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Want to Start a Company in the World's Sixth-Most Populous Country? Time to Move to Pakistan. - Forbes
I recently returned from a reporting trip to Pakistan, one of the most fascinating countries Ive ever visited. My first story, Into the Fray, ran in the July 20 issue of Forbes. Its a profile of Monis Rahman, an entrepreneur who was born in Lahore and educated in the U.S., where he started a tech company during the height of the dot-com bubble. After running out of money in 11 months and unable to raise more Monis realized that if he started another venture, he would need to be hyper-vigilant about managing expenses. To do so, he took a drastic step, selling everything he owned and moving back to Lahore. Read below to find out how he did it, and whether his bet paid off.
During my trip, I had the privilege of meeting with members of the Lahore chapter of The Indus Entrepreneurs, a networking group for entrepreneurs from the region. We spoke at great length about the challenges and opportunities facing entrepreneurs in Pakistan, the worlds sixth-most populous country. High on their list of grievances was the absence of a strong rule of law: Entrepreneurs have limited legal recourse if a competitor steals their IP, or an investor violates a contract. Pakistani entrepreneurs also struggle to attract talent, both because they cant offer new hires equity and the prospect of big IPO, a la U.S. startups, and people working outside of Pakistan often refuse to relocate there, due to safety concerns. VCs, angels and incubators are nonexistent, and banks rarely give commercial loans. But for entrepreneurs like Monis and many other people I interviewed, the promise of doing business in Pakistan outweighs the frustration. The country has over 187 million people, a nascent online economy, andfor startupslimited competition from big multinationals.
I could spend days writing about what it felt like to travel alone in Pakistan as a blond, female American, a month after U.S. forces killed Osama Bin Laden. The very fact that I got there was something of a miracle, courtesy of the consulate staffer in D.C. who agreed to give me a journalist visa. Ill write about my trip in subsequent blog posts. For now, enjoy Moniss story and, as always, feel free to comment below.
In the game of can-you-top-this entrepreneurial hardshipwho slept the least, whose office was tiniest, who choked down the most Ramen noodlesMonis Rahman holds some formidable trump cards.
Four years ago Rahman, a serial entrepreneur, launched Rozee.pk, now Pakistans largest jobs website, with 500,000 unique visitors a month. While Rahman was raising money in 2007, terrorists bombed the homecoming procession of former Prime Minister Benazir Bhutto. The Pakistani government subsequently suspended its constitution and declared a state of emergency. (A gunman assassinated Bhutto the following month.) When one of Rahmans potential investors called to express his firms misgivings, Rahman e-mailed him a Top Ten Reasons to Invest list. Reason number nine was: Were headquartered in Lahore, where there havent been any blasts, he recalls. Then I pressed send. The next day in Lahore, the high court was bombed.
Welcome to the Wild East of Web prospecting. Over tea on a 102-degree morning in Lahore, Rahman explains why now is the time to invest in Pakistan, the worlds sixth-most-populous country, with 187 million people and plenty of inexpensive labor. Obstacles abound, starting with the fact that only 17% of Pakistanis have Internet access. The country also suffers from low literacy rates, massive corruption, frequent blackouts and a weak judicial system.
You tend to hear the worst 5% of the Pakistan story 95% of the time, says Rahman, 41. Theres a perception arbitrage, and its providing a window of opportunity for entrepreneurs.
Rahman was born in Lahore but spent his childhood in the U.S. and Saudi Arabia, where his father worked as an urban-planning advisor for the United Nations. He studied engineering at the University of Wisconsin at Madison and then helped develop the Itanium microprocessor chip at Intel. That experience led to his first venture, a chip-design consulting firm that he abandoned after a year, seduced by the dot-com boom. In 1999 Rahman and a partner started a company that installed cameras in day care centers, allowing parents to watch the video streams online in real time. Edaycare.com attracted $2.5 million from investors, including Ron Conway, an early backer of Google and PayPal. A year later the men ran out of money, forcing them to sell the company for stock that was ultimately worthless.
I recently returned from a reporting trip to Pakistan, one of the most fascinating countries Ive ever visited. My first story, Into the Fray, ran in the July 20 issue of Forbes. Its a profile of Monis Rahman, an entrepreneur who was born in Lahore and educated in the U.S., where he started a tech company during the height of the dot-com bubble. After running out of money in 11 months and unable to raise more Monis realized that if he started another venture, he would need to be hyper-vigilant about managing expenses. To do so, he took a drastic step, selling everything he owned and moving back to Lahore. Read below to find out how he did it, and whether his bet paid off.
During my trip, I had the privilege of meeting with members of the Lahore chapter of The Indus Entrepreneurs, a networking group for entrepreneurs from the region. We spoke at great length about the challenges and opportunities facing entrepreneurs in Pakistan, the worlds sixth-most populous country. High on their list of grievances was the absence of a strong rule of law: Entrepreneurs have limited legal recourse if a competitor steals their IP, or an investor violates a contract. Pakistani entrepreneurs also struggle to attract talent, both because they cant offer new hires equity and the prospect of big IPO, a la U.S. startups, and people working outside of Pakistan often refuse to relocate there, due to safety concerns. VCs, angels and incubators are nonexistent, and banks rarely give commercial loans. But for entrepreneurs like Monis and many other people I interviewed, the promise of doing business in Pakistan outweighs the frustration. The country has over 187 million people, a nascent online economy, andfor startupslimited competition from big multinationals.
I could spend days writing about what it felt like to travel alone in Pakistan as a blond, female American, a month after U.S. forces killed Osama Bin Laden. The very fact that I got there was something of a miracle, courtesy of the consulate staffer in D.C. who agreed to give me a journalist visa. Ill write about my trip in subsequent blog posts. For now, enjoy Moniss story and, as always, feel free to comment below.
In the game of can-you-top-this entrepreneurial hardshipwho slept the least, whose office was tiniest, who choked down the most Ramen noodlesMonis Rahman holds some formidable trump cards.
Four years ago Rahman, a serial entrepreneur, launched Rozee.pk, now Pakistans largest jobs website, with 500,000 unique visitors a month. While Rahman was raising money in 2007, terrorists bombed the homecoming procession of former Prime Minister Benazir Bhutto. The Pakistani government subsequently suspended its constitution and declared a state of emergency. (A gunman assassinated Bhutto the following month.) When one of Rahmans potential investors called to express his firms misgivings, Rahman e-mailed him a Top Ten Reasons to Invest list. Reason number nine was: Were headquartered in Lahore, where there havent been any blasts, he recalls. Then I pressed send. The next day in Lahore, the high court was bombed.
Welcome to the Wild East of Web prospecting. Over tea on a 102-degree morning in Lahore, Rahman explains why now is the time to invest in Pakistan, the worlds sixth-most-populous country, with 187 million people and plenty of inexpensive labor. Obstacles abound, starting with the fact that only 17% of Pakistanis have Internet access. The country also suffers from low literacy rates, massive corruption, frequent blackouts and a weak judicial system.
You tend to hear the worst 5% of the Pakistan story 95% of the time, says Rahman, 41. Theres a perception arbitrage, and its providing a window of opportunity for entrepreneurs.
Rahman was born in Lahore but spent his childhood in the U.S. and Saudi Arabia, where his father worked as an urban-planning advisor for the United Nations. He studied engineering at the University of Wisconsin at Madison and then helped develop the Itanium microprocessor chip at Intel. That experience led to his first venture, a chip-design consulting firm that he abandoned after a year, seduced by the dot-com boom. In 1999 Rahman and a partner started a company that installed cameras in day care centers, allowing parents to watch the video streams online in real time. Edaycare.com attracted $2.5 million from investors, including Ron Conway, an early backer of Google and PayPal. A year later the men ran out of money, forcing them to sell the company for stock that was ultimately worthless.
