The Middle East never appeared on Michael Connelly's list of potential new markets when he thought about expanding overseas. Canada seemed like the next logical step for Connelly's company, New York City-based Mosaica Education, which had started 50 charter schools in seven U.S. states and Washington, D.C., teaming up with local education boards and managing everything from lesson plans to the cafeteria. "I never would have dreamed of the Middle East," Connelly says.
That changed in 2003, when Connelly received a phone call from a consultant at the Rand Corp., a Santa Monica, California, think tank that had been hired by the government of Qatar to help restructure and modernize the country's public school system. Rand had heard about Mosaica's success in the U.S. and was calling to offer Connelly the chance to replicate it in a Middle Eastern nation that was a 15-hour plane flight away. "At first I thought it was a prank call," Connelly says. "All I really knew about Qatar was that there was no u after the q. But the more I learned about this opportunity, the more excited I got."
Few business owners are likely to rank the Middle East as a top region for setting up shop. Besides fears related to political instability, terror attacks, and resentment toward the U.S., the cultural differences can seem insurmountable. But ruling out the Middle East is a mistake, says Michael Izady, a history professor at Pace University in New York City who trains and prepares companies working in the Middle East. "The most important challenge companies face is getting rid of their own cliches," Izady says.
In fact, several nations in the region, including Qatar and Oman, are aggressively courting U.S. companies with tax breaks and other perks in an attempt to bolster their national economies and satisfy growing consumer demand for Western products and services. During the past few years, a number of larger companies, such as Chevron and IBM, have opened offices in the region. Entrepreneurs are getting in on the action as well. "Cities like Abu Dhabi in the United Arab Emirates are developing faster than Las Vegas," says Todd Thiel, CEO of McKinley Reserve, a real estate developer in Hilbert, Wisconsin, that has done business in the U.A.E. since 2001.
Importing Western-style education is another priority. In 2003, Qatar set out to overhaul its elementary, middle, and high school systems. That's where Mosaica came in. After getting the call from Rand, Connelly had several meetings in California and New York with delegates from Qatar, who asked him to help modernize 200 schools in 10 years, implementing an American-style curriculum, retraining local teachers, and handling administration.
Connelly was torn. On the one hand, the deal looked too good to turn down. Mosaica, like all businesses in Qatar, would not be required to pay taxes. Qatar even offered to house Mosaica staffers for free. On the other hand, Qatar had experienced a string of bombings in recent years. Connelly wondered if any of his 1,000 employees would be willing to relocate there. "For this to work, we needed our employees to buy into living in a different culture," he says.
Connelly was willing to look deeper. Over the next several weeks, he conducted due diligence with the Qatari delegates, Rand, consultants, and the U.S. State Department, which helped him analyze everything from safety to business corruption. He decided that the potential rewards outweighed the possible drawbacks. "I saw this as a potential long-term win," he says.
The next hurdle was finding staffers to make the move. Connelly and his HR team identified eight longtime employees who had management experience and spoke Arabic, had relatives in the Middle East, or had worked overseas. They then pinpointed seven other longtime staffers--and much to Connelly's surprise, all 15 people accepted assignments in Qatar almost immediately. "It gave me a lot of confidence that we were going to pull this off," he recalls.
After signing the contract with Qatar in February 2003, Connelly made several visits to the country's commercial attache in D.C. to register Mosaica and obtain visas for his employees. Next, he held a two-day boot camp for staffers, during which they learned, for example, that classes in Qatar are segregated by gender and that school days there are shorter than in the U.S. Meanwhile, Connelly scrambled to find publishers to provide Arabic language books, teaching plans, and flash cards. He also hired contractors to refurbish the school buildings, which lacked fire exits and other basic safety requirements.
In February 2004, the 15 Mosaica employees made the journey to Doha, Qatar's capital. They had seven months to convert four schools and then oversee their administration. The first weeks were close to overwhelming, recalls the company's vice president of administration, Kenneth Campbell, a former U.S. soldier who made the move with his wife and 5-year-old son. To ease the transition, the co-workers all moved into the same apartment building. Connelly also hired translators to help the 13 team members who didn't speak Arabic communicate with students and teachers recruited from the community.
Everyone was a little worried about how it would all come together on the first day of school, Campbell says. But it did. Mosaica met its obligations for the first year, and Qatar renewed the company's contract for 2006. The success has drawn the attention of Abu Dhabi. This fall, 35 Mosaica employees are scheduled to begin converting schools there. Connelly expects the Middle East to account for about 20 percent of Mosaica's $91 million in projected revenue this year.
Connelly, who now makes a couple of trips overseas each year, is emboldened. He plans to branch out further in the Middle East and venture into Asia. He is now in talks with Bahrain, Oman, and Turkey, as well as China and Korea.