doing small things in a big way
ISSUE 2
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Where are the angel investors? A peep into what the Qatari banks are doing to promote the SMEs in the country and the options available for prospective entrepreneurs in kick-starting their businesses, V L Srinivasan writes.
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Business is Brand
The changing scenario
Your brand must stand for something that’s real, authentic, meaningful and memorable, delivered in an engaging, creative manner. Anthony Ryman compares creating a small business to having a baby.
Nick Edmunds looks at the various opportunities and challenges for International SMEs coming to the Middle East.
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Your ride is a Innovation’s screen tap away next decade Ayswarya Murthy talks to the
Uber Doha team, whose cab-on-demand mobile application has been an instant hit with people.
While the world economy continues to look shaky, the technology industry has never looked stronger, Sramana Mitra writes.
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“Clouding” Qatar The concept of cloud computing is yet to catch up with the SMEs in Qatar but the future for “cloud” in the region is bright, experts tell V L Srinivasan.
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Entrepreneurs earn more
Catch ‘em young
Are you an entrepreneur?
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more than just Ideas Sindhu Nair talks to new-age entrepreneurs and experts who give insights into their eventful lives and entrepreneurial behaviours of the people in the region.
With the exception of “superstar” entrepreneurs, individuals who switch to self-employment earn less, Dr Thomas Astebro writes,
Focus on “customer validation” will be the crux of the Qatar Business Incubation Centre (QBIC) which will open in April, V L Srinivasan finds out.
If you are doing something that is worthless, impossible or stupid, then, maybe, you have the entrepreneur in you, says Prof Daniel Isenberg.
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Starting a food revolution Fadi Malas tells Sindhu Nair how he converted an existing idea into a successful start-up.
Publisher & Editor-in-Chief Yousuf Jassem Al Darwish Chief Executive Sandeep Sehgal Executive Vice President Alpana Roy Vice President Ravi Raman
// from the desk
editorial Editor Sindhu Nair DEPUTY EDITOR v L Srinivasan SENIOR CORRESPONDENTS eZdhar ibrahim abigail mathias ayswarya murthy
Small and medium-sized enterprises provide the backbone for any nation’s economy as they not only contribute significantly to the GDP but also generate employment. With a robust economic growth, Qatar is aware that encouraging SMEs would further accelerate the pace and is taking several steps in this regard. Since the presence of angel investors is minimal, the task of funding the SMEs has been entrusted to financial institutions like Qatar Development Bank and other local banks.
art senior Art Director Venkat Reddy deputy Art Director Hanan Abu Saiam assistant art director Ayush Indrajith senior Graphic Designer maheshwar reddy Photographer Robert F ALTImirano
In our cover story, SME Connect highlights the various steps taken by major banks to ensure that the SMEs tread on a rosy path. But are these steps enough? That is a question that needs to be asked constantly to innovate and to pave the path for an entrepreneurial climate. Branding expert Anthony Ryman says creating a memorable brand that goes down well with consumers is vital for the success of start-ups. In yet another interesting report, SME Connect discusses with the present generation of entrepreneurs about entrepreneurship, the trials and tribulations and how they cope with failures. While the entrepreneurs vividly share their experiences encountered on their entrepreneurial journey, the experts share their views on the behaviours of people in the region.
marketing and sales senior Manager – Marketing Zulfikar Jiffry ASSISTANT MANAGER – MARKETING THOMAS JOSE senior Media ConsultantS HASSAN REKKAB LYDIA YOUSSEF Media Consultant KOMAL BHARADAVA MARKETING RESEARCH AND SUPPORT EXECUTIVE KANWAL BALUCH
In a city where public transport is yet to be developed, Uber Doha has been trying to put an end to the agonising wait for a taxi using a mobile application. Experts like Prof Daniel Isenberg discuss the characteristics of an entrepreneur going to the extent of saying that if someone has an idea that is stupid or worthless, then there is an entrepreneur in him. Nick Edmunds talks about the challenges while Sramana Mitra mulls over the future of technology in her column. The region might not have the best entrepreneurial climate but it is still home to some inspiring success stories like the Just Falafel, a classic example of how a simple and existing business idea can be converted into a successful venture by popularising a local street food. SME Connect brings to you all the stories that inspire and educate entrepreneurs.
senior Accountant Pratap Chandran distribution Sr. Distribution Executive Bikram Shrestha Distribution Support Arjun Timilsina Bhimal Rai basanta pokhrel
Happy reading V L Srinivasan
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TOP SLOT
“I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.” - Steve Jobs
Two Arab startups selected for Silicon Valley accelerator The eighth batch of startups being accepted into 500 Startups includes an Egyptian and a Jordanian company. Over 1,400 startups from around the world applied for the eighth batch of the famous seed fund accelerator programme out of which 28 were finally selected from countries like US, Spain, France, China, Brazil and India. Two Arab startups also made it to the list – Egyptian job search company Wuzzuf and Jordanian music education startup i3zif. Wuzzuf does "intelligent job matching by simulating how ‘human’ recruiters actually think, screen applicants, and communicate with both employers and job seekers” according to their profile, while the online music education company teaches users musical instruments, both western and eastern, through video tutorials. During the four-month acceleration period, the startups will use the investment they receive (which can be anywhere between $25,000 and $250,000) to develop their company further and will demo their business to VCs and angel investors at the end of the period for another round of investments. 500 Startups has already started accepting applications for its ninth batch. 8
Adieu to India’s oldest accelerator India’s first private startup accelerator, The Morpheus, is shutting down its acceleration programme after six years of operations. One of India’s earliest accelerators, which has incubated about 82 startups including CommonFloor, IIMjobs, and Practo (five have been acquired by other investors; 25 startups have shut down), is shutting up shop due to stiff competition from new accelerators like Microsoft. “We are stopping the accelerator programme. We will be shutting down the website this week and will be closing the tap for more applications,” Sameer Guglani, co-founder of The Morpheus was quoted as saying in an Indian daily. He also mentioned that they will be back in a new avatar, focusing on startups in the two to five year period instead of the zero to two year age group that they cater to now.
TOP SLOT
“Your most unhappy customers are your greatest source of learning.” Bill Gates, Microsoft co-founder
Resilience amidst strive The Damascus Startup Week, held in February, was important for many reasons but mostly, for inspiring a young generation to innovate and dream against all odds. The intense 54-hour event brought together local entrepreneurs, developers, designers, marketers, product managers, startup enthusiasts and anyone interested in building a business and help the local community to share ideas, form teams, and launch startups. Recognising that entrepreneurship is “the hope and key factor for the Syrian youth to contribute proactively and shape the future of their country”, the organisers put together this business building blitz, looking to be a catalyst for students and aspiring entrepreneurs to take their first steps towards launching a web or mobile company in the Middle East. The event has received enthusiastic response, with 120 signups witnessed within the first 24 hours after opening registrations. The winners of the event – T3DMaker, who sought to design a 3D printer from local resources received $1000 cash prize, in addition to a complimentary month of mentorship and workshop access.
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Bitcoin CEO in hot water Just as it looks like Bitcoin is set to go mainstream, one of its leading entrepreneurs was arrested on the charges of money laundering. Charlie Shrem is the CEO of the Bitcoin payment processor BitInstant and vice chairman of the Bitcoin Foundation. He has been a loud and persistent supporters of Bitcoin and has been lobbying for according it a legal status and keeping it away from government regulation. The digital currency, which has been gaining rapid acceptance with various business around the world accepting it as legal tender and its value almost quadrupling in the past year, will now be cast under a shadow of doubt due to the shocking arrest of Shrem and as well as an associate who was an underground bitcoin exchanger. The duo have been accused to selling more than $1 million worth of bitcoins to users of Silk Road, which is an anonymous black market in the dark net for drugs and other illegal substances. The founder of Silk Road was arrested only a few weeks ago and the domino effects are starting to ripple across. Both have been charged with money laundering and operating an unlicensed money transmitting business, according to Forbes. Despite this, the North American Bitcoin Conference went on as per schedule in the end of January (Shrem was supposed to be one of the keynote speakers), drawing thousands of techies, entrepreneurs, lawyers and experts.
TOP SLOT
Crowdfunding continues success streak
Turn 8 graduates woo investors The first batch of tech startups to graduate from the Turn 8 accelerator scheme in Dubai conducted demos for investors recently, looking for funding in the tune of $1 million. Launched by global marine terminal operator DP World and powered by Innovation 360, Turn 8 is a seed accelerator that recently churned out nine startups ready to pitch their ideas to over 50 international and local investors for a further round of funding. The fledgling companies demoed an eclectic mix of tech ideas including a social media application for dreams, a tool to analyse the words and mood of Arabic-language social media, and a text-based solution to fight against widespread counterfeiting of auto parts, pharmaceuticals and luxury goods in the Middle East. The Demo Day startups hail from numerous countries like the UAE, Egypt, Indonesia, Pakistan, and Belarus, and their ideas were listened to by investment companies such as Tecom Investments and STC Ventures, UK-based Venturebright and USbased Fenox Venture Capital. The startups were asking for between $350,000 and $950,000 to develop their businesses further, with the majority looking for about $500,000.
“Always look for the fool in the deal. If you don’t find one, it’s you.” Mark Cuban, AXS TV chairman and entrepreneur
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Since its launch mid-last year, the Middle Eastern crowdfunding platform Eureeca.com has successful completed the funding of six companies. The latest startup to be achieve complete funding (in fact, over funding) was the luxury brand Poupèe Couture that raised over $80,000 (almost $20,000 over its initial goal) just ten days after launch. In fact the last four of its six successful companies have received more funds than what they applied for. Harir, an online shopping club in the Middle East for top design and lifestyle brands at discounted prices in fashion, home and more, received 83% more than the $50,000 it had requested. Abjjad, the first Arabic books social network for readers, writers, and bloggers, did quite well as did Foodlve, "a social discovery platform for food where users can collect, create, browse and buy all about food in one place”. Eureeca has won several award in the past year including "Innovator of the Year" at the Gulf Business Industry Awards.
(Top) Participants at the Arab App Challenge Finals in Doha; (Bottom) Creators of Loujee, the winning app
DOHA snippets
Get your game face on The startup fever reaches high pitch with two competitions announced for young entrepreneurs from Qatar looking to kickstart their business.
The Arab App Challenge The finals of the first ever Arab App Challenge which was held in Doha recently saw the best app ideas from the region go head to head. The challenge, hosted by Silatech, the Applied Innovation Institute and Ooredoo, saw teams from across the region who had won the regional finals compete to be in the global finals to be held at the Mobile World Congress. Created in a bid to promote entrepreneurship and technology-based career skills for Arab youth in addition expanding the choice of available Arabic content and applications, the event held at the Ooredoo headquarters saw the applicants showcasing innovative ideas to a jury of world-class experts in the field of innovation, incubation, digital media and venture capital. Since November 2013, more than 150 teams from Qatar, the UAE, Saudi Arabia, Jordan, and Tunisia have competed in the contest, developing mobile apps that address specific needs in education, healthcare, entrepreneurship or employability, and entertainment. In January, each of the five countries hosted a local Mobile App Challenge, and sent its three finalist teams to the regional finals in Doha. Each team, with up to six members, all younger than 35, was matched with a mentor who provided advice on business and app design, and developing the app into a viable and sustainable business. Loujee, the first Arabic-speaking mobile app educational toy for children, won the grand prize of $50,000. In second place was Crowd Analyzer, the first fully-automated Arabic social media monitoring platform in the Middle East and North Africa, winning $30,000. Finishing third was Markabaty, which helps car owners troubleshoot problems and find car workshops, winning $20,000.
Qatar Career Fair (QCF) and Bedaya Centre for Entrepreneurship and Career Development are calling out for young Qataris to submit their ideas for a brand new business concept. The best 10 concepts will be showcased at QCF 2014 in April. This year’s competition is also open to smaller Qatari businesses to give their existing products and services a boost in the market. Winners from both categories will be given a free booth within the QCF’s ‘Startup Arena’. They will also be invited to network with potential employees, partners and investors throughout the duration of the fair. Aspiring young entrepreneurs could also enroll in the fourth edition of the annual Qatar National Business Plan Competition – Al Fikra 2014 – organised by Enterprise Qatar. The programme encourages enterprising young minds to submit their ideas for a successful startup business project. Winners will receive much needed capital injection in the form of cash prizes and consultancy and incubation services to help their business ideas flourish into profitable ventures. Both these competitions will be conducted across two categories – professional and students. So if you have a bright new idea and want to air it out, this is your chance.
Looms & Knots, second place winners of Al Fikra 2013, student category
SME CONNECT | ISSUE 1
DOHA snippets
Digital world fuels Arab ambition Eight out of 10 young people in the Middle East and North Africa (MENA) region are optimistic about their prospects in 2014 although 45% of employed are not doing their work they would like to do, according to a new study, whose findings were released recently.
Al Dhameen expands partnership to more banks Qatar Development Bank’s (QDB) Al Dhameen programme, which encourages banks to easily fund potentially viable SMEs, signed on more partners earlier this year. Through this programme, QDB has been covering a portion on the lending entities’ risk in financing new ventures which often get brushed aside due to bad or limited credit rating or insufficient collateral. Three years on from when it first began with just one partner bank, QDB now works with 14 banks to support the fledgling SME sector in Qatar. Abdulaziz bin Nasser Al Khalifa, QDB’s Chief Executive Officer was quoted by an English daily as saying at a recent dialogue session with partner banks in Doha, “The programme managed to achieve huge success in a relatively short period of time.” Recently it was announced that Qatar National Bank in association with QDB signed an agreement to finance Al Naqeeb Plastic Factory through Al Dhameen. This brand new factory will be located in the SME Industrial Area with a total built-up area of 2,230 square metres, which includes the company's offices. Qatar-based private sector companies, whose annual turnover does not exceed QR30 million, are eligible for guarantees of up to 85% of the loan amount not exceeding QR15 million.Existing companies are eligible for guarantees of up to 75% of the unsecured outstanding principal and financing limits of up to QR15million under Al Dhameen. The financing can be in the form of loans for either manufacturing (maximum tenor is eight years including a two-year grace period) or services (maximum tenor of five years, including a one year grace period).
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The extensive online study entitled “New Horizons: Young, Arab and Connected”, was commissioned by Ooredoo to provide a snapshot into the digital attitudes of young people across the MENA. Ooredoo chairman HE Sheikh Abdullah bin Mohammed bin Saud Al Thani released the survey findings in which 10,642 young adults in 17 countries in the region including 184 from Qatar were surveyed between August 16 and 26 last year.
Nine in 10 young MENA citizens believe that access to the Internet and mobile digital technology can help them realise their personal aspirations for employment, entrepreneurial opportunities, banking, education and health care.
91% As many as 91% of young Arabs believe that technology is the basis of a modern, forward-thinking and functioning society and encourages them to be more entrepreneurial. 51% of youth claim “knowing how to fully utilise the technology for business” is both important and difficult.
83% Among the young people in Qatar who were surveyed, 83% said that there are good options for small businesses and entrepreneurs, 47% intend to start online businesses and 13% have already started one. Some 42% of the respondents currently buy online, and another 31% intend to purchase online in future, the survey said.
A meeting of
entrepreneurialminds
pic credit: qatarisbooming
QNB discusses financing startups
Qatar National Bank recently participated in an entrepreneurship networking workshop organised by the Bedaya Centre.
Entrepreneurship in Economic Development, a two-day forum promoting entrepreneurship among young people, took place in Doha on February 24-25.
The one day workshop enabled organisations to participate and discuss how to develop and help finance startup businesses, an important component in stimulating and driving the participation of SMEs in the Qatar economy. Hamad Al Jamali, QNB’s Acting AGM for SME stressed the importance of the business banking – BB – programme that has recently been launched for all small and medium companies, an English daily reported. The programme is an innovative platform studded with detailed business oriented solutions from QNB that will enable all current and future business owners to expand or start a business by granting them easy, convenient and fast access to finance their small- to medium-sized businesses.
Qatar University and Interactive Business Network put together a conference, Entrepreneurship in Economic Development, featuring international experts in business, education, finance and government as keynote speakers. Revolving around “fostering the new generation of entrepreneurs in Qatar and the Gulf” the conference sought to connect prospective business owners with established business leaders to encourage and support the spirit of entrepreneurship in the region through practical advice. The participants included noted names and brands like Farhan Kalaldeh, Executive Director at Queen Rania Center for Entrepreneurship; Ahmed Abdulwahab, Head of Incubation Centre at Qatar Business Incubation Center; Aysha Al Mudehki, Executive Director of Injaz; Ali Al Khulaifa, the Acting CEO of Enterprise Qatar; and Qatar University’s Dean of the College of Business and Economics Dr Nitham Al, among others.
Ready the battle ground
Young app developers, handpicked from around the world battle it out at the University Mobile Challenge in Barcelona.
The EduTechnoz team
The University Mobile Challenge, held in conjunction with the GSMA Mobile World Congress in Barcelona, is focused on encouraging student entrepreneurs to build creative applications of mobile technology to solve problems and pursue new business opportunities. Among the many teams that participated this year, top-ranking teams from five Middle Eastern countries competed on the global stage. These teams are ICAPS(UAE), an intelligent profile managing app; Baharat (Saudi Arabia), a social network for people who love to cook; EduTechnoz (Qatar), an app that provides gamification for learning Arabic; ThePen (Jordan), which improves the quality of writing on tablets; and Grant Fit (Tunisia), which adopts an Insulino++ approach for managing insulin doses.
SME CONNECT | ISSUE 1
DOHA snippets
Creating the right atmosphere YourStory.com has been part of the Indian startup eco system showcasing and sharing many inspiring and transformative stories of Indian entrepreneurs'; of the hundreds who push through to the growth stage and the handful who are seeing successful exits. Here they give their recipe for the right entrepreneurial ecosystem. We have heard very little about the Middle Eastern startup scene – barring the occasional Startup Weekend activity and news about In5 and SeedStartup accelerators. Looking at how the Indian startup scene has evolved in the recent years there are few key factors which could help catalyse similar eco-systems in other parts of the world:
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Availability of resources or talent pool – India is home to perhaps the largest tech employee talent pool, but it's not just about tech - UI/UX, sales, marketing, human resource - we need experienced professionals or quick learners across all these segments.
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Good set of mentors and angel investors – the right set of mentors and angels can make the eco-system vibrant and growing, while the wrong kind - looking for short term quick gains can be lethal. A good set of successful entrepreneurs local or international will be the ideal choice for a good pool of mentors and angel investors.
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Supporting eco-system – as the name says it’s a system encompassing many entities and it starts with family and friends - their love and encouragement for the founders and supporting them as they take their first steps in entrepreneurship.
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Accelerators and incubators – while angels and mentors can provide one-on-one and personal mentoring, accelerators and incubators can streamline the process and have a better mentoring process. More than that the best part of accelerators and incubators is the crazy amount of peer-to-peer learning that happens and strong bonds built between founders of different companies who go out of their way to help each other, as they see themselves in other batch mates.
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Media – if startups and entrepreneurship doesn’t become part of the mainstream media and we do not see a few success stories emerging it will be a challenging task. Till then writing and sharing about the stories and passion of the entrepreneurs – their love for problem solving and their hunger for success can be motivating for others to startup as well.
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Government and Universities – we have seen it here in India, Singapore and of course the US as well, both the government and universities, through partnership or separately, taking keen initiatives in promoting entrepreneurship and supporting them through grants, incubators, co-working spaces, etc. If these two entities can have fostering startups and entrepreneurship on their agenda and can allocate part of their focus towards it, it will be a very valuable asset to the ecosystem in the long run.
Ahmed Abdulwahab, Head of Incubation Centre at QBIC
Catch ‘em young Focus on “customer validation” will be the crux of the Qatar Business Incubation Center (QBIC) which is all set for opening in the first week of April this year. By V L Srinivasan
SME CONNECT | ISSUE 1
ideation
Q “Unlike traditional business schools and textbooks, it’s not about writing and also not about execution of a pre-defined business plan. The teams will spend most of their time out of QBIC talking to customers and partners. They will use the Business Model Canvas to develop their business model and the Customer Development Model to validate it.”
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BIC is the first of its kind in the Middle East and the biggest one in the region in terms of space. Coming up on a sprawling 20,000 sq m in the new industrial area, QBIC is expected to provide a boost to the entrepreneurship sector in the country. The project was conceived two years ago when Qatar Development Bank (QDB) and Social Development Centre (SDC), which is part of Qatar Foundation, joined hands to establish a world class business incubator in Qatar. At present, QBIC is in the process of short-listing the start-ups among the 100 applications it has received so far. “In a nutshell, it’s a start-up village with all facilities for the success of start-ups and scale-ups and we have drawn ambitious plans to develop the next QR100 million companies,” Ahmed Abdulwahab, Head of Incubation Centre at QBIC, says. Detailing the concept behind the Centre, Abdulwahab says instead of high-level objectives such as developing an entrepreneurship eco system and/ or enterprise culture, QBIC plans to have its own specific and inspiring objective to develop the next QR100 million companies. “We have a specific target with an inspirational objective. We want to do something which really helps the entrepreneurs. We want to develop 10 start-ups and five scale-ups (young companies with a significant potential to grow) in the first year,” Abdulwahab says. Going by his words, QBIC will not be another stereotype of the existing incubation centres in the Middle East, which are struggling to make the startups succeed in their respective countries for reasons which too often overlook the needs of the customers. Programmes QBIC has devised programmes like speaker series, startup sessions, lean start-ups and lean scaleups, and mentoring and providing smart financing for the entrepreneurs selected for incubation. The first phase "Speaker Series" are designed to inspire and motivate the Qatari community where select industry leaders and entrepreneurial visionaries from all over the world shed insights, provoke thoughts and stimulate conversations in innovation and entrepreneurship. From the entrepreneurs perspective it’s about inspiring to advance to the next stage “Discovery & Action,” Abdulwahab says. In the second phase, as part of startup sessions,
where ideas are generated, the gatherings will bring together potential entrepreneurs to learn about startups and entrepreneurship, networking, discuss potential business ideas, refine business ideas, initially validate the business idea, and identify potential co-founders/team members. From the entrepreneur's perspective it’s about setting the startup foundation to advance to the next stage “Lean Start-up.” “Lean Startup” is a ten-week entrepreneurial programme that provides real world, hands-on learning experience on how to successfully start a company. “Unlike traditional business schools and textbooks, it’s not about writing and also not about execution of a pre-defined business plan. The teams will spend most of their time out of QBIC talking to customers, partners. They will use the Business Model Canvas to develop their business model and the Customer Development Model to validate their business model,” Abdulwahab says. Based on the feedback, the teams use Agile Development to develop a product that meets the requirements of the customers. At the end of the programme, the teams pitch their start-up to judges and potential investors. From the entrepreneur's perspective it’s about customer validation and developing a product that meets customer needs in order to advance to the next stage “Lean Scale-up,” Abdulwahab explains. Customer validation With the traditional business plan models, entrepreneurs spend most of their initial startup stage in documenting a theoretical plan before getting significant customer validation and this is one of the major reasons why most startups fail. “We do exactly the opposite and ask our entrepreneurs to talk to customers, partners, etc before taking the plunge and start product development. They should then develop a minimal viable product, just one inexpensive feature of the final product, and again return to the customers to validate it. Only after customer validation, only then, should they start to develop the product or start writing down the business plan. This is not another or new approach in entrepreneurship, but rather a fundamentally different approach in how to successfully start a business,” Abdulwahab says. The Centre’s Lean Scale-Up accelerator programme is a structured entrepreneurship initiative focused on extraordinary growth by accelerating
An artist's impression of the QBIC complex
the sales and marketing machine in order to turn a high potential young business into a successfully scalable company. This is designed for selected young companies that are looking for proven strategies and processes to accelerate their growth and profitability. The teams will be trained and coached in sales/ selling, channels or distribution and strategic alliances, entrepreneurial finance and cash-flow management in order to scale up their business. During the programme, the teams will be pitched to potential investors and lenders for growth capital. From the entrepreneur's perspective it’s about scaling up the business and preparing to graduate. Smart financing QBIC will also provide smart financing based on two types of investment to businesses that are incubated. The average investment amount of QR 300,000 will be invested as follows: Conditional seed fund of QR100,000 within the first three months for customer validation and equity financing QR 200,000 from three months to 12 months. The company will receive the investment amount based on the agreed milestones and timelines. During the mentoring phase, the entrepreneurs, who successfully complete the programme, will be advised and mentored in their specific areas of interest. “At the same time, we will monitor the track
record of these companies with regard to number of firms still in business or that have been merged or acquired, number of employees, sales, revenues, investment raised etc in order to track the economic impact in and for Qatar,” he says. “While the lean startup will bring the change we want, the lean scaleup will make the desired impact we need. There is no guarantee that all start-ups will taste success but by undergoing the process, they will learn how to solve the problems and become customer-friendly,” he says. The incubation of the start-up will take two to three years depending upon the type of industry. If it is information technology, the company will finish the programme within 18 months but for others like water conservation, etc, will take longer. Industry agnostic Abdulwahab says though QBIC is “industry-agnostic” and would encourage all sectors, those companies that are in tune and that are going in the direction of Qatar National Vision 2030, will be accorded priority. “The entrepreneurs should go out and validate the business idea instead of coming up with an 80page business plan. A single page of business model canvas is enough to explain to the customers. This is the fundamental change that we intend to implement. Other challenges faced by Qatari entrepreneurs involve legal issues and bankers’ laws,” Abdulwahab adds. SME CONNECT | ISSUE 1
expert talk
Entrepreneurs earn more With the exception of a few high-flying lawyers and other such “superstar” entrepreneurs, individuals who switch to self-employment tend to earn less on average than they do as wage-earning employees. They also work longer hours and no longer receive paid leave. Is there a rational explanation as to why so many choose the entrepreneurial path in spite of these disadvantages? Could the lower earnings associated with entrepreneurship be a function of income under-reporting? by Dr Thomas Astebro
C
ubicle-dwellers dreaming of becoming self-employed might want to consider the following sobering facts before quitting their day jobs. On average, entrepreneurs earn 4% to 15% less per year than their wage-earner counterparts, work longer hours, experience higher income risk, and their earnings rise less quickly over time. Only a small fraction of entrepreneurs end up making a lot more money than they did as employees. In other words, for every Richard Branson there are thousands of restaurant owners, graphic designers and plumbers slaving away for less than what they would earn as salaried employees. If a difference in earnings of 4% to 15% per year doesn’t sound like much, it adds up to a substantial amount in terms of foregone earnings over a lifetime. Academics are the only segment of the population who do not find a significant income discrepancy between salaried employees and in-
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dependents. The main reason is the “academic discount”, or downward pressure on university salaries, related to the strong demand for academic positions regardless of pay level. Other than that exceptional case, the puzzle remains: why would any rational individual choose to become an entrepreneur instead of a salaried employee if it were both riskier and less rewarding in financial terms? Explaining the entrepreneurial choice There are many theories competing to solve the riddle of the entrepreneurial choice. Besides matching and learning models and others based on labour market frictions, look at the entry and exit mechanisms of the entrepreneurial and wage markets. For example, those with lower abilities get squeezed out of the labour market and, when fired, go into entrepreneurship. In that case, lower skills would thus explain lower wages. Also, those who
have already invested considerable amounts into entrepreneurship may persist even with lower realisation in misguided attempts to recover sunk costs. Another potential explanation for the preference for entrepreneurship might simply be the non-financial rewards offered by independent work, such as autonomy, flexibility and better use of personal skills. Who can argue against pursuing a passion for photography or stand-up comedy, even if it comes at a cost? But is there truly a cost, or might the earnings gap simply be a function of income under-reporting? Hiding income from the taxman The most potent explanation is that income under-reporting by entrepreneurs. Indeed, they have many opportunities to work without invoicing, while in contrast it’s nearly impossible for a wage-earner. Tax evasion is a strong motivation to under-report income. The incentive to under-report is present even when measuring income for research purposes through surveys rather than by going through tax-filing data. The entrepreneurs think that the matter will be reported to the tax office. Furthermore, money is always a sensitive subject. According to survey data, entrepreneurs do not declare all of their earnings. In surveys you can ask people pretty much anything, are they married, do they have kids, how long do they commute, but one out of three declines to answer questions about income. If entrepreneurs do earn more than what they report, then the income discrepancy puzzle disappears. In surveys, one out of three declined to answer questions about income. The devil is in the details: food expenditures To test this hypothesis, I worked with my colleague Chen from a model that uses food expenditures to indicate levels of income under-reporting. To measure the relative income and food expenditures of entrepreneurs and wage earners, we used 15 years’ worth of data from the world’s longest-running household panel survey, the Panel Study of Income Dynamics, which includes a nationally representative sample of US households. The sample contained more than 39,000 observations on the heads of 7,371 households active in the labor force between 1980 and 1997 and be-
tween 1990 and 1996; among these individuals, 13% were self-employed. and the self-employed spent significantly more than salaried employees on food. According to the model, the translation in terms of under-reported income lifts entrepreneurial average earnings by between 10% and 40%. If the method is sound, rather than a deficit there is a premium to entrepreneurship in terms of income. But the model rests on the assumption that the self-employed and salaried employees have the same food preferences, an assumption. Entrepreneurs may go to restaurants more often for networking purposes, for meetings, to generate business. Indeed, when the analysis is fine-tuned to focus on food consumed at home, the difference between the two populations lessens. One Canadian study, thus adjusted, found that the earnings discrepancy worked out to an average of Canadian$3000 (QR9833) over one year, which is far less of a discrepancy. But even if the fraction of under-reporting is less, and earnings from entrepreneurship are “only” 7% to 30% more, it is still significant.
“The most potent explanation is income underreporting by entrepreneurs. Indeed, entrepreneurs have many opportunities to work without invoicing, while in contrast it’s nearly impossible for a wage-earner.”
Implications for policymakers A number of public policies in European countries as well as Japan, Chile and other countries subsidise entrepreneurship in various ways, with loan guarantee schemes, tax breaks, and stipends for start-ups. But if people are willing to become self-employed in spite of lesser earnings, or, as this body of work suggests, possibly even earn better money than in salaried employment, does it make sense to maintain financial incentives for entrepreneurs? The question is all the more topical in times of fiscal austerity. To conclude, it may sound extreme, especially since such incentives are popular, but why spend money to stimulate entrepreneurship if people will make that choice no matter what? On the other hand, there is a case for one type of entrepreneurial venture: ventures such as the ones that led to the discovery of recombinant DNA, of penicillin, or of the mp3 compression algorithm. Such enterprises benefit the general public in terms of health and well-being, contrary to the creation of a restaurant or dry cleaner’s, where the value is mostly to the entrepreneur’s benefit.
More about the Guru
Dr Thomas Astebro Associate Professor of Strategy and Entrepreneurship, HEC Paris Dr Astebro teaches High Tech Entrepreneurship and Managing Innovation at HEC, which he joined in 2008. He holds a master’s in engineering and an MBA from Chalmers University of Technology in Sweden, as well as a PhD from Carnegie Mellon University in Pittsburgh, USA. He has taught at the University of Waterloo and the University of Toronto in Canada and regularly works as a consultant to entrepreneurs.
SME CONNECT | ISSUE 1
Photo Credit E Suarez
expert talk
Are you an entrepreneur? If you are doing something that is worthless, impossible or stupid, then, maybe, you have the entrepreneur in you. By Prof. Daniel Isenberg Isenberg
T
he thesis of my new book, Worthless, Impossible and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value, is that entrepreneurship is the contrarian creation and capture of extraordinary and, usually, economic value. I realise that this definition is an unusual one, but I hope it will provide clarity about what is, and what is not, entrepreneurship. The term "entrepreneurship" is one that has in recent years become something of a buzzword. From its origin in economic pursuit, “entrepreneurship� has been stretched to include social entrepreneurship, intrapreneurship, small business, intellectual entrepreneurship, self-employment,
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innovation, startups and entrepreneurial leadership. All of these terms are used, some of them interchangeably with entrepreneurship. And the term, "entrepreneurship," has been applied to parenting, science and art as well. This is unfortunate in my opinion. When any term is stretched to include almost anything good and novel, like the stretched rubber band, it runs the risk of snapping, losing its power, and becoming useless. I want to preserve the power of entrepreneurship by focusing it squarely on its economic roots. So in Worthless, Impossible and Stupid, I argue as strongly as I can that this extraordinary (more than the market would expect) value creation and capture are necessary and sufficient
characteristics for something to be considered entrepreneurship. Why contrarian? Because virtually every entrepreneur who creates and captures extraordinary value does so by investing his or her time, reputation, money or other assets in something that the “market” (whether customers, investors, or talent) at first views as not worth doing, or as unfeasible. The entrepreneur is not greeted from the outset by cheers and applause, but by apathy or even derision. He or she is doing something that everyone else views as “worthless, impossible or stupid”, a waste of time. If a lot of people thought the venture were a good one, they would be doing it already. An entrepreneur uses a society’s or an economy’s “scraps”, its discards, its residuals. This definition also implies that: Entrepreneurship is NOT the sole province of start-ups, despite the fact that there is a Startup. Everything these days, and despite the fact that even experts use the terms "start-up" and "entrepreneurship" interchangeably. But entrepreneurship can be manifest in acquisitions, family business take-offs, corporate spinouts and recapitalisations, as well as some startups. It is ALWAYS about striving for and achieving venture growth; without growth, there is no entrepreneurship. Is NOT necessarily innovative, and can be manifest in real estate development, trade, commodities, generic pharmaceuticals and copycat businesses. Frequently it is implied that the “best” entrepreneurship is innovative and even technology-driven. Not necessarily, according to my definition. It depends on whether value is being created and captured, not whether there is innovation. It is NOT manifest in the large majority of owner-employed businesses, who more often than not disparage risk-taking and the concomitant potential for extraordinary gains. In fact, in many ways self-employment is frequently the opposite of entrepreneurship in terms of mindset, attitudes and actions taken to protect rather than grow the business through prudent risktaking. Is IMPOSSIBLE to know a priori if an act will create extraordinary economic value or not; at the heart of extraordinary value creation is betting against the market, bucking the trends, and developing businesses in areas that everyone else ignores or, frequently, devalues. In short,
growing ventures that everyone else – even the smartest amongst us – thinks are worthless, impossible or stupid. Definition There are many implications of the definition of entrepreneurship as the contrarian creation and capture of extraordinary value. For the entrepreneur, it means that you should expect detractors. In fact I tell my students that if your idea doesn’t have at least one very smart person whose opinion you highly respect telling you that your idea is worthless, impossible or stupid, then it probably is not a very interesting venture. This definition also means that you should expect adversity and resistance as you try to push your way into the marketplace. For policy makers, one of the implications is that you cannot and should not try to “tell” entrepreneurs where the opportunities are, because it is their “job” to find or create the opportunities exactly where we “experts” think there are none. Furthermore, as I argue in Worthless, Impossible and Stupid, policy makers should not try to eradicate all types of adversity that every successful entrepreneur will face. Not only is adversity an intrinsic aspect of the entrepreneurial experience, it also helps entrepreneurs become tough and resilient. The famous economist Joseph Alois Schumpeter is known for his term “creative destruction”, but I think his conceptualising reached a pinnacle in a little-known article discovered in 1993, 60 years after he wrote it, simply entitled “Development.” In it Schumpeter equates economic development, of which he sees entrepreneurship as the driver, with a process that he claims is fundamentally unpredictable, occurring in a “... crack, jerk or a leap ... not reachable by adaptation in small steps.” Entrepreneurship is unpredictable and is driven by the “... fundamental impossibility of extrapolating trends. ... The triad ‘indeterminacy, novelty, leap’ remains unconquerable.” Two decades later Schumpeter addressed the annual gathering of the world’s leading contemporary economists: “Without committing ourselves either to hero worship or to its hardly less absurd opposite, we have got to realise that since the emergence of exceptional individuals does not lend itself to scientific generalisation, there is an element that ... seriously limits our ability to forecast the future.”
“For policy makers, one of the implications is that you cannot and should not try to tell entrepreneurs where the opportunities are, because it is their job to find or create the opportunities exactly where we experts think there are none.”
More about the Guru
Prof. Daniel Isenberg Founding Executive Director, Babson Entrepreneurship Ecosystem Project Professor Daniel Isenberg is a Babson Executive Education Professor of Entrepreneurship Practice, the founding executive director of the Babson Entrepreneurship Ecosystem Project (BEEP), and founder and CEO of Entrepreneurship Policy Advisors.
SME CONNECT | ISSUE 1
expert talk
The changing scenario Opportunities and challenges for International SMEs coming to the Middle East by Nick Edmunds
W
ith the exception of Dubai, whose fortunes have seen a rapid turnaround in the past 12 months, and those countries still suffering the long-term effects of the Arab Spring, the Middle East has seen continuous large scale government spending on infrastructure throughout the financial crisis. Now, “in light of the current global recovery, the Middle East is expected to be fast to pick up on FDI and the SME sector is expected to be the fastest sector to respond positively.” The net result is that the period from 2008 to the present saw a large scale influx of internationallyminded SMEs to the region and, going forward a combination of extended austerity and encouragement from governmental trade organisations in their home markets have meant the regional SME sector is only likely to grow. Further encouraging this trend is the statistic that an SME engaged in international business is twice as likely to succeed as one focused purely on a domestic market, and for many of those entities
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the move will prove to be the making of the company. For others, however, the foray will prove expensive, time consuming, frustrating and, ultimately unsuccessful. The question is what can be done to ensure you fall into the first camp and the answer, in as far as there can be one, is covered within the oft quoted but regularly ignored military maxim that “prior planning prevents poor performance.” Location and Structure Does the SME in question actually need to be in the region as there is a significant difference between being engaged in international trade and being internationally located? While clients prefer to deal with people who are “here” and it is true that the days of the carpet bagging salesman - maybe carry-on baggage would be a better modern term - are coming to an end; with the exception of government contracts it is often possible to sell goods and services as an international/overseas company and some suppliers actually benefit from the brand association which comes from being based in a major established
sector hub. Conversely, regional companies which are registered in a different country, emirate or even Free Zone from their clients, generally find that they have to work through local agents, resellers or partners. This is an entirely normal relationship and the right partner can be a very effective force multiplier in terms of achieving effective market penetration. However, early engagement with professional advisors is critical and advice should be cross referenced to ensure it is accurate and impartial. Local partnerships and selling structures should be subjected to due diligence and, if local representation is required, SMEs should look to establish trial periods before agreeing to exclusivity – while it may be difficult to find the right partner, that pain is nothing in comparison to trying to separate from the wrong one. Consider the Market (and your route to it) Just because an entity sells to a particular sector in its home market and just because that market responds to one set of value propositions doesn’t mean the same will be true overseas. Many market sectors are under-represented in the Middle East and early movers who spend time genuinely understanding their client’s requirements – as opposed to focusing on selling what “we normally do” – quite often find that they are able to work on much larger programmes than that would be normal elsewhere. An example of how to miss a clear opportunity is that of a Scandinavian company that was wellplaced to win work and had a product with genuine application in the Middle East but chose to demonstrate its qualifications for working in the desert by showing pictures of the equipment working in snow. They left the presentation with a confused client and without a contract. USPs and project references need to be tailored to the audience and cultural sensitivities considered. Time should be spent working out what level of a client organisation to target. The regional culture of hospitality is genuine and access to high level executives and government officials is often easier than in the West but being hospitable might not mean understanding what is being offered or why. Ensuring that, when you have found the right person who understands what you do, they have
the right tools to support a buying decision is vital. Doing business with a Middle Eastern government is often seen as reaching nirvana in terms of potential revenue and the rewards from a contract size perspective can be substantial. However new market entrants are often surprised by the apparent complexity which exists in government procurement across the Middle East and the onerous procedures that need to be followed just to qualify as a prospective supplier can be daunting or even insurmountable. Successful SMEs often find that a less direct route to the end user such as partnership with a local entity - preferably one with a good track record of delivery in a complementary area - or taking a sub as opposed to prime contractor role often works better. The loss of revenue that comes from such a position can be made up by both volume and the fact that capital - real or via bank credit agreements – can be tied up in contract related performance bonds etc. remains liquid and available for other activities.
“Successful SMEs often find that a less direct route to the end user such as partnership with a local entity – preferably one with a good track record of delivery in a complementary area - or taking a sub as opposed to prime contractor role often works better.”
Big Brother is Watching Corruption does exist in the Middle East, as it does in almost every market in the world including the major Western economies, and SMEs should remember that they will be subject to both host nation anti-graft regulations, which are rigorously applied, and to legislation such as the Foreign Corrupt Practices Act (FCPA) of the US and the UK Bribery Act when doing business in new markets. Like the rest of the world, something that looks too good to be true probably is not for you and a venture overseas is not a reason to forget or ignore procedures that one would follow at home. The local partner, who understands and works within a coherent compliance framework, will deliver far more than the one who tries to circumvent it. The Middle East is home to some 400 million potential consumers, many of whom are based in countries like Qatar with the highest per capita wealth in the world and a deep desire to create sustainable, world class economies and living environments. It is a market whose opportunities cannot be ignored but where care and consideration are a must. Due diligence, the application of common sense and a willingness to listen are the strongest tools that the SME can use to ensure success.
More about the Guru
Nick edmunds Founder and CEO, Aldridges Nick Edmunds is the founder and CEO of Aldridges, a UAE-based company focussed on helping companies find, win and deliver business in the Middle East and Africa. Over the course of the last decade Nick has worked for both government entities and private companies and has delivered projects throughout the UAE and wider Middle East. His website: www.aldridges-group.com
SME CONNECT | ISSUE 1
cover story
Where are the angel
investors?
Lack of Funding is said to be one of the disabling factors for entrepreneurship. But the banks in Doha are trying their best to make themselves accessible to new businesses. By V L Srinivasan 26
I
n the absence of adequate angel investments and lack of collateral coverage for loans from private lending agencies to start-ups, the onus is clearly on the domestic banks to fund the small and medium-sized enterprises (SMEs). All over the world, SMEs play an important role in terms of creating jobs as well as contributing significantly to the Gross Domestic Product (GDP) of their respective countries. It is estimated that SMEs generate 75% of jobs and contribute 60% to GDP in the European Union. In neighbouring Bahrain, SMEs contribute 25% to the country’s GDP and employ 75% of private sector employees. In Qatar, where the SME sector is relatively undifferentiated, there seems to be no consensual definition of small and medium-sized enterprises. The International Monetary Fund (IMF), in its country report for Qatar released last year, said that the standing of SMEs in the country’s economy was “weak” by regional and global standards. “Some 9,011 SMEs in the country contributed about only 15% of non-oil GDP in 2010 and less than 20% of total employment in 2011,” the IMF report says. It goes on to say: “Financing obstacles persist, despite the credit guarantee scheme, as commercial banks are still reluctant to lend to SMEs, due to the small size of the market, its high risk and setup costs, the absence of a legal structure for quick arbitration, and lack of SME-specific credit rating in the credit bureau.” Even a World Bank/Union of Arab Banks survey of over 130 Middle East and North Africa (MENA) banks found that only about 8% of all lending goes to small businesses, whereas in the high-income countries around 22% of bank lending goes to SMEs, which contribute more than 60% to both GDP and private sector employment. Bank lending to SMEs in Qatar, as a share of total lending, is 0.5%, substantially lower than the GCC and MENA averages, which are already far below
advanced-country levels, the IMF report adds. Problems persist Everyone knows that entrepreneurial journey is not a smooth road for prospective entrepreneurs. There are many challenges, and important among them are the availability of land and, at times, accessing funds from financial institutions. Regulatory issues like launching a new business and the cost of starting a company are other factors that frequently pull down the entrepreneurial spirit. But the Ministry of Economy and Trade and Enterprise Qatar, along with other agencies, have been trying to address these issues for the growth of the sector. Al Sulaiman Holdings Chairman Nasser Sulaiman Haider Al-Haider, whose company is one of the four firms given Local Enterprise Awards by Qatar Development Bank (QDB) and Qatar Shell, says the growth of most of the economies in the world depends on SMEs, and Qatar has also been paying attention to developing the sector. The government is encouraging local SMEs to get contracts and become contracted suppliers to multinational companies like Shell. However, the shortage of land is posing a major challenge to the growth of SMEs in the country. “The government has been doing its best in helping us but as a businessman and as an investor I still expect more support in the form of setting up more industrial areas for SMEs,” Al-Haider adds. Concurring with his view, QDB Chief Executive Officer Abdulaziz bin Nasser Al-Khalifa says there are many challenges faced by the sector. “Availability of land, access to finance sometimes, although we are trying to mitigate the issues,” he comments. Angel investors Qatar has two kinds of start-ups – traditional ones and others driven by technology. While the traditional SMEs have easy access to funding as their
“With the government taking on several mega infrastructure projects, there is a golden opportunity for SMEs to become partners in Qatar’s growth. These companies should take advantage of the programmes and schemes available through Qatar Development Bank and all related institutions to boost Qatar’s economy further.” Abdulaziz bin Nasser Al-Khalifa Chief Executive Officer, Qatar Development Bank
cover story
“Our bank passionately believes in sustaining the growth of the SME sector and is continually looking for new ways to support its customers in this segment. We have helped a large number of SMEs by providing both credit and regular banking facilities to them.” Kenneth Clark Head of Enterprise Banking, Commercial Bank of Qatar
estimated revenues are known due to available historic data, it is the tech-driven start-ups, which have no previous data, that have limited or no access to finances. It is here that the angel investors play a crucial role, as Qatar intends to become a knowledge-based economy. Start-ups and scale-ups (young companies with significant potential to scale) in Qatar have a good opportunity to make a really big difference, says Ahmed Abdulwahab, Head of the Incubation Centre at Qatar Business Incubation Centre (QBIC), which was launched by QDB and Social Development Centre. According to him, to make that difference the SMEs need first and foremost customers and access to a larger market. Second, they need access to human capital. Third, they need entrepreneurship coaching and mentoring provided by experienced entrepreneurs who have been through the process of starting and running start-ups and/or scale-ups. Finally, they need access to an attractive financing model, especially equity funding. “Since there is no effective angel network, we need to create and educate potential angels (such as high net worth individuals) about the pros and cons of becoming angel investors, in order to provide equity financing,” Abdulwahab says. QBIC aims to do just that once its Board approves and provides smart financing for startups and scaleups. Role of banks A peep into what the Qatari banks are doing to promote SMEs in the country reveals some interesting facts. SME Connect has been exploring the various options for prospective entrepreneurs in kick-starting their businesses. To begin with, the IMF report has been largely accurate until recently, but the establishment by Emiri Decree in 2011 of the Qatar Authority for the Development of SMEs, tasked with the responsibility of encouraging the development of the SME sector in Qatar, has changed the scenario.
The Emiri decree came as a relief to the domestic banks, as they had been increasingly looking to diversify into new business lines to maintain and enhance their profits, and the SME sector, which offers significant business and opportunities to expand, was one of the sources for them. It is a known fact that the income growth in the SME sector clearly outperforms other businesses and yields two to three times as much as traditional business segments. Since Qatar has been moving away from depending on hydrocarbons for sustainable economic growth, various programmes launched to support SME development have focused on the key objective of promoting diversification and competitiveness. At present, there are a little over 17,000 companies (more than half of them SMEs) in which over 350,000 people are working in Qatar. As part of pro-SME reforms launched three years ago, the government has designated Qatar Development Bank to support SMEs and enable their growth in core areas of the economy. QDB has launched schemes including Al Dhameen to offer financial aid to start-ups as well as established companies. QDB’s efforts The Al Dhameen indirect loan programme guarantees loans to companies in collaboration with other local commercial banks. Barring areas like agriculture, fishing and livestock, non-oil mining and quarrying, wholesale and retail trade, financial and insurance activities and real estate activities, all other sectors are eligible for support under Al Dhameen. The QDB provided QR450 million to 105 Qatari companies last year, and its portfolio exceeded QR2 billion in direct finance. As far as exports are concerned, the bank has extended over QR350 million so far. QDB’s Abdulaziz Al-Khalifa says the bank provides 85% of the finance as a guarantee from its side to the partner banks, up to a maximum of QR15 million. Above that, QDB pro-
“The government has been doing its best in helping us, but as a businessman and as an investor I still expect more support in the form of setting up more industrial areas for SMEs.” Nasser Sulaiman Haider Al-Haider Chairman, Al Sulaiman Holdings
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vides direct finance to SMEs and private sector borrowers. Al Dhameen guarantees banks’ risk-sharing in case the financed project fails, partially or fully. It also encourages banks to finance SMEs that are promising but cannot provide the required collateral or accounting documents to become eligible for loans. Faith in sustained growth Commercial Bank of Qatar (CBQ), which has set up
a dedicated unit for SMEs called Enterprise Banking is among the QDB’s partner banks and is in the forefront of supporting Qatar’s entrepreneurial business community and helping to nurture the expanding sector. Head of Enterprise Banking at CBQ Kenneth Clark says their bank “passionately” believes in sustaining the growth of the SME sector and is continually looking for new ways to support its customers in this segment. “We have helped a large number of SMEs in Qatar by providing both credit
Banks and Schemes
A
l Dhameen and Direct Lending: QDB offers financial aid to startups and existing companies by offering highly competitive interest rates and terms that include lengthy repayment periods through its Direct Lending and Al Dhameen programmes. The direct loans (both traditional and Islamic) are offered through project financing facilities (long-term) and raw material facilities (short-term). Enterprise Banking: Launched by CBQ, Enterprise Banking is a dedicated unit for SMEs and is helping to nurture the expanding sector. Enterprise Banking launched an Enterprise Business Loan (EBL) and Deposit Direct Card for SME customers. The EBL provides working capital financing with faster turnaround times and efficient delivery while taking into consideration SMEs’ risk profile and factors such as the lack of detailed financial information. The Deposit Direct Card eases the practice of depositing cash on a daily basis at branches, thereby improving the customers' banking experience and branch operational efficiency. Moreover, with the bank’s advanced technology, customers can also track and reconcile their accounts online using their corporate internet banking access. Business Banking (BB): A product of QNB launched in October last year, BB offers innovative services and business solutions to meet the needs of start-ups and entrepreneurs. It also offers a comprehensive package of business solutions that meet the needs of all enterprises and
business executives. Under this programme, commercial and industrial companies at various stages of development will find a helping hand to start up or expand their activities and benefit from the ease of financing opportunities for all their business endeavours. Tasdeer: A government initiative aimed at encouraging Qatari exporters, Tasdeer provides them with guarantees in case the foreign country in question defaults. QNB is the best partner for Tasdeer, and through its extensive networks across the Middle East and North Africa (MENA) region, the bank hopes to promote exports from the country. Tatweer: Launched by Doha Bank, Tatweer is a specialised one-stop-shop solution to provide a wide range of banking and financial services to help SMEs grow to their potential. Startups can get financing for their operational needs, use an array of products and services to drive their growth, improve efficiency and bank without leaving their place of business.
“QNB has ambitious plans to launch more products this year for SMEs, develop its network by having bigger teams incorporating more sector experts and also hopes to expand its presence in terms of physical locations. Of particular emphasis is a desire to sign more equipment finance programme deals.” Hamad Hassan Al Jamali Acting Assistant General Manager, SME Banking, Qatar National Bank
Aamaly: A new programme announced by Qatar Islamic Bank to provide special services to SMEs, offering them financial services, guidance and advice. The benefits for SMEs under the programme include: dedicated relationship managers, special SME-centric banking centres, 24-hour banking, payroll services, cash and cheque collection, overnight vaulting and time deposits, together with flexible lending and financing options.
SME CONNECT | ISSUE 1
cover story
“Since there is no effective angel network in Qatar, we need to create and educate potential angels (such as high net worth individuals) about the pros and cons of becoming angel investors in order to provide equity financing. At QBIC we will, once the Board approves, provide smart financing for start-ups and scale-ups.” Ahmed Abdulwahab Head of the Incubation Centre, Qatar Business Incubation Centre
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and regular banking facilities to them,” he says. According to him, the bank places significant importance on supporting enterprise customers by providing education and training. They are collaborating with the College of the North Atlantic– Qatar (CNA-Q) to host a series of customer workshops on topics relevant to their growth. “The various initiatives in 2013 reflect our commitment to SME growth in line with Qatar’s National Vision 2030, which places emphasis on SMEs as being the key constituent of the country’s economic future and diversification,” Clark says. Enterprise Banking continues to review its products and services to ensure that it remains competitive in the market and meets or exceeds the expectations of SMEs. Start-ups ignored? With regard to ensuring SMEs have more access to finance, Clark says banks in Qatar, including CBQ, are generally able to serve established and medium-sized “SMEs,” but the higher risk profile of entrepreneurial (start-up) businesses leads to more stringent credit criteria being imposed. “This is an area where additional government support may be beneficial to help share the risk and enable easier access to finance,” Clark feels. Qatar National Bank (QNB), in partnership with QDB, is both actively promoting the SME sector and at the forefront of funding startup businesses through many channels, says Hamad Hassan Al-Jamali, Acting Assistant General Manager, SME banking at QNB. Describing the perception that SMEs are not being supported by banks as simply “wrong,” Al-Jamali says the response to QNB’s various schemes for SMEs has been steadily increasing as more people approach the bank’s officers to take advantage of its competitive and attractive offers. “The enquiries have more than tripled and we are delighted by this fact. As a result, we have launched several new products to support prospective entrepreneurs, and to date these have been very well received,” he says.Citing an example of how their associates are also involved in their programmes for startups and future entrepreneurs, Al-Jamali says officials at Qatar Building Company, QNB’s new partner for Hyundai equipment, have been offering free travel to the Hyundai plant in South Korea as a reward for selected customers.
With the government announcing plans for an economic diversification process, the doors have been thrown open for the manufacturing sector in the country. “QDB has a clear strategy to support the manufacturing sector in the country and has helped more than 60 Qatari companies, whose contribution to non-oil-and-gas exports increased by 77% between 2011 and 2012,” QDB’s Al-Khalifa says. As the government implements several mega infrastructure projects, Al-Khalifa also sees a golden opportunity for the country’s SMEs to become partners in Qatar’s growth. QDB has partnered with Qatar Rail to identify opportunities for the SMEs and is doing the same with Shell to support local firms. “The SMEs should take advantage of the programmes and schemes available through QDB and all related institutions to boost Qatar’s economy further,” he adds. QNB has five designated branches to serve the SME sector, and plans are under way to open a main branch exclusively for the SME sector in the first quarter of 2014. Top priority for health and education Though QNB has been funding all sectors, priority has been given to health and education, which have been recognised by the government as crucial for the country’s development. Al-Jamali says QNB’s role in funding startups is supported through government entities like QDB, Bedaya and Enterprise Qatar (which assists entrepreneurs through its Jadwa programme). “As a lender, we want the enterprises both to have good business plans and to be effectively run and operated. Unfortunately, it is not our role to both lend and advise businesses at the same time. That guidance should come from the appropriate government partner,” he says. As far as funding is concerned, he says SMEs can get up to QR30 million in assistance and this threshold can be raised in exceptional cases. “QNB has ambitious plans to launch more products this year for SMEs and develop its network by having bigger teams incorporating more sector experts, and also hopes to expand its presence in terms of physical locations. Of particular emphasis is a desire to sign more equipment finance programme deals,” Al-Jamali adds.
entrepreneurship
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Entrepreneurship
is not just
Ideas Some say that entrepreneurship is the result of a need and a passion to drive the need. According to the godfather of entrepreneurship studies at Harvard Business School, Prof. Howard Stevenson, entrepreneurship is the pursuit of opportunity beyond the resources you control. By Sindhu Nair
SME CONNECT | ISSUE 1
entrepreneurship
A
nother very detailed definition says entrepreneurship is the willingness to take risks and develop, organise and manage a business venture in a competitive global marketplace that is constantly evolving. An entrepreneurial spirit of innovation and ambition is essential to the process. While there are definitions galore, we all know entrepreneurs as pioneers, leaders, innovators and inventors. They are dreamers and, most importantly – doers. But there is one more characteristic that defines an entrepreneur: his resilience to failure. SME Connect talks to new-age entrepreneurs who give us an insight into their eventful lives, while experts tell us about the entrepreneurial behaviours of people in the region. While all the entrepreneurs have a passionate streak, evident as they regaled the audience at a talk organised by Qatar Science and Technology Park in celebration of Global Entrepreneurship
“Through provision of the right facilities, favourable regulations, sophisticated training programmes and groundbreaking forums, QSTP is committed to helping Qatar’s technology entrepreneurs turn their visions into reality.” Hamad Al Kuwari Managing Director, Qatar Science and Technology Park
Week with their tales of despair to success, grit and steadfastness, it was perseverance that made them continue even in the face of failure. SME Connect tries to decipher the entrepreneurial spirit to encourage the younger generation to start a fresh revolution of building new enterprises. Twenty-three-year-old Daniel Gomez co-founder of Solben, a prominent Mexican biodiesel producer and MIT Technology Review’s 2013 Innovator of the Year, was told that he would have to look outside Mexico when he insisted that the technology he needed could be developed in his home country. Today, more than 80% of biodiesel producers in Mexico use Solben’s home-grown technologies. Gomez had an independent, if defiant, streak and always “did just the opposite of what my parents 34
wanted”. His entrepreneurial skills were evident from the young age of eight, when he started selling nuts collected from his backyard. He not only sold nuts but also delegated the work of selling to his younger brother. He was “bankrupt a number of times”, never knew how to make a business plan, failed more times than he could keep count yet he still persisted for failure was one word that he had already erased off his dictionary. “For an entrepreneur a ‘no’ means possibly while a ‘possibly’ means ‘yes’,” he says. As you will have guessed, ‘no’ and ‘failure’ are words absent from Gomez’s vocabulary. Social entrepreneurship Social entrepreneur Evans Muchika Wadongo, founder and Executive Director of Sustainable Development for All-Kenya, turned a $50 (QR182) business of making simple solar lamps into a $1 million (QR3.64 million) business without any external funding. “Simplicity is the key,” he says as he explains his intent of developing innovative solutions for people who live in extreme poverty. At 19, Wadongo demonstrated his innovative leadership abilities by designing a simple solar-powered lantern out of mostly recycled materials. Through his “Use Solar, Save Lives” programme, he has produced and distributed thousands of solar lamps to rural households in Kenya and Malawi, and he is helping women initiate income-generating ventures from funds saved through not using much kerosene. The programme also helps children in pastoralist communities to access education by attending night classes facilitated by the solar lanterns. “My concern was to answer the communities’ immediate needs. To create designs tailored for the needs of the community,” he says. Wadongo engaged with his community to understand their needs, and the result of this engagement was the solar lamp, using the skills of young men in his community who had little or no formal education to bank on. “I wanted to involve them in the solution process since they were too poor to continue with their studies. Hence my solution had to be easily replicated. The distribution model was also innovative and easy to follow,” he says. Wadongo’s story is an example of what the developing world truly needs, entrepreneurs who are more concerned with the community and its needs than with the interest generated from the businesses they establish, startups that are about the greater good rather than individual gain. While social entrepreneurs like Wadongo are tough to replicate, the entrepreneurial spirit is something that can be used as a model.
Innovators can be created Research-based entrepreneur Ayesha Chaudhary is a cofounder at Windmill Health Technologies, a healthcare innovation start-up based in New Delhi, India. She received her doctorate degree in biomedical engineering from IIT Bombay, where she developed implantable glucose biosensors for diabetics, and was awarded Gargi Vishnoi Memorial award for best PhD thesis. After her PhD, Chaudhary joined the Stanford India Bio-design fellowship. It was after graduating from the fellowship; Ayesha co-founded the company. She feels that innovators need not be born, they can be created. Essence is universal While conditions in Qatar are not the same as those elsewhere around the world, the entrepreneurial spirit that differentiates an entrepreneur from the rest is the same. Dr Filipe Santos, Associate Professor of Entrepreneurship at international business school, INSEAD, feels that regulations and market needs might be different around the globe, but the essence of entrepreneurship is universal. The entrepreneurial mindset, according to Santos, is not about personality or the ideas generated but the behaviours and actions towards realisation of those ideas. “It is not about ideas alone,” says Santos, “but how they are implemented.” Entrepreneurs, he says, are action-oriented, with a vision in life driven by a need. Entrepreneurs need a way to express themselves by building something new to fill a gap or a solution to bridge barriers. Entrepreneurship is not just a way to make money, but the way young or old people craft change in their communities by building something new as a way of expressing themselves. And in the Gulf region and Doha specifically what is (sometimes) missing, is not ideas but the drive, shares Santos. “No country can thrive on one sector; it needs to diversify. It needs to use the revenues of that successful industry to diversify, and that is why entrepreneurs are necessary to find new business.” But the importance of a forward-action plan is not to be discounted. The QSTP speakers urged entrepreneurs to put customer needs assessment into action sooner rather than later. While acknowledging the fundamental importance of technology design in the classroom, most speakers encouraged attendees to start building prototypes, take what knowledge and resources are available, and move forward. “Knowledge is not enough by itself. You need to get it into practice,” says Gomez. “Intellect is that thing that helps you take a decision in a wiser way, and that’s the thing entrepreneurs should be looking for.” Santos echoes these sentiments. The real needs of the customer, professional interactions, meeting customer trust and having a good customer relation is all important for entrepreneurs. Funding
“No country can thrive on one sector; it needs to diversify. It needs to use the revenues of that successful industry to diversify, and that is why entrepreneurs are necessary to find new business.” Dr Filipe Santos Associate Professor of Entrepreneurship, INSEAD
and even business plans come much later, he says, what’s most vital is “to understand the real needs of the customer and then acquire his trust by meeting his needs. The finances, the cost analysis, requirements of man power all fall closely behind, in the path to forming a SME,” says Santos. Santos also feels that instead of sourcing resources from outside in the initial stages it is better to start by pooling resources from known sources until completely sure of the plan to be implemented. A culture of entrepreneurship The general level of entrepreneurship is very high in the US and, reflecting on the huge success stories of entrepreneurship that have come out of the Americas, Santos agrees that there is an appetite for entrepreneurship in the US which is “a cultural thing” as being a immigrant country, people come there in search of a better life. “And entrepreneurship is pursuing a vision of a better life.” “Unlike countries in Europe and the Middle East, the people there know that they are on their own and that the state or the government is not going to provide for them, which make them more self-reliant and open to starting businesses on
“For an entrepreneur a ‘no’ means possibly while a ‘possibly’ means yes.” Daniel Gomez Co-founder SOLBEN
SME CONNECT | ISSUE 1
entrepreneurship
“Qatar is a unique and prosperous country. With such a small density of population and about three-fourths of its population being expats, it is difficult to compare Qatar with any other country.” Yacoub Hobeika Partner - Audit and Advisory at KPMG
their own,” he says. Another element is how individuals accept failure. In the US failure is taken positively, while in the Europe and the Middle East it is not taken very well. It is almost taken as a badge of shame. “I tell my students, that failure is inevitable, but try to fail in a clever way by learning something new. Also, minimise or limit the cost of failure by not committing too many resources, so that failure does not halt your business. In other words, manage your failure,” he says. The negative perception of failure has to change, the true shame of failure is not to have tried rather than to have tried and failed in the process of building something. Santos talks about three types of entrepreneurship: lifestyle entrepreneur, who has a certain expertise and starts his or her own business to sell that expertise; necessity entrepreneurship, where in the absence of a job the only solution is to go and make something; and the growth entrepreneur, more prevalent in the Silicon Valley, the idea of transforming the world, or
“I wanted to involve them in the solution process since they were too poor to continue with their studies. Hence my solution had to be easily replicated. The distribution model was also innovative and easy to follow.” EVANS Wadongo Founder and Executive Director, Sustainable Development for All-Kenya
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being a leader in the market. “Here (in the region and in Qatar in particular) there is less or almost no necessity entrepreneurship models while you may have lifestyle entrepreneurship. What we have to do is to instill the tools to nurture the ambitions for a growth entrepreneur. Once you understand the needs in the market and be a leader in the market niche, your opportunity to be a market driver is unique,” he says. Examples of countries that, like Qatar, have high economic stimuli but (unlike Qatar) have still worked on their growth entrepreneurship are Israel and Lebanon. “Lebanon is an interesting example. If there was one country to single out with highly entrepreneurial attitude, it is Lebanon,” says Santos. “They (the Lebanese) are highly resilient and very open to change and a very proactive group. Being in a country which is open to new developments makes the people more entrepreneurial.” Qatar incomparable But Yacoub Hobeika, Partner – Audit and Advisory of KPMG, is categorical when he says that there is no country like Qatar. “Qatar is a unique and prosperous country. With such a small density of population and about three fourth of its population being expats, it is difficult to compare Qatar with any other country. In Lebanon, there are more opportunities for entrepreneurs since the government cannot afford to take care of all of its population hence the highly-educated population is left to their own means,” he says. Santos adds that the uniqueness of Qatar comes with strengths and weakness too. “The focus should be on how the weakness can be turned into advantages,” he says. “A new idea can be implemented, or an idea can be replicated for the region, the possibilities are infinite, and if a small percentage of the population can be motivated, then there is no end to revolutionary enterprises.” QSTP focus Educating young Qataris about innovation in science and technology features prominently in Qatar’s planned transition to a knowledge-based economy. “The pace of economic growth and development in Qatar brings great opportunity and complex challenges to the growing base of technology-focused entrepreneurs here,” says Hamad Al Kuwari, Managing Director of QSTP. “Through provision of the right facilities, favourable regulations, sophisticated training programmes and groundbreaking forums QSTP is committed to helping Qatar’s technology entrepreneurs turn their visions into reality.”
wacky design
Your ride is just a screen tap away We talk with Uber Doha’s launch team who are bringing this incredibly successful cab-on-demand mobile application to the city. By Ayswarya Murthy
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oha is not friendly to the wheel-less. Public transport is non-existent, taxis are hard to come by and the informal, disconnected network of private, and often unlicensed, drivers are often out to fleece you. So if you are a resident who doesn’t drive or are visiting for an extended duration, you are pretty much left at the mercy of the elements. That’s why for many, something like Uber couldn’t happen soon enough. A month since an informal launch in December last year, during which the app spread quietly through word of mouth, the team officially launched Uber in the city in January. It was obvious from the cozy, informal shindig the company had thrown together (as opposed to a stuffy press conference) that they had a fresh, new approach to getting things done. Majed Abukhater, Managing Director of Uber Doha, says that the city’s “receptiveness to new technologies and presence on the world stage” was what attracted the company, which is already
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present in over 26 countries. “Needless to say Doha has become an international player on the world stage with its far-reaching successful businesses such as Qatar Airways, Qatar Foundation, Ooredoo and Qatar Holding. The growth of the city and the healthy mix of global expats and Qataris made the decision to come to Doha very easy.” Not only was Doha ready for Uber, it demanded some of its best service offerings - Uber Black. “We want as many people in Doha to try out the service as possible to really see why Uber has become the hottest startup in America. Our current customers in Doha love our Uber Black product which offers a Mercedes S-Class, BMW, or Audi A6. In other cities we have launched UberLUX, UberSUV, and UberX products and in Doha we need to evaluate what would best suit the market and the city,” Abukhater says. Though the launch team in Doha is small, they have the advantage of receiving excellent feedback and guidance from Uber in cities like London, Paris and New York, which have been in operation
“To click a button on your smartphone application and have a car pull up to your location is a great experience. It’s seamless, comfortable, and easy to use.”
for over two years. “Together as a global company operating in over 70 cities worldwide, Uber has done a great job in ensuring adequate knowledge transfer from one city to the other,” he informs us. With a well-defined and tried and tested business model and a ripe market ready for the taking, all Uber needed to do was find the right partners – in this case limousine companies. “The drivers are not our employees and don’t work for Uber,” says Abukhater, clarifying how the business works. “They are our partners who provide the service to the customer while Uber provides the technology to help reach a wider audience in the city. In that way, our partners pay Uber a fee for that technology. We provide the drivers with the devices and the data connectivity in order to connect to the Uber system.” Abukhater is understandably reluctant to reveal figures; it is still early days. But he says it’s not about how many cars you have on the road but rather how soon you can get one when you need it. “Our goal is reliability. If we have 500 cars on the street but they’re only operating after 6pm then that’s not a reliable service but if we have only 50 cars and we’re able to ensure that customers can get rides 24 hours a day then 50 cars in this case is more reliable than 500 cars,” he says. It is all about making the system efficient for both the driver and the passenger. An example of this is Uber’s rationale behind not catering from advance booking of rides. “Providing cabs in advance is extremely inefficient for the drivers,” Majed argues. "In many situations, when a driver is booked in advance for, say 7 a.m., they usually have to arrive at the client’s pick up location at 6:30 a.m. and wait. In many instances the client will not begin till 7:10 a.m. or 7:15 a.m. The drivers
obviously know that advanced bookings have this inefficiency and hence always charge the clients a higher fee for the potential waiting time and that’s exactly what our competitors do.” He compares this with the Uber modus operandi. “Now imagine a situation where the customer only requests a ride at the time they need a car. The driver can within five minutes, reliably reach the customer and the customer can begin the trip right away. In that way the inefficiency of advanced booking is removed because there is very little wait time for the driver and the client is paying cheap rates because there is no need to compensate for the driver’s waiting time. This efficiency is why tens of thousands of driver partners work with Uber around the world and why millions of customers continue to rely on Uber to get around their city.” Uber is obviously still ironing out the kinks in Doha where wait times vary quite wildly and sometimes cabs are not available at all, making a last minute booking a risky proposition. However this could be because Uber was pleasantly surprised with the pace of adoption of the service in the city. “Our challenge is to ensure that our growth keeps up with Doha’s growth. Since we soft launched on Qatar National Day we couldn’t have imagined that Uber Doha would be growing as fast as it has been. The response has been better than what we expected. Our biggest cause of growth has been a result of word of mouth marketing. We knew that Doha would be very receptive of Uber and that’s why coming to Doha has been part of Uber’s plan for a very long time. Residents of Doha are very well connected to the rest of the world and therefore many people enthusiastically welcomed our launch since they have known, used, and loved Uber from North America, Europe, and Australia.” SME CONNECT | ISSUE 1
branding
Business is Brand Your brand must stand for something that’s real, authentic, meaningful and memorable, delivered in an engaging, creative manner. Anthony Ryman compares creating a small business to having a baby. Well, almost...
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reating a small business is not vastly dissimilar to having a baby. OK, it is HUGELY different, but there are some similarities. Stay with me while I elaborate. Nine months of detailed planning and conceptualising leads to launching something that, quite frankly, is so mind-bogglingly different and alien to all expectations that we’re never really prepared or equipped to deal with it. We just do the best we can and usually we get by on commitment and dedication, hoping against hope that if we can give this little thing enough love, care and attention, he/she will turn out OK, survive and maybe even be happy and successful. As a small business owner, you’re all things to all people – tea maker, fixer, nurse, counsellor, lawyer, accountant and a jack-of-all-trades. Invariably you’re so busy at the coalface trying to deliver that you focus on just the practicalities and don’t create a vision for your brand. Creating a brand is tantamount to fulfilling a dream. You’re asking people to believe in you and to buy into your vision. The way to create a memorable brand is to ask yourself, how do you want people to feel about your product/service? Why
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should they believe you? If you stay focused on asking and answering these questions, then you move beyond the functional/descriptive positioning of your brand towards a more evocative, emotional and experiential positioning. This is important, because brand and its expression is much more about what your company is and what your dream is than about the product. This is how you’re going to be able to differentiate from everyone else and achieve stand-out and individuality. Look, Coca-Cola know how to make bottled fizzy sugary black water. They worked out the manufacturing and distribution process and figured out their 5 P’s of Marketing (Person, Place, Price, Product and Promotion). They spend 90% of their focus testing the pulse of society, finding out what we want, what we aspire to, what makes us sit up and take notice. Coca-Cola are not in the business of selling bottled fizzy stuff; they tell the consumer they’re delivering happiness with every mouthful, like Fedex are not in the business of delivering parcels on time – they know how to do that! They say they’re in the business of delivering peace of mind. You need to find out what you’re delivering. And
it’s not the product. That’s secondary. It’s your dream. Your vision. Your purpose. This move away from function to experience is everything. In a world where thousands of advertising messages are beamed at us every day, where logical choice is almost impossible, brands represent transparency, authenticity, reassurance, consistency, status and a sense of belonging – everything that enables human beings to define themselves. Owning brands and branding have become conceptual shorthand for interpreting and decoding the world around us. Brands promote a sense of identity and are therefore ideally suited to the age of the “instant now” world we live in. Your brand must stand for something that’s real, authentic, meaningful and memorable, delivered in an engaging, creative manner. That’s one of the reasons why design is crucial in branding and ultimately in business. Industry research puts strong positioning as delivering seven to 10% ROI (return on investment), so there’s a strong business case for developing a powerful brand. Coca-Cola’s brand value is quoted at $71.86 billion (QR261.57 billion) (source: Interbrand). Because branding is about creating and sustaining trust, it means delivering on promises. The best and most successful brands are completely coherent. Every aspect of what they do and who they are should reinforce everything else, establishing a sense of reliability, credibility and trust in the minds of their customers. You have to have a good product in the first place to build a great brand. With the rise of the internet and social media, brands increasingly emerge as the most significant “spiritual” and cultural connector in our contemporary world. It’s how we recognise our “tribes” and, most importantly, how we project and define our needs and aspirations, our desires and our wants. The most successful brands in the world belong to customers, not their manufacturers or market-
ers. Brands develop a life and personality of their own, which tend to be quite different from when they were on the drawing board. By taking ownership, customers are saying "look, I know you’re selling to me, but this gizmo/service is actually pretty cool so I don’t mind, as I use it to project my personality to my tribe!” Brands are so powerful because they combine function and appeal to emotions (inspiring loyalty beyond reason). There’s no set formula to create and manage brands. Brand guardianship is a very intuitive, creative, non-scientific (intangible) process. We imbue brands with personality, so they have a life of their own and then they change and morph depending on how they are used. Brands need to be more creative, touching emotions and resonating with consumers through insights that reflect who we are or want to be, complementing and expressing our personality. We enjoy brands that help us say something about ourselves because we (partially) define ourselves through them. Consumers understand advertising very well and there is a BIG backlash to being sold to. It’s almost as though they have generated antibodies to traditional marketing. At Grow, we call it moving from “broadcast” – where you’re shouting about your product – to “bookmark,” where you give people the opportunity to market for you. Consumers want products and services that are both useful and relevant, and they want the companies that make them to behave well socially and to be effective and meaningful contributors to the community in the world we live in. Brands are aligning themselves to stand for something that’s much more than the product. It’s about a point of view and value system, a sense of purpose and philosophy of being that defines and creates hope and promise and builds trust. Let’s see where this takes us.
“We imbue brands with personality, so they have a life of their own and then they change and morph depending on how they are used. We enjoy brands that help us say something about ourselves because we (partially) define ourselves through them.”
Anthony Ryman is Managing Director of Grow, a refreshingly Doha-based creative advertising and design agency focused on brands. For more information please go to http://www.growqatar.com or e-mail anthony@growqatar.com
SME CONNECT | ISSUE 1
expert talk
“I think of programming as a liberal arts discipline. Everyone should learn to programme.” Steve Jobs
Innovation’s next decade While the world economy continues to look shaky, the technology industry has never looked stronger. Now is perhaps a good time to stop for a moment and reflect on what the next decade will be all about for the industry. By Sramana Mitra
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y vision of what the technology industry needs to focus on is best described by the title of Michael Dertouzos’s book The Unfinished Revolution (Dertouzos was the head of MIT’s Laboratory for Computer Science, where I was a graduate student). The revolution that Dertouzos talks about is in “human-centric” computing. Indeed, today’s open problems are not so much in the domain of chips and networking as they are in the more human-centric domains. For example, the technology that makes it possible for a digital worker in rural Africa or smalltown India to work on data processing projects already exists. What do not yet exist are systematic methods of locating such projects and connecting these remote digital workers to them. Similarly, the basic technology for telemedicine does exist, but the socioeconomic framework to connect willing doctors to needy patients around
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the world does not. In some of these areas, technology has already played a phenomenal role. Microlender Kiva has created the socioeconomic model for crowd-sourcing micro-finance investments and matching them with projects. And Egypt’s revolution is a salute to Facebook and Twitter’s role in the organisation of a society’s bid for democracy. Bollywood actor Salman Khan’s attempts to democratise K-12 education through video lectures speaks of the same philosophy of using technology to impact humanity on a large scale. The Renaissance In exploring the possibilities for our future, let me revisit certain historical phenomena, especially the Renaissance. Although it can be difficult to pin it down in a definition, the Renaissance can be understood as “a cultural movement that profoundly affected
European intellectual life in the early modern period. Beginning in Italy, and spreading to the rest of Europe by the 16th century, its influence affected literature, philosophy, art, politics, science, religion and other aspects of intellectual inquiry.” (Wikipedia) What was striking about the various Renaissance movements was the extraordinary degree of intellectual, artistic and social achievement, and the tremendous cross-pollination among the leaders of those different disciplines. Leonardo da Vinci was the quintessential Renaissance man – an engineer, a painter, a scientist – with a mind capable of assimilating ideas from multiple disciplines and pushing the envelope in several. That same capacity for acute observation, experimentation and smart synthesis that is the hallmark of a Renaissance mind was in part the secret of Steve Jobs’s success. Jobs drew from art, architecture, design, sociology and computer science to build Apple into the most innovative and exciting company in the world. I believe that in the decade ahead the style of thinking that will have maximum impact is this ability to assimilate ideas from across domains and disciplines and apply them to innovation and entrepreneurship, instincts already deeply woven into the technology industry’s fabric. In other words, it is the Renaissance mind that is likely to create the most important companies in technology. Now, if you agree with my premise, the next question is, where do you find such minds? Where do they naturally hang out? I did my undergraduate work at Smith College in the picturesque town of Northampton, Massachusetts. My recollection of those four idyllic years includes beautiful New England fall colours, pristine snow, and long hours of programming on a transputer that the Computer Science department bought with a grant from GE. They also include a class in poetry writing, one in English novels, and a jazz dance unit, as well as theatres, concerts, exhibitions. My majors were Computer Science and Economics, but Smith, being a quintessential liberal arts college, also offered the opportunity for me to develop as a Renaissance thinker, which was my natural instinct. Today, 20 years after my graduation, the entire
system of liberal arts education in America is under threat. America is falling behind in the sciences and mathematics. Youth unemployment, ballooning costs of higher education, obscene levels of student loans are all raising questions of economic sustainability. Against that backdrop, it is legitimate to ask, what do you do with a degree in philosophy? Now, if you are aligned with my point of view, then you could try to combine a philosopher with a computer scientist and an entrepreneur and see what happens. And therein lie some of the answers to our questions. America’s great system of liberal arts education naturally has created institutions where Renaissance thinking can be cultivated systematically. Those colleges and universities could become great cauldrons of innovation. But some change is necessary. In a 1995 interview with journalist Bob Cringely (wonderful, highly recommended), Steve Jobs made a statement: “I think of programming as a liberal arts discipline. Everyone should learn to programme.” Jobs was right. Technology liberates. In the modern world, not being able to use technology to its fullest power is a real disadvantage. My friend Barry Katz, a professor both in Stanford’s Department of Mechanical Engineering, and at California College of the Arts, and a fellow at international design consultancy IDEO, reminded me the other day: liberal arts are the arts that liberate. It further strengthened my belief that everybody should learn to programme, and that the liberal arts colleges should make it compulsory for students to have at least a course or two in computer science to graduate. Pursuing the same vein of thought, I have another radical idea. Everybody should have at least a year’s training in entrepreneurship. The liberal arts programmes should make that compulsory for students as well. Why? Because that will turn thinkers into doers; because it will further liberate them, unleashing vast pools of creativity and action in our young. And it will align the American education system with innovation’s next decade: human centric, pervasive, and magnificent.
Everybody should have at least a year’s training in entrepreneurship. Because that will turn thinkers into doers; because it will further liberate them, unleashing vast pools of creativity and action in our young.
More about the Guru
sramana mitra Founder, One Million by One Million Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs globally to reach $1 million (QR3.64 million) in revenue and beyond. A Silicon Valley entrepreneur and strategy consultant, Sramana writes the blog Sramana Mitra on Strategy, and is author of the Entrepreneur Journeys book series and Vision India 2020. From 2008 to 2010, She was a columnist for Forbes. As an entrepreneur CEO, she ran three companies: Dais, Intarka, and Uuma. Sramana has a master’s degree in electrical engineering and computer science from the Massachusetts Institute of Technology.
SME CONNECT | ISSUE 1
ideation
“Clouding” Qatar Business houses in Qatar are yet to catch up with the concept of cloud computing but the future for “cloud” in the region, particularly for SMEs, is bright. By V L Srinivasan 44
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any people are unaware of cloud computing but are using the services offered by cloud providers, and benefitting, without knowing it. In its report entitled “Qatar’s ICT Landscape 2013”, Qatar’s Supreme Council of Information and Communication Technology estimates that nearly nine out of 10 companies in the country are unaware of the cloud and its potential for helping their business. “Even so, looking forward, among those aware of cloud computing but not currently using it, 25% of small establishments, 36% of medium, and 47% of large establishments indicated that they intend to use cloud services for e-mail, website, ERP (enterprise resource planning), security and other applications in the future,” the report adds. The research firm Gartner estimates that revenue in the wider MENA cloud services market would reach $462.3 million (QR1.68 billion) in 2013, a 24.5% increase from the previous year. Public cloud services are expected to gain a foothold in the next few years, and, for example, Qatar First Investment Bank (QFIB) is developing a private cloud infrastructure in partnership with Microsoft Gulf. Private sector ahead While IT departments in the GCC are adopting the latest standards and making strides updating IT infrastructure, larger enterprises have been the main adopters of cloud services in the private sector. Microsoft Middle East and Africa General Manager (Marketing and Operations) Michael Kogeler says: “The advent of the cloud and the explosion of smart devices have revolutionised the way we live, work and play, and I think the future of cloud in Qatar and the region is bright. For SMEs, it represents an opportunity to grow their company, manage costs, empower their employees and ensure their business is secure. Services and devices such as Office 365, which works from the cloud, and Surface, recently launched for business use in Qatar, are responsive solutions to these trends." According to Kogeler, the number of small enterprises using paid cloud services is expected to triple in the next three years. “In Qatar and the GCC, I think one of the greatest opportunities in cloud computing is in supporting the SMEs. Microsoft has a number of SME customers in Qatar who have improved productivity since adopting cloud-based solutions. One was able to gain constant access to customer information by storing it in the cloud, helping the company issue orders more smoothly and quickly and grow the business,” he says. Computing is strategic Dr Ashraf Aboulnaga, Principal Scientist, Distributed Systems, at Qatar Computing Research Institute (QCRI), says cloud computing is strategic for Qatar’s companies since it simplifies how they
“For SMEs, it represents an opportunity to grow their company, manage costs, empower their employees and ensure their business is secure. Services and devices such as Office 365, which works from the cloud, and Surface, recently launched for business use in Qatar, are responsive solutions to these trends." Michael Kogeler General Manager (Marketing and Operations), Microsoft Middle East and Africa
fulfil their computing needs. Instead of relying on in-house computing infrastructure and expertise, companies can depend on cloud providers to supply the computing services needed. “Instead of running their own e-mail servers, companies can rely on a cloud-based e-mail service such as Gmail. This model extends beyond e-mail into other types of computing needs, and results in significant cost savings for the companies. It also simplifies the process of accessing computing services, and enables companies to easily access vast amounts of computing resources. Cloud computing is starting to get traction in Qatar, and it can be
"Adopting cloud computing is not without its challenges. For instance, when a company migrates its applications or services to a cloud provider, there is the potential of vendor lock-in, by which the companies cannot easily move from one cloud service provider to another. Through standardisation and migration technologies, people are working across the globe to simplify the cloud-to-cloud migration procedure.” Dr Majd F. Sakr Associate Professor, Computer Science Department, Carnegie Mellon University
SME CONNECT | ISSUE 1
ideation
“Instead of running their own e-mail servers, companies can rely on a cloud-based e-mail service such as Gmail. This model extends beyond e-mail into other types of computing needs, and results in significant cost savings for the companies.” Dr Ashraf Aboulnaga Principal Scientist, Distributed Systems, QCRI
encouraged by improving awareness and providing help to companies that want to transition to a cloud environment,” Dr Aboulnaga says. "Businesses and industries in Qatar need new cloud services and solutions to improve operational efficiency and gain a competitive edge. At QCRI our distributed systems research is focused on developing next-generation cloud infrastructure and applications to maximise performance, increase scalability and handle more data-intensive applications," he adds. Cloud computing benefits Dr Majd F. Sakr, Associate Professor in the Computer Science Department at Carnegie Mellon University-Qatar, says the benefits of cloud computing are numerous and it has the potential to help start-ups and SMEs, financially or otherwise. “Cloud computing is simply the transformation of computing from a product to a service. Computing resources can now be leased on a pay-as-you-go 46
basis using cloud computing. Since SMEs do not have large capital, they no longer have to procure, install and maintain their own computing resources. Software can be maintained and updated directly on the cloud, enabling all users to benefit from the enhancements without having to do any maintenance on their own computers. “Another advantage is the ability to vary the amount of leased resources based on a company’s current needs. This elasticity provides a major advantage in limiting capital expenditures when addressing peaks in computing needs.” says Sakr. This freedom allows SMEs to compete with larger companies. Dr Sakr is leading a team of experts at CMU-Q, Qatar University and Texas A&M at Qatar under a Qatar National Research Fund (QNRF) National Priorities Research Programme (NPRP) – funded grant to develop new cloud computing approaches and services that meet the needs of Qatar’s scientific community. The project is aptly named “Qloud.” The adoption of cloud computing is growing in the world. However, there still are some technical, security and regulatory issues that require development to widen adoption. “Adopting cloud computing is not without its challenges," Dr Sakr says. "For instance, when a company migrates its applications or services to a cloud provider, there is the potential of vendor lock-in, by which the companies cannot easily move from one cloud service provider to another. Through standardisation, people are working across the globe to simplify the cloud-to-cloud migration procedure." Cloud computing has the potential to be a game changer in how we procure, deploy and utilise computing. Like Qatar, most countries are formulating policies to regulate cloud services, and Dr Sakr says that services offered by cloud providers will continue to mature with time. The challenge will be building short- and long-term strategies to benefit entities in Qatar by effectively adopting cloud services, he adds.