Built to last

Patrick Fitzpatrick [P.F]: Ladies and gentlemen, I'll ask Todd, and Laila, and Ahmed to join me on stage for our next panel. And as they do, I would like to, 1) Thank all of you for being here today. 2) Thank you all for welcoming us into your inbox, onto your telephone, into your ears, if you listen to our new podcast. And last but not least, I'd like to thank you all personally, from me. For welcoming me, an immigrant, into your community and letting me be part of this thing that we're building together. 

So, what is the single largest uncertainty — the single biggest uncertainty — each of you is planning for as you look ahead to ‘26? We’ll start with you, Todd.

Todd Wilcox [T.W]: There’s the things we know, Patrick, and it's very boring. So, we do our forecast for the pound; we're seeing EGP48 to EGP50. Inflation, we think [we’ll get] to 10% by the end of next year. Interest rates, we think 18%.

So I think the one thing — I've been here five years — is that Egypt is resilient and the client base is resilient. If you're in business here, you've been through a few crises. It's what we don't know. It's what we can't predict. 

There are some things we know are going to continue to be volatile. The US is going to be volatile for another three and a half years. I'm Canadian, by the way, I am not American. It's what we don't know. We've seen it with COVID. We've seen it with the Ukraine-Russia war. So what we build in is resilience and a plan to keep steady and stay the course.

P.F: So it's about buffers. Okay, Laila? 

Laila Hassan [L.H]: I think for us, when we talk about budget, it's more of our deployment schedule, as we look into [the] pipeline. So, for 2026, we're actually seeing a great pipeline of new companies, and that's fueled primarily by AI. So more products are being launched much faster, smarter, and scaling. And definitely the structural reforms. We're seeing a lot of international investors coming back to Egypt and looking to invest.

I would say the single most uncertain thing, as we look into our investments, would be AI. How much of that is going to impact our existing portfolio as well as other companies? Which companies are actually going to win and how much are going to be left behind?

P.F: Ahmed, what about you? 

Ahmed Badreldin [A.B]: Simply put, in the past few years, the number one concern at this time when we're putting our budgets for the new year has always been costs. Costs were very uncertain. Costs were all over the place. We finally got costs under control — not just us, but as a country. And now we have an uncertainty problem with revenue on the top line for next year. I think most people here will share this sentiment. It just needs proper planning for the next year, year and a half, but after that, I think we're good to go.

P.F: So when we were preparing for the panel, you attributed that softness to issues with affordability impacting demand — primarily, I don't want to oversimplify it for you. But on the other hand, you're looking beyond '26 and you see a great '27 for the real estate industry. 

How are you approaching '26 so that you have the balance sheet strength to go after the opportunity in '27?

A.B: We think 2026 is more of a year that clears the noise. There was a lot of noise in the last year or two or three, whether from geopolitical issues, whether the currency situation. So, there was a lot of noise both on the demand side and the supply side, and real estate was not an exception to that. There was a lot of speculative demand. There was a lot of — again — noise that does not represent the real market.

What we're shifting into now — and we as a company have always kept our eye on that — is what is the real demand? What is the real demand for the product? Who are the people who will live in our spaces? Who are the people that will work in our spaces? 

Historically, we address that by not designing things or building things that are built for the speculative market. We always look at the function and the final end user of the product and make sure that this person is catered for, even though he will not move into this unit before four or five years. In those four or five years, in the meantime, there’s a lot of other things that can affect the market which we saw in the past two or three years. And coming out from that devaluation hangover, I would say, the noise is clearing. The smoke is clearing. And you can really differentiate the products that are built for the market and the products that were designed for the speculative buyer.

P.F: Just to trap short-term demand. Laila, you’ve said that Algebra is still investing, but when we were getting ready here, it was with a bit of a focus on roll-ups, bolt-ons — which is sort of a new strategy for you folks. How does that play out in practice in '26 and beyond?

L.H: I think it's important to note that Algebra has been investing since our initial close, which was in 2022, and we've continued to invest even during the macroeconomic turbulences, et cetera. Our belief is that at the stage of the companies we invest in, the macro conditions don't kill the company as much as product-market fit. So if you're able to deliver a good product, the change in the dollar might shy away some international investors, but the fundamental problem still exists.

P.F: Okay.

L.H: As we move into how the evolution of VC has become, we're starting to see more and more companies that are better able to compete when you're offering a clearer ecosystem of products. Because at the nascent times, when you're still producing one product, you can command a margin. But as more and more of the products are commoditized, you start to shrink your intake. So we're trying to work with founders — whether to integrate their products within a clear value chain, or consolidating or bringing on board more stickier products, especially in the unregulated companies — to be able to catch a much bigger chunk of margin and offer a clearer ecosystem. So, it's not necessarily a change in strategy as much as wanting to make sure that in our part of the world, especially in Egypt, more companies are built to last, if you will.

P.F: Todd, I think a lot of us have become amateur bankers over the past few years as we look at the dynamics of your industry. But that's often been from a risk perspective. 

Where are we from an opportunity perspective? What makes you excited about '26 as a banker specifically?

T.W: Bankers don't get excited, Patrick. So that's probably an overstatement. 

Where do we see the opportunity? I think it's very much as the two ministers [Rania El Mashat & Hassan El Khatib] here today talked about; there’s interest in Egypt. We see that. I see that. 

I was in China a couple of weeks ago. I met with a number of big Chinese corporates. They're looking at opportunity here. They are Chinese companies that are only in China but are now looking for an outreach, their next post out. And they see — as the ministers [were] saying — the low cost of entry in many ways. The infrastructure is here. It's an attractive time. And just the pure location, [they see] that they can export elsewhere.

I see that [with] Turkey; we see many textile companies. The minister mentioned that. We see… certainly the UK; we had a team from the UK here a few weeks ago with the EBCC — we had 20 British corporates in, looking at Egypt. Egypt's getting a lot of attention. Next week we've got a team from HSBC China also coming just to look at the Suez Economic Zone, go meet with them, go meet with GAFI, and to bring corporates here. It's the right time.

P.F: These are real corporates that are writing small to mid-size tickets by global standards?

T.W: Yeah. So, Patrick, it was interesting being back. I went from Shanghai to Ningbo. I met with two corporates there. And I lived in China for 5 years, so I should have known better, but I get to Ningbo — it is huge. It is not a small city. It is a huge, brand-new, out-of-the-box city. I met with a textile manufacturer. They had their own 24-story office tower that they just built.

Talking about robotics... the tea lady. So in China, if you're there and you’re working, a tea lady comes with a little cart every afternoon; [she] brings tea and snacks. It's now a tea robot. So I think robots are taking over the world. So the tea robot came by. 

But this is a very large Chinese textile manufacturer. They sell to Nike, Adidas and a number of big Chinese brands, and they're looking for their first foray out, and this is where they're looking. So they’re a huge, very professionally run, 24-story office tower. They own the whole thing, they fill the whole thing, and they're coming here — a $150 million factory.

So that's substantial. It’s those small pieces. It was interesting to talk about Ras El Hekma — huge. But it's those long-term foreign direct investments that really move the dial.

P.F: We're going to switch now to people. I'm going to ask each one of you to give me a number expressed in a percentage term, whether it is at your own institution or maybe at your portfolio level. What do you think the average raise increment that you're going to have to give in 2026 looks like? 

During this performance evaluation season, you're going to have to put a number on your salary budget. “It’s going to go up by X%”. Setting aside new hires or creative restructuring from AI, what’s that number? We've been told, all of us, for three or four years now that 25% is not enough. 30% is not enough. “Ahhh I am gonna quit!” Okay, well. 

Is this the year it stops? Is this the year it comes back down to the stratosphere? Or do we have to put another push in to help middle-class people regain purchasing power? What's the number? Ahmed, you go first.

A.B: This is a tough one. First of all, we want to differentiate two things. From one side, you're raising salaries to keep up with inflation, so people can try to keep up with the standard of living. This is one thing and this is a duty we have. And on the other hand, you have the brain drain which you're trying to fight. The brain drain in our industry is not just from neighboring countries — people going to the GCC, to Libya, to Iraq… — but we also have local brain drain, from people like Laila: VCs and startups and the fintechs. It's a much more appealing place to work for some Gen Zers.

So let's differentiate the two increases. From an inflation perspective, it’s definitely much less than previous years. You could say that prices were more or less stable this year. So next year we don't have this moral duty to increase as much as we did before. But at the same time, we have the competitive duty. We have to retain the top talent, so this is done partially by raising salaries and with monetary compensation, and through other ways as well. You need to attract talent in other ways and not just by increasing their salaries. 

P.F: What are the other ways? If you folks will pardon the minor digression, what are the other ways? 

A.B: Top talent, if you chase them with money, money will keep chasing them and they'll leave anyway. So you have to find ways to keep them engaged, to keep them part of the business. Again, we're trying to take this from the rulebook of VCs and startups. Get people more involved across the business. If someone who you really value as an engineer, you want to keep them engaged, you should involve them with other parts of the business — with planning, finance, sales, marketing initiatives. This is how you keep the people in the organization involved and keep them loyal. Because if it's just money, you can't compete.

P.F: Laila, what about you?

L.H: Patrick, you're putting me in a very tight spot. I have most of my Algebra team here.

P.F: And Algebra portfolio companies in the audience. 

L.W: No, but I agree with Ahmed that it's definitely going to be much less — in terms of inflation’s reach, definitely much less than last year. I think for Algebra, we are a very small team, we are like 12 people, so we want to make sure our team is incentivized and we benchmark that across, whether local or international. I think our portfolios, [it] is usually them saying, but definitely for inflation, much less. 

P.F: For both of you, are we still talking double digits?

A.B: Very low double digits.

P.F: Okay, very low double digits. Todd?

T.W: I've got one of my board members here and a number of my team as well. Our turnover is quite low. Our annual turnover is much less than 5%, although I recognize that we staff a good chunk of the corporate treasury departments in other banks. So, we're a training ground. 

12% is what we're budgeting for.

P.F: All right, folks. Low double digits. You got your guidance for the year. 

Todd, you said something recently that kind of struck me as unusual. You've noticed a downward trend in the pace of out-migration, that things have slowed a little bit. And you're not the only one who said that. I think Dasha said that in my office after we did our podcast. The pace of hiring in the Gulf seems to be slowing down a little bit. Has that held since we last talked or was it a blip?

T.W: No, certainly. I think when you really had the currency drop and the foreign currency availability that we saw, I saw a number of people start to identify that they wanted to go elsewhere, right? So to UAE, to Saudi and so on. And certainly, in the last year and a half, that has slowed considerably. We see people wanting to either return or that request to move is gone.

And I thought the previous panel [Where (and how) will we live (and work) in 2035], the discussion about the number of Egyptians that want to come back is true. You know, I mentor a company that is looking to do tokenization of emerging market debt. Both founders are brilliant; they're Egyptian but living in the US. And one certainly is wanting to come back here because of the quality of life and the culture, and want his kids to grow up here in Egypt. So, I think there's a lot to be said for the quality of life, and the Egyptian culture seems quite strong to me and it’s bringing people back.

P.F: Laila, you are in an industry, and your portfolio company is certainly operating in industries, where remote work is super attractive. Where remote work enables me to chase after dollarized salaries. What types of things are you seeing that work to keep the team intact? We heard from Ahmed that it is exposure across different functions, what about on planet startup?  

L.H: I completely agree, actually, Ahmed. I think something worth mentioning is that because of the remote setup, we're hearing a lot of brain drain happening, but actually, we're seeing a lot of reverse brain drain. Similar to what you were saying, in the sense that we've seen people come back at very counterintuitive times, even when the dollar was quite high. One of our co-founders actually, in our portfolio company, moved back from San Francisco to Egypt at those times. 

People are incentivized differently. So it's not necessarily just money, but believing in the vision, getting a sense of ownership of the project they're building, and honestly believing in the founder and how much they can actually grow this business. 

P.F: If you can build a great company, you'll attract the talent? Okay. 

Speaking of people still, what qualities are you guys hiring for right now in the context of this AI shift that we're all losing so much sleep over? Has it changed how you approach hiring at any level?

A.B: Definitely. In the middle to top management positions, it needs a lot of flexibility. Because of all the shifting landscape — whether in AI, whether in the industry itself, whether in the market — it needs a lot of flexibility. It needs to be very fast-paced, as was said in the previous panel. 

Even our industry of real estate needs to be built to be flexible because you can never be faster than the trends; you will always have to react to the trends. So, if you're building something that's not flexible, not changeable, you're stuck. 

This goes back to the team as well. The team has to be ready to change and ready to adapt. If you want as a business and as a product to be able to be flexible and adapt to change, so does your team. So this is one of the main qualities you have to look for. 

P.F: Laila, what about you? 

L.H: What do we look for in founders you mean?

P.F: What you’re looking for going forward, it could be in a founder, it could be someone to add to the core team in Algebra. Are you looking for a different skillset these days? Or is it more the same?

L.H: I think founders generally need to have the grit and be able to adapt. And if we're looking at AI as kind of a horizontal enabler, then the right founders are the ones that are going to start companies that are AI-native as opposed to AI-enabled. It doesn't necessarily change how we're looking at the companies themselves, because the fundamental problems still exist, right? We're still talking about financial inclusion, service inclusion, education, and all those things. It's just how you go about it given this underlying shift of AI.

P.F: Todd, what about you?

T.W: I'm going to tell you I learned something when I was back in Asia. And I thought of it listening to the panels and discussing AI. Has anyone heard of Labubu? Do you guys know what Labubu is?

P.F: Oh my God.

T.W: I had no idea. So, I'm sitting in taxis in Hong Kong. The taxi drivers all have Labubu everywhere. And I thought, I need to figure out what this Labubu thing is. 

I went to Pop Mart, which is the Labubu store. I lined up to get in. And if you go into Pop Mart, the Pop Mart experience is unbelievable, right? They're there to sell you everything. And there's real fans. You do have to line up to get in. I got the last two Labubus in the store. So, if anybody wants to bid on a Labubu…

P.F: Todd has Labubus, you’ll be very popular with your kids. 

L.H: But why did you buy them? I had to get them for my daughters. Why did you have to buy the Labubus? 

T.W: I bought the Labubus in Hong Kong. I stood in line for twenty minutes. I think because I am not the typical Labubu buyer, they let me to the front of the line faster. But what it taught me is that what still matters is the connection to people. Right? It’s still the connection. 

So, AI will eventually take our transaction monitoring, eventually it'll take up some of our credit assessment, but we still have clients. And what you sell is the client experience because otherwise, it's all just generic. So my AI might be faster than somebody else’s AI, but it’s the experience. And Labubu… the founder — I had to look all this up — in Beijing, 15 years ago he was 22, and now he's worth $21 billion. He is one of the richest under 40 in China. 

So that connection matters, and we need to hire for the connection and that ability to recognize the opportunities.

P.F: I don't want to belabor the point with AI, but I have to ask you Laila, how has it impacted, if at all, your investment decisions going forward? And I’m specifically curious, are there certain sectors that you're sort of taking a pass on, or at least pausing on for a little bit, before re-evaluating given what’s happening right now? 

L.H: So AI is not just a vertical among businesses; it's really how we underwrite the investments. It has impacted our investment decision significantly. We had companies that we were looking at in January and we thought they were great. Now they're kind of uninvestable at this point. So it's really quite adaptive and quite fast.

How we look at businesses for AI... we try to think of the moat. Or what are they doing? It's not just about consuming it, but also creating it. And in order for it to win in our part of the world, we need to create a local moat for it. So, it's not just the product itself, but what are you feeding this technology to make you win? Whether it is your own proprietary network, whether it is your own set of data that you're feeding it.

So, for example, we have a company in Morocco called DeepEcho. They do prenatal ultrasound diagnostics. And they recently got the FDA approval in the US simply because they could access a wide range of scans all over the world. As opposed to a product that does very similar things but they’re unable to give it this data to create it much smarter. So, it's being able to create those moats that will make you win in our part of the world.

P.F: Is there a sector that’s off limits for you right now? 

L.H: I wouldn’t say off limits but I would say that they need to be able to answer the question of how being AI-native will help them evolve. 

P.F: Ahmed, you've gone to 800 employees from 30 while institutionalizing. You've got a third generation of the family about to join the business. What's been the most difficult thing about separating or preparing to separate management from governance?

A.B: This is one of the hardest things in the life cycle of the business and this is one of the hardest things of getting the business to last. It's very tough to transition from the entrepreneurial beginnings of the business, with founders who have a very fast-paced, very agile day-to-day work environment, to getting into a bigger institution with governance, with structures, policies, and procedures in place. It is tough. 

First of all, you have to accept that you will not be as agile. You have to get this out of the way. You have to accept it. You are not going to be as agile as you were. It's not going to be your decision all the time. It’s not gonna be done the way you want it all the time. But you have to accept it. 

But once you accept that, you can begin moving on to the next step. And the next step is to try to institutionalize the entrepreneurial DNA. It will never be the same as it was, but you have to find ways to keep the spirit, or keep that DNA. 

I always use the analogy of a big cruise ship vs. a small speedboat. If you're driving a small speedboat, you can turn it whenever you want. You can go very fast, you can reach your destination in minutes. For this same journey with a big cruise ship, it takes miles just to turn. It takes 20 people just to untie the ropes. It takes 20 people in the engine room to get it moving, et cetera. 

The key with that, what we are trying to do after lots of trial and errors, is to make sure that this big institutional cruise ship is there with all its weight and procedures, and have satellite businesses — you can call them subsidiaries, or you can call them departments, you can call them project groups — that maintain this entrepreneurial DNA and can be the little speedboats that go off the cruise ship and get to the destination quickly. While using some of the resources of the big ship, without putting the big ship at risk. So this is the key to finding this balance. I am not saying we were able to do this a hundred percent, but this is the idea we are working on. Otherwise it’ll be too big to sail or you’ll have to stay small. So it’s about trying to find the balance in between.

P.F: I have revealed myself to be a bad interviewer. I wanted all of you guys to give me your USD rate for next year. Todd says 48.5. Ahmed, what say you?

A.B: USD? A year from now? 

P.F: A year from now. What are you using for your budget next year? What’s your average rate for ‘26? What have you got penciled in?  

A.B: 55. 

P.F: 55? 

A.B: I hope so.

P.F: Okay, okay. Laila, what about you?

L.H: No, I think it's around the 48 range.

P.F: 48, okay. Last question to everybody. We’ll start with you Todd. There's a whole lot of optimism about next year. We've been feeling it for a while at Enterprise. The people we talk to in this room day in and day out are feeling it. The ministers really genuinely seem to feel it. I think that carried through the stage throughout the course of the day. 

What’s keeping you awake about 2026? If we are all optimistic, great. But what's the one thing that keeps you awake about 2026? 

T.W: You know, it's that unexpected, right? Because I am hugely optimistic and I see it in the market. We were in the UK with the Central Bank, and the minister of finance and the minister of investment. The response is great, [there’s] interest from China. But it’s the unexpected. It’s that unpredictability. 

P.F: Is it domestic unpredictability? Is it regional?  

T.W: No, no it's not here, because it seems like we are on a stable path. 

P.F: We seem to be. 

T.W: It’s the external shocks that we can't anticipate, right? And as I was saying, we know the US is going to be unstable for the next three and a half years, but what else will happen? 

P.F: Yeah. Will the genocide next door stop. Laila, what keeps you awake?

L.H: If I'm being honest, I would say it's the liquidity gap. From our part of the ecosystem, if we don't see more exits, consolidations, et cetera, there won't be capital recycling and LP interest is going to fade. I think it's very important in the next period to focus on creating those avenues of consolidation. So, creating an ecosystem for a certain winner to be able to scale, but also building bridges in other countries.

I think for the past 10 years we've been talking about Saudi and how Saudi is the next big thing. More and more we're starting to see more structurally similar markets that actually make more sense for those to merge. So one of the things within Algebra that we're doing is we went to Nigeria. Nigeria is similar to Egypt but on steroids, right? So, they're probably facing the same issues and creating their own playbook. If you can create more of those conversations in other markets and create this partnership with other VCs there, I think this is really what gives us a chance to actually win and create this as a viable asset class in Egypt.

P.F: Ahmed, what about you? What keeps you awake?

A.B: As I said, I think 2026 will be a tough year, but it's going to be the beginning of the next upward cycle. So, I'm optimistic about that. 

What keeps me awake is I hope we've learned our lesson. I hope we don't repeat the same mistakes again. As I said, when you asked me about the US dollar, I said 55. I hope it's 55 because a year from now, if it's where it is today, then we haven't learned our lesson. 

As long as we're running the balance of payments deficit, it has to devalue a bit every year so we don't go through the same extreme cycle again and again and again. There's a huge opportunity. There's lots of lessons learned. The foundations are in place. The structural reforms we talked about today have all kicked in, or are kicking in. 

So if we've really learned the lessons and let things just flow the way they should naturally, I think we're good to go. Otherwise, we're repeating the same mistake for the third time.