entrepreneurship

The new definition of entrepreneurship

The new definition of entrepreneurship

The Middle East will need to build its own definition of entrepreneurship

In an era when no one seems to agree on anything, there is one issue on which everyone seems remarkably aligned – that the salvation of our youth is in entrepreneurship.

With most governments unable to afford and guarantee jobs to their large, educated youth population, the only way to gainfully deploy energetic and promising young people is to turn them into job creators, instead of job seekers. Active and well-advertised initiatives to support, encourage and enable entrepreneurial ventures are visible all over the region in the form of subsidies, training and mentoring programmes, incubators and accelerators.

Most of these efforts look to the Western, ‘Silicon Valley’ model of entrepreneurship. Oft-used terms such as ‘angel investing’, ‘seed investing’, ‘B2B’, ‘B2C’, ‘scaling’, ‘traction’, ‘burn rate’ and ‘venture capital’ have become an integral part of the entrepreneur lexicon. Hubs such as Dubai have attracted talent and skill from around the region and ecosystem supporters from all over the world, creating an unusual and heady mix of ideas and expectations.

But there seems to be a lack of local and regional models of entrepreneurship and, sometimes, even essential localisation of alien imports. The region, especially Dubai, is a testament to entrepreneurial zeal and has an exceptional tradition of, proverbially, making something out of nothing. The region has always defined its own rules and built its own models of success and rarely has an imported model been successful as it is.

The most common refrain heard is the lack of ‘funding’ in the region. Considering that this region has been blessed with an abundant and liquid investment past, this appears to be particularly contradictory to an observer from outside. Possible lack of investment interest in regional talent is an issue for us to resolve and the best way to do so is to show attractive exits. We need to convey to the talented lot, spending their time thinking of their next start-up, that there are options and opportunities besides making the Middle East version of the latest Silicon Valley trendy start-up.

While localisation of tried and tested ideas is a viable option at times, there is immense pending opportunity in solving local and niche problems that can best be tackled by those on the ground. That they may not be global and restricted in scope may actually be a great way to rule a new category, and a captive geography, for the pioneers. The need of the hour is to look beyond the glamour of starting up, which remains a hard and lonely trudge.

The history of entrepreneurial activity in the region is full of success stories, and actually shows that the best of them created their own models, their own markets and, finally, profits and riches for all connected. While we are seeing a growing, but nascent, crop of home grown venture capital and angel groups, there is a long way to go before we have the availability of abundant experimentation capital that matches the promise and expectation already created. The role of regulation, scope of governmental engagement and participation of the private sector require attention and specific work on and can make the region flourish as a magnet for talented entrepreneurs and promising start-ups.

Promising, out-of-the-box and pioneering enablement initiatives such as the in5 Innovation Centre, Oasis500, Sheraa, Astrolabs, Badir, Tumooh, Flat6Labs and AltCity, as well as a host of corporate initiatives have added a new flavor of home-grown innovation and stake-holding. They are nudging long-held mindsets, restrictive regulations and unreasonable expectations to allow the region to get the due dividend of its young and eager population.

Why then do we expect that the region will need to build all the exact pieces of the entrepreneurial jigsaw puzzle we see in the West? We will need to build our own definition of entrepreneurship, our own specification of what we would call a start-up and, similarly, our own system of funding, valuing and investing for the opportunities in the region.

We will learn from all, the finest from around the world, but we will be served best by what we create to suit our specific set of needs – our very own definition of entrepreneurship.

(This article was written for meed.com. To read it on their website, click here. Featured image as seen on meed.com)

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The Network Effect

The Network Effect

I have always believed in the power of teams or networks… they multiply your capabilities and significantly increase your reach. My association with TiE has been an awesome such learning.

In this interview, I speak about the beauty of being able to work outside the box as an entrepreneur and the availability of some illustrious and successful TiE Charter Members through what I call “The Network Effect”.

Having worked with some of these members, who are now friends, across various cities, it is truly a glorious network that is under-utilised and can be applied to create some of the best entrepreneurs in any field of interest. As the President of the Dubai Chapter of TiE, its my endeavour to assist as many budding and wannabe entrepreneurs as possible!

Here is the video, courtesy of TiE Talks.

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Harsh realities of being your own boss

Last week I saw this tweet on my timeline — “Have not had a vacation for three years, tell my why I should celebrate entrepreneurship?”. A very frustrated twenty-something was complaining to whoever would listen about his recent introduction to the hard reality of being your own boss.

I am not sure if you should feel his pain and sympathise, or blame him for jumping into the deep end of the sea with wrong expectations. Don’t get me wrong, I spend a lot of my time evangelising for people to do what they want to do, and not what they have to do — my definition of ‘retirement’.

A lot of glamorous words are used for this state of mind, including entrepreneurship and being in a start-up. I have been blamed to be one of the few people in the world, asking for Techcrunch to be banned by TRA in the quest to create a real start-up eco-system in the region.

The gasp of shock that follows is intended. I am in complete support of freedom of speech and choice, but the lack of local knowledge, local support and role models makes our promising young idea-people to look for more mainstream and international sources and expect the same ground rules here.

Nothing could be further from the truth as it stands here. Setting up a small business here is synonymous with a strong and regular doses of hard knocks. Besides running all around to set up a cost-effective base and getting the first few co-workers, there are an unending number of small, but irritating, procedural issues to keep you busy.

Staying focused
Once you have found the resources, paid the cash deposits (and postdated cheques) to guarantee your up-front commitment to pay the powers that be, you may begin to do what you set out to do. But then, we seem to be digressing.

Let’s go back to our friend and his quest to reach success in his chosen mission of doing a successful start-up. The truth is that a start-up is nothing but a small business like any other and has the same pressures of making ends meet.

Many, in their pursuit of the great idea, forget that the venture has to make financial sense in the first place. That an idea is cool is no barometer for a business to be successful.

The venture has to be based on solid fundamentals and sound market research. The need to generate revenue and to get to a stable footing is essential. Any and all investment into the start-up will be based on its financial potential, and not just the promise.

It would be unreasonable to underestimate the sheer hard yards required to create a successful start-up at any time, leave alone in a recessionary economy.

From failure to success
It is usually a lonely trudge in a dark tunnel for the team that decides to put its faith in its idea and embarks on the path of entrepreneurship. But this step is taken with open eyes and not for the faint-hearted. Competition is severe and the race ruthless and failure has a greater probability than success.

So it’s not unusual to find driven people focusing more on proving a point rather than building something of long-term value.

A far more important requirement in such an environment is to form a formidable team of key people and co-founders, something that is invaluable and provides for the knowledge and management bandwidth required to go past hurdles which are bound to be many.

A frequent reason for failure at this juncture is the so-called “one pillar” venture, too dependent upon a single individual, with the rest being a “hired” team. A single bout of pressure or simply burning out of the main individual may spell disaster.

So, another promising venture dies a premature death, just because the entrepreneur thought he was superman.

So, before you reach this point, let better sense prevail. Go and find yourself some worthy partners and mentors, even if it is just to share the dark, lonely trudge through the wilderness of Planet Entrepreneurship.

This article originally appeared on Gulf News.

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Striking a balance on the balance sheet

There are two ways to make money; one by earning more money and the other by spending less. The latter is a time tested remedy that gets taken out of the closet whenever the economy sneezes and the business environment feels congested. It’s prudent to keep overheads low at any time, irrespective of the economic climate, as a few saved pennies are always welcome. When you are setting up a small business or running one, money is always tight. Being intelligent and prudent at this time with your resources may mean the difference between eventual success or failure.

Making the dirham go further will be considered value that you will be able to cash in on once the company becomes successful. Doing more from less is an essential part of any business plan for a small enterprise. Usage of technologies and the internet, even if your business is not an on-line business, is a surefire way of saving cost and to generate greater mileage. A mix of technical DIY and a simple search can provide the enlightened entrepreneur with a toolkit of services which are either free or provide great value at a low cost.

Here is a jargon buster tutorial:
Use Cloud Computing and reduce dependence on dedicated hardware and related infrastructure. Services like Google Apps allows you to host a small business e-mail, documents, calendar, etc. for free. This allows you to do most of the tasks the expensive systems that larger organisations utilise. This translates into an edge over others at no cost.

Negotiate
If your company has a few telephones — mobile or land lines — consider negotiating with the telecom provider (yes, even etisalat and du in the UAE) for a better package with special offers such free internal phone calls and cheaper long distance dialling and handsets. The saving such consolidation creates will surprise you by the time the year ends.

This also provides you a dashboard to actually view your usage and to efficiently plan for the future and to plug any holes. At least in the initial phase, try to outsource as many of the tasks as you can — accounting, administration, technical support, IT, cleaning or whatever that is not core to the business. These should not be a load on your time. Whatever anyone says, even if you don’t get involved, there is a certain management overhead that essentially creeps into it and distracts you from the main task.

Social media
Communicate with your customers regularly and use more efficient and economic methods to do so. Technological advances have made it possible to use social media e-newsletters and e-mail to your advantage at almost no cost.
An effective Twitter and Facebook presence clubbed with a simple and informative website will be a great asset to the business. And if you are a social person, it may be an invincible combination and trying it out is usually free.

Find a mentor and guide to take you through the travails that any start-up faces in the early phase. However much you may know about the business, the aid of a sound head at times of challenge cannot be belittled. The idea is to find someone who gives you sound advise because he wants to not because he is enticed to do so by incentives such as stock options or consulting fees. You may even be surprised by people who would give you valuable insight for nothing! Grey hairs count in making things easier, even if it’s because someone else has committed mistakes before you had a chance to do the same. They save you from making one!

Keep your eyes and ears open and network a lot. There is no alternative to making contacts, nurturing them and to build on them. Most business opportunities come your way through people you know. This circle of people is also a gold mine of helpful resources from lawyers to accountants, technology geeks to marketing mavens. Innovators will find a way to encash this valuable asset and create successful enterprises we all will talk about.

This article originally appeared on Gulf News.

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Innovation critical to Dubai’s success

A lot has been said and seen about Dubai having built something out of what was considered nothing.

A long time ago, its founders started a tradition of welcoming people with diligence, ideas and perseverance to come here and prosper, which has continued in its various reincarnations. In recent years, its speed of growth and buildings evoked the envy of many a competitor and as the boom slowed down, the hankering began. While there are some areas where more prudence would have been desired, a lot of pioneering work often gets criticized. It does not require a rocket scientist to understand that time has come to reinvent and rebuild on the strengths, which are many, and build on its long tradition of entrepreneurial innovation.

Like our founding fathers, it’s time to welcome the creators. Creators are those who look beyond the ordinary and build things that leapfrog them and those around them into prosperity. Be it artists, designers, programmers, thought leaders or free thinkers – we need more of these to come and make Dubai the beacon of creativity and creation in the region. Remember a majority of jobs and opportunities are created by small businesses, those with less than 20 people. Reduction of licence fees, visa costs, rentals and front loading of the setting up process will make Dubai attractive for a lot of such people.

A case has often been made for the economic downturn having made Dubai an unattractive market. But then Dubai was never a local story – it was the best gateway to the whole region. The strength of its infrastructure, geographic location and connectivity are beyond compare, despite the financial downturn and impossible to match by any other city, by far.

Building on strength
Let’s build on this strength to remove all hurdles to its success. Let the government consider removing all barriers to setting up new ventures, and actually encourage small companies. In the past large corporations have had an advantage of being able to negotiate better terms due to their clout, Let’s turn it in favour of innovation and enterprise. Remove the link between license and real estate and the overemphasis on transaction-based clusters.
The downturn has made business in these clusters unviable and counter-intuitive to enhancement of small and medium enterprises (SMEs). Encourage the filling up of empty real estate by people who will actively commit to create, bring innovation to the fore and create jobs and support the economy.

Let their success be counted by the number of real partnerships and enterprises they generate with the national youth. Dubai was built by people who thought outside the box – encourage this pioneering spirit by reiterating the need for such initiatives. New leaders of the national workforce need to be guided, but at the same time encourage them to think anew and not to fear failure, nor be afraid to air their ideas.

What we need is a change in sentiment to one that is encouraging, inspiring and full of positive ideas for a future that beckons. Undue emphasis has been given by some quarters on the odd headline emphasising the eternal tussle of tradition and the drive to being a modern metropolis. With growth and modernization comes a lot of responsibility and balancing the yin and the yang is a delicate are. But, in the drive to excellence we need to focus on the larger goal and probably be prepared to such instances being blown out of proportion.

What will speak louder than anything is our success to build on our strengths to achieve the pinnacle in our carefully chosen areas of excellence. The new generation is not afraid of hard work, in fact, it revels in challenging times. It’s time to channel their drive and power through the guidance of the more experienced into making Dubai cement its position as an unparalleled hub of innovation, entrepreneurship and creativity.

This article originally appeared on Gulf News.

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Stock options could benefit UAE companies

Giving employees a share of the business through stock options are an important incentive for staff and increases the resilience of a company during an economic downturn, according to a recent report by Cass Business School, in London. However, this staff incentive is not easily available in the UAE. While EOB’s have proven to be resilient during the downturn, the number of business in the Middle East offering this business model are much less common compared to the UK or US due to the local ownership regulations. In most cases, stock options for employees are simply absent.

“The set up in the UAE is not very conducive to employee-owned companies as our law here does not support stock options. It’s not easy to build mutli-levels of shares and it makes it difficult for people to use share holding as a form of incentive for employees,” Prashant Gulati, the secretary general of the Indian Business and Professionals Council in Dubai, told Gulf News.

While EOB’s have proven to be resilient during the downturn, the number of business in the Middle East offering this business model are much less common compared to the UK or US due to the local ownership regulations.

Part ownership

An EOB is a business that is owned in whole or partly by its employees. Employees are often given a share of the business after working with the company for a certain period. If local companies choose to implement this option, an offshore structure will have to be created which can be complicated and expensive.

“Although it is possible to build an employee-owned business in the UAE, the sponsorship model, the majority expat population, the transient nature of the work force, and company law requirements create an environment in which employee-owned businesses are more challenging to build and run,” Dr Armen V Papazian, financial economist and CEO of Keipr, a consulting firm that specialises in business analytics and intelligence told Gulf News.

The UAE business landscape is dominated by government owned corporations and family conglomerates which are not the typical candidates to introduce employee-ownership. Medium enterprises, which tend to be located either in free zones or as domestic companies set up in partnership with nationals have owners as employees for visa sponsorship purposes but the vast majority of them are not typical employee-owned businesses, Papazian says.

However, international companies such as Mott MacDonald a management, engineering and development consultancy that have extended their EOB model to the Middle East, say they are experiencing success.

“The EOB model has aided our growth in this market, as expansion is financed through the company funds with a confirmed policy of growth decision making. The model also provided us with more resilience during the economic downturn. We have been able to support our clients through difficult times, with a view to long term business relationships,” said Paul Looker, from Mott MacDonald. “In the Middle East at present many of our publicly owned competitors have been under stress with their stock market positions, so being structured as an employee-owned business has been a major benefit for us.”

“Resilience … has been neglected as a crucial aspect of company performance over the past two decades. Instead, business strategy and public policy have been dominated by an unremitting focus on maximising share value.” said Joseph Lampel, professor of strategy and entrepreneurship at the Cass Business School, London.

This article originally appeared on Gulf News

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