A few months ago, I, and about 249 other young entrepreneurs from across Latin-America and the Caribbean landed in Detroit, Michigan to mark the commencement of a US Department of State-sponsored program called the Young Leaders of the Americas Initiative. On arriving in Detroit, the Saint Lucian cohort – which I am a part of […]
A few months ago, I, and about 249 other young entrepreneurs from across Latin-America and the Caribbean landed in Detroit, Michigan to mark the commencement of a US Department of State-sponsored program called the Young Leaders of the Americas Initiative. On arriving in Detroit, the Saint Lucian cohort – which I am a part of – decided to go out to have a late lunch. As we sat at an Applebees awaiting the arrival of our food, our conversation veered toward politics, policymaking, and entrepreneurship. What do we need to create an environment where entrepreneurship in the region thrives?
My suggestion was simple. I wanted to meet with Caribbean governments who form part of the CARICOM to put forth a simple proposal: Each Caribbean island will pick a niche (or not) – tech, agriculture, food, arts, culture, film or music – set up at least one live-in co-working space, with a small live-in team of mentors and skilled professionals with expertise in branding and marketing, programming, app, and web development. We would bring in 30-50 fellows from across the world mainly from across the Caribbean and Africa. The government would then inject a $100,000USD – $150,000USD investment to the program. This investment would be used to fund ideas, giving companies $2000USD to $5000USD to put towards the growth and development of their companies within the 6-month incubator/accelerator program. In exchange, every company coming out of the program MUST be registered in that country, thereby ensuring their possible success will give back to the country in the form of payment of taxes. Another key feature of the proposal is that Caribbean governments who host and fund these programs would also gain an equity stake in each company.
Two women and two men seated at the table, my suggestions were greeted with a barrage of male laughter. The two men at the table felt that this was not nearly enough, perhaps not taking into consideration that in being responsible for providing the housing for the members of the accelerator/co-working space, one Caribbean government would be investing anywhere from $350,000USD-$500,000USD to get such a program off the ground.
Over the 6 weeks that would follow this discussion, I would spend copious amounts of time analyzing the questions asked by my counterparts as well as the reasons supporting their analysis that the idea would likely fail solely because the financial accelerant provided would not be enough. I would also spend copious amounts of time speaking to development practitioners about how I best feel we can use entrepreneurship as a tool for Caribbean Development.
At the end of my thoughts, I remained confident that while the proposal currently excluded companies seeking larger capital investments, that it would fill a need. At the end of my thoughts I recognized that common to the pushback was the comparison of American ecosystems to that of the ones in the Caribbean. It became clear to me that a huge part of our struggle to create a functioning and robust ecosystem for Caribbean Entrepreneurs is our desire to pattern it after Silicon Valley. At the end of my thoughts I had highlighted three things that we need to rethink if we are concerned with developing a successful Caribbean Entrepreneurial ecosystem – one tailored to the unique constraints encountered in the region; one founded on the understanding that the Caribbean is not Silicon Valley and it shouldn’t try to be.
1. Defining Our Success
Many of us have read on the vastness of the wealth of the “successful ones” out of Silicon Valley. They’re valued in the millions and billions. Perhaps what we’ve read has begun to influence how we define success, because in the Caribbean we typically define a successful company as one where at least one of the shareholders is a millionaire. But how realistic is this if the solution provided is one that will address specific Caribbean problems?
A successful Caribbean company does not necessarily mean a million-dollar company. A successful Caribbean company may be one banking $50,000USD or $250,000USD in profits every year. If you ask me, a successful Caribbean company is one which seeks to solve the region’s problems in efficient ways while maintaining financial sustainability.
Am I saying that Caribbean companies should not seek million dollar valuations?
Absolutely not!
I have personal goals of becoming a millionaire, so my aim here is not to discourage anyone from the attainment of that goal. My aim here is to help Caribbean Entrepreneurs consider what drives their definition of success. Is it financial profit or impact and value?
This is important because our narrative around what a successful company is has fueled a narrative of its own “Think Global”. We now tell entrepreneurs not to look to serve only the Caribbean market if they want to be successful. This is problematic because more than anything else the Caribbean Entrepreneurial ecosystem should be seen as an ally to the Caribbean’s development. When it is viewed that way, the reality becomes that some companies will spring up to solve problems that are unique and exclusive to the Caribbean. When it is viewed through these lenses it becomes clear that every Caribbean company CANNOT scale to meet global needs. And there is nothing wrong with that.
2. Seeking Large Injections of Capital Investment
One of the most cited success stories about incubator/accelerator programs is Y-Combinator. Today, Y-Combinator has a competitive entry process and gives selected entrants a $120,000USD financial accelerant. What most people don’t know is that Y-Combinator did not start off giving $120,000USD. They started off giving $10,000USD. As the program grew in stature and success, many investors wanted to become a part of the movement in Silicon Valley and thus made more funds available.
When I made my simple suggestion, one of the young men at the table countered that he had needed much more than what I was offering and that the amount I was offering would not even assist him in getting his company off the ground. I was curious. I had knowledge of the costs it entailed to set up a company like his so I asked how much he needed to get his company off the ground. When he dropped a bomb of the amount that he thought he needed to just get his company off the ground – $15,000XCD – I was flabbergasted.
To some people, this is not a large amount of money. And it really is not a superior amount. But to me, relative to what it was being used for, it is. Also, I think I was more shaken that I could have outlined how he could have started the very same company with a little less than $2,000USD even without the team of experts that would come attached to the $2000USD that I was offering.
His approach to getting his company off the ground – not lean – had me evaluating why and what we seek large capital investments for. The reality is that many Caribbean companies seek more investment than they could possibly know what to do with not because they need it, but because they are following the rules of an ecosystem which has said that this is the way to go.
In the Caribbean context seeking Large Injections of Capital Investment usually means one of two things:
i. Pressure on Caribbean governments and agencies to fund Opulence as Opposed to Development
ii. Great Dependence on the Benevolence of Foreign Investors and Venture Capitalists
I’m opposed to both.
I believe that Caribbean governments are responsible for creating an environment where Caribbean companies can thrive. But I am often vocal in my opposition to the pressure that local entrepreneurs place on them to find and funnel large capital investments into local companies and events. Often these large injections of capital per business are not needed but they’re requested simply because we’re looking to pattern an ecosystem that does not fit our cultural, economic and political realities.
As it concerns the courted intrusion of Foreign Investors and Venture Capitalists both by governments and private entities, I could not be more opposed. There could not be a greater travesty to our development as a region. Amongst the many implications of this is that we are setting Caribbean companies up for failure, but I think the most poignant to be that this approach embraces everything unsustainable about development.
What, pray tell, do I mean by this?
Caribbean Entrepreneurs currently speak a lot of the sustainable development goals and how their companies aid in the attainment of these goals. However, through various discussions, I’ve noted that most Caribbean entrepreneurs define sustainable development simply as “development able to meet the needs of now”. The way in which they define this concept is important because the way in which they define it largely directs the quality and quantity of capital investment which they seek. It also largely supports their reasoning – steeped in opulence – for why they’re seeking such large investments.
When I or most development practitioners speak of sustainable development we do not define it simply as “development able to meet the needs of now” or even “development able to meet the needs of 5 years from now.” We define sustainable development as “development able to meet the needs of now without compromising the ability of future generations to meet their needs.”
When we say generation, we’re talking about at least 30 years from “now”. This means that in the context of development when evaluating the sustainability of a project, proposal or approach we need to consider how these actions affect our region now, but also how they will affect our region at least 30 years from “now”.
So how do I see large capital investments from foreign investors and venture capitalists affecting us?
Investment is ownership. Whether or not we want to admit it, investors and venture capitalists inject capital in exchange for ownership of something: our land, cheaper labor, shares in our companies, and in some instances, political power. Because of our position within the international system, the Caribbean is more often – if ever not – in a position of weakness when coming to the negotiation table. Even when it comes to private negotiations, if you’re a small Caribbean company not owned by Butch Stewart or Massy, you’re very likely in a position of weakness when coming to the negotiation table. As such, we’re often giving large pieces of land at low costs, under-priced labor, and too many shares in our companies in exchange for the large capital investments that we ask.
And no, we do not have the ability to predict the future, but we do have tools and means of evaluation which can give us an estimate of how certain actions and policies can affect us. With our current approach to building the ecosystem – seeking large injections of capital investment from foreign investors and venture capitalists – it is not far-fetched to say that within the next 30 years, we would have limited the ability of future generations to own land and to own homes. We are leasing large pieces of land at next to nothing to entities that can afford to pay top dollar for them. As such, we are limiting the availability of land in the face of rising demand, and thus pushing the prices of land up; up to a point where most locals cannot afford it. I can see that 30 years from now, the lion share of the profits – the majority of the region’s wealth – would be leaving the region to go back to some economic powerhouse, funneled through their investors and venture capitalists. I can see that using our current approach, 30 years from now, not unlike the plantation system, Caribbean people would have again found themselves producing for the profit of some metropole. Then again, has this ever not been a part of our identity?
I believe that the time will come where Caribbean entrepreneurs can seek large capital investments from foreign investors and venture capitalists while simultaneously controlling the narrative but I don’t think that the time is just yet. As of now, we don’t hold the power necessary to dictate terms. I believe that the way forward – if we want to be owners of a brand of development that is sustainable – is for this generation of entrepreneurs to bite the bullet and to be content to develop at a rate which we can afford to develop at; be content to scale our companies at the rate which we can afford to.
The way forward is lean and sacrificial.
This article from Solomon Igori shows how at MEST, one of Africa’s leading accelerator programs, participants are given an equivalent of $4USD to successfully start a business. This group was able to convert it to a little over $173USD after three days.
3. The Exclusive Caribbean Entrepreneur Clique
A few weeks ago, one of my Facebook connections from Ghana shared this:
There is so much idol worship in Silicon Valley re: successful founders and investors. But there is a common denominator for success which is rarely addressed: Privilege.
Source: Eric Bahn, General Partner, and Co-Founder at Hustle Fund.*
I want to confess my own journey of success, as it relates to Privilege. My Korean parents were poor when they arrived in the US, seeking opportunities for their future kids. Upon immigrating, my father Germanized the spelling of our last name (B-A-H-N), with the rational that a white-sounding last name would open up opportunities. I think it has.
By the time I was born, my parents were doing very well. I never suffered their trauma of poverty. I lived in a big house and went to the best public schools. As a kid, I never felt like I was missing any resources. Partly because of my abundant resources, I was able to attend Stanford. Mom and Dad paid for that too, and I graduated with no debt. They even bought me a Honda after completing grad school! (I know, spoiled brat).
With my family safety net, great education, zero debt, economy car, and abundance mindset–I went forth into the world ready to take huge risks. Taking risks was easy and natural because I COULD AFFORD IT. Success followed. I’m not saying that I didn’t work hard throughout my journey, but Privilege was like a tailwind that seemed to accelerate my career. In Silicon Valley, Privilege seems more normal/common than not.
It feels like so many founders/investors here aren’t running the same race as regular people. If this were a 100-meter dash, we got a 40-meter head start while everyone else waits at the starting line. Our team HustleFundVC believes great founders look like anyone and come from anywhere–privileged or not. I’m starting to realize that Privilege should be an important factor in the assessment of founders.
By better understanding a founder’s personal journey, we should use that knowledge to tare how far along privileged/unprivileged founders should perform across an equal timeline. Founders with a lot of resources will naturally report more progress than founders who have very little resources, over the same period of time. Both still could be equally great in outcome over the long term.
I’m still thinking a lot about how to approach Privilege in Silicon Valley. As a starting point, I wish more people here would recognize it when discussing their ‘self-made’ success.
I love this piece because Eric Bahn shares something that we rarely ever think about when we cite Silicon Valley as “the” model: the privilege of the majority of its members. I’m also sharing it because it brings us to the next element: the exclusivity that I hope we renounce in our endeavors to build the Caribbean ecosystem.
It wouldn’t be wrong to say that Silicon Valley is America’s country club for entrepreneurs. It naturally excludes certain demographics and socio-economic groups and while many of these groups are fighting to change its composition, I see the builders of the Caribbean ecosystem rushing to and adopting similar exclusive approaches and attitudes to grow the Caribbean ecosystem.
If we want to build a robust ecosystem as quickly as possible, we need all hands on deck. The Caribbean is way too small for us to hog resources; skilled people, or the right connections. The Caribbean is way too small for us to have to deal with issues such as not being able to access the right people at the right time because of skin tone, gender or an unfamiliar last name. The Caribbean is way too small for our most successful to not purposely seek to – to not go out of their way to – mentor, aid or give a platform to those coming up. If we can rethink our approach to exclusivity – support for a mindset that is concerned with who will be the first crab out of the barrel – we would have remedied a large part of the difficulties we face in constructing a robust Caribbean entrepreneurial ecosystem.
As I conclude, I wish not to be seen as someone professing to know it all. I do believe that some of my proposals can be tweaked to provide even greater efficiency than what is currently inherent. Still, as a young Caribbean Entrepreneur keen on ensuring that we are creating and growing profitable companies without compromising sustainability – that we are raising entrepreneurs who are not just concerned with profit, but solutions – I hold firm in my assessments that rethinking these 3 key points will do well to grow a fruitful ecosystem.