Fifteen  years is a long time in the technology world. Back in 1995, the heady days of the US-led dot-com boom were just kicking off, but in Egypt the internet had yet to be licensed commercially and mobile phones were a luxury afforded by less than 20,000 Egyptians.

At 21, Karim Beshara was in his junior year at the American University in Cairo when, like many young Silicon Valley entrepreneurs, he decided the internet was going to be big. So together with six friends, including his brother Khaled Beshara, he took an idea born out of a university marketing project and created Link Egypt. This small idea developed into what later became known as LinkdotNet, an internet service provider (ISP) with a market share of around 30% and the provider of a large number of digital-based services including web services, mobile-based services, software development and content generation. In fact, the company’s ISP arm was sold to mobile service provider Mobinil for a whopping $130 million (LE 755 million) during 2010. 

Although his company is now a household name in its own right, Beshara still remains unchanged. Dressed casually, he doesn’t look like the chief executive officer of one of the most successful firms in the market. And at 35, he still has the youthful face that presented such a challenge when Link was getting started. 

“I remember at the beginning when we [went to] sell corporate lines,” he says. “They [the clients] would say, ‘Okay, get me your boss.’ ‘I am the boss,’” he’d reply. “‘There’s nobody older in your company?” was the usual response, Beshara recalls with a laugh. “So there was a challenge because of age for a long time, where people used to come and say ‘They’re too young; they can’t pull this off; we’re not going to get the right reliability on our network,’ and so on.” 

The story of establishing Link and its growth is all about swimming against the tide in a risk-adverse market, where deep-pocketed investors preferred to copy others’ success and venture capital was available based on who one knew instead of an idea’s potential.

“For you to get money, you had to go knock on doors and say, ‘Hi we’re these guys.’” Not an easy task for a bunch of 20-something university students with no track record or financial backing. “We were just trying to go around, picking up money from everybody we knew. It was that kind of story.”

Companies doubling their value overnight by simply adding a “.com” to the end of their name and pimply-faced college kids driving Ferraris to class might have been common stories in Silicon Valley, but in Egypt, young entrepreneur-led startups were rare.

That didn’t mean the ISP market was short of competition. In 1996, with the release of commercial internet licenses, 12 ISPs appeared on the scene. By the time Beshara joined Link in 1999, after a brief stint with his father’s rice and flour distribution company, Egitco, that number had already reached 45 by 1999.

By 2002, Link had become one of the top two ISPs in the country and Beshara’s first project was to oversee the merger with the number one player, In Touch, to solidify Link’s posoition. It was also the year the company received a much needed injection of cash and support, when business mogul Naguib Sawiris came on board.

The right partner

For the seven young entrepreneurs looking to rapidly expand, bringing in an investor was probably the make-or-break decision for the three-year-old company. 

“We had a couple of other people [who were interested in] the company and we used to ask them the same questions,” says Beshara. “What happens if Link is in trouble? What would you do? This is my whole life.” But the responses did not always reflect the commitment the young entrepreneurs were hoping to hear. “One of them said [the company would represent] less than 5% of [his] revenues, so [everything would] be fine. The other one said [he’d] try to give [us] a bit of money a couple of times and see what happens from there.”

Then Naguib Sawiris, who at the time only owned Mobinil, came along with his vision of regional expansion. “For us to meet a guy who had such a big vision was a big, big deal,” says Beshara.

And with that vision came the promise of positioning Link as an ISP powerhouse.

“We always thought in Egypt people would not [invest in] younger guys, would not give them a chance. [But] from the beginning, Naguib believed in us. Even being such a small operator, being young guys, […] he used to spend quite a bit of time with us. This is what made the difference.”

For example, Beshara explains that at the time Sawiris first came into the picture, Link was making a humble LE 120,000 a year through its online advertising. He jokingly says this is probably the same amount Sawiris made during the first five minutes of the year Mobinil was established. 

“We gave him presentations and told him [...] why we think [the internet will be] the future,” he says. “And [Sawiris] took a leap of faith.” Eight years later after the company reached LE 100 million in revenues, Beshara sent Sawiris a text message saying, “[...] here we are.’ I think if we had been working with somebody else this would [never] have happened.”

Hitting the LE 100 million mark, was more of a dream than a realistic target and Beshara says the temptation to just sell the company and walk away with millions was great. “There was this  [realization] that this is a lot more money than we put in [and] we’re only three or four years into the business. We can cash out and everybody can become very rich. But I think most of us had a bigger [vision]. I honestly believe, especially at the beginning of the internet, that we were changing peoples’ lives. We were giving people an opportunity that didn’t exist [at that time]. People had no exposure. There weren’t even enough TV channels for people to see what was going on, to get the news [or] to have a bit of education,” he says. “It was as much a cause as a business endeavor.”

Once the company began to grow in size, it was no longer just local investors who came shopping for subsidiaries or affiliations — plenty of global players were on the hunt for emerging market start-ups, particularly in an economy with as much untapped potential as Egypt. This high demand made selling the business tempting option for a young company facing competition from not only well-backed local firms but also some of the biggest companies in the world, as Link was exploring software development and expanding its online advertising ventures. 

“We were approached [by and] talked to some people in the beginning,” says Beshara, who explains that their lack of know-how in the new areas the company was exploring — along with the need for advice on managing rapid growth — made the idea of international partnership quite tempting. 

“A lot of these problems get solved if you have a partner that has all the know-how,” he says. “But you want to create your own thing. We all thought that we [had] a lot of know-how ourselves, and that was the biggest value [of] the company. If you give that to someone, you don’t have a lot of room to innovate; you don’t have a lot of room to make decisions. You follow a system that already exists, and is not necessarily the most fitting for our country.” Looking back at the decision, Beshara is certain that opting for a local partner was the right way to go. 

Leaps and bounds

With Sawiris coming on board in record time, the company entered into a period of rapid expansion that hasn’t halted. From a presence in Egypt and a small Dubai office, the company expanded geographically, opening offices in Saudi Arabia, Algeria and Pakistan. It also delved into new sectors, entering the online advertising market through the creation of Connect Ads in 2000, the content market in 2001, and also engaged in an aggressive acquisition strategy, simultaneously acquiring eight other dot-com operators just a year later.

But rapid growth presented its own challenges. The company went from just a handful of people to 2,500 a little over a decade with 1,250 people in the ISP arm alone. Revenue grew from LE 1.1 million in 1996 to over LE 600 million in 2009. 

“Managing a company with that much growth — trying to maintain the culture, the moral values, the spirit — was probably one of the biggest challenges,” says Beshara. This is not to mention managing the needed cash flow. “Expansion too fast means you need to spend a lot of money now to probably make some money later.” There is  also the challenge of finding highly skilled employees to fill openings and holding on to current staff. Then there is the infrastructure, has also been a problem since the company’s early days.

“Infrastructure is still an issue — in certain places more than others,” says Beshara. “Expansion from an ISP perspective has been hampered more than once. It’s pretty painful. You have the customer, you paid [for] the marketing, people are interested, they want to buy your brand but you can’t install it. That’s a very frustrating experience.”

But the challenge that has been a consistent companion to Link’s growth is getting people to understand the industry and convincing them that future is online. 

“Infrastructure is still an issue – in certain places more than others.” 

Pushing the market

Unlike the US and other more developed markets where tech-savvy customer demand drives company innovation, Link has found itself tasked with pushing the Egyptian market to ensure that it embraces technology. 

Beshara recalls his first attempt at educating the public about the internet. “We went to an industrial zone and had a presentation at a hotel. Out of the 300 people invited, [only] 30 came.”

Even companies that were interested in creating an online presence proved difficult to educate. “We used to try to tell the customers that if you make a website and don’t update it, it’s probably better not to make a website at all,” he says. “We used to push people and tell them that part of the contract is four updates, so you have to update it because you spent [the] money.” And while the market growing, companies still need coaxing to create and accurately maintain their websites.

It’s been the same story for every new initiative Beshara and his team have tried to push, from online advertising to content generation. At first, people aren’t receptive, but with some nagging, they tend to catch on. He illustrates his point with the company’s newly launched online movie site Shofha.com, which like its sister site Mazika.com — a company that was “100%” illegal when Link bought it — is now offering a legal alternative for people to download the latest Egyptian and Arab cinema has to offer.  

“The first time we went to talk to the studios [to tell them we] want to put movies online, we were almost thrown out of the office. The second time we went in [...] a couple of years [later], they [told us that they were] not sure,” he says, adding that the studios were worried about the vast amount of pirated content online. But what studios saw as a challenge, Beshara saw as an opportunity.

“Piracy’s very high and I think that should be something we leverage, not go against,” he says. “If your movie’s online anyway — and that was almost our sales pitch — you might as well make some money from it.” His solution was to place the high quality original copies of the movies online and seek online advertisers and sponsors so people could watch them for free. “You get a DVD-quality movie on the internet, legally.

Everybody made money; the customer didn’t pay anything and the whole ecosystem works,” he says. It is this type of outside-the-box thinking that has kept Link at the cutting edge of Egypt’s tech sector.

A different take

Doing things differently is the secret behind Link’s success, an approach that the company has applied to its overarching business model as well. In an IT market that more often than not sees smaller players gobbled up in acquisitions and startup brands subsumed by global names, Link prefers to keep things small.

 “We kind of have an experimental [approach],” explains Beshara. “You start off as a small division but once you reach a certain size, we automatically move you into a company of your own. You can see the mistakes more, you can evaluate profits and losses, [and] you can understand the growth.”

The company applies the same model when it buys brands as well, keeping them intact, says Beshara, before correcting himself: “We’ve killed one brand and I think that was the biggest mistake we’ve ever made: InTouch.” 

In 2000, Link Egypt merged with In Touch Communications to create LinkdotNet. A long time rival of the company, the disappearance of the In Touch brand from the market was often interpreted as an illustration that Link was the real powerhouse behind the deal. 

“It was one of those things where I would say I was young and foolish. It was us against them for the longest time, we kind of felt we won,” he says. “I think that was a mistake. It was a good brand. We could have used it more at least for a while. We were too hasty. We tried to revive it a bit but it was too late.”

The recent split with OT Ventures, which saw the ISP side of Link’s business separated from its other operations — its online advertising, web services, mobile services, data centers, software development and its outsourcing divisions — and sold to Mobinil for $130 million (LE 755 million), would seem to be in line with Link’s devolution model. But in a way it’s very different. 

“I think the number of companies outgrew what could be efficiently managed,” Beshara explains. “We started grouping them where it made sense for them to be together. LinkdotNet as an ISP is a little bit bigger than everything else combined and we thought it’s taking quite a bit of time, it’s making us lose focus on the other stuff that is growing faster at this point in time. These ventures will now fall under the name OT Ventures. The split was almost there under the OT umbrella. Now we took the ISP side out and put it with Mobinil,” he says. The idea was that by separating the group from the ISP arm, it would receive more focus, become a bit more efficient and move a bit faster.

However, with the ISP arm acquired by Mobinil, Link is now moving in a very different direction: integration.

“We’ve killed one brand and I think that was the biggest mistake  we’ve ever made.”

Integrated future

“From a vision point of view, we thought this is where the world’s going,” says Beshara. “To take the next step, we need a lot more muscle than we have today. If you look, for example, at Link with nine stores across the country and Mobinil with 100 stores, we can’t get from here to there without them.” This is, from his perspective, simply a matter of numbers, where size does matter. 

Fixed and mobile data don’t compete, says Beshara, because people use both — fixed lines at home and work, while using mobile services on the move. “And eventually they’ll integrate. So the idea of integration is something we’ve had in mind for a long time. We had some unfortunate events that [have delayed integration], but […] we think this is going to take Link to the next step.”

Beshara says that while still a few years off, the market is heading towards a seamless, converged product offering. “In theory you should not care what you are using when,” says Beshara. “You should be able to get the content you want on the device you want whenever you want. And the infrastructure should be following you and not the other way around.”

He says that bits and pieces of this pattern are now emerging, but a fully integrated model in Egypt has yet to appear. Companies wishing to be at the forefront of this new trend, need to move now.

And convergence is not just for the services, it’s the future for Link as well. “I imagine Mobinil and Link will become almost one company in three years,” says Beshara. “We’ve decided to take this slowly. At this point in time, we’re trying to see how things fit together and [to] do a few things for the market that serve the purpose, but real convergence is going to take time.”

More competition needed

For this convergence to really take place, Beshara sees the need for more growth, which inevitably, will lead to more competition. “I think competition is always healthy,” says Beshara, choosing his words carefully. “If we had not had that much competition in the ISP sector, we would not have gone this far, that’s for sure. I think the lack of competition in certain areas is not helping. Would we rather see more infrastructure providers? The answer would probably be yes. You get better quality and cheaper prices. We all understand that. [...] It’s a no-brainer.” 

Moreover, he notes that opening up the Egyptianmarket for a few other wireless technologies would help bridge the gap between the infrastructure currently available in the market, and the ever growing demand. “That’s something the government is working on,” he says. “It’s something that definitely needs to happen soon if we want to continue expanding the internet with the same speed,” he says. “If you look at some [other] emerging markets that we’ve worked in like Pakistan, they almost have everything: cable, normal lines, copper, wireless, CDMA, WiMax. If you compare that to us, we’re a little bit behind.”

Without Link, Beshara is hoping that the company will now have the time needed to concentrate on and venture into the negotiation and licensing process for triple play, a move he sees as securing the future of Egyptian growth. Moreover, he notes that there are some interesting opportunities around for investing in innovation and maybe a venture or two on the stock market. Although he will not discuss specifics, what remains clear is that Beshara will build on the experience he gained during the build up of LinkdotNet and will continue to expand his business portfolio. bt