Aramex's Fadi Ghandour: talking about a revolution

Aramex co-founder Fadi Ghandour is today a leading backer of young Arab entrepreneurs, lending his capital and expertise to start-ups and urging a reinvention of the corporate blueprint. Rather than tunnel-vision capitalism, where the business of business is profit, and nothing else, he describes a model where social returns are as valuable as financial returns

In December 2010, on the streets of Sidi Bouzid, Mohammed Bouazizi lit a fire that would rage across the Arab world. The fruit seller’s act of self-immolation, a desperate response to the confiscation of his unlicensed cart, ignited an uprising that spilled from Tunisia, to Egypt, to Libya, and continues to burn today. His actions struck a chord with millions of young, downtrodden Arabs, grappling with poverty and joblessness. Today, says Fadi Ghandour, those same factors are set to drive a fresh tide of entrepreneurial disruption and social activism across the Middle East.

“At its core this – the Arab youth uprising – is an economic story,” he says. “When you don’t feel economically engaged, when you have no stake in the stability of your society, you will rebel. Bouazizi was the first entrepreneur-rebel.”

Ghandour is on the frontline of this revolution. He is best known as the co-founder of Aramex, a business he grew from scratch into a $1.3bn logistics giant, and the first company in the Arab world to list on New York’s Nasdaq stock exchange. Today, his targets are smaller but no less important. Over the last decade, he has become a leading backer of young Arab entrepreneurs, lending his capital and expertise to start-ups. This is no petty cash: he has staked millions of dollars, both through the $40m fund, Mena Venture Investments, he launched with Arif Naqfi, the founder of Abraaj Group, and in his own right into the start-up scene. Ghandour has kept his Midas touch: he was the first backer of Maktoob, an Arabic-language web portal that was sold to Yahoo in 2009 for a reported $164m.

Ghandour stepped down as chief executive of Aramex in 2012 – though he remains its vice-chairman – placing a fresh focus on his philanthropic activities. To give a smattering of his current titles: he is the chairman of Wamda, a web platform dedicated to all things start-up, and founder of Ruwwad for Development, which fosters youth activism in poor communities through scholarships and other schemes. He sits on the boards of Endeavor Global, a nonprofit that pairs entrepreneurs with seasoned business experts, and Injaz Al-Arab, an organisation that aims to kit students out with entrepreneurial and leadership skills. He also lends his clout to the Jordan-based start-up accelerator Oasis500 and the American University of Beirut, among others. It does, he says mildly, keep him busy.

“His work will go down in our region’s history,” says Habib Haddad, CEO of Wamda. “Not just in terms of him being the face of entrepreneurship, but by his putting his money where his mouth is through investment, and by always having an open door for young people. His impact has been incredible.”

Start-ups are part of a broader conversation about the ties between private business and society that has been gathering pace since the onset of the Arab Spring. The turmoil threw the region’s mass youth unemployment and economic inequality into sharp focus, and made clear that governments had neither the cash, nor the capacity to fix these problems alone. Entrepreneurship has been touted as an antidote to this mix, but it needs the backing of a dynamic private sector – and not all are on board.

“If every word spoken about start-up capital in the region translated into funding, we’d have the biggest funds in the world” “Companies still aren’t doing enough,” says Ghandour. “The idea that they are only responsible for their own commercial success is, in my view, crazy. If we look at the countries that were responsible for the uprisings, the private sector was hammered. It’s in its interest to give more – of its capital, its knowledge and its capabilities.”

Ghandour is lobbying for a reinvention of the corporate blueprint. Rather than tunnel-vision capitalism – where the business of business is profit, and nothing else – he sees a model where social returns are as crucial as the financial motive. This is disruption of a high order, and it banks on the buy-in of companies. Many of the stated goals of the Arab Spring – job creation, stability and better living conditions – will stall without vibrant, private sector-driven economies.

“This is not about CSR. This is about the company as a living organism that affects society around it,” he says. “The affluence of a company is tied to the affluence of the community it lives in, and vice versa. If we don’t take that view, we risk sacrificing long-term success just to gain a quick profit.

“The demand for change may have quieted down now, but anyone who assumes this has been resolved does so at their peril,” he continues. “The questions are the same: how does wealth trickle down? How do we get our youth to become job creators, to feel the affluence of society?”

This is not idle criticism: Ghandour practices what he preaches. Corporate activism is entwined into the Aramex business model. The firm has a long-standing track record of aiding in disaster relief, in education and employment schemes, in sports and youth development and – unsurprisingly – support for entrepreneurs. It also has a policy of buying small; if it can sign up an SME as a supplier over a bigger player, it will.

“People ask me what is the difference between Aramex and its multibillion-dollar competitors. I always say it’s our corporate culture, because anybody can sell what we sell,” Ghandour says. “The private sector has a job to do here. Governments can’t drive reform alone, the safety net of social welfare doesn’t stretch that far. Will it cost us? Yes. But it’s an investment that will pay off in the future.”

Much depends on exporting this idea of conscious capitalism to the next generation. Ghandour, a Jordanian national, traces his own activist roots back to his upbringing, which played out against the background of the Arab-Israeli conflict. Politics were a daily point of discussion and there was, he recalls, “a clear sense of social justice and duty. A sense that something must change in this region”.

He has sought to mimic this with Ruwwad, which gifts scholarships to university hopefuls, usually at a cost of around $2,000 to $3,000 per student per year. In exchange, they are expected to find volunteering opportunities in their local communities, a trade-off of sweat equity for cash. “This is not charity. They have to earn their money,” says Ghandour. “They get an education, but they also learn that this is a two-way street.”

Get it right, he asserts, and these graduates could be harbingers of a coming business revolution, where profit and social returns are deeply interdependent. “This is how you create activist citizens, by not waiting for the government to tackle social problems. They have a sense of ownership and responsibility for their own communities, for their neighbours.”

Still, it is a long game. The revolution may have swelled the ranks of Arab entrepreneurs, but start-ups still face an uphill struggle to survive. Financing is an ongoing battle, with investors still favouring tangible asset classes such as property and industry over the risky odds of a start-up. In the post-Maktoob flush, there have been few notable exits and none with the same headline-grabbing appeal. The competition is only set to grow: according to a survey of 3,500 youth in 16 Arab states, published in April, two-thirds of respondents believe people of their generation are more likely to start a business than previous generations.

To date, Mena Venture Investments has put money into more than 60 companies. The fund’s sweet spot is, says Ghandour, “somewhere between $200,000 and $300,000, and always as a minority investor” – but such funds remain scarce. “If every word spoken about start-up capital in the region translated into funding, we’d have the biggest funds in the world,” he asserts ruefully. “The reality is that venture capital, early-stage capital, seed capital, is still in the tens of millions of dollars. We need so much more.”

In oil-rich Arab economies, some governments have sought to offset the shortfall by launching state-backed funds, a tactic that could have its own drawbacks. “I worry about government money coming into this space, because the last thing you want to give entrepreneurs is a safety net,” he says. “There will come a day when the government can’t afford further handouts. Part of being an entrepreneur is standing on your own two feet, and creating alternative wealth outside of the state.”

By any measure, these are big-picture problems, but Ghandour’s formula is simple. On the thorny topic of impact, a political hot potato that can consume some businesspeople-turned-philanthropists, he is relaxed. “I think the jury is out,” he says. “My measure of impact is that you are addressing a pain in society, with clear commitment of continuation. That’s impact as far as I’m concerned.”

For would-be social activists, his advice is equally direct. “Take what you do and extend it to society. It’s not about having a huge budget. Be a mentor; take on interns. If you’re a big company, devote 10 to 15 per cent of your procurement to SMEs. This is your community and you know the challenges as well as anyone else.

“I don’t want to complicate it,” he continues. “It’s not about changing the world. It’s about changing your corner of it. That’s social activism – and it works.”