Muslim Entrepreneurs (Issue Brief)
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| Blog Post | |
|---|---|
| Title | Muslim Entrepreneurs (Issue Brief) |
| Author | Dylan Dickens |
| Series | |
| Content status | TBD |
| Publication date | |
| Notes | Decrease focus on Trump; differentiate between high-tech, high-growth and small businesses |
| Image | |
| © edegan.com, 2016 | |
Abstract
1,400 words on the effects of Muslim entrepreneurs on the ecosystem, and some of the dangers of anti-Muslim demagogy in terms of entrepreneurship.
Text
As Aristophanes wrote in the 5th Century B.C., "A demagogue must be neither an educated nor an honest man; he has to be an ignoramus and a rogue." The United States 2016 presidential race seems to be showing signs of demagogy absent since the time of Ross Perot in the late 90's. Due to a variety of factors, ranging from a marked increase in violent Islamist fundamentalist and extremist actions in the 21st Century(1) to a disproportionately negative portrayal of the culture and actions of their religion as a whole in American media(2), Muslim Americans have disproportionately bore the load of populist pressure in this cycle. As the Bookings Institute's Center for Middle East Policy(3) purports, Presumptive Republican presidential nominee Donald Trump's proposal to ban Muslims from entering the United States “until we figure out what’s going on,” is dangerous, bigoted and "genuinely frightening." As it so happens, its a terrible idea economically as well.
Entrepreneurship is an incredible boon for the economy. The mere less than 1% of entrepreneurial firms which receive venture capital(4) alone are responsible for 5.3%-7.3% of job growth (5) and 35% of companies which reach an initial public offering(6). In his testimony for the Texas House Investments & Financial Services, Larry Peterson the Executive Director for the Texas Foundation for Innovative Communities, claimed that these high-growth companies will account for nearly all net jobs and GDP growth in the state of Texas, and will be responsible for driving about 60% of necessary economic growth in our state(7). This comes at little surprise, as while Texas under performs in some aspects of its entrepreneurship ecosystem, such as available capital(8), it vastly over performs in one key area: immigration. Immigration has been highlighted by the Small Business & Entrepreneurship Council(9) as a key issue in small business and entrepreneurship. The council cites a 2012 report from the Small Business Administration that reveals higher rates in business ownership, business formation, and business exportation among the U.S. immigrant population as compared to the non-immigrant population(10). The council further quotes a 2014 Kauffman Foundation report(11) in saying that "Immigrants were nearly twice as likely to start businesses each month as were the native-born in 2013," as well as Karen Gordon Mills, the former Administrator of the U.S. Small Business Administration, as saying: “In 2011 alone, immigrants started 28 percent of all new U.S. businesses, despite accounting for only 13 percent of the U.S. population(12)."
Muslim Americans are not just disproportionately affected by 2016's revival of demagogy, as it turns out, Muslim Americans are also disproportionately likely to start their own business as well. As Forbes reports,(13) the percentage of Americans involved in start-ups hit a record 13% in 2012. Gallup reports(14) a much higher, more than double, rate of start-up involvement among Muslims, with around 27% of Muslim Americans reporting to own their own business. Iran, a nation with 99.7% of its population following the faith of Islam(15) has an incredible rate of immigrant entrepreneurship, with nearly a quarter, 24.4% of all Iranian immigrants in the United States owning their own business(16). Other nations with above average rates of Islamic devotees such as India and Canada, also posses higher than average rates of business ownership among their American diaspora. There are plenty of less-than-empirical tales of Muslim entrepreneurship as well such as the rise of the Somali-entrepreneur powered Karmel Square Mall in Minneapolis(17), to the multi-billion dollar yogurt emperor, Hamdi Ulukaya, founder of Chobani(18).
Perhaps this should be unsurprising. As the journal Asian Social Science explains, "entrepreneurship is in fact a part of Islamic culture and Prophet Muhammad, peace be upon him, and his companions are examples of this. Islam is not opposite with entrepreneurship, and always invites all Muslims to be innovative, entrepreneurial and active(19)." Islam does not just represent a seemingly entrepreneurial faith system, but also a massive, and ever growing market for entrepreneurs to take advantage. Islam, with around 1.7 billion adherents is now the worlds second largest religion and expected to surpass Christianity, the worlds largest religion, by the year 2050(20). As Forbes calculates, these 1.7 billion consumers make up twice the number of consumers in Africa and account for nearly 30% of the emerging market total(21). In their words, "it’s hard for any multinational to claim they are truly international if they don’t have a strategy for selling to the Muslim world." According to the Saudi Gazette, the overall value contributed by Muslim consumers worldwide to the global digital economy stands at $107 billion, representing 5.8% of the total global digital economy. Moreover, the growth in total value of Muslim consumers’ contribution to the global digital economy, 17% by 2020, is expected to outweigh the growth of the total global digital economy(22).
The Guardian summarizes this incredible opportunity best in its coverage of the 2016 Muslim Lifestyle Expo(23), "The halal market is worth $2.1 trillion annually worldwide, and is increasing by $500 billion a year. This huge opportunity is being missed by corporate brands, but is being taken by storm by young Muslim startups." These are startups that the United States, a nation with a long history of religious tolerance, immigration, and entrepreneurship could be fully harnessing. Dangerous, bigoted, and Islamophobic rhetoric from demagogues is preventing this from happening. Imam Khalid Latif, chaplain of New York University’s Islamic Center described Muslim Americans as "a population that has been marginalized in every sense of the word." He further claimed that many Muslims have to choose between practicing their faith and “just being able to live day to day(24).” This attitude has permeated to the business world as well. “We don’t do halal” is a common response when asked whether a company might target the Muslim consumer. The idea of ‘halal’ has branding challenges in the non-Muslim world. It’s become an emotional topic and many brand owners would be keen to promote their products in another way which avoids the negative light sometimes misappropriated to Islam through Western rhetoric(21).
The misinformation and rhetoric is directly stymieing Muslim entrepreneurs in America. Venture capitalists, normally eager to back firms with the potential to reach more than billion users, are standoffish when it comes to startups with Muslim founders, or ones that are targeted at a Muslim audience. Discrimination, media coverage, and election rhetoric were cited as reasons for this discrepancy. The lack of venture capital forces these entrepreneurs to resort to meager crowdfunding instead(25). “In talking with investors and in the entrepreneurship landscape, it feels like there is a lot of heartburn associated with Islamic-related startups,” says Amin Aaser, the co-founded of Noor Kids, a line of children’s books designed to empower Muslim children. "When you say that you’re doing a product for Muslims, many people say it’s a niche product," says Navid Akhtar, the CEO of Alchemiya, a Netflix-like video service with content focused on Muslim life. "But it’s not," he continues referencing the current 1.7 billion Muslims on Earth, a number expected to rise to 2.8 billion over the next 35 years. This testimony from Muslim entrepreneurs shows the direct effects of anti-Muslim discussion and misinformation on the entrepreneurship ecosystem. Further marginalization and failure to support arrises from the uniqueness of Islamic finance, wherein some Muslims chose to to follow the Quran and Sunnah in economic matters. These Sharia principles include the prohibition of interest, riba, transactions based on uncertainty, gharar, gambling, maysir, and investing in prohibited industries such as alcohol, weapons, pork and so on(26).
The discussion and misinformation on Islam is in no short supply this election cycle. From the aforementioned call by Donald Trump to ban Muslims from entering the United States(3) and his proposed policy for a database of Muslims and requiring Muslims to carry special identification cards to former Arkansas Governor Mike Huckabee's infamous quote "It's time to wake up and smell the falafel. We are importing terrorism,” in regards to Muslim Syrian refugees, 2016 has contained plenty of damaging rhetoric(27). Not only is this talk dangerous fuel for the fire of anti-western terrorist groups, and embarrassing on a geopolitical scale, it is marginalizing the largest emerging market on Earth and effectively cutting the United States off from billions of potential earnings and millions of potential jobs. Perhaps a candidate who claims he will "be the greatest job-producing president in all of American history,(28)" may want to change their tune.
References
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(4)Hellmann, Thomas F., Manju Puri, and Marco Da Rin. 2011. "A Survey of Venture Capital Research." NBER Working Paper No. 17523. doi:10.3386/w17523
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(8)http://bakerinstitute.org/research/?research_focus=44&research_type=27
(9)http://sbecouncil.org/2014/07/21/entrepreneurship-immigration-reform-and-the-economy/
(10)https://www.sba.gov/sites/default/files/rs396tot.pdf
(12)https://www.sba.gov/blogs/nation-immigrants-and-entrepreneurs
(14)http://www.huffingtonpost.com/michael-wolfe/muslim-biz-entrepreneurs-_b_9548540.html
(15)https://en.wikipedia.org/wiki/Islam_by_country
(17)http://www.startribune.com/women-drive-success-of-somali-mall-in-minneapolis/323386601/
(18)http://www.wnd.com/2016/01/yogurt-billionaire-hire-more-muslim-refugees/#
(19)file:///C:/Users/DylanDickens/Downloads/5988-18811-1-PB.pdf
(20)http://www.pewforum.org/2009/10/07/mapping-the-global-muslim-population/
(22)http://www.mostresource.org/storybank/muslims-influence-on-global-digital-economy-climbs/
(25)http://mashable.com/2016/05/22/muslim-entrepreneurs/#.lPTedkqc8qS
(26)http://zilzarlife.com/has-islamic-finance-failed-our-muslim-entrepreneurs/
(27)http://www.islamophobia.org/15-reports/164-islamophobia-in-the-2016-presidential-election.html
