A Cultural Shift: Changes In Kuwait's Entrepreneurship Discourse As Seen At Nuqat's Human Capital Forum
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With GCC countries preparing for an oil-bereft future, one can draw similarities among their attempts to develop knowledge and innovation-based economies. In Kuwait, for instance, the Kuwait National Development Plan (KNDP), launched in 2017 under the “New Kuwait” slogan (but mainly known as the Kuwait Vision 2035 program), resembles similar initiatives of its neighbors- it seeks to transform the country into a financial, cultural and trade leader. One of its main targets is increasing the GDP share of the private sector that now represents approximately 30% of the Kuwaiti GDP. As seen in other regional countries as well, the private sector has not taken a back seat, but has instead joined public institutions in a concerted effort to enable and support a broad-based embrace of entrepreneurship by the local youth. However, one peculiarity makes Kuwait stand out in this innovation-chasing crowd.
In 2015, Germany’s e-commerce group Rocket Internet acquired Talabat, a Kuwait-based food delivery platform, for US$170 million, which is considered as the second largest exit in this region. When talking to Entrepreneur Middle East, Talabat’s former CEO Mohammed Jaffar comes across as having a collaborative (rather than competitive) attitude, a stark difference from many of today’s “champion” startups around the globe. It seems to be a trait of Kuwaiti entrepreneurs I couldn’t avoid noticing while attending the Human Capital Forum, a two-day event organized by Nuqat, a Kuwait-based organization for cultural development, in February.
Jaffar, a former corporate banker, acquired Talabat from its original founder for $2.4 million in 2010, and soon after entered into a fierce battle with Rocket Internet for a share of the country’s nascent e-commerce market- or at least that’s what you may have assumed. “We had a good relationship with Rocket Internet for a few years before the acquisition, although we were competing in the same space,” Jaffar said along the sidelines of the forum. “I believe in good and clean competition, so there was a lot of respect between us. That is very important. For that reason, when it came to our negotiations, it came about easily. We exited the business, because of their strategy of wanting to acquire all the players in that space at the same time. So, we thought that for the sake of the brand, it was better to be under one group, instead of having to compete with everybody else. The thing here is about keeping good relations with people- even though you are in competition with them.”
Similarly, the four co-founders of Nuqat –Wakim Zeidan, Hussa Al Humaidhi, Sara Al Nafisi, and Dana Al Hilal– teamed up in 2008 to focus on solving problems they had all been experiencing in their individual entrepreneurial paths. Before starting his first business in Kuwait –a creative consultancy called Wakpot– Lebanese design and communications professional Zeidan attended the Cannes Lions International Festival of Creativity in 2007. “One of my dreams, as an advertiser, had always been to go to that festival, so when I went in 2007, I realized that the business environment in Kuwait was not encouraging at a creative level, when compared to what I saw there,” he remembers. “Since it is so expensive to go there, I was sure that lots of people couldn’t go because of the costs, so I thought of doing something similar here. I started a twoday symposium to gather likeminded people and test the waters. That was when Hussa Al Humaidhi and Sara Al Nafisi were starting their own company, Raw Design, a branding agency, and they had the same frustrations relating to creative development as I did. They joined the symposium as participants, and somehow, we clicked. They said they wanted to do something similar, but instead of competing, they proposed a collaboration. We joined efforts and organized the first Nuqat conference in 2010, with 200 people attending. It has snowballed from there.”
According to the co-founders, Nuqat came out of their collective frustration from the lack of educational opportunities for empowering creative thinking across the Arab world. The same sentiment was echoed by one of the forum’s keynote speakers, Bader Al Kharafi, Vice-Chairman and CEO, Zain Group, a Kuwaiti mobile telecom provider. “The biggest strength we have is our talent, a good community of entrepreneurs, and established communication channels between them, however, the issues are that our culture does not really support creativity due to its demanding nature from the society as opposed to contributing to it,” Al-Kharafi says. “Our companies and their people should realize that it is time for us to give more than we take, as I mentioned yesterday in my presentation. The reason is that we all depend on the government, and what we believe we are entitled to. When we rely on something, we don’t really invest effort, whereas when you start giving and participating in this community, then you start feeling that sense of responsibility and begin to act upon it.”
Al Kharafi himself is a living example of this. In addition to heading the telecom giant which serves 46.6 million customers across eight MENA markets, as well as the Kharafi Group, his family business conglomerate, he is most fond of talking about his other endeavors such as being the Vice Chairman of INJAZ, a non-profit organization providing education on entrepreneurship and financial leadership to the youth, or partnering with Nuqat to launch IN•DIG•GO, an alternative thematic-based educational program for children between the ages of 6 and 11 years.
Al Humaidhi explains that similar initiatives are necessary for the local community to start embracing the trial and error phase tied to any entrepreneurial and creative endeavor, as opposed to being afraid of failure. “To announce a failure and admit it to yourself and your team is a successful point,” she explains. “But, culturally, there’s a lot of shame here, generally you put on the image- the successful, clean, well-dressed image. This idea of illusive perfection is very much what is creating the fear factor, and the fear of judgement because, in the end, we are afraid of failure, because we are going to be judged by it. That, in itself reflects self-judgement, which is the most destructive thought that hinders any person. It is all in the head, and everything that is in you is reflected outwards. So, I think that culturally, we need to get pass the idea of perfection and hiding behind the mask. We need to be authentic and ourselves.”
Al Kharafi adds, “My conviction is that if you don’t fail, you will never succeed,” noting that a much-needed cultural change should be supported by the changes in the education sector. “Unfortunately, that fear of failure was instilled in our schools. Whenever kids go to school, the focus is on the notion of ‘don’t fail.’ For instance, they hear, ‘If you don’t focus on math and science, you will never succeed,’ or something similar. So, it’s all fear-based motivation and that is how we have created that culture of fearing failure. In the past, whenever you saw somebody cleaning the streets, the elderly would tell you something like, ‘if you don’t study hard, you will become like him.’ Instead, they should have said, ‘if you study and work hard, you will be able to help him, and create a better life for him.’ That is how we can take away that fear of failure. So, we need to change the direction of our education and enforce positive motivation in order to build courage in our kids.”
In the presentation delivered at the forum, Al Kharafi revealed a few interesting statistics- about 67% of the country’s university graduates are women, but not many of them excel in the workplace- in Zain Group, for example, only 23% of its workforce is female, while the global average is around 40%. With its Women Empowerment Initiative, the group now aims to increase the number of women in leadership positions from 14% today to 25% by 2020. Similarly, Kuwait spends approximately $14,300 on education per student per year, which is amongst the highest amounts in the world, but the quality of actual education attained through this expenditure is valued at $3,300, just 23% of the real value. For those with innovative business ideas (and not afraid of failing), Kuwait has proven to be a good launch pad, especially since the establishment of the $6.1 billion Kuwait National Fund for Small and Medium Enterprise Development in 2013.
The fund finances up to 80% of the capital requirements of enterprise projects submitted by Kuwaiti nationals. Recently, the National Assembly of Kuwait amended the fund to encourage healthy competition among entrepreneurs by expanding its role to sponsoring projects rather than focusing on financing. “Kuwait is a forward-thinking country that supports new ideas,” Al Kharafi says. “I think that in Kuwait we are way past the trends of big brands but more appreciative of quality and level of service. If you look at most of the popular F&B outlets here, they are not franchised, but Kuwaiti creations. If you look at new apps, Kuwaiti entrepreneurs have done really well. In the past, we were big brands oriented. Of course, there are a couple of brands that still dominate the market, but the majority of people don’t look at them exclusively anymore. So, we do have talented people but there is always room for more. I think that a lot of our investors are looking for great ideas abroad because we don’t have many developed and tested ideas here yet. So, we look for ideas outside of Kuwait, and if they [foreign entrepreneurs] came here to present their ideas, they would definitely find an investor. The capital is here but where to deploy it is a challenge at the moment. We are therefore always looking for good ideas, anticipating them to be domestic.”
Linking theory, previously envisaged by regulators, to reality on the ground often paints a different picture, and both Zeidan and Al Kharafi agree that ease of doing business in Kuwait needs to be improved. “In terms of getting your license in Kuwait, it used to take you six months,” Zeidan says. “The other thing is that there was no culture of angel investors and venture capitalists, so we used to take bank loans to run the business. Now, things have changed. Licensing takes a month or two, which is still long but much better than before. There are now many entities established to fund SMEs.”
According to Al Kharafi, “a lot has been done, but there is still much more to be done. Our Ministry of Commerce has done a good job at expediting the establishment of companies, but depending on the type, licenses can still be [burdensome] and the monopoly [in certain sectors] needs to be broken up to give chances to everyone. Visas and immigration issues for non-Kuwaitis are still a bit of a complicated topic since, for example, getting and/ or hiring technical talent is hard to find here and it is also very hard to bring them in from abroad. So, there are good things happening, but we need to work more on giving entrepreneurs a full toolbox to establish their companies.”
Faith Capital typically invests between $500,000 and $1,500,000 in startups with at least six months of product/market launch history. Furthermore, the fund takes an active approach to its portfolio companies. “We are an operating VC, we have more than 30 people, and we invest in three to four companies at one time and then we deploy ourselves into these investments,” Jaffar says. “We get involved on a day to day basis. My aim is not to invest in as many companies as possible, but to invest in a few and leverage our know-how into this companies and push them into the right direction. Some entrepreneurs don’t like this, so they don’t come to us, whereas some do, and we like to work with those entrepreneurs who listen.”
Following the conclusion of the Human Capital Forum, Nuqat has declared its intention to continue with its ongoing project of touring the Middle East to identify, understand, and overcome issues impeding the development of the region’s creative economy. “We believe that every country in the GCC should be authentic and recognize what they are good at instead of competing with each other,” Al Humaidhi concludes. “I feel that Dubai is a great gateway to the international world, Abu Dhabi is positioning itself as a cultural hub, while I feel that Kuwait has the entrepreneurial and creative energy. Our strength is that we have the freedom of speech. Historically, we have been empowered to speak up about what we think. When compared to the rest of the Arab world, Kuwait and Egypt are outspoken and this gives us the freedom to create. Kuwait has been recognized in the Gulf as the trendsetter.”