I just spent a fantastic week in Doha, Qatar, working with the researchers and entrepreneurs of the Qatar Science and Technology Park (QSTP) Research To Startup program. In this program, the first of its kind in Qatar, we brought together about 20 entrepreneurs from around the world (including a couple of local entrepreneurs) to work with the researchers of the Qatar Computer Research Institute (QCRI) to decide if they wanted to build companies to commercialize QCRI technologies.
It was an awesome experience for a variety of reasons. First and foremost, I got the chance to work with an incredible group of people. The entrepreneurs included three of my HBS classmates, as well as serial entrepreneurs, experienced executives, and top talent from around the world. The researchers were an equally impressive crew, albeit with more PhDs and fewer MBAs.
Second, all the other people we interacted with were warm and welcoming, from the QSTP staff to the various VIPs who attended the various proceedings. I was even invited to visit a number of people’s homes.
Third, Doha was full of interesting attractions. Even though we were kept very busy, I did manage to sneak away to visit the Museum of Islamic Art and the markets of Souq Waqif. Alas, since I had to get home in time for a family commitment, I was unable to participate in the final day of the program, where the team got to ride camels, fly falcons, and hang out on Doha’s famous beaches.
Finally, Qatar presents a combination of fascinating challenges and opportunities, which definitely engaged my mind. Qatar has incredible oil and gas supplies, which have made it one of the richest countries in the world. As a Middle East novice, I’ve always thought of Saudi Arabia and Kuwait as rich; Qatar’s per-capital GDP is nearly triple that of Kuwait and nearly quadruple that of Saudi Arabia. Add in the fact that 90% of Qatar’s population consists of expatriates (mainly low-paid construction workers and service industry professionals), and the GDP per Qatari citizen is a mind-blowing $750,000 per year. The figure is even more astounding when you adjust for purchasing power parity (PPP); this roughly doubles GDP again, making Qatar the richest country in the world. The government distributes this largesse like a benevolent patriarch–Qataris are given cushy, well-paid jobs, cheap housing loans, free utilities, and massive cash gifts for getting married and having children.
However, Qatar’s leadership also realizes that the oil and gas which have provided the country’s wealth are finite and non-renewable–a fact that has been hammered home by the free-fall in oil prices over the past few years. The fact that Qatar is still the richest country in the world despite a 20% drop in GDP is remarkable. Qatar is investing heavily in an attempt to transform itself into a knowledge-based economy; the QSTP cost some $800 million to build; the Qatar National Research Fund (QNRF) which funds institutes like the QCRI, dispenses some $100 million per year in grants.
The strategic challenge is for Qatar to use its current wealth to build an asset base that will allow it to maintain a high quality of life in a post-carbon world. In many ways, the simplest approach would simply be to build an enormous sovereign wealth fund; Qatar is in fact doing this–the Qatar Investment Authority (QIA) now owns $335 billion in assets around the world, or well over $1 million in assets for each Qatari citizen! That’s double Qatar’s GDP. But in order to provide complete current income replacement at the standard 4% withdrawal rate that most foundations use, the QIA would need an endowment of 25X Qatar’s current GDP, or roughly $4 trillion.
Qatar’s bet on transforming itself into a knowledge-based economy is that investing in human capital will deliver better long-term returns than simply investing in financial capital. This is challenging and riskier than simply building up the QIA, but offers a much bigger payoff, not just in terms of money, but also human happiness. The big vision that QSTP Managing Director Maher “Dr. Maher” Hakim laid out is that Qatar is trying to spark an Arab renaissance; to hearken back to the Islamic Gold Age, when the Muslim world led the globe in science and technology. Not only would this generate wealth, it would also offer hope and purpose to the young people of the Muslim world. Qatar’s current wealth can provide luxury to its citizens, but it cannot provide meaning–that has to be earned, not given.
The road will be challenging. The “edifice complex” is very real; the buildings in the QSTP were magnificent, but also operating at a fraction of full capacity. Institutions can be rigid and resistant to change–the two running jokes of the trip were that the security gates never worked, and that the cafeteria in our residence refused to let us have omelets, which were “reserved for students.” Workers live in fear of being fired, since doing so would force them to leave Qatar almost immediately. Low oil prices have impacted the economy; we ate at a number of high-end restaurants, all of which were nearly empty, as was the student center in Education City (an American student getting his masters told me that while things were emptier than usual thanks to recent exams, the facilities never got close to being crowded). Yet there was still plenty of excitement on the part of the QSTP and QCRI staff, Qatari and ex-pat alike, and the markets of Souq Waqif were bustling with natives and tourists. I even got the chance to mentor some local entrepreneurs, who were just as energetic and optimistic as the young people of Silicon Valley.
Many of the leaders in Qatar realize the need for change; for example, the QSTP is a “free zone” where businesses can be 100% foreign-owned and tax free (I must admit, I was pretty tempted to set up my own entity there!), and Qatar is starting to increase the number of non-Qataris it accepts as citizens (although at this point, most of these lucky folks are still football/soccer stars). If Qatar opens itself up, and allows a thriving community to develop, it could see its vision of a knowledge-based economy become a reality. Not only does it have immense carbon wealth to fund investment, it also has a central location and premier airport that makes it a crossroads of Europe, Africa, the Middle East, and Asia. I’m excited to see what comes next, and to play some small part in this story.
Special thanks to QSTP’s Maher Hakim and his hard-working staff, my Wasabi Ventures Global business partner Jeff Abbott, and fellow mentors Tim Taylor, Katherine Glassey, and Scott Johnson, as well as all the hard-working researchers and entrepreneurs in the program!