Iran is indeed among the most attractive and high potential markets of the world. But doing business in Iran is not that easy. It takes a lot of effort for foreign businesses to understand the eco-cultural climate of the country in order to unfold its unlimited opportunities.
In May 2017, President Rouhani was re-elected for a second term. A government known for its sustainable development and close ties and communications with other countries. This is a change —and whenever there is a change, there are winners and losers. So it’s time to know how to take good advantage of this change to join the side of winners at this point. The new cabinet is young, and they’ve been approved by the parliament with high percentages of confirmation.
On the other hand, for those who are interested in Iran’s startup scene, the youngest of the cabinet is the Minister of ICT. Also the Science and Technology Vice President remains in his position to help the sustainability of the ecosystem. In fact, knowledge-based companies are more important to the government than entrepreneurial activities and risk-taking sort of businesses. These companies are in-line with the resistive economy and the government sees startups as a leverage for administrating the resistive economy.
Startup community of Iran is gradually developing itself. Tons of events and Startup Weekends are taking place every week all around the country. You can also check out Iran’s startup ecosystem map which we’ve made back in Sep 2016. In this ecosystem map, we talked about nine role players which are advisors, incubators, venture capital companies, users, accelerators, events, startups, angel investors and the government. It can be seen that the nine key role players have developed by 30 to 40 percent since that map was made last year.
The government now plays the role of a great supporter for startups. It is now the time for sustainable relationships. Aside from that, Iran is a very interesting point on the map for everyone. This untapped emerging market has the second biggest population in the MENA region which makes Iran a great destination for those who want to grow their market and develop their businesses.
But you have to keep in mind that Iran must not only be considered as a big market. You cannot have a sustainable business if you forget about empowerment. It’s proven throughout the time that any business which only focuses on the market and has no empowering benefit for the country and is despised not only by the government but also the people and society.
Being an ethnographer by experience, I gradually got to know about my society and its values. Working professionally on startups, my job is to gather around high-level people and give them a structure to start new businesses or develop the already established ones. From time to time, I advise foreign companies that want to enter Iran and develop their market. The following paragraphs are the gist of more than three million dollars of my clients, and ten years of advisory, in terms of do’s and don’ts when you think of entering Iran’s market.
We believe that everything looks easy in Iran at first, but then things start to get more complicated. Like how the great ancient Persian poet, Hafiz, said:
“Path of love seemed easy at first, what came was many hardships.” Hafiz – Ghazal no.1
Keep in mind that everything that I have mentioned here, is for developing a sustainable business related to one of those nine key role-players in the startup ecosystem. And that’s why those who want to enter Iran’s market with the hope of making some profit for a while and leaving after, are not the target audience of this article. That’s why we argue that you shouldn’t rush this process. Mark Zuckerberg once said: “Move fast and break things, unless you are breaking stuff, you’re not fast enough.”
But in this side of the world, the rules aren’t the same. In Iran, there is no first-mover advantage, there is always “the last man standing”. This means survival skills are the most essential when others begin to fall down.
If you are one of those eager companies studying the Iranian market, and dreaming about enjoying Iran’s potential, I have seven key points for you as a practical guide to survive in Iran:
1. Big role players are not the biggest
The Iranian government has always been open to facilitate international economic relations, especially now that many of the sanctions and barriers are being lifted. Yet, working with the government is not always the answer and the government is not necessarily the best customer for every newbie in the Iranian market. Considering all this, is it always the wisest plan to skip all the private and gray sectors’ capabilities and try to work with the government? As an example, Snapp is a successful foreign startup entry into Iran’s private sector, and other startups such as Digikala, Aparat, CafeBazaar that worked privately show the potentials of Iran’s private sector. Many other startups also reached out and made good progress affiliating only with the government. But then conflicts with the society emerged, since they were putting costs on the government’s shoulders in the years of the resistive economy. So big role players in Iran are not only limited to the government. Iran’s private and gray sector has proved to be more thriving than the government throughout the last decade.
2. Get to know the ecosystem
Market development is all about starting a movement in a new time, geographical and cultural place, and geography matters. Iran is known for a complex working system. And thus, there are questions you have to ask if you want to clarify your vision about it. Questions such as, who makes the decisions? Where do the funds come from? Who are the real role players? What are the things that the government can or can’t do?
For market development in any new dimensions, you can use several tools, one of them is the effectual reasoning. It provides you with three major questions that you can ask yourself and think in this context:
What do you know? You already know what you know, since you are a multinational company.
What do you like? Whatever that makes money for you and serves your vision and takes a lot of time to change that in a new market. You need to have another branch, another headquarter and probably a joint-venture.
And whom do you know? It’s the type of means that are worth investing in, to know the real role players of each industry and serve their benefits individually and organizationally while keeping in mind that there are ways other than bribing in order to reach your desires.
One of the other aspects of effectual reasoning is making as many partnerships as you can, instead of making competitors, make friends. And in positions like this, it’s sometimes better to make a joint-venture with partners that have similar visions instead of branching.
3. There are rules and there are other rules
I’ve always been a fan of the TV series “Mad Men“; it’s about this big 60s advertising agency in US and stories of its people. In one of the scenes —if I remember clearly, Don Draper, a partner of the company, tends to fire their accountant but Bert Cooper —the wiser partner of the firm, forestalls that because, regardless of the accountant’s skills or lack thereof, his family connections are important for bringing in new business for the firm. When Cooper asks why do you want to fire him? Draper replies: “because there are rules!” to which the old man replies: “but there are other rules”.
If you pay close attention to the trends, you can see the other unwritten rules in Iran that you have to respect. If you call out McKinsey, they will provide you with all the available laws and rules, but you have to keep an eye out on the other rules. It’s possible to find them if you come here, build up an office and put several months of hard work with blood and sweat and tears. With all due respect if you want to make sustainable money here, you have to look forward and learn about the other rules. This leads us to the next point: the rules of Sharia, Customs, Laws.
4. The rules of Sharia, customs and laws
Iranian acceptance system is a mixture of these three different, yet close rules. If you’re targeting a limited portion of the market, you can work on by only respecting the laws. Consider the law of diffusion of innovation, in order to get the attention of the early and late majority you must know about what setup values run through Iranian culture and that means having a strong knowledge and respect toward these three rules.
Islamic canonical rules, so called “Sharia” has deep roots in Iran’s culture. Although it’s proven through the history that Iranians are tolerant and open to accept other cultures, there are some setup values that cannot be skipped. 98 percent of Iran’s population are Muslims, and 90 percent of Iranian Muslims follow the Twelver Shia creed. For example, the Shia creed has several religious events that affect the business in Iran. Occasions such as the holy month of Muharram that commemorates the martyrdom of special historical characters and the holy month of Ramadan known as the “divine feast”.
Iranian people work with three different calendars, Shia events happen on the lunar Hijri calendar. Iranians work with the solar Hijri calendar and the business with other countries work on the Solar Gregorian calendar. These calendars have different weekends so it requires close attention if you want to plan your schedules in Iran.
Customs of Iran’s culture is a set of Dos and Don’ts. There are certain values that are unwritten and hidden inside the Iranian customs. For example, everyone respects the elders, or “White beards” as Iranians say. Martyrdom is another major setup value in Iran, people respect anyone who sacrifices their life or donates for the high beliefs of the culture.
Iran’s laws are mostly derived from the French civil laws, but there are some points in Iran’s trading laws that are different from other countries, for example, people use bank cheques as a guarantee instead of contracts. It may be different, but it is working on. Other than that, clarity of the companies’ agendas must be clear to everyone in the country. This leads us to the next point: Bring the money, not the Agenda.
5. Bring the money, not the agenda
Because of the historical memory of the last century, people and officials of Iran are worried to be abused politically and economically by the foreigners and their conspiracies. They are sensitive about any kind of activity which has a certain agenda about social changes, especially with foreign funds. Any foreign brand that enters the Iranian market should have a proper answer to these questions and establish positive communication. This could be done by explaining the win-win relationship and not changing anything in Iran in order to only serve their own benefits. Many times this sensitivity helped the country from major potential losses and in some cases companies were sacrificed because of bad communication.
So, you must bring the money and not the agenda. Iran’s agenda is the national development plan. You must try to be in-line with the development plan and bring investments in order to extend the work you’re doing.
6. GIVE to Get
Some companies try flashy promotions to grasp people’s attention. But depending only on the marketing may not work as expected in Iran. Iranian people have a quite positive memory of European and American companies with their high-quality products, and these expectations cannot be replaced solely by advertisements. Bringing dependable customer service, high-quality products and a proper advertisement is the best way to find your way into the market’s hearts. Sometimes the best way is to affiliate with Iranian companies by co-branding and adding values by empowerment. You should consider that you can’t look at Iran only as a huge consumable market, but you should also show social responsibility toward the society. If you’re resting in the shade of the tree, you need to water it.
7. Similarities with other emerging markets
I was a mentor at the Seedstars World 2017. an event which focuses on startups and emerging markets, There I understood that many of the challenges in emerging markets are similar to each other. Iran’s market is complex, but if you follow the trends, you can see that it’s following the same trends as other emerging markets in the world such as Turkey, UAE and Egypt.
You must be careful about the timing when you’re following the trends. For example, it’s now too late to get into the Fin-Tech branch of startups in Iran. You have to look at the details and predict the future trends of the market by three to five years. Iranians have proven to be very trendy people, for example millions of people abandoned Viber mobile application and started using Telegram in just one night. So in order to have a clear and more active vision toward Iran’s future trends, you can look at similar emerging markets that have the same situation. But in order to get a better understanding of Iran’s market, you can’t compare Berlin’s market with Tehran. It’d be much better if you compare it with countries like UAE. For example, you can’t compare Snapp in Iran with Uber, but comparing it with Careem can give you a better vision of the trends in the market.
Considering all of the above points, the golden rule of entrepreneurship says that as long as you serve my needs and requirements of people, they’ll be willing to pay you for it. I’m deeply optimist about the potentials of Iran and I think that it can turn out to be a great opportunity for everyone if it’s treated in its own individual way. We just have to learn “how”. I also would like to thank Ali Ahmadi, my friend who helped me organize my thoughts and pull this article together.
If you have other points, best practices and advice for a go-to-market strategy in Iran, turn this to a group discussion and share what you got in the comment area.