By Tamara Pupic
The founders of Afterschool.ae and Pixelbug on how they’re developing family-bases businesses
For every status quo, there is potential for disruption. The tech sector has proved that time and again.
However, when it comes to the kids-tech space there appears to be much more hesitation, even among forward-looking players.
But because every resistance brings with it a possibility of acceptance through understanding, we take a look at what Dubai-based start-ups have in store for both parents and children.
“Kids entertainment is massive,” says Joanna Santillan, founder of Afterschool, an online portal for searching and booking after-school activities for children, when asked whether today’s children prefer to enjoy the wonders of the digital or the real world.
“As a parent you want your kid to have everything in the world.
“Kids love physical activities and parents are forcing them actually. Even with my own kids I make sure that they do some physical activity and socialise.”
Determined to solve her own problem of how to entertain her three children, Santillan founded the portal in April 2014 as a daughter company of her first Dubai-based venture, Searchfuse, a digital marketing agency located at Ibn Battuta Gate Office.
Harvesting the power of digital platforms to allow others to connect, share, and create value, the portal now lists various after-school activities from about 500 providers.
Afterschool regularly cooperates with the Knowledge and Human Development Authority (KHDA) and other relevant government bodies to ensure that the providers have obtained all necessary work permits and licences before registering on the website.
The platform offers two types of subscriptions packages – professional and premium – with annual fees starting from AED2,500. With an average of 12 to 15 inquires per month, Santillan states that the revenue generated for providers has reached $48,000 in the year-to-date.
“In Abu Dhabi we have very few providers when compared to Dubai,” she adds. “In Dubai, there are a lot of options for parents. I think it’s because in Abu Dhabi most of the after-school activities are free, funded by the government.
“At the beginning it was tough, but with the marketing that we’ve done so far, and the quality of leads that we gave to the first providers on board, it has just been word of mouth ever since.
“It’s not a listing website where you just list your website and leave it like that. It has a booking management system where a provider can see how many page views they have had, how many leads they have had and how they performed compared to their competitors.”
When it comes to the services offered to the 20,000 registered parents, Santillan doesn’t leave anything to chance. “This is a bit of a mummy thing and I want my people to think like a parent,” she explains.
“As soon as we get enrollment, we call both the parents and the provider to make sure that they [the parents] are taken care of.”
The company now enjoys 92 percent growth on a monthly basis, and plans to expand across the UAE as well as to expat-dominated countries like Qatar and Kuwait.
A glimpse into its data shows that more than 20 percent of parents search for swimming-related activities, a bit more than 10 percent look for more educational options, less than 10 percent for art classes or workshops, while football and tennis share the bottom rank with less than five percent each.
At the same time, these children are often referred to as belonging to a “touch screen generation”.
Around 11 percent of children aged three to four and 34 percent of children between five and 15 years old now have their own tablet, a recent study by Ofcom, the UK’s media and telecoms regulator, shows.
Although most of the parents want their children to embrace technology, they don’t want them to be consumed by it.
So where is the balance?
“We found that this was a very suitable type of application that would solve a genuine problem and a pain point for parents who are now feeling alienated from their kids’ use of technology,” explains Dany El Eid, CEO and managing partner at Pixelbug, about their edutainment app Colorbug.
“In the interviews that we’ve done [we hear] that sometimes they are completely banning the use of technology in their household. So they resist the use, but we all know that if you resist something, it makes it worse.
“We can’t escape the use of technology, it’s part of our everyday life.
“So the best way is to fuse something traditional, which kids do using their hands and motor skills, and, at the same time, keep the innovative aspect of technology. Augmented reality (AR) was perfectly suited to combine both.”
The Colorbug app, which is free to download on Apple’s iTunes and Google’s Play Store, while the Android version will be launched soon, uses AR to help children between four and 10 years old to engage with content, improve their motor skills and learn in interactive ways.
In simple terms that means that when a child records with a camera-enabled device a previously chosen and coloured-in stencil (a colouring page containing a character, such as Bugsy or Ricky the Rabbit, or a renowned architectural structure, such as the Burj Khalifa) the app uses the recording to unlock AR experiences.
Keeping the child engaged and excited, the drawing of the character or a structure appears on the screen with music, and the user hears the story of the drawing, plus other entertaining or educational content.
In each case, the experience of the reality is enhanced.
The idea to apply this kind of technology to kids’ entertainment and education came to El Eid and the two other managing partners – chief strategy and product development officer Elie C Youssef, and chief technology officer Denis Kruger– in the summer of 2014.
“It’s definitely emerging. There are other companies that are trying to do something similar, but they are a handful. We are definitely amongst the first,” says El Eid about their invention.
That is one of their similarities with the well-known start-up innovators of Silicon Valley. However, they’ve added a modern Dubai take to it.
“We started working at a hotel lobby actually. You know how Silicon Valley has garage stories. In Dubai, it’s five star hotel lobbies [stories]. So we were working there,” explains El Eid.
Long-time friends and former flatmates El Eid and Youssef set up Pixelbug, a marketing technology company to help businesses adopt new technologies to drive engagement across the range of industries, through Creative Zone in April 2012.
Now with 10 employees, the company is based at popular co-working space, The Cribb.
Initially bootstrapped by El Eid and Youssef, the business started to take off due to customised projects they did for multinationals including Procter&Gamble, Nestle, Sony, HSBC, as well as many advertising and media agencies.
“Initially, we were focused on developing advanced technologies for multinational brands, mostly including augmented reality, gesture-based technologies, projection technologies and mobile and web services,” El Eid explains.
“These were the four building blocks we used to focus on.
“It was done very consciously because we wanted to still have the flexibility to experiment with these technologies.
“We knew that by getting projects of substantial amounts we could reinvest in R&D (research and development) very quickly, instead of having to get external investors, whom we would have to convince about these technologies, because we are not dealing with any copycat model.”
Their eureka moment happened while engaged in a project to develop a kids-focused app for Nesquik.
“We realised that there was a big demand for this type of application for kids. Kids are a lot more intuitive and flexible in terms of what’s possible with this technology,” El Eid says.
“So then we realised that the best way to go further was to combine the physical aspect of colouring books with innovation of augmented reality.
“The whole objective is for the kids to learn in a more fun and interactive way.”
With around 5,000 organic downloads to date, Youssef explains that once a few improvements are done, they’ll invest in advertising to attract more users. However, media and popular tech bloggers already have Pixelbug firmly on their radars.
A recent meeting with Robert Scoble, the Napa Valley-based tech blogger credited for helping young entrepreneurs who went on to develop Instagram, Flipboard, or Twitter, ended with him sharing a Facebook post about the company calling them “the coolest start-up in Dubai.”
It has received over 71,000 views and 800 shares on Facebook so far.
Currently, the Colorbug app is free to download as well as a certain amount of stencils, but to activate them, users need to make in-app purchases. In addition to English and Arabic, the versions in French and German, a new package for famous architectural structures, and a few other new features are in the pipeline.
The trio’s work has been recognised by the industry with awards at the UAE finals of the Get in The Ring Competition in October 2014, and first place at the MIT Enterprise Forum Arab Startup competition in April this year. El Eid says the awards add credibility while the prize money provides “some breathing space.”
As an additional revenue stream, they still work with companies to develop stencils – sponsored stencils – which are designed to appeal to their specific audiences. One example was the app for the Abu Dhabi Royal Family for the inauguration of Mushrif Central Park in March.
“We are not aggressively pursuing investment now. We are [more] focused on traction at the moment,” says Youssef.
And the future of the sector looks bright.
“We are focusing on the education and entertainment industry and mobile, which is approximately a $4 billion market globally,” he adds. “If you think that revenues from mobile applications are $75 billion, then we are talking about a $4 billion market just for the entertainment and education.”
A report by CCS Insight, a consultancy on global trends in mobile communications and the Internet, states that, in addition to the expected continued increase in smartphone use, shipments of AR devices will increase 16-fold, from 300,000 to four million, by 2018.
More established industry leaders are following suit either by entering the realms of AR, such as Apple’s recent acquisition of Metaio, a German AR software company, or focusing on its bigger sister, virtual reality, such as Microsoft developing Hololens, Facebook buying the Oculus Rift headset, or Google releasing Google Glass.
“AR will become part of our lives in various industries,” El Eid explains. “Next year will be the year of virtual reality, the year after that will be owned by augmented reality.
“Once Google and all these companies develop hardware, they will need to fill it in with some content, like Apple needed apps to be developed to fill the App store. So now we know that we are already at the forefront of it and we are ready to ride that way.”
However, to say that they are seen as by local investors as risky would be an understatement. One reason for this is the lack of big exits in the sector.
“There are no big exits, it’s an innovation,” El Eid adds. “It has the potential for something we maybe haven’t envisioned yet, but it will reveal itself as we progress.
“That’s part of the excitement, we are part of the leading edge of innovation. Is there some reluctance? Obviously, like with any type of innovation that is not widely understood.”
A handful of forward-thinking regional investors have shown interest, including Dubai-based WOMENA, and Kuwait-based Arzan Venture Capital, as well and a few companies from Lebanon.
“We need fast acceleration and fast growth. We want smart money, so we need strategic investors,” El Eid adds.
“But eventually we’ll need to go where the money is, which for our industry is in Silicon Valley. I don’t think there’s any way of going around that place to attract investments.”
Preparing for the big moment, the co-founders recently brought a financial advisory firm on board to help them structure future investments worldwide.
“The reasoning was that since at some point we’ll have to hire a CFO anyway, with these guys you don’t get only one person, but a firm that will see us grow and pursue the next funding round,” El Eid explains.
As a start-up that’s preparing to take off from its Dubai base, El Eid is encouraged by the entrepreneurial upheaval in the emirate, but pointed out a number of issues that need to be addressed: The encouragement of risk-averse investors, elimination of red tape, and a decrease in costs.
“There’s no infrastructure,” Youssef adds.
“To simply stay in the country you need a work visa and a lot of capital unless your parents are living here, but even then after a certain age you can’t be on their visa.
“So the very basic infrastructure is not available.
“I think a lot of ideas are crashed early on because people can’t take that risk in Dubai. It’s not only one of the most expensive places, but legally you can’t stay [here]. So, it’s a big challenge.”
In spite of the various challenges, their app has made its mark in developing the next generation of innovators.
Youssef says: “The trend now is the ‘maker culture’ [a tech-based extension of the Do It Yourself (DIY) ethic that promotes self-sufficiency] for them [children] to be able to build something on their own.”
“For them the digital and the physical have fused already,” El Eid adds. “They don’t distinguish what’s offline and online, it’s just one massive experience.
“And the more they grow in the future, the lines between physical and digital are going to be even more blurred.”