The Coronavirus and Who We are – Early Lessons from the Crisis

coronavirus lessons article deviantart luuqus

We are in the early stages of what is shaping up to be a once-in-a-lifetime crisis. Estimates still vary significantly, but the most alarming ones say that the Coronavirus could infect up to 20-30 percent of the world population over the next twelve months. This would obviously have dire consequences in terms of loss of life and economic and social distress. Whether the extent of the projections materialize or not, a few lessons can already be drawn from the situation:

  1. History is now. We tend to think that great wars, pandemics, global natural disasters and other Earth-shattering events happened only in the past and might only reoccur in the distant future. This leads us to take for granted warning signs and make bad decisions — the belated and inefficient response to this Coronavirus spread being one of them. Other examples of disasters waiting to happen include the effects of climate change and the threat of nuclear war. On the former, specialists have been losing their voices for decades, screaming for attention. On the latter, the Doomsday Clock has never been so close to midnight. Hopefully, this health crisis will open our eyes and make us understand we are part of the world we live in and our actions do matter, today.
  2. We are all the same. We are all on the same boat: black, white, brown, men, women, gay, Christian, Muslim, whatever you are. We live and we perish the same. Any sentiment of racial, cultural or gender superiority should seem frivolous at this point. If this crisis does not humble us and teach us to put things in perspective, nothing will. Like soldiers that went through war together and are ever bonded by overcoming a common fear, hopefully this crisis will help us learn how to leave differences aside and focus on what unite us.
  3. Institutions are not as solid as we think. We tend to trust our institutions. We rely on the ability of our governments, hospitals, and the general infrastructure to keep us safe and hold order. But the reality is that we are much more vulnerable and powerless than we would like to believe. If that many people do indeed get sick, we will not have enough hospital beds, ventilators and doctors to deal with it, and no contingency plan seems to stand on its feet. Luckily, the Coronavirus is not a particularly lethal one, with mortality rate estimates from various sources ranging anywhere between 0.1 and 5 percent. The mortality rate for the Ebola virus, for example, was about 40 percent, but in that case, we lucked out on the contagiousness side, as it was easier to contain its spread. But one day we might get the worst of both worlds and we better be ready to deal with something like that. Or a major terrorist attack. Or the effects of climate change. Hopefully this crisis will urge us to prepare better for these situations, in time.
  4. The cost of having lousy leaders is much higher than we think. In some countries, we are paying the price for having elected lousy leaders, who are clearly unfit to rule a nation let alone to manage a crisis of this proportion. When one casts a “protest vote”, he/she normally does not foresee a situation such as the one we are living in. In the face of a major crisis, serious leadership and competent teams matter more than ever and can be the difference between the life and death of thousands or even millions. Hopefully, moving forward, people will add another variable to their decision-making process when it comes to electing representatives to public office.
  5. Yes, we need the State. Regardless of political views, it is clear that only the State can handle (or lead) certain services and situations. Health, education, social safety nets, and part of infrastructure (including of course public-private partnerships) are some of the obvious areas. Weakening the State by cutting the budget of vital branches that oversee some of these areas can have calamitous consequences. Hopefully, after this trauma, even the most fanatical free-market evangelists will come to recognize that we need to strive for a balance between the public and private initiatives.
  6. Science demands respect. Science is imperfect, but it is the best tool we have to live in a livable world. It is what will ultimately allow us to combat diseases, mitigate climate change, and create ever-evolving societies. After what we are experiencing, there should be no more room for denying scientific consensus, minimizing warning signs, or challenging facts. The stakes are too high. Hopefully this experience will push Earth-flatters, climate-change deniers and the like to the very peripheries of the political debate, cleaning the noise around what matters, and increasing the focus on what needs to get done.

I ended each of the paragraphs above with a “hopefully” statement. We have tough months ahead of us, but I am confident that the realization of these lessons will make us better and stronger.

Stay safe!

What have I missed? Feel free to chime in below by leaving a comment.

6 Ways Innovation and Entrepreneurship Promote Prosperity

entrepreneurship innovation

It is not a coincidence that the most developed nations are also the ones with the highest levels of entrepreneurial activity and innovation. While starting from a minimal level of development helps support the latter two, for example through basic access to capital and institutional stability, the impact of innovation and entrepreneurship on the economy and society more broadly cannot be overstated. In fact, it goes beyond usual suspects such as increased productivity, competitiveness, and job creation, spilling over to areas as diverse as regulation, infrastructure, the environment, and social inclusion. Below I provide a (certainly non-exhaustive) list of six such effects. While every issue deserves an article (or even a book!) of its own, I provide but a brief overview on each point, leaving the interested reader to dig deeper on his or her own.

  1. Innovation can drive regulatory improvements

Although ideally the right conditions, including regulations, would be in place to enable the occurrence of innovations, the reality is that the order is often inverted. Regulatory changes can be drawn by the innovations themselves, from the bottom up. For example, in Kenya, Safaricom launched a series of increasingly innovative financial services through its M-Pesa platform, such as e-money transfer, virtual savings accounts, and virtual credit. The government watched while the company experimented and innovated and, once the demand for its services were demonstrated, the government enacted and amended laws to adequate the functioning of the financial system to M-Pesa’s offerings. This set a new regulatory stage in Kenya that benefited other fintech startups and helped democratize access to finance. When regulation follows innovation, it tends to work better than ex-ante efforts, which are often based on non-transferable international practices and struggle to support innovations that are not yet fully understood.

  1. Innovation can support infrastructure progress

Innovation can also promote infrastructure development. In the early 2000s, in Africa, the growth of telecom pioneer Celtel was hindered by insufficient cellphone coverage in countries like Congo, Gabon and Zambia. But the company did not just wait for government investments. It took matters into its own hands and invested in cell towers itself, as well as other complementary infrastructure such as roads, to be able to service the towers effectively, and water supply, so workers and their communities could have basic water access in remote areas. This investment has paid off for Celtel, enabling the exponential growth of the business, and the countries where it operates, which benefitted from improved infrastructure. Similarly, in Nigeria, Tolaram launched its popular brand of instant noodles Indomie, the first of its kind in the country, which quickly became a hit and a must-have dish across the country. The growth of the business, however, was being hindered by the precarious infrastructure and logistic capabilities in Nigeria. Tolaram invested more than $350 million in developing its own logistics company, with over 2,000 trucks, and building infrastructure including electricity and sewage and water treatment facilities. Furthermore, the company took a leading role in developing a $1.5 billion public-private partnership to build and operate a deep-water port in Lagos, all to support the long-term growth of its business. Both cases are discussed in details in the book The Prosperity Paradox.

  1. Innovation and entrepreneurship can promote environmental sustainability

There is plenty of evidence that this generation of entrepreneurs and innovators, especially younger ones, tend to be more environmentally conscious than businesspeople from previous generations and government bureaucrats. In fact, many startups are set up specifically to mitigate environmental challenges. Colombia’s Conceptos Plasticos, for example, contributes to the circular economy by using recycled plastic materials to form Lego-style bricks which are then used to build affordable housing. Global startup Airborn Water, in turn, designed a technology that efficiently produces fresh (potable) water from the air’s humidity, contributing to sustainable water supply in even the remotest areas. Moreover, even when the business itself is not focused on solving an environmental issue, (younger) entrepreneurs are generally more mindful of mitigating potential negative externalities, following sustainable practices, and adopting a triple-bottom-line approach to business.

  1. Innovation and entrepreneurship can mitigate social problems

Entrepreneurs are problem-solvers who understand that a problem can become the opportunity for a profitable business. They often build companies around solving pain-points they have identified in their own lives and communities. Many startups have business models that rely on resolving social problems or targeting the base of the pyramid as consumers, workers, and suppliers. In fact, three of the examples provided above – Celtel, M-Pesa and Indomie – illustrate businesses that have great social impact. Also, there is a subset of social entrepreneurs that run non-for-profit enterprises which are committed, first and foremost, to addressing community challenges. Hospital Beyond Boundaries provides health services to poor, underserved communities in Malaysia and Cambodia. Zomato Feeding India combats food waste in India and provides meals to the poor. It has a network of about 25,000 volunteers across more than 100 cities and has served over 33 million meals to people in need.  She Says is an organization that fights for gender rights in India, especially those of women and girls that have been victims of sexual assault and harassment.

  1. Entrepreneurship can promote inclusion and change cultural norms

Many countries face challenges when it comes to the inclusion of minorities and women in the economy. In certain regions of the Middle East and Africa, for example, business is still not seen as an appropriate activity for women. They are expected to take on domestic roles or perhaps become teachers, nurses, or work in traditional agriculture and manufacturing. In Africa, only 9 percent of startups have women leaders, according to Venture Capital for Africa. In such context, the development of programs that promote women’s entrepreneurship, for example through business education, incubation and acceleration, helps debunk taboos and shake the status quo. Initiatives such as New Work Lab, in Morocco, and the Kosmos Innovation Center (KIC) in Ghana, Senegal, and Mauritania, are making targeted efforts to support women entrepreneurs. Similar initiatives abound throughout Africa and the Middle East and are paying off. The landscape for women in the workplace is changing for the better, as female entrepreneurs become role models and serve as inspiration to others, regardless of sector and occupation. And the economy benefits too. According to the Women’s Entrepreneurship Report, women entrepreneurs in the Middle East and North Africa are 60 percent more likely than male entrepreneurs to offer innovative solutions and 30 percent have businesses with international reach, which also exceeds their male counterparts.

  1. Entrepreneurship can strengthen ties with diaspora and help address brain-drain

Many developing economies suffer from brain-drain, with an important share of the well-educated and resourced leaving the country to search for better opportunities in developed countries. The growth of a vibrant entrepreneurial ecosystem creates the opportunity for people to choose to develop their talent and invest their resources locally, instead of voting with their feet. It also motivates the diaspora to re-engage with the local economy by becoming (angel) investors, mentors, connectors – and eventually even returning to their countries. For example, ChileGlobal, part of Fundación Chile, promotes and facilitates the development of business projects and the introduction of innovative technologies through its network of influential Chileans living in the United States, Canada, and Europe. Pangea, in turn, connects African entrepreneurs and successful diaspora members by providing both training and business intelligence for diaspora investors and engaging the diaspora in the startups Pangea has invested in.

Do you have additional points to raise? Examples to share? Agree or disagree with a particular issue? Leave your comments below and let’s keep this discussion alive!

Time for Ecommerce Entrepreneurs

Print

Most people know that launching a business, especially online, has never been easier. However, few realize how true this is in the ecommerce space. Today there are fantastic resources available that allow for the relatively seamless development and maintenance of e-stores. In my experience, working only nights and weekends, I was able to launch an online shop for Brazilian apparel and accessories in just a couple of months. So if you ever thought about starting your own business, I suggest you read on.

Setting up an ecommerce doesn’t require any technical skills whatsoever. I never coded or designed a website. Still, I was able to set up my Brazilian lifestyle store completely on my own. Platforms such as Shopify provide you with the complete toolbox needed for your ecommerce, including awesomely designed templates. In the backend, they operate as intuitively as ticking boxes and drag-and-dropping images. They also integrate with several useful apps, which help you with marketing, CRM, logistics and all other aspects of running a business.

In terms of supply chain in particular – assuming you will be selling physical products – our lives have also been made easier by fulfillment companies, like Printful. Through them, you can automate the supply management of the business, from production to distribution. Not only that, but depending on what you sell, you can set up your business with no overhead or inventory costs, and have your products be manufactured and shipped on demand, one by one.

The beauty is that what’s left is what the majority of entrepreneurs would consider the most pleasant side of any business: value proposition, strategic positioning, product design, marketing, and customer relationship. In my case, for the most part, I developed the business concept and work on the strategy and marketing. My partner, who is a fantastic artist, takes care of our Brazilian themed art and designs. Other parts of the business were outsourced to freelancers you can find in websites such as Fiverr or Upwork.

So if you have the faintest idea of a product sell, this is the time to pursue your startup dream. There are plenty of free resources out there to help you refine your idea, test assumptions, and assist you in arriving at a winning business proposition. For example, pick a few ecommerce podcasts to listen to, such as Shopify Masters and Ecommerce Fuel. Read relevant blogs such as Digital Marketer, Get Elastic and Practical Ecommerce. This article on customer value optimization (CVO) is a great place to start thinking about your business.

Of course, building and running an ecommerce is still tons of work. But work you can administer at your own pace, especially if you are good at delegating. So go out there, think of a great business idea, develop it, and let’s get to work!

Image: creative common.

Development finance institutions and private sector innovation

innovation development dfi

Post originally published on IDB’s Sustainable Business blog.

Development finance institutions (DFIs) can play an important role promoting innovation for increased competitiveness and sustained development in their client countries. Properly executed programs and projects can leverage private investment placement, develop local capital markets, improve resource allocation, as well as avoid moral hazard.

As laid out in the document “MDB Principles to Support Private Sector Operations,” endorsed by the heads of multilateral development development banks (MDBs), private sector operations should seek to include: (i) additionality; (ii) crowding-in; (iii) commercial sustainability; (iv) reinforcing – and avoiding distorting – markets; and (v) promoting high standards in governance and conduct. More details can be found here.

With this in mind, there are three types of interventions that work particularly well because of their intrinsic role in crowding-in private investments; providing additionality to high-impact businesses; and planting the seeds for continuous innovation.

1. Catalytic first-loss capital (CFLC)

This form of financing occurs when the financier takes on more risk than other investors by providing concessional equity, debt, grant or guarantees that lower the level of risk for other investors. This form of blended finance has been carried out by select DFIs since the late 1990s and has gained momentum in the past decade, especially with the growing presence of impact investors and large donors working with DFIs. One example is the Clean Technology Fund (CTF), which provides concessional funding for large low-carbon energy projects through multilaterals, including the IDB.

CFLC provides credit enhancement and mobilizes more risk-averse sources of capital. It supports innovation by financing projects otherwise difficult to finance and by leveraging complementary investments, typically at a rate of 4 times – often, significantly more. To illustrate this, $6.1 billion is allocated under the CTF for 134 projects and programs, expecting total co-financing of $51 billion from other sources. The approach supports projects of different sizes, from large geothermal plants to social entrepreneurship interventions.

CFLC adds the most value when it is part of a long-term strategy of continuous crowding-in of private investors – such as private equity funds and commercial banks – and phasing-out of the concessional funding. By supporting innovative (and often risky) projects, it generates significant demonstration effects, lessons learned, and promotes market development. Also, the very providers may participate in later rounds, directly benefiting from the initial risk taken. For example, a DFI may offer an early CFLC tranche, and then come back in a few years with a market-priced loan after the project has reached maturity and needs financing for additional growth.

2. Limited partnerships (LP) in select funds

Venture capital (VC) and private equity (PE) funds are key players in the creation of high-growth businesses and the dissemination of their innovations. In turn, impact investment funds are strategic supporters of innovations that bring about, not only financial returns, but also social and/or environmental benefits. Impact Assets showcases such funds.

Because these funds are specialized and typically operate locally, they know their markets, technologies, entrepreneurs and clients. They are better suited than DFIs to source deals and manage portfolios. Therefore, DFIs could spur innovation by increasing their presence as investors in these funds, providing technical assistance, coordination and cross-fertilization.

Understandably, DFIs worry about risk exposure and ratings. That said, efficient due diligence and strong diversification across markets, fund sizes and maturity, may well allow for a significant growth in DFI presence in this space within acceptable risks. Also, part of the funding may be mobilized through external donors, minimizing the impact on the DFI’s balance sheet.

3. Strategic support to incubators, accelerators, angels

Besides supporting larger projects and early stage businesses mature enough to receive VC/PE funding and CFLC, DFIs could pollinate the innovation ecosystem by spreading entrepreneurial seeds and fostering a change-making culture. One of the best ways to do this is to support the growth of business incubators and accelerators, as well as those who are most prone to invest in the ideas that come out of this fertile soil: angel investors.

Incubators and accelerators play an important role in the development of startups and their innovations, by providing office space, administrative support, mentorship, networking, access to capital, clients, among other advantages. Companies that are born in these platforms have much higher rates of success than lone-wolves. This type of support is especially important in developing markets, where information asymmetries and inefficiencies are high.

In this space, DFI support would come less in the form of financial resources and more in terms of technical cooperation, dissemination of knowledge and best practices and development of networks and systems. Institutions such as IDB’s Multilateral Investment Fund (MIF) and the World Bank’s infoDev work in this space.Finally, from the angel side, DFIs can promote a culture of early stage investing, for example, by supporting the creation of angel groups, business plan competitions with clear objectives, and even by providing matching grants to angel exposures (through donors, if need be).

Innovation is a broad and complex topic and one that should also involve discussions on policy, regulations, education, R&D, and the role of the public sector. That said, as far as private sector interventions go, the three described above, while by no means exhaustive, are bound to bring important progress from the bottom-up.

Andre A. is an economist and entrepreneur.

Economics as if people mattered

schumacher small is beautiful

What took me so long to read “Small is Beautiful: Economics as if People Mattered”, by E. F. Schumacher? This 1973 classic was never introduced to me during my education in economics, but I finally got to it. While undeniably but delightfully utopian, very few books go so deep in the attempt to completely reformulate the way economics is studied and practiced.

Some of the most current issues in the economic debate, especially since the 2008 crisis, such as the status of the economic “science” and its quantitative methods, the treatment of the environment, and the questioning of the “homo-econonomicus”, were eloquently raised by Schumacher over 40 years ago. Other issues, in fact, are even more fundamental in nature, and may only be discussed today in places like the New School or the Institute for New Economic Thinking.

My original intent was to dismember the book and develop linkages to current economic theory and practice. However, I’ll step back and let the man speak for himself and the reader be the judge. Below, I list my favorite Schumacher quotes:

The ownership and the consumption of goods is a means to an end […] Modern economics, on the other hand, considers consumption to be the sole end and purpose of all economic activity, taking the factors of production—labor and capital—as the means. [Instead of] maximize human satisfactions by the optimal pattern of consumption, [it] tries to maximize consumption by the optimal pattern of productive effort.

The modern economist […] is used to measuring the “standard of living” by the amount of annual consumption, assuming all the time that a man who consumes more is “better off” than a man who consumes less. A Buddhist economist would consider this approach excessively irrational: since consumption is merely a means to human well-being, the aim should be to obtain the maximum of well-being with the minimum of consumption.

Economic development is something much wider and deeper than economics, let alone econometrics. Its roots lie outside the economic sphere, in education, organization, discipline and, beyond that, in political independence and a national consciousness of self-reliance.

An ounce of practice is generally worth more than a ton of theory.

It is doubly chimerical to build peace on economic foundations which, in turn, rest on the systematic cultivation of greed and envy, the very forces which drive men into conflict.

The cultivation and expansion of needs is the antithesis of wisdom. It is also the antithesis of freedom and peace. Every increase of needs tends to increase one’s dependence on outside forces over which one cannot have control, and therefore increases existential fear. Only by a reduction of needs can one promote a genuine reduction in those tensions which are the ultimate causes of strife and war.

Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage — to move in the opposite direction.

From the point of view of the employer, [work] is in any case simply an item of cost, to be reduced to a minimum if it cannot be eliminated altogether, say, by automation. From the point of view of the workman, it is a ‘disutility’; to work is to make a sacrifice of one’s leisure and comfort, and wages are a kind of compensation for the sacrifice. From a Buddhist point of view, this is standing the truth on its head by considering goods as more important than people and consumption as more important than creative activity. It means shifting the emphasis from the worker to the product of work, that is, from the human to the sub-human, surrender to the forces of evil. […] The function of work [should] be at least threefold: “to give a man a chance to utilize and develop his faculties; to enable him to overcome his egocentredness by joining with other people in a common task; and to bring forth the goods and services needed for a becoming existence.

That soul-destroying, meaningless, mechanical, monotonous, moronic work is an insult to human nature which must necessarily and inevitable produce either escapism or aggression, and that no amount of “bread and circuses” can compensate for the damage done—these are facts which are neither denied nor acknowledged but are met with an unbreakable conspiracy of silence—because to deny them would be too obviously absurd and to acknowledge them would condemn the central preoccupation of modern society.

Ever bigger machines, entailing ever bigger concentrations of economic power and exerting ever greater violence against the environment, do not represent progress: they are a denial of wisdom. Wisdom demands a new orientation of science and technology towards the organic, the gentle, the non-violent, the elegant and beautiful.

Education which fails to clarify our central convictions is mere training or indulgence. For it is our central convictions that are in disorder, and, as long as the present anti-metaphysical temper persists, the disorder will grow worse. Education, far from ranking as man’s greatest resource, will then be an agent of destruction.

Modern man does not experience himself as a part of nature but as an outside force destined to dominate and conquer it. He even talks of a battle with nature, forgetting that, if he won the battle, he would find himself on the losing side.

An attitude to life which seeks fulfillment in the single-minded pursuit of wealth – in short, materialism – does not fit into this world, because it contains within itself no limiting principle, while the environment in which it is placed is strictly limited.

Don’t you feel like changing the world right now?

Andre A. is an economist and entrepreneur. Photograph: www.schumachercollege.org.uk

Modern Times 2.0

Changemaking through the 21st century

I’ve been writing about the role of entrepreneurship in the creation of value and prosperity for many years. This is a natural deduction for me, having spent about half my career working as an economist and the other half starting and running businesses.

In fact, looking back in history, there is enough evidence to support this. The countries that have prospered the most – Netherlands in the XVII-XVIII centuries, nineteenth century England, twentieth century U.S. and, more recently, places like South Korea and Israel – were the ones where people with good ideas had access to capital, under systems that promoted accountability (see here for full discussion).

That said, in today’s world, I’m convinced this vision needs refinement.

Recently, I’ve had the privilege of spending a few hours talking to Bill Drayton, the founder and CEO of Ashoka. Bill enlightened me with his vision of “frame change” and “everyone a changemaker” (EACH) world. During our conversation, it became clear to me that the original model of “entrepreneurship + access to capital” alone is no longer sufficient to promote wealth and prosperity.

In the twenty-first century, the success of people, organizations and countries alike depend on the understanding and implementation of a new framework.

The new model for problem-solving at all levels requires a rupture with the old way of doing things. From the Industrial Revolution through late twentieth century, value was created with efficiency gains, mostly through specialization and repetition. The roles of leadership and innovation were confined to a handful of people, who also benefited disproportionately from the system. The majority of the workforce was limited to dully specialized labor.

As satirized in Charles Chaplin’s “Modern Times” (1936), depicted above, a typical worker would spend most or all of his time doing the same job. Each person would have a defined task, compatible with the education and training received, and would follow orders according to a strict hierarchy. Decisions were made from the top down, by those who controlled information and knowledge.

Nowadays, there is a new game, which is driven by change, not repetition. And everyone wants to be a player.

Information is no longer the privilege of few. Enabling technologies are cheaper and more accessible. Almost anyone, anywhere, has the ability to gather the resources needed to be a changemaker – in their communities, institutions, and country. In this context, the rate of change becomes exponential.

Twenty-first century problems are increasingly being solved by (social) entrepreneurs, who are strategically positioned to come up with the best solutions. People no longer wait passively for others to solve their problems. As the changemaker mantra goes: “everything you change changes everything”, and that’s contagious and unstoppable.

What does this mean for businesses? In such scenario, old structures are doomed. Companies that are not able to adjust will lose relevance and eventually die.

There is no coming back. Institutions must reform and embrace the new world. Leading firms can no longer expect people to work in silos, perform monothematic jobs, take orders at face value, remain detached from the organization’s vision and decision making. Walls must come down.

Teams need to be formed – and dissolved – quickly and seamlessly in order to tackle problems and innovate continuously, under a fluid “team of teams“. This requires embracing a new framework, where every person is offered the resources, networks and tools to become a co-leader in the respective team. Leadership and innovation are no longer the privilege of few, but the responsibility of all.

The EACH framework and the team of teams system reinforce each other and bring the best out of each player.

The new paradigm relies on pro-activeness, empathy and collaboration. Top-down leadership, rigid hierarchies, and aggressive behavior towards others become liabilities. The same values one applies at home, with family and friends, become vital in the work environment. Measures of character and success at work and life are no longer distinguishable. Empathy, teamwork, and leadership become the norm. Those who don’t embrace these values will fall behind.

Make no mistake: changing the way societies think and operate is one of the greatest challenges imaginable.

However, we live in a historical moment. We have the resources to take on this challenge, transforming mindsets and behavior. How exactly? Well, that’s the “seven-billion-people question”. Breaking this code, however, I’m convinced is the key to a more prosperous and peaceful world.

Like Chaplin in the 1930s, Bill Drayton is telling us that there is something fundamentally wrong with our current values and system. And this is no laughing matter.

Andre Averbug is an entrepreneur and economist.

The Business of Self-Publishing: 5 lessons from an indie author

self publishing, independent publishing

Recently, I finally got to fulfill a personal dream and launch my own book, The Drifting Self: a novella. Being an entrepreneur, I decided to take matters into my own hands: I published the book independently and have been marketing it by myself.

In the process, I’ve faced a steep learning curve. I read dozens of articles about self-publishing and indie book marketing, watched countless YouTube videos on the topic, connected with hundreds of fellow independent authors on social media, and learned from my own trials and errors. Here are five lessons I learned, in no particular order:

  1. You don’t have to be a (good) writer to be a non-fiction bestselling author: WHAT? Yes… A lot of authors are really simply curators, doing research on a particular topic and putting together, for example, series of “how to” books. Others outsource writing altogether to ghostwriters in order only to focus on the marketing side. I know, it’s pretty crazy, but self-publishing is a business and many entrepreneurs are jumping on the opportunity very pragmatically. Mind you, this does NOT mean that the quality of such bestselling books is poor. If you don’t have good products, people won’t buy them. It is just that the way non-fiction books are written has changed a huge deal. In the past, a good book about eating healthy, for example, was probably written by a PhD in Nutrition; today, with all the vast information available to everyone, a good curator can put together a very good book on the topic, mostly by quoting articles from respected journals, blogs, and general media. You get the picture.
  2. If you already have a following of any sort, self-publishing is the way: Say you are a blogger and have thousands of followers; a musician with an extensive mailing list; or a successful businessperson with a somewhat recognizable name. If you want to publish a book, you have much to gain from self-publishing versus going with a traditional brick-and-mortar publisher. Amazon’s Kindle Direct Publishing (KDP), its self-publishing platform for ebooks/Kindle, offers in most cases a 70% royalty on the book’s sales price. A traditional publisher will usually offer you 10% at the most. It is true that they would do most of the marketing and other legwork for you, but with such royalty difference, if you already have loyal followers to get started (which is the most difficult part of marketing a book) it is probably worth trying it on your own.
  3. Don’t worry about the technical details, focus on having great content: Writing a great book is the most important job for you, be it fiction or non-fiction. Once you have your content, using CreateSpace, KDP or any other platform is a piece of cake. There are several instructional videos on YouTube showing you how to use these publishing tools; they are very intuitive. Also, indie authors help each other, you can join several Facebook groups, cold-call other authors, be an active member of this vibrant community. I assure you that, once your content is finished, in a couple of days maximum you will be able to upload it to any platform.
  4. All the help you need is much cheaper than you think: You might be asking, “but how the heck will I have a nice cover, have my book professionally proofread, edited, do the basic marketing etc.?” All these services are super cheap nowadays. If you go to sites such as Fiverr and CrowdSpring, you can find amazing designers working out of India, Romania or the Philippines, who will do a great ebook cover for you for anywhere between $5 and $50. You can also get proofreaders, editors, beta readers etc, who will do a great job for two digits, maybe three. And don’t forget to use friends and family too, they can provide useful feedback, help you bounce ideas off etc. In terms of marketing, there are tons of tricks to learn from fellow indie authors, as well as resources to use, such as sites that promote your books for free, bloggers that review indie books, Twitter accounts that retweet your book to thousands of followers etc. It’s not easy and it takes time. But it’s certainly doable if you have the drive.
  5. Look at Amazon not as a bookstore or retail store,  but as a search engine: Amazon is the second largest search engine in world, only behind Google. The easiest way people will find your book on Amazon is through its search tool. When you go to Amazon and want to buy a book, say, under the genre of “magical realism”, that’s what you type in the search box, right? Once you look at Amazon this way, you start understanding its algorithm, and you’ll be able to make your book accessible to those who might want it most. You will be able to classify your title under the most efficient categories, choose the best keywords to associate with it, and use a couple of other tricks to rank well. I’ve been following a few best-practices I’ve learned in my research, and my book has been ranking anywhere between 5,000 and 40,000, depending on the day, out of the millions of books listed on the Kindle store – not bad for an indie author.

So, if you’ve been promising yourself that you will write a book in your lifetime, the time is now. No more excuses. All the tools you need are available to you. Write on!

Andre A. is an entrepreneur, economist and author.

Have you ever published a book? At least meant to? Tell us about your experience!!

Illustration: arwisebooks.com

A country is hit by the entrepreneurial bug and start-up culture

jamaica startup women

Guest post by Susana Garcia-Robles (@RoblesSusanaro)

September 9th:  Arriving at my destination to speak at a Venture Capital conference sponsored by a local government agency.

September 10th and 12th: Attending the inauguration of the country’s Start-Up program and meeting the women behind that initiative and Startup Weekend. Listening to the manager of a prestigious private sector incubator. 

September 11th and 12th: Meeting tech entrepreneurs and participating in pitch events showcasing the winners of two local pitch competitions— one run by a local university, the other  a National Business Model competition spearheaded by a US fund manager who visited this country last year, fell in love with it, and has supported different entrepreneurial activities since.

September 12th: Meeting with a woman who runs mentorship programs for entrepreneurs. Meeting with potential  investors in VC/PE funds. Meeting with regulators.

Can you guess where in the world I am? If you are thinking Silicon Valley, Israel, or Brazil, you’re wrong. 

I’m in Kingston, Jamaica.  And I’m witnessing history in the making.

When I started working with the public and private sectors in developing entrepreneurial ecosystems in Latin America and the Caribbean more than 16 years ago, the world –in spite of the Internet boom – was a very different world than the one we live in today. We were beginning to experience the power of the Internet. Globalization was an issue discussed at an academic level. In Europe, the Euro had not been implemented yet. The region was not an investors’ destination, and there were subjects pending to be taken care of before we could be considered as a region with potential: poverty, economic crises, corruption, weak institutions, and lack of innovation better described us then.

Fast forward to 2014. The region has improved dramatically: many people who belonged to the Base of the Pyramid are now entering the middle class. No global or regional crisis has originated in the region  in a long time and better yet, we showed resilience during the last global crisis. Democracy is established at large. Globalization, coupled with access to technology, has shortened geographic distances, making access to information and knowledge available all over the world. 

Add to this mix the benefits of many countries having a young growing population known as the Millennials. They were born and live in a world where technology allows them to reach out to anyone they want, learn and work in informal settings, and be informed of what’s going on in the world as events unfold. Most importantly, they have developed a sense of belonging to a global community where they can work together in teams.

And this is what’s happening today in Jamaica. The  entrepreneurial bug has infected this country  and there is no cure for this.

I have met these Jamaican entrepreneurs and they resemble any other entrepreneur from any country that has a well-established VC industry. They are full of drive, trying out their ideas to make them into viable business models that can attract financing.  Angel investors, incubators, accelerators, MVP, pivoting the model, are part of their daily lexicon.

Together with many actors that come from different sectors of the country, the MIF is helping this ecosystem thrive: establishing a culture where risk of failure is accepted as part of the innovation and start-up creation process (fail fast, learn from your mistake, get up and move on to try again!), where being an entrepreneur does not mean having lost your job and not yet found your next one, but a life choice.

So…  yes, there is a Start-Up Jamaica, a Startup Weekend Jamaica, a Branson Centre of Entrepreneurship, a Jamaica LAB. And entrepreneurs are running start-up companies like Herboo, DocuJam, and Regal Farms Ltd.

Best of all, the Jamaican entrepreneurial movement and early-stage industry seem to have a greater participation of women than in other countries like the US or Brazil. Women are running the Start-Up programs and incubators, and start-up teams have women founders!

The future is bright for this island committed to fostering innovation from both government agencies and the private sector. At the MIF, we are working on a project with the Development Bank of Jamaica to strengthen this growing ecosystem for venture capital.

Meanwhile, major players in the Jamaican economy are getting involved as well. Jamaica’s largest bank, National Commercial Bank (NCB), and the Jamaica National Building Society (JN) are the companies behind Start-Up Jamaica, the cellular company LIME helped establish the infrastructure for Start-Up Jamaica’s awesome space. 

Have you seen signs of the entrepreneurial bug in Jamaica? And where do you think it will be seen next? 

How international development organizations can help scale BOP businesses

dfi bop business

Most discussions regarding the scaling of base of the pyramid (BOP) models focus on financing the BOP companies themselves. While this is obviously very important and the way to go in the majority of cases, there are other ways development finance institutions (DFIs) could help BOP ventures scale.

My first company, PV Inova, was a BOP business in Brazil. It developed and patented a public GSM telephone that allowed low-income commuters to place cheap calls while on public transportation vehicles. We raised significant amounts of funding (equity, debt and grants) from different sources and closed partnerships with players such as Brasil Telecom, Oi Telecom, the Municipality of Porto Alegre, and Metro Rio. The venture received public support and media attention, and earned awards for social innovation and product development. However, ultimately the business did not thrive due to lack of large-scale financing. We then pivoted the company into a different business line, away from BOP.

What did I learn from this experience?

When you are in a capital intensive business (PV Inova for example demanded expensive hardware production), the conventional financing options do not necessarily work. Why? Because the BOP startup does not have the balance sheet to take on large amounts of financing, be it debt or equity. This is where there is a role for development finance institutions (DFIs).  DFIs could finance the large companies that are willing to purchase from or partner with BOP startups.

To illustrate this, I‘ll refer again to my own experience. After launching a pilot on 400 buses in partnership with Brasil Telecom in the city of Porto Alegre, PV Inova came back to the table with the telecom’s directors to negotiate the expansion of the business. Nevertheless, because margins were (by definition, as with most BOP businesses) thin and the project relatively small in the eyes of a large company, they ultimately decided not to continue to invest. They did however leave a door open in case we could come up with “interesting ways” to finance the scaling of the venture – which we couldn’t do at the time.

However, what would have happened if I had brought to the table a DFI willing to provide funding for Brasil Telecom to purchase the first large order of phones from us? This could have been the ultimate nudge, or tipping point, to make the transaction viable, representing the best of both worlds for all parties: (1) PV Inova would have been able to scale the business; (2) Brasil Telecom to finance the growth of a low-income targeted business and explore new market and branding opportunities; and (3) the DFI would have leveraged the expansion of an innovative BOP business while taking the lower risk of a large company’s balance sheet.

My experience negotiating with large companies from the “weak side” tells me that the involvement of a DFI could add real value to closing the deal. Also, risks for all parties could be manageable because, at the end of the day, the DFI should be paid back regardless of the success of the venture. Innovative and sustainable business models require innovative and sustainable financing solutions.

Andre Averbug is an entrepreneur and economist.

See also Copycat Businesses Can be Great. Photo: Reuters for The Telegraph

The Benjamin Button Startup

baby startup

Guest post by Suhail Kassim

A new startup is like a baby

A startup needs to be cradled and nourished. Even so, there is no certainty that the baby will grow up to be a lean mean fighting machine. In this post, I begin to investigate the phenomenon of some exciting startups which then refuse to grow up — the “Benjamin Button” startups.

Introducing the Benjamin Button startup

A very small minority of entrepreneurs seem to be amazing at finding the right sort of help in their early days. They join rock-solid incubators, find top-notch mentors, maneuver their way into active university forums, win famed business plan contests, know where the hungry angel investors sit. These entrepreneurs are obviously off to an awesome start. Destined for greatness, right?

Not necessarily. Many (if not most) of these startups struggle to fulfil their potential. They stubbornly refuse to scale-up, linger on until they lose relevance, then meet a slow yet inevitable demise. The internet is littered with outdated websites of nascent ventures that never monetized. The chrysalis never transforms into a butterfly. 

I call such ventures “Benjamin Button Startups”, named after Benjamin Button children who refuse to show signs of growing up.

Startups fail all the time, what’s the big deal?

In my personal experience, there is a growing trend of highly promising startups running into the ground. This trend is disturbing for at least two reasons. 

Firstly, this sends a hugely discouraging signal to all other startups: if these poster children fail, despite everything going in their favor, what hope is there for the rest of us?

Secondly, outside startup hotbeds like the Valley, the early stage ecosystem is typically not vibrant. It often has limited resources that can only support a few chosen entrepreneurs at a time. Hence their imperative to succeed — and thereby to return more to the ecosystem than they took out of it — is higher. When they do not, it causes a small ripple. Just a few such ripples could shake up the already fragile ecosystem. The already wary seed investor will turn away, LP funding will ruthlessly re-route to greener pastures, incubators will be left with tarnished reputations, the Fortune 500 executive will politely decline to mentor the university business plan winner. 

What makes a startup a Benjamin Button?

Sometimes it seems to me such startups are victims of their own early success. The founder confuses the “first big win” with the ultimate destination. He/she gets caught up in all the attention, the award ceremonies, the media buzz, the blogosphere hype. Some entrepreneurs succumb to the heady temptation to become celebrities today instead of business moguls tomorrow. They end up doing a ton of calorie-burning activities like giving guest lectures, mentoring other startups, speaking at jazzy forums. As a result, they stay stuck in the “successful-student-startup” mode instead of growing up. And if the founder does not grow up, the startup won’t either.

There is also an element of hubris. Entrepreneurs sometimes think the same skills needed for early wins will carry them through scale-up. This is almost invariably not the case. Early stage success can happen through blue sky thinking, strong personal and professional networks, hyperactive multitasking, good mentors, and a couple of passionate co-founders. There is adrenaline rush after adrenaline rush. Scaling up, on the other hand, needs grit, patience and the ability to fight boredom. It needs long nights out working on a particularly stubborn piece of code while dining on ramen noodles. It needs the founder to hyper-delegate and decentralize or risk falling into the “Founder’s Trap”. It needs a different kind of mentor and adviser — not someone who can ideate but someone who has actually implemented. 

Also, for VC-stage companies, the VC is always more demanding — and less polite — than the angel investor. Unlike a basement startup with three high school friends who are bootstrapping off their pocket money savings, here the money runs out quicker: the VC-stage venture needs to pay its “employees” (it’s no longer just the co-founders) market-pegged salaries (and, gosh, benefits!) — and I’m not even including joining bonuses and annual bonuses and small stock options to the first 100 employees… . In some ways, starting a venture is akin to a part-time Masters program, while scaling up is like a full-time PhD program. Not every MBA gold medalist is suited to do a doctorate in business administration.

Finally, there is the culture of failure. Some ecosystems reward failure — the Valley places a premium on “fail fast, fail early, fail often” — which reduces the tolerance level needed to slowly but surely cultivate a fledgling startup, leading to premature demise of ventures that should have succeeded. Other cultures punish failure — and in such places, the founder is tempted to grab whatever minor victories he/she can — whether it be to speak at a forum or give a newspaper interview — at the cost of focusing on the core business itself.

See also Time To Start a Business – or Not. Illustration: covenant-harvest.org

Have you witnessed instances of Benjamin Button startups? If yes, do you agree with the reasoning above? What are the other explanations as to why this happens? Leave us a comment and let us know your thoughts!