Aramex's Founder Fadi Ghandour's Will To Succeed
In its search for capital Aramex became the first Arab-based company to list on Nasdaq. It was a mistake that became the making of the company. “I don’t know if anyone isn’t afraid of failing,” Fadi Ghandour, founder and recently departed CEO of transport and logistics company, Aramex International, surmises when asked about his reputation for being fearless. “Trying can lead to failure but there’s balance in being confident enough to say if I fail – if I fall – I will try again.” Whether it’s new markets, new products, new partnerships or innovative ways to raise money, Ghandour has infused his staff with the mantra: don’t stick to the menu and don’t be afraid to try. It’s the story of the early days of Aramex, (an acronym of Arab American Express). Created in 1982 as a small Jordanian courier service with big ideas, assisted by strong international partnerships and dogged determination, it became one of the leading logistics and transportation companies in the Middle East and South Asia. Passionate about Arab entrepreneurship, Ghandour is also co-founder and director of MENA Venture Investments, a seed capital fund which provides capital, mentorship and technical expertise to start-ups, and a founding partner of Maktoob.com, the world’s largest Arab internet service recently acquired by Yahoo! But it’s his first company, Aramex which gained a reputation as MENA’s most successful entrepreneurial enterprise. “The first 15 years of [Aramex] we failed, we fell, we stood up. The doors closed, we kept knocking until they opened. We took wrong decisions, hired wrongly, everything you can imagine trying we tried.” And the end result, says Ghandour, is the company today with 12,000 people in 150 locations and expected 2013 revenue of US$1 billion. “We owned nothing” On any scale Aramex has done well out of the global economic crisis. Very well. With its asset-light, debt-free business model, the transport and logistics company is taking advantage of lower costs and prices, buying up businesses and stretching its reach to become the premier courier service linking the emerging and fast growing Asian and African economies. But travelling asset-light has not always worked in its favour. When seeking capital from the Arab world in the late 1990s local investors were reluctant to put their money with the company. “We tried to do a private placement but the Arab markets didn’t know how to value us,” Ghandour told INSEAD Knowledge after addressing an executive education programme at INSEAD’s Abu Dhabi campus. “They wanted to see that we owned buildings and land and warehouses. We owned nothing. So we thought, if the Arab world doesn’t want to invest in us, we’ll go West.” In 1998 the company became the first – and to date only – Arab-based company to list on the Nasdaq stock exchange with surprising results. Suddenly it was the Arabs who were Aramex’s biggest supporters. “It was as if they thought ‘OK if Nasdaq accepts these guys they must be legitimate.’” The listing had an impression on other players as well. Banks, clients, strategic partners all started to look at the company differently. “It was as if because we were listed on Nasdaq suddenly we were global players,” says Ghandour. Despite the new-found respect, Aramex failed to get the capital it was after. The stock remained a microcap on a massive exchange, and from a region that was not looked upon positively by global investors. “Every skirmish that happened in the MENA, every bomb that popped up here and there, they would think was going to affect our business. So our stock was stagnant, there was very little liquidity on it.” Unable to get the value the company needed, Ghandour, in partnership with Abraaj Capital, bought back the company in 2002 and three years later listed on the Dubai Stock Exchange where it remains today. “It was a case of a success that came from a failure,” says Ghandour. “We wouldn’t be here today and the company we are today if we hadn’t gone public on the Nasdaq.” Aramex became better run, more disciplined and able to meet the stringent transparency and disclosure rules required of public companies. “It changed me as a person too,” he notes on a personal blog. “As a CEO, (and) as a disciplined manager. Nasdaq was the one single milestone. If it wasn’t for Nasdaq, everything that has happened since wouldn’t have happened.” Taking a risk, like the Nasdaq listing, says Ghandour is key to entrepreneurial success whether it’s in the pursuit of fresh markets, a new business model or new products, you can’t be afraid to try. Political instability remains a challenge, he concedes but not one that can’t be overcome. “For us, risk is relative. We live in a region that has always been politically risky, so when we go to a country that has political risk we say, “It looks like home.”
