In 1602, the Dutch government granted the British East India Company (BEIC) a 21-year monopoly to trade in Asia. BEIC was a two-year old enterprise at this point and their assets were limited to the four ships in the fleet. In order to expand into Asia, they needed enormous amounts of capital to fund long-distance voyages and maintain ships. Historically BEIC raised capital from merchants on a per-voyage basis but given the scale of the opportunity and enduring road ahead they required permanent funding and lots of it. To raise the necessary funds, they sold shares to the public and paid dividends based on the success of ventures, making it the first-ever initial public offering. VOC, their initial equity offering, gave merchants permanent equity in the entirety of the British East India Company business and provided BEIC with the necessary backing to explore far eastern territories on multi-year voyages. Thus the Plunder for Profit business model was now accessible to the general public.

Over 400 years later, the Pirate Stock Exchange found in Somalia has managed to preserve a good deal of the Dutch East India Company’s original spirit.

Harardhere: The Forgotten Town

After the fall of the Somali government and President Siad Barre in 1991, Somalia descended into civil war. The central government collapsed, and the country fragmented into different regions controlled by warlords, clans, and militias. Harardhere, being a remote and coastal town, became largely isolated during this period of chaos and lawlessness.

In the absence of a central government, Harardhere fell into an anarchic state. Primary education rates amongst school-aged children fell below 15%, infrastructure and healthcare were virtually nonexistent and sustainable, legitimate sources of income were nowhere to be found.

In a place like Harardhere, many would join private gangs to avoid a life of militancy, poverty and petty theft. Further inland, Somali gangs generated revenue from extorting local businesses, kidnapping for ransom and clan-based resource control.

In Harardhere none of the pre-existing methods of value extraction were available due to a lack of high-value kidnapping targets (no government presence and lack of industry), resources were largely perishable or commoditized (fishing was the main export) and stealing from local businesses was not profitable enough to be the sole source of income.

Harardhere did have two things going for it:

-Strategic access to high traffic shipping routes

-Boats and experience navigating the Eastern Somali coastline

Harardhere is located directly on the coast of the Indian Ocean and under 150 miles from the strategic Gulf of Aden, which links Europe to Asia through the Red Sea. The Gulf of Aden services 20,000 ships annually and 55 ships per day on average. It is particularly vital for energy transport, with a significant percentage of the world’s oil and gas supplies passing through the region.

Harardhere also had a surplus of skiffs which were used to fish for tuna, sardines and grouper along the Eastern Somali coast to be sold to markets in the Middle East.

As the town collectively realized the Somalian government was too preoccupied with quelling the burning embers of Islamist extremism to support them, many decided it was high time to capitalize on their #1 export: piracy.

Finding PMF: Pirate Market Fit

“Move fast and take risks.” – Mark Zuckerberg (and also Somali Pirates)

The Somali pirates of Harardhere were fully bootstrapped to start.

The maiden voyages were haphazardly staffed and resourced– typically funded by petty theft and equipped with stolen supplies. Pirates came brandished with any threatening objects they could find and vessels were outfitted with oars rather than engines.

read more at the url : )