Azerbaijan aspires to make its economy more competitive at home and abroad by boosting entrepreneurship. Yet in our country many entrepreneurs still struggle with the basics of operating and growing their businesses because their attention and resources tend to be focused on singular interventions, not systemic change. For entrepreneurs to thrive, there needs to be a more comprehensive and supportive ecosystem ranging from nimble government infrastructure, to access to customers and funding. Policy frameworks and institutions play a particularly important role in entrepreneurship ecosystems. Building a truly competitive entrepreneurship ecosystem requires an environment where businesses operate on a level playing field, where their rights are protected, and the same rules apply to all. There is no one-size-fit-all template for building such ecosystems; Azerbaijan must find its own unique approach to reform. That requires an open, democratic dialogue where policymakers and entrepreneurs come together to discuss barriers and find solutions. Training workshops for ambitious Azerbaijani High-Tech and High Growth Companies led by Entrepreneurship Expert Kenneth Morse have been organized within the initiatives to build and nurture entrepreneurial ecosystems in Azerbaijan.

Kenneth Morse, who is also Advisor to High Tech Park Azerbaijan, shared his vision on building entrepreneurial ecosystems in our country and gives his recommendations to Azerbaijani entrepreneurs and government policy makers.

“I would like to remind you of the remarks that were made by Bobby Kennedy

when his brother Jack Kennedy was thinking about running for president of the United States in 1957. Teddy said to Jack: “If not us who? If not now when?”

I think that we are in the right place and in the right time. 10 years of activities to build dynamic and Globally Ambitious Entrepreneurial Ecosystems are planned for Azerbaijan. It requires sustained efforts led by the ICT sector and by the President of Azerbaijan and involves many other parts of the economy and public policy of Azerbaijan.” – Kenneth Morse, Serial entrepreneur, Angel Investor & Global sales veteran, and Founding Managing Director of the MIT Entrepreneurship Center/USA.

Question: The kickoff workshop for ambitious Azerbaijani High-Tech and High Growth Companies, led by you, was organized in High-Tech Park Azerbaijan. From your point of view which ideas and thoughts from this course are the most valuable for Azerbaijani entrepreneurs and for government policy makers?

Answer: Everything starts with the customer. The most important reason for a company to exist is to serve its customers. The first step is to attract clients and validate the value of customers’ proposition. After getting customers it is easier to recruit people to the team. After getting customers and more people on the team then it is easier to sell outside of Azerbaijan. After having customers, a team and customers outside of Azerbaijan, then it is easier to raise money. Some entrepreneurs and some government people think that they should try to raise money first. That is not the way to go. And it is not the way the world works. Another recommendation for Azerbaijani entrepreneurs is do not try starting a company right out of school. Azerbaijani young people should get jobs with real companies and get real world experience. Don’t try to start a company when you are still studying in University or just after. The second recommendation is recruit only experienced people to your team. Founders should be experienced and members of the team should be experienced. The third recommendation: if possible get overseas experience as soon as possible in your career. Study abroad, go to summer camp abroad, learn and understand that there is a big market there, outside of Azerbaijan. The most successful entrepreneurs I know had all worked abroad for many years.

Q.: What was your impression of the people in the classroom and of the judges?

A.: The men and women who attended the workshop were all ambitious, positive and highly interactive during class discussions. About one third of them were ambitious enough to do elevator sales pitching. Another third of them attended the pitching as “wing” men or “wing” women to the people pitching. The judges were very interested in supporting entrepreneurs. One of the judges, Farid Ismailzadeh, is very busy because he plans to be the first company to make an IPO on the Baku stock exchange. He is a pioneer. He works day and night. But he is kind enough to spend time with the next generation of entrepreneurs.

Q.: How can we help Azerbaijani ICT entrepreneurs?

A.: Coaching helps a lot. For example I have a group of coaches who are helping young tech companies in Spain and Turkey. Usually we help in 3 ways. We help the CEOs to put into practice what we teach during the workshops. That is about getting customers and building the team, and perhaps how to do self financing. Those coaches are perhaps willing to come here. They will come after the companies have experienced some of the workshops, when the quality will be higher and there will be a common vocabulary. The first coaches might come in October. But there is a lot of work to do first. In the beginning the most important thing we can do is to introduce these companies to customers and to partners. I already have some potential partners for some of these CEOs that I met in the workshop.

Q.: Today business angels invest not only within their regions. They look for the best teams and ideas all over the world. Business angels are successful not only in the USA, but also in European countries. What is the situation in Azerbaijan? Is the ICT market in our country attractive for investments? Do you have any plans related to investment in early stage companies in Azerbaijan?

A.: It could be possible to build an Angel Investment Network here in Azerbaijan but it will encounter the same challenge that we have seen in other cities. The investors will probably have made the money in other businesses, but not in ICT. So they would be able to provide money to ICT companies, but they will probably not be very good at providing advice, recruiting people or opening doors to clients.

Most of the angel investors in Austin, Texas for example, made their money in real estate or in oil. There are not many people who really understand ICT. We are working on building the angel investors network here in Baku. I was a co-founder of the Common Angels Network in Boston. Most members of that network are from software companies, so they have a natural affinity for other entrepreneurs in software. It is not realistic to expect many foreign angel investors to come to Azerbaijan. Angel investing and venture capital investing is a local business. The men and women we will be able to attract would be those who have a special connection here because they are Azerbaijani living in Boston or because they are particularly attracted to the specific business model of the local entrepreneur. It is not impossible, but it is a big challenge, and not likely to be sustainable.

Q.: What are your main recommendations for development of entrepreneurship in Azerbaijan?

A.: Which stakeholders for ICT are the largest customers here? – Government agencies. The best way for the largest customers is to make faster decisions and to make special efforts to buy from young companies and then pay on time such as in 20-30 days and be willing to make advance payments . Since the largest customers for ICT in Azerbaijan are government agencies, each ministry should dedicate a special person and a portion of the budget to buying from small companies. It takes hard work but it is a good investment in the nation. Many governments have done this with good success. The US program is called Small Business Innovation Research (SBIR). I think the Government in Azerbaijan should spend 2-3 % of its budget buying from small companies. Each Ministry is supposed to spend 2-3 % of its budget buying from small companies. Even if they are willing to do so, they will need to do so. If Governments want to be good customers they have to make quick decisions and pay on time in 30 days, or less. In Norway, the Norwegian Oil Company realized that it was more appropriate to purchase smaller items from local tech companies. So they set up one department just to buy items from local small companies. It was very smart and made a very positive impact. In one region of Spain the governor asked me why we don’t have any start-ups here. I told them you don’t pay your bills for 410 days. If you sell to the Government in this region of Spain they pay you 410 days later. In Valencia they pay in 30 days or less. Last year Valencia had more start-ups companies than any other region in Spain. They don’t have the biggest population. It’s because the Government understands what they need. And other companies who are selling to the Government, they get paid on time, and can buy from small companies so it has a cascading affect.

Q.: What do we need more in Azerbaijan for building entrepreneurial ecosystems?

A.: We need more ambitious entrepreneurs with international experience. One way we will get them is to attract the Diaspora to come back home. There are many wonderful Azerbaijanis living outside. And we have to make it attractive for them to come home. When they come back, they bring access to markets, access to modern management techniques, and access to money.

The 2-day workshop which will be held in April is on sales, sales management and going global. Why is it important to sell outside Azerbaijan? We will never know if we are competitive if we are only selling locally. The value of selling outside first in the Caucasus Region and then beyond is that we prove that our technologies are globally competitive. If you believe you can do it.

Q.: What is your outlook on opportunities for building entrepreneurial ecosystems in Azerbaijan?

A.: Azerbaijan is committed to building the knowledge sector of the economy. That means knowledge-based industry such as ICT and biotechnologies. The reason why Azerbaijan wants to build the private sector is that the public sector has reached its limit in terms of providing meaningful employment. So we turn to the private sector in order to create high-value jobs. That means entrepreneurship. And entrepreneurship means innovation – that means working with men and women who has built entrepreneurial ecosystems before. The Commit Network and Entrepreneurship Ventures have been building entrepreneurial ecosystems in other countries and regions for 10 years. The Azerbaijani Government intends to build entrepreneurial ecosystems. And we are here to help in that mission of building entrepreneurial ecosystems which involve ICT companies, entrepreneurs, and public policy. Also it involves working with the education system in the field of science, technology, engineering and math. The most important thing here is for government policies and strategies is to be part of the solution, not part of the problem.

Q.: How do you evaluate the development of the telecommunication software field in Azerbaijan?

A.: I believe that there is great potential and a good base in Azerbaijan. There will be opportunities for improvement in public policy, in procurement, in education and in technology development. The Azerbaijani market is a great place for young companies to start but they will need to be selling outside; they will need to export. In the end it is all about the people.