Welcome to Backstory, a weekly newsletter turning global technology shifts into a three-minute read. This week, we’re watching floundering technology IPOs and consider the ingredient they all seem to lack – Mary Ames, Director of Strategy

THE BIG TAKE

Trust is the Missing Ingredient

WeWork, the company offering hip co-working spaces, was supposed to change the world. Far from reaching that goal, WeWork is the latest technology company to spectacularly stumble while going public. Uber and Slack are facing similar reckonings. The trends are familiar: companies go public at incredibly high valuations only to see their stocks drop off a cliff in the weeks following. Wary of a sluggish global economy, investors don’t seem to have the appetite to pour money into companies that pursue growth at all costs. Easy enough to understand but what else is at play?

Cultural fluency: Pursuing (and subsidising) growth at all costs means going into unfamiliar markets. WeWork expanded at breakneck speed with co-working spaces from Tokyo to London. The only problem is that many of its markets simply didn’t make sense for its business model. Since the company never purchased its office locations, it found itself acting as a real estate behemoth renting more than 20 million square feet of office space worldwide. That’s an incredible amount of space to fill with paying customers.

The Unicorn Industrial Complex: Analysts are quick to point out how WeWork’s appeal was tied up with its high-flying and charismatic founder. Like other unicorns, the WeWork founder was able to effortlessly distort reality around him with a bold vision of coworking. With the IPO off the books and the future of the company in question, is our love affair with unicorns and their eccentric founders ready for a break?

Unicorns in the UAE: Technology companies based in the UAE aren’t generally hampered by cultural fluency and founder obsession. Consider Souq.com and Careem, both companies operate regionally from their bases in Dubai. They exist in markets where they have deep understandings of the challenges and opportunities on the ground. After all, Souq.com’s ability to deliver goods in markets that had poor or non-existent postal systems was part of the company’s success. When it comes to founder obsession, can you name the CEO’s of souq.com or Careem? Probably not. The ability to work across the world with the best infrastructure in relative anonymity is one of the unspoken benefits of Dubai’s growing technology sector. As IPOs such as WeWork continue to sink, Dubai’s ecosystem will keep quietly churning out unicorns that hold their value.

QUOTE OF THE WEEK

“If you aren’t embarrassed by the first version of your product, you shipped too late.”

Reed Hastings, CEO of Netflix

OUR VIEWS THIS WEEK

Global Fintech at Home: Have you noticed Backstory’s interest (read: obsession) with the remittance market? Well, if you haven’t, we are laser-focused on how payments and remittances are ripe for a major disruption. Facebook is trying (and failing) to break through the market with its new cryptocurrency, Libra. This week, we reviewed the latest moves in the UAE remittance and payments sector. Keep your eye out for a unicorn hiding in plain sight.

You Should Get Paid for Your Data: Considering that data is the new oil, shouldn’t users benefit from the value they create? This question led futurist Jaron Lanier to construct a bold new system for the future of the internet. At its core, users get paid for their data and in return pay for popular services currently offering for free like Gmail or Instagram. It’s a fascinating idea, and we took a closer look this weekto see if it could really work.

SPOTTED ELSEWHERE

Ban loyalty? A new report out of the United Kingdom concerning climate change contains an unusual call to action. To cut down on carbon emissions from air travel, researchers at Imperial College London suggest that frequent flyer programmes should be banned outright. The UK researchers believe these programmes encourage people to fly more than they need too. Well, that’s exactly what they are designed to do. Frequent flyer programmes are one of the strongest vehicles for customer loyalty in any industry. Is this really the best way to solve the climate change challenge? Etihad is testing zero waste and reduced emission flights, which will be way more effective in combating climate change. Loyalty, in this day and age, shouldn’t be banned but rewarded.

The African iPhone: A Rwandan company has unveiled two new smartphones that are the first to be entirely manufactured in Africa. The Android phones have a slightly higher price tag compared to their Chinese counterparts but the manufacturer is hoping people will pay a little more to support the local economy. More manufacturing coupled with growing rates of smartphone usage will translate into a powerful African technology sector. The wheels are moving forward.

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