Inside the NBFI firestorm with Hazem Moussa

Hazem Moussa: That is the whole point of a market. 

People are creative. And you don't want to push that creativity in the wrong direction. You want to push it in the right direction. 

But there's one concept that you have to accept, which is that some people will fail, and some people will succeed. And that is the whole point of a market.

———

Patrick FitzPatrick: Hey everyone. My guest today is Hazem Moussa. 

The first time Hazem came on the show, it was just a few short weeks before Covid and his company had just gone public. He was in the thick of it, leading and building Contact Financial in the public eye. And a lot has changed since then. 

In April of this year, Hazem walked out the door at Contact for the last time. A 25-year run as co-founder, then CEO, then chairman. And soon after we recorded this interview, he called to tell me that he had just sold his last shares in the company, and with that, he was gone. 

If you've ever bought a car in Egypt on installments, you have in a way touched something that Hazem built. 

Back in 2001, when consumer finance wasn't even an industry here, when the word fintech hadn't been invented, three guys with a business plan went out to raise money for an idea that almost nobody understood. That became Contact, the spark that gave birth to our booming non-bank financial services industry.

Hazem is a builder by nature, and he just walked away from the thing that he's best known for having created.

I wanted to have him back on the show to talk through four conversations, none of them really simple. First, how do you actually leave the thing that you built? Second, is there a bubble in the non-bank financial services industry? What happens when the thing that you built becomes bigger, messier, and maybe riskier than the thing that you intended to build?

Third, I wanted to ask him something a bit more human. Hazem has what we call "fuck you" money. So why is he setting out to build something again? 

And finally — because I can't help myself — we talk about AI and how it's shaping his thoughts on what he's going to build next. 

Hazem said he didn't want to throw any bombs today, but I want to, at least a little.

And that's the conversation. 

Hazem, welcome back to Making It.

Hazem Moussa: Thank you so much, Patrick.

Patrick FitzPatrick: Before we talk about why you left, I want you to take readers who haven't listened to the last episode or who don't know you personally, to take us back in time to where it started. 

It's 2001, you're an investment banker, and you decide to raise money for a kind of company that doesn't even exist yet. 

Why consumer finance and why cars?

Hazem Moussa: Okay, so go back three years earlier than that. So go back to 1998 when we started fundraising for this idea that we had, myself and my two partners. We all worked together at HSBC at the time. We came up with the idea through a series of discussions that started with trying to raise debt for companies. Then it became securitization, and then we realized that infrastructure doesn't exist. 

So, companies were not very organized when it comes to their receivables and their credit sales. In different forms, we're not talking just about retail credit. We were talking about different kinds of receivables. And then our area of focus became retail receivables.

So we were looking at the spectrum and cars just made sense as the natural beginning. The market already existed. Consumer finance or installment sales have existed in this market for generations and in the world. It's taken on different names. 

Consumer finance as a term maybe came a bit later. But from time immemorial, people have been selling stuff on installments, which is coincidentally one of the main arguments or points we made when we were discussing creating consumer finance law and lobbying for it with the government: the market exists. We're not creating a new market. We're trying to make it more formal. You're trying to make it more transparent. You're trying to make it in a way that you can regulate it. So it was a fairly clear path on that front.

The more difficult part was raising money, initially through equity, which back then was not a thing. You didn't go around raising money in rounds. Back then, you had to raise everything you needed for your business plan in one shot, in a very difficult environment. '98, '99, 2000… it was tough days. 

But, alhamdulellah we succeeded. It took us a while. We tried different forms and formats, from private equity to investment funds to private individuals to car dealers. Eventually, we landed on a couple of banks and some private investors and took it from there. 

But it took three years until we got to that point. So that's when the 25 years start.

Patrick FitzPatrick: After the first three years of hard work.

Hazem Moussa: After the first three years.

Patrick FitzPatrick: Do you remember what it was like the day you finally left the bank and you knew this was what you were doing full-time?

Hazem Moussa: Yes, I remember very clearly, actually.

Patrick FitzPatrick: Yeah? Tell me.

Hazem Moussa: Well, there wasn't a huge gap. So we were fundraising for this idea concurrently with what we were doing. And it was very exciting at the time to be able to do that switch, to start something from scratch, which is what I wanted to do from the beginning. My partners were a little bit more senior, but not too far away. 

I was 25 at the time, so I didn't have to wait that long to jump into setting up the business.

Patrick FitzPatrick: Where did that spark come from inside you? Why did you want to build a business? 

I mean, this is a time when engineers and business grads were building out the finance industry, or they were going to work for multinationals, right? In cement, in consumer goods, and whatever.

Hazem Moussa: It wasn't very common then.

Patrick FitzPatrick: Yeah. Not a lot of people set out to build a business. Why did you want to build a business?

Hazem Moussa: That's a good question. I've always wanted to do that from when I was in school and college, that was on my mind. 

I think part of it relates to Egypt. Opportunities here are plenty. And I like to… I wasn't premeditated, but I like to build things. And so putting those together, I think — maybe if there was a different market it would have been different — but I think in Egypt, there's just so much to do and so many potential opportunities that exist. 

And I think that's still the case today, even though the market has changed substantially for the better. It wasn't so common 20, 25 years ago to hear of things that are successful that you've never even came across.

Patrick FitzPatrick: So fast forward 25 years to April 2026. Twenty five years, and then one day, metaphorically at least, you walk out the door for the last time. 

What is Contact on the day that you stepped down as chairman?

Hazem Moussa: Contact became a very diversified group of financial services. We started with car finance within the consumer finance space. We added mortgages a few years later. Of course, mortgages never became what I'm still hoping that it will become in the market, because I think there's a lot of potential there. [We] added non-asset-backed consumer finance, so revolving credit and personal loan-style products a few years later. We also added some commercial lending in the form of leasing and then later factoring.

We started selling insurance products. Later on, we became a broker selling more insurance products, not just car insurance to our clients. And that's when we eventually set up the insurance companies in 2018. 

We applied for a license and started operations in 2019. Also, some various ventures in technology. 

As you were saying at the beginning, we started long before the word fintech was coined. But of course, like any financial service company, it's based on technology. And so the core of everything we had built was around technology and systems that we had built in-house to run the loan management operation, to run the finance side, to run the client database and everything else. But then we also set up ContactCars.com, which was originally a marketing site for Contact.

Patrick FitzPatrick: Find me an Egyptian guy of a certain age who doesn't know Contact.com, man. Everyone knows Contact.

Hazem Moussa: So ContactCars was set up as a marketing tool, a marketplace that we could attach our name to as a market penetration strategy. It took a life of its own very quickly and became one of the largest sites in Egypt just a few years later. This is back in 2002 when set up.

We're talking about 2003, 2004, 2005 when it became larger than the car market itself, in terms of the number of people that go on the site. And eventually the app crossing a million — a very long time ago — monthly users. The car market doesn't reach anywhere near these numbers. So it's quite interesting that that happened. 

It was a great venture, but also became a bit of a problem. Right? As I was saying, we were planning on building a financial services group all along. It was a good problem to have, trying to say it's not just about cars. 

But, hey, it worked. It gave us huge reach. And so that was a big part of the group as well. And so, there are some bits and pieces there that are not strictly about financial services, but they kind of feed into the whole. And so that's the company it became. 

And the target all along, well, my target all along was to be able to reach a point when I could leave. I was surprised to find that it's not very common that people think like that. I guess people just wait and see, when eventually I need to leave, or [when] the entrepreneur or the founder or whatever needs to leave, things will sort themselves out somehow.

Patrick FitzPatrick: And a lot of us sort of think that we are absolutely essential to every little thing, right?

Hazem Moussa: And you might be, but time is not on everyone's side, right? So eventually…

Patrick FitzPatrick: If you try to stay forever, you will leave feet first on a gurney at one point in time, right?

Hazem Moussa: I mean, it depends on the industry you're in. Maybe not industry, but kind of the segment you’re in, or the world you’re in. 

But, you don't necessarily put a plan and it ends up working out the way you think. But in the end, I think I did achieve what I set out to achieve, which was to be able to have the company run by other people going forward. Not the founders, not me. And be able to continue to grow and do well. And I think we built good foundations for that. 

Things didn't exactly pan out the way you plan it, but the result is the same. 

Of course, reaching that point is tricky because you have your own imagination of how that's exactly going to pan out, and then there's reality. So it can get quite emotional.

Patrick FitzPatrick: What was the most difficult part about letting go for you?

Hazem Moussa: It's not about the letting go in and of itself. It's just the idea that you're moving on in a… It's contradictory what I'm about to say, which is moving on not exactly the way you planned it. Or not planned it, sorry. 

You're trying to manage it, but at the same time, that contradicts the whole point of exiting, right? So trying to manage how that's going to happen, how the transition is going to happen and all of that. 

Patrick FitzPatrick: But the moment you give up control, you give up a measure of control over the process.

Hazem Moussa: And I started doing that a long time ago. I'm not sure everybody understood letting go a little bit over time. Maybe people looked at it more as switching off or something, which is just the opposite. It takes a lot of willpower and discipline for someone that is a micromanager at heart. 

It maybe looked like you don't care, but it's far from that. It's actually deliberate. Trying to let things develop and grow in a way that — even if you don't necessarily approve or like — just let it happen. Focus on the big picture.

Patrick FitzPatrick: How do you do that, man? I mean, you've called yourself a micromanager. In our last interview, you called yourself a control freak. 

How does a micromanager teach himself to let go and let people make those mistakes, or just do things in a way that you wouldn't have done it?

Hazem Moussa: Well, it's a struggle. It's not easy. But you tend to try to focus on the big picture. I guess that's the only thing you can do. And keep reminding yourself of that. And not reacting to impulse, I guess.

Patrick FitzPatrick: Did it get easier over time, or... No, not to the last minute, man.

Hazem Moussa: No, no, it does not get easier over time. It doesn't feel good necessarily, but...

Patrick FitzPatrick: How did it feel on the last day?

Hazem Moussa: Well, given that it was a struggle to get to that point, when I actually got to that point, it felt good.

Patrick FitzPatrick: Was it liberating? 

Hazem Moussa: Yeah, very much so.

Patrick FitzPatrick: Contact's net income fell by about half last year according to the most recent earnings release. And they called it a rebuilding year where, among other things, they invested in AI pretty heavily. They talked that up. 

How does that feel? To see net income come down 50%? To see it described as a rebuilding year or a transition year?

Hazem Moussa: It's terminology. I mean, people can choose the terminology, but I think there are a number of circumstances in this transition. In the last year. 

There was a bit of a change of strategy within that, and a big change in the leadership of the company. Rebuilding, or let's say, preparing for the next phase… I prefer to use that terminology because it's rebuilding. You’re really...

Patrick FitzPatrick: You’re not tearing it back down to the studs.

Hazem Moussa: … reinvesting in the next phase. So I think the next phase is very promising, whether that's in finance or insurance. Insurance is a younger industry, so there's a lot of room there on both sides. 

And the results of the last year I think are just short-term considerations, rather than where it's headed. And so that's my view. And my hope, of course.

Patrick FitzPatrick: Contact said that AI and digital infrastructure had helped them cut by about half the credit decision cycle. And that's cool. But my CTO likes to say that AI is an accelerant. It accelerates time to great results for capable people and time to stupidity for the less competent. 

How do you know which one it is? How do you know the most beneficial use of AI in a business like Contact?

Hazem Moussa: Well, you have to ask yourself that question all the time. How do you know? Ask yourself that while you're doing it. Because there's no sure way. It's more of the why are you doing this? What are you expecting out of it?

Patrick FitzPatrick: Is it a cost control tool? Is it a revenue growth tool?

Hazem Moussa: In Contact's case, I think they were talking about credit extension, so the approval cycle. Which is exactly the question you're asking on steroids. Because it's not just a matter of: can I make it faster? You're actually saying, am I making the right decisions?

But AI in general, in a business like Contact and most businesses obviously, there's so much value it can add, like any business. In terms of just efficiency and productivity on the one hand, and customer relations and everything related to the client on the other hand, or another hand. Because maybe there's a third hand in this case, which is credit. And this is the big question. 

Can AI automate credit decision-making or not? 

I think the jury's still out on that. I think as an accelerant and as a tool to help you get to the decision, there's a lot of value there. Of course, it's dependent on how much access you have to underlying data. We in Egypt are unfortunately far behind when it comes to that particular area. It's improved, but still. 

So when you say in Egypt that you want to focus or use AI and alternative data to lend, it's not the same as saying that sentence in many other markets. It sounds the same, but it's very different. 

In other markets, you have more data: government data, public data, things like that. Here, you don't. So your reliance on alternative data is significantly higher.

Patrick FitzPatrick: What does alternative data mean?

Hazem Moussa: Your natural credit… data that you use to analyze credit tends to be things. Related to either the financial side — so your income, your assets, your financial status or financial condition — and then your willingness to pay. 

So the willingness comes from two sides. One is your own side. So your reputation, your habits. And then the deterrence on the other side, which is consequences for non-payment, which will then push you to pay. So that's on the willingness to pay side. 

On both sides there are direct data sources, and then there's proxies or indirect data sources, which you can call alternative. 

Direct, which is your payslip. It tells me exactly how much you're making. But indirect or a proxy would be your spending habits, where you send your kids to school, your assets, where you live, the kind of phone you carry, things like that. 

And then you can take it a step further, which is: who you bank with, how much your monthly spend is on your phone. Assuming again the data that you're actually capturing is accurate, or has a high degree of accuracy, then you can start using that in that context.

And on the other side, there are proxies for willingness to pay. You know, if you have had a long relationship as a client for this company or that business or something, then that says that obviously they had no reason to end or break that relationship. And so on. So there’s that. 

Some of these you can extrapolate from reports like I-Score, which has improved a lot over the last few years.

Patrick FitzPatrick: That’s the national credit bureau.

Hazem Moussa: Yes. Which didn't exist 25 years ago at all. So you get that kind of data. 

Then the second half of the willingness to pay, as I was saying, is deterrence. 

Deterrence comes from your contract, the legal environment, [and] consequences of that in the credit bureau. Not paying, therefore everybody else knows that you didn't pay this lender. These are consequences that will then affect your life, which will push you to pay on time. 

So, for example, the consequences of not paying your car loan are different from the consequences of not paying for a credit card, or, outside of banks, for a buy-now-pay-later credit line. The consequences are very different. 

So you're probably more likely to be pushed to repay your car than you will be for your general spending loan, like buy-now-pay-later credit.

Patrick FitzPatrick: Absolutely.

Okay, we’re going to take a short break. And when we come back — Hazem didn’t just work in the industry, he launched it here. 

He even helped write the law that governs it. So I’m going to ask the man who built Egyptian consumer finance whether the whole thing has become a bubble.

———

Patrick FitzPatrick: So obviously I think listeners expect us to talk about, is there a bubble in the NBFI industry? It's sort of the topic of the day as we're recording this, maybe two weeks after CIB’s CEO Hisham Ezz El-Arab, kicked over a little bit of an anthill. 

But before we talk about whether there is a bubble, what do you think we're talking about when we as a community ask whether there's a bubble? 

What is a bubble, in the case?

Hazem Moussa: So, the word has different meanings, or different people mean different things by it. 

So there's a bubble in any segment when it comes to, say, valuation. Are people expecting too much from this sector? Or is this sector overblown, or are there too many players? That's one kind of bubble. 

Of course, when you're talking about this segment in particular, the much more important meaning for bubble would be a credit bubble, and whether there is overexposure: too much money being lent, [and] not enough quality credit underlying those loans, and therefore...

Patrick FitzPatrick: Too much money to people who really shouldn't have been given that money.

Hazem Moussa: And that has ripple effects, right? 

One, there’s a direct effect on the lenders and the lenders to those lenders. So in the ecosystem of finance, most of the people delivering actual credit are also funded by banks or by the banking system, or through securitization by the market at large. So everybody is borrowing and lending, right? Everybody's along the chain of the financing system. So high defaults or delinquencies, late payments, can have an impact up that chain. 

One of the reasons there is a bubble is there are too many people investing in a sector that doesn't have that much to give necessarily. And so that has an impact on equity returns and therefore repercussions. 

So it's tricky to talk about a bubble in both those sides, because the market is not big enough. 

But at the same time, has it been moving in the right direction and is it structured well? I think there are question marks on that.

Patrick FitzPatrick: What does structured well mean and what does the right direction mean?

Hazem Moussa: Is there a lot of loose credit happening and are people, market participants, pushing for growth over quality? That of course is going on, to some extent. 

There's also that rush to set up business and everybody wanting to get into consumer finance.

Patrick FitzPatrick: Talabat wants to "install my sushi." It's become a noun. On what planet.

Hazem Moussa: That is the kind of thing that would be excessive in my view. And when you look at it, if you took that offer, what does that say about the client side? You're financing something that you really shouldn't really be financing.

Financing expenses is a tricky game, because a lot of people are doing it. It's unhealthy when it becomes a large enough component of the overall market. You should be lending on durable goods, assets…

Patrick FitzPatrick: Yeah, there's a difference between my car or even a laptop I might use for work if I'm a developer or a graphic designer…

Hazem Moussa: Even if there's still a big difference in deterrence between the car versus the laptop, which I am not going to end up taking it from you because, how am I going to even find it?

But still, your mental and your psychological investment in that asset is very different than when it's a lunch, or something that's gone. Or even worse, a holiday that you're bitter that you still have to pay for six months later, or more. 

So these are considerations that a customer should have, but [ones] the lender first and foremost should be very attentive to. Because if your portfolio ends up in one direction or another, it makes a big difference over time.

It's very hard to isolate factors from each other. You know the phrase that we always like to use when you're analyzing is "all else being equal." All else is never equal in finance, especially in consumer finance. 

So, what's happening on the macro level, what's happening with inflation, what's happening with devaluation. All these things play a role in judging whether you lent correctly, or you had the right portfolio or not. You could have a very bad mix and a very bad quality portfolio, but you can be saved by inflation.  

Inflation can also hurt you, in the sense that some people will have less disposable income and therefore [will] be unable to pay. But on the other hand, the installment that they had to pay that was a EGP1,000 became a lot cheaper — it's still EGP1,000 when a lot of inflation happened. 

So there are impacts on both sides. It depends on your customer base and other factors that you might not be able to see. Which coincidentally is one area where AI can really help. And people are well aware of that and trying to really go behind the obvious numbers, in terms of the composition of your loan portfolio into further dynamics: What is affecting consumer behavior, what can affect consumer behavior. Because it's not straightforward.

It's not so easy to kind of sum it up in terms of, “we're in a bubble, we're not, there are risks or not.” But what you can say is that there's a lot of work that needs to be done going forward to make sure that the sector is sustainable and no big problems happen.

And I think, what Hisham said a couple of weeks ago, or three weeks ago...

Patrick FitzPatrick: One little spark in the NBFI industry, could have knock-on effects for the wider economy.

Hazem Moussa: He's absolutely correct. There is concern. But I think what needs to happen is to turn that concern into genuine good planning and good…. 

It's all about, "Oh, is something wrong? Something is going to blow up imminently." Even if that were the case. If I were on the regulator side, I would look at it very differently, which is: how do we plan for a market that can a) allow for potentially things that can grow? We can't control everything. And if you control everything, then you start going to the lowest common denominator and things start going wrong. 

So you want to enable the market to grow, but at the same time you don't want to micromanage, on the other hand. 

Patrick FitzPatrick: Your job is not to prevent absolute failure.

Hazem Moussa: Well, yes, your job is to protect the market, and protect participants.

Patrick FitzPatrick: Which means some people will have to go out of business. A cowboy who writes a whole book of bad loans, should that person have access to the securitization system?

Hazem Moussa: Listen, we run the risk — and this happens in other segments as well — of going from no regulation to over-regulation in one shot. 

When we started lobbying and pushing for the consumer finance law to happen, the rationale was simple: the market is there anyway, better to regulate it so that you have influence over it in the future and be able to steer it in the right direction, which is productive for the economy, and helping the economy grow. As a regulator and government, you want it to play an important role going forward. 

For that to happen, you need to have a good structure. By saying a good structure, meaning a market that encourages participants, encourages innovation, encourages people to come, encourages capital to be invested in that market.

But at the same time, you can't micromanage a market. That's kind of an oxymoron in and of itself. You have to let the market play out and try to steer things in the right direction.

I think what happened was after the law came out, which I thought was really well-structured in that it gave the regulator a lot of room to maneuver, without being too specific on the details at the beginning… But I think what has happened more recently is — as some problems started to emerge in some lenders and some securitization transactions, that had cut some corners or some bad credit that existed in the market — the regulator perhaps started responding to the other extreme. Which is starting to say, "Show me all the details of everyone you're lending to, show me your entire portfolio, show me every..."

Patrick FitzPatrick: An Excel sheet with 2,000 rows.

Hazem Moussa: Every single constituent of the portfolio that you're planning to fund. Not just from securitization, from banks, from whoever. Now that is dangerous, because then the regulator can easily just become part of the decision of who you're lending to. And you don't want that. As a regulator you don't want to be involved in...

Patrick FitzPatrick: You don't want to say that I gave a stamp of approval to this issuance.

Hazem Moussa: Or that I'm steering who you're lending to or what kind of people you're lending to or not. Because the rules will never be detailed enough and dynamic enough that they actually bring out the right quality. They'll be like, "Well, your income-to-debt has to be X." So how do you prove that? Is it a matter of just producing a piece of paper that says that? 

It invites gaming the system, and you will never be able as a regulator to really get to the bottom of that. You're constantly going to be in a whack-a-mole kind of situation, constantly trying to fix something, and they're going to try to game it somewhere else.

That is the whole point of a market. People are creative. And you don't want to push that creativity in the wrong direction. You want to push it in the right direction. There's one concept that you have to accept, which is that some people will fail and some people will succeed, and that is the whole point of a market. 

If you look at the debt market, for example, there's been this general trend of everything has to be above a certain quality to be traded. If a bond comes into trouble, or if any borrower comes into trouble, it's "No, we have to fix that.” We can't accept that things will be delinquent or God forbid defaults because we're worried about the impact on the system. 

The whole system will not survive unless there's winners and losers. Otherwise, it's not a market. Because if you try to over-ensure that everything stays a certain quality, you're just papering over the cracks and you're risking a much bigger problem later on. Or, alternatively, you're risking the market not growing and not developing.

Patrick FitzPatrick: Where do you see the risk? Is it more in consumer finance? Is it in factoring? Is it increasing? Is it everywhere?

Hazem Moussa: Well, the concept is the same everywhere, in terms of what can go wrong. 

Retail and consumer credit is the bigger market, right? It wasn't visible at all before because it was unregulated. That is naturally the biggest segment. And by extension, that's where more problems can happen. It also affects people directly rather than businesses. 

We don't have a mortgage market. That normally would be a much bigger component of what we would call consumer credit.

Patrick FitzPatrick: Just by virtue of the ticket size.

Hazem Moussa: Well, ticket size and also just by the size of the industry. The real estate stock in the country versus the stock of cars or other assets or electronics or whatever. No comparison. 

So if there were a thriving mortgage — or “a” mortgage market in the first place — it would also help dilute a lot of the importance of the non-asset-backed consumer credit. If there were a mortgage market, a lot of that equity, a lot of that investment would go more towards mortgages than funding expenses...

Patrick FitzPatrick: Less towards my sushi or my mobile phone.

Hazem Moussa: Exactly. Well, you can't put those in the same sentence, but... yea. 

So if I were looking at this, I would really focus on building out the mortgage market. Of course, that has much wider repercussions and things that need to be addressed to do what I'm just saying. It's not as simple as that.

Patrick FitzPatrick: I think we could spend an hour on the mortgage market easily. And we don't have that kind of time today, unfortunately. 

But in a minute, what is the obstacle to a mortgage market functioning in Egypt? It's obviously a really complicated problem, starting with the registry office and extending to interest rates and everything else in between. 

But if you could do one thing to create a mortgage market in Egypt, what would it be?

Hazem Moussa: Ban off-plan sales.

Patrick FitzPatrick: What's off-plan sales?

Hazem Moussa: So off-plan sales are where you're being sold the house or flat or whatever before it's built. And so effectively, they call it financing in installments and so on, but in reality, until that house is delivered, you as the customer are funding the developer. 

Now we're one of the few markets in the world where that is 90-plus percent of the market. Other than in the Gulf, it barely becomes more than a small percentage of the overall market and tends to focus on the high-end segment, for good reason. 

As you can see, even here, where is the money going? It's going more towards the higher segment, 

Patrick FitzPatrick: 100%. 

Hazem Moussa: So that would change things dramatically.

Patrick FitzPatrick: So if I'm one of the builders, where do I get the finance for that product?

Hazem Moussa: From your equity and from what is missing, which is construction finance. 

It's been replaced by banks financing those same receivables. They're not really receivables, but those promises to pay by contract, that customers are paying the developer to build their unit, and then refinanced through banks or advances covered by that flow. 

But the whole equation is prohibitive for an actual mortgage to exist. 

There's a very small portion of units that are sold ready. Very, very small. That's also why a lot of the money is not going to the middle market, where the real housing need is. And a host of other considerations.

Patrick FitzPatrick: Does that get solved in our lifetimes?

Hazem Moussa: It can be, if there's a will. It can be resolved in a short span of time. 

But the problem is that it affects other segments as well. So it affects land prices, it affects the way the whole cycle is built. And it's very entrenched. So, [it’s] very difficult. 

It would have to come as a matter of national policy. It cannot come through a market player because you would be at a huge disadvantage if you decide to do that as a developer yourself. 

Why would you need ten times the equity as the next guy, just because you're trying to discipline yourself? Nobody's going to do that. It doesn't make sense.

Patrick FitzPatrick: No.

After the break — the part I’m most curious about. Where does a man who could do literally anything next put his chips? 

And why is half his answer “AI,” and the other half “the things AI can’t touch”?

———

Patrick FitzPatrick: All right. Hazem, you have "fuck you" money. You do not need to work another day in your life if you don't want to. 

You got your boat. You got your health, alhamdulellah. You've got time. Touch wood. 

Why build anything, man?

Hazem Moussa: Building is exciting for me. That's what I find most interesting. 

I spent 25 years in Contact. Maybe the building part dwindled over time. I still kept building new stuff like the insurance companies, which was only six or seven years ago.

Patrick FitzPatrick: But it's never the same as it became a few years...

Hazem Moussa: Yeah, it became less about building and more about managing. So I'm working on a bunch of different things. Still early stage.

Patrick FitzPatrick: What are you looking for this time around?

Hazem Moussa: Well, I'm not looking for something specific. I'm kind of just seeing where... I'm definitely interested in focusing on things that I'm more passionate about.

Patrick FitzPatrick: Does that mean we're going to see a sailing venture?

Hazem Moussa: Well, there is a sailing venture. But I'm trying to keep it a bit on the fun side and hobby side, not just pure business, because otherwise it'll stop being fun. It can stop being fun.

Patrick FitzPatrick: It’s the dichotomy. You hear all the time, like, if you do something you love, you'll never work a day in your life. And then the flip side of that is, if your hobby becomes your job, you just ruined your great hobby.

Hazem Moussa: But actually sailing is something that I’ve been involved in for a number of years as a business. Sailing in terms of cruising, not the sport. The cruising side. That activity did not exist here, almost at all.

And so other than sailing, I'm actively working on a few things that also could have substantial impact where I can help local industry in a couple of sectors.

Patrick FitzPatrick: Like what?

Hazem Moussa: Like food. Like clothing, fashion, textiles. Not textiles, but clothing and fashion. Through being a business, but at the same time impactful in that you're helping a sector grow rather than just...

Patrick FitzPatrick: Being another me-too product.

Hazem Moussa: Being another product out there. 

So those segments, coincidentally, I found as I was thinking about them, are also the least impacted by AI going forward.

Patrick FitzPatrick: We talked before and you referred to it as sort of a barbell thesis. 

You've got stuff that is very likely to be impacted by AI, positively or negatively, on one side. And you've got stuff on the other side that is very unlikely to be impacted by AI. 

How has that shaped your approach?

Hazem Moussa: Well, it’s been part of the approach. It didn’t start there. 

But I found myself gravitating towards that kind of thinking, or that being the result. Focusing on areas that are resilient, will continue to grow…. Technology will help. AI will help accelerate, grow, come up with new ways of delivering — but it won't disrupt the actual product.

The third one of that also is real estate and hospitality, which is maybe a little bit less impactful in terms of a sector, but it's something I'm interested in and working on. 

Patrick FitzPatrick: It depends on what you want to do. 

Hazem Moussa: And then there's the flip side, which is AI itself. I’m working on something there. Trying to create AI tools that can help businesses. So there's something that I'm working on as well… AI and its opposite, let’s say

Patrick FitzPatrick: What type of tools?

Hazem Moussa: Well, tools that can help you do more in terms of top-level strategy, insight, and planning. It's hard to be too clear yet, but it's in that direction.

Patrick FitzPatrick: What is something in the middle that you wouldn't touch? Something that looks great, but AI is going to eat that. It looks like it's an interesting problem in Egypt, or an interesting opportunity in Egypt or somewhere else in the Arab world, but it's just… not that.

Hazem Moussa: I haven't thought much about things I don't want to touch. I’m just focusing on what I find exciting. But that's why we're talking about product, right? 

Instead of just going into a product that then you have to change. Now it's pretty clear that things will be different in a year or two or three. 

And it's crazy how the time frames have become so short, because you don't say things will be different in ten years. Things will be different in two years, in one year, now, ha?

Patrick FitzPatrick: But all of this is going to be so much messier than any of us give it credit for being. 

Go back to the Industrial Revolution. The very first thing everybody did was replace the water wheel with the steam engine in one place. And it wasn't a one-for-one substitution that led to the productivity gains of the changes. It was completely reimagining what a factory floor looked like and where the energy came in. 

So, I think we have a complicated period of change coming up, and it's not going to be two years. What the hell do I know?

Hazem Moussa: Well, a lot will change in two years, but the whole cycle will not be two years.

I was listening to this very interesting conversation on a podcast recently. Two guys were arguing about this specific point. One was saying new jobs will come up, things will change. The opportunities will just be different, and so it's going to be a net positive all along. 

And the other was saying that there's going to be huge unemployment in the short term. That disruption in and of itself is going to cause chaos for a long time. And so this switch that you're talking about is not so easy. I think they're both right, to some extent.

And I think how that is managed... there's going to be winners and losers. It's unfortunate. 

The big question will always be for companies, for governments, for everyone, is how to accept and smoothen that transition and that change. And not either overemphasize that it's all about AI now and everything else is unimportant. That's wrong. It's also wrong to pretend like this is not happening and nothing's going to change. 

The Industrial Revolution came and went. The world didn't collapse. Businesses came and went, the world didn’t collapse. But there can be a lot of chaos between now and a clearer new paradigm.

Patrick FitzPatrick: What is your role going to be in these new ventures that you're spinning up? 

Are you the investor, or are you the chairman, or are you the CEO? Is it all the above?

Hazem Moussa: Potentially all of these. It depends. As things develop, I'll form a better idea. But I’m investing in several of the ideas and working with partners on the others. I'm constantly looking for collaborations. That's how I think the best plans and the best businesses get set up. 

Once we have that, then it will define the phase after that. Whether it's going to be hands-on or it's going to be more of a supervisory, or just plainly let other people do it and I'll help you fund it or help raise money for the whole thing. Those options are all open.

Patrick FitzPatrick: What's something that you believed about building last time around with Contact, about how to make a company, that you've changed your mind about since?

Hazem Moussa: I don't know. So much has changed in these 25 years that it's hard to compare. 

It's hard to compare what it was like in 2001 to now.

Patrick FitzPatrick: But then what hasn't changed? 

What's the success factor that mattered to you massively at Contact that amid all that survived amid all that change of banks, markets, access to finance, global connectivity? What's something that is very much the same today that matters at least as much, if not more, than before?

Hazem Moussa: I think having a... I like to call it a compass. It's not a clear plan because plans can change and your route to that endpoint can change. 

When I say a compass it’s more like a clear idea of where I want to go. And it doesn't have to be exact. I'm going east, I'm not going to this particular point. And to think through your decisions and your plans and everything you do in that context. 

I see a lot of people doing things differently than that, which is take it as you go and like everything can be changed. And there's a certain amount of value to that and logic to that. It's good to obviously be flexible and be nimble and be able to pivot and do all these things. That's very important.

But, it’s important also not to get lost. 

This idea that you can take it one step at a time... Sure, a lot of things you take one step at a time, but not the overall direction. 

I can't just decide today I'm making mugs and tomorrow I'm going to start making light bulbs. Sure, if there's a good reason for that, do it. But just a general idea of what you want to be as a company, as a business, as a product, is something that I think you should have a general direction for.

Patrick FitzPatrick: There's been an over-glorification of the pivot.

Hazem Moussa: Yes. To some extent. 

Like a lot of these things, when you translate everything to terminology, you run the risk of overgeneralization, and therefore everything becomes about the terminology or the jargon rather than about the thing itself.

Patrick FitzPatrick: Hazem, thank you so much for joining me, man. Let’s not wait six years before doing this again.

Hazem Moussa: My pleasure. Thank you for having me. It's great to be here again, and I look forward to our next discussion.

Patrick FitzPatrick: Thank you, man.