Most become demoralized when they do not succeed, hence why this career option is often overlooked by the majority, yet, it is the only bonafide option that offers an opportunity for unlimited economic upside.
In markets across Africa, entrepreneurship is an endeavour that is often frowned upon because with it, comes the risk of failure, humiliation, and ideas of “hustle.” The idea of ‘hustling’ to a middle-class Nairobi parent is distasteful for a parent to listen to, especially after spending an average of $7,000 for four-year university education. In their worldview, the return must be immediate.
A parent will often say, “I did not sell that piece of property in location X so that you can “hustle” fight this out, and get an executive job at PricewaterhouseCoopers, Oracle, Citibank or a renowned multinational corporation”. To add to this mindset, we have a mechanical, quite dated, education system that does not tolerate failure, experimentation, and concepts of abundance (i.e. an abundance mindset). We emphasize and zone in on scarcity as a way to view the world, which may have some utility, from an economics, theoretical standpoint. However, this way of perceiving the world, by and large, is detrimental to the development of a local, globally orientated startup ecosystem.
How many times have you heard your boss articulate this sentiment “failure was not an option?” especially when target X or Y is not met? This is a typical standard corporate speech.
It’s fallacious. Any economy that prides itself on being innovative must embrace a culture of failure, experimentation and trial and error. This really must be embedded in its philosophy.
In addition, one of the more common excuses, continentally, for not venturing into entrepreneurship is a lack of access to capital. This is partly true, but also, partly false, especially in innovation-driven type enterprises, a concept we will briefly describe below.
Contrary to popular misconceptions, entrepreneurship is permissionless. You need not have certain qualifications, large amounts of capital in the bank, or come from a certain socio-economic background to build and develop a thriving enterprise. It’s mythical. The atypical Harvard dorm room MBA who built a multi-million enterprise is the exception, not the norm, a narrative developed often by the media for sensational effects to romanticize entrepreneurship. This is often not the case for a majority of entrepreneurs who have built successful enterprises across the world.
“Entrepreneurship also offers a way out of corporate life, out of a system of task and reward allocation run by others, to one run by you” as Philip Delves Broughton, a Harvard-MBA alumni and author of “Ahead of the Curve,” often says. It offers an opportunity to innovate, challenge the status quo and allows you to let your originality flourish.
Sadly, our local education system doesn’t emphasize the importance of entrepreneurship as a pathway to finding solutions to existing problems. These are many. We often do not look at challenges as opportunities. Hence why Kenyans on Twitter (KOT) are renowned the world over for complaining over this and that with no solution or recourse to any challenges presented.
Those who do can be classified as entrepreneurial-minded individuals.
We excessively focus on employment. Yet, we know that 90% of the opportunities are in the informal, small medium-sized enterprises (SME) sector run by merchants and traders engaging in ‘survival entrepreneurship.’ Hence why many of our young and driven graduates are not gainfully employed as they have been conditioned to seek out white-collar jobs that really don’t exist.
Bill Aulet, Managing Director of the Martin Trust Center for MIT Entrepreneurship and professor of the practice, innovation and entrepreneurship at MIT makes a distinction on two types of entrepreneurship.
Small Medium Enterprise (SME) entrepreneurship. These are small companies that will stay small, experience linear growth (flattens at some point) and often have a focus on local markets. They are service businesses servicing a local opportunity. For example, an electronics shop, a hardware store, or your local pharmacy. They provide income opportunities, but the upside on returns is very limited.
Innovation Driven Enterprise (IDE) entrepreneurship serves global or super-regional markets and often experiences exponential, non-linear growth. These are mostly technology-driven businesses that have ambition for global growth, mass consumer adoption and often leverage network effects. For example, Flutter wave, Paystack, Kobo360, MarketForce360, Pineapple Insurance (SA) or Gro Intelligence.
Access to capital for high-growth innovation enterprises is in abundance and therefore, the argument for a ‘lack of access to capital’ really doesn’t cut it. How to go about accessing such capital is a separate discussion we may pursue at a later time.
From a local standpoint, we are not seeing massive investment in this second type of entrepreneurship. The emphasis is on the first, and public policy is often driven to support “SMEs” and not “Startups.” This needs to change.
There needs to be a re-education and a radical re-orientation of what we perceive to be entrepreneurship and particularly entrepreneurship driven by technological adoption that drastically improves efficiency and effectiveness across society.
In my assessment, locally and regionally, part of this challenge lies in understanding new emerging business models related to angel investing, private equity and venture capital and how these businesses think about the risk-reward relationship. Therefore, we stick to what we know, the tried and tested – Funding SMEs.
Stephen Murithi is the Founder of Brainhouse Capital a firm that strives to be a leading strategy and financial advisory firm across the continent solving complex management problems for small and medium-sized enterprises across a wide range of industries. They offer cutting-edge expertise that leverages first-class, strategic and financial insights that help you simplify and structure your processes to become a lean efficient enterprise.