• Publication date: January 6, 2015

How a Startup from the Arab World Grabs 1B Views on YouTube

Kharabeesh has the hallmarks of a fast-emerging startup, with a reputation for producing edgy content on YouTube, prominent VC investors to keep happy

Kharabeesh has the hallmarks of a fast-emerging startup, with a reputation for producing edgy content on YouTube, prominent VC investors to keep happy, and a client list that includes Samsung, Pepsi and big agencies like BBDO.

The pressure is only more intense lately, after the $500M acquisition of another company in the YouTube channel space, Maker Studios by Disney. On a recent reporting trip to Amman, I asked the founder, Wael Attili, what makes the 35-employee company stand out — besides the harsh satire of some its cartoons, which fearlessly take on Middle Eastern politics.

“We are the company we are — here (in the Arab world),” he said. “We’ve survived.” On one hand, the odds were stacked against Attili and his co-founders, friends who met while they were struggling to pay their university fees. They bootstrapped until they landed early money from Fadi Ghandour, founder of Aramex, and Ali Al Husari, founder of Dash Ventures.

The company pivoted away from a service model into pure storytelling, and landed an A-round of $1.65 million from investors including Silicon Valley’s 500Startups.

On the other hand, their timing is just right: They are riding a huge wave of economic growth that is mostly unrecognized in the United States.

Outside most Americans’ consciousness, huge emerging markets cities like Amman, with a population nearing 5 million, are becoming economic engines in their own right. Jordan’s economy is expected to grow at 5%, according to the International Monetary Fund. Amman, the capital, is probably growing at a much faster rate.

Four hundred twenty-three cities are expected to account for about 45 percent of global GDP growth from 2008-2025, according to a McKinsey study. Second-tier cities like Amman, not the giants, are where the fastest growth is coming.

Some big global companies are waking up to the potential, as Kharabeesh’s client list shows.

People and companies with the local knowledge to navigate these tricky markets have a huge edge. Kharabeesh’s business model is basically built on its power to attract views from the Arab market: It sells advertising or finds other ways to boost brands, like product placement. I met Attili earlier this month, on a trip to Amman to finish some stories I started reporting back in July about refugees in Jordan.

The refugees — there are officially more than 600,000 Syrian refugees (and probably many more) in a country of only 6.5 million — are part of the picture that most Americans know. Most probably also have a vague sense of an ally in the middle of a region of turmoil. Jordan, which borders Israel, Syria and Iraq, signed a peace treaty with Israel in 1994 and is one of the only Arab countries with a free trade agreement with the United States. I flew in to Amman on a Boeing BA +0.12% Dreamliner, one of 12 planes recently bought or leased by Royal Jordanian, on a nonstop flight from JFK.

 Economies in these fast-growing markets are characterized both by speed and bottlenecks. Three hundred of us poured off the famously innovative and fuel-efficient plane, only to get stuck in 1.5-hourlong lines at the airport.

My volunteer Jordanian tour guide, Mahmoud Al Arab, a friend of a friend, was living one symptom of the growth. Over breakfast at Hashem’s restaurant in the newly revitalized Amman downtown, he explained he’s looking hard for an apartment to buy as prices keep shooting up. He estimates they’ve doubled in the past 10 years, so that, in a country where a typical wage might be 400-500 JD a month (or about $550 – $700), an apartment costs 40,000 JD.

Even for a professional taking home 1,500 JD, he says, the costs are a struggle. The fast growth brings challenges for the entrepreneurs, too. Attili is worried now about how to manage the next phase of his company’s growth. Kharabeesh, which has a total of five co-founders — along with Attili there are also Wafa al Nabulsi, Mohammed Asfour then Firas al Otaibi and Shaher Al Otaibi — has produced some 10,000 videos since its founding in 2008.

The 35-employee company, which also has a network of hundreds of freelancers, is not yet profitable but with a social media network of 7 million it has a powerful platform to leverage. The company has 1 billion lifetime views on YouTube, said Attili.

The intensely competitive space, where all the rules of the road are still evolving, is a constant stress, Attili says. “I don’t know what’s next,” he says, worrying aloud. “Should we be a talent management agency? Should we open another office?” The company has an office in Dubai and, perhaps in 2015, will open one in Los Angeles.

He just returned from a seven-week tour of the states as an Eisenhower Fellow, a program that brings leaders from other countries to the United States for a few weeks in the spring to talk to leaders here. If Kharabeesh can scale up successfully from its home in Amman, it will be largely carving its own path. He’s keenly aware of the company’s role as a groundbreaker and sounds a little wistful when he talks about the United States: “It’s the only country in the world where you can scale up fast,” he says.

This article is copied from: www.forbes.com/