May 7, 2020
When we talk about entrepreneurs, we often think of people who have followed a dream to create a business. They are a group set apart because of their bias towards action — getting their hands dirty and building a company, and because of that, many are role models to the millions of other aspiring founders across the world. We are not talking about the basic desire to imitate a businessperson because of their wealth and success, but rather about being a role model, which entails a degree of awe and respect for a person’s methods and strategies for building successful and impactful businesses. They do things that others feel are impossible. The world’s best entrepreneurs are not looked up to because of their salaries, but because they do three key things: they solve big global problems, they survive risky situations, and they create with limited resources.
Solving big problems
Entrepreneurs dream big, and the role models of the business world rarely start by trying to solve a small problem. They create a product that solves an unserved, acute pain point in the formal economy, and where there are existing informal, unlicensed, or unofficial alternatives, they bring legitimacy and formality to the industry. Role models offer solutions for the mass market, not just the elite, and they focus on game-changing innovations that fundamentally rethink a market and a sector.
None of this is easy. People aspire to be these great business leaders because they are tackling difficult, complex problems that many people before them have tried to solve and either failed or achieved only limited success. Sure, good, healthy businesses can be built to produce the next photo-sharing app, but the entrepreneurs that get talked about again and again and are used as exemplars for the business world are the ones that take on sizeable global issues in arenas like healthcare, education, energy, transportation, or financial services.
I teach an MBA class on emerging-market entrepreneurship. My students often ask for my feedback on the direction of their business ideas. I am asked questions like, “Will this even be possible?” “Am I making things too hard on myself by trying to build this new idea that has never been done?” I ask them, “Why are you doing this?” Almost exclusively, they tell me they want to make the world a better place. The reality is that building a startup, any startup, is extremely hard and takes a long time. If you’re going to work that hard for a large portion of your life, you might as well build something meaningful. And if you succeed, you will be a beacon for others to follow, inspiring the next generation of founders.
Taking risks and surviving
Entrepreneurs will inevitably go through difficult times when money gets tight or the product seems less viable under new market conditions. But the best entrepreneurs take the right risks at the right times. The cost of failure and the perception of risk that founders have is real, particularly in emerging innovation ecosystems outside Silicon Valley — most are able to push through the alarm bells that go off in your head when situations become difficult. By being able to showcase this fortitude, entrepreneurs win where others fold.
This does not mean that they are foolhardy individuals. Some are, yes, but the role models of the group are ones that take calculated risks. Those that are too nonchalant about debt or a difficult market will eventually fail if given enough time. The top tier of founders find the right times to expand their business and ingest capital for that propose; they are honest with themselves about when they are right and can succeed versus when they are just being stubborn, trying to fit a round peg in a square hole. Everyone has met a leader that is overly confident to the point of voluntary blindness of the situation around them, but the best entrepreneurs are the ones that put time and effort into building a product for a market to solve a real problem and then are relentless in their pursuit of solving that problem. They are able to take more risks because they have built trust in their product. And once they come out on the other side with a successful business, people take note and try to emulate that same self-assurance.
Turning nothing into something
Entrepreneurs often start with nothing more than an idea. But that idea generates leads on capital, and then the real fun begins.
Everyone loves a good underdog story because they make helpless situations seem more hopeful. Founders are in many ways the underdogs of the business world, and people look up to them because of that story arc. Companies begin as a David against many Goliaths, but they find their small advantages and exploit them. Sometimes that means going after a niche market, sometimes it means using the company’s nimbleness and flexibility to out-flank a big competitor on a sale or partnership. Whatever it may be, the best entrepreneurs find ways to turn a small amount of capital into great returns.
Companies outside of the funding factory of Silicon Valley are great examples of this. Whereas Silicon Valley has nearly a thousand venture capital funds, Africa’s fifty-four countries together account for fewer than ninety firms. Latin America has fewer than 150 firms across the entire region. The founders of companies in these markets make for great role models because they have no choice but to work with a smaller pool of venture funding and are expected to survive in tougher business climates and generate returns--but that’s exactly what they do. Against all odds, the best entrepreneurs use what they have and grow slowly and strategically, conserving resources while still achieving growth.
Supporting the ecosystem
All of the aforementioned traits of role model entrepreneurs are centered around the idea that founders are valued as role models because of their ability to make the impossible possible. They beat the odds, and they inspire others. But the best entrepreneurs don’t just build successful companies. They create industries and healthy business ecosystems. They are the giants upon whose shoulders their successors stand.
These entrepreneurs become role models for the next generation, and their scaled businesses train new generations of leaders. They become “older siblings” and often take an active role in giving back, as investors, mentors, and supporters.
Take Hernan Kazah, the founder of MercadoLibre, one of the first Latin American ecommerce companies. After its IPO in 2007, Hernan stepped aside and founded Kaszek Ventures in order to give back to the startup community of which he was such an integral part. Hernan wanted to provide these entrepreneurs with the mentorship, network, support, encouragement, and, of course, capital that he had struggled to access when he first began. Kaszek Ventures started out investing only its own personal capital but subsequently accepted outside capital. Its most recent fund, its fourth, was more than $600 million. The portfolio includes the companies of leading regional startups such as Nubank, Guiabolso, and Dr. Consulta. Many of these companies have a social lens, and they focus in part on giving back to the community as a whole.
The real societal benefit of these entrepreneurial role models is the cycle of sustainable growth and societal benefit that the best founders create in their spheres. Entrepreneurs play a direct and active role in creating the building blocks of an ecosystem. This includes laying the foundations of an entrepreneurial culture, educating prospective entrepreneurs, providing skill training through innovative programs, and creating ecosystem infrastructure through industry organizations. They also bring up the next generation of entrepreneurs through informal schools of entrepreneurship often in parallel with developing their own ventures.
The best entrepreneurs, then, aren’t just the ones that we aspire to be because of their successes, but also because of what they give back to their communities and the world.
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