More Maktoobs to Come

Some are concerned that Maktoob’s stellar success was a one-off. They needn’t be.

Five years ago, two Jordanian entrepreneurs sold their startup to one of the largest Internet companies in the world. Appropriately named Maktoob (Arabic for “letter”), it was the first Arabic/English email service. At its height, Maktoob was a celebrated company, operating in several countries and employing hundreds of people. The sale of Maktoob to Yahoo! in 2009 was a victory for Jordan and a catalyst for future startup activity in the region; thousands of Jordanian entrepreneurs have since found inspiration in Maktoob’s success and started businesses of their own.

But after several proceeding years of increased entrepreneurial activity, many people have started to wonder if there will ever be another Jordanian startup to match the success of Maktoub. The short answer is probably yes.But it may not happen for a while.

First, let me share some background on how startups work. Cash flow is the most challenging part of running a startup, so in the initial stages of a business, the founders put in their own capital to get things going. If the business is lucky and starts to generate some impressive results, the founders might make the rounds and try to raise venture capital. While this may be the right choice for a startup, it comes at a price. In exchange for JD500,000, for example, a venture capital firm might ask for 25 percent ownership of the company.

New startups are born everyday around the world. Unfortunately, three out of four of them fail, according to The Wall Street Journal. So Maktoob is an exception rather than the norm. It’s true: these odds are less than favorable; venture capitalists know that. Entrepreneurs know it too, but I think the opportunity to create something of their own and beat the odds is what partly motivates them.

The rewards are there for those who take these risks. Maktoob, for example, was sold to Yahoo! for a cool $164 million. That’s a lot of money, but it didn’t all go to the Maktoob founders (although I am sure they would have liked that). I can guess that co-founders Samih Toukan and Hussam Khoury gave away some equity to their first employees and some more to investors. When Toukan and Khoury signed the papers to sell to Yahoo!, they may have only walked away with around $45 million each. This isn’t actually too bad a result. By comparison, Yahoo! acquired Tumblr in May 2013 for $1 billion. The founder of the micro blogging site David Karp only walked away with his 25 percent share, or $250 million.

It’s easy to see that entrepreneurs and venture capitalists work together to generate returns, but what’s less obvious is that it often takes a long time to see results. The journey of Maktoob, from its inception to its sale to Yahoo!, took 11 years. When a VC puts money into a startup like Maktoob, it does so with at least a six-year vision. That means within six or more years, the VC will plan to “exit” the startup, either by going public, getting it acquired by a larger company, or simply selling their shares to another investor.

So let’s suppose that most of the startups in Jordan were launched after Maktoob’s big moment five years ago. Optimistically, the earliest we could see another big exit is in 2015. On a timeline more like Maktoob’s, we would not see another big exit in Jordan until 2020.

The truth is that there are a lot of great entrepreneurs in Jordan. Many will fail, but others will succeed (often times having failed once or twice before). Jordan remains one of the safest and relatively cheapest places to experiment with a startup. If we keep things going at this rate, I expect to see some pretty big results in the next few years.


Robert Carroll is an investment expert at Oasis500 in Amman, Jordan. He also leads the Jordan chapter of Startup Grind, Powered by Google for Entrepreneurs. You can find his advice for entrepreneurs and VCs at