Even if three out of ten startups go on to become big businesses, it
more than compensates for the amount of money spent on them
all, leading industrialist Abdul Razak Dawood tells

Developing a culture of entrepreneurship is vital for the growth of a country’s economy. Starting by establishing links between universities and industry besides offering incentives to ‘angel investors’, a government can help create successful entrepreneurship culture.
Even if three out of ten startups go on to become big businesses, it more than compensates for the amount of money spent on them all.
These thoughts were expressed by leading Pakistani industrialist Abdul Razak Dawood, chairman of Descon and one of the founders of Lahore University of Management Sciences (LUMS), while talking to Community in Doha.
Dawood, a graduate in Mining Engineering from Newcastle University UK and a Master degree holder in Business Administration from Columbia University, NYC, USA, was in town to deliver a talk on the importance of entrepreneurship at the invitation of Pakistan Professionals Forum Qatar (PPFQ).
His company Descon Engineering is perhaps the first Pakistani multinational company which is operating in five countries with four overseas manufacturing units and more than 30,000 employees. Descon’s employees come from 20 different nationalities working in Pakistan and the Middle East.
Dawood says entrepreneurship is a cultural thing. Referring to countries like Pakistan, he says their culture is not attuned to developing entrepreneurs like the United States where a conducive system throws up entrepreneurs.
However, he believes, slowly the wheel is turning. There are many universities and NGOs that are now coming forward to help encourage people to become entrepreneurs.
“We all know the importance of entrepreneurship in the development of a country and a classical example is America. We at LUMS are doing this and our own institute at Descon is developing entrepreneurs at the bottom of the pyramid,” Dawood tells Community.
In such a situation, what a government can do, he suggests, is that it can encourage people to establish venture capital, a company or people who would be willing to lend to entrepreneurs.
“You see a bank will not lend to a startup, an entrepreneur. It is going to be what they call angel investors. Now how do you get angel investors? You can get people who put money into a venture capital if the government can encourage through tax and other incentives,” says Dawood.  
The problem with funding an entrepreneur is high risk and that is why a lot of people do not do that. It is high risk but the gains are very high too.
“If we fund ten ventures, seven will fail but the three that will do it will probably more than compensate for the losses,” argues the Descon chairman, adding that in Pakistan, Punjab government is developing a Knowledge Park.
“That is basically a similar thing where you encourage entrepreneurs to come in and the Government of Punjab will give them subsidised office space, internet connections and other things,” he adds.
Dawood is also a former federal minister and held the portfolio of Commerce, Industries & Production from 1999 till 2002. He is also a former director of the State Bank of Pakistan and he strongly believes in the increased involvement of Small and Medium Enterprises (SMEs) in a country’s economy.
“I was surprised to see when I went to Japan that almost 90 percent of the people involved in the economy were actually the SMEs. SMEs will always remain the bedrock,” observes Dawood. However, for the development of such a culture he believes two things are required.
It requires more and more people to become entrepreneurs and become SMEs and larger businesses to use SMEs as suppliers, vendors, etc. because an SME does not have the muscle for vast distribution or branding.
“That marriage has not come forward in Pakistan, for instance, as it has developed in the western world and in Japan,” says Dawood.
On his own experience of establishing and developing Descon, Dawood says a businessman needs to have a global vision with ambitions to become a larger player.
“Let’s face it, nobody can grow larger than his vision. Then, you have to be a long term player. If you are a long term player, then you make certain decisions which may not help you in short term as they might affect your profitability in the short term but will give you benefits in the long term,” says Dawood.
“I have always felt that one of our issues is that our Pakistani businessmen are looking more to just operating within Pakistan whereas we want more and more Pakistani businessmen to have a global vision,” he said.
At Descon, he says, right from the start they had a global vision and that is why they were out. Their first overseas contract was in 1982. “I am happy that we are operating in several countries and I am not happy because I think we could have done better than what we have done,” says Dawood.
“Our vision is global but we are only regional. We have got to get into Africa, the Far East. We are not in Australia, not in Latin America,” he acknowledges. However, he is determined his company will be there one day. “The company will get there, if not in my lifetime, at least in the company’s lifetime. It is a long haul,” he smiles.
Dawood has also served as a visiting faculty member at the newly established MBA Programme at the University of Punjab. He taught from 1975 till 1981. He is one of the founders of LUMS, now a top-ranked university in Pakistan, and has been its Rector since inception.
Speaking about the success of the model of LUMS, Dawood says it takes a lot of effort and vision. What makes LUMS standout is that it is not-for-profit and others are not not-for-profit.
“Our mindset is different. We said to ourselves, keep a seat empty but do not compromise on quality. Do not compromise on merit. Others may not say that and they compromise because they want their revenue through fees and all that,” says Dawood.
But isn’t LUMS also one of the most expensive universities in Pakistan?
“LUMS is expensive but the amount of people that get in on scholarships is increasing and for the last 20 years at that. Almost 2 billion rupees have been given out in scholarships. And our National Outreach Programme (NOP) which is only to allow sons and daughters of poor people like peons and gardeners to come out of their villages,” replies Dawood.
The secret of LUMS’s success is the establishment of a culture based on rigour, discipline and unorthodox teaching methods.
Dawood has never been into politics and does not want to be. “I think people like me should not do that. It is a huge conflict of interest. If I join a political party and then you have large businesses, it is a conflict of interest,” feels Dawood.