The entrepreneurial frontier spirit isn’t dead – you just need customer cash to ignite it
Throughout US history and reflected consistently in its literature, the frontier has been viewed as symbolic of the outer edge of the wave of progress. The success of Hollywood in spreading American culture has meant that globally the American frontier is known for being a force for constant movement and progress, as well as a steadfast representation of freedom and opportunity.
For the modern Arab mind, the embodiment of this freedom and opportunity can be found in places like Dubai, the home of large multinational corporations and a hub for new business ventures. The United States is famous for exporting its popular culture and business practices to the rest of the world, and now, similar to Silicon Valley, many places around the region bear names that either begin with something to do with technology, or end with “City”, or “District”. This echoes the toponyms that make up the map of Dubai showing clusters of excellence in their respective fields: Media City, Internet City, Studio City, Motor City, Business Bay and Design District.
When the sun is shining, as it so often is in Dubai and across the Gulf of Arabia, the markets are up and jobs are plentiful, the entrepreneurial frontier voice of ‘the valley’ is in full chorus. However, during downturns or periods of volatility, this is when the true spirit of the frontier comes into play, and individuals must adapt in order to succeed.
An antidote for tough times
In his new book, Break the Rules!: The Six Counter-Conventional Mindsets of Entrepreneurs That Can Help Anyone Change the World, London Business School’s John Mullins offers an antidote for the flagging will of those faced by a failing market, where cash and opportunity have lost their lustre.
“When there is a deteriorating economic outlook, and fading appetite for growth companies, don’t despair or look for someone to blame,” says Mullins. “When VC funds dry up there is happily a little-talked-about but much more agreeable and hospitable source of cash and opportunity: customers who are eager to buy what the company offers, and, sometimes, pay in advance.”
Three mindsets revealed
Three of Mullins’ six counter-conventional mind-sets for entrepreneurs really come to the fore during tough times. These are:
“Yes, we can!”: When asked by a prospective customer whether they can do something promising that’s entirely new and unfamiliar and falls outside their current competencies, entrepreneurs say “Yes, we can!”. Then they figure out how!
Ask for the cash, ride the float: By getting customers to pay in advance, and by paying their suppliers afterwards, entrepreneurs put that spare cash into growing their businesses.
Instead of asking permission, beg forgiveness later: When the legal or regulatory landscape is ambiguous or uncertain, entrepreneurs simply plough ahead.
Who needs venture capital?
The UAE has a vibrant startup ecosystem, with many companies raising significant amounts of funding to fuel their growth and expansion. Across the United Arab Emirates, numerous business luminaries such as Careem, Fetchr, Property Finder and Anghami have used funding to accelerate their expansion and reach their blue-chip status, just as the likes of Michael Dell and Bill Gates had done so in times gone by.
Advantages of customer-funding
While Tesla founders Elon Musk, Martin Eberhard, JB Straubel, Marc Tarpenning and Ian Wright were visionaries who knew next to nothing about building automobiles, and while the road ahead would prove to be littered with potholes, they got one thing very right. “They asked for payment up front, sometimes a deposit, sometimes in full. The first-generation Tesla Roadster, with its $112,000 (~411,000 AED) price tag, meant it was always going to be a car for the very selective few. If you wanted one, you not only had to pay well in advance, but you had to wait, too, which added to the anticipation and created a buzz around the brand,” says Mullins, himself a veteran of multiple start-ups.
Ingenious entrepreneurs – frontiersmen if you will - need not be deterred by bleak headlines. Instead, they should make certain that what they offer is sufficiently compelling, like Tesla, so that their got-to-have-one customers will pay them today for something that gets built and delivered tomorrow. This brave but more sure-footed approach mitigates, and sometimes even eliminates, the need for scarce and costly venture capital. Who needs investors, anyway?
Whether this approach to new business funding will take firm root in the MENA region is open to debate. Perhaps something altogether new will spring to life? Elon Musk is himself a frequent visitor to Dubai, maybe sensing that the next potential big innovation in business development may come from the Gulf region.
About the author
John Mullins is an internationally recognised thought leader on entrepreneurship, professor of management practice at London Business School, and a best-selling author of a new book Break the Rules! The 6 Counter–Conventional Mindsets of Entrepreneurs That Can Help Anyone Change the World.