Speaker 1: In May two thousand sixteen, I took a trip to Zurich.
Speaker 1: I joined executives from all over Europe, the US, and
Speaker 1: Canada who were there to talk about Iran. For years
Speaker 1: around was isolated from the rest of the world. Foreign
Speaker 1: companies had serious limitations around doing business there, which meant
Speaker 1: that often they did no business there at all. But
Speaker 1: that changed in today, after two years of negotiations, the
Speaker 1: United States, together were international partners, has achieved something that
Speaker 1: decades of animosity has not, a comprehensive long term deal
Speaker 1: with Iran that will prevent it from obtaining a nuclear weapon.
Speaker 1: Sanctions were lifted in January last year. When the sanctions
Speaker 1: were lifted, then we started really having a lot of
Speaker 1: excitement inside the whole startup world. This is Fuzzy Amir
Speaker 1: Sole Money, founder of Ku, an online retailer selling baby products.
Speaker 1: I first met Futty at that gathering of exact patives
Speaker 1: in Zurich. I saw her again in September. Her story
Speaker 1: stayed with me because the end of sanctions was a
Speaker 1: big deal for Iranian startup founders. We were finally going
Speaker 1: to access some real funding sources, and so we had
Speaker 1: a lot of meetings with foreign investors who were really
Speaker 1: excited with this country fut He thought the lifting of
Speaker 1: sanctions with market turning point for the growth of her
Speaker 1: business and the broader tech industry in Iran. At the time,
Speaker 1: Kodak who was talking to a Swiss fund about a
Speaker 1: potential investment of a million dollars. But just as the
Speaker 1: sanctions lifted, one presidential candidate halfway around the world was
Speaker 1: attacking the deal. The Iranians are very good negotiators. The
Speaker 1: Persians are always great negotiators. They are laughing at us
Speaker 1: back in Iran. I would have made a deal, not
Speaker 1: from desperation. I would have doubled and tripled up the sanctions,
Speaker 1: and I would have made a much better deal. Of course,
Speaker 1: this candidate went on to win the US presidency, and
Speaker 1: his victory spooked a lot of potential foreign investors in Iran,
Speaker 1: like the Swiss investors for he was talking to. It
Speaker 1: took a well, it took a few months before it
Speaker 1: really you could really feel that the interest had dryed out.
Speaker 1: Now things might get even worse, as President Trump has
Speaker 1: stuck with the heartline approach that he promised, and tensions
Speaker 1: between the US and Iran have escalated any day now,
Speaker 1: Trump could trigger a series of events that would cause
Speaker 1: the US to reimpose sanctions, and that could isolate Iran
Speaker 1: from the world once again. Hi m a kite and
Speaker 1: I'm the Dan Necessary and this week Undercrypted, we're taking
Speaker 1: a look at Iran and what the rising political tensions
Speaker 1: could mean for the country's budding taxing. In recent years,
Speaker 1: Iran has been helped by your more moderate political leader,
Speaker 1: President has San Rohani, who was elected in two thousand thirty.
Speaker 1: Then came the nuclear deal and the lifting of sanctions.
Speaker 1: These changes have fostered a more open business climate, and
Speaker 1: Iran has seen dozens of startups appear, some of them
Speaker 1: even getting funding from international investors. But if the US
Speaker 1: chooses to reimpose sanctions, a lot could change and that
Speaker 1: would have wide ranging implications for ordinary Iranians who just
Speaker 1: gotten used to life in the digital economy. So the
Speaker 1: entrepreneur Facty is Iranian, but spent most of her life abroad.
Speaker 1: She grew up in France, went to Columbia Business School
Speaker 1: and worked in mergers and acquisitions at Morgan Stanley in London.
Speaker 1: Then in two thousand nine she took time off from
Speaker 1: Morgan Stanley to have a baby during that time, a
Speaker 1: level to Iran a few times uh and had the
Speaker 1: difficult experience of trying to find baby products from my kids.
Speaker 1: You have the huge traffic inside the city. There's a
Speaker 1: lot of small shops. In France, she said, most of
Speaker 1: the retail space was organized retail, but in Iran it
Speaker 1: was the opposite seventy where mom and pop shops and
Speaker 1: Fatty was used to shopping online, but she soon discovered
Speaker 1: that wasn't really an option in Tehran. Around the economy
Speaker 1: mostly had been closed to the world for a decade.
Speaker 1: As a result, there was very little money from outside
Speaker 1: investors to fund startups, and companies like Amazon, Facebook, and
Speaker 1: Twitter were blocked. And you know, Tehran is a gigantic
Speaker 1: city of twelve million North Carolina. Is that the foothills
Speaker 1: of the Albows Mountains, with it's cooler temperatures and cleaner air.
Speaker 1: It's where the more affluent choose to live. The more
Speaker 1: south you go, though, and the more ends busy and polluted.
Speaker 1: The city becomes a twelve mile avenue links north to
Speaker 1: south Tehran. But here's the thing. Despite highways, dedicated bus lines,
Speaker 1: and efficient subway lines, downtown Tehran is still often jammed
Speaker 1: with cars and hijacked by spot In Iran, for hundreds
Speaker 1: of years, commercial life has been focused around the buzz aar,
Speaker 1: which is this marketplace of merchant family businesses. You realize
Speaker 1: that this retail space is very fragmented and there's a
Speaker 1: lot of small shops and no major organized retail right.
Speaker 1: So my first reaction was to think, Okay, this market
Speaker 1: has to be consolidated. Futty wasn't the only one to
Speaker 1: see the huge opportunity for technology to organize and expand
Speaker 1: Iran's retail sector. I've been reporting stories from Iran for
Speaker 1: more than a decade, and in the last two to
Speaker 1: three years alone, I've seen some drastic changes. A couple
Speaker 1: of years ago, the teh Run started seeing was still
Speaker 1: a phenomenon on the margins with a handful of vcs
Speaker 1: and a bunch of young Iranian founders. Now the impact
Speaker 1: of the tech community is much more visible. Some notable
Speaker 1: startups include snap, which is Iran's version of Uber, and Dishkala,
Speaker 1: which is kind of like the local Amazon. These companies
Speaker 1: have become part of everyday life in the capital. For example,
Speaker 1: I spoke to one of the security guards at a
Speaker 1: shopping center in central Tehran. His name is Reza Hasani
Speaker 1: and he lives in Kadah, just outside the capitol. Before
Speaker 1: he would use a combination of buses and metro to
Speaker 1: make it to work. With Snap, he treats himself sometimes
Speaker 1: because it's half the price of a normal cap Most
Speaker 1: people around me use it, my dad, my brothers, my sisters,
Speaker 1: my aunts, whoever I suggested to their using whoever I
Speaker 1: suggested to, They're happy with it. My parents used Snap.
Speaker 1: They have learned. The first couple of times is difficult,
Speaker 1: but I kept showing them and now they're easier with it.
Speaker 1: Reza showed me he spooned so I could see the
Speaker 1: iteena reas he had saved on his parents phone. In there.
Speaker 1: It has an option you choose that and it saves
Speaker 1: the trips you take. So I saved for them route
Speaker 1: one and two and three, my house, my brother's house,
Speaker 1: my younger brother's house, my sister's house. My mom used
Speaker 1: to say, what is this electronic world? What are these
Speaker 1: mobile phones in the hand of kids? But since I've
Speaker 1: showed her Snap, she says, this one thing at least
Speaker 1: is good. She's happy with it. So you have ordinary
Speaker 1: Iranians getting familiar with the convenience of technology. Iran is
Speaker 1: also a country of eighty million and some seventy arounder
Speaker 1: the age of thirty five. What Futty also saw was
Speaker 1: a lot of people potentially interested in baby products. For me,
Speaker 1: the opportunity in this retail market were huge, Um, and
Speaker 1: I was ready to take a chance to go back
Speaker 1: in the country and maybe build, I mean build an
Speaker 1: e commerce company. Futty had lived most of her life abroad.
Speaker 1: She looked for a partner who knew the country and
Speaker 1: the culture. When Fotty called me with the idea, and
Speaker 1: I just could not resist working with her and the
Speaker 1: idea because Peo both already had our first children. This
Speaker 1: is Lord and gold Cheny, who happens to have the
Speaker 1: same name as me. She's Fotty's business partner. We knew
Speaker 1: the Hassele's moms had to go through shopping with a
Speaker 1: little kid, driving in traffic of Tehran for hours, um
Speaker 1: with a screaming child at the back. At the time,
Speaker 1: in twelve, Iran was still under sanctions Press Senate Rohaney
Speaker 1: wasn't empowered yet, Ivan had limits on its oil exports,
Speaker 1: Its banking system was cut off from the international payment
Speaker 1: system swift and few Western companies were involved, and that
Speaker 1: was taking its toll on the economy. Inflation picked at
Speaker 1: GDP was shrinking and the national currency had lost a
Speaker 1: third of its value compared to the dollar. It was
Speaker 1: it was a big question to know if we were
Speaker 1: actually going to launch the product or not because the
Speaker 1: prices were fluctuating so quickly. I mean, the prices of
Speaker 1: product tripled during that year, right, So being an internet
Speaker 1: e commerce based company, you always had to have the
Speaker 1: updated prices on on the website. We would have needed
Speaker 1: to change the prices every two weeks on four thousand,
Speaker 1: five thousand products. So obviously that's a really tough environment
Speaker 1: in which launches startup. The election of President Rohaney changed everything.
Speaker 1: The election of Faster and Rohaney no have commers a
Speaker 1: surprise to many result this election would be much more fragmented,
Speaker 1: but it's not a surprise to so many of his supporters.
Speaker 1: They voted for change, they voted for hope, and although
Speaker 1: it's a little bit earlier, they're already saying goodbye to
Speaker 1: the current president. As soon as he was elected in
Speaker 1: two thousand thirteen, he made it clear that priorities were
Speaker 1: to stabilize the currency market, control inflation, and negotiate with
Speaker 1: world powers to get the sanctions lifted. Prices started stabilizing
Speaker 1: around two thousand thirteen, and we started getting signals from
Speaker 1: the market in two thousand thirteen that basically things were
Speaker 1: settling down, that the market was getting more stable, and
Speaker 1: on the other side, that the customers were back into
Speaker 1: I mean, customer confidence was higher and they were back
Speaker 1: into purchasing products. And that's basically when we started to
Speaker 1: launch the business in Iran in two thousand thirteen, e
Speaker 1: commerce was still a novel concept. Fautian Ladan were trying
Speaker 1: to work with importers, including the buzz Aar, which remember
Speaker 1: is the powerful traditional marketplace. We had a very tough
Speaker 1: first year, and the problem was getting the suppliers to
Speaker 1: trust us to have their products being sold online. They
Speaker 1: did not want to sell it or create a competition
Speaker 1: for their physical shops, so basically took us a while
Speaker 1: to try and educate them, to take them through the
Speaker 1: whole concept of marketplace and what's happening internationally with e
Speaker 1: commerce businesses. In a way, those traditional business owners turned
Speaker 1: out to be right. E commerce websites have created competition
Speaker 1: for their main businesses. The market is going in that direction,
Speaker 1: Instagram businesses, e commerce, it's going towards internet market. I
Speaker 1: really think Digicala sells as much as this entire shopping center.
Speaker 1: That how much they sell. This is Hasha your bobboy,
Speaker 1: a salesman in a computer accessory shop, and the company
Speaker 1: he referred to, Digicala, is the big online retailer in Ivan,
Speaker 1: sort of like Amazon. Kasha Year says he often has
Speaker 1: kids walk into his shop, ask about the price of
Speaker 1: something and say it's cheaper to buy this on Diga.
Speaker 1: We are businessmen. We don't want the customer to leave
Speaker 1: the shop. Sometimes we have even sold a product without
Speaker 1: making a profit, just so the customer doesn't leave empty handed.
Speaker 1: We have no choice. We got to compete, Hashaer says,
Speaker 1: even though they owned the shop and have been in
Speaker 1: business forever, Digkala has become a nuisance to them. I
Speaker 1: think in a few years people won't even shop like this,
Speaker 1: like come and walk around here in the shopping center.
Speaker 1: But then Hasha told me he shops online himself. I
Speaker 1: bought a shaver once. It's not bad at all. To
Speaker 1: be honest, you said, at home, drink your cup of tea,
Speaker 1: choose your product, they send it home, and even above
Speaker 1: a certain price, it's free delivery. Yes, why not? Unfortunately,
Speaker 1: m H. When you ask Iran's tech founders about the
Speaker 1: various challenges they face, the one issue they all talk
Speaker 1: about is access to funding. Fatty and Laddan launched Kuduku
Speaker 1: with their own money in and two years later they
Speaker 1: started looking for their first infusion of cash. It seemed
Speaker 1: like a good time. That year, the nuclear deal went through,
Speaker 1: which meant that the sanctions were going to be lifted.
Speaker 1: After the Iran Deal, things changed. A lot of foreign
Speaker 1: investors got very serious about Iran and they started looking
Speaker 1: into the market. They were receiving weekly, on a weekly basis,
Speaker 1: phone calls and emails. Fatty and Laddan had plans. They
Speaker 1: wanted to boost their marketing and partnerships with local hospitals.
Speaker 1: They hope to expand into accessories for women and home decoration.
Speaker 1: But they had no idea that the business climate was
Speaker 1: about to change. Okay, so let's past forward to the
Speaker 1: nuclear deal had been agreed to, the sanctions were mostly gone,
Speaker 1: and Fatty and Ladan were fielding all kinds of calls
Speaker 1: from foreign investors who wanted to learn more about their business.
Speaker 1: Some of these investors had even sent them term sheets,
Speaker 1: which is this document outlining the terms of investment. It's
Speaker 1: what gets the ball rolling for the two sides to
Speaker 1: sign a final agreement. For Fati and La Dan. It
Speaker 1: wasn't just their money that they were excited about, and
Speaker 1: the foreign investors are the ones that actually understand what
Speaker 1: it takes for an e commerce business to escape the
Speaker 1: money requirements and also other restrictions and requirements that are
Speaker 1: needed for an e commerce business to become the Amazona
Speaker 1: dig you call us of this world. But then Trump
Speaker 1: are elected and what seemed like these dune deals fell apart.
Speaker 1: Foreign investors opted to wait in this new world of uncertainty.
Speaker 1: When you're an entrepreneur, being an entrepreneur as a roller coaster,
Speaker 1: so you have you have down moments and up moments
Speaker 1: all the time. Right, it's a real roller coaster. Today,
Speaker 1: Fatty and London are in tact with local investors. They
Speaker 1: said they've had to scale back their ambitions, but they
Speaker 1: are confident that they'll be able to raise enough to
Speaker 1: keep going. It's not just Fatia da Dan who are
Speaker 1: struggling in this new climate. Take for example, here returned
Speaker 1: to your run in two thousand eleven at the height
Speaker 1: of sanctions to launch netback, a bargain site similar to
Speaker 1: group On. We were seeing the world and you could
Speaker 1: see that this this thing is going to happen sometimes,
Speaker 1: I mean it was clear. I think the people who
Speaker 1: who believed in this industry that this is going to happen.
Speaker 1: Sometimes we didn't know when today at the result is
Speaker 1: at the head of an umbrella company that includes five startups,
Speaker 1: including net Barrack. The nuclear deal which lifted the sanctions
Speaker 1: helped his business grow. There was this way of Parners
Speaker 1: coming to Iran. They told Iran is going to change drastically.
Speaker 1: Ali Reza says he contacted a German fund that had
Speaker 1: made an investment in a partner company a year and
Speaker 1: a half ago, but after Trump's election the answer was different.
Speaker 1: I'm not sure. Let me think about it. I think
Speaker 1: Trump's administration had some negative effects and the people's hope
Speaker 1: of things going yeah much more faster. He's a very
Speaker 1: uncertain person. I mean you cannot predict his behavior for
Speaker 1: the next week. So that the companies want to come
Speaker 1: to your and they want to look at their next
Speaker 1: ten years so open they see that there is this uncertainty,
Speaker 1: they will have more doubts. And if you're not totally
Speaker 1: sure where the sanctions stand at the moment, you're not
Speaker 1: the only one. There have been new twists to the
Speaker 1: story every day right now. The sanctions that were lifted
Speaker 1: with designing of the nuclear deal still remain lifted, but
Speaker 1: that might not last long. Most recently, Trump went to
Speaker 1: the UN to try to convince you as allies, to
Speaker 1: renegotiate the nuclear agreement. European leaders didn't budge, insisting on
Speaker 1: keeping with the original deal, and Iran has said it
Speaker 1: can walk away from the agreement if other countries push
Speaker 1: for renegotiations too. Trump now faces an impending deadline. You
Speaker 1: have to decide whether they declare that Iran has been
Speaker 1: complying with the terms of the nuclear agreement. If he
Speaker 1: says that Iran has not complied, the U S Congress
Speaker 1: would have sixty days to consider imposing back sanctions on
Speaker 1: Iran and even putting aside these fundraising concerns. Building a
Speaker 1: startup in Iran presents its own set of challenges. For example,
Speaker 1: Facebook and Twitter, or band in Iran, although many officials
Speaker 1: use them and it's easy to get hold of epns,
Speaker 1: and even though most of the sanctions are still lifted,
Speaker 1: there are some that remain. That's meant that Iranians can't
Speaker 1: access cloud providers like Amazon Web Services, which makes things
Speaker 1: particularly hard for internet startups there. More recently, Apple decided
Speaker 1: to remove some Iranian apps sitting trade sanctions enforced by
Speaker 1: the U S Office of Foreign Assets Control, and that
Speaker 1: included some of the popular apps like Snap, the white
Speaker 1: hailing app. We mentioned earlier the mistake that I think
Speaker 1: most of the business people make about Iran. They want
Speaker 1: the good safety. That's Ali Reza again. We have learned
Speaker 1: in business school that when you have a high risk,
Speaker 1: you have a high retain. When there is a little risk, yeah,
Speaker 1: you have a low return. So you cannot have a
Speaker 1: high retain and a low risk. Iran is a high risk,
Speaker 1: high return country and we believe in its potential. It's
Speaker 1: this mentality that has prompted many Iranians like Fatty and
Speaker 1: Alireza to be turned to Iran and share their knowledge.
Speaker 1: When I look at what was the sort of pool
Speaker 1: of talent and the amount of information which existed in
Speaker 1: all the people. Like four years ago campaign to now,
Speaker 1: there has been much more training and talent in the country.
Speaker 1: So when people come they bring Even if they start
Speaker 1: their own company, they start training other people inside their company,
Speaker 1: and these people will go to other companies and the
Speaker 1: information is shared slowly. The government of Iran Centrist President
Speaker 1: Hassan Rouhani has been supportive of the tech industry. It's
Speaker 1: under Ruhani that three G and four G internet appeared
Speaker 1: and expanded. Before that, the internet was very slow. Ruhani's
Speaker 1: government has also invited Iranians abroad to bring their creativity
Speaker 1: and ideas back to their own country. I met a
Speaker 1: guy called mohammadres as Ali. He wants the tech Russell
Speaker 1: website in Iran, which he likes to refer to as
Speaker 1: the Iranian Tech Lunch, and he said he and his
Speaker 1: colleagues regularly received emails from Iranian studying or working abroad.
Speaker 1: They are assessing the market to try and be persuaded
Speaker 1: that this is a good place to come back to
Speaker 1: because abroad the market is already mature. The chance to
Speaker 1: stay there set up a successful startup is very low. Here,
Speaker 1: the space is untouched. Many are seeing this and want
Speaker 1: to do something of course, whether these Iranians are brought
Speaker 1: actually come back home depends on what happens to the
Speaker 1: nuclear deal and the sanctions and how foreign investors and
Speaker 1: executives respond. For now, many European companies, including multinational always
Speaker 1: like to tell and Siemens have taken chances on Iran.
Speaker 1: But if the US reapplies some of the economic sanctions
Speaker 1: on Iran, that could really put international investors off. Sanctions
Speaker 1: come with a lot of rules for companies that still
Speaker 1: want to do business with that country, and most people
Speaker 1: don't want the hassle of having to comply with such
Speaker 1: a complicated settle US. In the meantime, for forty and
Speaker 1: La Dan, it's about taking it one step at a time.
Speaker 1: This kind of setback forces you to become better, right,
Speaker 1: and to become more lean and make your company more efficient,
Speaker 1: right to to become successful. Right. So I think that's
Speaker 1: where we're standing today. We must see setbacks in the
Speaker 1: next um three or four years, and three years, I
Speaker 1: would say, but that doesn't matter. We're as Iran, yes
Speaker 1: we're We don't look into um ops downs and changes
Speaker 1: short term because we've had we've had a royal coaster
Speaker 1: of changes in the country, but we usually have more
Speaker 1: of a long term prospect, so I'm very hopeful. And
Speaker 1: that's it for this week's episode of Decrypted. Thanks for listening.
Speaker 1: Before we let you go, just a quick note. On
Speaker 1: last week's episode about Stands Sack Company. We said that
Speaker 1: Randy Shekeler is the CTO of Stance, but in fact
Speaker 1: he oversees quality assurance. We'd love to hear what you
Speaker 1: think of the show. You can email us at Decrypted
Speaker 1: at Bloomberg got let or I'm on Twitter at the
Speaker 1: Dawn Massari and I'm at aki Eto seven. If you
Speaker 1: haven't already, please take a moment to rate and review
Speaker 1: our show. It's the best way to help us get
Speaker 1: the show in front of new listeners. This episode was
Speaker 1: produced by Pia Gatcary, Liz Smith, and Magnus Hendrickson. We'll
Speaker 1: see you next week.