If there is anything that can change the world, it is start-ups. Think about it, you use an app for transport, to gossip with your best friend, to have chicken tikkas delivered to your doorstep and even for bagging a romantic interest.
By that token, isn’t it fair to assume that start-ups could also help tackle more macro-level issues of hunger, education and inequality? Apps such as NoFoodWaste from the Netherlands and MyStudyLife from United Kingdom are tackling issues of hunger and education already and Pakistan must follow suit.
The start-up culture has witnessed somewhat of a renaissance in Pakistan with more initiatives and investors entering into the arena. In 2015, many new start-ups mushroomed but due to a lack of efforts and quality initiatives, a number of initiatives plummeted by next year. We continue to face a dearth of angel investors, seed funds and venture capital along with a number of other challenges that we’ll explore further.
Currently, Pakistan has a total of 11 incubators in four major cities, 4 accelerators and a total of 723 start-ups. Only a small percentage of these are funded and even despite being funded, they continue to face many challenges. A good example is zameen.com, the real estate app that failed to live up its vision of revolutionizing the real estate market in Pakistan and resorted to focusing on short-term monetary goals.
If there is one thing that makes me hopeful regarding the future of Pakistan, it is the Pakistani youth. Two thirds of Pakistan’s population is below 30 years of age and according to UNDP, 23 % of them want to embark on the entrepreneurial path. Truth is that we’re famished for change and the only way we can navigate is upwards.
Undoubtedly, Pakistan, with its many idiosyncrasies has a long way to go before it can streamline start up success. It is an endeavor that requires an evolution of mindsets across the institutions of family, social values, education, law, business and politics. Let’s explore these issues in detail.
1) Cultural Beliefs – Parenting and educational system.
US based billionaire Sara Blakely, founder of Spanx, a women’s apparel company achieved billionaire status in her early thirties. Before innovating the figure-flattering brand of inner wear, Sara blakely “failed” many times but always persevered to try again until she was successful. She attributes her tenacity to her father’s unique philosophy of failure. He would ask all his children at the dinner table what they had failed at that day, destigmatising and redefining failure as not the final destination but an essential to taking risks, persistently as to inculcate values of true entrepreneurship. Sadly, in our part of the world, most people in positions of power (parents, teachers, managers) have a little to zero tolerance attitude towards failure. If a child quits a job, fails at a business or a gets divorced, he is often dubbed as “failure” with a capital F. Most people in our culture do not realize that failure is an inevitable part of life and is better than not trying at all as it educates one with a wealth of learning. We need to not only accept but encourage risk-taking behavior as failure has always lead to more opportunities than inertia ever will. We, as a society must de-stigmatize and redefine failure.
2) Spending Habits
As a culture that spends ludicrous amounts on weddings, food and other forms of unnecessary material luxury, we need to rethink about how and where we like to spend. Are we spending on assets that will build the community or liabilities that will deteriorate with time? We must also rethink the opportunity cost on society and the economy. Belonging from a developing country, which is in dire need of institution and industry building, we must be more conscientious of spending on business start ups that will build job opportunities, empower the masses and meet societal needs and wants. The common man should be concerned with his influence on society, economy and ultimately the nation rather accumulating products.
Just imagine how great it’d be if the neighboring aunty probed you on how your start up was doing or how you were bettering the world rather than “when are you getting married?”
3) Educational System
The foundations of entrepreneurial thinking must be embedded in the youth from primary school level to secondary, higher education and professional life level. From an early level, the curriculum must be such that promotes chance-taking, critical thinking, community building and cooperation. It means that if a student fails at Math, teachers must investigate the cause. Perhaps the student is a visual learner as opposed to one that learns simply by lectureship. Or perhaps the child is excellent at art or music and his focus must be diverted towards those fields. This also creates opportunity for more diversity in industry.
A student’s talents must be recognized and nurtured from a young age instead of dubbing him as an inept or as a “failure”
At college or university level, original thinking must be encouraged instead of a blasé “copy-paste” culture, which is the status quo at many Pakistani institutes. Institutions must also appoint teachers based on merit, who have in depth and sound knowledge of their subject and who encourage students to learn independent thinking and entrepreneurial values.
– Quality Teachers
Institutes must appoint teachers based on merit who are able to impart quality knowledge and an original thinking ability in students. Teachers must also remain relevant to the course that they are teaching and not try to inculcate personal dogmatic beliefs in students’ minds. I remember during my Business Administration degree, one Advertising teacher would astray from the topic at hand and scare students with his pseudo-premonitions of some midget-like species that he professed were going to soon inhabit the country. Needless to say, I took zero interest in that course, even though I find advertising quite interesting.
4) Entrepreneurship courses across all levels and fields
Higher education organizations and workplaces should offer mandatory entrepreneurship courses and electives that inculcate leadership via practical learning. I believe that these courses should not only be available to business students but also to students of medicine, development, science, engineering, art and media. A varied group of specialists must be able to set up their own initiatives in an overly saturated job market. Universities should also invest in setting up incubation centers that produce entrepreneurs and not just employees. With LUMS and NUST taking the lead in pioneering incubation centers, it is expected that a total of 9 Pakistani institutions will have their own incubation centers including PIFD and Comsats. Workplaces must also encourage independent thinking as opposed to a totally authoritarian leadership style.
5) Expectations of “A Gatsby lifestyle” by Entrepreneurs
Many young entrepreneurs expect that starting up a business would be akin to winning the lottery. They envisage throwing fancy parties and taking trips abroad. While that may become a reality down the line, setting up an enterprise is a painful and unglamorous process that involves around the clock hours and a lot of blood, sweat and tears. It is similar to being pregnant. Entrepreneurs must be able to sacrifice many of life’s luxuries in the initial stages if they want to see long term gain. If you want quick money, become an employee but if you want to make a significant impact on the world, and hopefully earn much more over time, become an entrepreneur.
6) Incubators and accelerators.
Even though it is encouraging to see the role of incubators and accelerators in aiding start ups, there are many flaws with the current incubator system. Incubation center training is analogous to teaching a child how to stand but then leaving him in a jungle with all sorts of wild animals and only a bag of gold to survive (while expecting him to thrive). It’s not enough to heavily fund start-ups whilst overlooking management counseling, inculcating a vision, offering a strong business plan and teaching financial acumen.
– Meritocracy in Mentorship
Incubators must also appoint mentors with technical knowledge in the particular industry that they are mentoring. Some incubation institutions in Pakistan have also become stained with self-interest and politics. They practice nepotism and inefficiency when only true meritocracy can elevate the start up culture in Pakistan.
– Company Law
Incubators also hold the responsibility of partnering up with legal advisors to help startups with IP protections, Patents, Trademarks, Copyrights, Taxation Laws and Coany incorporation.
7) Lack of Legal/Public Support
The regulatory framework in Pakistan is too complex and over cautionary. There are over-complicated laws that need to be decrypted to make them startup friendly. Usually private law firms are needed to find solutions but law firms are too expensive and most startups lack funds to hire them. It is advised that the government simplify procedures and run awareness campaigns to support and sustain the start-up culture. It is proposed to restore the one-window solution service to address infancy-stage problems. It is suggested to create a helpdesk liaison between government and private sector departments to have a one-stop shop for business solutions.
Private sector is also encouraged to take part in a conceptual framework on policies, taxation, stock options, regulations with collaborations with the government.
8) Lack of research and market analysis before launching.
Many young and naïve entrepreneurs launch a business without testing their product or service or carrying sufficient market research to determine whether their product would carry a validated market opportunity with customers willing to pay for it. Sometimes they emulate an idea that worked in a foreign market, without considering socio-cultural elements or educating the audience regarding how it could be applied locally. Other times many start-ups apply the same copy-paste culture that they used in their university assignments by photocopying another start-up’s model. For example when Naan Stop launched the concept of pizza naan’s, at least 8 other renditions with their variations of the same concept, with a name that rhymed with naan, popped up across Islamabad. While it was good to see young hopefuls jump into the start up scene, perhaps more originality would’ve won them more luck in the long run. Pakoras with pepperoni and cheese filling, maybe?
9) Focus on Money VS Team Building
Many new entrepreneurs focus on money too soon whereas in the initial stages, more focus should be on team building, brand building and product/service streamlining. Money can be raised via multiple sources however a dedicated, motivated and talented team of people who would work with passion and commitment is difficult to find. The right team can make you grow exponentially and the wrong team can have you stuck at best and bankrupt at worst. Entrepreneurs should focus on building a quality product/service and company environment in the short run as opposed to expecting a lot of ROI, from the get go. However, this varies form industry to industry.
10) Lack of a Proper Exit Strategy.
There must be a framework for investors and start-ups to seamlessly exit their investment at maturity. Crowd funding platforms are a very promising funding resource that could be tapped into order to raise investments funds by the public and build communities instead of large investments from traditional investors, with a long list of caveats. Angel investment platforms can also be set to tackle this.
I believe that by employing the above mentioned techniques, Pakistan could inch closer to creating a culture more conducive of entrepreneurship, however, on a more personal level, one must also discern whether he or she is cut out to embark on the transformative journey of being an entrepreneur which can be much more challenging than regular employment.
Through trial and error, one can figure out whether they would thrive more in conventional employment, entrepreneurship, freelance work or a combination of two or more.