Beats | July 8, 2016

To Harness Silicon Valley for Global Development, First Change its Attitudes

ImpactAlpha
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ImpactAlpha

On my way to the second morning of the 2016 Global Entrepreneurship Summit recently, I took an Uber. Originally from Bolivia, my driver had fully embraced Silicon Valley-centricity. As we were discussing Facebook founder Mark Zuckerberg, who was scheduled to speak at the Summit, he looked in the rearview mirror and earnestly asked me, “Can you imagine that Facebook was started so far away, like in Massachusetts, right?”

My surprise at his amusing myopia was magnified later that day when a venture capitalist in the Valley summarily — and surprisingly — dismissed social entrepreneurship as “meaningless” in a public session. Social entrepreneurship, he said, conjured images of “investing a million dollars to build a well in the Congo,” which, he argued, “could never be sustainable.”

[blockquote author=”Randall Kempner, Aspen Network of Development Entrepreneurs” pull=”pullleft”]It’s time to focus our collective capital and energy behind businesses that turn out more than just a profit.[/blockquote]

Well, I guess some in Silicon Valley still have some things 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 not reliant on donations, nor funding from venture capitalists.

Big, Hairy, Audacious

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 explicitly social missions.

This trend comes at an opportune time, as the world 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. The UN’s process enumerated 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 Jim Collins, a favorite of the Stanford Graduate School of Business, “these are big, hairy and audacious goals”.

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.

Entrepreneurial Ecosystems

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.

These assets have become increasingly interlinked in formal and informal networks that 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. Still, as demonstrated by the hundreds of emerging market-based entrepreneurs at the Global Entrepreneurship Summit, 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.

Human Capital

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 solution 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 to do so, 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. Yet, these enterprises already demonstrate clear social returns, 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 profits.

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 all 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 —if we can get more of its leaders to embrace a broader and more global perspective on entrepreneurship.

“Your impact could be bigger,” Youssef Chaqor, founder and general manager of Kilimanjaro Environnement, which recycles used cooking oil into biodiesel, told the Summit. “Stop looking at just the 60-mile (area) of Silicon Valley.”

[seperator style=”style1”]Disclosure[/seperator]

A version of this post originally appeared in the Financial Times.

For more on ImpactAlpha’s coverage of the 2016 Global Entrepreneurship Summit, see:

http://dev.impactalpha.com/global-entrepreneurs-to-silicon-valley-we-have-arrived/

http://dev.impactalpha.com/dealflow-6-23-16-funds-boost-global-entrepreneurship-chan-zuckerberg-backs-andela-and-a-bump-for-diabetes-prevention/

http://dev.impactalpha.com/21st-century-source-of-business-innovation-reflections-on-the-global-entrepreneurship-summit/