Anne Habiby: Entrepreneurship and Job Creation in the Arab World
SUSTG | 10.24.12
In addition to featured speakers such as President Bill Clinton and Mr. Abdullah Alireza the recent C3 Summit in New York City presented a number of compelling panel discussions addressing commercial and trade issues related to doing business in the MENA region.
SUSTG has featured the remarks at this event of Abdullah Alireza (Global Economic Drivers: Saudi Arabia’s Evolving Role) and Randa Fahmy Hudome (How do I get my business over to the Middle East).
This post highlights the insightful comments of Anne Habiby, co-founder and CEO of AllWorld network, who was part of the C3 session focusing on Entrepreneurship and Job Creation in the Arab World and How the US Can Help.
Anne Habiby: Entrepreneurship and Job Creation in the Arab World and How the United States Can Help
Thank you. First of all, a very, very big thank you to a few people. I’d like to thank you for inviting me. The C3 for inviting her mother and my mother who are both here, and we’re delighted to have both mothers here. In the Arab world, your mother is, you know, forget the patriarchy. It’s certainly a matriarchy. So thank you for inviting our mothers and also to many friends in the audience, Ambassador Jordan, Judith Kipper and many others. So thank you for staying for our panel.
So I want to kind of go way back and then jump way forward. So I’m going to go back 10 years and then jump 10 years, because the last 10 years have taught me an unbelievable amount about entrepreneurship. And my summary conclusion is, I think, we’re in the first five minutes of entrepreneurship and it’s a whole new realm and a whole new world. So I’d like to go back and then fast forward and then tell you what we’ve found in the work we’ve done which is primarily the “Arabia 500.”
Before I do that, to test how ‘Arabized’ you are, a show of hands for those who know what my last name means, what Habiby means. For the rest of you, so it’s very easy for you to find me in the future, it means “my love” or “my darling.” So you know you just walk around the Middle East and say you know “that Habibi person” and they’ll lead you to my father or to me.
So first of all, about 10 years ago, actually 15 years ago, a very famous Harvard business professor, and I was a young thing, young economist, at that time myself, founded an organization to do something at that time that was totally nuts. And that was to find and scale the growth entrepreneurs of America’s inner cities – very poor, urban areas that at that time were afflicted by the disturbances in Los Angeles. And we at the Harvard Business School thought, “Certainly we business people must be able to do something.” And we did a lot that didn’t work and then we totally accidentally fell upon the most extraordinary thing. This is what will give birth to AllWorld.
So people said to us, “Boy, those reports with all those bubble charts, it’s so boring.” There’s only one man who read every single report we wrote and he happened to be in the White House and he spoke yesterday. His name was Bill Clinton. But he would write to us and say, “Footnote 32, could you explain footnote 32?” you know from the office of – and you’d think, well by George I better explain footnote 32 a little better. But he was the only one who read any of this stuff.
And then we happened upon this idea of creating something called a ranking of very fast growing private companies in America’s inner cities called the “Inner City 100.” This was 15 years ago. We went about looking for these fast growth companies. You’ll see now what we do in the Middle East in a moment. Well we went to every mayor, “Who are your fast growth hot companies in America’s inner cities?” and they’d say, “What?” So in the first year of creating the “Inner City 100” with “Inc.” magazine, which creates the “Inc. 500,” we found 140 companies, which for those of you who are in business, is a disaster. You don’t create a ranking of 100 based on 140. That’s basically anybody who wants to go to the party is on the ranking. That’s very bad news.
But ten years later in 2008, 8,000 companies applied or were nominated to the “Inner City 100.” What we discovered is a whole new way to move the dial on entrepreneurship and I’ll be very honest, we discovered it by accident. There was no genius at our business school who cooked this up. We just totally were baffled. And so this is what we discovered. We discovered that if you have large data and information for every city, every state every industry, you were agnostic but the data were the same, that the markets knew exactly what to do. So we would get calls from CALPERS and CALSTRS. I mean imagine our surprise when getting notes from the President, calls from the largest pension fund at the time saying, “How do we invest? How do we do this?”
Every bank, and then Bill Clinton had the genius to say if this information is true, I’m going to reengineer banking policy in the United States of America. If one bank wants to buy another bank and they take withdrawals from the inner city, you’ve proven they should be investing in the inner cities. So then came the whole thing of banks calling us.
What we discovered is that information has infinite upside. We were a small non-profit. We had no money, we just had nothing going for us except information. And we realized, by God, you could remap the entire investment community, the policy community, entirely by accident, because Bill Clinton figured that one out, and everything else by information.
Google has since gone on to make that point in an extreme way. They make nothing, except they organize information that everybody else can organize. So we thought about this and we thought more and more and then what we discovered is the moment the “Inner City 100,” in the next hour the phones would ring for those 100 companies. Pepsi would like you as a minority supplier. We didn’t have to do anything. The phones would ring. Co-visibility.
We mapped this for ten years and we came up with a theory called visibility economics. Which is, if we could create a data infrastructure of large data and make that data visible, markets would do everything and we would just sit back and watch. Well, that is basically the business model of our organization called the AllWorld Network. Could we remap the entire emerging world creating the “Arabia 500” where we started, because what is my name? Habiby.
So you don’t start in Africa; you don’t in Asia. You start in the Middle East. And we Palestinians don’t have much, you know we might as well just take over the Middle East. So we started with the “Arabia 500” and we’re building on the “Africa 500” and the “Eurasia 500” but the whole point you see from our history was an accidental discovery. Could we remap the whole world – not with the World Bank catastrophic data: how bad you are in education, how bad you are in literacy, how bad you are in bridges – just reverse engineering. How good are you?
So we set out a mission that people laugh at us literally you should see how they laugh at us, but we will laugh last. And it is to find and scale all the growth entrepreneurs of the emerging world by 2015. So we started in the Middle East with the “Arabia 500.” First we worked in many, many countries and then we published an article in the Harvard Business Review because we were finding something that we did not expect: hundreds of companies that were awesome. If you just change Beirut and put Boston, you would’ve believed us that they just had the wrong address. Unbelievable companies.
And we published an article called the “High Intensity Entrepreneur” and the joke we had with the publishers, that anybody reading the Harvard Business Review would assume we’re talking about an American and then they’d read the article and go “Oh! Nope. It’s a Palestinian. Nope. It’s a Saudi.” And so forth.
So we expanded that to the “Arabia 500” and I’d like to take a minute to tell you what we found. Tell you how I think visibility can actually create massive new value and new wealth in the next few weeks and the next few months.
So the “Arabia 500”.. ..We unfortunately had to plan in the middle of the “Arab Spring” and the financial catastrophe of the world, so it was a little hard to find a ranking of 500 very fast growing privately held companies in the middle of the largest recession we had ever seen. But the Middle East came through. We created the “Arabia 500.” If you find the ranking you’ll see we lied a little bit. It’s really 480 companies. But 480 companies powered through and grew at substantial rates.
They have to give us audited statements so we know a lot about these companies. They have to fill out forms and it’s exactly like the “Inc. 500.” We did not change the criteria. Basically these companies if they were in Boston instead of Beirut they would be on the “Inc. 500” in the United States of America.
So what did we find? Their growth rates were 60% a year. That’s ten times the private sector growth rate of the region. So they’re obviously doing something. They can thrive in complexity. They have at least a 3-year track record of 60%. The average size is not 2000, its $20 million, growing at 50% a year, 60% a year. Not bad. They collectively are 15 billion in sales. That’s a huge common market right there if you just tapped them growing at 60% a year with a cumulative top line sales at 15 billion, that’s not a bad market. They’re actually very competitive. A third of their sales are internationally, so outside the local markets. So it can’t just be their uncle or their brother. They have to at least go on to the extended family in other countries, but internationally competitive. They are an average of seven years old.
So they were not invented by the “Arab Spring” but they were invisible. They were sitting there, lingering. Most expect to found another company, another company in the next few years so that’s very encouraging. The 500s will birth yet another 500 and many have spun off entrepreneurs, there are employees who spin off. If you look at the American ecosystem, and you ask where do entrepreneurs come from? They come from Microsoft. They come from Google. They spin off. So we see that phenomenon occurring.
We were in Istanbul together for the first time when the “Arabia 500” sat in a room and they literally, the Jordanians didn’t know each other that well, although the Jordanians I must say through Usama, know each other quite well. But I assure you the Saudis didn’t know each other. Tunisians had no idea. The Moroccans, the one Syrian, bless them, the four Palestinians – hooray – no one knew each other. And they were there and it was electrifying because they had this massive mutual interest and they had just discovered each other and the world was just discovering them and the phone was just ringing. So if all of this is there, what’s the problem?
Well the problem is they’re not visible. The “Arabia 500” is just starting. And if you’re not visible, you can’t reach true scale. You simply will get to 5 million, 20 million and that’s it. No economy succeeds with a lot of companies that are 5 and 20 million. That’s a disaster. In fact I really take issue, I have an annual fight with the World Bank who says, well these are successful companies, why bother? These are not successful countries and until a 20 million company becomes a 200 million to 2 billion, you’re nowhere. So they need visibility. They have a massive visibility deficit. And the visibility deficit really retards all that these countries can do.
So lastly where are we going? The “Arabia 500” is the anchor so the Middle East is very important to us. And now we have the “South Asia 250” that’s about to happen, the “Africa 500” is in the making, Eurasia, Latin America, and bless the poor Europeans they’ve been applying to one of our rankings that we don’t have yet because by the time I think we’re done, Europe will be the next 500 and the next developing region that we work on. So we’ve literally had, literally Spaniards and so one applying, “Please put us in the ‘Arabia 500’, because in the past we were related to the Middle East.”
So where large data lets you do everything, Bill Clinton invented redoing policy – we didn’t. If you put the data out there consistently, rigorously, policy will change. Investment will change. You basically close the distance between all of the companies and all of the actors, thousands of them all just sitting there. We watch this unfold in front of us. So we believe the next vector of change is visibility. That if in fact you have visibility, Google, eBay… is a visibility company. Amazon is a visibility company. We do visibility and data for entrepreneurs. You can actually power massive transformation of new wealth creation.
We’re also building entrepreneurial informatics. So when we have all of the entrepreneurs that are on our website, we can see what profiles they look at and what they look for so it allows us to test what’s the next thing they’re interested in. So we can tell you with the “Arabia 500” what they’ve been doing for the last few years but as we map, like Amazon does, surely you would like to buy this blender because you’re interested in this, we can tell you what the entrepreneurs are searching for and what they’re looking for. There are many things we’re building.
My conclusion is not only are the “500s” important, their signaling power is transformative. And economics is about information. And if you can signal something at the scale of 500 you can remap markets. I would just conclude with three things.
Visibility has breathtaking reach. Simply, Google has discovered you cannot understand even the power of visibility.
Secondly, the pace of visibility is accelerating so our whole model is this breathtaking reach that we don’t control, we just enable, it’s accelerating.
And I hope you would join us in Dubai this December where the “Arabia 500” will be together for only the second time and they will be joined by the “South Asia 250.” And imagine 750 hot job entrepreneurs in a room. I assure you they wouldn’t have allowed me to speak this long. They would’ve thrown up their hands, thrown something. They’re a wild calamitous bunch. But they are our future and I think giving them visibility is a way we create new value overnight.
So I thank you again for our mothers being here and for this opportunity. There’s a lot of information right on the brochure and the website will give you all the information.