The ambitious Dubai

I spent the bigger part of the week in Dubai with my family – enjoying the sun, sand and the sights. Dubai is definitely one of a kind of place to visit; aggressive investments into the construction industry with the goal of having the biggest, tallest and most glamorous buildings available.

Dubai is also the host of the world expo in 2020 and they’re frantically building a lot of venues around the region to accommodate visitors, but also bring in investments. The Dubai Creek Tower is anticipated to be ready for the 2020 world expo and it is going to be some 100 metres taller than the Burj Khalifa, which holds the title for the world’s tallest building today.

It is one of a kind of a place to visit, but no place comes without its issues. We met a woman from the Philippines working as a waiter in one of the restaurants we visited and she said she hasn’t seen her 11 year old son in more than a year. She has an annual holiday, but last year it was cancelled. Working conditions in Dubai have come under scrutiny in the recent years, just as they have in Qatar who is hosting the 2022 FIFA World Cup. Not sure how much of that is Dubai and not just the restaurant owner taking advantage, but the culture surely differs greatly.

Whatever you think of Dubai and the greater Middle East region – it is not to be ignored. Dubai is definitely one of the most attractive spots in the region to tap into, when considering business opportunities in the Arabian peninsula.

Flying from Helsinki to Dubai is also really quick; just 6 hours with a direct Finnair flight. Finnair only flies to Dubai with its leisure/holiday routes, so departure times can be challenging (especially with small children). We left Finland about 9pm and arrived just shy of 5am local time (3am Finnish time). Our flight back left 6am, so we had a rough 3am wake up.

Market size and business models

Something that is very obvious and hits you when traveling to a heavily populated city like Singapore, is the size of the market and how the most niche kind of businesses survive at street corners. Singapore has some 5.6 million people living on the small island. That’s more than the population of whole of Finland.

This difference enables a lot of things to take place from a market perspective. I stayed in Singapore for about 3 full days. I had a dozen or so meetings all over the city and commuted to those, with an exception or two, with Uber.

First of all, whenever you open the Uber app – you see about dozen cars rolling around a few blocks from your location. If it’s peak time, you might see less, but they’re still there.

It usually takes a few minutes to secure a ride and they are very cheap. A 5-10 minute ride might cost you 4-8 SGD, which is about 2.6-5.3 euro. Not a lot, but more than a few times I received a reservation from a driver who was still dropping off his previous passenger somewhere close by.

What this basically does to the driver is that the Uber “software” (for the sake of the argument) keeps drivers constantly driving and earning. When the demand is this high, it doesn’t really matter that you only make less than 10 SGD per ride. It adds up and you can make money on it.

This of course is only possible when the market size is great and demand and supply enable opportunities like this.

Kristo Ovaska and Tuomo Riekki from Smartly, a Finnish Facebook advertising company, noted in an interview in Helsingin Sanomat recently that building the company was tough in Finland. Soon they figured most of their business was international and today of their 17 million euro turnover (2015) only 2% comes from Finland.

Another clear example that market size and its dynamics basically make or break the company.

I believe that in the future, more and more businesses will become instantly global to even enable their business model to work.

Psychological distance

Wikipedia states under Construal Level Theory that:

Psychological distance affects the extent to which we think about an event, person, or idea as high or low level, and this will influence how concrete or abstract those thoughts are.

I came across this term in university a long time ago and it has stuck with me since then. I have used it to look at my own view on challenges and really try to understand how psychologically distant they really are – compared to reality. Internationalising a business is a great lens to look at psychological distance.

It took me 12 hours to fly to Singapore with Finnair from Helsinki. That’s a very short period of time in the grander scheme of things and still, it brings you half way round the world. Yet the stereotype with avoiding internationalising a business is usually affiliated with the statement that markets are far away.

This delta, between the 12-hour flight (for example) and something being far away, is all in your head. Improved travel opportunities have brought everything so much closer and further with the Internet, much of business activities can be conducted online.

Be aware of psychological distance the next time you assess risk and reward – opportunities are in many ways really close by and achievable in today’s world, even on a global scale.