I Like Focusing on One Line of Business
Seid Mohammed Birhan
Founder & Chief Executive Officer, Ambassador Business Group
Born in Adi Awro, Tigray and growing up where there was no power, water, or even a bed to sleep on, Seid would first be introduced to the garment industry at the tender age of six when his father gave ETB600 to his older brother to start a business.
However, in a few years’ time, war broke out between the central government and armed rebels in Tigray and his entire family had to flee to the state’s capital, Mekelle. After doing some small entrepreneurial works, Seid moved to Addis Ababa where he began the journey of Ambassador Garment with a single used stitching machine which he bought for ETB1,000 in Mercato. Paying a monthly rent of ETB20 around 30 years ago, Seid would commence his positive and profitable trajectory.
The small business he has launched by hiring himself as an employee has now grown to employ thousands and fashionably-dress innumerable more with a vision of being a figure for a modern lifestyle brand. Now, Ambassador Garment is the destination for sharp men’s suits for the aspiring Ethiopian middle-class male. His small cloth patching machine has catapulted him to take on other business ventures. Seid Mohammed Birhan, founder of Ambassador Garment, Ambassador Hotel, and Ambassador Real Estate gave EBR’s Addisu Deresse an audience at the glinting Ambassador Mall to share his extraordinary and exemplary life as an individual and a businessman.
You are a family man. Tell us about your family and what kind of husband and father you are.
I have seven children and 13 grandchildren. I am not a hard man and I don’t believe in harsh talking or beating children—something I took after my father. All my children, except for one, work with me. One of my sons is actually deputy-CEO of Ambassador. We are all both a family and a team in the business world. I remember bringing my son to a board meeting when he was just a high school student and to other business engagements outside of the country. One of my daughters has been the manager of Ambassador Hotel and Ambassador Mall. Our brand has advanced to the second generation—I no longer sign cheques. My children are already in my line of business.
What do you say about teaching young boys and girls to become financially literate?
There was nothing that I studied at the school level. For me, what is more important and what has actually driven me through the years is the goal I set for myself. The dream of what I want to achieve has carried me through the challenges of learning all those things through trials and errors. The skill to prepare quarterly sales reports and plans, for example, came much later after numerous business engagements. Attending numerous meetings and working with so many professionals and the experiences that came along slowly brought such skills towards us. So, for me, having a clear goal was much more important than the skills necessary to achieve them.
Tell us about Ambassador’s manufacturing project in Gelan town. What is its progress?
It did not work well and we sold the store and abandoned the whole idea. The idea was to engage in the manufacturing of T-shirts with our branding. We used to have plans to export the produce. A mixture of factors led to the decision to abandon the idea. It was partly due to advice from industry players on how difficult it is to compete globally and partly, I think, fear on our part.
You shut down your manufacturing plant in Addis Ababa’s Gerji area to move there. So, how are you managing the manufacturing of suits now?
We have stopped manufacturing suits as we have outsourced it to a factory inside the Adama Industrial Park, opened only for the garment industries and where two lines are dedicated to us. Other big brands do such things, too. Whether it is Nike or Adidas, they outsource their manufacturing and focus on their branding and that is what we are doing now. We focus more on design, branding, marketing, promotion, and those aspects of the business. You might have heard the Prime Minister recently talking how the suit he was wearing was made in Adama. He was talking about us.
How do you see the impact of Ethiopia’s removal from AGOA on the garment industry?
The privilege was indeed a big benefit for the country; no doubt about that. But I would worry more about our side of the problem. Let’s talk about the conditions under which our employees are working and their dedication to work extra hours to increase output. Let’s talk about how long it takes the product to reach Djibouti and how fast one secures various permits in this country or even the awareness of government officials in trade and industry offices. Whether in the US or elsewhere, the market is there. But, we should rather focus on our side of the equation. But I still hope we will get back to AGOA.
How do you build institutional culture and a team with a well-shared goal?
I believe in creating a free environment for my employees. We [have very collegial relations with everyone in the company and] joke amongst ourselves. I know most of my employees by name. This is how, among other ways, we spread and share the organization’s goals among team members.
What is your strength and weakness as a business leader?
Involving my wife and children in my business has taught me to be open to criticism. I don’t bet on the image of being a boss, but rather one that keeps learning from what comes my way. However, at times, I sometimes look back at some missed opportunities—caused by indecisiveness and the fear of risk—through which we could have grown bigger and more impactful. It has been 30 years since I came to Addis Ababa, and as much as we have accomplished, some potential areas for growth have not been tapped. I think that could be a weakness.
The country seems to be running short of inspiring stories like yours despite the increasing number of millionaires. What is your take on that?
There is this story of taking the short-cut way to success. It’s the unhealthy way. There is no doubt about that and that is something I always teach my children against. But we also have to consider how people might not feel the same way about sharing their stories. Why talk about how you stopped your education in the 4th grade?
There are groups of people who do not work on their visibility at all. Therefore, for the media, that requires a lot of knocking on doors. But I also think it is one of the duties of the entrepreneur to create opportunities for others to learn from his or her experiences. I am currently doing just that. I appear as a guest speaker on others’ platforms and also use my own endeavors to get my stories across. I share my story as an entrepreneur so that young people learn from it. I believe that testimonials attract more people to the world of business.
What are the benefits of focusing on one line of business for many years compared to engaging in many?
Global entrepreneurs present that idea through the analogy of keeping your eggs in one basket versus in many. Each has its own merit and demerit. I like focusing on one line of business. Doing many things carries the risk of not doing enough towards what it takes to make the business a success. If you have too many businesses and you are not paying enough attention to each, there is no point in keeping your eggs in many baskets. Starbucks, for example, believes in expansion and upgrading, only. It’s just a one line of business, no diversification.
In what manner did you join the hotel industry?
It was more than 15 years ago and was not a preplanned endeavor, really. At that time, there was a well-circulated belief in the potential of the tourism industry and how the hotel business would thrive in support of tourism. So, we joined the business following others—like the common tradition of doing business in Ethiopia. We first built the first two blocks with four stories each and a total of 48 rooms. Then, we bought adjacent lands for an additional 75 rooms and did the same thing again for a further 75 rooms. We slowly grew into the business with almost 200 rooms even though it was not well planned before starting.
How did your hotel cope with the shock of Covid and other challenges?
We have a strong management team and they did a great job. They partly cut costs and targeted local customers. Now, the hotel management team is moving forward with ambitious goals and budgets for the coming years. So, yes, it was challenging, but we managed to maneuver very well.
What about your real estate business?
Similar to how we started the hotel business, it was not a well-thought-out business exercise. As it was being done by many others at the time, we just jumped in and have delivered 101 housing units. But for me, it was not a profitable business as such as it was challenged by bureaucratic bottlenecks, inflation, and the lack of in-house managerial experience. There was even a time when the garment business had to subsidize it. But the community that has been created at the site has been really meaningful in my business life and has introduced me to various people that are always thankful to what we have done. That has given me something I enjoy more than the financial benefits.
Should we expect Ambassador suits going beyond borders?
Ethiopian law does not allow you to take your financial resources out of the country and invest elsewhere. We especially think about expanding in the region but the law of the land is restrictive. It might have benefited us thus far but we have to ease some of those tight rules going forward. Such a burden of unemployment cannot be resolved by local investors only. We obviously need outside help.
In Ethiopia, it is not easy to get your dividends. In other countries, your share in an investment allows you to take out dividends or reinvest very easily. The security aspect is also making international business collaborations more difficult than they should have been. The country’s credit score on the international level is also another matter. Foreigners also assess access to loans. They consider all that before they come here for collaboration and work.
How do you dispense your corporate social responsibilities?
We usually respond to governmental calls on various matters. Beyond that, in the town where I was born, we have built a school and mosque. Under my mother’s name, I have also built a youth center. We have also sponsored entrepreneurial contests in support of youth start-up initiatives. Even though not under a distinct department, we try to give back to the community and country that raised us.
What are your business plans for the near future?
We will expand and continue in real estate. I think we will also have another mall like the one we are in right now [which is in Addis Ababa’s Arat Kilo area, near the House of People’s Representatives]. And we will definitely expand in the garment business—avoiding polyester and trying to focus on wool. We also have plans for developments in Mekelle, Debre Birhan, Adama, and Hawassa. So, there will be more expansions in all the areas and we are already engaging our plans.
What is your advice for young people, whose lives are being challenged by the various conflicts in the same way yours was back in the days?
I grew up at a time when the Dergue regime was at war with the [Tigray People’s Liberation Front] TPLF and [Eritrea People’s Liberation Front] EPLF. At some point, tanks, gun shots, and death became the everyday actuality. That was my reality in my youth. When the harshness became the new normal, I realized how I could focus on what I actually wanted to achieve. Not just that war, even the current war in the North has affected me in a lot of ways. But I focus on what I want to achieve and don’t get involved in politics.
There is a lot of focus on the hate messages circulating on social media. We need to minimize that. So, my advice to the youth that has to deal with such a harsh reality is to focus on work—no matter how hard it sounds. But, for the elites who are pulling the strings on both sides, I think it is better to see the damage that has been done and try to resolve the matter through discussion.
We inherited wars from our parents and now, our children are inheriting wars from us in the same way. No one ever thought it would be easy for countries to go to war after the second World War as the elites who pull the strings know how Germany and the entire Europe built their economy after that war. They understood the need of staying away from conflict as the first and major step towards realizing the level of development which they have reached since the war.
Do you know the difference between the war that happened when I was a kid and the one that is going on now? Then, the nation was full of uneducated people. As such, both the decision to go to war and the causalities are understandable. Now, the people making the decisions are university graduates, and the kids being killed are university students. That is shocking!
There is a local saying that talks about how you should let the rat go for the sake of the mitad [or griddle, a locally made clay baking pan]. Let somethings go for the greater good of the generation and economy.
What do you see when you look into the future?
I am a cautious optimist. In fact, we are cautious in our budget and all of our business decisions. The future is challenging, but it is brings many more opportunities. I urge the government to focus on the economy. The youth that is throwing hate at each other needs to build something that they will be obliged to protect. Someone that has something to protect doesn’t throw stones on others. We also need to focus on national dreams; groups are now dreaming their own dreams. We need one big national dream for all of us to be united to work towards; in fact, this is where government comes in. They need to strategize this effort and create a social movement. Ten millionaires are not going to change much. I believe a national social movement towards an agreed up on national dream would change the course of history. That’s how South Korea did it. EBR
10th Year •July 2022 • No. 109