By Pranay Jethwani
Intern at BECO Capital, and student at Babson College, in Wellesley Massachusetts
As an aspiring entrepreneur in high school, I had questions that I’m sure many have asked themselves regarding success in the field of entrepreneurship. With companies such as Uber and Airbnb disrupting entire industries, one can only imagine what the future will look like. Dubai, of course, has its own crop of extremely talented and driven entrepreneurs with the aim of enhancing our lives. Entrepreneurship is all about experience. Therefore, the experiences of innovative founders would surely provide an insight into the challenges faced, the risks that paid off and the lessons learned along the way. This inspired me to start a project to acquire the vital pieces of information that could act as a starting point for budding entrepreneurs seeking to change the world as we know it.
A true visionary, Dany Farha has experienced anything and everything there is to experience when it comes to entrepreneurship. His inquisitive mind coupled with vast knowledge make him truly admirable. The mind behind Bayt and Intercat, Dany now aspires to serve the next wave of entrepreneurs in his current role as a Managing partner at one of Dubai’s leading capital investment companies, BECO Capital. His experiences and views are invaluable.
Starting your first venture in Dubai more than a decade ago, how different is the current landscape for entrepreneurs of today’s generation?
In the older days, it was much more difficult to get funding. Over time you had to build relationships with banks because you needed a lot of bank facilities which they don’t like giving. Especially back then, they would rarely give these facilities to people they didn’t know and didn’t have a track record.
Today, SMEs (small and medium sized enterprises) can go to multiple sources of finance and borrow money. There are angel investors around, there are lots of different networking groups, there is crowd funding (although it hasn’t been very successful in this part of the world yet). Banks are now putting a certain proportion (5% of their total balance sheet) towards funding SMEs. That figure was 0% twenty years ago when I started out. So it’s much easier but it’s not a cake walk and it should never be too easy otherwise we’ll have another crisis on our hands.
The second thing is that when I started out in this part of the world, apart from the prior generation, there weren’t too many people that started their own businesses early on. When you don’t have a support group around you, it’s very difficult. Today, you can find support groups online, there are so many different associations and networking groups that you can find. It’s just become a lot more culturally acceptable to seek advice. It is also much more acceptable to be an entrepreneur than it was in the past and in particular to start something that people didn’t understand.
Have you always had an eye for an opportunity or was it a skill you learnt later?
In my experience, I don’t think you have an eye necessarily. Typically for me it’s always been something that I see that’s just glaringly obvious and needs to be fixed. Now that I’m on the investment side, the people that we enjoy interacting with the most and tend to fund are the ones who had a personal view into a problem. It’s not about the idea because everyone has ideas. It’s about seeing a problem and realising that the way something is being done today needs changing.
On the catering front, there was a monopoly situation when we started. That one company was feeding the whole country. There is something wrong with that. You need competition. It was a very high margin industry as well. So a monopoly making a lot of money was definitely worth getting out of bed and changing.
Another business I started was Bayt. Already a business owner at the time, I couldn’t hire people. I’d put an ad in the Gulf News and would receive 50 crappy CVs rolling off a fax machine in 7 to 10 days that would cost several thousand Dirhams. High investment, low return and that too the CVs were always average at best. When the internet came along, it was clear: you can recruit at a fraction of the cost in a matter of minutes. If you open up a search in a database, you can find the person you are looking for in 20 minutes. You can literally see the CV and say this is the person I’m looking for. You can call the person right now and say let’s meet up and have an interview and I could hire him or her in the same day.
The internet is a global networking solution and you can hire people from anywhere in the world as long as they know about you. All I have to figure out is what my customers want, where they want to recruit from and make sure that I’m marketing to those people in those geographies. You then get people to come to your site, look for these opportunities, build profiles and CVs and connect two parties. Our job is connectivity and we make money in the process.
So for me it has always been out of personal need and seeing the ‘pain point’ personally and just being affected by that pain and thinking I’m an entrepreneur. My job is to go out and solve problems where the solution is really transformational. If you are solving a problem that results in incremental improvement i.e. evolution, I wouldn’t bother and we don’t bother with those businesses as investors. We don’t fund those ideas. We want to invest in entrepreneurs who are building something that is not evolutionary, but revolutionary.
Now on the other side as an investor, do you miss the entrepreneurial CEO role you once played?
Rarely. I think I work as hard as I did before but running the business and being the operator is a different kind of worry. As the CEO, you directly have staff that are dependent upon you every single day. Everyday they need a decision from you: Are we going to go left? Are we going to go right? Are we going to drop prices? Are we going to compete with this company? That becomes a huge responsibility that isn’t for everybody. I enjoyed it while I was doing it. I’m actually enjoying having other people go run the businesses that we invest in far more because they are the ones worrying and having those sleepless nights.
I think doing one and then doing the other is an enriching experience (going from CEO to investor). Having actually been on the other side and been that operator, you actually understand the entrepreneurs because you’ve been in their shoes.
How do you spot potential in entrepreneurs that approach you? Are there certain characteristics that make someone more likely to succeed?
We look at the business, the business model and the scale of the business but the person is far more important than anything else.
The obvious characteristic we look for is work ethic but before work ethic, being ethical in general. I prefer to give money to somebody who is hard working and of average intelligence than to someone who is lazy and dishonest but very smart. Honesty and integrity are key and we spend a lot of time getting to know people (sometimes for years) before making an investment.
With regard to work ethic, those we invest in have to work extremely hard. The only way you can outperform your competitors is by working harder and smarter than everybody else. There’s no other way to do it unless you are lucky. We don’t want to depend on luck.
I think the most important characteristic of all is persistence. You are going to fall over, you’re going to break your nose and it’s going to be bloody. Everyone has had it to different degrees. You have to have the resilience to realise it’s a journey and it’s a bumpy road. Starting a business is like getting on a treadmill. You’re either off or you’re on. There is no halfway. If you aren’t sprinting, don’t bother. If you are in business, you have to be sprinting otherwise you’re not going to get anywhere.
The mind-set of I am at ‘X’ and I am going to get to ‘Y’ no matter what it takes. That’s a wonderful quality. I’d always tell my sales force in my companies that the average sales person needs five interactions in order to close a sale. An interaction is defined as: a phone call, an email or a meeting. You have to touch them to say “I’m here.” An email is the lightest touch but a phone call or a meeting is where I can push you and assess what your needs are to get you to buy my product. Most people quit at three interactions. The guy has a need, you have the product that can serve that need. You have to push! The same concept applies in business. You just have to keep going until you create enough inertia.
Throughout your career, you’ve experienced huge success with companies you founded which continue to flourish, how did you get everything so right?
I think if you are really going after something that needs to be improved significantly, you can’t get it wrong. If you work really hard and you surround yourself with smart people, it’s really that simple.
Your successes make it seem as though minimal risk was involved in launching these concepts, how sure were you that all your ventures would succeed so tremendously? Did you ever fear anything would not go to plan?
Absolutely. With every single business, I always thought: “This is it. We are never going to get through this. This is not going to end well.” Every single time. When you start experiencing these for yourself, you realise you’ve had that feeling of doubting yourself before. You just need to tell yourself, “It’s okay, we’ll get there. There is enough of a customer base that needs what I have to offer. I’m on top of my business and I’m doing a good job. Just persist and the magic will happen.”
I think you have to have people who are optimistic around you to be honest. For me, it was my father. He’s been in Dubai around for almost 50 years. He’s seen boom after bust. If you think about what he’s seen with the Gulf Crisis. I can’t think of anything worse than that. They came through it with flying colours.
If you believe what you are doing is of value and is the right thing then you respect that and you respect yourself. That’s why having a clear vision and knowing exactly where you want to be and why is so important. Sometimes you have to ignore advice you are given. When I started Bayt, I went and saw 20 of the wealthiest businesspeople in Dubai. 20 out of 20 told me I was insane. Look at what Bayt is today.
Several companies that we see in Dubai today are franchises or ideas taken from abroad. Do you think that when someone introduces a concept that mimics that of a company from abroad, that the company is destined to succeed in Dubai?
For me, nothing is guaranteed. That’s for sure. What I do like about bringing Shake Shack to Dubai as an example is that is was a resounding success in New York, destroying McDonalds. So clearly if you bring it here, it’s going to work. But if you look at the menus, they are localised. They cater to the Asian taste. They’ve got curry recipes and kofta for the Arabs. The conclusion is that if something is working somewhere else, it has a much better chance of working elsewhere but you have to localise. We’ve invested in Property Finder. It’s Zoopla in the UK but we’ve localised the living daylights out of it. There are things that we offer that are so Dubai or Saudi focussed. Even the dropdown menus in Saudi are things that you don’t have anywhere else in the world.
Some say that to experience success in the field of entrepreneurship, one must first experience failure. Do you agree with this statement?
I don’t agree with that at all. Research shows that failed entrepreneurs don’t have a better track record than first time successful entrepreneurs. As long as you learn from your mistakes, I think it’s a good thing but I personally don’t see the link between experiencing failure and success. I’ve seen so many people succeed first time round and I’ve seen people succeed eventually. I don’t prejudice people who have failed. I just want to know what they learnt. If they’ve learnt and they’ve got scars from having failed once or twice, their judgment the next time round is probably going to be far better than the guy who has not made any mistakes.
If you could only one piece of advice to budding entrepreneurs of this generation, what would it be?
Really have a long term view on what you’re doing. That means set a vision. If that vision is just making money, that’s less interesting. I really think it has to have a higher purpose that you want to achieve. Once you’ve set that goal and you really believe in it, don’t let anyone get in your way. You are going to get there.
This article originally appeared in October 2015, in Entrepreneurial Minds, a self-published magazine celebrating entrepreneurship in our region.
“Entrepreneurial Minds is a booklet containing the interviews of six very different entrepreneurs. Ranging from the founders of app start-ups to global social enterprises, the booklet informs readers about what it takes to start a company, what entrepreneurship is all about through amazing advice from the people that know exactly what it takes to succeed in the region. Having interviewed each personality, I was able to pick their brains and get the answers to any questions you may have before starting a venture.” – Pranay Jethwani