Why Give a Damn:
The democratization of entrepreneurship is laying the foundation for global change led by the “entrepreneur class”.
One of the great trends we’ve been witnessing over the past decade, and in particular the past 5 years, has been what you might call the “democratization” of entrepreneurship”. It’s a powerful trend and one that I think will have a huge impact not just on the US economy and workforce, but perhaps even more intensely on other areas of the world – particularly developing economies.
There are several underlying factors that I think underpin this sift that are worth noting:
- The breaking down of geographic boundaries that confined entrepreneurial communities. Fundamentally entrepreneurial communities are networks (not hierarchies). And as such they thrive best in open environments that lack artificial restrictions. They also thrive best when information sharing is free and when entrepreneurs have access to other entrepreneurs (in this way entrepreneurial communities follow Metcalfe’s law of networks which states that the power of a network increases exponentially with the number of nodes on that network; entrepreneurial communities are exponentially stronger as they add more entrepreneurs to their “network”). The globalization of economies combined with the free flow of information fostered by the internet and other media has enabled entrepreneurs to establish connections that extend beyond traditional geographic boundaries and create virtual communities of peers where they once couldn’t exist.
- Entrepreneurship is becoming more highly valued. While many societies have thought of themselves as “entrepreneurial” it’s really only been in the past 10 years or so that entrepreneurs, as members of the creative class, have been truly celebrated. Where once striking out on one’s own was considered overly risky and either big companies (or in some countries state enterprise) was the path to job security and economic independence, now in many parts of the world entrepreneurship is embraced (think of the emphasis both candidates in the recent US election put on entrepreneurs as the growth engine of the US economy, for example). This acceptance (even celebration) of entrepreneurship is opening doors for many people around the world that were until recently closed due to cultural and economic pressures.
- Entrepreneurs don’t care about pedigree. I referenced above a belief that entrepreneurial communities are networks, not hierarchies. Openness, the free flow of information, the lack of community gatekeepers and entrepreneurs as leaders are hallmarks of these networks (vs. hierarchies which are closed, tend to have a small number of people who control access to the system and where information flow is controlled and limited). As a result the fundamental tenants that underpin these networks there is a decreased emphasis on pedigree, background and connections. While this hasn’t completely taken hold in all countries, in many places entrepreneurs are rightly judged by the strength of their ideas, the value they bring to the community and the success of their past efforts and not on their family name or where they attended school. This has opened the door for many entrepreneurs who 10 or 20 years ago would have found themselves cut off from the opportunities they have today.
- A focus on mentorship and giving first. One of the most powerful trends in support of the democratization of entrepreneurship has been the establishment of broad mentor networks that support entrepreneurial communities. These networks are aided by the trends noted above and stem from the fundamental belief that a larger and larger number of experienced entrepreneurs are embracing of giving first, getting later. Ultimately the best mentor relationships become two way but the going in expectation of the mentor needs to be that they’re participating first to give with no expectation of anything they’ll personally take away other than the satisfaction of helping out. The development of these mentor ecosystems – bolstered by the rise around the world of accelerator programs (the Unreasonable Institute being a great example) – has allowed entrepreneurs greater access to advice and counsel and I think helps create better entrepreneurs and more vibrant entrepreneurial ecosystems.
Fundamentally the world benefits from the democratization of entrepreneurship as more people look to themselves as the engine to grow beyond their circumstances. And importantly this phrase works in reverse as well – entrepreneurship promotes democratization. Entrepreneurs value the stable systems that democracy tends to bring, they see themselves and not government as the answer to their societies challenges, they provide jobs and economic stability that promote stable society and they work in networks that by their nature are fundamentally more democratic than hierarchical regimes. I don’t have a crystal ball and I don’t know exactly what the next 20 or 50 years will bring. But I do believe that the global trend towards entrepreneurship will continue and that the world will be much better for it.
What key factors are needed to grow entrepreneurial ecosystems?