Social Entrepreneurship By Those In Developing Countries

The ‘Invisible’ Entrepreneurs

Social entrepreneurs from developing countries are seldom known. This is hardly because developing countries lack entrepreneurial talent; it is because many, especially those who have initiated entrepreneurial projects to lift themselves out of poverty, simply go unrecognized. The field of social entrepreneurship conventionally gives recognition only to MBAs and investment bankers, the elite group who have acquired specialized training in an institutional setting, but not to the poor and disenfranchised. It is time that they are recognized as legitimate practitioners of social entrepreneurship, and be given the necessary support and resources. No longer satisfied with just being the clientele of social ventures, the poor, too, want to participate actively in improving their own lives.  

Social Entrepreneurship: A Survival Tactic for the Poor

"The true social entrepreneurs are ghosts that never claim the glory for themselves, that work for their goal like their lives depend on it, because actually, their lives do depend on it. They don’t work to be counted. You don’t find them in congresses, seminars and forums. They don’t read literature about social entrepreneurship; they don’t study it. They just are social entrepreneurs because they need to be. They live for it and by it.”– John Alexis Guerra Gomez

For many of the poor, social entrepreneurship is a vocation of necessity, not of choice. In an effort to eke out a living, many rural poor have unknowingly become what Western academics term social entrepreneurs. These entrepreneurs have low or maybe even zero visibility in the field of social entrepreneurship because they do not actively engage in public relations, or they do not have resources like Internet access or even the necessary language skills to discuss their ideas. Yet, they are contributing in significant ways to the betterment of their communities. Their social ventures may not achieve a scale significant enough to trigger a paradigm shift, as is conventionally the desired outcome of social entrepreneurship, but they nevertheless still have a huge impact on their immediate surroundings, especially on the poor people around them.

Contrary to popular belief, most poor people do not want to get by on charity; they want a sustainable way of making a living. Given the tools and resources, they too can become successful social entrepreneurs. Only when they can generate a consistent income to guarantee their own financial security, and their own families’ economic stability, are they then willing to use their skills and resources to serve others in the community through their social ventures. “Individual ownership is the key to sustainable economic development,” says Kickstart, a nonprofit that fights poverty.

Community Members as Social Entrepreneurs

It is common perception that most social ventures are initiated by foreigners who see a social problem and decide that something should be done. However, local people cannot and do not rely on the initiative of foreigners. Instead, local people themselves take the initiative to develop their own entrepreneurial plans of action in response to social problems. Moreover, they possess unsurpassed experience and knowledge of their immediate surroundings and needs, and therefore are in a good position to take action.

A powerful synergy can be created by harnessing the entrepreneurial talent of local people to develop social ventures in collaboration with social entrepreneurs from developed countries who can provide the funding and other resources. Unite For Sight, for instance, depends on such a synergy for its success; it cultivates and invests in the talent of local eye care leaders who have the determination and skill to create social enterprises that serve their community's poorest people. Unite For Sight's partners include Ghanaian ophthalmologist Dr. Thomas Baah, who founded Save The Nation's Sight Clinic to bring eye care to the doorsteps of the rural poor. Unite For Sight is also a partner of Kalinga Eye Hospital in Dhenkanal, Orissa, India, which was founded by Sarang Samal to provide low cost, high quality eye care to some of India's most difficult to reach patients.

Karrus Hayes, a Liberian refugee and the founder of “Vision Awake” Africa For Development, is another example of a “local” social entrepreneur. The 1989-1997 Civil War in Liberia was a period of unimaginable turmoil. Fleeing for their lives, thousands of Liberians have now settled in refugee camps in neighboring countries. But the living conditions in these camps are often deplorable, and residents suffer from the effects of poor sanitation, polluted land, and contaminated water. In one such refugee camp, Buduburam Refugee Camp in ghana, Karrus Hayes realized that many children could not go to school. Seeing an unfilled education need, he decided to set up a free school. He had no money, but he had an entrepreneurial spirit. With a loan of $50 and some donated church space, he started the refugee camp's only tuition-free school for needy children. Today, his organization runs several programs, including a community college, microfinance and orphan assistance programs.

“It really touched me, but I didn’t have control over it…I’m a refugee too. I don’t have any means of helping. But I knew that I would do something because I had an idea.” – Karrus Hayes

 Supporting Local Entrepreneurial Talent

“To define people by their conditions rather than their abilities is dehumanizing. When you look past the poverty, you see abilities, resources, and desires. The poor are extremely hard-working and entrepreneurial – they must be just to survive. They don’t want or need to be rescued. They want an opportunity to create a better life for their families.”

It is clear that local entrepreneurial talent should be nurtured and developed. In order to do so, the field of social entrepreneurship must reach out to the “invisible” social entrepreneurs whose talent remains untapped. Ashni Mohnot has several ideas on how this could be done. In particular, she suggests that entrepreneurship conferences, like the Skoll World Forum, should encourage participation from these “invisible” social entrepreneurs in developing countries. More funding should also be made available locally to fund their social ventures.

The Role of Innovation

Social Entrepreneurs as Engines of Innovation

Just as business entrepreneurs are willing to take risks and play around with ideas until they find one that works, social entrepreneurs must dare to innovate even if it means treading where no one has ventured before. Of course, not all social innovations are successful. But even so-called failures are usually blessings in disguise because they inform the social entrepreneurs what to avoid in a future enterprise. Since social entrepreneurs often work in a variety of different social contexts throughout their career, with each new situation demanding a different approach or even a different solution, they must be flexible in the way they think and approach problems.    

Innovation – A Tool to Better the Whole Society 

There is no doubt that innovation plays a vital role in any entrepreneurial enterprise. While the ability to generate innovative ideas is important, this alone cannot make the social entrepreneur successful. Many people can think creatively and generate a lot of ideas, but many tend to rest on their laurels once their own problems are solved. According to William Drayton, the social entrepreneur effects a paradigm shift in the whole society:

“There are many creative, altruistic, ethically good people with innovative ideas. However, only one in many thousands of such good people also has the entrepreneurial quality necessary to engineer large-scale systemic social change. Entrepreneurial quality also does not mean the ability to lead, to administer, or to get things done; there are millions of people who can do these things. Instead, it refers to someone who has a very special trait -- someone who, in the core of her/his personality, absolutely must change an important pattern across his/her whole society. Exceedingly few people have this driving motivation. Most scholars and artists come to rest when they express an idea; many managers relax when they solve the problem of only their company or institution; and most professionals are happy when they satisfy a client. It is only the entrepreneur who literally cannot stop until he or she has changed the whole society.”(1)

A Case in Point: Andrew Carnegie & the Birth of the Library System

“Imagine that Andrew Carnegie had built only one library rather than conceiving the public library system that today serves untold millions of American citizens. Carnegie’s single library would have clearly benefited the community it served. But it was his vision of an entire system of libraries creating a permanent new equilibrium – one ensuring access to information and knowledge for all the nation’s citizens - that anchors his reputation as a social entrepreneur.” (2) – Roger L. Martin & Sally Osberg in the Stanford Innovation Review

Social Entrepreneurship and Eye Care

Unite For Sight supports eye clinics worldwide by investing human and financial resources in their social ventures to eliminate patient barriers to eye care. The village and slum communities where Unite For Sight and the eye clinic partners now work had not previously had access to eye care due to many patient barriers. Unite For Sight's model enables the local ophthalmologists to create real change and a sustainable impact for those living in extreme poverty. With Unite For Sight's support, the local ophthalmologists develop and lead eye care programs that provide high quality, cost-effective care to the world's poorest people.

Unite For Sight’s programs are sustainable because emphasis is placed on nurturing and developing local potentialities so that eye clinics can meet local eye care needs on a long-term basis. Unite For Sight provides the necessary support to cultivate leadership, talent and ideas among its eye clinic partners. Not only are eye care programs led by local staff, but local volunteers are also trained to serve as support staff at local eye clinics. To nurture local talent, visiting specialist volunteers, such as ophthalmologists, optometrists and ophthalmic nurses, provide training to local specialists. Unite For Sight’s model is able to significantly increase the number of surgeries provided by local eye clinics annually. 

Unite For Sight works with partner eye clinics to provide local solutions, identifying, and overcoming community-specific barriers to effective healthcare delivery, such as transportation and communication. Patients are transported to and from the eye clinic. Moreover, local community leaders and members are involved in outreach activities, raising awareness and providing education regarding eye care to those who would otherwise not have access to eye care. Unite For Sight’s model has been employed successfully in a variety of different social contexts in Ghana, Honduras and India.

Social Entrepreneurship vs. Charity

Social Entrepreneurship: Not Just Charity

Social Entrepreneurship cannot be confused with charity. While charity reflects the benefactor’s compassion for humankind and is measured in terms of the generosity of donations to the less fortunate, social entrepreneurship reflects more than the good intentions of its practitioners, who are not merely driven by compassion, but are also compelled by a desire for social change. Oftentimes, charitable organizations survive at the mercy of their donors whose contributions vary with the economic climate. A nonprofit that practices social entrepreneurship, on the other hand, relies less heavily on donor funds because it creates social programs that are meant to be self-sustaining. Social entrepreneurs manage donor contributions in an effective manner, investing in social ventures which can then generate their own revenues to sustain themselves.

In other words, while charity uses donor funds to buy food to ease the poor’s hunger, albeit only temporarily, social entrepreneurship uses its funds to make a lasting social impact, creating instructional programs that teach the poor how to grow their own food so that they can take care of themselves in the long run. In a world of scarce resources, it is no longer enough to simply donate out of good intentions. Rather, Greg Dees emphasizes the need for people to value the social impact that their donations are actually having:

“In society, I’d like to see more value placed on social impact and success than on good intentions or effective marketing or the severity of the need you’re claiming to serve. I’d like to see a fundamental change in ethics or culture around that. We still have the lingering effect of a culture of charity, which honors people for their sacrifice—how much they give and the purity of their motives. The word charity comes from the word “caritas,” which is Latin for love or compassion. We’re rewarding people for demonstrating their love of humankind, but we’re not often looking to see whether it has the intended impact. So I’d love to see an ethics change, so that we honor people for the impact they’ve had directly, or indirectly in choosing to support programs and organizations and individuals that have had impact, not just for how much they give or how generous they are.”

Moreover, social entrepreneurs have to identify opportunities that have the potential to change the world. In the words of Martin J Fisher & Kevin Starr, the authors of Real Good, Not Feel Good:

“We can no longer afford to spend scarce funds on things that simply feel good. Instead we need to support initiatives that do real good, and that have the potential to generate large-scale and lasting solutions to the world’s biggest problems.”

What Makes a Social Entrepreneur?

Social entrepreneurs are:

• Social Catalysts – They are visionaries who create fundamental social changes by reforming social systems and creating sustainable improvements. According to J.Gregory Dees, “though they may act locally, their actions have the potential to stimulate global improvements in their chosen arenas, whether that is education, health care, economic development, the environment, the arts, or any other social field.”

• Socially aware – Social improvement, as opposed to the creation of profit, should be the ultimate goal of the social entrepreneurs. The success of their endeavors is measured by their social impact, not by the amount of profits generated.  

• Opportunity-seeking – They pursue their goals relentlessly, seeing every obstacle as an opportunity to develop and fine-tune their business models. 

• Innovative – They are creative, willing to think outside the box and ready to apply ideas to new situations. They understand that not every innovation will be a success, and they see failures as learning opportunities even as they strive for success.

• Resourceful – Their visions are not limited by the resources that they have. Besides optimizing the use of existing resources, they actively expand their resource pool through collaboration with others.

• Accountable – Social entrepreneurs are accountable to their beneficiaries, and they often ask themselves, “Am I creating value for the people I am serving? Do I understand their needs?” This is because social entrepreneurs want to know that they are actually making an impact. They are also accountable to investors who want to know that their contributions are indeed stimulating social improvements as promised by the social entrepreneurs.

More 'Patient Capital' for Social Ventures

An increasing number of venture investors are hunting for small companies that could yield social benefits as well as high profits

Gaia Herbs sounds like an unlikely candidate for venture capital. Ric Scalzo, a medical herbalist, founded Gaia in 1986 to produce, distribute, and sell organic supplements. The $16 million, 125-employee firm prides itself on its commitments to improving society, including funding education in the South Pacific islands and Sumatra, where the company sources some of its herbs. The alignment might sour most VCs, who train a strict eye on bottom-line benchmarks. Nonetheless, Gaia, in Brevard, N.C., received a $3 million venture investment in July to develop new products and expand its reach in the fast-growing natural products market—and for Gaia's new investors, Scalzo's social mission was a selling point.

"They have such an aligned vision with the growth and development of Gaia," Scalzo says of his new partners at TBL Capital, a venture firm in Sausalio, Calif., dedicated to funding companies with social missions. Venture capital fueled the companies that revolutionized such industries as semiconductors, biotechnology, and the Internet. Now venture capitalists want to use the same combination of financial might and business savvy to stem global warming, create jobs, and alleviate poverty. The idea of putting VC-style investing to work on social problems has been around for the better part of 20 years. What's changing, VCs say, is how much interest in social enterprises has grown—among both investors and consumers.

Indeed, a growing number of venture investors want to back companies that, in addition to financial returns, will also yield environmental or social benefits—a model called the double- or triple-bottom line. "The market has moved in our direction," says David Kirkpatrick, co-founder and managing director of SJF Ventures in Durham, N.C. He says the 10-year-old firm, with $45 million under management in two funds, has been investing in growth-stage companies that create jobs in low-income areas as well as such industries as clean technology "before it was cool."

Potential Social Impact

No one can say exactly how much social venture capital has been invested, partly because exactly what constitutes a social venture is hard to define. Many VCs who are agnostic about portfolio companies' social missions have nonetheless poured millions into ventures with other benefits—clean-energy companies, for example—because they see market opportunity.

On the other end of the spectrum, nonprofit funds such as the Acumen Fund make loans and investments based more on their social impact than on financial return. For example, Acumen has backed A to Z Textile Mills, a Tanzanian manufacturer of antimalarial mosquito nets, which now produces more than 16 million of the lifesaving nets each year at a final cost of about $5 per net. But even the line between Acumen-style enterprises and for-profit ventures is blurring, as entrepreneurs seek new markets in what University of Michigan professor C.K. Prahalad famously called "the fortune at the bottom of the pyramid." Investors have formed entire VC funds, such as the Monterrey, Mexico-based IGNIA, to back for-profit companies serving these markets.

Joshua Humphreys, director of the Boston's Center for Social Philanthropy, has tracked at least $7.3 billion invested in 100 socially responsible alternative asset funds, which include venture capital, other types of private equity, and hedge funds. Of that, he estimates that $5 billion 10 $6 billion is venture capital. That's still a small chunk of the VC world, which invested more than $28 billion in 2008 alone. But it includes funds from such marquee VC firms as Kleiner Perkins Caufield & Byers, a firm that backed Google (GOOG), Amazon (AMZN), and Intuit (INTU), and now counts Al Gore as a partner. "The brand-name, top quartile funds are investing in the very space we're investing in," says SJF Ventures' Kirkpatrick.

No Need for a Tradeoff

While some social VCs concede that they will accept lower financial returns for social benefits—particularly those who back nonprofit ventures as well as for-profits—others don't see the need for a tradeoff. Kirkpatrick says SJF Ventures has the same investment expectations as traditional VC firms, because his firm backs companies that have social and environmental benefits "fully baked into a sustainable business model," rather than as an add-on that they have to balance against making money. "SJF's focus is no compromise, financial or mission," he says.

The key difference between social VCs and those purely seeking profits is that mission-driven investors provide "patient" capital, says Mark Finser, general partner at TBL Capital, who raised the $50 million fund in 2007. "The highest tolerance is in their time horizon," Finser says. His fund, mostly raised from high-net worth individuals, invests in "companies that will be game-changers in that particular industry," he says.

Investors and entrepreneurs are still trying to resolve big questions about how to apply the venture capital model to social enterprise. For one, there is no clear way to quantify social and environmental impact so investors can measure their nonfinancial returns, though such tools as the Acumen Fund's Portfolio Data Management System and consulting firms such as Social Venture Technology Group attempt to do so. Another question for social VCs is what constitutes a socially responsible exit—that is, how can a portfolio company retain its social mission through an acquisition or public stock offering? "This is an experimental phase right now," says Meredith Walters, senior associate at social venture firm Good Capital in San Francisco. "People are trying different things. There's no accepted way to do it."

But it's clear that venture investors are becoming more interested in social entrepreneurs—not just in their products but also in their missions. Some industries in particular, where investors see potential for big profits and big impact, have received more attention than others: clean energy and green, organic, or natural foods and consumer products are especially in vogue. "There's more attention in this space, and with attention, more investors want to participate," says Deb Parsons, business development director at Investors' Circle, a network of angel investors, VCs, and foundations involved in socially responsible investing. "It becomes less a fringe and more acceptable. In a few years it'll be closer to mainstream."

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Advances in technologies are propelling societies into the future but not every country is progressing equally. The most developed countries have a distinct technological advantage and poorer nations are being left to fend for themselves on the wrong side of the digital divide. This latest blog is designed to examines the reasons behind this chasm of digital inequality and what can be done to close the gap.

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How Search Engine Works ?

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Entrepreneurs are... lazy?

I’ve seen it argued that “laziness” is one of the most essential traits of some successful entrepreneurs because it leads them to innovate.  They don’t complacently accept “the way it’s done,” if they can figure out an easier, faster way to get the same result.  Shawn Fanning revolutionized music by creating Napster because it was easier – period.   Every song you want, with the click of a mouse?  Sure beats dragging your butt out of bed, leaving your dorm room, catching a ride down to the local record store or mass retailerand actually paying for the CD.  That, folks, is an innovation that can lead to efficiency, expediency and – you guessed it – success.

But it begs the question:

Whether it’s laziness, impatience or simply a refusal to accept the status quo - do these entrepreneurs become successful DESPITE their flaws, or BECAUSE of them?

As the recession teeters between decline and recovery, many new would-be entrepreneurs are created with every massive round of corporate layoffs and every graduating class of students that can’t find a job.  Instead of encouraging them to discover what they love to do and follow it, perhaps we should be encouraging them to discover what they HATE to do – and find a better way to do it.

I’ll be interested to see what aspects of the mundane – tasks we accept as they are because “that’s the way it’s always been done” – are pushed further up the evolutionary ladder by some bright, innovative, creative – and yes,maybe lazy – new entrepreneurs.

What do you think – is “laziness as motivator for entrepreneurial spark” a valid theory?  Disagree with me?

Let me know what you think in the comments.

Entrepreneurial Justice

Judicial activism, Roe Vs. Wade, civil rights, constitutional interpretation – these are all topics that Judge Sonia Sotomayor has been grilled on in determining her fitness to sit on our nation’s highest court. Pretty much since the nomination of Judge Robert Bork, the confirmation process has morphed into a dance of disingenuous rapport and obfuscation that is more about surviving the process than full disclosure.

Senator Lindsey Graham summarized best what the process has devolved into when he stated: “Unless you [Sotomayor] have a complete meltdown, you are going to be confirmed.” How comforting it is that such matters of national interest are a fait accompli.

If however we found a way to return to a civil and intellectually honest process of discovery, I would add to the lens of appraisal topics that you hear of rarely, if ever, yet are arguably of equal social importance as the list above. I am referring to policy matters that are routinely being born or bastardized in response to knee-jerk reactions within the courts of public opinion. Recent examples would include such over reactions as Sarbanes-Oxley or the unfortunate absence but much needed legal reform of our patent laws as well as convoluted responses around immigration.

All of these topics are impacting the engine of entrepreneurship that drives our economy, with significant socioeconomic consequences themselves. Yet, you won’t hear any of our elder statesmen ask a Supreme Court nominee, “What have you observed as the unintended consequences of the Sarbanes-Oxley Act of 2002, and what, if any, remedy would you propose?”  Sadly these matters languish in obscurity because they lack loud, influential financially-organized, advocates to bend the political will of those who stand in judgment. Instead of knocking down the barriers that impede the birth and growth of high-impact entrepreneurial ventures, we perpetuate the status quo because that has become the politically expedient thing to do.

Alas, we can dream of a day in the future when we can have an informed public dialogue around the contribution of immigrant entrepreneurs and its influence on the growth of our economy. We can debate on how the patent laws have not kept up with the pace of innovation and are now actually stifling the commercialization of invaluable intellectual property. And we can have the courage, even in the midst of the worst economic crisis since the Great Depression, to state that oversight and regulation (such as Sarbanes-Oxley) born in haste to placate the uniformed masses is having a chilling and destructive impact to the entrepreneurship that this country was built upon.

Thankfully, Kauffman, the Foundation of Entrepreneurship, is not sitting idly by wringing our hands. We have commissioned the single largest collection of economic research on entrepreneurship that provides the justification for new bold thinking. For policy makers and influencers that are courageous enough to read it and act upon it, we are ready to stand with you to answer those that may challenge with jaundice interpretations. That may however require the rare characteristic of thinking beyond self-interest while understanding that supporting entrepreneurship benefits all of society.

For those hungry for more, stay tuned. This fall we will be launching a movement that will give a voice to this cause. We will rescue entrepreneurship from the status of being the white noise of our economy. We will force upon the public conscious that entrepreneurs birth the new, create the jobs, and generate the wealth that will be required to pay for the sins of our past. Entrepreneurs are leading the recovery and soon everyone can join in this noble effort.

Innovation = Job Creation, it's a simple equation.

We are currently narrowing a field of 30 applicants for 12 availabl Postdoctoral Researcher/Entrepreneurship Fellowships. The basic premise is that we are selecting a dozen incredibly bright folks from science, technology, engineering and medical fields, and we are going to help them accelerate their particular technology of interest into commercial application – technology commercialization as it is known. On a side but related note, we have also partnered with the National Postdoctoral Association to sponsor the Kauffman Foundation Outstanding Postdoctoral Entrepreneur Award and the Emerging Postdoctoral Entrepreneur Award. 

As I had the pleasure of being among those interviewing these incredibly bright individuals, a few things became quite obvious. First, and probably most significantly of any other general characteristic I gleaned, was the high percentage of immigrants. And they came from all over the world – India, Iran, Italy, Finland, Germany, and Scotland just to name a few from my group of interviewees. As it turns out, around 75% of the total field were immigrants. Keeping in mind that applications were from US-based schools, I found this to be astonishing. 

Obviously that speaks well of our schools that there is such demand, but it also speaks to the entrepreneurial ecosystem in this country as most of these individuals see their best path to commercializing their technology is in the U.S. That is not to say, however, that there isn’t much more that we could and should be doing to encourage even more activity, but that is a subject for another post. 

Another interesting observation was how many of these immigrant scholar entrepreneurs are already well along their way to building companies – several of which already employing others. And rest assured that with the innovations they were promoting in the fields of therapeutics, medical devices, environmental controls, etc., we aren’t talking minimum wage, dead-end jobs. 

I know that immigration is touchy subject, and we have certainly published our share of research on this space; but the undeniable fact is that commercializing innovation leads to job creation, which restores the health of our economy. Those that would push out or prevent this source of growth to our economy would be cutting off their xenophobic nose to spite their face. If I had my way, we would staple a green card to each and every diploma from anyone graduating in any of these promising fields. 

After all, they may very well bring the innovation to the market that saves your life some day. And if that day should come, I doubt that you will be overly concerned if it were invented with an Asian, European, or Middle Eastern accent. 

As always, I am happy to hear supporting and opposing views – that’s what the comment button below is for.

The Lost Word on the Economy

While pundits, columnists, economists, and policy makers climb over mountains of financial data, looking for signs of recovery and politically convenient scapegoats upon which we can turn a distracting public focus of populist rage and class warfare, there is a quiet but steady vibration of activity that has the comforting quality of white noise – as well as the anonymity of it too.

This activity however holds many of the keys to our economic recovery yet it struggles to be heard, not unlike the piccolo section of an orchestra. Everyone seems all too eager to focus on the loud drums and trumpets because they are loud. Yet it is the fairer woodwind instruments that take on the more challenging task of adding depth and complexity to a movement. Likewise, entrepreneurs have added depth and vibrancy to our nation’s economy since its founding; yet they are all but non-existent in today’s discourse on policy and stimulus priorities. For example, with over 177,000 words and a price tag of $850B, the stimulus plan makes only one generic use of the word entrepreneur as part of broadband spending.

Quietly and largely underrepresented, entrepreneurs have become the white noise of our economy – nondescript yet comforting and generally assumed to be omnipresent; until such time they are not. They do not stand in line with hat in hand asking for a bail out. They do not take the work and value of others, packaged in incomprehensible get-rich-quick schemes to dump on unsuspecting investors, while lining their own pockets through incredulous compensation plans approved through gross incompetence in the best case, willful misconduct in the worst cases.

They also do not have, with few exceptions, strong and organized lobbies or advocacy groups. Too often, policy makers and others lacking the attention span or intellect to understand the distinction, lump entrepreneurship and small business into one ubiquitous ball of taffy – conveniently stretched when necessary yet easily wrapped and shelved for another day. The previous administration couldn’t pronounce the word entrepreneur; but the Obama Administration appears to be, for the moment at least, missing a golden opportunity. They are looking for a “two-for” by increasing loan guarantees via the SBA. That type of funding is but one small way to support a smaller fraction of the types of high-growth entrepreneurs that will build the companies that will ultimately grow our way out of crisis.

From early entrepreneurial pioneers like Carnegie, Edison, and Ford, our nation’s economic vibrancy and competitive advantage was born by individuals that saw opportunity where others did not, and built companies that employed thousands of individuals providing for the needs of others. And these efforts led a nascent nation from ‘up and comer’ status to the single largest economic power in the world. How distant of a memory that now seems with our own economic destiny abdicated to an international community all too eager to fund our deficits while we complacently turn a blind eye from compromising our own power of self determination.

For those who stand in opposition of wealth creation out of some misguided sense of social justice, please recognize that you can not build a manufacturing empire without employing throngs of people. And while the motive to become wealthy drives many of these people, it is their creation of wealth, the earnings of their companies, and the people and corporate earnings of everyone up and downstream of the supply chain, that pay the taxes that fund all of our ambitions; for better or worse. This wealth creation has also led to another uniquely American endeavor of forming private foundations that have provided immeasurable and invaluable benefit to humanity.

If you are still not convinced, consider that it has been about 1,000 high growth firms, many of which being started in prior recessions, that have led the job growth needed to grow our way out of past recessions. There is more than ample data to justify a significant and long-term prioritization of supporting entrepreneurship. We simply need to have the attention span and discipline to recognize the contribution of entrepreneurs.

Our policy makers need to look past their immediate self interest and awaken to the fact that helping entrepreneurs succeed is the smart thing to do, even if they can’t take credit for it. After all, a vibrant entrepreneurial ecosystem has a multiplier effect (entrepreneurial spawning) that really will put us back on the path of self reliance.

So let’s pull this word, entrepreneurship, out of white noise obscurity. Let’s remember that starting and building great companies that employ people and advance new innovation and productivity, is the surest way for us to pay for a future worth living.

We Get What We Incentivize

Over the last two decades, I have been involved in several entrepreneurial endeavors that employed over a thousand people collectively. I have interviewed and hired many over that period of time, including negotiating compensation packages. The one thing I have learned from doing that is, you get the kind of behavior from people that you incentivize.

This is painfully obvious in the current economic meltdown compliments of a financial industry (and a few others) acting in their own shameless self interest, bent upon immediate gratification at the expense of creating any long-term value. Who could have guessed giving a half million dollar mortgage to a person with little to no income, low or non-existent credit, without any money of consequence as down payment could lead to problems?

Which is to say nothing about leveraging such worthless devices in convoluted credit default swaps bought and sold by ‘experts’ that were either recklessly ignorant about the construct or willfully (and I hope some day to be proven criminally) turning a blind eye, all the while raking in bonuses that were paid independent of the overall profitability of the parent organization. On what planet does that make sense!?

The better question however is how this came to pass? And the answer is not really as complicated as many would like to make it out to be. In most cases, the mortgage industry was incentivizing volume of loan originations over quality. In the get rich quick ethos that led to the fall we all are now bailing out, people were paid for churning paper, regardless of the ability of the applicant to service the debt.

Now all of the blame doesn’t rest there. Political correctness should also get some credit here thanks to the race baiting bombastic rhetoric of policy makers that were shamelessly pandering to the interests of uniformed constituents that made for great uniformed clients - of the very groups that were funding said politicians at the time.

It was all very cozy and encouraged with a wink and a nod; current moral outrage and fist pounding rhetoric notwithstanding. Those who opposed these sleazy practices at the time were labeled racists for not wanting the same American Dream for all citizens. So many retreated lacking the conviction of character to stand up and call it what is was – wrong and ultimately dangerous.

So it is that I am now wary of the so-called stimulus plan, the TARP, and the various and sundry bailouts being handed out. I am concerned that lost in the minutiae is a basic and fundamental discipline of understanding how the individuals that will lead the efforts to rescue these troubled industries will be compensated. The AIG bonus fiasco shined a bright light on this, but we are unfortunately lacking the stamina, and in many cases, the qualified personnel to evaluate such intricacies influencing many other companies bellying up to the public trough.

Imagine if you will, if the SEC would be empowered to pay investigators competitive wages to Wall Street players. Imagine if they could receive six and seven figure bonuses for uncovering fraud and corruption. Ask any one of Bernie Madoff’s victims if they would have minded paying a government employee a million dollar bonus for discovering his deceit several years ago.

We need to start incentivizing good behavior over bad. We have to be smarter in rooting out systems that still reward rampant self interest at the cost of unsuspecting others. We need to get back to understanding that wealth creation comes from starting and building great companies that employ people and advance new innovation and productivity. This had been the backbone of our economy and our global advantage … until we lost our way. And the surest way of getting back on track is to pay people to do the right thing.

Interview with an Iconic Entrepreneur

One of the greatest gifts of my job is the opportunity to meet entrepreneurs. Born around the globe and bred from all walks of life, it never matters the entrepreneur’s background, nor does it matter the outcome of their venture—be it success or failure. From each entrepreneur I come to know, I glean a new sense of appreciation for this path they’ve chosen and learn even more about what makes these individuals so unique. 

A couple weeks ago, I was fortunate enough to talk entrepreneurship with Barnett Helzberg, Jr., former CEO of—you guessed it—Helzberg Diamonds. An iconic entrepreneur in Kansas City, Barnett is the only one I’ve come to know personally who’s sold a company to Warren Buffet and to me, that says a little something about his ability to grow and run a business. 

I have known Barnett for a while, prior to taping the latest Top of Mind episode with him. He’s also the founder of the Helzberg Entrepreneurial Mentoring Program (HEMP), a program right here in Kansas City, MO that matches seasoned, successful entrepreneur mentors with less-experienced entrepreneurs. When he established the program, Barnett drew inspiration from his own 23-year mentoring relationship with Kauffman Foundation founder, Ewing Kauffman. 

Needless to say, I have come to know Barnett well through his work with HEMP. But it wasn’t until our recent discussion that I learned even more about his and his family’s inspiring entrepreneurial journey—including the times when he thinks the now nationwide chain of more than 200 stores was close to going out of business. Watch the interview with Barnett…he has a few things to teach us all.

Community Is the New Currency

In her book, It Takes a Village: And Other Lessons Children Teach Us, Hillary Clinton famously (or infamously, based upon your politics) advocated for a society that assumes shared responsibility for raising children. The book became a New York Times Bestseller and a conservative lightening rod to denounce what the right deemed as a nanny-state intrusion on family.

For me, the value proposition of the book boiled down to the societal benefit of raising socially balanced children with the requisite cognitive and academic skills to contribute to society—an aspiration that is not the sole providence of the right or left.

I have concluded that there is some value to "the Village," but in an emerging way that may be redefining what we expect from the communities in which we engage. As it relates to entrepreneurs considering where to start a company or how to engage the assistance of others, I see increasing value in a variety of forms of communities such that I believe communities are emerging as a form of currency in our economy. Namely, some communities are providing direct economic benefit to entrepreneurs capable of identifying, engaging and leveraging these communities.

Let me offer some evidence. In March, I attended the fifth annual gathering of the Global Entrepreneurship Congress in Rio de Janeiro. More than 2,000 people representing 130 countries attended the Congress and shared ideas, best practices and assistance promoting an assortment of programs, resources and networks. There for all to witness was activity that had genuine economic value -- either as gifts of resources, time and access or other linkages.

Whereas the research purists reading this would (rightly) suggest that one couldn't simply assert that economic benefit is directly caused by this global network, one could certainly observe a correlation. By virtue of many individuals coming together in a community of common interest and purpose, they can extract value in obvious and less obvious ways.

Back in the U.S., we launched a new experiential-based learning program for aspiring entrepreneurs starting new firms called 1 Million Cups. The premise behind 1MC was built from the notion that if we could have more conversations (presumably over a cup of coffee), we could encourage and assist more individuals to start firms by sharing the knowledge and experiences of others. The program ostensibly has become a platform for community-based experiential learning for the aspiring entrepreneurs who present every Wednesday morning.

Founders of two startups get six minutes to present a company overview followed by roughly 20 minutes of Q&A from the audience, which now boasts more than 200 weekly in Kansas City, Mo. Invariably, each company gets the question, how can the community help? For the entrepreneurs who have done their homework, namely participate as a community member in several 1MCs prior, they will anticipate this question and get a rare opportunity to ask a sizeable crowd to: sample my product, register for our newsletter, help with warehouse space, sign our petition, help us find programmers or other employees, etc.

At the recent one-year anniversary of the program, alumni got on stage and shared an update on their progress post-1MC. Participant after participant could point to tangible benefits from the program, by virtue of the 1MC community that engaged with them.

A more recent book espousing the virtue of community (ecosystem) is Brad Feld's Startup Communities: Building an Entrepreneurial Ecosystem in Your City. In the book, Feld identifies roles for people in the community: Leaders and Feeders. In his view of successful ecosystems, Leaders are bona fide entrepreneurs and Feeders are everyone else who has an interest in supporting and growing such communities.

The existence of these communities, however, isn't always obvious. That's why we recently deployed a new channel on our website, entrepreneurship.org, named ID8 Nation. ID8 is a multimedia online journal focusing on entrepreneurial ecosystems of cities around the country. The channel debuted with a look at the iron city better known as Pittsburgh. Stories, videos and photos attempt to stitch together a tapestry of the vibrant community in Pittsburgh, partly to help its residents see what's happening among them, and partly to showcase great ideas that can be shared with other communities looking to promote similar activity.

In an increasingly mobile world with lessening geographic constraints to starting and growing companies, we need to help entrepreneurs identify the communities that may best serve their needs. In so doing, communities will realize the economic benefit of supporting the activities and needs of founders who are working hard to plant the seeds of economic growth in their "community gardens."