Rethinking Business: A Look At How Some Enterprises In Dubai Are Transforming Themselves In Response To the COVID-19 Pandemic "Yes, you have to act fast and make some big decisions, but do this based on data, rather than feeling, or because everyone else is."
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It may be no match for popular conglomerate-backed giant hypermarkets, and it doesn't have the infrastructure of the now much-favored e-grocery sector, but a little corner shop in one of Dubai's oldest low-cost residential districts has found its own way to digitally transform to stay afloat amid the novel coronavirus (COVID-19) pandemic.
Reliant on regular neighborhood walk-ins to buy fruits and vegetables, or loyal customers placing their orders by phone call, the independent store in Karama saw its business temporarily crippled as the UAE and countries across the world imposed extreme movement restrictions to stop the virus spreading.
"You know business models are already pivoting [in response to the outbreak] when even the small neighborhood green grocer goes online," P.K. Gulati said, speaking of the shop his family is now using to order their fresh produce from via WhatsApp. "The shop owner broke into the market by sharing his message through a school mum's WhatsApp group, explaining that he doesn't have a website, but that the fresh fruits and vegetables he sells are good quality and cheaper than what larger supermarket chains are offering, and that he can make contactless deliveries. I personally found it simpler to order from him, so that's what we've been doing."
P. K. Gulati.
Gulati, a technology innovator, angel investor and mentor, with more than two decades of experience building, investing in and supporting technology companies, insists that there are a "whole lot of opportunities" even as organizations worldwide continue to endure what the International Monetary Fund (IMF) predicts will become the worst economic crisis since the Great Depression nearly a century ago. "Most digital business have already adapted, and will continue to adapt very quickly," he added.
But not all companies, including startups and small and medium enterprises (SMEs), have found themselves in a position to shift to digital products and services overnight. In response to the challenge, Dubai Startup Hub, an entrepreneurship arm of Dubai Chamber of Commerce and Industry, launched various support initiatives to help startups sustain and grow as they navigate exceptional market challenges. A practical, hands-on, virtual training workshop by Dubai Startup Hub with global internet domain registrar and web hosting company GoDaddy was launched earlier this month to share guidance and ideas on how entrepreneurs can build or enhance their web presence in a short span of time.
Meanwhile, Dubai Startup Hub also announced the first-of-its-kind Smartpreneur 5.0 Online Pitch Bootcamp to back technology entrepreneurs that want to evolve the emirate's position as a global hub for innovation. "This training program is the first of its kind, innovative training model that takes into account the exceptional circumstances we are in, and how to enhance the capabilities and skills of the entrepreneurs and startups to sustain and grow in such situations," Dubai Chamber's Manager of Entrepreneurship, Natalia Sycheva, said. Entrepreneurs will benefit from more than 100 individual and group online training workshops, as well as one-to-one work with startup business coaches to improve business and financial models of the startups.
Gulati noted that the coronavirus has compelled firms of all shapes and sizes to digitally transform at record-breaking speed and with few resources, proving that the process did not require the many years or massive budgets that likely caused many business leaders to lag in making the investment. "In the past it would have been, in many cases, a situation where a company called in their CIO or CTO asking for timeline and budget for the project," he said. "And the answer they would get would be a 2-3 year time frame, incorporating training, integration and so on, with a cost that would run in the millions or tens of millions of dirhams. But really, everyone's managed to do it in a week and no one's complaining."
The pandemic has also forced non-tech businesses to completely rethink their offerings especially those in the worse hit hospitality, aviation and tourism sectors. Vinayak Mahtani, CEO of holiday home management company bnbme, said that he has turned to models his direct competitors don't offer. "For example, we are not competing with real estate agents in letting out our properties for medium term rentals," he said. "We are taking contracts anywhere up to three months long, which was [previously] a complete no go in our business."
bnbme has also deployed its hospitality cleaning and maintenance teams to residential properties. "This could lead to a whole new division for us," Mahtani added, explaining that homeowners have been comfortable relying on his crew because of their hospitality experience. In addition, when bnbme's hotel supply business ceased after all its customers stopped operations, Mahtani said he began using the company's China office to source COVID-19 supplies instead– a move that has kept his team "extremely busy."
However, at the same time, Gulati acknowledged that adapting to crisis is far easier said than done. As the deadly virus continues to sicken millions and tragically claim lives, more and more businesses around the world are projected to miss their financial targets due to lockdown disruptions. The IMF said in April that it expects the global economy to contract by 3% in 2020– starkly different than its January forecast of a global gross domestic product expansion of 3.3% for the year.
"It's logical to say things like spend less, earn more, collect cash," Gulati said. "While this is all logical, it's easier said than done, when outgoings like rent, salaries, loan payments, and VAT, are constant, but income is questionable with reduced demand or customers not able to honor their contracts. All you can do is try to renegotiate wherever you can."
Gulati –who is founder of the Smart Start Fund and President Emeritus of TiE Dubai, a local chapter of Silicon Valley-founded The Indus Entrepreneurs (TiE), and was a senior advisor for the Dubai Future Foundation– said he is even seeing landlords of highly-coveted Palo Alto spaces making concessions. "A startup I advise told me about how they went to their landlord. They said something along the lines of "Look, we have the money to pay you, but if we burn our cash in rent, we're not sure how long we'll be able to keep going, so we need your help'. The landlord immediately told them not to pay for the next two months."
In the same way, Gulati advises founders to be transparent with employees, vendors, and customers. "It's not about not being able to pay," he explained. "It's about that everything is simply not the same." Pre-COVID and post-COVID are going to become "standard terms," Mahtani predicts. "These are tough times, and cash is king," he said. "For a startup, if you don't have the cash and are in an industry that does not look like it is recovering for the next 12 months, it might be better to close down, and re-look at the opportunity over the next 18 months. Take this time to sharpen your pencil and work on some skills you might be missing. All business models will change."
Contrasting fortunes of pre- and post-COVID models will, however, impact the livelihoods of millions as the world shifts to the "new normal" set in motion by the pandemic. But the adjustment also presents huge avenues to transform and paves way for great new ideas. "Startup founders are natural born risk-takers," Gulati said. "They decided to hustle, instead of working in a comfortable job. They chose to become job creators instead. They are always thinking of possibilities and ideas, and they are now in the best position to find gaps to fill and opportunities to explore."
The serial entrepreneur said areas of huge opportunities include in edtech, fintech and collabtech (collaboration technology), pointing out that video-conferencing software company Zoom is now valued at more than the combined market capitalization of American Airlines, Expedia, and Hilton. Google Cloud CEO Thomas Kurian said in a blog post that, as of March 31, cumulative daily meeting minutes on the Google Meet video conferencing platform surpassed two billion minutes per day, roughly the number of minutes in 3,800 years. Companies like Netflix, Amazon, and Peloton have also seen their shares surge to record highs in the quarantine economy.
Closer to home, e-grocery startups, apps offered by supermarket chains and food delivery services in the UAE, and others have seen their businesses boom. Particularly, the sudden sharp rise in online grocery orders that even big chains have been struggling to fulfill in time has pushed other platforms to tap into the demand. Apps like Zomato, Talabat, and Deliveroo started offering groceries in addition to meals from restaurants, while Dubai's Roads and Transport Authority (RTA) has purposefully routed its fleet of taxi drivers to carry out deliveries. Food delivery service Careem NOW also introduced an on-demand service for groceries, medicines, pet supplies and other essentials, aiming to deliver items in under an hour.
However, Mahtani cautions founders not to panic and make decisions in haste. "Yes, you have to act fast and make some big decisions, but do this based on data, rather than feeling, or because everyone else is," he said. "Don't lose confidence. If you were doing well, and on the right track before, and you believed in yourself, then don't beat yourself up for what's going on now. This is a global correction, which, in fairness, was well over due. You will come back, and come back stronger."
Gulati added that crises are often what "nudge" people to realize their highest potential and leapfrog development. "The pivots we are seeing now are equal to what the smartphone did to change business, and the way we live our lives," he said.
After all, even a tiny Karama corner shop's existence has been disrupted and simultaneously transformed.