IBD BLOG – TEAM MAJID AL FUTTAIM

Written by: Jorge Tellez, Ryan King, Jennifer Rokosa, Daniel Clayton and Kelly Gillfillan

Entry 1: May 17, 2018

The five of us (Jenny, Daniel, Kelly, Ryan, and Jorge) touched down in Dubai five days ago and were greeted by 105-degree heat and a 4-day long sandstorm. Dubai has a giant desert in its backyard, and if the wind is blowing strong enough in the right direction, the entire city gets hit with a wall of sand. From the street, a sandstorm just looks like a foggy day (not quite San Francisco level fogginess, but close), but if you run your fingers across any outdoor surface, you can immediately see the layer of sand blanketing everything.

The jetlag is finally starting to wear off for most of us. Dubai is 11 hours ahead of Berkeley, meaning we’ve been hitting the coffee pretty hard. However, starting today, we’ll be drinking those coffees in a large closet at Majid Al Futtaim’s (our host company) headquarters. Let me explain…

Team Majid Al Futtaim at the Cultural Center

Team Majid Al Futtaim

Today is the first day of Ramadan in the UAE, meaning most Muslims are fasting for the whole month. Between the hours of 4am and 7pm, it’s is not permitted (whether Muslim or not) to eat or drink in public, including in the office. So while we’re on-site, we’ve been instructed to keep any eating or drinking restricted to a small pantry area on the fourth floor—don’t worry, they have an espresso machine in there.

We head to the UAE cultural center later today where we’ll learn a little bit more about the history of the country, the traditional dress, food and customs. This weekend, we’re heading out to the desert on a guided tour, and then to Abu Dhabi to check out the sights there. Pictures to follow!

 

Entry 2: May 24, 2018

Somewhere between hanging out with two dozen penguins at the foot of an indoor ski slope and watching tourists scuba dive with sharks inside a three story aquarium, you realize the words “shopping mall” in Dubai mean something very different than they do back in the states.

Penguins

Penguins

For us, five millennial Americans dropped into the Middle East for the first time, the word “mall” evokes imagery of angsty loitering teens, sticky movie theater floors, and CDs with the parental advisory warning peeled halfway off (I don’t know about you, but that’s the only way my parents would let me listen to Eminem). Conversely, malls in Dubai have less to do with shopping and more to do with mind-blowing art installations, architecture, five-star restaurants and hotels, movie theaters where you’re served three-course meals, and did I mention, PENGUINS!

This is all to say that while malls in the US have been dead for nearly two decades (thanks, Bezos), they’re thriving here in Dubai. Why? A couple reasons:

  1. E-commerce hasn’t had nearly the same impact here as it has had in the states. Online sales penetration stands at just 2% of total retail sales in the Middle East and Africa, compared to over 10% worldwide.
  2. It hot. Really, really hot. Six months out of the year its too hot to go outside, so heavily airconditioned malls are absolutely the place to be.
  3. The folks at Majid Al Futtaim (our host company) and Emaar (their primary regional competitor) realized a long time ago that experiences would be the way forward for brick and mortar retail. Hence why malls here are built around incredible, experiential attractions.

That last point, which doesn’t really sink in until you’re watching a fountain show at the base of the tallest building in the world, left the five of us asking “How are we going to add value here when this company is so far ahead of mall operators in the US?”

Sitting in Silicon Valley, its sometimes easy to think the US is at the forefront of virtually every industry, but our ignorance was made abundantly clear with just one lap around the Mall of the Emirates. Our recommendation to Majid Al Futtaim was not going to be as simple as relaying what mall operators in the US are doing. Instead, we’d have to figure out how a company that is performing quite well can continue to innovate in the retail space, and how they can even better prepare to defend against e-commerce, which we’d be naïve to think Dubai is immune from.

More next time from Team Majid Al Futtaim!

Entry 3: May 31, 2018

We presented our final project today! The last week and a half was filled with almost a complete overhaul of our presentation, as we homed in on some key recommendations for the company and what we envision the mall of the future will look like. If you had asked me a month ago, my vision of the mall of the future would have been precisely the malls we saw on this trip, but there are some really interesting regional dynamics that lead us to believe a lot may change behind the scenes for malls in the Middle East.

A good example is everything happening in Saudi Arabia today, where the crown prince is loosening up a lot of restrictions, allowing women to drive for the first time and allowing movie theaters to reopen after a more than 30-year ban. Majid Al Futtaim, who manages Vox Cinemas, has plans to open 300+ screens in Saudi Arabia in the next year.

From the dozens of conversations we had with Majid Al Futtaim employees over the last three weeks (including the CEO), it seems absolutely key for malls to position themselves as “experience centers” going forward, as opposed to shopping-only centers. This means more movie theaters, gourmet restaurants, and leisure activities—like an indoor ski resort, for example, or a giant aquarium full of sharks! (Those last two already exist.)

We also believe that the relationship between mall operator and tenant (retail stores) will change in the coming years. We’ve seen a ton of direct-to-consumer brands realize that their e-commerce presence isn’t quite enough, and that they actually need a brick and mortar presence to round out an “omnichannel” offering (e.g. Warby Parker, Everlane, Casper, and dozens more). We think this will be one of the primary retail models going forward, meaning that there will be a host of online-only retailers looking to move into the brick and mortar space through pop-up shops and showroom-style stores.

Mall operators can take advantage of this trend by pioneering what we’re calling a “store-as-a-service” model, whereby the mall operator provides everything required to build and run a store, making it very easy for brands that do not have a physical retail presence to create one quickly. This would also have the benefit of attracting fresh, new retailers to the UAE by offering a de-risked and less capital-intensive entry to the country.

We’ve also been really impressed with Majid Al Futtaim’s commitment to sustainability. Most of their buildings and hotels are LEED gold or platinum certified, which is no small feat. Further, they have a goal to be “net positive” in carbon and water by 2040. Jenny absolutely nailed her piece of the presentation, which focused on how the company can make progress towards achieving that goal by partnering with clean building technologies (at Berkeley, for instance) and helping them through the commercialization phase, which is often known as the “valley of death” for cleantech given the number of companies that fail at that stage.

Team MAJ enjoying dinner after their presentation

Team MAJ enjoying dinner after their presentation

Our presentation was very well received, and we’re thrilled to hear they’re interested in many of our suggestions. We look forward to being in touch with the team in the future and we’re incredibly thankful for the opportunity to work with them all.

We went out on the town to celebrate the end of our project and this journey last night. We shared highlights over pizza and drinks and then packed up for the 15 hour flight I’m currently on now. I think we’re all excited to get back stateside and start our internships, but sad at the same time that this amazing journey has come to an end.

That’s it from us (Jenny, Dan, Kelly, Ryan and Jorge)! Thanks for reading!

IBD Team 51job

Written by Andrew Efstathiou, Johna Seo, Vir Choksi and Liz Jung

Notes from one of our design thinking sessions

Notes from one of our design thinking sessions

Early in the morning, rising to my feet, I open my bedroom curtains to the cacophony of the city and the bustling freeway outside of our window, cutting through Shanghai like a knife through tofu. Today is another day where we need to suit up and head to a large, multinational firm to interview them on their international recruitment strategy. Our client, 51job, is one of the largest recruitment firms in the Middle Kingdom and has come a long way since its inception at the turn of the century. With over 5,500 employees and offices throughout first, second, and third-tier cities in China, 51job is leading the way in helping China’s youth obtain work. With an economy growing at a rapid clip, more and more students that study overseas are looking to return home to start a life and a career. Our assignment at this crucial inflection point for overseas returnees, or “sea turtles” as they are known in the local parlance, is to help our client figure out how to best serve these students.

Office visit to Bloomberg

The office visit to Bloomberg

Today we head downtown to speak with a recruiter at Bloomberg, a large, global financial services firm. The room where we are conducting our interview is filled with Bloomberg terminals and overlooks the Bund, which contains a large radio tower that rests amongst scores of recently constructed skyscrapers, emphasizing the breakneck pace of development that the People’s Republic is experiencing. Our research with various companies, students, and university employees has surprised all of us in realizing the gaping disconnect between demand for jobs from Chinese students abroad and companies with active foreign recruitment channels. After our interview, we head back to the office to assemble notes, debrief, and synthesize our findings.

Bullet train to Hangzhou

Bullet train to Hangzhou

For lunch, we embark on a walk to the local mall that houses an array of local and international food options. Yesterday we sampled a dim sum offering with buckwheat noodles and delicate cuts of chicken. Today we need to eat in a hurry to head back to the office for more research, so we grab a quick bite at Joe’s Pizza, a classic New York pizza establishment that sits aside the local mall. In the afternoon, we must call around ten students and alumni from universities in five different countries. Our room is populated with phones, coffee cups, and computers; after a few hours, we close out our marathon session of phone calls. In addition to research pertinent to our assignment, throughout the process, we have also learned a lot about Chinese traditions, customers, and business practices. During the previous weekend we took a bullet train to Hangzhou, a beautiful old city west of Shanghai that contains a lake surrounded by trees. Escaping the city has allowed us to imbibe the authentic culture and lifestyle of a different part of China. From our first night meeting with our main client contact to our daily interactions with the co-inhabitants of our building, the experience has helped us to step back and become lost in a truly transformational experience that cannot be replicated in any classroom.

Morning of the final presentation

Morning of the final presentation

Around 6pm we depart our client’s office to grab a taste of a different Chinese cuisine, this night being a vegetarian Taiwanese option near the ornate Jing’an Temple. The nebulous cloud of lights, smells, and chatter envelops us as we navigate our way to the restaurant. The food is covered in a generous helping of spices, pepper, and oil. With our food, we must order cold drinks or else we will receive a tepid cup of tea. We reach into our pockets for renminbi, the Chinese currency, to pay, as very few establishments accept credit cards. China has leapfrogged the US in digital payments, and most Shanghai denizens solely pay for everyday objects with WeChat, an extremely popular, all-in-one mobile application created by Tencent. The last stop of the night is a nearby bar popular with locals to wind down from the day and bond as a team. As we step out into the cooling evening air, we see a blue tint emanating from the overpass that greets us every morning as we rise, coming full circle as we rest to meet another day.

 

IBD Team YGA Travels to Istanbul to Work with Young Guru Academy (YGA) for a Second Year

Written by Team YGA: Joanne Lee, Clara Jiang, Enrique San Martin Petit and Daniel Mombiedro

After a successful inaugural engagement between Young Guru Academy (YGA) and IBD in 2017, the two partnered again this year to send a team of four MBA students to Istanbul, Turkey. The IBD team was tasked with assessing the potential of virtual reality tours to develop a go-to-market strategy and revenue model. Piri – one of YGA’s most promising startups – wants to expand beyond its current travel app which offers only GPS-based tracking audio tours. The value that the Berkeley Haas IBD team would be able to deliver was unique – situated in the hotbed of innovation with VR companies like Oculus, YGA understood this advantage. I had the privilege of being a member of this IBD team and embarked on my first international work experience.

A day in the life:

My alarm goes off at 7:30AM. I quickly get ready and head over to the dining hall for breakfast. Dining hall? Yes, that’s right – my team members and I are staying at Özyeğin university where one of YGA’s offices are located. I assemble on my tray a typical Turkish breakfast – eggs, cucumbers, tomatoes, cheese, and simit, a circular bread encrusted with sesame seeds. I pour myself a cup of hot tea and join my team members in the discussion of today’s agenda.

An elaborate traditional Turksih breakfast spread at a café

An elaborate traditional Turkish breakfast spread at a café

Today’s agenda: a Piri tour of Karakoy, a brief 30-minute meeting with the CEO of Turkcell (the largest tech company in Turkey), self-study time for our team to get some work done, and wrap-up with a dinner party hosted by Sezin, a YGA colleague. I am excited to do a little sight-seeing of Istanbul which qualifies as product testing – perks of working with a travel tech startup.

We arrive at the starting point of the Karakoy tour, a beautiful mosque with two minaret towers, and are promptly greeted by Çağlar, one of Piri’s co-founders. We all plug in our earphones and begin following the instructions from the audio tour. The experience is seamless – as I stare up the intricate details on the dome ceiling, I hear about the rich story behind the mosque. The tour concludes with us reaching the harbor with a spectacular view of the glistening Bosphorus river. After snapping some photos, we stop in a café. Over baklava, we provide feedback to Çağlar on our experience with the tour. Eventually, it is time for us to meet with Kaan Terzioğlu, Turkcell’s CEO – we don’t want to be late and Istanbul’s traffic is unpredictable.

IBD Team on the Karakoy Harbor with Çağlar, one of Piri’s co-founders

IBD Team on the Karakoy Harbor with Çağlar, one of Piri’s co-founders

Again with an unobstructed view of the Bosphorus River, I am sitting next to Kaan in a large conference room. My team members and I are presenting our research on the VR industry and getting a rare look at how the CEO of a major tech company conducts himself. Kaan is engaged, nodding, and occasionally interjecting with an insightful comment. After the meeting, we collect our notes and head back to the YGA office.

We settle into an empty conference room and get to work. Daniel Mombiedro, our team lead, starts going through our slide deck and proposing changes to be made. We all offer our thoughts on how to best reflect the new information from today. We are a collaborative team – discovering, discussing, and delivering together. After several hours of tweaking models in Excel and putting together slides, we’ve made good progress. A YGA colleague swings by to offer us a ride to Sezin’s dinner party. We pack up and prepare to sit through more traffic.

Upon arrival at Sezin’s apartment, I kiss cheeks one-by-one with everyone there. As an Asian-American raised in New York, cheek kissing is uncommon. Through these warm embraces, I feel a strong sense of the close-knit family that YGA has formed. Sezin has prepared a bountiful feast with a variety of meze (similar to tapas). With full plates, we sit around the living room and chat with YGA members to learn about what drew them to YGA. I am particularly inspired by Küşat’s story – Küşat, who is visually impaired, is working on the world’s most advanced smart-cane, WeWalk, that detects obstacles above the waist and integrates third-party apps through voice-activation to lessen the everyday challenges of the blind. At the end of the night, my team packs into a van to return to our dormitories – it’s been a long but eventful day and I’m excited about what tomorrow holds.