Noon, the online retailer, was announced in November 2016 with a launch date of January 2017. Last week, word began to emerge that Noon, now almost five months late on its originally announced launch date, might be moving many of its staff to Saudi Arabia. Why, when a venture is already delayed five months, would you make such an important shift? More perplexing is why a venture that is less than a year old would suddenly have to move people? Was the earlier plan wrong in its emphasis on Dubai? Aren’t businesses supposed to pick Dubai as their regional hub? This was perplexing, so I tried to look at it from different angles.
One angle is that since Saudi’s Pension Investment Fund (PIF) was investing half of the US$1 billion into Noon then PIF wanted to domicile the company in its own country. Wouldn’t PIF have thought of that when it decided to make the investment? It is, after all, known to be sophisticated and professional. All things being equal, it would have made that decision at the beginning. If by some oversight it didn’t, PIF would understand the high risk of moving the operational base of a late-to-launch start-up. There must have been another reason.
Perhaps looking at what little publicly available information there is on Noon might shed some light on the matter. A quick survey of relevant announcements reveals: (1). A five-month delay in launch; (2). A last-second offer for Souq.com; (3). The acquisition of JadoPado, an existing online retailer; (4). One month later, senior people from JadoPado and Noon left the venture; and (5). The announcement of the move of the operating venture to Saudi.
The first four points signal negative events for Noon. The last one simply looks like PIF, the 50 per cent shareholder, deciding to exercise some corporate governance and move the operational base to Riyadh so that it could have better oversight over the venture. This is, of course, simply my theory since as of writing this nobody from Noon has provided a rational explanation to what is going on.
One of the heartbreaking issues is that JadoPado, a great entrepreneurial start-up story in the region, seems to have been unnecessarily shutdown. Is this a sign of things to come? People who have, or control, large amounts of financial assets harming our nascent venture capital ecosystem because they think they know what it means to be an entrepreneur? Will other entrepreneurs who have spent years building up their companies face the same fate because established interests are suboptimal in how they handle their acquisitions?
This reminds me of a poem by William Butler Yeats:
Aedh Wishes For The Cloths Of Heaven
Had I the heavens’ embroidered cloths,
Enwrought with golden and silver light,
The blue and the dim and the dark cloths
Of night and light and the half-light,
I would spread the cloths under your feet:
But I, being poor, have only my dreams;
I have spread my dreams under your feet;
Tread softly because you tread on my dreams.
In the end, that is the only thing that true entrepreneurs have – dreams. People who have money and business success handed to them will never, can never, understand this. When entrepreneurs ask in vain where the funding part of the ecosystem is, perhaps they should look to those who have received business and support in excess of the value they produced. If those who can be commercially successful can’t find funding because those who aren’t commercially successful keep hoovering it up, perhaps we should rethink the ecosystem.
I spent three years building an investment bank in Saudi Arabia dealing with regulators, government departments, investors, and staff. They are competent and professional. I hope that they can help what is left of JadoPado and invigorate Noon. Unicorn should mean sold for a billion dollar valuation, not destroyed a billion dollar valuation.
I also hope that we can rebalance the venture capital ecosystem in the UAE to support entrepreneurs.
This article was originally published in The National.