How To Avoid The Falafel Shop Syndrome

This article was first published by Forbes Middle East on 20th September , 2016 and is written by Kamal Hassan, General Partner at TURN8.

Walk down a street in the Middle East, and you’re going to see a LOT of falafel shops. To a certain degree, this is because a lot of us like falafels. But that’s not the real reason there are so many.

In reality, this is the easiest business opportunity to copy. Someone who wants to be an entrepreneur — but who doesn’t want to think that hard about what people really need — simply looks around and finds the easiest successful business model that he can copy.

Hence, we end up with so many falafel shops. This is definitely not the path to true innovation.

Here’s the problem: the falafel shop syndrome permeates the region, and not just with regards to food shops. Our “innovators” are reluctant to pursue truly original ideas, and many simply copy or make slight modifications to established business approaches. This problem is magnified because many early stage investors — friends, family, and angels — lean heavily in favor of this sort of derivative, seemingly safe idea.

True innovation means rooting your venture in a substantive change. This change might be rooted in new technologies, economics, or regulations. For example, the introduction in 2007 of the iPhone and its subsequent competitors set off a broad wave of new app-driven businesses; none of these existed before because the technology didn’t exist before. 24/7 wireless access to information made everything possible from Uber to security systems that allow you to unlock your front door from 500 miles away.

In the Middle East, there’s a tendency to embrace best practices developed elsewhere. Instead of innovating, we import. We borrow business ideas developed elsewhere. We hire experts who learned their craft in other regions. There are many efforts underway to change this, but we too rely on the energy and drive that other regions and business innovators fostered.

In other parts of the world, every other college kid wants to launch a startup, in the Middle East innovation isn’t nearly as appealing.

Part of this has to do with the ways our laws are structured. We lack the protection for intellectual capital that exists elsewhere, which makes it far harder for an entrepreneur to raise millions of dollars around a new idea.

This attitude can’t continue.

Increasingly, wealth in our world will not be created from natural resources but rather from intellectual capital. Ideas are worth more than any single physical object.

Derivative ideas might be worth a few percentage points on the upside — you can sell your falafel for the tiniest more than the shop next door — but these pale imitations will never be enough to create or sustain true wealth.

If you want to avoid the falafel shop syndrome, try this:

Be open-minded, and don’t be afraid to fail. The most successful entrepreneurs are those who think big, learn from failure, and keep fighting until they succeed.

Focus on your customers, rather than your competitors. Industry lines are blurring, and it’s often nearly impossible to identify your eventual competitors. It’s much better to focus intently on the evolving needs of your customers, and to become obsessed with solving their problems.

Be disruptive. While derivative ideas struggle to attract significant investments, truly disruptive ideas can attract staggering financial support. Think bigger and bolder.