, that's my global phonenumber that has no country codes that has no, um, old infrastructure, uh, whereI have to call a country called an area number and then, uh, the otherremaining of the phone number. And I can use this wherever I go, using whateverSIM card I take from the local country I'm in.So imagine, I'm sure you know the idea of the SIM cardmarketplaces. There's an app, multiple apps. You install this app, and you take an eSIMwherever you go, and then you start using it, uh, to use the Internet, mainly,because you only care about data. So imagine where there's an app, just likeWhatsApp or Telegram or Messenger, where it automatically.It detects where you're traveling and replaces your eSIM andpeople can still call you on that specific number, not on the oldinfrastructure of the telecom operators, but on the data plans of these eSIMs.And again, once you add that person, you don't care about the number anymore.But when you start.Look, when you, when you meet someone in an event, you ask fortheir phone number, you don't give them the phone number, you give them thenumber, number, anyway, a long answerAli Zewail: it. Andthe business model is, uh, what do you, is it subscription? Is it a share ofthe ECM revenue? How would youAhmad Takatkah: well,we talked a lot about the business model of this company, and there aremultiple ideas. I don't want to talk about one specific approach or, Option fornow. I'll leave it for later. One of them would be sharing cost with telecomoperators. One of them would be selling short numbers or special numbers as aservice, like every year you pay a specific amount to keep this number, but fornow it's free. We don't want to worry a lot about the business model for now. Iknow it's against the norm now. You need to think profitability and economics.This is the new trend now inAli Zewail: No, um,yeah,Ahmad Takatkah: yeah,Ali Zewail: it depends on the product, doesn't it? I mean, what's app. Wassold for $19 billion and it had no business models. So,Ahmad Takatkah:exactly.Ali Zewail: not everybusiness is a lot, is the same. Every and the dynamics here, I think it makessense to go forAhmad Takatkah:here's, Ali Zewail: out howto make money for it.Ahmad Takatkah: yeah,the idea is, or the goal is, be one of those neo telecom companies of thefuture. I think calling apps and messaging apps are the telecom companies ofthe future, and we want to be one of these future companies in telecom.Ali Zewail: Great. Iwish you luck Chala. Um, so I mean, uh, maybe. We can talk about, uh, your book thatjust got, uh, published VC evolve. It's from what I saw the, I haven't, uh, hadthe privilege of reading it, fortunately, but, but it seemed to me from thetable of contents to be, uh, like an A to Z of, uh, venture capital.including some new ideas around, you know, using data to investin things like that. Uh, but the first thing that struck me was the, was thename, why the name VC Evolve.Ahmad Takatkah: Yeah,it's basically we're evolving as VCs because I have this idea, a concept,venture capital should not be static business. Because it's investing ininnovation and innovation is always, you know, uh, evolving, right? It's, uh,in the name I, I have, I, part of the name is that ever evolving startupfrontier. And I started a VC, uh, podcast before the VC, the app podcast wascalled still there VC evolve podcast to talk about the future of the VC modelitself. So I host the VC for like half an hour or 45 minutes. To talk about howthey think about the past, present, and future of the VC model. Some focus ondata, some focus on AI, some focus on changing, um, or the evolving legalstructure or fund structure of the VC, like a continuity fund, or some talkabout the venture study model, some talk about the accelerators, the move fromincubators to accelerators to what next.A lot of things are happening now in the VC model and the VCindustry itself. So I wanted to focus on that piece of the industry, theevolution, the continuous evolution of the industry, because we keep investingin an evolving innovation. So that's why I called it VC Evolve, and it'scomplemented by the.Podcast the VC evolved podcast. Um,Ali Zewail: Right.Ahmad Takatkah: soyou can, after you read the book, if you want, you can also listen to thepodcast, which every month we bring in a new VC to talk about the future of theVC industry itself. That's why I want it to be dynamic, not static.Ali Zewail: Okay.Well, while we are on the subject of writing, I'm really impressed by With allthe stuff that you've been doing that you've been across the years blogging andyou have a lot of blog posts, some of which I've benefited from over the yearsand now you write a book. So my question to you is how do you develop thishabit of writing?How do you maintain it? Uh, how does it fit in your schedule?Ahmad Takatkah: Yeah,um, maybe before we talk about that, just a disclaimer on the book, it's atextbook style. It's not an opinion book. It's an aggregation of knowledge.It's what I wish I had when I started my VC career. But, everyone should know,VC is an apprentice job.You learned from others, you learn by doing, you learn byinvesting yourself and making mistakes and you develop this skill in additionto, of course, the big part, which is the science part, the, the data drivenpart, the analysis part, all of that. So, uh, I'm working on another book thatwould be maybe an opinion book, but this one, this one is more like a textbookstyle.You get the knowledge you need to know for venture capital. Youmentioned it's an A to Z and venture capital. I hope it is. That was the goalof everything you need to know, but you need to practice. Of course, you needto start investing and start working now back to writing. Um, I learned thatfrom my big inspiration for writing when I started my VC career was Brad Feld.Brad Feld is one of the managing partners of the Foundry Group.I think it's in Boulder, Colorado, not even Silicon Valley. But he's one of thefirst VC bloggers. And he used to blog about anything and everything. Justshares his day, shares comments on a meeting, shares his personal life, um,some, um, issues that he went through personally, uh, or in his career.And I learned a lot from him. And I was like, okay, I likewriting. As a person, you know, there are some people like talking more thanwriting. Some people like writing. For me, I organize my when I want toorganize my thoughts, I sit down and write them. That's how I think. I think better when I write my thoughtsthan when I talk.For example, I know some of my best friends. No, they can't dothat for them. Um, no, I want to talk about something to organize my thoughts.I'm the opposite. Um, and when I, when I was inspired by Bradfield, I said,okay, let me start writing whatever I learned in venture capital. It's like,it's a journey and I'll start writing my opinion.I know some of these will be stupid blog posts and somewhereactually. Um, uh, some I learned a lot by just the process of writing, becausewhen you want to write about something, you start researching it and learningmore about it. And that was my, my best way to learn, actually, uh, like as anexample, when I wanted to write that, um, blog post, uh, VC Funds 101,Ali Zewail: Yep.Ahmad Takatkah: Iwanted to learn how VC funds are structured legally. And I spent monthsresearching this and asking lawyers and talking to people and talking to VCs.And at the end of the day, you combine all this and summarize it for you toorganize, you know, everything you learned. Hey, I did all that. Why not shareit? And I shared it. And it was one of my, you know, biggestsuccess, successful, um, blog post, I think.Ali Zewail: Yeah. Ilove it. Personally. I always come back to it.Ahmad Takatkah: Thankyou. And it's evolving. I mean, uh, now there are different ways to structureVC funds. Like, for example, the continuity fund, I think it was not mentionedin there at all.Ali Zewail: No, itwasn't.Ahmad Takatkah: Sothings are,Ali Zewail: As far asI canAhmad Takatkah: see,yeah, things are evolving. So that's why, again, back to the book, Why VCEvolve, because things keep evolving. And my plan is, I don't know, every yearor two, I publish a second edition, third edition, or another edition, where Ali Zewail: Right. Ahmad Takatkah: newthings happened in the VC industry.Ali Zewail: So youdon't like structure time for writing every week or something like that. Youjust start doing research and then write something.Ahmad Takatkah: Iwork in bursts of energy. When I have some energy for something, I stay up allnight working on it. When I don't have that energy, I'm like the laziest personon earth.Ali Zewail: Are weall all right? Um, so I gotta ask you about this, uh, since you havethis, uh, experience, specific experience In early stage investing. Do youreally think that data. is relevant, uh, to the extent that, you know, there's,there's hardly any data there. Um, what are your thoughts on that? I canunderstand, of course, how it's very relevant in like series and above inrevenue share, revenue financing, revenue based financing, et cetera.But at the early stage, does it really make sense?Ahmad Takatkah:That's a big question. My usual answer was no, because again, you mentionedit's early stage, there's not enough data, but I was proven wrong by a friendin the U. S. He started a VC firm focusing only on that aspect of the datadriven part of early stage companies, and he's managing more than, I think, 150million now. And he started like only a few years ago. What he did was, I wantto study the backgrounds of the founders, regardless of what they're actuallydoing now. Um, but the backgrounds of or what problem they're solving or theattraction they're having or any of those things that we usually look at, butlet me look at the backgrounds of the founders and the key team members in thecompany and compare them to other backgrounds of successful founders who madebig exits.And look at the networks they have, the education they have,not necessarily the top tier universities. We're not talking about that, butthe industry there and, uh, found their market fat, the number of years they'reinto this market, the network they have, how many potential investors they havein their network, how many potential mentors or experts they have in theirnetwork.How many years did they spend in a specific industry? Therewas, I think, a study in MIT. Please don't quote me on this. I can't remembercorrectly. But study said, if you, if a person works in a specific industry forone to three years, they know enough about the industry. But they can't reallydisrupt that industry or come up with a new innovation that would change theface of that industry.They're still new. They're still learning. If you're sevenyears and more into that industry, you're already inside the box. The window ofinnovation kind of closes. But between three to seven, this is the window ofinnovation in any industry. This is where you learned enough about theindustry, but you're not inside the box of the so you can't innovate.disrupt, create, be created, et cetera. So things like that, ifyou focus on these signals, you might create, be able to create like a mosaicof things that you look at in the founding team members to decide if they'regood in the future or not. Another example is the Founder Institute in PaloAlto. They focus on behavioral tests for founders.And the only thing that they focus on is Will the founders staytogether in the next three to five years or not? And they gave this test tothousands of founders over the past, I don't know, seven, eight years. And theyclaimed with an accuracy rate of 98 percent or something, I don't know,something in the 90s, that they can predict if the founding team can staytogether or not.So that's another example of what data to look at in the veryearly stages. Okay. I don'tAli Zewail: But theseare like two, these examples are actually very interesting because the firstone might actually increase bias. So if we say that, because it's based onhistorical data, so if investors were come from a certain background and sothey tend to invest in people from that background, then the data will say thatthis background is the best background.But that doesn't mean that the others, uh, can't be successful.It just means that they don't fit this bias. I mean, it's not forward looking,it's backward looking and, uh, emphasizes biases rather than, um, you know, uh,making contrary or maybe decisions that, that can have very high upsides. Like,you know, people like Topi, the founder of Calendly, he, he, he, he didn'traise VC funding because he couldn't raise VC funding as an African American,you know, uh, second generation immigrant.Uh, but you know, it ended up to be unicorn, uh, outcome with,uh, with hardly any funding. Um, and, and, and you can see how an algorithmwould not have invested in him either. So that, whereas maybe the founderinstitute, it's really behavior. So it's, it's this person in front of you,it's really color blind, uh, education, background, blind country, blindimmigration status, blind, et cetera.And so maybe there's no bias there, but there is a danger ofhaving bias if you, if you use Ahmad Takatkah: Iagree. I fully agree. There is that danger. Of course, there are ways to reducethat bias. Uh, if you include a bigger sample, if you try to remove the race,the, uh, ethnicity from, uh, from this. if you focus on. The topic of educationat the school that the founder went to, of course, there's always a bias forHarvard and Stanford and everywhere.But yeah, there are ways to remove or reduce. Let me say notremove, reduce that bias. But I think there is that bias.Ali Zewail: Yeah.Well, anyway, I thought, I mean, you were the best person in the world to askabout this. Uh, All right. So,Ahmad Takatkah: I'mnot.Ali Zewail: well, Imean, from your background, data and venture, like the intersection of dataventure, not a lot of people have, have had this focus for such a long time.Uh, so, okay. I got to ask you about gen AI.How do you, how do you think seed and venture, uh, investorsshould approach, uh, gen generative AI startups and in the different layers ofthe stack, you know, how are you thinking about this?Ahmad Takatkah: Seedinvestors, he said.Ali Zewail: Yeah. Soin the early stages where things are maybe less clear, because some people are saying it's too late. Yeah. Go ahead. Sorry.Ahmad Takatkah: Ithas to be deep tech, not, uh, not an application or I mean, if you're, you'reasking about gen AI, not in general applications of AI. So now the trend isinvesting in agents who would use deep tech. Uh, the, the, the infrastructureof the models, but if you're talking about the, the, the infrastructure itself,the models, the new innovation and I think it has to be deep tech, newresearch, like coming out of universities.Commercializing these, these new research papers or theprojects that people are working on. I've seen a company only 2 or 3 months agowhere they're creating a new technology to create those LLMs. I don't have allthe details right now. I wish I can share all those with you. But, um. Yeah,it's a total new technology that would mean things would be smarter and fasterand use less resources like the resources. It's way more efficient. Uh, so that's somethingwe, I mean, see the investors if they're interested in that, uh, domain theycan look at, but it's not, yeah, it's not the applications of, of AI. Now, ifyou're talking about general AI, but yeah, I mean, all types of companies are,could be good. It depends on the founder, the founding team, the execution, themarket, of course, and all the things that we look at.Ali Zewail: Yeah.But, but you think it's any upside from like applications that are wrappersover, uh, an existing large, uh, language model are not really worth investingin are not venture scale, like outcomes. Is that what you'reAhmad Takatkah: No,don't get me wrong. No, no, I'm not. I'm not saying that. But if you're lookingfor the next chance, or the next Gemini or copilot, you need to look at to golook at the deep tech technologies that are technologies that are being createdright now and research labs and universities. That's where you look for them.Maybe I misunderstood question. That's what I, the next GT.Ali Zewail: You go tothe university, so to speak, or to Okay. Um, as I think about the region, uh,going back to, to our region, what are the, what do you think are the mostpromising verticals in the region?Ahmad Takatkah: Thesexiest, I can tell you is Fintech. Everyone wants to be in Fintech and be the fashionable one. And we, we talked aboutthis in the latest episode where we have so many payment companies, so many,um, peer to peer payment companies, uh, payment gateways, uh, wallets. Digitalwallets, neo banks, wealth management, savings management, personal finance, alot of things that are just copies of each other. Uh, so many of them, so manyof them, and, um, as we were talking, many of these would either mergetogether, consolidate, or just die out, and a few winners will, will surfaceout. What other things that Ali Zewail: so so inyour opinion is FinTech, uh, too, like it's too competitive for the, the reallybest outcomes or does that mean that FinTech is worth investing in? In theregion,Ahmad Takatkah: It'sworth exploring, and it depends on your stage, I mean, if you're a growthstage, you can, you know, pick the winners, and they're already there, you canalready tell who the winners are, the big winners, in specific. Verticals andsome would argue, Hey, no, uh, fintechs are not really that good and our regionbecause banks are somehow forced sometimes by regulators to be advanced.Unlike the US, actually, I was with a VC in Jordan, um, a weekago, and this was his opinion. VCs should not invest in fintechs because thecompetition from banks will kill them. It doesn't think that the banks willacquire them. Banks will have to evolve and build their own tech teams and movefaster and compete with these fintechs, especially with the regulations,because they have the ability to get the licenses they need faster than startups. They might acquire, acquire the tech.Those companies, because they need the team, the talent, but they can get thelicense. They have the cash. They have the customers. So, but anyway, so in theregion, I think. We like we missed out on many types or, uh, peaks globally.And I think we have the talent and we should focus more on tech investment,like pure tech. We have people in universities that are working, trying to workon new technologies, uh, they have some resources, especially in the biguniversities and the GCC. They have really good infrastructure and resources,and they have really good professors or teachers and Ali Zewail: and professors.Ahmad Takatkah:budgets and they collaborate with international universities and they have thepotential to create great To really contribute and creating new technologies.So instead of us being users of new technologies over time, wecan maybe once create those technologies. And I think there has to be somechange in a model. I don't know what, I'm not claiming that I know the answerto this, but I understand the VC model is not maybe designed for this. I mean,um, I want a business that would create Economic value now or in the nearfuture, but if I invest in a technology that would be commercialized in 5 yearsor 10 years, that's not viable for a VC firm.I don't know what exactly how to do this, but we need that. Weneed to focus on that somehow. And of course, one of the biggest issues that wewill face in the near future is oil. We will not have enough oil in the region.What would we do? And I mean, countries like Saudi, the Emirates, and I don'tknow if Qatar is also doing that.They're trying to diversify their economies to not depend onoil sales, um, that much. So anything that would contribute to that visionwould be really needed in the region. But again, um, uh, I have always been,uh, talking about globalism or globalization of our startups. I love it when Isee a global company coming out of our region, your question was more about theregion.Uh, so I gave you that answer for the region, but for me asAli Zewail: yeah.Building for the world is something the region should do.Ahmad Takatkah: Yeah,exactly. Ali Zewail: Exactly.That's how it should think. Yeah, me too. I always like, uh, you know, justthink big, think bigger. That's, that's what our founders should do. All right.So, uh, as we come closer to wrapping up, I mean,. If you could go back in time and give advice to your youngestyounger self about things you didn't know back then that you know now aboutinvestment, uh, what would you tell yourself?Ahmad Takatkah: Oh, Idon't know. Um, things that come to my mind would be maybe against what I'mdoing now, but focus because, honestly, because I used to think about differentgoals in life. And now I'm, although I'm doing multiple things, but it's underone umbrella. But earlier in my, in my career, I had multiple umbrellas. That I'm thinking about.So this is me focused now and I have friends that tell me, Hey,Ahmed, you're not focused enough. You have to focus more, but I'm like, no,this is my capacity of focusing. I'm focusing on this thing, but I had myfamily business. I had my engineering career. I had some other business ideasthat I wanted to do.And I was lost in between multiple things and life, but theneventually, somehow, um, I found myself maybe by design or maybe by passion,just focusing on venture capital. And when I say venture capital, again, we'retalking about the primary venture capital, secondaries, venture capital, RBF,revenue based financing, venture capital, writing books about venture capital,et cetera.So, um, so startups, VCs. This is my, my thing. Ali Zewail: Yeah. Uh, yeah, that's, that's why we're here, right? So, um, as wethink about like venture venture capital in the region, obviously, I mean, weneed exits for people to have returns on their investments. Uh, what are yourthoughts about, you know, exit opportunities in the region for startups? Howthings are evolving?Uh, do you have any thoughts on thatAhmad Takatkah: Idon't have a perfect solution, but I have something, or I am seeing somethingthat makes me very, very optimistic about the future of exits in the MENAregion, which is the IPOs and NEMO, it's called NEMO, the main market in Saudi,our NEMO. We have Jahez and we have the other company in Saudi thatwent public. Last month,Ali Zewail: yeah, Iknow. I know the one you're referring to, but also the name can'tAhmad Takatkah: yeah,so we have two IPOs and the MENA region, we have IPOsoutside, Ali Zewail: ones.Yeah, exactlyAhmad Takatkah: yeah,so I think if we focus on IPOs, that would be a solution, uh, like, one of thesolutions that we can have for the exit issue in, in, in, uh, the MENA region.And, um, I'd say that maybe before, um, other podcasts, but I, I'm saying itagain, Impact 46. They invested in those two companies that went public inSaudi and they helped them go public. I don't know if their focus is pre IPOcompanies or they go to growth stage companies and help them go public, butthis is a focused VC firm that helps companies go public. And I wish there aremany more PC frames like that.Ali Zewail: right.And it's good for the region. It's good for them personally as aAs a VC firm. Ahmad Takatkah: yeah,yeah. Mm hmm.Ali Zewail: Great. Soon the wonderful subject of, of, uh, of exits, uh, we can move like to the wrapup questions. Um, what book or books do you like to recommend to othersAhmad Takatkah: Many,um,but, uh, Ali Zewail: VC Ahmad Takatkah: Iwould say, Ali Zewail: I mean,that's, that's not allowed.Ahmad Takatkah: Okay.Zero to one comes to mind Ali Zewail: Okay. Uhhuh. Um, how do you and why unwind and how do you stay energized?Ahmad Takatkah: Ihave these, um, days where I just do nothing. Um, always go, go, go, do, do,do, read, write, whatever. Uh, but there would come days, like, I don't know,every month or so. I have one or two days where I just, yeah, disconnect. donothing, uh, let myself be lazy, eat a lot. Apparently this is, this isincreasing, but anyway, watch Netflix, enjoy a movie, whether it's a trailer,horror, action, sci fi,Ali Zewail: Yeah,Ahmad Takatkah: justbinge watch a show that I heard about for a while, but I didn't have the timeto watch it, binge watch it, finish a season and maybe one night or two nights.So I give I give myself room for, you know, just be lazy. It'skind of I recharge and I'm in between, like on the edge. Whenever I do thattest, the introvert extrovert, I'm always in between.Ali Zewail: Yeah.Same for me. Ahmad Takatkah:sometimes I really do get more energy by talking to people, and sometimes I getexhausted by talking to people. I mean, I get more energy by just talking topeople. And I just go with the flow. I let myself tell me what I need at thattime and just do it.Ali Zewail: Yeah.That's great advice to, to listen to yourself, so to speak. Um, who, who do youthink we should have as guests or guests on the podcast?Ahmad Takatkah: Alot, and I mean, over the past few months, since I came back, I met a lot ofreally good VCs in the region. And I should, I think you should, you would talkto all of them and bring them all. And also some really very smart, brilliantfounders more about startups more than VCs. So there are lots of really goodfounders, but I think. We're kind of overlooking, if we want to think globaland talk global,we're overlooking theArab diaspora founders who started global companies, uh, from somewhere elseoutside the region, because this would be an inspiration for me personally, andeveryone else, maybe to think global from day one.Like for example, the founder of Replit, I don't know if you hosted Ali Zewail: shut. Ahmad Takatkah: ornot, Amjad. Ali Zewail: I wish, Imean, I'd love to have him actually. I love what he's building and I love hisgeneral like approach to be honest.Ahmad Takatkah: Andothers like the founder of AI explain, um, and many other founders from theArab diaspora. And I know it's startup Arabia, but because there's the wordArabia in it, I would ask you to find founders or VCs, uh, who are of Araborigin, but in different regions that we don't know about, like I wish tolisten to someone who started a company in Japan, but in China. And tell us about the challenges. And yeah, Ali Zewail: Yeah. And the differences. Ahmad Takatkah:asking for very hard, very hard things, but I think you can listen to thesepeople and get them.Ali Zewail: Yeah,hopefully, inshallah. So, what question should I have asked you that I didn't?Ahmad Takatkah: Idon't have any specific questions. Yeah, I think you've covered a lot of groundand you interrogated me.Ali Zewail: Come on,man. So, um, of course people can reach you on vcpronerd. com We're going tohave links to all that, and we're going to link to your, uh, book link onAmazon. Uh, is there like a preferred channel that you'd like people to reachout to you on? Is it email, Twitter, account you want to share,Ahmad Takatkah: I'mvery active on LinkedIn, Ali Zewail: Right. LinkedIn. Ahmad Takatkah: Sojust add, I always accept everyone who sent me any LinkedIn request. And afterthat, you can send me a message. So very active Ali Zewail: So onthat note, uh, my wrap up question is always, uh, what is agift somebody, uh, has given you that, that has had a positive impact on your life.Ahmad Takatkah: I'mblessed and grateful for everyone and along my career. But I think the firstone who promised me experimentation, I mean, career wise, we're talkingprofessionally, promised me experimentation and delivered, and I learned a lot.And that company was Rashid Al Ballah. That was the gift of believing in me,uh, that nobody who is obsessed about venture capital and who wants to createthe Y Combinator in the Middle East in 2009, I said, Come, let's, let's, let'sexperiment together.I think uh, that, that gets them believing in me.Ali Zewail: yeah,that's a wonderful thing. This gift of believing in someone is, is verypowerful and can really changed their lives. So we should do, we should all domore of it. Uh, more often. Ahmad Takatkah: yeah,Ali Zewail: Thank youvery much, uh, for, uh, for your time, Ahmed, uh, really enjoyed ourconversation and, uh, to many future conversations to come.Inshallah.Ahmad Takatkah: Thankyou for having me. I really enjoyed this conversation.Ali Zewail: Thankyou, Ahmed.Ahmad Takatkah:Thanks. Ali Zewail: Thank youfor listening to this episode of startups Arabia podcast. If there wassomething you really liked about what the guests said today, reach out to themon social media and tell them what you liked. And of course, if you haven'tsubscribed yet, what are you waiting for? You don't wanna miss any of our greatupcoming episodes.Also, please rate us and give us comments on our social mediaaccounts so that we know how to improve. And also tell us what you like. Wedon't mind hearing that either. Until next time, this was your host Addie'swhale.

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