This is the fourth post in our case study series, in partnership with the El Khazindar Business Research and Case Center (KCC) at the American University in Cairo's School of Business, Wamda and Aramex, featuring an in-depth look at 12 leading startups from Egypt, Jordan, the UAE, Palestine, and Lebanon, highlighting their startup stories, major challenges, and future plans.

This case study reveals the story that launched web entrepreneurship in the region: the rise of Maktoob, which was acquired by Yahoo!.

In 1999, Maktoob’s Jordanian founders Hussam Khoury and Samih Toukan sought to expand e-mail usage across the Arab world at a time when e-mail capabilities were expanding globally. When they launched the very first Arabic email service, they kept it free in order to grow their userbase.

Their largest challenge was gaining a foothold in a market dominated by powerhouses Yahoo!, Microsoft and Google. Maktoob grew by watching what their competition did, tracking their progress against new developments in each of the key players’ services. These benchmarks mostly included monitoring the total number of unique users visiting the website per month, and total number of product uses each month. After growing steadily for four years, Maktoob turned a profit in 2004, and hit 16 million unique monthly visitors in 2009.

The team then doubled down on improving products and services for both its internet and email users and its advertising partners.

Acquisition by Yahoo!

In 2009, as everyone knows, Maktoob was then acquired by Yahoo!, marking Yahoo!’s entrance into the Arab world. The U.S.-based web portal had already reached 20 million regional users in English, compared to Maktoob’s 16 million, making both among the top-10 websites across the Arab World.

“We think this [acquisition] is the turning point for the whole industry in the region,” Toukan says in the case study. The deal allowed Yahoo! to offer Arabic content for the first time and begin to develop Arabic versions of its offerings, like instant messaging, e-mail and the Yahoo! front page. Roughly 200 of Maktoob’s employees became part of Yahoo! Inc. and both companies used each other’s services while working together to increase online activity in the region.

For their part, Toukan and Khoury served as consultants for the company while running Jabbar Internet Group, a region-wide umbrella company that owns CashU, ikoo.com, Sukar and Souq.

Check out the full case study in the grey box to the right to learn more about Maktoob’s story, including its initial challenges in managing rapid site growth and convincing advertisers in a nascent market to come online.