Startup Communities and the Bottom-Up Approach to Prosperity

The insights shared during a recent webinar organized by the Legatum Center for Development and Entrepreneurship at MIT made for a refreshing hour and a half of intellectually stimulating and inspiring discussion. The session featured Brad Feld, author of The Startup Community Way and Managing Director of Foundry Group, Professor Fiona Murray, Faculty Director of the Legatum Center and Associate Dean for Innovation & Inclusion, and Christopher Schroeder, Co-Founder, Next Billion and author of Startup Rising. The conversation was facilitated by Dina Sherif, Executive Director of the Legatum Center, who engaged the panel to explore how startup communities are foundational building blocks for innovation ecosystems and for economic prosperity. Below are four key insights I gained from listening in and should be considered when thinking about startup communities in emerging markets.

View the full webinar here.

Recognize Entrepreneurs as the Long-Term Stakeholder

“Large companies run on [an] annual rhythm, universities run on [an] annual rhythm… government run on [a] 2-4 year cycle.. [with] startup communities.. you have to have [a] 20 year view.” That governments are not the long term stakeholders in developing a local economy, as most narrative coming out of them would emphasize, seems counterintuitive.

However, the quote by Brad Feld resonated with my personal experience as a person who spent the last eight years working on entrepreneurship ecosystem building and economic empowerment in Yemen. I observed infrastructure and projects disappearing juxtaposed against the relentless efforts of a community of entrepreneurs who just won’t stop trying. Entrepreneurial success takes a long time, 15-20 years as Brad would emphasize, “it is not a 20 year view that is absolute, I lived in Boulder for 25 years, I am not on -5 of my 20 year journey, I am on year 25 year of my 45 year journey”. In emerging markets, entrepreneurs long-term view is not only about building their solutions, but also the infrastructure and markets for their solutions to succeed.

Interactions and Connections are What Matter in A Startup Community and Ecosystem

While I personally tend to think of innovation and entrepreneurship as ecosystems requiring the engagement of all relevant stakeholders, Brad makes the case that the startup community should be at the core. He argues that the interactions of this community should have  one main purpose, “to help an entrepreneur succeed.” An entrepreneurship ecosystem is built out of it, as a system of systems. In The Startup Community Way, Feld distinguishes between Leaders, Instigators and Feeders as the main actors in a startup community.

• Leaders are the entrepreneurs,
• Instigators are people working within other relevant stakeholder organizations,
• Feeders are the organizations themselves.

Feld emphasized that it is not the parts of the community or the ecosystem that matters but rather the interactions between those parts. Prof. Fiona took a step back to look at the bigger picture and drew attention to the other communities within the ecosystem, each with its own shared intent, trust, and social norms. Murray highlighted the need to break the boundaries between these communities, and how critical connections across communities are to eventually create an Innovation Ecosystem that gives us the results we are seeking in terms of economic development and prosperity.

An Inclusive approach is needed

The MIT approach to innovation ecosystem development, highlights, the importance of engaging all stakeholders in the process. It emphasizes bringing all stakeholders to the table including universities, government, corporates, risk capital, and entrepreneurs, and I would add civil society. However, when we talk about emerging markets, or even smaller markets within the US, not all of these players may be ready or willing to engage. Brad Feld noted this potential mismatch of purpose and stressed the importance of “not hav[ing] the organizations themselves try to control and lead the activity in the startup community [as] that would stifle it”. Prof. Fiona agreed that “it is not that you can’t make progress when some of these key actors are lagging behind, but clearly you can accelerate progress when you bring them on the journey…but you need to bring those individuals (instigators) on and have them bring their organizations”.

Importantly, panelists agreed we shouldn’t just wait for other stakeholders to be ready,  entrepreneurs can create the holding environment for a startup community to emerge and these communities play a critical leadership role in advocating for changes needed in order for entrepreneurs to succeed and innovation to emerge.

Shift the paradigm, recognize the value of local knowledge and leadership

We are now at the forefront of a model of a diverse set of startup communities. Whether based in smaller cities in the US or in emerging markets, these communities are working from the bottom up creating momentum for innovation, and are invested in the long term. Christopher Schroeder defined this model as a model that values people, not as a problem to be solved, but as assets to be unleashed. Christopher also brought attention to the new realities  where “rising markets around the world share as much together if not more than they share with Silicon Valley.”

Increasingly, entrepreneurs in emerging markets are connecting with each other and sharing lessons as they recognize the similarities in their startup communities and challenges they face, rather than relying on or trying to replicate the structure of already well-established ecosystems that are totally different in terms of composition, challenges, and mindset. Chris makes a strong case that VCs in such established ecosystems, such as Silicon Valley, need to learn from what is happening in emerging markets. Local “entrepreneurs are creating solutions on their [own] terms” and are better positioned to understand the needs and challenges of their local environments. This is how they are managing to win against large well-funded companies who lack local understanding, pushing these large companies to either acquire them (as in Uber acquiring Kareem) or leave the market (as in Uber leaving the East Asia market for Grab).

“[We need to] focus startup community energy as organically as possible on the big problems,.. because clearly, governments are not going to do it on their own [and] foreign aid is not going to do it…we have to do it differently”.

Entrepreneurs and startup communities’ long-term commitment to local development, their topophilia (love to place), coupled with deeper insights into what it takes to innovate in a local setting is the best bet for development in emerging markets. When entrepreneurs are willing to brave conflict, as in the case in my home country Yemen, not because they don’t realize the challenges facing them, but because they believe in the value of what they are doing, in their ability to navigate challenges, and their commitment to the cities and towns within which they are operating, prosperity starts to be more of an eventual certainty not an unlikely eventuality.

This article was written by Adeeb Qasem, Executive Director of the ROWAD Entrepreneurs Foundation and Researcher at the Legatum Center for Development and Entrepreneurship at MIT.

Thank you to our panelists for their contributions and insights:

• Brad Feld, Author of The Startup Community Way and Managing Director of Foundry Group
• Chris M. Schroeder, Author of the Startup Rising and Co-founder of Next Billion
• Professor Fiona Murray, Associate Dean of Innovation & Inclusion and Faculty Director of the Legatum Center for Development and Entrepreneurship at MIT
• Dina H. Sherif, Executive Director of Legatum Center for Development and Entrepreneurship at MIT

View all of the Legatum Center webinars here.