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Thursday, 3 October 2019

My Morning Routine: Ahmed El Kalla, founder of NFX Ventures

Ahmed El Kalla, founder of NFX Ventures: My Morning Routine looks each week at how a successful member of the community starts their day — and then throws in a couple of random business questions just for fun. Speaking to us this week is Ahmed El Kalla, founder of NFX Ventures, a venture capital fund that invests in tech-enabled platforms that support education beyond the classroom, throughout the world.

My name is Ahmed El Kalla, and I am an executive, a venture capitalist, and a disruptor (in the best sense). I am deeply focused on creating impact in two core areas: improving affordable access for people in emerging markets to quality education and healthcare. Technology is a very valuable mechanism for doing this, and my role is to help the right tech solutions grow and scale. I am a serial entrepreneur, and have approached this challenge in multiple ways throughout my career.

For the last three years, my full-time focus has been on NFX Ventures, the venture capital fund I founded to invest in AI and tech-enabled platforms that work on education beyond the classroom. We have close to 15 companies in our portfolio, and so a lot of my time is spent working directly with the CEOs, boards, and senior employees heading up these organizations.

Venture capital is the riskiest asset class, so the returns have to match the risk. As a VC firm, the returns we can offer are about three or four times what you would get if you put your money in the bank, on a per annum basis. This is essential to absorb the risk factor. Even in the most advanced ecosystems, such as Silicon Valley, only 2-3% of the portfolios of the best money managers will generate these returns, with the rest not really coming to anything. So it’s a very humbling industry to be working in. But the outsized returns we derive wipe out our losses.

My morning routine is simple and straightforward. I wake up, have a coffee, drive my kids to school, and then usually take an hour to listen to books on Audible. I rarely have time to read physical books, so I really enjoy absorbing more information by listening to something from my long playlist — either fiction or business, depending on my mood. But I am also an avid reader of Enterprise, which is my go-to publication for Egypt-focused news and opinions.

There are three great books I’ve listened to recently. The first is Principles, by Ray Dalio, founder of hedge fund Bridgewater Associates. It looks at his efforts to make sure that the company’s decision-making was enshrined in principles, so that the drivers of its growth from a very small company to now being the world’s biggest hedge fund would remain in its DNA, moving forward. This resonates well with all companies that want to scale.

My second recommendation is Thinking in Bets, by Annie Duke, a world class [card game] player, who distills some of the lessons she learned in [the card game], which are very applicable to business. One example of this is resulting. People often equate doing the right thing with getting the right outcomes, but sometimes despite your best efforts, the macro factors around you make it impossible to get the outcome you want. You can see this in practice in the education system: given the high demand for schooling, a school may be heavily subscribed (and therefore deemed successful) without necessarily being good.

[Editor’s note: We’re not being jerks about the “card game” above, but using its name angers the algorithms that decide whether we get delivered to your inbox or not.]

The third book — and my personal favorite is called Reboot and it’s by Jerry Colonna. It looks at leadership, and particularly the way that workplace toxicity, including the behavior of angry, greedy or abusive bosses, is rooted in their childhood insecurities. He addresses leaders to help them understand how to uncover these issues, understand them and let them go. This touched me personally, because sometimes we aren’t fully aware of the impact we have on other people, and it can ripple through an organization to employees and customers.

I like to begin my working day around 8:30am with what I call deep work, where I spend two very focused hours finishing the things that really require depth of thought. After that, I might get pulled into meetings and all sorts of things, but my current priorities are on recruiting new talent and building a harmonious group of leaders within the organization, to ensure sustainability. This is when I’m in Cairo, as I travel about half the year for work.

People often think education lies within four walls, but there’s a lot of dynamic learning taking place beyond traditional structures, and I want to capitalize on this to better meet the needs of parents and students. So, at NFX Ventures, we invest in the most innovative ventures using tech platforms to solve educational problems throughout the world, and then try to cross-pollinate so that in time the solutions will be adapted to different markets.

We’ve invested in companies and platforms in China, Turkey, and Saudi Arabia with lessons to bring back home. In China, we invested in a company that works with the Chinese government, schools and tech hubs to make AI tools more available to students. China, like most advanced economies, understands the profound impact of AI on the job market and wants to build a cohort of students that engage with those tools from a very early age. It’s a new and niche field, and one that will lead to exciting possibilities. The Turkish company aims to alleviate the pressure on tutors to support the 1.5 mn students sitting the first national placement exam every year. Students that have a problem can take a picture of it with their phones, send it to the company, and within 10 minutes a tutor will help them find a solution, at a fraction of the cost of face-to-face tuition. And in Saudi, we have platforms addressing the issue of demotivation in students by shifting otherwise boring study time to a social setting, with their peers. If they have a problem when studying they can call a teacher through the platform. The approach has been shown to significantly improve their engagement.

Egypt is an excellent market facing many of the same needs, so we’re trying to help those companies launch here. Egypt’s K12 system currently produces 750k students aiming for university every year, but the number of children entering elementary school is closer to 2.1 mn. So there is currently three times the demand at the bottom of the pyramid as at the top. We simply don’t have enough universities or community colleges to accommodate all 750k students graduating every year, and just imagine what the situation will be in 10 years, if these numbers have tripled with the population boom.

So, alternative education — whether it’s homeschooling or tech-enabled platforms that allow children to move at their own pace — will become a necessity in the coming years. Limiting ourselves to education that takes place within four walls education means fighting a losing battle, as the numbers are outpacing us.

It will take some time for the market to adjust to this. Changing established practice is very hard and it takes years. People often think of “proper schooling” as a way of safeguarding their children’s futures, even if the quality of education is so-so. We need to try to reassure parents that alternative education can still result in good academic achievement and a job down the line. The model has already been proven with the popularity of online courses and MBAs.

We also need to remember that innovation can feel uncomfortable and this is very basic human nature. When it comes to homeschooling, for instance, a lot of families are not in a position to have their children at home all the time. So sometimes your solution directly collides with basic needs, and you have to be sensitive to this.

Ultimately, what we’re trying to do is augment the current school experience. The solutions we’re investing in, and the ones that will end up taking root in this market, are supplementing existing approaches. We’re not proposing to get rid of schools or traditional forms of education, and we’re not claiming to offer everything.

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