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America believes it will always lead the world in innovation and entrepreneurship. It expects to keep coming up with Big Ideas—such as personal computers, iPods, and smartphones. It assumes China will keep manufacturing what it designs and India will keep running its call centers and maintaining its aging computer systems. America thinks it still has a monopoly on the American Dream.
It doesn't realize how much the world has changed.
India has already moved far beyond low-level IT outsourcing and call centers; it is rapidly becoming a global research-and-development hub. Its engineering R&D services industry is now a $10 billion business and expected to grow to $45 billion by 2020. China is investing massively in R&D and already leads the U.S. in such areas as clean tech. And it has learned how to beat the U.S.at its own game in intellectual property. In both countries, entrepreneurship is booming.
I am not talking about villagers setting up vegetable stands funded by microloans or techies starting IT service companies. I am talking about the same type of explosive, fast-growth, greed-based entrepreneurship—and the same types of engineering products and Web technologies—that you find in Silicon Valley.
And it's not just in India and China where this is happening. In her new book, Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit from Global Chaos, former BusinessWeek staff writer Sarah Lacy shows how similar entrepreneurs in Brazil, Indonesia, and Rwanda are to their kin in India, China, and Silicon Valley. She vividly illustrates how the American Dream has become America's most significant cultural export. Each of these countries faces different obstacles and is taking a different path to economic success. But in every case, it is the entrepreneurs who are propelling their nations forward.
Lacy, who is now a senior editor at the popular technology blog TechCrunch, starts her global journey with the story of Marco Gomes, a Brazilian entrepreneur who grew up in the slums of Brasilia and couldn't afford to attend school. At the age of 12, he worked for an uncle who ran a computer-assembly business. Because his uncle's factory had Internet access, he was able to access the Web. He learned about Yahoo (YHOO) and Google (GOOG) and the founders of these companies. By watching his uncle build his computer business, Gomes saw entrepreneurship as a ticket out of poverty.
Gomes learned how to develop websites and ended up working for an ad agency in São Paulo. Then he had an idea for an online network that would aggregate ad space for blogs. He started pitching this to anyone, anywhere, who would listen. (Even I got an e-mail from him last year.) Gomes found an investor. With $300,000 in the bank, he launched Boo Box—now a highly successful company with more than 20 employees.
Lacy also tells the story of Indian entrepreneur Rajiv Mehrotra. When he was 10 years old, Mehrotra started assembling and selling transistor radios on the side of the road. He went on to build a billion-dollar business in Gurgaon, India, that delivers satellite TV and land lines to rural areas. But Mehrotra wasn't satisfied with its impact on society. He saw a greater opportunity to bring cell phone connectivity to the hundreds of millions of Indians who live in villages that lack electricity and running water. By enabling them to connect to each other and to the world, he believed he could improve their lives.
Mehrotra couldn't find investors to fund the development of the low-cost, voice-only, solar-powered base stations he envisioned.So in July 2008, he invested $100 million of his own to start a company called VNL to make the technology.Today, his product costs a tiny fraction of the alternatives, requires no electricity, and can be installed by the villagers themselves.It's in use in India and will soon be all across the developing world.The World Economic Forum recognized VNL as one of its top Technology Pioneers, Time magazine included him in its roundup of "Tech Pioneers Who Will Change Your Life," and Fast Company named his business one of the 50 most innovative in the world.
Then there's Martha Tilaar, whom Lacy dubs the Oprah of Indonesia, who began her cosmetics, beauty salon, and spa empire decades ago, when hardly any cosmetics companies were in Indonesia, for few saw the promise of selling beauty in the world's largest Muslim country. Tilaar used some of Indonesia's 30,000 indigenous herbs and spices to make beauty products specialized for Indonesia's tropical climate. Aside from building a $50 million business, Tilaar has trained and supplied jobs to thousands of Indonesian women, many of whom had few options other than working in the sex trade.
All these entrepreneurs, and thousands more whom you find in every country, have something in common. They are all:
Brilliant in being able to see opportunities that others don't see. They have a vision of how they can solve big problems.
Crazy enough to start something that is both risky and disruptive. Most startups fail, everywhere. That's the nature of entrepreneurship. In Silicon Valley, failure is a badge of honor; so it's O.K., and you can try again. In most other places, if you fail, you become a social outcast and are never given a second chance; there is no safety net.
Cocky in believing that they can change the world and build a billion-dollar company.
As Lacy writes, these entrepreneurs have an "internal compass that they listen to rather than the world." They ignore what the world tells them and do what their instincts say.
Here is the rub for U.S. competitiveness: The entrepreneurs in emerging markets actually have an advantage over their American counterparts because they have less to lose. They are not confined to doing things the way they're usually done. They have the luxury of starting fresh, and they have more freedom to take risk. This is great for their countries and the world, but we need to understand that these entrepreneurs are already generating the next Big Ideas.
By 2050, America will be the only G-7 nation still among the world's seven largest global economies, according to Goldman Sachs (GS). In other words, the world is changing very rapidly, and we will face many new, aggressive competitors. We can sit back and watch the world rise as we stagnate. Or we can bring in as many of these ambitious entrepreneurs as possible. Today, the world's best and brightest see the U.S. as the greatest land of opportunity. They want to bring their Big Ideas here because there are fewer obstacles in the U.S. and more resources, and they believe they can do more for their home countries by achieving success here. Tomorrow, things may be different.