Chicago Booth Review Podcast Why Are Refugees More Likely to Be Entrepreneurs?

Andrew Leon Hanna: A lot of talk of grit and resilience in the world of startups in the Bay or in the United States is often when your seed funding is almost running out or your VC dollars. It could not be more different than in the case of many immigrants and refugees.

Hal Weitzman: When you think of an entrepreneur, who comes to mind? A refugee may not be the first person you'd think of, but refugees are in fact two to three times more likely to be entrepreneurs than the population at large. In the US, for example, 13% of refugees become entrepreneurs compared to 9% of Americans born in the US.

Welcome to the Chicago Booth Review Podcast where we bring you insights from some of the world's top policy minds. I'm Hal Weitzman and, today, I'm talking with Andrew Leon Hanna, a social entrepreneur, lawyer and Chicago Booth adjunct assistant professor whose book, 25 Million Sparks, The Untold Story of Refugee Entrepreneurs, tells the stories of a handful of individual refugees who started their own ventures. In the first of two podcasts about the book, we discuss why he thinks refugees are so much more likely to become entrepreneurs.

Okay, Andrew Leon Hanna, welcome to the Chicago Booth Review Podcast.

Andrew Leon Hanna: Thanks so much, Hal. Appreciate it.

Hal Weitzman: It's great to have you here. You've written this wonderful book, 25 Million Sparks. This is not a traditional business book, right? It's really well-written, very captivating, but it's primarily a real human narrative that has business lessons rather than the other way. Typically, what you see is the other way around, the business lessons and then people trying and finding stories that fit that. You've done the other way around. You take the journey of these three Syrian women refugees, each of whom becomes an entrepreneur in a different area, Yasmina, who makes these wedding dresses and experiences, I guess, Malak, an artist, and Asma, a children's storyteller. Just briefly, please, just tell us something about them.

Andrew Leon Hanna: Yeah. Sure. Thank you so much. As you said, the book features three Syrian entrepreneurs who fled during the war to the Za'atari camp in Jordan and then zooms out to 20 camps or cities around the world and talks about entrepreneurs who fled their home countries all around the world. Asma, Malak, and Yasmina, Asma as you mentioned is a storyteller, a social entrepreneur, she had the situation where her house was burned down in Syria, she had to flee with a very young child and eventually, when she got to the camp, she suffered a lot of different challenges and difficulties. She wanted to provide some kind of support for her kids. She had two daughters at the time, Tamara and Maya.

This was before education infrastructure was built in the camp. It was mostly just tents, and you had a lot of kids going around helping their parents find any kind of means to create income and survive. Asma said, "Well, I have always had this passion for education, and I want to uplift these children by bringing a storytelling initiative that will bring them to the trailer and have this magical experience where they can escape in these stories, number one, see themselves in those stories and find new ambitions for their lives."

I mean, these are children who their whole lives to date or much of their lives have been spent with words like war bombings, shellings, so bringing these stories that are more about Syrian protagonists who are creating peace or becoming professionals and doing amazing things in the world. She would bring them to the trailer to have these readings, and then there was also this education component where there would be activities. They would get better with their skills in reading and literacy. There's this dual component which was almost like a escape and a way to encourage students and youth to see themselves bigger than their problem, and then there's also education skills and continuing their education during this gap. She actually spoke virtually in our class at Booth just last week, which was very inspiring for the students.

Malak is another person I'm still close with. We have been chatting. She's in the camp still. Asma actually relocated to France since. Malak is an artist. She was quite young, younger than Asma, when she fled from Za'atari. She talks about bringing her crayons and her notebook because art was her outlet for all of her emotions. Probably, I think, if everything were equal, if there was equal opportunity in the world, she would be the most famous artist in the world. I think her work is really brilliant and amazing across many mediums, from charcoal to watercolor. She does everything.

Yes, she became an artist. She started winning some awards and, most importantly to her, she was able to win a scholarship to go to college and expand her work further in Jordan and actually won some different international awards, but, most importantly, she has used her art to help encourage girls in the camp. A lot of the work she's done has been on human rights, on girls' rights. Her view is that art can change people's minds more than maybe telling people or telling them what they should do. She's seen that happen in topics of child marriage and other things.

Then Yasmina, as you mentioned, started a wedding shop and salon. She actually was the one who was an entrepreneur before. She already had her store in Daraa, Syria, but at some point realized, "I need to go all in on this in the camp. It's going to be a long time here. The war is not getting better," and so she sold all her wedding jewelry, everything really of economic value and personal value that she had and started her salon business and wedding shop business, and she helps people celebrate even in the midst of a difficult time, and also just a beautiful trailer where she has her store, just colorful.

Hal Weitzman: Yeah, and you describe how lively it is. You talk about these three people and, as you say, lots of other refugees as well. Where you get to with this is that these are examples of refugees who are successful at being entrepreneurs. As it turns out, refugees are much more likely to become entrepreneurs and to be successful than those of us who are not refugees. Now, I'm interested in why you think that is.

In the second half of the show, we're going to get to some of the reasons that you think that refugees are more likely to become entrepreneurs, but, at a psychological level, is it the experience of having become a refugee and what you went through that makes you more likely to be an entrepreneur or is it the kind of people who make it through and are able to survive these awful migrations and the kind of people who are able to make it through and to get to these refugee camps have the kind of skills that will enable them to succeed? What do you think?

Andrew Leon Hanna: Yeah. It's a great question. It bumps up against different types of migrants. You have immigrants who are folks who choose to leave their home country and go somewhere new, and then refugees and asylum seekers and internally displaced people are forced to leave their homes, internally displaced within their country as refugees and asylum seekers outside of their country. Actually, immigrants and refugees/asylum seekers, both displaced people, forcibly, and people who chose both have very, very high rates of entrepreneurship.

In fact, refugees in the US broadly tend to have a higher rate even than immigrants. What that tells me is it's less about the people who are really entrepreneurial go out and they're able to make it and more so the experience of being forcibly displaced creates a kind of extreme level of entrepreneurship. We'll talk about several factors, but it creates in you a level of resilience. It creates in you this commitment where you don't have any other real opportunities and you have to go all in.

Whereas, as an entrepreneur myself, I know I have backup options, and that can be not a great thing actually in terms of level of commitment and going all in level of engagement and need to to make it succeed. Yeah, I think a lot of it is the experience of having to rebuild your life all over again, having to be resourceful, having that urgent calling of "I need to support my family no matter what and I don't have a backup option". It builds in people, including my parents, they're immigrants from Egypt just coming to England without money in their pockets and then come to the US with very little, it creates in you a grit and resourcefulness that I think other people don't necessarily get, or they can get, but not in that way.

Hal Weitzman: You talk about that backup option. One of the parts I thought was most interesting about your book was when you dispel some of the myths about entrepreneurship that we so commonly hear in the US. It's about having a can-do mindset or it's about perseverance or it's about risk taking. You point out very, very well that the risks that the entrepreneurs take in the US pale next to the risks that all refugees take just to survive, let alone to become entrepreneurs. In developed countries, startups have all this financial and legal and educational and social infrastructure that refugees just don't have. Talk about that dichotomy, what it taught you about some of the homespun wisdom that we hear about what it takes to be an entrepreneur in the US.

Hal Weitzman: Yeah. I think it's funny. When I was in business school, there was a joke that a lot of the cases were about folks who made it on their own, they pulled themselves up by their bootstraps and a million dollars of their parents' money. That's obviously not the case of-

Andrew Leon Hanna: Right, the old joke about how do you make a million dollars? You start with $10 million. Right.

Andrew Leon Hanna: Right. Exactly. I think there's still a lot to admire for people who started with stuff and then made it bigger or started in an economic environment that was more stable, but, really, I think we can learn a lot. Folks at all of these schools, entrepreneurs, I think people who read Forbes, I think the cover should be Asma, not some of these 30 folks or whoever it may be. The reason is because I think you can learn a ton. I also think their model of entrepreneurship is often more inspiring and more generous and more selfless. Yes, I think a lot of talk of grit and resilience in the world of startups in the Bay or in the United States is often when your seed funding is almost running out or your VC dollars. It could not be more different in the case of many immigrants and refugees.

There's an example in the book of someone who came to the camp early on and was starting a cell phone repair shop and was basically running back and forth to the hospital to care for his kid. In that case, it's somebody who has no backup plan, no money really saved up, has no idea how long he's going to be living in this camp, probably has seen or heard of family members dying during the war, all kinds of trauma, all kinds of difficulties and yet is having to come up with something with no access to capital and no other groundwork laid, just skills or resourcefulness to figure it out. The same with Asma, the same with Malak, the same with the Yasmina.

So many times, too, it's little money that is involved. A lot of the entrepreneurs celebrated here, again, start with a big loan or a big investment. We talked about Razan in the book who is in Yorkshire in England. She started a company called Yorkshire Dama Cheese. She combined the resources in Britain like the milk that she felt was perfect for making this Halloumi squeaky cheese that she knew from Syria. That turned into an award-winning business, over a hundred thousand pounds in revenue. It started with just a 2,500-pound loan from the government, and so we're talking about taking almost nothing and starting something huge.

Even the folks I work with through my venture, Mona, it's just a loan of five, $6,000 that can turn someone into an entrepreneur that changes the course of their family and their communities. You don't even have to look further than my own father who, again, came to the US with very little. My parents did and started a primary care practice that changed the lives of thousands of people in my hometown and, again, really didn't have any startup capital, didn't know anyone, didn't know any lawyers and had to figure out how to start a medical practice.

I think that's where you can learn, at least be inspired by a level of resourcefulness, a level of resilience, a level of commitment and recognize that, okay, if they did this with that little, I should believe in myself that, if I can push harder and take this example, perhaps I can do something without all of the conventional cushions that we have often available to us.

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Okay, Andrew, in your book, you outline five reasons that you think refugees are more likely to become entrepreneurs based on your observations and interacting with a lot of refugee entrepreneurs. The first one is that innovation is just a way to survive in a refugee environment. There's a parallel there, isn't there, with people saying, for example, in the US that, if you lose your job, you're much more likely to start a company than if you don't. This is a more extreme version of it, so tell us about that.

Andrew Leon Hanna: Yeah. I mean, so many of the examples in the book are people who, in Yasmina's case, threw a bunch of trash bags of her belongings into a truck. Actually, she was pregnant at the time of having to leave, which made it even more difficult and had to come across the border and somehow find a way with her husband to provide for her family and, as I mentioned, sold her wedding jewelry, sold everything that was significant to her and said, "I'm going all in." There's a level of commitment and risk-taking involved in this idea of "back against the wall, I have to survive," because there's really almost no backup option.

You have a lot of people who come to new countries. We talk in the book about Utica, New York, which is a quarter refugee and helped revitalize that city, so many stories of people in the book and throughout the world that come to a place and have no other option but to innovate. The parallel to what you mentioned about people losing their jobs is similar as well, and we'll talk about discrimination, but part of it is, if they're not finding ways to get jobs in the normal employment pool, then really it is the only option. You're facing the reality of my kids not having food to eat or not having any opportunity.

Particularly, as migrants in different legal definitions, a lot of times, asylum seekers and refugees, don't have full access to resources of the government or social safety nets, and so it becomes really like I either make this salon and wedding shop work or, in the camp, I'm relying on just some rations of bread every day. If you're in a city that doesn't even have that, you're in a host city or you went to Utica, New York, or Jacksonville, Florida, wherever it is, then you're relying on some government funding or support, if there is, but, after that 90-day period or whatever it is, I have to start this business and it has to succeed.

Hal Weitzman: Right. That's the first one. Just to survive, you have to be innovative. The second one that you identify is that they have been exposed to different cultures. You talked about the Syrian woman who started the English Halloumi cheese business which has become very successful. Tell us about that, about how bringing one culture to another or looking at an environment in a different way with fresh eyes can bring opportunity.

Andrew Leon Hanna: Yeah. There have been a few studies that showed that students even who study abroad and come back end up having better or more promising business ideas than those who didn't. There's this cross-cultural element. Razan from the Halloumi Cheese Company is a perfect example where she saw something in the resources in Britain that people in Britain didn't necessarily see. She had this context of a market, of an industry of customer preferences in another place that she could bring. We obviously see a lot of that with immigrants and refugees bringing new foods, new cultural clothing, new textiles, even new approaches to technology that others didn't see. Having that advantage of a whole nother set of ideas, a whole nother set of catalysts for ideas that can be created is a big advantage.

Hal Weitzman: It's so interesting. I mean, it's a form of globalization. We think of globalization as being international, not bringing people to do different things in new environments. I found that really fascinating. Okay. That was the second one. Then the third reason that you identify refugees are more likely to become entrepreneurs, I want to ask you about this one, is that they understand customer needs better or at least have a good understanding of customer needs. Why is that?

Andrew Leon Hanna: This one is a broader point on empathy. When I look at the applications, we do a zero-interest loan program at Mona in partnership with a nonprofit called Kiva. The applications are striking in that it's often immigrant and refugee entrepreneurs who really, really, really want to contribute to their communities. Money is a part of it, of course, but there's a real desire to improve their community and satisfy people. I think they haven't done any studies on this or anything, but from my experience, there is a lot of desire to integrate in their communities and, as part of that, it's like, "How can I create this as a community-centered venture that can impact people's lives?"

When you come at it from that angle as opposed to, "I want to start a big business and I want to make money," or whatever it may be, that is very helpful. Obviously, there's people who come at it from that angle from all walks of life, but I think immigrants and refugees particularly because they want to create community. They want to find a sense of belonging. They want to help their new community. There's often that, and sometimes it's catered to their own fellow migrant communities, which is why sometimes groups will emerge. A lot of Egyptian folks will be in Houston or a lot of Syrian folks will be in Cleveland. It's because, often, they'll build it to help their own people who are migrating.

Asma is a good example in the camp because she had a deep empathy for all of these kids because her own kids were some of them. She wanted to create an education program that would solve her own problems, and that's the best way, if you can start a business, you understand the customer needs that personally is quite helpful.

Hal Weitzman: It's a classic thing where they're not MBA students who are discovering some cool technology or technique and thinking then how can I sell it, but they're seeing a need and supplying that need. Okay, that's the third reason, and the fourth reason that you think refugees are more likely to become entrepreneurs is, again, it's about necessity being the mother of invention because it's about discrimination. Like you mentioned earlier, they're discriminated or excluded from certain forms of traditional employment, right?

Andrew Leon Hanna: Yes. If you're not able, Razan again is a good example where she talks about in a quote to, I believe, a humanitarian group that helped support her. She talks about how it felt like being stabbed in the heart, how many times she was rejected from jobs, because she was eminently qualified, spoke multiple languages, multiple degrees,. The reality is that, aside from all kinds of other forms of discrimination like racial discrimination and gender discrimination, there's also this whole set of refugee-and-asylum-seeker questions where sometimes unconsciously, sometimes purposefully, companies will either not know how to handle. "Do you have a work authorization? What is your work authorization?" Maybe they're not in a position where they can handle folks who are learning the language during their early stages or more pernicious or more problematic where they say, "I don't want to deal with folks of this kind of background or folks who don't understand the culture," whatever it may be.

Usually, what I've seen, it's more just there aren't proactive folks. Companies are willing to take the chances and support them because, refugees, statistics show that they're two x retention rate. It's a great ROI to invest in hiring refugees, but, often, they just don't know how to go about it and don't really build the pipeline. There's also a discrimination element, and so it's both not seeking them out and then, when they come through the door, treating them differently. That leads to somebody like Razan saying, "I have to start something. I don't have any more time."

Hal Weitzman: Okay, so discrimination is the fourth one, and then, the last one, you just talked about resilience. We've talked a little bit about that, but just tell us why refugee-entrepreneurs have more resilience than the average entrepreneur.

Andrew Leon Hanna: Yeah, I think it's just having learned that, when you have your entire world wiped out, sometimes you've lost limbs in your body or you have big injuries from explosions or you've lost loved ones or you've lost a kid, you've lost a father or mother, at that point, I think the challenges of entrepreneurship and the need to be resilient mentally is totally not anything compared to what they've had to deal with in terms of fleeing war with nothing really. Often, going to a camp, relocating multiple times, mental limbo of not knowing where you're going to go, calling on the phone to see how is everything back there, all of that builds a level of resilience at a whole nother category of things which is life, family, basic needs, basic resources.

When it comes to the challenges of a business, I wasn't able to get legally permitted to do X, Y, Z, or I couldn't find a storefront or I don't know how to build a website, whatever it is, that's the kind of thing that perhaps, if you haven't been hardened by other things, it's hard, but for somebody who's seen all of these things, it's just another obstacle, a much more minor obstacle to try to overcome.

Hal Weitzman: Okay. Great. These are the five reasons that you had. A way to survive, you have to innovate. That's number one. Being exposed to different cultures is two. Understanding customer needs is three. Discrimination is four, and resilience is five. I was wondering, Andrew, whether there's a sixth one that I observed in your book, which is this concept you talk about, if I'm saying it correctly, [foreign language 00:23:33], slowly, slowly. They're building these companies slowly, and there's no venture investors demanding business plans and outsized returns and expectations. Perhaps, there's less financial pressure, there's less demand to build up an international franchise or whatever, and that could be a strength.

Andrew Leon Hanna: Yeah, I think that's true. I think a lot of the community-based or smaller businesses, it's very true, the main end result for them is a family business that will be profitable. It's not going to be the "gain thousands of users" and then try to get it acquired or whatever it may be. It's a world of "we need to have a positive cash flow and we need to have a business that can be in the black immediately or pretty soon", and so that's why they're able to do so much with just a small loan. At the same time, a lot of the stories of the biggest companies are immigrants and refugees as well. That resourcefulness, I remember hearing the founder of Chobani speak, Hamdi Ulukaya. The interviewer said, "Why didn't you get VC dollars for your venture? He said, "That's not something that I even considered." He immigrated from Turkey. Nobody was knocking down his door asking for his PowerPoint deck. He just got a conventional loan and then started it. He talked about building his business on Excel and on QuickBooks until it was hundreds of millions in revenue.

I think there's an element of not being as bloated because you don't have all this investment opportunity. You have to make it somewhat profitable from the beginning. Just on that note, lots of first-gen folks that we meet, so kids of immigrants like myself, tend to also have a lot of that inherited from their parents, the most famous example being Steve Jobs's dad was a Syrian refugee. I believe Bezos, one of his parents was a Cuban immigrant. You have people who maybe inherit that scrappiness and that ability to build without a lot of resources.

Hal Weitzman: Sure. Okay. I want to maybe think about those people who are entrepreneurs, but don't have that migrant background, not immediately perhaps anyway, in their family history. What are the lessons? One obvious lesson I can see is that one about starting with the customer need, not with the cool technology or whatever. What do you think are the other lessons that come out from your book and your research or your interview that would work for all entrepreneurs?

Andrew Leon Hanna: Yeah. I think Asma helped provide some of these when she came to speak to our class on social entrepreneurship. I think one of them, yeah, as you said, starting with the customer need and a level of empathy with the customer. Another is what we just talked about a little bit, which is not questioning the need for a lot of capital up front. What is the quickest way you can build an MVP or a prototype that can test out what's going on and what's the quickest way and the most scrappy way that you can, rather than rely on a big infusion of money and then hire people quickly, test things out, make that there's a product market fit early on and then grow through whatever method you have? I think there tends to be, especially if you're getting access to these opportunities as an MBA student, there tends to be a feeling of "I want to get that article that I raised an X, Y, Z seed round.

I think there's a lot of lessons on bootstrapping, on being scrappy, on being profitable early on and on testing with very little resources that can be learned from even Yasmina, who probably didn't know early on that will weddings continue. How is this going to go in this new environment? She quickly put that to the test before she made her big sale of her jewelry to make that move. I think that's another one, and then I think there's also an element of just resilience and understanding that, if I have all these backup plans and all these options, it's not that much of a risk compared to other people who have done it with so much less.

Even just my own experience, again, my dad and my parents aren't refugees, they're immigrants, they came by choice to the US, but just thinking about everything that my dad had to do with little money, not knowing anything about the law in the US, having to come up with a medical practice, having to get malpractice insurance, having to legally incorporate, having to lease and then buy offices, that is an amazing thing to be able to do.

Sometimes, when I'm paralyzed with lack of action, I'm like, "Oh, what's the legal risk of this?" or, "How do I put up a contract for this?" and I'm a lawyer, by the way, so it should be easier, and then I think, "Well, my dad was able to do this and he made it through and he dealt with the problem." I need to perhaps be a little less thoughtful prospectively and just take action because that's what he did partly because he needed to, but I can try to embody that a little more.

Hal Weitzman: Well, Andrew Leon Hanna, it's been so fun to talk to you. Congratulations on your book, which really is a good read, 25 Million Sparks. Thanks for coming on the Chicago Booth Review Podcast.

Andrew Leon Hanna: Thank you so much, Hal. I appreciate it.

Hal Weitzman: That's it for this episode of the Chicago Booth Review Podcast, part of the University of Chicago Podcast Network. For more research analysis and insights, visit our website at chicagobooth.edu/review. When you're there, sign up for our weekly newsletter so you never miss the latest in business-focused academic research. This episode was produced by Josh Stunkel. If you enjoyed it, please subscribe, and please do leave us a five-star review. Until next time, I'm Hal Weitzman. Thanks for listening.