Dany Farha – Beco Capital
The Middle East: Why and Why not?
Dany Farha, the man behind BECO Capital, is a good person to talk to about business in the Middle East. He would know as he’s been around long enough to set up a successful business venture himself, and learnt the important things along the way. Ask him to list the merits of setting up a business here and he says, “Less competition, so if you are able to make it, you can stand out from the crowd.” He also adds that the demographic in the Middle East is another advantage,“It’s a young, mostly well to do demographic, which is well educated and well read, and are tremendous consumers with a very high propensity for consumption, making it easier for newer ventures”. The demerits he says is primarily the mindset to buy from smaller, newer ventures, unlike the States saying, “The idea that small businesses could find customers very quickly and the mindset of buying from a small business/start up as long as they could provide a service existed in the States, but here that is missing, sure things are changing very quickly, but in my experience, some 20 years ago, when you were at the inception, or even if you were 5-6 years down the line, people still discounted you as the newbie, and see that as a disadvantage instead of seeing the hunger as an advantage even if you would provide better service at better pricing.” His solution to make the Middle East a friendlier zone for entrepreneurs is simple, “If we could make the middle east a trading block, as a region, that would be the single biggest sustenance and help that we could provide entrepreneurs.”
His inspirations or his influencers?
He goes on to speak of the entrepreneurs he admires, especially Richard Branson for his “ability to have fun and for doing things in very different ways that other people wouldn’t think of doing and running in the direction opposite to the crowd.” The other person he speaks of his father for his level headedness and zen like attitude which he believes, “helps you make better decisions and helps you run the distance because being an entrepreneur is similar to running a marathon, and not running 100/200 meter sprint.” The third person he mentions, is the one he wants to be like and he had the chance to see very recently in India, is Ratan Tata, he speaks of his experience and says, “I saw him being interviewed in India and all I could think of was that I want to be exactly like him, he is around 79-80, well read, well versed in so many different aspects, incredibly humble, and charming. And then there are his philanthropic activities, which I hope I can emulate at least a little bit.”
India vs the Middle East.
Speaking of India leads us to the question as to why the Middle East has not seen the same kind of foreign investment that India has, for which Farha has a very logical explanation, “There are multiple reasons for this. The first being, India’s 1.2 billion large population, which leads to higher transactions, something that the investors greatly value. The second reason is that the vast majority of the Indian population speaks English ensuring that language is not a barrier. The third and the final reason is that though the GDP per capita is higher in the Middle East, the purchasing power parity is significantly higher in India.” These reasons can be worrying for entrepreneurs in the Middle East, which is something that Farha agrees with but believes that the Middle East has found a way to combat the problem in it’s own unique way, adding, “In the last one year or so, we have seen true innovation come up in the Middle East. People are using technology to solve problems specific only to the Middle East. These ideas might/might notexist elsewhere in the world currently, but the attitude is changing here, it’s no more, let me see what is working elsewhere and try to use it, but now is ‘if there is a glaring problem, then I need to solve it’, and they are solving it.”
The effect of VAT on the entrepreneurial ecosystem
Farha has one more idea which he believes will make doing business in the Middle East much easier is the introduction of VAT,something he agrees has dealt with it’s own share of controversy and skepticism, “VAT is not going to be supplemented/ swapped for the existing visa costs and indirect costs, that are perceived to be taxes, they are still going to exist, but it will be another revenue source for the government like it has been in the UK and also in the rest of Europe. What it will also do is allow the government to then configure start up licensing, for almost no cost.In London you can set up a business in a day, in 100 pounds, and one of the biggest drivers for that is VAT which is encouraging people to develop something of value.”As for the threat of global companies coming and taking over local innovation, Farha has an easy solution- intellectual property rights, saying “If you are going to build a big successful business, with no IP, don’t bother, because it is going to be very painful for you in the long run.”
The Future: Farha, Beco, and the region.
It’s clear that Farha sees a good future for entrepreneurs in the Middle East, as for himself, and for Beco, he says, “My dream is to see the Middle East come alive from the technology and the innovation perspective, and I hope that myself and Beco can play a significant part in achieving that dream, so in 5 years I should be able to look at the region and say that we have so many businesses built here, for here, as well as have global impact and uptake. We can build a global brand, like Emirates has done, and technology allows us the level playing field to do just that.”