Taking The Leap: Saudi Arabia's Talent Pool Looks To Opportunities Within The Entrepreneurship Domain
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Hashim Alhussaini has had first-hand experience with and insight into the entrepreneurial landscape in the Kingdom of Saudi Arabia. The Saudi national has founded five startups over the past decade, and as such, has had his share of being turned down by potential recruits, including trusted friends, back when the ecosystem was almost non-existent. “When I started in Saudi Arabia 11 years ago, people were laughing at me,” he recalls. “Friends who I wanted to bring [onboard] (because I wanted to work with trusted people) said: 'Sorry Hashim, how can we come with you? Maybe you will close this small company [if it] will not succeed after four or five months, and then I will have to go find another job.’”
But responses like these are beginning to change, especially after Saudi Arabia’s ambitious economic reform plan Vision 2030, driven by Crown Prince HRH Mohammed bin Salman, set raising the current contribution of small and medium-sized enterprises (SMEs) to the GDP as a top priority. “Today, I'm hiring a lot of these people who were laughing at me,” Alhussaini says, as part of his current role as co-founder and Managing Director of Monimove, a B2B fintech platform that enables fund providers to create live links between the projects they are funding, and the results being produced. Monimove, which has been in the works for three years and launched just 60 days ago, is still at pre-revenue stage but has received an official valuation from Deloitte of $2.4 billion as a projection over three years.
Hashim Alhussaini, co-founder & Managing Director, Monimove
Monimove is based in the UK, and it operates globally with offices in London and Delaware, an office in Dubai for its operations in the Middle East and North Africa, and now, a branch in Saudi Arabia for which he is currently recruiting. In a recent meeting with H.E. Dr. Nabeel Koshak, CEO of Saudi Venture Capital (SVC), Alhussaini says the executive asked him why, as a Saudi citizen, his company was based in the UK, and operating from the UAE. “I told him [that] I am loyal to my country, [and] would have loved to [setup in Saudi], but three years ago, no one wanted to listen to innovation. No one wanted to support the youth, and believe in new ideas that change the world. That's why we setup in the UK. We came to Dubai, because we found that people here would really like to support innovation.” But the environment is rapidly changing now, Alhussaini says. “[From] What I've seen here the last couple of weeks, we are going to be better than Germany in the next few years.”
Ahmad Alzaini, CEO and co-founder, Foodics
Game of guts
But developing the startup ecosystem in the Gulf's largest economy will take time, says Ahmad Alzaini. It all comes down to “risk,” explains the co-founder and CEO of Saudi cloud-based pointof- sale system for F&B businesses, Foodics, of trading a generous paycheck and the cushy security of working in the public sector or for large multinational corporations, in exchange for a more challenging life at a startup. Foodics announced that it raised US$4 million in Pre-Series B funds in June this year, taking its total investment raised so far to $8 million. “It's always been really hard and a big challenge finding talent and convincing [them] talent to leave their comfortable and stable jobs to shift to a startup and come to Foodics,” he says. “Family plays a very huge role on convincing the talent not to take a risk.” The mentality has been passed down for generations, Alhussaini adds. “Their fathers and their grandfathers used to say learn in school, because you have to go get a secure government job and a salary.” he says. “This is the conventional thinking that they've been raised with. Even if you offer them money, or more money, they will say the most silly things [like], 'How can I be sure if [the company is] going to carry on for six months or not?' They don't believe in sacrificing today for tomorrow. They don't want to have the guts.”
A report by Wamda Research Lab (WRL) in 2017 said a survey among university and vocational school learners found that more than half of students still preferred to work for the government, even after announcements were made about prospective cutbacks in civil service recruitment. Forced choices of study major also impact expectations and employability, Alhussaini says. “Most Saudi families force [their children] to study engineering and medicine,” he explains. “That's why a lot of them are unemployed There is an excess supply [of engineers and doctors] and they are asking for high salaries when there aren't enough jobs.”
On the other hand, Alhussaini says the lack of people with both financial and technology expertise is a challenge as well as those with knowledge in supply chain and logistics, all big sectors that are currently undergoing massive digital transformation. “There is lack of availability of developers, data engineers and machine-learning experts,” Alzaini adds, and the available pool only gets even smaller for earlystage startups. “Early stage companies are facing more difficulties to find and convince talent, but it becomes easier as the company gets bigger in size and value,” he explains, adding that hiring dynamics typically change right after a round of funding makes headlines. In all fairness, potential recruits aren't wrong to be skeptical, he acknowledges. “They are aware about the companies that go bankrupt, so a good reputation in the ecosystem matters too.” The most challenging hire is finding a co-founder to take the risk with you, Alzaini adds.
A good start
But while the majority are still “reluctant” to take the leap, Alhussaini believes the minority is a good start. “As with everything, you are changing or disrupting the thinking of the people,” he says. The mentality among Saudi youth is also changing owing to this generation's Silicon Valley successes, he notes. “They've seen that the people who did Facebook, WhatsApp, Google, and so on, are all young people.” And it's vitally important for the country's future prosperity perceptions change, Alzaini insists. “In America, 90% of the government's revenue comes from the startup companies like Google, Apple, Amazon, [and] Facebook,” he points out.
Saudi's Vision 2030 plan was designed to attract foreign investment, create jobs for citizens and most importantly, diversify the economy away from dependence on oil after crude prices plummeted in 2014. The government's target is to raise the contribution of SMEs to GDP from 20% to 35% by 2030.
Dubai-based business growth specialist Ayman Itani, who advises founders and governments that run startup programs in the UAE and Saudi Arabia, is bullish on the changing scene. “In any growing economy there's going to be a need for more talent,” he says. “The ideal approach is always to source [talent] locally, especially if you're solving local problems. What's exciting about startups in Saudi is that they're working on solving local needs.”
And with success stories in the region, like Uber's acquisition of Dubai-based ride hailing app Careem for US$3.1 billion, the largest technology sector transaction in the Middle East so far, as well as other exits in the region, Itani says he witnesses more and more individuals in the Kingdom wanting to shift to entrepreneurship every day. “They're leaving their comfortable jobs to go to challenging startups. They're putting in their own money and family money as well, because they are eager to do so now and also it's more socially acceptable due to the success of Careem.”
Moreover, with many startups offering workers ownership interest in the company through employee stock ownership plans (ESOPs), Itani says talent are become more tempted to venture into the ecosystem. “Even if they're not starting their own business, they want to be part of a growth story,” he explains. “That gives them long-term benefits as well, financially, or as an alumni of the startup. One talent trend that I see that I think is encouraging for everybody is that let's say you work with an early stage startup, as that startup and its name grows, you become wanted, and can move on to a bigger startup. So, you could be vested in this one, and have moved on.”
The real struggle for founders, Itani adds, is hiring the right person based on their budgets. “They always want a higher level of talent than they have, as they're always trying to level up,” he says. “[But] this is not a Saudi issue, it's a startup issue because in any city, members of startups aren't a 100% fit [for the role] but that's what helps them be able to succeed.”
A change in mindset
Sharing stories of failures and successes with youth is crucial to shifting the mindset, Foodics' Alzaini says. The successes are important to inspire and show them what's possible, and failures are to help them learn from the mistakes of predecessors who have more experience. “I believe colleges play a very important role in encouraging entrepreneurs to start their career and take a risk at early ages so they always have time to recover,” Alzaini says, adding that he has been approached by many students to share his story as a business case study and speak at events. They would have less responsibilities at a younger age, he adds. “No wife, no kids, they can do whatever they want. If they fail, they can go get a job.”
Ultimately, Alzaini adds, recruiting is “all about sharing your belief” with your team. “The only way we can convince them is by sharing the vision and invite them to be a part of the vision,” he says, explaining that his pitch when hiring includes selling the idea of feeling that you are making an impact that is proportional to output. “In big companies, you cannot find impact. My question to people is do they want to be part of a passionate team, want to be agile, [whether] they find risk really interesting, [whether they] need to be a part of the new thing in the country, part of development and disruption. If you're a qualified person, you shouldn't worry about your future. Because if you fail for example, you'll still have experience, and you can join another career, or you will have an idea to found your own company, and be an entrepreneur.”
Not everybody can work at a startup, he warns. “People who like to be part of a change, this is the guy that we are looking for. People who like to just watch what's happening, they're not for us.” Monimove's Alhussaini has his own story with potential hires. “I tell them I am an example [because] I worked in a bank,” he says. “One of my friends was working in a very prestigious bank in Saudi Arabia, and he's now joining me as Operations Director. Now, we're about to hire [more people] in Saudi, and I know, for example, if someone is taking SAR10,000 a month, I will tell him: 'Come [work with us]. You know you're going to add value, For me, I'm going to have billions so my job with you is not for you to just be staff. Come, take the experience, take more salary, be a partner [through] revenue sharing, and I don't want you to stay with me [indefinitely]. If you want to stay with me, it's ok, but my goal is to give you the experience and transfer the knowledge so you can go make yourself an entrepreneur and make another business, and you can even become a customer of me or I can become a customer of you.' If you talk to them with this language, they want to go for this.”
Meanwhile, as many young Saudis are getting themselves educated in prestigious business schools, Alhussaini's question to them is: “Why are you getting an education in a business school, if you are only going to remain an employee? Why is your father spending so much on you just to go get a job, and you stay for your entire life in a job? Go take the job, get the experience, and then go [build something].”
Ayman Itani, business growth specialist
Source: Ayman Itani
Alhussaini admits that he's an anomaly though. Rather than dealing with discouragement from family against risking life as an entrepreneur, he's had the rare advantage of having his father as his co-founder. But political will and reforms have already powered big waves of transformation across the desert state. “I went to Saudi [in October]... and we've seen something that we couldn't believe in how the country is changing now,” he says. “We found people of action [and] people who really want to listen to innovation.” Unlike three years ago, Alhussaini says banks and government institutions he met with “saw the problem” and understood the solution his startup offers. “They agreed that we have the right solution that will make a big advantages and leverage the national economy. We're not coming to solve a local problem. Hidden operational risk is a global problem in the entire lending cycle, whether by governments or by banks. This is a problem we've lived with for years.”
More significantly, what he found in the new Saudi is expedited response times. “They took action immediately, and they said, ‘Ok, let's go and do it,’” he recalls. “They sent us an email immediately. Can you imagine a government entity sending you an email in five minutes after a meeting? This is like a dream. Two years ago, if they reply to you after six months or one year, you are a champion. Now everything has changed. We are very proud of this.”
He adds: “Our Crown Prince has said we can be number one. I believe we can be. If you see the Saudi youth that I'm now seeing every day, it is something really incredible, something that we've never seen before.