Live blogging from the Presidential Summit on Entrepreneurship
Update: Editor: in his speech Jerry Yang founder of Yahoo praised ArabCrunch.NET the first and largest social platform that empowers and connects Arab entrepreneurs and geeks.
As many of you know, on April 26-27 President Obama is hosting the first ever “Presidential Summit on Entrepreneurship”. I arrived in Washington DC this morning and have been covering the event for ArabCrunch.
The very first session brought together a diverse set of people: Tri Mumpuni from Indonesia, a non-profit champion establishing micro-sized and community-supported hydro-electric powerplants across the Indonesian islands; Waed al Taweel, a young Palestinian woman who started her own student-run business at age 17; Sandiago Uno, a self-made Indonesian coal magnate; and Douja ben Mahmoud Gharbi, a successful business owner and President of 5 companies.
Their approach varied considerably but all agreed: Islam and entrepreneurship are very compatible, and the Muslim people can be excellent entrepreneurs. What is lacking is knowledge, awareness, and a support system – almost every person in these countries looks for a professional job, a steady income. Very few people turn to entrepreneurship.
Waed started her event-planning business in order to win a competition sponsored by Injaz Al Arab. Not only did her team win, but she was voted best student CEO. Waed highlighted that, for her, the most valuable part of the competition was learning how to operate a business: the team you put together, the business plan, financials, and, 7 months down the line, return to shareholders. Her company returned 200% investment in 7 months.
Sandiago started his own company, an advisory business, after being fired during the Asian financial crisis. Now worth $400million+ as estimated by Forbes, Sandiago became an entrepreneur out of desperation: “I didn’t even know what an entrepreneur was, I just needed to put food on the table”. In ten years, his 4-employee company now employs over 15,000 people.
Tri Mumpuni has helped build 60 community-owned hydro-electric powerplants throughout Indonesia. By allowing farmers to own, operate, and make money from the powerplant, she is raising awareness of what communities can do to help themselves.
After the morning session the delegates broke for lunch (Press not invited, unfortunately), where Jerry Yang delivered a keynote. We tried to get Jerry for an exclusive ArabCrunch interview, but he had to leave immediately after lunch due to a packed travel schedule.
The second session began with remarks by Dr. Rajiv Shah, Chief Administrator of the US Agency for International Development (USAID). The focus: Access to Capital for entrepreneurs. Panelists were Arif Naqvi, CEO and founder of the Middle East’s largest Private Equity fund, Abraaj Capital; Melody Barnes, Director of the White House Domestic Policy Council; Fred Hochberg, Chairman and President of the U.S. Export-Import Bank; Arif Naqvi, Chairman and CEO of Abraaj Capital; and Putera Sampoerna, Founder of the Sampoerna Foundation in Indonesia.
Dr. Shah discussed the activities of USAID, providing microfinance and other help to muslim countries, but admitted that the agency could do much more to take risks, find and finance entrepreneurs.
Arif began by sharing his belief that we are living in a “watershed moment in history”. After the global financial meltdown, the repercussions will be seen for years to come: people will become more conservative in nature, they will save more, and control their spending. This could be a problem because entrepreneurship is inherently about risk-taking; could entrepreneurship decline because of the crisis? Arif thinks that in MENASA, the largest problems of the crisis were somewhat isolated. Both because of oil exports and government spending, entrepreneurs were somewhat buffers. However, Arif admits that venture capital or small business equity has never gotten off the ground: even Abraaj has only focused on larger deals. Arif believes there are issues in MENASA that can only be addressed by venture capital: a young population, a population with huge growth prospects: 30% of the world’s population, half of them under 25. There will need to be 100million jobs created just to keep unemployment constant: this is not going to happen by government spending or large enterprises, but by entrepreneurial innovation. The new generation will need jobs, and satisfaction: new products, international access.
Fred Hochberg was next, discussing the innovation we have seen in the 21st century: an investment made in wind turbines made in California, deployed in Mexico, and sponsored by EDF, a French company.
Melody Barnes discussed different ways of financing social entrepreneurship – the other side of the coin from private sector/business entrepreneurship. Melody conceded business entrepreneurship created 50% of new jobs in last 10 years, but social entrepreneurs transform the US and the world. She discussed people like Geoffrey Canada and the Harlem Children’s Zone, providing education for socially disadvantaged people in New York. Melody has borrowed the idea and is working across the country to bring it to scale and educating people from the grass-roots level. Melody discussed partnerships with the private sector to maximize the public sector’s money, the Social Innovation Fund.
Next came Putera, who discussed his businesses in Indonesia. He started with manufacturing cigarrettes but sold his company to Philip Morris for over $5.4 billion. Putera believes that microfinance does relieve poverty, and we need to work on developing small businesses – people that need $10-20k in capital. He hopes that what will come out of this Summit will be a movement to promote entrepreneurship, similar to the microfinance movement started by Mohamed Yunus. Putera believes promoting entrepreneurship is an equation: on the left is the entrepreneur – we have to help them visualize the possibilities for their business, how to start, how to obtain financing, teach them business skills. On the other side of the equation are the sources of capital; there are no Angel funds abroad, we need to promote grass-roots resources similar to Angel networks – which is very complementary to the Shariah concept of financing. Banks do not lend to start-ups or small enterprises. In the middle of the equation is a center that can bring the two sides together: a communication portal connecting entrepreneurs to investors, educators, and mentors. The big challenge will be connecting entrepreneurial knowledge to rural areas. He discussed his belief of the need for a global entrepreneurial center, uniting fragmented efforts into a global push for development.
Questions began; a gentleman from Pakistan asked the panel on their views of what the NEXT step should be: how can we actually achieve the goals laid out for the Summit. Arif responded: each country/region has its own initiatives going on, and he believes that it’s OK to allow them to proceed separately. What is key is for successful business leaders and corporations to reinvest into their communities, which will pay dividends down the line.
Fadi Ghandour spoke in defense of microfinance: 99% pay-back rates, 80% women borrowers – this is an excellent way to raise living standards and promote entrepreneurship.
A delegate from Egypt discussed the problem of mind-set: people are not open to taking the risk of becoming entrepreneurs. Putera responded: we cannot rely on Public funding on a long-term basis, a mind-set change will start by raising the awareness of the abilities of the people to own and operate successful businesses. Governments will need to encourage and incentivize the private sector (banks, etc) to invest in small and medium size businesses. There is a strong need for angel funds to help entrepreneurs start up.
Melody discussed the movement of Corporate Social Responsibility; aligning social programs with a company’s bottom-line. But she does think there’s a big difference between people focused on shareholder returns and those focused on community returns. She also mentioned that the US is learning along with the Emerging markets how to best promote social entrepreneurship.
Arif discussed why venture capital has never taken off in MENA: no exit opportunities to date, but this is changing. Large businesses have brought borders down, and now the potential for businesses are region-wide instead of country-wide – now this is attracting hard-nosed venture capital investors. Arif also discussed the need to keep changing and adapting: “today’s peacock is tomorrow’s feather duster” – funny guy.
Main theme through the session: real change will come from promoting entrepreneurship in small and medium sized enterprises, and this can be profitable. Small entrepreneurs are not beggars for social help, they are a unique and revolutionary opportunity for investment.
#image: Abdulsalam Haykal , Young Syrian entrepreneurs Society SIYA founder CEO of transtik and ArabCrunch board advisor with Mumamad Younis.