Pakistan’s growing technology sector is being driven by dynamic local engineers and visionaries who are taking advantage of global online marketplaces and leveraging the country’s nascent but increasingly competitive pool of talent. Gaming, mobile apps and e-commerce are leading the way, and there has been a recent surge of social networking startups. Prestigious international collaborations are underway and major global tech companies have begun to come calling, intrigued by the innovators and products emerging from offices in Lahore and home-based laptops in Peshawar.
The persistent specter of power outages and limited investment capital impose tangible constraints; but with US$3 billion of revenue rolling in over the course of 2012, thirty million Pakistanis already online (and rising rapidly), and the entire world as a potential marketplace, the Pakistani tech sector is primed to scale up.
Zafar Khan is keen to discuss his passion for organic farming and Zakky Farms outside of Lahore, where he harvests sustainable produce. It is from this farm that he now runs one of Pakistan’s most successful internet companies, Sofizar. The company has annual revenues of twenty million dollars, mostly from Ticketnest, a Stubhub-type ticket aggregator with a global userbase, and a staff of ninety split between Lahore and Silicon Valley. Khan is the face of a relatively new breed: the Pakistani tech entrepreneur.
Milling about Lahore’s Startup Weekend in February this year, there was sense of purpose and a definite buzz emanating from members of a quickly expanding technology industry that is increasingly organized. According to data from Pakistan Software Houses Association (known as Pasha), the size of the industry is already at about US$3 billion and growing at twenty percent annually. Mostly self-funded and scrappy, these companies cover the gamut of financial services software and infrastructure to gaming, e-commerce and social networking.
Outside the halls of LUMS, where the conference is held, the business environment these tech professionals operate in is not always easy, punctuated by Khan refers to as ‘geopolitical constraints’. But the allure of Silicon Valley and tech idols like Google’s iconic CEO Larry Page and entrepreneurs like Jack Dorsey, co-founder of Twitter and Square, is what keeps these engineers and businesspeople motivated to deal with a very unique set of challenges. Just as with their billionaire inspirations, they believe the next big technology moment could be at their fingertips.
In an increasingly isolated economy, the internet provides vision, ideas, and best of all, reach. The local market is growing quickly – there are thirty million internet users in Pakistan, and internet penetration has increased by sixty-five percent since 2009. There is an abundance of talented tech professionals and no shortage of ideas. Eight of the companies on the prestigious AllWorld Live 25, a list of the fastest growing companies in Pakistan, were high tech – this included Khan’s Sofizar and the Islamabad-based pioneering telecom powerhouse Nayatel, which sits on top of the list and is a major regional leader in the buzz-worthy field of fiberoptic technology.
We are all Gamers
Babar Ahmed, one of the local startup world’s celebrities, runs gaming house Mindstorm Studios out of Lahore. After graduating from Stanford University he was looking for an end-to-end indigenous gaming product focused on the Pakistani market, so he picked cricket. The game, Cricket Revolution, was the official pick for the 2011 ICC Cricket World Cup, and the company has not looked back. Babar is passionate when he talks about the product; it boasts sleek graphics, multiplayer real-time features and state of the art animation. Along with Mindstorm’s other games, it is sold through online stores directly to the end users, who could be half a world away.
There has been a surge in mobile app developers in the last several years, as the boundaries of marketing and market access have been stripped away by forums like Google’s Marketplace and the Apple Store, which has completely democratized the mobile device application market. As Zafar Khan says, ‘the red tape has significantly faded away; if your product is superior, it sells’.
And this is where engineers are thriving, there are over fifteen top-tier companies developing apps, and growth rates are phenomenal. Mobile app developer Pepper.pk had the top Blackberry app four times in a row for the PhotoEditor, with over two million downloads at US$0.99 apiece and counting. Their Ninja Foodbash game has over a million downloads. Another developer, GenITeam, has had sales double over a two year period, and their applications boast ten million downloads across their titles on the Google Android Platforms.
Network this world
Mobile social networks such as Pring.it are tapping into the one hundred million mobile subscriptions in Pakistan and linking mobile phone users to Facebook and Twitter. Pring.it alone claims 3.5 million users and hopes to exceed the number of Pakistanis users on Facebook in 2013. Even bigger, SMSall.pk is a mass texting platform that has been used to send over four billion text messages for everything from coordinating political rallies to blood-drives and even corporate events; it has expanded quickly to countries in Africa and the Middle East.
Also looking outside Pakistan’s borders, ‘social discovery network’ Face2Face, based in Karachi, is focused on making inroads in external markets and to aggressively launch in China. Founded by a group of peripatetic Yale alumni led by CEO Hameed Khan, the platform aims to connect people along three lines: social connections, shared interests, and physical proximity. According to Hameed, ‘existing social networks have taken our connections and put them online, we are looking to help people create an online network which they can bring offline.’
The company raised almost US$2 million from angel investors both within and outside Pakistan, including the prominent fund manager Richard Shea and social media guru Adam Hanft. Still in a ‘stealth testing phase’, Hameed is keen to play up the Pakistan angle, ‘we want our launch to be in Karachi. This is as much about showcasing our country as it is about leveraging the tremendous potential of programmers here. Launching in the US would have been in many ways easier, but this is a story we all wanted to tell.’
Tech boom
Portals like ShopHive.com sell vertical electronic goods online at consistently lower prices to retail outlets. Sales rose seventy percent in 2011 alone with sales of everything from smartphones to iPads, flatscreen televisions, and digital cameras. Along with their one hundred or so competitors, the founders of this e-commerce site are supporting the growth of local PayPal equivalents to facilitate transactions.
And on the non consumer-facing end of the spectrum, highly competitive financial services companies like MixIt have struck multi-million dollar deals developing complex technologies for trading exchanges including the NASDAQ and NYSE.
In the long tail, there are thousands of entrepreneurs running shops that run from one-person affairs and up. Elance and oDesk are training grounds for an entire generation of computer programmers and engineers in Pakistan. They often moonlight their services to supplement their regular incomes, and in the process get exposure to the hottest Silicon Valley startups when they’re in their inception, shoestring stages. Fine Arts graduates from Lahore’s National College of Arts hone their skills of 3-D animation and graphic design, and computer geeks from GIK, FAST and SZABIST get a sense of the ins-and-outs of sleek web design and social marketing.
One of these engineers, Jawwad Karim, went through five failed startups before hitting on an idea that worked, a Finance e-learning site called FourQuants which has just closed its first round of angel funding and launched an iPad app. And it is this sense of uncertainty and opportunity that is attracting graduates who don’t want just another predictable desk job.
Scaling up
Big international players such as Google have begun to pay attention; Eric Schmidt, Google’s Chairman and former CEO, paid a groundbreaking visit to Pakistan in June last year with company executives, meeting with developers and representatives of the tech industry. In a Google+ posting, he expressed optimism about Pakistan, particularly as the emerging middle class continues to leverage ‘connectivity, information and the Internet.’
As a precursor to this trip, in 2010 a group of Googlers traveled to Lahore to learn about the local tech scene and subsequently set up a fund to provide seed funding to twenty-five of the top technology ideas. At US$10K per prize, the prize was small, but the prestige factor was high, and also reflects the moderate costs of setting up a scalable business.
And there has been some external acknowledgment of outstanding Pakistani techies. In 2011 MIT’s Technology Review included Dr. Umar Saif , creator of SMSall.pk and numerous other successful startups, in its list of the top 35 Innovators Under 35 (an honour previously bestowed upon luminaries such as Sergey Brin and Mark Zuckerberg). The Cambridge University-educated Saif is also one of the World Economic Forum’s Young Global leaders and a regular on the global tech research and op-ed circuit.
But for all but a select few firms and individuals, both recognition and funding of local talent remains limited. Pakistan is starved of venture capital investment, especially as exit strategies remain difficult to quantify in a market with still questionable intellectual property laws. Funders such as Abraaj Capital have begun making inroads, and an MIT led consortium has established a Tech Angels Network, but dealflow remains limited. Most companies grow organically, reinvesting revenues and diversifying product offerings.
And so companies raise capital in creative ways. Joint ventures with firms from Southeast Asia to the U.S. abound. Gaming studio GenITeam derives thirty percent of its revenue from programming services to clients, and Mindstorm Studios offers design and animation services for advertising and media outlets. And firms are often paid for services to Silicon Valley startups in equity, the value of which, for some of them, has grown considerably, adding significantly to their valuations.
Programming the Future
Jehan Ara, head of Pasha and tireless crusader for the expansion of the Pakistani tech industry thinks that there is a ‘need to nurture young entrepreneurs and proffer adequate training.’ She works closely with CEOs such as Silicon Valley based Murad Akhter of TinTash and serial entrepreneur Umair Javed, who are keen to give back. They are members of the faculty at LUMS, teaching courses ranging from introductory computer science to advanced software engineering; and they regularly lecture at seminars on cutting edge tech industry issues. Emphasizing that academics are only one component of success, they are bringing the spirit of entrepreneurship to the classrooms, and their students have done projects for tech startups and collaborations with students at Stanford University.
The shine of startup conventions and the appeal of the technology sector is only likely to expand. A new sense of empowerment is emerging, and as Zafar Khan tells me, ‘we have smart, motivated engineers and the entire world as a potential market. We require an internet connection and enough money to keep a diesel generator going – that is all the infrastructure we need.’
For Pakistan’s computer science students, graphic designers, and aspiring entrepreneurs, there are now homebred trailblazers who are providing all the right kinds of inspiration.
Suhair Khan works at Google in Mountain View, California. This article represents her personal views.
