IOTLIGHTCAN ENTREPRENEURS

SAVETHEWORLD?

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Wo rld- cfemse ntrep r er!eil rs he story ofentrepreneurship in the the U
twentieth cenhrry was about individu- job st
fasnreresefted critiecl mecssin als who got accessto sophisticatedcap- ers; Jr
sor!?esrurpr8s8ng
p{crces-cnd ital in afewadvanced markets and cre- whicl
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Thesefnnowsforsjust mfg&f their way ont o the Fortune5oo. But in the twenty- whii
neydrre
ffac gfobell eeonenry. first century, a very different story is unfolding. trY's,
by AnneS. Habibyand Deirdre Today entrepreneurs anywhere can create byCl
value with relatively little capital. Barriers to en- Dom
M. Coyle,Jr. try in almost every industry have come crashing store
down, opening vast opportunities for small com- seen.
panies. Thesedevelopmentsare especiallyappar- Thes

that an entrepreneurial economy is ready to bloom.
We've spent the past two years studying entrepre'
neurship in the Middle East, Afric4 and South Asia,
and wdve found hundreds of world'dass ventures
poised for significant growth there. Most people's
assumptions about entrepreneurship in the devel-
oping world-that entrepreneurs either dorft exist
there or are microentrepreneurs-are wrong' High-
potential ventures are surfacing where no one is
looking for them-in Beirut instead of Boston, in
CapeTowninstead of Silicon Valley-among people
who have historically been outside the economic
power structure.
What's surprisingis tfiat so many of thesecom-
panies aren-tin the fast-growing markets the world
is already watching, such as India or Brazil. They're
cropping up in placeslike Jordan,SaudiArabia, and
Africa-whose economies have been driven by top'
down government policy, large businessgroups,
multinational corporations,and even socialelites,
such aslocal royalty. Until relatively recently, such
places were thought to have a critical shortage of
businesspeoplewho could build companies.
The ventures that we uncoveredin our research
generatefarmore jobs and wealthttrantypical small
businessesdo, and they often createnew industries
or open new markets. They indude companieslike
the UAE's Bayt.com, the leading Middle Eastern
job search site, which attacts 4.5 million job seek-
ers; Jordan'sAramot, tJte FedExof the Middle East,
which has honed its edge by making deliveries to
placesglobal distribution companiesavoid; Airblue
of Pakistan, the fust paperless airline in t}te world,
which quickly acquired a 30% shareofthat coun-
try's domesticmarket; and MeetingPoint, Iaunched
by ChristineSfeir,who atz2 openedthefust Dunkirf
Donuts store in Beirut and 10 yearslater runs 3o
storesthat, unlike any Dunkin' Donutsyou haveever
seen, are elegant hot spots for young professionds.
Thesebusinessesarescalingup at dramaticratesand
introducing exciting new product-market combina-
HBR.ORG
Annes. HabibY(ahabibY@
allworld]ive.com)andoeirdre
M. coyle' Jr. (dcoytejr@
allworldlive.com),are
cofounders, with Harvard
Businessschoolprofessor
MichaelPorter,of theetlwortd
Network,an organization in
Bostonthat works to advance
entrepreneurship in emerging
markets.
tions. A casein point is Rumman,the first eventsand
publishing company focusedon SaudiArabia'slarge
youth market. Operating with a team of 30 recent
college graduates, it hasbecome so successfulthat
brands such.asMIV now work with it to market to
youngSaudis.
Countriesthatwant to play in the globaleconomy
need companies like these, which are building and
redefining industries that satisfy domestic demand
and generate export income-not to mention cre-
ate employment for the rapidly growing younger
population. For multinationals, these ventures can
be apath to accessingthenewideas, customers,sup-
pliers, and talent of emergingmarkets. Finding and
investing in them maybe one key to reenergizingthe
globaleconomY.
TheGreat EconomicDetour:
A Focuson SmallCompanies
The world at large urgently needsto ramp up the
paceofjob growth and newvalue creation.Accord-
ing to the World Bank, the Middle East alone must
create 80 million more jobs by zozo just to absorb
new entrants to the labor market without lowering
living standards.This iszueis graverin parts ofAfrica
and Asia, where job creation is imperative to lift mil'
lions out of crushing poverty. The question is how to
makeithappen.
Almost all government economic development
and entrepreneurship programs tend to focus on a
wide swath of small to medium-size firms. To ex-
plain this approadr, they often quote statistics about
how the overwhelming majority of job creation
comesfrom theseenterPrises'
But their broad efforts may be misdirected. In
2oo9 the Global EntrepreneurshipMonitor (GEM),
which looks at 54 countries in the emerging and
developed markets, concluded that only r4yo of
all start-ups expect to create20 or more jobs. The
zone for significant job growth is very small-and
it's especiallyhard to find in developingcountries
75
September2oto HaruardBusinessReview
SPOTTIGHTCAN ENTREPRENEURS
SAVETHEWORLD?

that have yet to identify their own entrepreneurial ageof4oy"ayear for three or more yeius-1o times
communities. the national private sectorgrowth rate-collectively
But those communities are out there, and they creating3o,ooojobs. They representeda wide range
havegreatambitions. The GEMdata, the only global of industries, including IT, telecommunications,
data on entrepreneurship, show that the incidence medi4 publicrelations, pubtishing, health cale, and
of entrepreneurship is twice as high in emerging education. But almost everyone in the country had
marketsasin the developedworld. Out of every 1oo aszumedthat sudr competitive entrepreneursdidn't
people GEMinterviewed in developing countries, evenexist.
towere laundringbusinesses.Four ofthose ro firms More recently,when we compiled fast-growth
were "necessity driven' and six were 'bpportunity listings for Lebanonand Jordan, we found a simi-
driven." In developed economies, only five out of lar base of competitive entrepreneurs. Judging by
every loo people were launchingbusinesses,and our initial researdr for the Arabia 5oo, we exPectto
of those firms, one was "necessity driven' and four find comparablegrowth companiesthroughout the
were 'bpportunity driveni' Although there aremany Middle Eastand North Africa. (Ourfindings will be
more necessity-drivenentrei:reneursin emerging public in zorr.) We'veseena similar pattern in Paki-
markets than in the developedworld, what is often stan and India (starting points for our list of the 5oo
overlookedis that those markets are home to even fastest-growingentrepreneurial companiesin Asia)
more opportunity-driven entrepreneurs. and when compiling the South Africa roo (the start-
Opportunity-driven entrepreneurstend to cre- ingpoint for the Africa 5oo).
atelarger enterprises,but only a small percentageof Until now, emerging markets have mostly been
them will build high-gowth companies-so-called seenas sourcesofnew revenue for large Western
gazelles.Gazelleshave a disproportionateimpact. companiesor homes for emerging giants in finaace,
They consistentlycreatenew products, new supply construction, and the extractive industries. What
or distribution channels, and new customers, and we've found changesthe waywe shouldbe looking
generateeconomicvalue. But they canbe hard to see at the potential of emergingmarkets.It suggeststhey
when they arein the maling-especially if they're in arehome to a growing community oflatent gazelles.
markets sudr as the Middle East and Africa, which In fact, the company founders we encountered
arelargely unscrutinized by investors, multination- there are as sophisticated as their Western counter-
als,and thebusinessmedia. parts-and, some might argue, perhaps have more
potential.
Lookingfur the Market Movers Entrepreneurial DNA. If you took away their
At the invitation of the Saudi Arabian General national identities, it would be impossible to distin-
Investment Authority (SAGIA),we started our re- guish entrepreneursfrom SaudiArabia,SouthAfrica,
seardr in SaudiArabia. The country is arguably one and the United States.(Our Americanreferencepoint
of the most unlikely markets for entrepreneurs; its is the Inc. 5oo.) On paper, entrePreneursfrom tfiese
economyis dominated by the state-controlled oil three countries look the same with respect to their
indusuy and large family-run business conglomer- educational and professional backgrounds. Most
ates.It urgently needsto diversify. When we began, of them have undergraduate degrees,and many
SAGIAand our other partners (the news organiza- havemaster'sdegrees.Most have five or more yeats'
tion AlWatan,Nationd CommercialBank, Siraj Capi- worth of experiencein industry with a top firm like
tal, and real estatedeveloper SukoonIntemational) Procter & Garnble,Pepsi, Unilever, Toyota, or IISBC'
were hard-pressedto name more than a handful of The averageageofthe founders at start-up is even
entrepreneurialgrowth companies. the same in each country: 33. Entrepreneurs of all
Nine months later we announced a list that we three nationalitiesform companiesin the samenew'
call the SaudiFastGrowth 1oo.Theseroo rapidly economyindustries and have similar inspirations
growing companieshad provided audited state- and mind-sets.Most are self-financed at start-uP.
ments to document their performance and met the ConsiderOsamaNatto, formerly an executive at
samecriteria asthelnc. 5oo-considered bymanyto P&G.At the ageof3z he establishedJeddah'based
be the gold standard of entrepreneurship. Without Innovative BusinessSolutions, a strategy consulting
the benefit of attention from either the government firm with expertise in markets from Kazakhstan to
 HBR.ORG
ENTREPRENEUR
THE HIGH.INTENSITY

his house and moved his family into an apartment-
just as many U.S.companyfounders do-and since
then, IBShas gro'wn28ooloa year to reactrrevenues
of dose to $3million.
Entrepreneurial intensity. one notablechar-
acteristic distinguishes emerging-market entrepre-
neurs,our researdl shows.Ttrey demonstratehigher
levels of 'tntrepreneurial intensity"-a measurewe
createdto caphuethevolumeof zuccessfulcompa-
nies they form. Historically, entrepreneurs we've
firms dorr-tjust hang on to the global economy's
sexttrils. In fact, they may be uniquely designedto
thrive in a new global economy that favors leanly
financed, adaptablecompanies-and could be turn-
ingthe abilityto enecutein the drallengingbusiness
environment of emerging markets into a competi-
tive advantage. Look at Qanawat, a Saudi roo tele-
communications company, which rapidly scaled
up to $l billion in revenue in its first four years by
serving rural areasof SaudiArabiathat were diftcult

Entrepreneursin emelg]lg marketsstaftZlo/o more

companlesthan their U.S.gounterpartsdo,andtheir
firmi havea higher survivalrate.
identified in emerging markets have started 25% to reactrand untapped by industry leaders.With that
more companiesthan their U.S.counterpartson the experience behind it, Qanawat is well positioned
Inc. 5oo have. The emerging-marketstart-ups have for a move into Africa and other Middle Eastern
a higher survival rate, and when asked about their markets.
future plans, anamazing80% oftheir founders said We believe these high-intensity entepreneurs
they intended to laundr anotherbusinesswithin the could be among the gazelles of the emerging mar'
nexttwoyears. kets. They are skilled at identifying opportunities i'
What explains the higher entrepreneurial inten- that others donit seeand executing amid the uncer-
sity? In our interviews with more than loo ente- tainty, scarcity, and risks that draracterize thebusi-
preneurs, a pattem surfaced. ln emerging markets nesslandscapein most of the world.
there are many undefended nidres to occupy. The
other side of the coin is that to grow, new ventures Forces for Global
there often haveto fill inmissingparts of the market. Entrepreneurial ExPansion
we see
For example,Eye-z-EyeOptical,ahigh-end eyewear As we look acrosscompaniesand countries,
that will accelerate high-growth entre-
chain founded by a Saudiwoman, Aisha Natto, had three trends
to qeate a lens-manufachuingplant to keepup with preneurship in tlie emergingworld.
demand and to tailor products for its stores.Emerg- Migration of talent. Entepreneurial talent is
and
ing entrepreneursoftenhave togrowthe spacesad- being distributed around the world as the best
jacent to their business-effectively building out the brightest leave the West and return to their home
industry duster-so that their initial company can countries to start companies. These entrepreneurs
succeed.And in the process,theybecome more ad- have developedcoremarket shlls and international
ept entrepreneurs. networks while studying andworking in the U.S.and
former
Grourth momentum in zoo9. Another zurpris- Europe.A perfect orample is Amjad Aryan, a
CVSexecutive in the U.S.,who returned to Jordan
ing findingrelated to performancein zo-o9,whidrwe
looked at in the audited statements of hundreds of to launchPharmacy ! the country's first drugstore
is rap-
ventures from the Middle East, Africa, and South ctrain,whidt now hasmore than 40 storesand
Asia that had grown rapidly from zoo6 to 2oo8. idly orpanding throughout the Middle East.
While the global economy contracted 2%, most of A pent-up supptyof entrepreneurc- Aspo[ti-
these companies picked up their pace in zoog-in cal and economicconditions relaxin emerging coun-
Asia,
the majority of cases,growing 2oyoto 50% faster tries, and as more entrepreneurs from Africa,
Latin America, and the Middle East become house-
than they had in 2oo8.
What this suggestsis that emerging entrePre- hold names, we exPect to see entrepreneurship
neurs'businessmodels have staying power; their take offas it has done in India and China- Surveys
Review7?
Business
September2oroHarvard
SPOTLIGHTCAN ENTREPRENEURS
SAVETHEWORLD? HBR.ORG

ofyouths in emergingcountries often find that more of Light & Electricity, has already helped ro employ-
than z5zoof them want to becomeentrepreneurs. eeslaunch thbir own start-ups. And one Saudi roo
Relatively low seed-capital requirements. winner, the founder of the high-end fashion design
The dearth of banls and venture capital and private house Lomar, worked at another Saudiroo winnet
equity firms in emergingmarketsused to be a signifi- 3Points Advertising, where he was encouraged to
cant constrainton companyformation there.Among start his ownbusiness.
firms thathave applied tobepart of ourfast-growth
raakings,however,the averagefirst-yearinvestment Unleashingthe Neft Century
was $2oo,ooo.Most midcareer entrepreneurs have of Entrepreneurhip
little uouble raising that amount from their own It's time to redefine the relationship between entre'
savingsor from their first round of customers. The preneurship and the developingworld. What holds
opportunity to enter industries without significantdevelopingcounuiesbackis not a lack ofworld-dass
bank and venture financing hasneverbeen greater. entrepreneurs but a lack of awarenessabout them,
whidr artificially suppressesgrowth andkeepsvalue
High-lntensity Entrepreneurshipls trapped. Building systemsto identify growth com-
the Future Grorrth Engine paniesand put them on the economicmap will have
The high-intensity entrepreneurswe have come an immediate impact. When nascentgazellesget on
acrossin our researdrdou-tjust build companiesthat the global radarscreen,customers,talent, and global
scaleup quickly from zo to 2oo employeesor from capital cometo them. Wecall this phenomenon"vis-
2oo to 2,ooo.They createjobs that developpeople. ibility economics3Visibility can give high-potential
They establish work environments that motivate companiesmany of the benefits of goingpublic. But
employees,investing heavily in on-the-job training without it, they stall out at a small size.

Emerging-marketventuresare
proficient incubatorsof other
entrepreneurs.
and providing a wide rangeofbenefits, from health Our researchto date suggeststhat every region
care to profit sharing. Their companies are chroni- in the developingworld has a hidden community of
cally searchingto fill positions and often promote potential gazelles.We estimatet}rat after we identify
fromwithin to keep their culture strongand reduce the Africa 5oo, Arabia 5oo, Asia 5oo, Eurasia5oo,
hiringand trainingtime and costs. and Latin America 5oo, and they gain worldwide
A goodexampleis Saudi-basedSecuTlonic,a high- recognition, those companies will be able to create
tedr securitycompanythat grew an amazing2,5oo% one million jobs in five years.But this is just the fust
in five years.It has a flat managementsfiucture, ac- installment. The firms on those lists have the poten-
cording to cofounder Ihab Elsamannoudi."There is tial to be massive-forcemultipliers, smoothing the
no boss-just zoo entrepreneursworking togetheri way for new industries and inspiring thousands to
he says.Adds cofounder JawadAli, "This creates expandmarkets asentepreneurs.
an energy that benefits the entire company, as well We may be on the verge of a global entrepre-
as our dients and shareholders.Behind any leader neurial heat wave. High-intensity entepreneurs are
at SecrrTtonicthere are many trained and prepared beginning to flourish in unlikely places,generating
minileaders.This is the only way to grow very fastj' new product-market combinationswith unbounded
These entrepreueurs' ventures are proficient potential. For multinationals and investors, they
incubatorsofother entrepreneurs.Fully a third of presentimmediate channelsfor growth. For govem-
the companieswe looked at in emergingmarkets ments and foundations, this new breed of innova-
actively supported employeeswho were creating tors provide the path to progressand prosperity. U