Palestinian-Canadian Raed A. Masri is a passionate investor who has been breaking ground in the tech world in North America for the past two decades. Lately, through his venture capital investment firm, Transform VC, based in Silicon Valley, he is helping fellow entrepreneurs from the Middle East turn their great tech ideas into a reality. eniGma’s CEO Yasmine Shihata chatted with Masri over Zoom, to learn more about his fascinating career, innovative business vision and how he is aiming to impact the Arab world with his work. Here are some excerpts of their chat.
Can you tell me something about your background and how you got into investing in the tech business?
I was born in Jordan and grew up in Saudi Arabia where my parents used to live. I really wanted to be a soccer player and I was really good at it. While I won a bunch of MVPs and some tournaments here and there, I could never join any organised soccer team, because I didn’t have the right nationality, as I was not a citizen.
When we eventually immigrated to Canada when I was a teenager, it was a massive revelation for me. I couldn’t believe that such nationality limitations would no longer stand in my way. I kept thinking, “What do you mean I’m allowed to pursue my dreams? I’m only bound by how big I can think and how hard I’m willing to work for it?” As it turned out, I also discovered I was not as good of a soccer player as I thought I was!
I figured out that my other path was engineering, so I enrolled in engineering school in Ottawa, which was once called Silicon Valley North. It got that nickname because we had Nortel, which 20 years ago was a $300 billion public company. We also had Newbridge, Mitel, Cognos and JDS, which were all billion-dollar companies. However most don’t exist today. I learned that when the market corrects, all these tech clusters contract or disappear. The real Silicon Valley right here in California, however, stayed and remains standing. In any case, I got multiple job offers and I ended up taking a job like all my peers.
I worked at one of those multibillion-dollar public companies, Newbridge Networks, which later became Alcatel. I was part of the professional services team there, but I literally couldn’t continue to do that, so I quit. I only lasted six or seven months because I wasn’t interested in the traditional nine-to-five schedule.
I just didn’t want to grow up to be like my dad. He had to get a second job to put us through the best schools and he was always stuck in a certain MENA country for his work and wasn’t able to be with us. I effectively was in pursuit of freedom. I quit the nine-to-five and started the nine-to-midnight setting!
So, you became an entrepreneur. Can you tell us about that journey?
In 2001, we built a software product with the best user experience similar to what we are used to with iPads and iPhones today. It was just years ahead of its time. However, no one believed in me, not even my own family. I learned a lot of hard and important lessons. Lesson number one, it doesn’t matter how good your product is if you can’t distribute it. Lesson number two, it is crucial to have recurring revenue.
Another great milestone happened in 2004, when Bell Canada, our largest telecom operator, a $55 billion company, had a labour strike. Three hours later, I was talking with a senior executive VP on his personal cell phone and he was shocked at how I got his number. I ended up getting a contract that was paying me $65 an hour.
They were giving each of my technicians 84 to 100 hours for turning things around and I was paying each technician $20 an hour, so I was profiting $45 an hour per head per technician per hour! I also learned another important lesson that day; it’s easier to sell a multimillion-dollar contract than it is to sell software to a small business worth just $5,000.
Tell us about your attempt at starting a telecom company in Canada…
One day, I was at the Murooj Rotana Hotel in Dubai, minding my business. I couldn’t help but overhear two people talking beside me. It turns out it was a job interview and one guy asked the other, ‘how big is your company?’ To which the response was, “we have three projects, each is worth $100 million.” I immediately thought I needed to speak to this man!
I ended up sitting down with him and pitching him the Canada telecom project, “Jaguar Wireless,” even though he was a real estate businessman from Kuwait. I didn’t know that but I pitched the idea. Luckily, he found it very interesting and asked us to go to Kuwait and present the pitch to his team and ultimately we became friends. We came very close to starting a mobile phone operator in Canada but the deal fell through and I was depressed for the next six months.
Six months later I was on the mailing list of Industry Canada’s spectrum buyers and the government sent me an email saying there’s new spectrum being put up for auction. It was for inflight internet. It was a much smaller opportunity, $15 million, not $400 million like Jaguar Wireless! Soon after, I got a call saying, “Congratulations, you got it.”
This meant that any airplane flying over Canada by law would have to get its internet from me. Following that deal, I was inducted to the Canadian Wireless Board Association, sitting side by side with other members like the presidents of Bell Rogers and TELUS!
Tell us about your latest venture capital firm where you are specifically raising money to invest in Arab startups.
Our ambition is to help create 1000 Middle-Eastern billionaires in America by the year 2040. We have a unique model at Transform VC; we don’t only invest, we also found companies. In cases where someone already has a technology and business acumen, we’ll just give them the money to get started. I always say that it is ambition that determines the maximum anyone can achieve. You can never achieve more than you aspire to achieve. A few of our proud investments include Ample, which we project to be our first trillion-dollar portfolio company, founded by Khaled Hassounah, delivering energy to any electric car in three-five minutes. Another is Flip, a social commerce app founded by Noor Agha, think TikTok meets Instagram meets Amazon all-in-one.
Our track record so far: out of $82 million deployed in 40 investments, we have realised seven successful outcomes with 50% IRR and almost 3x return.
Our philosophy is to have a chance at impacting a billion people, we seek investments that exhibit deep technology moats, strong network effects and a 10x advantage over the next best thing, and we aim to do all of that in America!