My last few articles have led to insightful comments on my website and lively debate on my Facebook profile. One comment that stood out for its nuanced global perspective was that left by Athar Mian on Saudi Entrepreneurs: Dream Big or Die Small.
Athar is an international entrepreneur, high-level strategist, and technology ventures manager serving the telecommunications and mobile software sector. He and I first met at a business event in Dubai in 2010, where I shared some information about the Saudi tech market with him.
I have added a title, subheadings, and links to his detailed comment for ease of reading, but have not otherwise changed the text.
An International Strategist’s Perspective on Dreaming Big
I liked this article a lot. So here are some complementary comments, based upon my experience as entrepreneur and corporate exec in New York, Silicon Valley, Toronto/Ottawa, Canada, Lahore, Pakistan and Hong Kong, China.
I won’t dwell on the excellent parts since they should be obvious to readers. But I will try some details.
Dreaming big is a great, and necessary, thing to do for entrepreneurs. For example, how you, in Saudi, would take advantage of the CMA-Capital Markets Authority– making a big global announcement of opening up the $530 billion cap Tadawul directly to qualified foreign investors next year? Or the fact of KSA being a member of WTO since 2006 and implementing various criteria? Or build your own platform given Internet technology that gets cheaper by the year, but then HR costs similarly keep going up?
But… you should have a scalable plan (as Osama suggests), while you dream big in your mind. It doesn’t pay to talk big when you find it hard to come up with an initial business whose costs will go up with growth. Investors like entrepreneurs with a firm business model and a good team that can control costs.
The Privileges of Outliers
Zuckerberg’s Facebook, I would say, just as Elon Musk’s big ventures, still are outliers. The fact is that these big name entrepreneurs had a lot going for them. Most importantly they were well connected on Wall St and technology circles via friends-and-family ties so they had access to big resources, and honestly, could afford to fail a few times (which they actually did.) Then of course they lived in a culture that worships risk-taking, and already had highly structured and available Internet access with huge government subsidies (would there have been any Amazon or e-commerce without Uncle Sam legislating tax-free Internet transactions?) Still, Facebook was founded more than ten years after the Internet, which, in development since the 1960s, finally commercialized with its browser in late 1994.
A lot of Facebook money came from foreign investors, like those less-known Russian billionaires who had no Silicon Valley or New York brand. Many of Elon Musk’s and other big name ventures were government funded. Think Solyndra– dubbed the Google of Solar- that received $600m US federal support, and still filed bankruptcy, with technology development that was obviously flawed and had a hopeless business model ! Solar PV technology still is deeply flawed and on life support by various governments across the globe. So can you think of a better solar technology that is cheaper, less capital intensive and more suited to your environment? (The answer is yes, actually.)
Most entrepreneurs do not have above such luxuries. They come from cultures that value a secure government job than learning from entrepreneurial ventures. Failure is a stigma and a lasting one. Additionally they need to understand how mature a certain underlying assumption is before jumping the bandwagon. One hint- many Internet type or e-commerce ventures don’t take hold in the Middle East because the Internet is not as mature as in the US, and speed is just one factor (even Europe lags behind the US in e-commerce given various practical constraints.) For instance, online payments in this region suffer from a huge lack of trust. Plus the local markets are small and various trade barriers exist across state boundaries, or just within them.
The Importance of a Plan B
The other big thing to consider is a Plan B. That is, what happens if your original plan does not work out? (Most don’t.) Entrepreneurs ought to have thought of salvage value, or an alternate plan that can be put into action. Simply, don’t put all your eggs in one basket (but then don’t have too many baskets, either.)
Whereas, there are major hurdles in the Middle East (just as in very entrepreneurial China, given its vast overseas trade networks, lots of cheap labor at home, high literacy and single ethnic origin), there are arbitrage opportunities, and also market consolidation opportunities. One needs to figure out how to find control over business models, and bypass big company and government restrictions (legally, of course.) Plan B is important.
The Advantages of Proportional Hiring
In most cases it is really difficult to find great ideas that scale well without proportional hiring. I would venture to say that lack of hiring is actually not in the Gulf Middle East’s or Saudi Arabia’s best interests, given a large and growing youth population that needs access to jobs and growth. However, there can be many good ideas that can scale well with increase in hiring– there could be virtue in smart outsourcing, with understanding of costs, legal and commercial issues. Entrepreneurship is the whole of good qualities, not all equally good, that exceed the sum of individual parts. Technology skills or business acumen are needed but there are other well rounding qualities needed in the mix.
Lessons from Start-Ups Targeting the Developing World
Some recent interesting examples: Viber, founded by Israelis Dec 2010, registered in Cyprus, and back officed in Belarus, that was bought out by a Japanese group, for $900m in February. Viber targeted markets not served by Skype, i.e, less wealthy emerging (but growth) markets like the Middle East, China, Asia, and Middle East. Viber’s dependence on the Arab market was so important that its founders had to come on Al-Arabiya channel to declare that their funding was all friends-and-family, and had nothing to do with the Israeli state or military. Then think of WhatsApp that was bought by the hugely successful Facebook for $20 billion, because Facebook too, to grow, desperately needed those same emerging markets which it had conveniently ignored for ten years. Contrast with Maktoob, Jordan, that Yahoo bought out for $12m , after ten plus years of operation.
What can you learn from above three examples about market structure, business plan, technology development, team building and outsourcing, and funding? Similar markets here, but very different outcomes. My answer: exploiting opportunities needs building structure and a vision (Big Dream), a lot of patience (pain) and experimentation. It’s very doable in here too.
In sum: Think big, but have a shorter term business plan, get a good team, have a Plan B, and find something that can scale even with more hiring. Lastly build relationships over time, and don’t be shy negotiating with potential investors. You need a good equity stake, but so does the investor. You both need each other !
Readers, what do you think of Athar’s response to Saudi Entrepreneurs: Dream Big or Die Small? I would be happy to feature more reader comments on my website and social media channels, so please share your thoughts.