The Experience of Dubai: Part One

I spent my spring break trip as part of a group of Wharton students sent to Dubai from March 6 – 15 to meet with the key companies in the United Arab Emirates, to attend the Wharton Global Alumni Forum, and to experience the culture of the UAE. The United Arab Emirates consists of seven independent city-states: Abu Dhabi, Dubai, Sharjah, Umm al-Qaiwain, Fujairah, Ajman and Ra’s al-Khaimah.

So I definitely want to start out by thanking Wharton, the companies I met with, the government of the UAE, the Wharton Alumni, and the trip organizers for hosting me and providing such incredible experiences.

I kept a journal for the length of the trip to keep track of my thoughts, experiences, and questions along the way.

I wasn’t really sure how to write a single post re-capping the entire trip and there are so many things I want to talk about.

Wharton arranged some phenomenal meetings with the CEOs and management of 3 large companies in the UAE. This post will highlight the three companies that we had official visits with. I’ll outline some insights/thoughts I had on the country/region/people in a later post.

Company One: Emaar Properties

The first company that we met with was Emaar Properties, a Public Joint Stock Company operating out of Dubai. Emaar is one of the largest real estate companies in the world and they are responsible for many of the iconic properties of Dubai like the Dubai Marina, the Burj Dubai (tallest building in the world), the Dubai Mall, and many other properties (commercial, residential, and mixed-use). They have focused on building integrated communities that have not only housing facilities, but educational, medical, shopping and other core facilities needed to sustain communities. It’s a unique approach, which allows them to build “start-up” communities anywhere in the world.

What was truly inspiring were Emaar’s plans for the future. They are not looking to become just the biggest company in the Arab world — they are instead aiming to become of the largest companies in the world. Period. They are working towards this goal by having multiple business units within the company to focus on things outside of real estate like hospitality, education, healthcare, transportation, etc. I noticed that everyone in Dubai is perhaps overly optimistic, but they have no qualms about thinking big. I love it. It is truly a city of dreamers and big thinkers.

After the CEO of Emaar presented to us, we were joined for lunch by the Chairman of Emaar, Mohamed Ali Alabbar. He is considered one of the most powerful business leaders in the Arab world and he holds lots of influence as the close confidant of Dubai’s Dubai’s Ruler and UAE’s Vice President/Prime Minister, Sheikh Mohammed bin Rashid Al Maktoum. Mr. Alabbar’s charisma and presence in a room is unlike anything else I have never witnessed. We learned of his growing up from a poor family and his fundamental beliefs in working hard and doing what you love. He told us that right now is the best time to start something entrepreneurial and to follow your passions. Like some others in this time of world crisis, Mr. Alabbar believes that there will be massive opportunities for those willing to take them while others run for cover. It never hurts to hear one of the most successful people in the world voice the key mantras of any entrepreneur.

Company Two: The Emirates Group

The next company that we learned about was The Emirates Group. We had the opportunity to meet with Mr. Maurice Flanagan, Executive Vice-Chairman of the Emirates Airline and Group, who was kind enough to give us a tour of his headquarters and talk to us about the history, goals, and future of the company. We sat with the man who literally built Emirates Airlines up from a startup funded with $10 million USD in 1985 into one of the most well regarded international airlines in the world — employing over 35,000 people, and flying over 20 million passengers a year. The Emirates Group is the holding company which controls Emirates Airlines, as well as other lines of business.

Emirates has had to deal with the massive fluctuations in oil prices as well as the changing economic preferences/attitudes of its consumers. Mr. Flanagan explained some of the technological advancements that they’ve made at Emirates to help keep them cost competitive and to keep them more informed. It was also informative to hear about Emirates’s operations in the cargo transport and the tourism services. Other airlines have actually outsourced parts of their operations to Emirates and Dnata (airline services subsidiary of The Emirates Group.) This puts Emirates in a powerful position.

Company Three: Mubadala Development Company

The third company that we met with was Mubadala. The company is a Public Joint Stock Company operating out of Abu Dhabi, and basically functions as the investment vehicle of the Government of the Emirate of Abu Dhabi. Some of the more famous investments that they’ve made are in AMD, The Carlyle Group, and Ferrari.

It is important to note that this is the only company we officially visited with outside of Dubai. There is some rivalry between Abu Dhabi and Dubai: Dubai gets all the flash and hype, while Abu Dhabi really controls the oil wealth of the UAE. Abu Dhabi is the wealthiest emirate of the UAE; the average net worth of an Abu Dhabi citizen is about $17 million USD. In fact, with all the real estate and tourism problems that have hit Dubai hard recently, Abu Dhabi has had to bailout Dubai with $10 billion USD. The Economist has a good piece on this here. Think of Dubai as the fast talking, risk seeking, ambitious, young gun nephew and Abu Dhabi as the prudent, methodical, veteran uncle.

This context is important for understanding Mubadala. The goals of Mubadala are to make not only financial returns, but strategic returns as well. This is interesting to note because their investment criteria differs from that of most Western investment firms. Mubadala is willing to invest in projects that may have low financial returns, but huge strategic returns — like building highway projects or educational facilities in the UAE.

Mubadala made it a point to explain to us that although their only shareholder is the Government of the Emirate of Abu Dhabi, they do not want to be considered a sovereign wealth fund. Their creative approach to investing really impressed me. I was also really impressed by the range of investments that they make — they invest in projects ranging from infrastructure to real estate to health care to energy to aerospace. And they are willing to invest globally as much as they are willing to invest in the region. They also employ a very flat organizational structure.

One thing that I made particular note of was their focus on bringing knowledge into the country. They are very interested in transferring knowledge and skills from foreign companies for the purpose of creating jobs and improving the abilities of citizens within the UAE. It is a very humble and mature approach to improving the economic situation of the UAE in the long term. They realize that the oil is going to run out and they are preparing for that very day.

Conclusion

Overall, the visits to these companies were fantastic. They were all incredibly hospitable and welcoming. I also witnessed just how business friendly everyone (government included) is. They are not scared of working with foreign companies and they are not afraid to think big. The governments of both Abu Dhabi and Dubai are very involved with businesses, and make no effort to hide it. There are no taxes in the tax free zones and the rules are incredibly transparent.

This country is a dream for entrepreneurs. The government will bend over backwards for you and give you everything you may need to succeed.  And unlike in America, ambitious dreamers in the UAE are the norm, not the exception. The most striking aspect of all this is that the visionaries see their dreams realized time and time again in the UAE. There are truly no constraints or limits to what is possible.