For the entrepreneur toiling away in Cambridge or Palo Alto, the furthest thing from their mind is the proceedings of the United Nations General Assembly. The UN is slow-moving, rhetorical and often disconnected from global reality, while the entrepreneur is disruptive, innovative, and always running. This, despite the wide-spread acknowledgement of policy makers that entrepreneurs are either directly creating jobs, or building the products and services that are creating jobs. Most of the major development breakthroughs of the last twenty years, like microfinance, are largely the result of entrepreneurs finding ways to acquire customers and scale up in the most challenging places in the world. Global reductions in poverty alleviation have not, for the most part, come from major government redistribution programs, but from innovations in product, business model or process.
In response to the UN General Assembly speeches last week, senior officials at the UN that I spoke with suggested that the entrepreneurial model itself will need to be adjusted to address the major global challenges that the UN is grappling with. These policy makers are not entrepreneurs, but they are smart people, and they identified several areas where entrepreneurs have great solutions, but have not necessarily found a way to make those solutions available to the millions that need them.
Two issues of great importance to entrepreneurs appear to be in great conflict when it comes to global challenges. These issues are intellectual property and scalability. For an American entrepreneur, intellectual property, or proprietary technology, is seen as critical to securing institutional investment. This is achieved in the form of expensive breakthroughs in technology, patents and licensing contracts. The second issue, of scalability and scalable business models, is also on the minds of startup companies everywhere. And outside of IT, getting to scale is complicated by large capital requirements, regulatory approvals, supply chain and logistics.
In three different settings this week, policy makers discussed how these two issues are coming into conflict. First, at the UN Climate Summit, leaders of the developing world acknowledged the need to adopt green technologies, smart grids, and more efficient energy and production systems to reduce global emissions. However, they all felt like the United States had to give them something to work with. They would all like to see rapid technology transfer from the United States and developed countries to the developing world. Without rapid tech transfer of alternative energy technology, smart grid IT systems and low-emissions capital equipment, countries did not feel like they would have the tools to reduce emissions. They don’t necessarily do enough research to create their own tools.
The second setting was the discussion by world leaders about the Sustainable Development Goals. As I stated in an earlier column, these goals are still very poorly defined. But a legitimate concern, again, revolves around the ability to commercialize and scale up innovations in public health, education, agriculture and workforce training. There are 5 billion citizens worldwide that are considered poor or working class by the World Bankthat stand to benefit from the SDG’s. But reaching those customers will take a long time if we have to wait for startups to grow in a traditional way.
Lastly, in the speeches of leaders from the developing world, you start to see this same theme emerge – that the “West” must decide on its priorities. Does America prioritize rapid development and improvement in indicators – in the environment and human development? Or do we value a business climate that supports entrepreneurs to build sustainable businesses that will create steady jobs and income for the citizens of the developing world.
English: Los Angeles skyline seen through smog on I-10 westbound near the I-5 interchange. (Photo... [+]
In America, we do not see it as a choice. We believe some combination is required. But the developing world believes that we are asking them to do both. That we are asking them to adopt American-style business methods, intellectual property and investment rules while also demanding they reduce emissions in a short period of time. To the developing countries, this sounds like a request to stop developing internally but still invite outside business.
This is exactly the challenge where America is best suited to show leadership. Across America, there are scores of entrepreneurs developing products to improve environmental sustainability or products for the poorest citizens of the developing world. Nearly every college business plan contest and major market accelerator now has entire tracks devoted to these green or development entrepreneurs. In addition, legions of entrepreneurs in India, China, Brazil, Turkey and elsewhere are building their startups on the “Silicon Valley” model. American environmental and public health non-profits have started investing in for-profit startups as a supplement to their advocacy and research grants. Nobody seems to put intellectual property high on their list of issues among these groups. But all seek major impact and improvement of the human condition.
America should lead by experimenting with creative solutions that will protect intellectual property without hindering the scalability of important products and services. The federal government, through vehicles like the Export-Import Bank, the Overseas Private Investment Corporation and US Agency for International Development, may be a source of financing and loan guarantees for companies with green technologies or development-focused innovation. The United States promised to raise $100 billion to stop climate change, but has only raised $1 billion in direct support. Instead, the United States should invest $10 billion and seek a return of a $100 billion – all dedicated to climate change. DARPA and ARPA-E have already shown us a blueprint to follow for government agencies to invest in national priorities in a successful, market-based manner.
The United States has fourteen months before the next important climate change summit in Paris. It has until 2015 before the Sustainable Development Goals are adopted. We can continue to push forward with an agenda that is being rejected by the rest of the world, or lead from our area of strength – innovation and entrepreneurship – where the rest of the world still wants to emulate us.
