Tuesday
July 12
2016

Randall Kempner

Getting Silicon Valley Behind Development: First, change its attitudes

let’s focus our collective capital, energy on businesses that turn out more than profit

On my way to the second morning of the 2016 Global Entrepreneurship Summit (GES), I took an Uber. Originally from Bolivia, my driver had fully embraced the Silicon Valley ethos — even its extraordinary “valley-centricity.” My evidence: as we were discussing Facebook founder Mark Zuckerberg, who was scheduled to speak the next day at GES, he looked into the rearview mirror and earnestly asked, “Can you imagine that Facebook was started so far away, like in Massachusetts, right?”

My surprise at his amusing myopia was only magnified later that day by comments from a venture capitalist in the Valley, who seemed summarily — and surprisingly — to dismiss social entrepreneurship as “meaningless” in a public session. When discussing social entrepreneurship, he said that it conjured images of “investing a million dollars to build a well in the Congo,” which, he argued, “could never be sustainable.”

Well, I guess some in Silicon Valley have much to learn. First, it doesn’t cost a million dollars to build a well. More importantly, social entrepreneurship, at its core, is all about creating sustainable entities. Indeed, social entrepreneurship is different from traditional charitable models because it is predicated on building earned revenue models that are  neither reliant on donations, nor funding from venture capitalists. It is different from traditional entrepreneurship because it explicitly places social impact as a primary goal of the business. Addressing a social or environmental ill becomes not an unintended or tangential outcome of firm operations, but an intentional goal. Such intentionality doesn’t mean that you can’t earn profits, offer high investment returns, or even become a “unicorn.”

It does mean that you have to care about value creation beyond the financial return. Happily for the world, more and more entrepreneurs and investors (even some based in Silicon Valley) are embracing an explicitly social mission.

This trend comes at an opportune time, as the world still desperately needs the passion of entrepreneurs to find solutions to our social and environmental challenges. To name a few…

  • 800 million people are malnourished
  • 1.8 billion do not have access to reliable clean water
  • 2.4 billion lack access to basic sanitation
  • 3 billion rely on wood charcoal or animal waste for cooking or heating

These challenges are laid out in the United Nations Sustainable Development Goals, which have been embraced by the global development community. In response to these challenges, the UN led an inclusive process enumerating 17 global goals that collectively represent a vision for how we can transform the world into one free of poverty, hunger, environmental degradation and preventable disease. Certainly, to quote a favorite Stanford Graduate School of Business’ author Jim Collins, “these are big, hairy and audacious goals”.

And there is no way we’ll achieve them without supporting entrepreneurs who see market opportunities in serving these massive human needs. History has shown that government programs and charity will not be enough to build the prosperity we seek. We need market-based solutions, implemented by innovative firms to be part of the answer.

And, here we do have much to learn from the Silicon Valley experience. Silicon Valley has become the global center for entrepreneurship because it has developed the assets, networks and cultural values necessary to promote risk-taking and innovation. It has world-class educational institutions, federal research institutions, capital providers, business accelerators and a beautiful climate that helps attract human capital. Over time, these assets have become increasingly interlinked as multiple formal and informal networks have formed to ensure that firms with good ideas are able to find the financial capital that fuels their growth. A key element of this interconnectivity is the underlying culture in the Valley that embraces risk-taking, accepts failure as part of the learning process and publicly celebrates entrepreneurial success. The Valley has an incredibly productive and self-reinforcing entrepreneurial ecosystem.

Such a system may well be impossible to fully replicate in other places — especially in less wealthy, emerging market regions. However, as demonstrated by the hundreds of emerging market-based entrepreneurs at GES, entrepreneurial talent and passion can be found everywhere. And in today’s age, capital can be shared at the stroke of a computer key. So, too, can insight from experts and mentors based in countries far away.

Emerging market social entrepreneurs often struggle most because they can’t build teams to grow their businesses. Without strong management teams, investment capital will not flow. The ideal scenario is to help build the educational infrastructure in emerging markets so that social enterprises can find and retain local talent, and build an underlying entrepreneurial culture.

There are a number of long-term initiatives under way, including Stanford Seed and the African Management Initiative. The organization that I run, the Aspen Network of Development Entrepreneurs (ANDE), recently released its report on the state of the small and growing business sector. Finding talented managers is still a pain point in scaling enterprises: a mere 22 percent of ANDE members provide non-financial support such as talent placement. Yet, these enterprises demonstrate a clear social return, already making strides in health and well-being, gender equality, affordable energy and clean water. It’s time to focus our collective capital and energy behind businesses that turn out more than just a profit.

We can challenge ourselves to overcome these hurdles and help to close the talent gap which persists globally for all businesses by sharing lessons learned. BiD NetworkPUM Netherlands senior expertsPartners In Food Solutions, and Silicon Valley-based RippleWorks are only a few examples of organizations that are helping with talent-transfer.

The solutions to our global challenges will not come from Silicon Valley, alone. But Silicon Valley can share its insights, its capital and its culture — and make money — assuming we can get more of its leaders to embrace a broader and more global perspective on entrepreneurship. As Youssef Chaqor, founder and general manager of Kilimanjaro Environnement, which recycles used cooking oil into biodiesel, told the GES audience:

“Your impact could be bigger. Stop looking at just the 60 mile (area) of Silicon Valley.”

Top image: President Obama, Facebook CEO Mark Zuckerberg, and three entrepreneurs – Mai Medhat, Jean Bosco Nzeyimana, and Mariana Costa Checa – sit on a panel at the Global Entrepreneurship Summit, held on June 22-24, 2016 at Stanford University in Palo Alto, California. Image by GES/Flickr.

 

Randall Kempner is executive director of the Aspen Network of Development Entrepreneurs.

This post was originally published in the Financial Times’ beyondbrics blog and is republished with permission.

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Entrepreneurship
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events and competitions, investment, small and medium enterprises, social entrepreneur, technology