Laila in Jordan

trek down rainbow street

2009-08-04T05:54:00.008-04:00

Rainbow street provides a small glimps into reform efforts in Amman. Located in Jabal Amman (Mount Amman) off of the first circle, this is one of the oldest streets in the city. A few years ago the city decided to revitalize the street, creating a hip hangout destination catering to people of all ages while preserving the traditional style. Several outlooks offer beautiful views of old Amman. Cafe Jarra has a photo gallery showcasing the Country's history and monarchy. Art galleries, cafes and bookshops abound. Here is a quick picture tour of the area:

The historic Rainbow Cinema after which the street is named:

Beautiful view of Old Amman from Old View Cafe at the bottom of Rainbow Street:

The Jordan River Foundation. This non-profit employs poor Jordanian women to craft beautiful textiles and homegoods created by expert designers. This showroom is also its flagship store. (http://www.jordanriver.jo/)

Books@ Cafe is an area staple, popular well before the Rainbow Street development project. It's a relaxed coffee shop, book shop, lounge. Said to be owned by an openly gay man, it also tends to be a trendy gay hangout.

Books@ wall art:

Souq Jara is an all day Friday market, fair and concert (in the evening).

Souq Jara welcomes an eclectic mix of people and crafts:

The Souq is also home to youth creativity:

Wild Jordan can be found off of Rainbow Street at the very end of Souq Jara. It's a Wild Nature Preservation Foundation, shop and healthy eating restaurant.

Nightime view of Amman from Wild Jordan's dining terrace:

hope for venture in jordan

2009-08-02T03:59:00.002-04:00

Last week I met with a venture capital fund that gave me hope for the prospects of venture in Jordan and the region more broadly: Accelerator Technology Holdings (ATH). First met with their associate, a young Duke graduate named Khaled Talhouni. Khaled is extremely bright and modest, and after only two years in the industry extremely well-versed in VC industry practice. I also met with the Fund's founder and CEO, Dr. Fawaz Zu'bi. Fawaz Zu'bi is warm, charismatic, articulate and genuine. He's the type to not forget a face or a name; they type to make you feel like you are the most important thing in the room when he is speaking to you.

In addition to generating attractive returns, ATH's mission is to advance the economic development of Jordan and the region by providing venture capital financing to early and growth stage technology, media and communications companies.

ATH was able to overcome the chicken and egg problem of raising venture financing: can't raise a fund because there's no track record and can't build a track record because there's no fund, due to Dr. Fawaz's strong network and track record as Minister of Information and Communication Technology and Minister of Administrative Development for Jordan. Thus, ATH actually has a fund of capital out of which to invest.

While the Fund doesn't currently face challenges on the investor front, it does face challenges on the investment front. Entrepreneurs in the region don't really understand venture terms. They often have inflated valuation expectations, little desire for succession planning and exit planning. Companies typically require a lot of hand holding during the investment period. And even if entrepreneurs want to plan for exit, exit opportunities themselves are scarce.

This makes me think: should entrepreneurs in the Arab World conform to Western venture standards, or should investors conform to the standards of entrepreneurs in the Arab World? I believe the answer is not straightforward. While I promised myself I would be cautious about taking the western model of venture capital that I believe in and applying it blindly to the Middle East, there are some things about it that I think should be applied. After all, investing in early stage ventures is a very risky business. If the formula doesn't allow for venture capitalists to have some degree of control and to work towards an exit that enables them to generate commensurate returns, investing becomes a fool's errand.

Venture capital can be very good for the entrepreneur. It creates access to capital that may otherwise not be there. The capital comes with years of experience growing profitable businesses and rich networks that lead to partnerships and customer relationships. At it's best, venture is a win-win situation that builds companies, creates jobs and promotes economic development.

However, investors in the Arab World are to a certain extent conforming to fit the regional circumstances. For example, if there is a lack of exit opportunities, investors can structure ongoing dividend payouts as a means of extracting return. If entrepreneurs are less seasoned in operations, investors are involved in a more hands-on way. If entrepreneurs are uneasy about minority control provisions, investors will require majority ownership stakes.

What I like about ATH is that they understand both the western model of venture and the local entrepreneurial culture very well. They are treading a line between both. They are adjusting their model to conform to the local entrepreneurial climate, yet they maintain high quality standards for the entrepreneurs in which they invest. It's a give and take. Slowly ATH, and firms like ATH (I mentioned the newly forming Middle East Venture Partners in a prior post), will change the entrepreneurial culture for the better. And the entrepreneurs will also force venture capitalists to adjust their model slightly to better fit the local culture.

With more firms like ATH who are nimble, have a willingness for flexibility, and strong drive to advance the economic development of the region, I think a venture industry can eventually flourish here.

best party city?

2009-07-30T03:41:00.005-04:00

Just a quick post to share a CNN news piece from yesterday.... and a bit of validation of my writings on Beirut as a party city:

In the event the video isn't loading properly, check it out on CNN's Site.

(Courtesy of my facebook friends Zeina and Fadi who were quick to post this!)

what type of company do venture capitalists fund?

2009-07-29T02:58:00.007-04:00

A few weeks ago I was introduced by my friend Sami Shalabi to the ArabCrunch blogger Gaith Saqer. I met with him at Illy's coffee shop off of Rainbow Street. Over a coffee, he proceeded to tell me all about the entrepreneurial climate in the region, new gadgets on the market, and regional events he helped organize. This guy has his fingers on the pulse of technology and entrepreneurship initiatives in the region and reports on them at Arab Crunch. He invited me to guest author a post on his blog, and I readily accepted. Here it is. I hope you enjoy it:
What Type of Company do Venture Capitalists Fund?.

nascent venture industry

2009-07-28T08:00:00.001-04:00

I've been meeting with various capital providers in Jordan and also speaking with some in other parts of the region. My primary role with Endeavor is to discover, profile and establish relationships with these capital providers. The hope is that they volunteer their time as VentureCorps Mentors for our Endeavor Entrepreneurs and that they can potentially be providers of capital to the entrepreneurs who need it. In exchange they get unfettered access to entrepreneurs who have been through a rigorous 5-stage selection process and could be great investment opportunities, as well as access to the Endeavor network and events.

By now I think I know every venture capital firm in Jordan. I've met with most of them and will be meeting with the rest this week or next. I've also met with several funds outside of Jordan and know of most of the rest. As such, I can say from experience, the venture industry in the region is nascent at best.

First, many "funds" aren't actually funds. That is, they actually don't have any money. People typically start venture advisory practices, providing fee-for-consulting services to entrepreneurs, in order to earn a living while they try to raise capital. Oftentimes investors aren't used venture terms and time horizons. They don't want to tie up their capital in a fund. Or they don't have the appetite for venture risk. Thus, often these firms are unable to raise capital so they continue operating as an advisory business. If an investment opportunity arises, they pool their network to see if they can find investors.

Second, even the firms who actually have capital and are structured as a venture fund typically find that it is extremely difficult to operate as a venture capitalist. Now the problem has to do with the entrepreneurs themselves. Entrepreneurs in the region simply lack an understanding of venture capital terms. They are unable to grasp concepts like right of first refusal, drag along provisions, preferred stock, participating features, veto rights, etc. Further, their "advisors" don't seem to be properly preparing them for these types of discussions; perhaps because the advisors themselves aren't fully versed in this language.

Third, there are some Islamic funds which follow shari'a law. Essentially, all this means is that the companies in which they invest cannot engage in certain unallowable activities that involve: gambling, alcohol, and charging or paying interest. It also means the fund itself can't structure securities that have debt characteristics. The existence of such funds is good since they provide an alternative for entrepreneurs who prefer to seek Shari'a compliant funding. However, for other entrepreneurs, they can mean a longer vetting process with unecessary restrictions. Additionally, venture capitalists often incorporate debt-like characteristics in their securities as a way of lessening the downside risk. So, to the extent Islamic funds cannot afford themselves this flexibility, they might involve themselves in a riskier type of investing than other venture funds.

This leads me to believe that while initiatives such as the Queen Rania Center for Entrepreneurship (QRCE) are quite admirable, there is still a long way to go. Largely, government initiatives are encouraging very early stage entrepreneurship. They are teaching Jordan's educated how to venture out on their own and build a real business. For example, I attended a very well-run and well attended QRCE seminar yesterday on Blue Ocean Strategy. The presenter was knowledgable, the audience engaged. Interestingly, I estimate the audience was 30%-40% women, and the women were much more vocal and interactive than the men. While these early stage initiatives are necessary, they are not sufficient. Further effort is needed to help entrepreneurs move beyond the early stage and build an environment where they have access to customers, partners and investors.

There is a role for an organization like Endeavor, which is focused on more established entrepreneurs who can employ many people and serve as role models for other aspiring entrepreneurs. Endeavor's high profile local board and VentureCorp gives it clout in the region. It can engage with the few true venture funds, verse its entrepreneurs in venture language and educate them on the benefits of VC. It can then hold up these transactions as successful examples for others to follow - both budding entrepreneurs and budding investors.

Additionally, more needs to be done on the policy side: to encourage venture investing, to headquarter more established businesses to the region as a way of creating an entrenched base of potential partners and acquirers for younger companies, and to ease registration and tax filing requirements for existing businesses.

Already, Jordanians who have built themselves a career in the West are returning to Jordan to give back to society. Ennis Rimawi of Catalyst PE returned a few years ago from Boston and Mohammed Alzubi of Middle East Venture Partners just returned from Silicon Valley. He informs me all of his belongings are in a crate somewhere in the middle of the ocean (not quite sure which ocean). People return full of hope and excitement, often to be disappointed by the challenges of reality on the ground. However, with a bit of friendly government policy, initiatives like the QRCE and the El-Hassan Science City, and organizations like Endeavor trying to guide constituents in the right direction, the Ennises and Mohammeds of Jordan might find some success here after all.

an adventure trip and the tourism industry

2009-07-25T04:00:00.005-04:00

Prior to departing for my mid-summer travels, I went on an incredible day trip just a 45 minute drive outside of Amman. The day started at 10am with a drive out to Wadi Mujib, a canyon and nature reserve southeast of Amman. Wadi Mujib offers several trails, including a two-hour guided rock-climbing trail, a seven-hour combination adventure trail, and a three-hour waterfall hiking trail. We did the latter, and it was quite an adventure. We had to forge against rapids, often using previously set ropes for support. We climbed up smaller falls along the way and sometimes leaped from one slippery rock to another, hopeful not to slip and fall into the fast-moving rapids below. The hike was challenging and rewarding, both because of the physical struggle and the lovely waterfall greeting us at the end. At several points I thought I would have to quit and head back, but I’m very happy I stuck through it. It’s unlikely I would have made it without the help of the guys who were with me.

After the hike we took a 15-minute drive to the Movenpik hotel resort at the Dead Sea and enjoyed a relaxing afternoon by the infinity pool, a therapeutic dip in the dead sea and a full body natural dead sea mud mask. We ended the day with a drive to the cliffs to watch the sunset before heading back to Amman for a chicken shawarma dinner and a good night’s sleep.

The trip got me thinking about the state of the tourism industry in Jordan. The breadth and depth of tourist attractions in Jordan are quite remarkable, particularly considering how much of the Country is dry dessert land. Wadi Mujib is one of many wadis and not even among the more popular sites in Jordan. The country is full of rich history. However despite recent efforts by the monarchy, Jordan has failed to really capitalize on the potential of a tourism industry here.

The sites are too many to list, but I'll cover all of the main highlights:

Petra is the ancient city of the Nabateans, entirely carved into the mountains, complete with sewege and drainage systems. Petra, well-known to Westerners as the famous setting of Indiana Jones and the Last Crusade, is one of the new 7 wonders of the world. Carved into beautiful pink rock, this vast hidden city was discovered by Swiss explorer Johann Ludwig Burckhardt. Petra has something to offer to everyone - an active hike up to the monastary, rock climbing trails for the more adventurous, and horse or donkey rides for the less mobile.

Wadi Rum is a desert full of mountains and hills. It's a popular place to go camping with the bedouins who will make dinner and coffee for you. It's also popular for a variety of sports and rock climbing.

Natural reserves like Wadi Mujib: Dana, Azraq Wetland and Shawmari. However, Wadi Mujib is distinct in being the lowest nature reserve in the world, and also the one with the most adventures to offer.

Roman ruins: Umm Qais is an ancient roman city that boasts a gorgeous view of the Golan Heights. Jerash is another ancient roman city in the North famous for its beautiful old roman architecture. Jerash is also home to the annual Jerash Music and Arts Festival.

Castles: Ajlun - with the famous Islamic Al Rabadh castle, and Karak from the times of Salah Al Din.

Amman itself offers the Roman Theater, various museums, lots of arts, and the dead sea scrolls.

Hamamat Ma'een - hot springs about 30 minutes outside of Amman.

Religious sites: The floor mosaic map of the early Byzantine St. George's Church in Madaba; Mt. Nebo where Moses was said to have viewed the promised land; and the Jordan River where Jesus Christ was babptised by John the Baptist.

Water: The Dead Sea, the lowest point on earth, has been developed with beautiful resorts. And Aqaba, at the Red Sea, has gorgeous coral reefs that are the best I've seen for snorkling and diving.

I'm very lucky to have done everything on the list above except for Wadi Rum, Karak and some of the museums. Though I did most of it nine years ago when I studied Arabic in Jordan for a summer.

The monarchy is making a concerted effort to promote Jordan as a tourist destination. King Abdallah even created a promotional video of himself braving the Wadi Mujib trails! Places like the Dead Sea, Maeen Hot Springs and the Red Sea are much more developed than when I last visited 9 years ago.

Additionally, some interesting entrepreneurs have decided to leverage Jordan's natural sites in building their companies. For example, one of the companies incubated at the El-Hassan Science City provides electronic tour guides of many of the sites in over 20 languages. As another example, Endeavor Jordan recently met with a company that offers corporate retreats and team building programs. The company holds its programs all over the country at some of the sites mentioned above. It is also building for itself an adventure tourism niche, as it charts brand new adventure courses in previously uncharted territory!

I'm not sure why Jordan's tourism industry hasn't boomed. At this point, I view Jordan as a true diamond in the rough in terms of a tourist destination. Perhaps people are afraid of the region (though I find it incredibly safe here). Perhaps the government needs to step up its promotion efforts even further. Perhaps its up to the private sector to advertise all that Jordan has to offer. Either way, I think Jordan will be one of the next up and coming tourist destinations.

a real arab city

2009-07-22T05:37:00.003-04:00

I took a 24-hour detour to Damascus (Al Sham as the Arabs call it), and I was blown away. Admittedly, I had never been to Sham and didn't know much about the City. Further, when I would mention to a Lebanese person that I was going to Sham, the typical response was, with nose up in the air and a downward lip curl, "Oh...why do you want to go there?" as if it's a desolate backwards place that the refined Lebanese do not visit.

Thus, to my surprise, Sham is simply amazing. It's a beautiful, clean city that is full of life and so much history. What I liked most is that people are genuine; truly genuine in the full sense of the word. In Beirut and Amman everyone wants to be "Western." It's as if they work hard to deny their heritage in order to be what they perceive as something "better" - more American or European. In Sham, this is not the case. People are true to who they are and proud to be Syrian. They are also generally well-educated, friendly, pleasant; simply top-class.

(From top left, clockwise) Our hotel courtyard, Old City, Ummayad Mosque, Old City Souq

Sham is what I dream a real Arab city should be. Full of beautiful architecture that tells its rich history, respectful of its heritage; yet modern, intellectual and comfortable. The University of Damascus, with over 85,000 students, is at the heart of the City. Society is very open. People from a mix of religions coexist and collaborate daily.

With so little time, I didn't have a chance to experience its nightlife. But a close friend who was visiting at the same time stayed a couple of extra days and partied with a Syrian friend, the Syrian way. When he went home at 4am, his friends were still going strong. He explained it as the most fun he had during his entire trek through the Arab World. Fun clubs, great music, reasonably-priced alcohol, approachable people. And the girls.... Compared to the often harsh glamour of Lebanon, the girls have a delicate natural beauty. They seem less preoccupied with their appearance and more interested with the quality of conversation.

The food is also amazing. I believe the Syrian kitchen is unparalleled in the Arab World. Some of my Palestinian and Lebanese friends may beg to differ, but as a Palestinian myself, I think the Syrian kitchen is #1. I'll share with you one of the Syrian delicacies "Habara Neye" (raw meat). The pictures from left to right show the progression from serving plate presentation, to composed on my plate, to fully eaten - all in under 5 minutes. Yum!

In all, this is definitely a place I want to return to and experience more fully. As harsh as this may sound, I think Damascus puts the rest of the Arab world to shame.

other entrepreneurial initiatives

2009-07-21T04:14:00.004-04:00

I want to give mention to other initiatives supporting entrepreneurs in Lebanon:

1. American University of Beirut Olyan School of Business Entrepreneurship Center. This Center has received $5 million in start-up funding from the Al-Maktoum Foundation. Tony Feghali, PhD and Lecturer in Business Information, is the Director of Corporate Relations at the Business School and interim Director of the Entrepreneurship Center. He's energetic, pragmatic, and modest. He's the kind of guy that believes in what he is doing and isn't above working to get done whatever needs to get done. Tony is wary of all of the entrepreneurship competitions in the region. "I don't know if they are good or bad," he said. In Tony's opinion, there is so much buzz around these competitions but little focus on what institutional and policy change is needed to help these entrepreneurs succeed. I agree with him. I've seen lots of competitions but little discussion of policy. During the Spring semester, he hopes to have a gathering of all regional entities interested in promoting entrepreneurship to discuss these issues: venture funds, non-profits, government entities, and entrepreneurs. Tony also offered to be a regional advisor for my masters thesis and we're applying to analyze data and author a report for an organization that just conducted some exciting regional surveys on entrepreneurship. I hope we win the RFP bid. I'm looking forward to working with him.

AUB Main Gate at Night

2. The Rootspace (http://www.therootspace.org/). This non-profit supports entrepreneurship, innovation and social entrepreneurship in Lebanon. The organization organized Global Entrepreneurship Week events in Lebanon, provides an online collaborative space for entrepreneurs and provides consulting services to small businesses and NGOs. Its founder, David Munir Nabti, is also a graduate student at AUB. We have very similar regional interests and might work together on a project with Tony.

3. The Bader Young Entrepreneurs. I mentioned them in my last blog post. You can check them out here: http://www.baderlebanon.com/. I briefly met Bader's Director, Joelle Yazbeck, and plan to connect with her again.

4. Capital Trust - MENAVEST and EuroMena Funds. This European investment bank and investor has focused on the Middle East and North Africa (MENA) region. They have three funds investing in growth-stage opportunities across the region and seek emerging market returns over the medium to long term. They particularly look for companies with the potential to scale from a single country market to a regional market, and they help them to realize this potential. Thus, their aim is to take already established entrepreneurs to the next level. Unfortunately, I didn't have time to meet with anyone from Capital Trust but am tyring to set up a conference call with them.

5. Manara Capital (http://www.manaracapital.com/). This is a family fund investing in the Middle East, Europe and the U.S. As a family fund, their mandate is very broad. They invest across geographies, industries and stages of companies, investing in both private and public entities. Thus, their aim isn't to support entrepreneurs per se. However, the guys managing the fund are smart investors and support of entrepreneurs is often a by-product of their activities. For example, as investors in Al Rifai Roastery, the leading provider of nuts in the Arab World, they are helping the Company expand globally.

nothing ventured nothing gained

2009-07-20T06:34:00.002-04:00

"It's the office building right behind the large smashed building," said Nagy (pronounced Na-Jee) on the phone. "You can't miss it. See you at 10:30."

Indeed I didn't miss it. I walked directly into his office, which in scrappy start-up fashion had no receptionist, to the sounds of Nagy ending a Skype call with Paris. He greeted me enthusiastically, "Can I offer you some tea? We are tea fanatics around here. I have 80 different types of speciality teas."

Luckily, I love tea. "Yes please," I said. "Choose according to your taste." He served me a delicious green tea, apparently from China, which he steeped for me himself.

"I'm starting a company that sells speciality teas," He continued. "We're trying to prove that with the right marketing and execution, you can easily build a successful company out of Lebanon."

Nagy is an entrepreneur turned venture capitalist running the Building Block Equity Fund with his partner Fadi Daou. I've written about how Lebanon is a land of "flash and no cash" and how there's little opportunity here. Together, this duo is trying to change that. They recognize the large gap between (1) microfinance and small business loans available for the mom & pop shops and (2) private equity available (largely from outside of Lebanon) to fund large companies and real estate development projects. The entrepreneur who wants to build a scalable growth business is simply out of luck unless he has large sums of family money to support him.

"We've screened over 70 companies during the past year," said Nagy. "If a company is not venture-fundable, we still try to help them by connecting them to the right people or providing some strategic guidance." Nagy and Fadi are also involved with the Bader Young Entrepreneurs Program, which provides mentor ship and connections for young entrepreneurs and promotes entrepreneurship education in unversities in Lebanon. Often, Nagy and Fadi guide entrepreneurs to the Bader program for help.

The Building Block Equity Fund itself is structured as a "real" venture fund and has already made several investments with several more in the pipeline. It has limited partners, standard fund terms, and invests using standard preferred securities. This is actually rare to see in the Levant. Most of the other funds I have met with are either (or a combination of):

1. All family money. Thus funds are all coming from one source and often managed by family members. This typically means the fund mandate is very broad and the investment strategy lacks focus.

2. Evergreen. There are no capital commitments on the part of investors. As opportunities come up, investors have the option to fund. This means there is no critical mass of capital dedicated to funding a particular investment strategy.

3. Not raised. Surprisingly, many operational funds haven't actually raised most of their capital yet. An example is a fund with a $50m goal that only has $2-$5m of capital committed for investment. It's very difficult to have an investment strategy with risk diversified across various types or stages of companies when the amount of capital and number of possible investments is unknown. This can lead to a failure of the venture model before it is even given a chance to succeed. Very bad for a region just starting to experiment with venture capital. I'll write more about this problem later.

In my opinion, the Building Block Fund has the right strategy: take a pool of committed capital and invest it in early and growth stage Lebanese and Lebanese-related companies with charismatic entrepreneurs and the potential to scale. Granted, narrow geographic focus in a country that has been prone to conflict in the recent past is risky. However, if your goal is to promote economic development in Lebanon via entrepreneurship, this is the right way to do it. And who better to execute on the strategy and manage the risk involved than a couple of experienced Lebanese entrepreneurs and investors?

I'll keep my eye on the Building Block Equity Fund during the next few years. I anticipate hearing some good news coming out of their portfolio companies.

a beautiful country

2009-07-18T06:35:00.005-04:00

Today is my first wedding anniversary. In celebration of that, my husband and I spent the past two weeks in Lebanon. While I've mentioned in several posts how beautiful the Country is, I haven't done its beauty justice in pictures. Here are a few shots from some of the things we did together.

Mountain View North of Beirut

Seaside South of Beirut

Mountainside North of Beirut

Mountain Castle North of Beirut

Newly Renovated Downtown

Southern Landscape

Southern Seaside Sunset

no opportunity

2009-07-15T05:29:00.009-04:00

Lebanon is packed. The airport, the ground border crossing, the streets, the tourist attractions, the restaurants, the clubs, the pools and beaches; all packed. Lebanon is such a vibrant country. So full of life and beauty. However, the energy of the place in the summer belies the true economic state of the country. Regardless of whom you speak to, the conversation often reverts back to the same statement, "there's no opportunity here."

Out at dinner with some friends, I couldn't help but notice, as people sat with elbows on the table, the row of designer watches on both men and women: Cartier, Rolex; Tag Heurer was the low-end. Wine constantly flowing, vodka bottles bottomless, I had to wonder, "where is all of this money coming from ?!" Rooftop bars and restaurants are the "in" thing in Beirut. I think the Lebanese are so numbed by the wars they have been through that demolished buildings simply fade into the nighttime skyline. But to me, things look different. I've never seen a contrast as striking as a beautiful glowing bar against a backdrop of destruction:

So where is all of the money coming from? How is it that the food and alcohol and designer watches are in such abundance while so many buildings remain destroyed and people continuously claim, "there is no opportunity?"

Standing at a rooftop bar, I leaned over and asked a friend, "How many of these people are NOT living in Lebanon?"

"90%," he responded. "Most of them are Lebanese, but very few actually live here."

Most of the money in Lebanon is coming from outside of the Country - the US, Europe, and the Gulf. Many beach clubs and real estate developments are actually owned by people from the Gulf. Some are owned by a handful of traditionally wealthy Lebanese and Syrian families. But largerly, the self-made Lebanese made himself outside of Lebanon.

This same friend told me that a recent college graduate is doing very well if he earns $1,000 per month. That's less than 1/4th of what a U.S. college graduate who is "doing very well" earns. However, the major cost of living components are very high. Apartments in Beirut cost $300-$400 per square foot - you can't buy anything decent for less than half a million dollars. Gas and cars are more expensive than in the U.S. And private school education is essentially required if one wants to go to college.

The people are generally very well educated. But industries are small and there's little opportunity to build a business beyond family money. There is virtually no venture capital - Building Block Equity Fund is the only real venture fund I could find.

While electricity is out 3 hours per day in Beirut and 12 hours per day in the South, politicians are busy playing to sectarian interests rather than working to fix the Country's problems.

Having a drink at the rooftop bar, enjoying the energy of the place and the stunning Beirut skyline, my friend said, "Lebanon is such a rich and beautiful country. I love it!" He paused and continued, "If only there was opportunity here, I would come back."

united under one sky

2009-07-12T03:06:00.016-04:00

"All of us under the Lebanese sky" (pictured) and "Our future together." These were two of new Lebanese Prime Minister Saad Hariri's campaign slogans during the June elections. And you can't miss them. They appear on billboards with bright blue sky backgrounds all over the country, particularly in the more Sunni areas. The slogans express a nice sentiment - that of unity, an undivided nation. But for a country with a sectarian government and fresh civil war scars, most visible of which are war-torn buildings all over Beirut City, the slogans are a bit ironic.

When I talk to the Lebanese about Lebanese politics, they say that no candidate has a real political platform. The candidates don't discuss social or economic issues, or political reform. Rather, they use broad slogans like the ones mentioned above. "People simply vote along sectarian lines," they say.

Lebanon's government is a parliamentary democracy structured under a framework of Confessionalism, whereby the highest offices are constitutionally reserved for representatives of certain religious communities. Thus the President must be a Maronite Christian, the Prime Minister a Sunni Muslim and the Speaker of Parliament a Shi'a Muslim. Seats in parliament are also divided as half Christian and half Muslim, with Druze considered Muslim. While the various Muslim and Druze parties tend to command loyalty, the Christians tend to be more divided.

Thus, can a country with a sectarian political system by design, a 15-year history of civil war, and a new generation that continues to vote based on sectarian affiliation rather than political platform really be united under one sky? Traveling around the Country one clearly sees divisions based on the election posters in the area. The East and North are full of Hariri posters. The South is full of posters for the Shi'a Amal movement and for Hezbollah. Afterall, when the Lebanese government failed for years to provide basic services to villages in the South, it was Hezbollah as a civil organization that provided healthcare, education, infrastructure, and defense. Despite the fact that Sa'ad Al Hariri's March 14 Alliance won a majority of parliament seats (71 of 128), the Hezbollah and Amal-led March 6 Alliance won the popular vote (55% vs. 45%). Is this a nation united or a nation divided?

War-torn buildings like this one abound in Beirut

I have some reason to think things will gradually change in Lebanon. First, The Lebanese Army has strong and positive relations with the Hezbollah militia. It's the Lebanese Army that mans checkpoints throughout the South, not Hezbollah. Second, Lebanon was united in 2006 against the Israeli attacks. The Lebanese felt a sense of oneness against an aggressor, minimizing their own internal divisions. Third, Saad Al Hariri won the elections with his unity campaign. Perhaps the March 14 Alliance didn't win the popular vote, but election day was largely uneventful and the results were accepted by all sides. The violence that was so feared did not materialize. Finally, parliament passed a law requiring that all election posters be removed from the streets. Posters signify sectarian affiliation and the new government wants these visible symbols removed. Walking around Beirut one can already see where posters have been torn down.

Thus, while some people might say Lebanon will always experience strong sectarianism and the new generation doesn't differ from the old, I disagree. I see signs of change. The change will be gradual. It will take more than one generation. But I think it is already coming.

flash and no cash

2009-07-05T13:46:00.013-04:00

I quickly stamped my passport and grabbed my bag from baggage claim. The lines were long but not for Americans, so I managed to get through quickly. As I walked passed customs in a single file line with dozens of other people and headed for the exit, a couple of teenage girls handed me a shiny little flier: Crystal Night Club - Paris Hilton Party. Tickets: $100 VIP, $150 Prestige. "Paris, why are you following me around the world?" I thought to myself, "I don't care to see your skinny, skanky self everywhere I turn." As I walked through the double-doors I was greeted with the largest crowds I had ever seen in an airport arrival terminal. "Welcome to Lebanon!" I thought to myself. "The most beautiful land of flash and no cash."

Three days later I had only seen a sliver of Lebanese society. Four night clubs, three nice restaurants, two beach resorts, and one newly renovated downtown. Valet parking abounds for $3. The majority of conversation is in English. The people are truly a cocktail. I don't even feel like I am in an Arab country.

However, I did see some signs of the Country's poor infrastructure. Many bridges, beaches and power plants were destroyed by the Israelis during their 2006 war on Lebanon. Thus the country is borrowing electricity from Egypt and Syria, and the power is out for 3 hours every day, even in some office buildings. But the power never goes out at the nightclubs. After all, the expatriates, tourists and upper class Lebanese must be satisfied. Dancing at a rooftop club with the Beirut skyline extending along the water as far as the eye could see, my husband leaned over and told me that during the war people danced as missiles lit up the air. The Lebanese never miss a party!

Wednesday Night - Bubbles Rooftop Club

Thursday - La Plage Beach Club. In quintessential Lebanese style, the writing on the wooden planks in the background says: "It is ok for me to have everything I want."

Thursday Night - Sky Bar. Rooftop club, outdoor air-conditioning, reservation only, $25 Belvedere Vodka drinks, beautiful Beirut skyline.

Friday - Riviera Beach Club Party.

Friday Night - Sky Bar Sean Kingston Performance.

impressions of egypt

2009-06-30T11:41:00.013-04:00

This is the third time I travel to Egypt, but somehow I think I'm seeing it through a slightly different lens. Perhaps it's my rigorous international development training, or the various hosts I've had on this trip, or the couple of meetings I had...

Leaving the airport, heading west towards Cairo, the length and depth of British rule over Egypt is immediately apparent. Ornate French and British architecture mixes with beautiful grand mosques along the entire 10km stretch of road from the airport to Cairo. It's quite impressive. Downtown I was met with a similar, but more aged, extravagance. Everything in Cairo looks old. Even that which is grand and high end has a worn look, as if the dust and pollution makes things nearly impossible to keep up.

Architecture in "New Egypt" between Cairo and the Airport

I had an interesting meeting with the managing director of the Endeavor office in Cairo, Ahmed Ezzat. Ahmed is a 25-year finance veteran, a venture investor and a documentary filmmaker. e described Egypt's economy as a "hand-to-mouth" needs based economy rather than a knowledge-based economy. "You have an elistist system," he said, "and the middle class has evaporated." He said of the 250 billion Egyptian pounds (~$45 billion) in the Country's annual budget, 60 billion goes to subsidies (mostly bread, as Egyptians consume 560 grams of bread per capita per day), 70 billion pays public sector salaries, 60 billion is spent servicing debt, leaving 60 billion for all other government programs, including health, education and business promotion.

View of trendy Zamalek and the Nile from friend's apartment

Exclusive Beymen Department Store at the Four Seasons Garden City

Indeed the "elitist" culture, lack of a middle class, and the "hand-to-mouth" nature of the economy is evident from a stroll down the street and a nice dinner out. But Egypt isn't that poor. PPP-adjusted annual GDP is ~$5,500 (4x that in 1981). The country engaged in a series of economic reforms in the 1990s including liberalization of trade and investments, reduction of price controls, reduction of taxes, and reduction of subsidies. But the country still has a long way to go. From Ahmed's perspective, regulation is not the problem. Rather enforcement of regulation is. Thus it's the softer things the country must focus on - corruption, governance, and bloated bureaucracies. This will help pave the way for a knowledge-based economy.

Currently, Endeavor-Egypt is supporting three entrepreneurs: First is jewelry designer Azza Fahmy who has recently gained fame across the Arab world and among Arabs in the West. Her daughter is taking over the business, putting growth into high gear. Second is wireless communications technology provider Khaled Ismail of SySDSoft. And third are Hind and Nadia Wassef of Diwan Bookstores. But Ahmed says Endeavor-Egypt has a long way to go if it plans to make a dent in the Egyptian economy. The office hopes to add 10-12 new high impact entrepreneurs per year such that it's supporting 50-60 by its 5th anniversary.

I also visited with the Economic Research Forum in Cairo. I met with Dr. Ahmed Galal, their director as well as Dr. Nadia Belhaj Hassine, one of their senior economists. This is an economic research powerhouse, focused on development issues in the Middle East and North Africa. Check out their work here: www.erf.org.eg

en route to cairo....top 10 things i love about queen alia airport

2009-06-28T04:44:00.004-04:00

I'm on my way for a brief trip to Cairo, and I'm simply amazed at the ease of travel here. So I thought I'd share the top ten reasons why I love Queen Alia International Airport:

10. World News Cafe with coffee, tea, snacks and BBC World News in high definition.

9. Cinnabon. Enough said.

8. Very friendly people and service.

7. No lines.

6. No smoking. Everywhere else in Amman people are smoking: restaurants, cafes, taxis, but not at the airport.

5. Expansive, shiny duty free shops filled with every over-priced thing I could possibly not need or want.

4. Easy access plugs for my computer.

3. Very easy security. No need to take my laptop out of the bag, or present my liquids, or remove my shoes and belt. I realize people might think this is scary, but come on, how secure do you really think U.S. airports are? They're a hassle just for appearances. And I did get a quick pat-down here by a nice woman - nope, no weapons on me.

2. Express check-in and bus service from Amman to the airport for $5. This is awesome. Rather than pay $30 for a taxi, I can check my bags and print my boarding pass at the City's offsite Royal Jordanian terminal. 45 minutes later (including wait time), I'm at the terminal. Taxi takes 30-40 minutes anyway. An exclusive service for Royal Jordanian customers.

1. Free high-speed wireless Internet! Take that Charles De Gaulle's 15 Euro wireless Internet service. I'm snapping and uploading photos and writing this blog as I wait for my flight to board.

the safest place on earth?

2009-06-25T08:04:00.001-04:00

Jordan is a very safe place. I'm not sure it's as safe as Singapore or Tokyo, but it certainly feels safe. It's difficult to explain why exactly. People are genuinely friendly, no one tries to rip you off, the city is clean...

I heard an interesting statistic the other day that may help explain why: 1 in every 4 people in Jordan is on the payroll of the Mukhabarat (Jordanian Intelligence). I heard this statistic from 2 people separately. When I mention it to others they say, "Yes, that sounds about right," or "Yes, they are more concentrated in the University areas. We used to know who they were when we sat in class."

It's astounding. While I'm usually very critical of such unverifiable statistics, I think this one could be true for several reasons.

First, Jordan is indeed very safe. The country borders Iraq but you don't hear of any terrorist activity here. There were hotel bombings four years ago, but that was the only incident and I'm sure they've upped the intelligence since then. I'm sure you think hotel bombings are a big deal, and I agree that they are; but I still believe that for its critical location, small size, and small government budget, Jordan is surprisingly safe. There must be some reason for this safety and good intelligence is a primary candidate.

Second, Jordan is a strong ally of both Israel and the U.S. Jordan receives a lot of aid from the U.S. - between $250m and $500m annually during the past 10 years. Also, Jordan is strategically located with Syria to the North, Iraq to the East, the Gulf to the South, and Palestine and Israel to the West. Thus, it is a key provider of intelligence to both Israel and the U.S. Therefore, these two very powerful countries have an incentive to ensure Jordanian intelligence is strong.

Third, there's a great entrenched source of intelligence. Jordan is full of Egyptian taxi drivers and waiters, and live-in housekeepers from the Philippines and Indonesia. These people earn between $100 - $200 per month and are willing to do a bit of work on the side to supplement their income. They also don't have any strong loyalties to people living in Jordan. From what I hear, these guys and gals are the backbone of the Jordanian Intelligence. I have trouble believing they're all so slick as to outsmart me. But then again, my interactions with them are always so brief with me doing most of the talking, often not to them directly. Makes me think twice about what I say in front of my friend's housekeeper. And I used to think taxi drivers talked me up because they were hoping to get my number! Perhaps I should think again?

promoting high impact entrepreneurs

2009-06-23T10:32:00.006-04:00

Endeavor Jordan had its first local selection panel on Monday. This is the process whereby Endeavor Entrepreneur candidates are vetted by a local panel of top business leaders to determine if they should present at the Endeavor International Selection Panel (ISP), held four times per year. The next Endeavor ISP will be held here in Jordan at the Kempinski Hotel, Dead Sea. This ISP will also mark the official launch of the Endeavor Jordan office - go Jordan!

Our panel consisted of the top business leaders in Jordan. They include, from left to right: Ali Al-Husry, former Chairman and CEO of Capital Bank and Chairman of Endeavor Jordan; Laith AL-Qasem, CEO of Arab Business Consultants for Development; Fadi Ghandour, Founder and CEO of Aramex and Endeavor Jordan Board Member; Maher Kaddoura, MD Huron Consulting Group; and Safwan Masri Professor at Columbia Business School and Endeavor Jordan Board Member. In the front you'll find Endeavor Jordan Managing Director Carmen Saad and me of course! These guys are very busy. As Fadi Ghandour tried to hurry out of the meeting, I intercepted him and asked that he pose for a proper group picture. Thankfully, he's a very nice guy and happily obliged.

It was an exciting day of entrepreneurs presenting to the panel, great discussion and (sometimes) heated deliberation. The event spurred my thinking again about the state of entrepreneurship in Jordan and the level of sophistication among both entrepreneurs and capital providers. I must say the search and selection team put together quite an inspiring and varied group of entrepreneurs.

Sitting in the room with the panelists, hearing them joke with each other and interrupt the entrepreneurs to ask incisive questions, I felt like I was sitting around the board room with the partnership at my old venture fund:

"How do you quantify your target addressable market?"
"Your greatest risk lies in successfully executing on your franchising strategy."
"What is your pricing model and how will you work to build your recurring revenue base?"

The entrepreneurs were quite impressive as well. They brought energy, charisma, shiny power point presentations, and well thought out responses to the panelists' questions.

The entrepreneurs included a female PhD who founded a profitable social enterprise, the creators of a very innovative new green technology, a couple of Web 3.0 gurus, and a niche retail specialist who has grown a sizable business already. We're very excited to see who makes it through the ISP to become an Endeavor Entrepreneur. Stay tuned to this blog - I'll announce the new Jordan Endeavor Entrepreneurs in October!

The entire experience made me think: "Yes, Jordan is ready. The seeds have been sown to grow a strong knowledge-based economy built on entrepreneurship."

How does Endeavor help?

First, Endeavor provides access to a network of top business leaders. In addition to 3 of the panelists mentioned above, Endeavor has Samih Darwazeh, Founder of publicly traded Hikma Pharmaceuticals on its board, as well as Peter Kellner, co-Founder of Endeavor. The office has also assembled a group of VentureCorps members, other business leaders who serve as mentors to the entrepreneurs. Endeavor provides consulting/mentorship, makes introductions to potential partners, customers and funders, and can provide training on raising capital and pitching to investors.

Endeavor seeks the entrepreneurs with high potential and gives them a bit of a push, or a shoulder to stand on, in order to ensure their success. In this way, the organization helps build large companies that can employ many people and helps build a culture of entrepreneurship that encourages others to achieve. Endeavor entrepreneurs give back by coaching others and in some cases donating a portion of their revenue.

A key question in my mind is: How much of a role does Endeavor play in the entrepreneurs' success? Would these entrepreneurs be as successful without Endeavor's help? I'll come back to this in a later post. But the short answer is, I think Endeavor does have a unique and important role to play.

Finally, here's a quick tour through our office:

Modern set-up.

Beautiful views.

Outside garden. We have 3 undergraduate interns (in suits), me (also in a suit), Ismail and Ali (search and selection team, Ismail on the left), and Carmen (managing director, center).

my neighborhood

2009-06-21T07:04:00.000-04:00

My husband wrote me an email the other day whose sole purpose was to say that while he really enjoyed reading my blog, he didn't think I was using that expensive new camera enough. "Where are the pictures?" he said. Well, Mohamad, I have been using my camera and these next couple of blog entries are for you!

I live in a neighborhood called Jabal El-Weibdeh. "Jabal" is Arabic for "Mountain" and "El" is Arabic for "the." So I live in Mount Weibdeh, which is literally up on a hill and thus has beautiful views of Jabal Amman and the old city to the south and east. Weibdeh, one of the oldest neighborhoods in Amman, has been rejuvinated of late and is now home to several art galleries, the National Gallery for Fine Arts, several non-profits such as Save the Children, CARE International and Endeavor, some Embassies including the Italian Embassy and the Pakistani Embassy, and a few cafes and restaurants. Here is the view from my apartment:

It's a small and beautiful neighborhood with culture and character. It has a very homey feel. People are friendly and helpful. It's traditional and family-oriented without being conservative. I'm quite comfortable walking around in a tank top and everything I need is within a 5 minute walk: supermarket, fruit and veggie stands, banks, pharmacies, convenience stores, dry cleaning, travel agent, taxi office, salons; I can't think of anything else I need.

The neighborhood also has both a well-known mosque and two well-known churches, within a 5-minute walk from one another. Many people in the U.S. don't realize that all Arabs are not Muslim. There's a plurality of religion in the Arab World with Shi'a and Sunni Muslims; many Christian denominations including Greek, Syrian, Armenian and Coptic Orthodox, Catholics, Latins, Protestants and others; Druze (11th Century offshoot of Islam); Bahai's; Jews and others. Jordan is no exception. Here Muslims and Christians live and worship alongside each other in harmony - literally in harmony as on Sundays one can hear the mingling of church bells with the call to prayer! Below are pictures of one of the Churches and the Weibdeh Mosque:

Perhaps what I love most of all is the sense of art and culture. Weibdeh is home to the Jordan National Gallery of Fine Arts, Dar El Funoun (House of Arts), the National Photographic Society, and several art galleries.

entrepreneurship initiatives versus public policy

2009-06-18T12:29:00.002-04:00

For a small country, Jordan is making a big push for entrepreneurship. On Wednesday last week I visited the El-Hassan Science City (http://www.elhassansciencecity.com/), home of the Princess Sumaya University of Technology, The Royal Scientific Society (an applied research institution), and the Higher Council for Science and Technology (policy and strategy). Co-located with Science City is the Queen Rania Center for Entrepreneurship (QRCE). Together, these institutions are working hard on very lean budgets to implement a vision of an integrated science park with students, incubated budding entrepreneurs and more mature businesses working alongside one another. And they are promoting a grander vision of a Jordan built on a strong knowledge based economy.

The QRCE has pioneered several initiatives, most notable of which is a national business plan competition sponsored by Google. They've also partnered with the Cisco Entrepreneurship Institute for business training and created a Made in Jordan competition whose aim is to turn innovative research into high growth companies. Additionally, business plan winners and runners-up, as well as some other companies, are supported at Science City's Incubator.

Courtesy of my friend Bob, who works as a consultant for Science City, I had the opportunity to tour the campus, meet with some companies and meet with the Deputy Director of the QRCE, Mohamad Khawaja. Here's a picture (and article) of Bob and Mohamad meeting with Her Majesty Queen Rania a few hours before I visited: http://www.jordantimes.com/?news=17456.

I think the effort is quite admirable, and I believe it will pay off. It already is. Mohamad, the QRCE's Deputy Director, is a young pragmatic yet passionate guy who can make things happen. The entrepreneurs at the incubator are young, hard-working and fired up about their prospects and the support and recognition they are receiving. I hear more talk of entrepreneurship than a few years ago. And while still rare, I see a venture fund popping up here, one there, focusing on high growth local entrepreneurs.

But there's still a long way to go for the government in terms of policy. Regulations often go counter to the goal of the business promoting initiatives. Take for example import tariffs. They're great, right? They generate revenue for the government while protecting or encouraging local business. But this is where Dani Rodrik's voice rings in my ear, "coordination failure." If the inputs that business require don't exist in country (coordination failure) and it's too costly to produce them in country, then they must be acquired from abroad. Now the import tariffs don't seem as appealing, since they might serve to depress business growth that can fuel the economy and generate many multiples more in tax revenue than the import tariffs currently generate. There are many other examples. For one, it is very costly and cumbersome to open a business in Jordan. Permit and license fees are very high as are working capital requirements.

Thus, we have exciting and ambitious government initiatives to foster entrepreneurship and build a knowledge-based economy coming at us from one direction, and mismatched government regulation that hinders entreprenuership coming at us from the other direction. Fortunately, in this monarchy government, strong potential exists for getting things done. If you are able to find and convince the right person things can start moving. Bob spends some of his time working on this. I'd like to as well....

what about endeavor?

2009-06-15T05:41:00.004-04:00

One of the key missing components for aspiring entrepreneurs in the region appears to be capital. Most of the entrepreneurs I've met or heard of in Jordan are Western-educated and come from money. Thus, they have the luxury to experiment with new ideas without having to worry about how to meet next month's rent payment and put food on the table. In many cases, they also have access to family money that can fund their venture beyond just the expenses of the founding entrepreneur. The obvious question is, where does that leave the other 99% of society? What opportunity exists for the smart, hard-working Jordanian who manages to get into Jordan University on his own merits, not because he can afford to pay? (As an aside, in Jordan, if you make the grades on the entrance exams you can go to University for a small fee. If not, you can pay 4-5x the fee and attend anyway. Presumably there are still some minimum requirements even for those who can pay).

The answer is that there is virtually no opportunity. The smart and hardworking middle class Jordanian can work at a bank or some similar company for $500-600 monthly starting salary. This amount will hardly cover rent, so most young professionals live at home.

At its core, Endeavor recognizes the large gap between microfinance loans available to small mom & pop shops and private equity available to large companies. There is no funding to help establish high growth companies and take them to scale. As such, Endeavor helps its entrepreneurs gain access to capital - be it in country, in region or globally. My primary project with Endeavor Jordan this summer is to map the venture capital and private equity landscape in the region, determine which funds can be most useful for Endeavor Entrepreneurs and build relationships between these funds and Endeavor.

The Jordan venture market is nascent. Investors also tend to be more conservative here than in the U.S. This means they often under-value young companies or are simply unwilling to invest. Thus far, I have discovered about 8 funds. While this is a good number for such a small market, let's not get too excited. Most of the funds are very small, many haven't raised their full target, and several aren't focused on early stage companies. Fortunately, most people are very willing to meet with Endeavor so I have already had one meeting and have a couple more scheduled.

However, I will have to look beyond Jordan to find additional sources of capital. The challenge is that firms like to invest close to home. Gulf money prefers to either stay in the Gulf or invest in developed markets like the U.S. and Europe. This is one of the primary problems I wish to research. When people think of the Middle East, they often think of oil and money. The money is in the Gulf, not the Levant (area comprising Syria, Lebanon, Jordan and Palestine). The Levant has the knowledge and skills. However, Gulf money does not come to fund these skills. Why? There are many possible reasons including lack of exit opportunities, small markets, lack of venture finance sophistication, difficulty of screening for the best entrepreneurs.

Perhaps an organization like Endeavor can play a role. By rigorously screening for the best entrepreneurs with the greatest potential, and providing these entrepreneurs with strategic guidance, Endeavor may help make them attractive to funders outside of Jordan. My job is to find these funding sources, educate them on the Endeavor model and get them excited about the prospect of investing in Endeavor entrepreneurs.

why jordan of all places?

2009-06-12T07:54:00.001-04:00

So why did I choose Jordan for my internship? Many of my international development (we call ourselves MPA-ID) buddies are off to more exotic places, or at least to larger places with arguably bigger development problems. Jenny, Oyebola, Jacob and Momar are in Liberia; Abhilash is in Kenya; Soham is in Sierra Leone with Tony Blair's commission, Paul is running TAMTAM (http://tamtam-africa.blogspot.com/); Helena, Olga, Martin and Dany are in India; Widhar and Jaun Pablo are in Vietnam; and the list goes on....

Jordan's annual per capita GDP is $5,300 (PPP-adjusted). Compare that to Liberia's $500. It's also small with a population of ~$6.2 million (July '08 estimates) up from about 4.4 million ten years ago, largely due to the influx of Iraqis into the Country over the past 8 years. So why care about Jordan when there are so many bigger development problems to tackle?

First, Jordan does have significant development problems. Jordan is a low middle-income country with very few natural resources but an abundance of high skilled human capital. However, the Country has failed to attract significant amounts of outside investment capital. Further, an interesting dynamic exists where there is a small upper class and a large, often well-educated, lower middle class that is unwilling to perform the unskilled labor tasks. As a result, the unskilled labor is mostly imported from Egypt and the far East. And there is a significant degree of unemployment and underemployment - often among people who are educated.

Next is my personal interest in the Levant region - the region comprising what was historically greater Syria and what is today Lebanon, Syria, Jordan and Palestine and Israel. As a Palestinian, this is the region I am from (Jordan is also an estimated ~60% ethnically Palestinian). While I speak Arabic fluently, and have been to the region often, I have never lived or worked in the region for any significant period of time. For me, being closer to my heritage and learning the ins and outs of the business culture in my region, is very important.

Further, Jordan is already making a big push at the government level to develop a bottoms-up knowledge-based economy so there is some activity going on for one to take part in. And Endeavor, a U.S. non-profit supporting high-impact entrepreneurs in developing countries, just opened its newest office in Jordan late last year.

Finally, while the Middle East is of strategic importance to many Western countries, there is a general lack of understanding of what the Middle East (and the Arab World more specifically) really is. What do westerners typically think of when they think of the Arab World? The Gulf? Oil? Wealth? The U.S.'s war in Iraq? Mysterious, exotic people? Radical Islam? Terrorists? ...Well, what about all of the "regular" every-day Arabs? I think the world doesn't really care to know about them; but I also think these are the most important people in the region to care about. I truly believe that ensuring the economic stability and security of a region is the surest way to foster strong allies and squelch violence.

So westerners don't really know much about the Arabs of the Levant region. And the oil-rich Gulf states invest their capital in Western infrastructure and industry (Chrysler building, Ferrari, etc.) and in local (Gulf) infrastructure projects. They largely do not invest in Arab entrepreneurs, despite the fact that education and human capital is arguably one of the Levant's greatest resources; and that the financial capital required to unlock its potential is lacking.

Why doesn't Gulf money find Arab entrepreneurs to be interesting investments? Why aren't there more Arab entrepreneurs? What are the biggest challenges to entrepreneurship in the Levant region? What are the barriers to getting things done? And how can lessons learned be applied to other regions such as Lebanon and Egypt? These are some of the questions I hope to study while I'm here.

all hail the king

2009-06-09T12:24:00.018-04:00

Last week, King Abdullah II declared Tuesday, June 9th 2009 a national holiday celebrating the 10-year anniversary of his ascension to the throne. Streets closed, parades, King's speech, parties, the works. It's the first really hot day since I've been here. Rather than participate in the festivities I chose to take it easy at a friend's barbecue and enjoyed a long afternoon nap.

The concept of a modern day monarchy may be a bit strange to westerners. Jordan is not a monarchy in name with the King as figurehead. Rather, the King has full executive authority as the head of state, the chief executive and the commander in chief of the armed forces. This got me thinking about the implications of a monarchy government for Jordanian society, political participation and economic development. Of course a monarchy must mean people are oppressed with little freedom of speech and political expression, social norms dictated from above, and a lack of judicial due process; right? But that's not what I see....

This being his first time in Jordan, one of the undergrad interns at the Endeavor office asked me and a couple of local Endeavor employees, "What do people really think of the King? When I ask the taxi drivers they all say they like him. But aren't they just saying that for fear of persecution?" One of the Endeavor guys answered, "No. I think the King is generally well-liked. People recognize that he's doing a lot for the economic development of the country. You might find more criticism amongst the lower classes, in East Amman." Based on my observations, I tend to agree. And let's not forget Queen Rania...who wouldn't like her? (Perhaps I'll save Queen Rania for another blog post, but for now, check out her facebook page: http://www.facebook.com/home.php?#/QueenRania. You've gotta love a Queen with a facebook page!)

First, the Jordan government is a constitutional monarchy. The King as executive appoints the council of ministers, or cabinet, and signs all laws. But there is a legislative branch, a Senate of 55 appointed by the King and an elected 80-member Chamber of Deputies, who can over-ride the King's veto with a two-third majority. The judicial branch is constitutionally independent, with judges subject to no authority but the law. While Islamic courts exist, they are used only to deal with personal matters including marriage, divorce and inheritance. Everything else is dealt with by civil courts. However, the system of checks and balances is lop-sided in favor of the King, with the Parliament generally regarded as weak.

The King has made genuine attempts to improve the economy. The U.S. Free Trade Agreement negotiated in 2001 has improved exports. Youth literacy rates are at 99%, and education is generally good. Projects such as the Queen Rania Center for Entrepreneurship and Al Hassan Science City aim to stimulate small and medium business growth. In fact, it is in this climate of enthusiasm for business development that Endeavor selected Jordan as its newest office. The Jordan River Foundation (http://www.jordanriver.jo/) promotes handicrafts of the poor to improve their livelihood. And the King promotes private investment in infrastructure - many of the development projects and the new stores and restaurants are a result of private foreign capital. The main one being the huge Abdali development project (the "new downtown of Amman"), funded by Lebanese-Saudi businessman Saad Hariri's Oger International.

Jordan is peaceful. One feels safe and comfortable here. Amman is very clean and easy to navigate thanks to new street signs and building numbers. There are no feelings of fear from the almighty ruling hand. No political persecution. There is freedom of religious worship. Students are free to wear headscarves or crosses or other forms of religious expression to schools. Compare this to rules banning such forms of religious expression in democratic countries such as France.

I heard some say yesterday that democracy won't work in Jordan. It's not that people are opposed to democracy. I believe Jordan is quite capable of having fair, free, peaceful elections with results accepted by the public. The problem people see is the sectarianism. They feel a democracy would be so by definition, but would lack any deep and meaningful political discourse, since people would vote primarily along sectarian lines; a system not dissimilar from that in Lebanon.

So is a monarchy good or bad for Jordan? If the King wants something to happen, it happens. It's somewhat of a system of benevolent dictatorship; probably great for a developing country. Think about how difficult it is for us to get things done in the U.S. Think about the mess of health care reform. Sometimes I wish someone had the power to fix it all in a way that optimized for the majority without wasting time and taxpayer money navigating a political web that's near impossible to navigate. But would I change the democratic system we have in the U.S.? Absolutely not. And would I change the system in Jordan? It's easy to say yes, as there could be many improvements. But I say, no, not yet anyway. I think the monarchy is good for Jordan, at least for the time being.

Different systems for different situations; and to each his own.

(Note: I snatched the photo of the King and Queen from facebook. Apologies if I'm breaking any kind of copyrights!)

what's a-buzz?

2009-06-07T17:52:00.008-04:00

So what is everyone talking about in Amman? Here's a quick run-down:

1. Obama's speech in Cairo to the Arab World. The sentiment is generally very positive. People are hopeful for the change Obama can bring. But they also recognize that actions speak louder than words. The Arab World is still waiting to see if Obama can deliver on his promises. A funny caricature summarizes the feelings quite well. By adding one stroke to the words "Uncle Sam" written out in Arabic letters, they are transformed to "Uncle Salam," which means "Uncle of Peace." But in the caricature, Obama himself is the one laying this claim. Let's see if it proves true.

2. Lebanese Elections. Taking place today, these elections have been all over the media. The elections pit the Hizbollah-led pro-Syrian alliance against the pro-West alliance that includes Saad Al Hariri and the Sunnis. Interestingly, the Christians are split between the two broad coalitions and thought to be a deciding factor. There are some fears of a backlash if the losing parties don't accept the results, but people generally don't seem to think this is likely. ...Results coming in now show the Hizbollah-led coalition has lost and is accepting defeat. Interestingly, a new law has passed to reduce the voting age in Lebanon from 21 to 18. This change did not take effect in time for this year's elections, but it is thought to benefit Hizbollah and the Shia'as. Let's see what happens next time!

3. Air France Crash. People here are just as shocked and devastated as everywhere else. I flew here on Air France...yikes!

4. Sports. Very much into the soccer finals and the French Open. Needless to say there's much more of a following of international sports here than in the U.S.

west meets east

2009-06-05T16:32:00.004-04:00

Amman is a booming city with a sharp mix of West and East. Walking by a new cafe in the trendy Jabal Amman neighborhood you hear the latest club tracks as the intoxicating sounds of the afternoon prayer fill the air. The towers of the Shmeisani financial district have a view of the old, crowded, traditional Amman to the East; the new, modern, wealthy areas of Abdoun, Deir Ghbar, and Khalda in the South and West; and the massive Abdali downtown development project below. Veiled women walk alongside those in the latest designer skinny jeans and Prada sunglasses, down streets full of billboards and brandname logos. Everything is written in Arabic and English. Amman is a hub of commercialism and real estate development. Every time I visit there are new neighborhoods and new development projects.

Doesn't really seem like the country needs economic development workers. The unemployment rate is 13.5%, the Country spends 6.5% of its GDP on education (slightly above average for the Arab World) and has a 99% youth literacy rate, and real estate development projects abound.

But beneath the shiny veneer lies a more complicated story. Jordan has a very large youth population with 70% under the age of 30. Perhaps they should be spending more on education. The actual unemployment rate is estimated to be upwards of 30%-40%. Female participation in the workforce is an abysmal 12%. The Country has very few natural resources (traditionally Jordan has relied on some phosphate exports), leaving it dependent on external sources for its energy requirements. The one "natural resource" it has in abundance, national sites / tourism, it fails to effectivley exploit.

The business culture has a shiny veneer as well, but beneath the surface seems to lack a certain degree of professionalism. Verbal promises and agreements are often broken, contracts often renegotiated. Availability of capital is still ambigous to me. Capital seems abundand for large real estate and business development projects, but very difficult to come by for entrepreneurs.

Look forward to digging deeper and learning more.

My Entry

2007-10-16T16:20:00.001-04:00

Aaah...I have finally entered the blogosphere. Very excited. More to come on finance, venture capital and economic development...