People generally shy from starting a new business during a financial crisis, I however did just that. It was the autumn of 2000; the world had just gone through a financial crisis known as the dotcom bubble that although not as large as the one we are suffering from today was historic nonetheless.
I had just graduated from university two years before and was itching to start my own business. I found a dormant brokerage license in our company books that was suspended on the orders of my late father just prior to the great UAE crash of the late 1990s. Emaar had reached 140 dirhams then, although no one really knew what the record price was since all trading was conducted over the counter (or under it) as there was no official stock markets. Still, brokerage houses, twenty of whom existed then recorded the prices and a lot of work was done on the basis of trust. As Emaar broke the two digit ceiling my father ordered the company to cease work since it looked like a crash was imminent.
He feared that buyers would not honor their commitment to pay these exorbitant prices, and sellers would defer selling stocks since a better price was a phone call away. However, the one reason that resonated the most in my mind was him saying that if people bought at such high prices and then the market crashed it would be said that the victims bought their shares through the family firm and my father would have none of that. Of course, the market rallied further still and for a not insignificant amount of time. My father had said then “Emaar’s share prices are like a balloon in a party, everyone takes turns in blowing air into it until eventually it will explode in someone’s face.”
More than two years later, when I was 22, I dug into our files, dusted off the central bank document that read Al Saud Stocks and Bonds and received permission from my father to reactivate the firm and base it in Dubai. I had two options in mind, each of them for a niche market. One was for what was then the burgeoning Shariah-compliant industry; then my idea was to start a brokerage firm that only sold shares of companies that complied with Shariah law. However, iHilal was just starting, and I remember going to meet Ramzi Abu Khadra, its founder and CEO in the spring of 2001. His idea was very similar to mine and I didn’t think it would entrepreneurial to start a business that already existed.
So I turned my attention to the large ethnic groups in the UAE, which included Indians and Westerners. The latter were overserved but the first weren’t served at all. Then came the challenging part of finding the right partner to work with, since the Indian stock market was quite tightly regulated and required local operations to buy and sell shares. By serendipitous fortune, a childhood friend of mine had recently become acquainted with an Indian gentleman called K.V. Shamsudheen, who had mentioned to him that Geojit, a reputed South Indian brokerage firm, was looking for a tie up with a UAE-based brokerage.
After meeting with the founder, C.J. George, I realized that it was a perfect match. A series of meetings culminated in a memorandum of association. Finally, the UAE Central Bank sent us notice that the reactivation of the brokerage license has been authorized by its board of governors. I decided to change the company’s name to Barjeel owing to my fascination with Emirati and Gulf architecture (Barjeel denotes windtower). Because of the great network and professional reach of our Indian joint venture partner we were able to attract the best possible candidates to run the brokerage.
Years later I continue to refer to my experience of setting up Barjeel Securities in my entrepreneurship lectures to the senior year business students in Dubai Men’s College so that they may be encouraged to try starting a new business themselves. What I learnt mostly from my father was not to follow the herd mentality and ratchet up businesses when markets are booming; it may be better to be more prudent. I also learnt that recessions offer plenty of opportunities to start new businesses: people in the future will look back and bemoan the business opportunities they missed in Dubai under the pretext of the current financial crisis.
(Sultan Sooud Al-Qassemi, [email protected], is a non-resident fellow at the Dubai School of Government.)
