The State of Entrepreneurship in South Africa The key archetypes of an entrepreneurial culture

3rd Edition White Paper; Deliberations and Key Findings

1 FNB Business Banking is proud to once I believe that it is this culture that sets us apart again bring South Africa the third State of from our peers and allows us to move quicker Entrepreneurship Whitepaper. Our focus this and be more innovative. FNB is committed year was to better understand the potential to offering entrepreneurs “real support”. Our opportunities and obstacles to implementing a non-traditional approach to banking allows intro range of entrepreneurial archetypes. us to decrease the costs of starting and operating a business, and our entrepreneurial Entrepreneurship is a hot topic at the moment platform, BizNetwork, allows us to up-skill our as presidents, ministers and big business realise entrepreneurs in running better businesses. I that these heroes on the ground are the true am confident that this Whitepaper is another catalysts of global economic growth. As a bank great contribution to the local and international started by entrepreneurs, we pride ourselves entrepreneurial debate, and we are incredibly duc in our own “owner manager culture”, where we proud to be a key part in this process. encourage our staff to run and manage their own functional units as their own businesses. Kirsty Davis tion CEO: FNB Business Banking

3 Approach and 01 Methodology

Main Panel 03 Presentation and Discussion

The 09 Model in SA

The Mothership con 15 Model in SA

The External Trigger ten 19 Model in SA The Local Hero 23 Model in SA ts 27 Conclusion 29 Gallery 31 AcknowleDgements

5 Approach and Methodology This paper was a collective effort. It was written to reflect what was said in actual debates of the third State of Entrepreneurship in South Africa conference held on 16 November 2011; it is not a mouthpiece to broadcast the views of Endeavor or FNB. In addition to the main State of Entrepreneurship panel that kicked off the conference, four specialised breakout sessions were held on the models / archetypes of entrepreneurial communities:

• The Silicon Valley Model • The Mothership Model • The External Trigger Model • The Local Hero Model

Each session was duly recorded in audio and video, and in late December 2011, copies of the audio recordings were forwarded to Endeavor South Africa where staff members proceeded to create the first draft of this paper. TheE ndeavor team listened once more to the audio recordings of each session. Drawing from these materials, session by session, they integrated this content into the paper before you.

Building on the previous two years during which this work has been compiled; it is our hope that the third edition of this paper will achieve its objective of creating a useful collaborative platform for South Africans who are interested in enhancing the level of entrepreneurial activity in the country.

2 Main Panel Presentation & Discussion The third annual conference on the State of Entrepreneurship in South Africa was held on 16 November 2011 at the Gautrain Hotel in Johannesburg. This conference was part of a series of activities within Global Entrepreneurship Week (GEW), a global Kauffman Foundation initiative that strives to foster national debates on entrepreneurship around the world. In 2011, it is estimated that seven million people worldwide, from 24 000 organizations, participated in 37 000 activities across 115 countries.

The headline panel of the SAP and FNB- Endeavor conference was preceded by a presentation from Pedro Arboleda to share the outcome of nearly 10 years of research conducted by Monitor Group on how communities, regions and countries can become hubs of high-impact entrepreneurship. The conference was attended by an assortment of policy makers, entrepreneurs, academics and funding providers. Their mandate was to drive a general discussion on entrepreneurship in South Africa with the underlying goal of setting the tone for the four subsequent breakout panels that were to follow later in the day.

4 Entrepreneurship Monitor Group An introduction An introduction in the South study on to the Silicon to the Mothership African context entrepreneurship Valley Model of Model of entrepreneurship entrepreneurship Reality and aspirations Premise and questions The Silicon Valley Model occurs when The Mothership Model can be a good alternative entrepreneur-scientists at high-quality universities to the Silicon Valley Model for decision makers South Africa’s performance on the most essential There are scores of data, reports and opinions or research centres create breakthrough who do not have a Stanford, Harvard or Bell lab, measure of entrepreneurship, the TEA index available that attempt to explain the world of Intellectual Property (IP) products and services, but may have an Intel, Anglo American or IBM in (Total Entrepreneurial Activity index; percent of entrepreneurship and reaffirm the link between and are able to commercialise these products their neighbourhood. The idea here is to unlock the active population who are entrepreneurs) entrepreneurship and prosperity. It has thus and services quickly and efficiently through the executive and entrepreneurial talent that may has improved from 5.9% to 8.9% between 2009 become quite difficult for decision makers to make the investment and support of competent be resident in anchor firms by allowing them to go and 2010, but is still lagging compared to other sense of all of the information available to them. local Venture Capitalists (VCs). The output of out and create highly successful new businesses. emerging economies. Since the mid-1990s, this formula stems from processes of active South Africa’s TEA has fluctuated between 4% There are definite opportunities for middle-income engagement between local academics and One of the critical success factors for this and 6%, whereas countries like Brazil or Mexico countries like Chile, India and South Africa to experienced VCs. model concerns mindsets; more specifically, (15% in 2010) have had TEAs thrice as large as leapfrog their economies into more and better the cultural norms and attitudes in a community South Africa’s. The average TEA for low-to-middle entrepreneurship. However, the following has been This model first emerged in the 1980s and 1990s regarding business failure. In most high-impact income countries has been between 10% and an elusive endeavour for most decision makers: on Sandhill Road, that legendary piece of real entrepreneurship communities, business failure 12% for the past three years. estate at the heart of Stanford University where a is often seen as positive and a way to learn • Understanding which policy levers are number of now world-renowned VC firms power invaluable business lessons the hard way. In the words of Ebrahim Patel, Minister of appropriate for each specific region. the likes of Yahoo, LinkedIn and . This attitude makes it easier for experienced Economic Development, “we have not created • Identifying which idiosyncrasies exist in one’s executives at an anchor firm to say, “I am going to an environment where entrepreneurs can flourish, environment. Because the Silicon Valley Model has created leave my secure job and start my own company. and at the same time, jobs are being lost on a • “Cracking the code” on what it takes to a number of breakthrough companies over I will start by providing this product / service to daily basis!” In fact, despite the myriad news- become a high-impact entrepreneurial region the years, many policymakers rapidly become the anchor firm, and I will succeed after x amount catching ‘announcements’ on how government or country. enamoured with this model and want to replicate of years because I will intimately understand intends to create 500 000 new jobs in the next it in their own communities and cities. What many the type of advanced / specialised product the five years, the reality is that 700 000 jobs have Monitor Group’s journey into the world of the do not realise is that this model also involves a anchor firm needs.” actually been lost since the Zuma administration entrepreneur began through an inquiry from measure of risk, as it requires significant levels of came into office 28 months ago. policy officials in Denmark who posed the investment with very uncertain returns, especially One of the most successful examples of an question: “What leads certain types of high- when the pre-requisites for the model to work are anchor firm entrepreneurship community is known Thus, the question of how to drive impact entrepreneurs to settle in specific not correct. as Research Triangle Park, which encompasses entrepreneurship and job creation is very much at entrepreneurial ‘hot spots’?” From there, Monitor IBM in the cities of Durham, Raleigh and Chapel the top of the national agenda in South Africa, as consultants proceeded to ask this question to a Furthermore, regardless of whether the region or Hill in North Carolina, USA. Between 1992 and in many other emerging economies. Aspirations number of entrepreneurs in Singapore, Silicon community has the right IP-assets for this model, 2000, about 20 new businesses emerged out are quite ambitious, but a set of nagging Valley and Korea, among others, so as to learn the ability to connect these universities / research of IBM’s operations in this region, including questions remain; namely: directly from their stories and experiences. centres to an efficient local VC community is entrepreneurial successes such as Red Hat often difficult because of the ‘chicken-and-egg’ and SAS, which went on to become worldwide • What is South Africa’s main entrepreneurship Monitor found that entrepreneurial success can issue of deal flow; meaning that VCs do not powerhouses in their own right. problem? be divided into four models / archetypes, which originate before there is substantial deal flow, • What issues are preventing South Africa from will now be discussed in detail. and deal flow cannot come about without a becoming an entrepreneurial ‘hot spot’? pre-existing VC community. Long-term underlying • Are South Africa’s entrepreneurial obstacles mostly assets, such as a world-class education system culturally, financially and / or socially based? feeding into the IP community or a super-efficient IT infrastructure, are often also obstacles to making the Silicon Valley Model successful. 6 An introduction to the External An introduction Trigger Model of to the Local entrepreneurship Hero Model of entrepreneurship This model is about fate, good and bad, In essence, the External Trigger Model of This model focuses on the local entrepreneur and how local stakeholders can turn fate entrepreneurship takes place when an external who ultimately builds a large, ground-breaking into an opportunity for greater and better event releases an abundance of skilled- business enterprise, motivates others and entrepreneurship. The story of a cluster of experienced workers and / or creates business creates opportunities for more entrepreneurship communication companies in San Diego, opportunities in a specific society, sector or in the community through his story. , is a case in point. San Diego initially region. Of course this model assumes that built the local economy by leveraging their great the community that is affected by the event Bill Gates had just such an impact with Microsoft climate and breath-taking pacific coast through understands the underlying factors that make in Seattle. A less-known success story is the tourism and their US Navy military bases. new opportunities possible. In the Qualcomm story of Earl Bakken, inventor of the first cardiac case, for example, Erwin Jacobs saw more pacemaker (1957) who founded the medical Between the 1950s and 1970s, leading edge than San Diego’s natural beauty and tourism device company Medtronic in Minneapolis, defence research was conducted in San Diego opportunities. He noticed that San Diego was Minnesota in 1949. Earl’s success led to the on behalf of the US PacificF leet, which led to ideal to sell sophisticated communications creation of key institutions in the Minnesotan major innovations in the area of distance-wireless equipment to ships for three reasons: medical field, such as the founding of theS aint communications between military ships. Erwin Jude medical device company in 1976, the Jacobs was one of the hundreds of researchers • San Diego is situated on the coast, meaning Medical Alley trade organisation in 1984 and the who worked on these advanced communications that ships are never in short supply. Guidant medical device company in 1994. By projects, but when US military officials in • He had access to a pool of serious 2006, Minnesota had become home to more than Washington started downsizing military bases engineering talent. 500 healthcare companies, employing nearly 250 and research centres across the country in the • He had the support of local officials and 000 people. In fact, of the world’s top 15 medical 1980s, he was one among several thousand dynamic local Venture Capitalists to support device companies, 12 are based in Minnesota. workers who was affected. and finance his new venture.

Chile also produced its own entrepreneurial local In reaction to this adversity, and because hero recently in the form of Fernando Fleishman, shipping communications was all he knew, a chemist who dreamt and built lagoon-size water Jacobs decided to remain in San Diego and features in which the clarity and cleanliness of founded Qualcomm, a company involved the water are maintained through the use of an in the manufacturing and selling of ship elaborate chemical solution. Fernando went on to communications equipment. Having to ensure license his chemical formula to developers and access to the local pool of engineering talent distributors worldwide, this on top of the impact from places like the University of California in San he personally had on building Chile’s own local Diego (UCD), Qualcomm worked with university construction industry. Today, his company is officials to set up and fund UCD Connect, a local valued at $1.4 billion. incubator group designed to nurture advanced research on communications solutions. By the There is no denying the massive impact that mid-1990s, the group had helped establish more local heroes such as Bill Gates, Earl Bakken than a thousand high-impact entrepreneurial local and Fernando Fleishman have had on their start-ups in that field. communities, but replicating the home-grown Local Hero Model of entrepreneurship is a very complex and difficult endeavour. It requires close involvement from savvy local economic development leaders who have the vision and decision-rights to leverage the success of these local heroes to ensure immediate benefits to the community.

8 The Silicon Valley Model in SA

10 South Africa has Partnership and A lack of the tools to make processes to understanding the Silicon Valley build a strong and practice Model successful SVM ecosystem of Intellectual are lacking Property Tertiary institutions such as Stellenbosch, the rights hinders University of Pretoria and the University of South Africa lacks a professional investor network development of are making strides in changing the that is easily accessible to entrepreneurs. A the SVM in South orientation of entrepreneurial education in South professional investor network includes seed and Africa Africa, and are laying the foundations of the angel investors who are willing to take high risks archetypical Silicon Valley Model (SVM). on innovative start-ups and Venture Capitalists According to Dr Anu Idicula, the inadequate who can make large investments to ensure the understanding of Intellectual Property rights from Dr Anu Idicula, Head of the Intellectual Property growth and scalability of entrepreneurs. This both funders and entrepreneurs is one of the Unit at the Technology Innovation Agency, multi-layered investor network is essential to critical factors hindering the growth of the SVM in acknowledges that the skeleton of a SVM exists ensure that risk-taking seed and angel investors South Africa. This may be because entrepreneurs in South Africa at these universities; however, are able to on-sell to existing Venture Capitalists are unwilling to share their ideas and business more can be done to further develop better and recuperate their initial risky investments. plans with funders who they believe will “steal” entrepreneurs. Frikkie Herbst, Head of Doctorial their businesses. Programs at the University of Stellenbosch, In addition to financing, it is critical that SVM notes that this institution has had to retool itself entrepreneurs have access to a network of skilled Andrea Böhmert, Exco Member for The Silicon to accommodate a new way of approaching professionals such as accountants and lawyers. Cape Initiative, believes that it is critical for entrepreneurship. Entrepreneurial education is not For the SVM to work, especially for early stage universities to have a bigger hand in supporting just about academic teaching, but also driving, entrepreneurs, a community of professionals entrepreneurs in understanding Intellectual supporting and being directly involved in practical who are willing and able to give advice to Property rights. With the proper support, hands-on support of entrepreneurs to ensure the entrepreneurs is critical. entrepreneurs will have all the prerequisite successful development of their businesses. information and documentation necessary when Enterprise Development is a great mechanism approaching funders. In comparison to the USA, South African to ensure that early stage entrepreneurs have universities and high schools are not introducing access to these types of professional services. Government also has an influential role to and exposing their students to practical The Silicon Cape Initiative in the Western Cape play in policy development and facilitating the entrepreneurship experiences and the intricacies is a government-led project encouraging the process of getting patents for new products and of the SVM enough, including education on development of tech start-ups in Cape Town. licensing services to ensure that entrepreneurs’ how to protect Intellectual Property. This results They are laying down the groundwork for Intellectual Property is protected. Vinny Lingham, in graduates who are not properly prepared successful partnerships between professional CEO of Yola.com, believes that government to approach funders or commercialise their service providers and entrepreneurs, and is not currently fulfilling its role but has great products. It is essential that entrepreneurs get full encouraging the development of a strong SVM potential to lead increased transformation of support from their educational institutions. ecosystem in Cape Town. entrepreneurs’ Intellectual Property into practical and commercialised products.

12 The South African funder and community is small and conservative

Andrea Böhmert, Exco Member for The Silicon Cape Initiative, asserts that the risk-shy environment in South Africa is hindering the development of the SVM and that there is a direct disconnect between risk appetite and reward. Efficiency-driven entrepreneurs (entrepreneurs with corporate experience that have identified inefficient systems in their previous work environments) are favoured over SVM risk-takers by funders. Encouraging development and greater access to investor networks will boost the development of an SVM ecosystem in South Africa. This can be achieved by focusing on Golden Triangles of excellence.

Universities in Cape Town, Stellenbosch, Pietermaritzburg, Durban, Tshwane and High potential Recommendations Johannesburg are hubs where industry-specific ventures and insights: investor networks can be established to target struggle to SVM entrepreneurs, according to Monitor Group attract and • Remodel the way entrepreneurship is partner Pedro Arboleda. “The majority of people retain talent taught in schools and universities to offer in the Venture Capital community in South Africa hands-on, practical teaching experience on have Charted Accounting backgrounds, meaning There is currently a shortage of highly skilled entrepreneurship and benchmark how this is that they are inherently conservative and trained management level executives in South Africa, done in other countries. to avoid taking risks. These Venture Capitalists and SVM entrepreneurs struggle to compete • Create a professional investor network that is do not tend to have entrepreneurial backgrounds with the salaries that large corporate companies localised to specific Golden rianglesT where and often have no experience in starting a are able to pay to individuals with management SVM entrepreneurs are located within multiple business. Changing this culture within the experience. “It is critical that investor networks layers (including seed, angel and Venture investor community is necessary,” states Vinny also provide additional support services for Capital funders). Lingham, CEO of Yola.com entrepreneurs such as access to professional • Create greater access to professional services services, assistance with identifying and recruiting such as accounting and legal advice for skilled individuals, and guidance on critical entrepreneurs who cannot afford to pay full price strategic hiring decisions,” states Pedro Arboleda, for these services. Enterprise Development is a Partner at Monitor Group. great mechanism to encourage access to these services for entrepreneurs. A clear way to test the success of the • Encourage government to create an development of SVM entrepreneurs is to see environment that enables entrepreneurs to how many entrepreneurs leave South Africa protect their Intellectual Property fairly and and how many are coming back. Government easily, ensuring that entrepreneurs are not can play an important role in encouraging an scared to share their ideas. entrepreneur-friendly environment by incentivising 14 entrepreneurs to stay in or return to South Africa. The Mothership

Model in SA The Mothership Model of entrepreneurship can be defined as large local companies spinning-off smaller entities by helping employees set up new ventures and offering support to these start-ups. It also applies to large companies that support their own smaller suppliers, customers or distributors, either directly or indirectly. This section will highlight the application of this entrepreneurial archetype in the South African context, as well as point out some barriers and offer solutions and insights to the development of this model.

16 Successful Intrapreneurship The Mothership Corporate Competition Enterprise examples of the versus Model is driven principles and between anchor Development Mothership Model Entrepreneurship by perceived procedures can firms and provides a unique in SA benefits for be a hindrance ‘connected’ small opportunity for Intrapreneurship is the culture of encouraging corporates to new spin-off enterprises can the Mothership South Africa has many Mothership Model employees in large corporations to develop ventures be a challenge Model in SA success stories in various industries. The most their own ideas, innovations and products The Mothership Model is anchored by talented notable examples are companies like Discovery into solid business plans that benefit both executives within large corporates who have an Although most successful large enterprises A new enterprise is usually supported by As much as the Enterprise Development aspect and OUTsurance who have corporate roots within the individual and the companies they work entrepreneurial edge. These managers come across started with founding entrepreneurs and a start-up the mothership because of the quality of the of B-BBEE Codes helps to foster the emergence the FirstRand Group. Additionally, the special for. Intrapreneurship is very important for the good ideas regularly and weigh them on financial entrepreneurial culture, this reality is often altered as entrepreneurial talent and the perceived differential of black-owned businesses, more could be regulations and specific components of Broad- Mothership Model to thrive and is effective in two return analyses such as Return on Investment (ROI) organisations grow and become more formalised. value to its operations. While in most cases done by the corporate community to foster Based Black Economic Empowerment (B-BBEE) ways; firstly, it helps identify the entrepreneurial or Weighted Average Cost of Capital (WACC). The the objectives of the new venture are outlined, smaller enterprises in general. For instance, Codes such as Enterprise Development talent within organisations, and secondly, it managers have to evaluate their own risk mandates The fundamental culture of many corporates, they are not always adhered to. Because new large corporate entities benefit when smaller encourage larger companies to help create shifts the mentality of high-level employees from in the boundaries of their companies. which includes strict and rigid policies and entrepreneurs have the expertise and contacts companies in their supply chain are strong and majority black-owned small enterprises. Anglo viewing themselves solely as managers. procedures, is often a hindrance to the success to offer the same products and / or services the competent, regardless of how “black” their Zimele, Anglo American’s Enterprise Development First and foremost, all prospective projects must of new spin-offs. The corporate mentality is mothership does, there is often a temptation ownership structure is. fund, is one of the most successful Enterprise Promoting intrapreneurship has its pros and be financially attractive. Other developmental inherent to many executives and often creates to do so. The disruption in this relationship Development initiatives. To date, Anglo Zimele cons. Corporates need managers to execute, or social benefits are usually overlooked in this a lack of entrepreneurial thinking within an usually stems from one party being seen to be In that vein, corporates could and should go has invested in over 845 small businesses – but stand to lose their top talent who possess process. To entice corporate managers to spin- organisation. This is often a source of conflict in competition with the other; more specifically, beyond the mandate of the B-BBEE Codes by generating 16 000 jobs and turning over more great industry knowledge and are ripe to lead off new divisions within their companies, would- between entrepreneurs who start new spin- when the spin-off is directly competing with supporting all supply-chain entrepreneurs that than R1.8-billion. successful spin-offs. The other major problem in be-entrepreneurs are required to demonstrate the offs and the managers of the mothership. The the mothership. It is imperative that there is have the potential to grow and create jobs. this model is motivation, as the entrepreneur-to- benefits for the corporate. “incubation” period of the new start-up should clarification of focus between the objectives of It is thus in the interest of large corporates to be must give up the security and other benefits of take place in an environment that allows for both the mothership and the spin-off. finance support structures and fund vehicles his / her current job in exchange for the inevitable cautious risk-taking, flexibility and leadership. that are accessible to all deserving companies risks of starting a new business. in their supply chain, not just ED-eligible ones. Employees within the corporate who are in charge of the support and funding structures should also be entrepreneurial themselves, which is often not the case – to the detriment of both the corporate and its supported entrepreneur.

Recommendations • BEE reform of Enterprise Development should to increased corporate partnership with and insights: focus on creating and nurturing more spin-offs and support of small businesses. CSR has through mechanisms such as Enterprise become an accepted spend in corporates, Development funds, contributed by both an ideal that many corporates participate in to government and corporates. varying degrees. • More communication is necessary to • From an outsider’s perspective, there is highlight the important and possible impact greater collaboration between large and of broader Enterprise Development so as to smaller businesses in South Africa than in encourage a paradigm shift in government. many other countries, which is encouraging. The shortcomings of B-BBEE Codes need to This presents a platform for the promotion of be addressed, especially concerning its focus greater participation. The focus should be on on ownership. Charters that call for reform of elevating sectors of the economy that creates government policies that are beneficial to all the most jobs. entrepreneurs are also necessary. • The rules of engagement between the • The success of Corporate Social mothership and spin-off have to be clearly Responsibility (CSR) must be replicated defined, so as to not create competition. within the business environment as it relates 18 The External Trigger Model in SA Although many types of positive and negative events can trigger opportunities to foster an entrepreneurial community, the participants in this discussion for South African External Triggers chose to focus on Broad-Based Black Economic Empowerment (B-BBEE).

20 Is B-BBEE an Is B-BBEE creating What are the Recommendations external a barrier for unintended and insights: trigger for entrepreneurs? results of entrepreneurship B-BBEE? • Government needs to be more consultative in South Africa? Ideally, Enterprise Development funding should and open to improvements of existing encourage more young people to become One of the unintended consequences of the B-BBEE legislations. The Ministry of Finance, Israel Noko, a lawyer and BEE consultant, entrepreneurs. In reality, this resource is often management control aspect of B-BBEE is that Economic Development, and Trade and believes that B-BBEE legislation is indeed unpredictable and inconsistent because of many highly skilled and experienced white Industry need to create mandated programs an external trigger that can foster economic confusion, misunderstanding and conflict executives leave the corporate environment in that will act as guidelines for the private sector transformation through entrepreneurship. He within corporates about business incentives for order to establish their own businesses. These to copy. We have seen that government- states that there is a need for B-BBEE to be Enterprise Development funds. This volatility deters individuals often end up in entrepreneurial led entrepreneurship initiatives have proven rolled out differently, with more positive links to potential entrepreneurs from taking advantage of ventures that make them wealthy and add value successful abroad. educate young entrepreneurs. This will in turn possible entrepreneurial opportunities. to the economy. • The education system needs to include promote the creation and development of small the basics of entrepreneurship. The and medium-sized businesses in South Africa. Within large corporates a lack of understanding Additionally, the culture of using tertiary education development of both external and internal and general confusion about B-BBEE programs in order to get a corporate job, a steady salary education programs for schools and The participants made the argument that South exists. Corporate employees often do not and an easy promotion track is hindering the universities is vital for the development of African corporations that abide by B-BBEE understand how to support and develop small development of entrepreneurship further in entrepreneurship. Developing programs like Codes currently do so primarily because they are businesses and medium enterprises. Creating South Africa. “A survey found that 90% of South Global Entrepreneurship Week for students compelled to by government, yet it is estimated “how to” guidelines and outlined programs for Africans would prefer to have a steady job rather to access, and giving them the opportunity that R22-billion goes unspent every year. The private sector companies is critical to the future than start their own company,” states Israel Noko, to interact with leading entrepreneurs in their reason for this is that corporates currently act on success of B-BBEE legislation. a lawyer and BEE consultant. communities, is essential. compliance rather than business incentives. One • Technology will play a critical role in developing such clear business incentive that corporates More importance should also be placed on the Another unintended consequence that B-BBEE young entrepreneurs by captivating their should embrace is investing in smaller black-owned broader potential benefits of developing young legislation has on potential entrepreneurs is attention and encouraging them to make businesses, so contributing to the expansion of the entrepreneurs as opposed to just checking discouraging young black individuals from starting the choice to become entrepreneurs. By South African ‘economic pie’. This will lead to more boxes. Pedro Arboleda of Monitor Group states their own businesses. Young, talented black exposing the youth to greater broadband customers and more disposable income, which in that seeing B-BBEE only as a philanthropic, CSR- students are often offered great job opportunities access, computer literacy skills and access turn will equal more corporate profit. initiative is short-sighted to the real potential of that are difficult to leave for the uncertainty of the to information, B-BBEE legislation can truly young entrepreneurs. entrepreneurial environment. enhance the chances for South Africa to develop successful young entrepreneurs.

22 The Local Hero Model in SA The local hero archetype of entrepreneurship is based on the success of a “local hero” entrepreneur who is admired by others and inspires others to start businesses within or outside the local hero’s industry. The emergence of a local hero is influenced by a myriad of factors, which makes this particular archetype abstract and difficult to replicate. This section aims to shed light on the Local Hero Model of entrepreneurship in a South African context.

24 Identifying a Celebrating the Corporate Different types Recommendations local hero is entrepreneurial aspirations of local heroes and insights an individual journey dominate South inspire different process African business types of • A potential way to institutionalise and formalise South Africa has a culture of celebrating the culture entrepreneurs the Local Hero Model is to identify potential Entrepreneurs are influenced by numerous achievements of successful entrepreneurs entrepreneurs that can provide internships, factors such as geographic location, industry without acknowledging the sacrifices that these There is a common perception in South Africa Necessity entrepreneurs are typically unskilled shadowing and mentorship programs so that expertise and personal experiences of successful entrepreneurs have had to make to achieve success. that the path to business success is through individuals who venture into entrepreneurship in individuals are exposed to their local heroes entrepreneurs they know. Individuals often Typical day-to-day challenges entrepreneurs a successful corporate career. This culture order to survive. They often lack the knowledge and see first-hand how much perseverance is identify with entrepreneurs who hail from similar experience are often not acknowledged when demonstrates an innate need for safety through or access to business skills that is vital to help required to start and sustain a business. backgrounds to theirs, and these local heroes’ showcasing them as local heroes. These challenges formal employment. This desire is especially true them grow their businesses. Their inability to • Institutions like Endeavor and the media childhoods and successes are often great include overcoming internal business politics, for those who have been previously disadvantaged create wealth from their businesses in some should showcase entrepreneurship by motivating factors for others. managing cash flow, managing staff, and constantly and have only recently been allowed access to cases erroneously portrays entrepreneurship as focusing on the actual journeys of up- innovating and adapting their businesses to external reputable institutions of formal education in order a route to failure. If these individuals had been and-coming entrepreneurs. In this way, A local hero influences the mindsets and attitudes market challenges. to acquire professional qualifications. provided with adequate training (apprenticeships, entrepreneurs will no longer only be praised of would-be-entrepreneurs. Many South Africans shadowing, mentorship) they may have had a when they reach the pinnacle of success, look up to different individuals for a variety of The media compounded this problem by only These new professionals are afforded many work higher chance of success. This also needs to be and potential entrepreneurs can learn from the reasons. Sowetans look up to fellow Sowetan highlighting entrepreneurial success stories. It is options at corporate firms and are typically enticed seen in the harsh reality of the global business stumbling blocks these entrepreneurs face Dr Richard Maponya, who started from humble often only when an entrepreneur is at the pinnacle by large salary packages, incentives and the context, where over 80% of new businesses fail before they reach the top. beginnings and has set up successful and of success that he is spoken of and celebrated. prestige of professional careers. For many such within 6 to 12 months. • Entrepreneurship thrives in communities admirable businesses. Others, such as young These success stories gloss over the barriers potential entrepreneurs, starting up a business where people are motivated by high goals and corporate professionals, may identify better with that entrepreneurs have had to overcome and is a much less attractive option. As such, South A deliberate effort must be made to foster a aspirations. South Africans need to invest in someone like Adrian Gore, who was a corporate portray them as ‘overnight successes’, which Africa finds itself in a situation where attraction to culture of entrepreneurship in South Africa. driving a culture of positive thinking. Culture employee before founding Discovery. Most conjures images of an entrepreneur who has never corporate and professional careers indirectly stifles Local entrepreneurial heroes need to be sought evolves over time, but for entrepreneurship to industries tend to produce their own entrepreneurial encountered challenges or perhaps has never the entrepreneurial spirit and discourages skilled out and celebrated. The challenging history of thrive it is critical to foster optimism amongst local heroes. It is vital for South Africa to showcase failed. As a result, people fail to appreciate the full youth from starting their own businesses. South Africa is acknowledged by many, but it people now. successful entrepreneurs and for communities to journey of a local hero. In reality, the challenges should not be a reason for a defeatist attitude seek them out and emulate them. and pressures an entrepreneur has overcome However, South Africa does have communities in towards entrepreneurship. It is extremely critical before reaching success forms an integral part of which entrepreneurial ambition is stimulated, for for existing or potential entrepreneurs to see their narrative and often contains the most valuable example in Indian and Jewish communities. These themselves as winners, as an optimistic mindset lessons for aspiring entrepreneurs. communities have great local entrepreneurial is crucial to success. heroes who have made starting a business a real For example, Nkhensani Nkosi of Stoned possibility for young entrepreneurs, as opposed Cherrie mentions being influenced by township to following the corporate track. Family approval entrepreneurs who were able to succeed despite also provides these potential entrepreneurs with tough operating conditions under apartheid. many benefits such as support structures, social With the support of understanding parents and a approval and financial safety nets. determination to overcome adversity, she started her own fashion label. Drawing from her own background and influences, she is now a strong advocate for the need to celebrate local entrepreneurial heroes in all communities within South Africa.

26 Conclusion In the end, there is no silver bullet to creating and fostering archetypes of entrepreneurship in South Africa. More investment is necessary for research to identify commonalities between different models of entrepreneurship and determine which models are most applicable for which specific region or city in South Africa.

28 Gal lery

30 EDITORS KAUFFMAN FOUNDATION PANELISTS & www.unleashingideas.org FACILITATORS ENDEAVOR TRY AFRICA FACILITATOR & MC Mary Brooks Malik Fal Founder, Try Africa Managing Director, Endeavor SA David Williams (Facilitator) Contributing Editor, Financial Mail Rezaan Daniels Search & Selection, Endeavor SA MEDIA Macfarlane Moleli (MC) eNews Channel, Prime Time Morning News PRIMEDIA Affiong Williams Anchor Entrepreneur Services, Endeavor SA Mary-Anne Lakin VIP GUEST SPEAKER Primedia Business Solutions Rea Bantobetse Marketing & Communications Intern, Endeavor SA Adrian Gore e.tv Chief Executive Officer, Discovery Chairman, Endeavor SA SPONSORS & Michelle Kirby Group Marketing & Corporate Social ORGANISERS PANELISTS Investment, e.tv

FIRST NATIONAL BANK HEADLINE PANEL Marcel Golding ACK Chief Executive Officer, e.tv Sanjeev Orie Vinny Lingham Head: Product Growth & Profitability, FNB Yola.com, Endeavor Entrepreneur DRAFT FCB Business Banking Prof Frikkie Herbst Pat Govender Howard Arrand Professor of Marketing, University of Stellenbosch Managing Director, Draft FCB Provincial Head, FNB Gauteng Business School (USB)

Mariaan Van Kaam Divan Botha Pedro Arboleda NOW Deputy Managing Director, Draft FCB Head of Marketing, FNB Business Banking Partner, Monitor Group

ENTREPRENEUR WORLD Gratia Botes Dylan Tudor-Jones Head of Events Marketing, Solar Heat Exchange Sthembiso Ntshangase FNB Business Banking Chief Executive Officer, Sobethu Media Susan Lasecki-Coiro Executive Producer, Entrepreneur World Thabi Mokoena Anglo American Communications Consultant, MEDIA LEDGE Brand Communications Nkhensani Nkosi Stoned Cherrie, Endeavor Entrepreneur Entrepreneurial Edge SAP AFRICA CNBC Africa BREAKAWAY SESSION – Derek Kudsee Local Hero Model Nadine von Moltke Chief Operating Officer, SAP Africa Entrepreneur Magazine Palesa Makanda (Facilitator) Sunil Geness Endeavor SA MENTS Corporate Affairs Executive, SAP Africa Ronen Aires Nteseng Maboe Entrepreneur Org Global Communications & PR Manager, SAP Africa Jules Newton ENDEAVOR Avocado Vision

Fiona Pieterse Nkhensani Nkosi Office Manager, Endeavor SA Stoned Cherrie, Endeavor Entrepreneur

Maria Azevedo Education Manager, Endeavor SA 32 BREAKAWAY SESSION – OTHER Vivian Khumalo External Trigger Model acknowledgements Themba Mabizela Elizabeth Malumo Pedro Arboleda (Facilitator) Howard Arrand ENDEAVOR SUPPORTERS Partner, Monitor Group Kimberly Bolton Gratia Botes ACTIS Ross Beerman Divan Botha DISCOVERY All Life Insurance Dinesh Fakir DRA – TSHIKULULU Greg Illgner FNB Israel Noko Marcel Klaasen TRANSVAAL ELECTRIC BEESA Thabi Mokoena KORBETIC Nameera Munnisunker EDCON BREAKAWAY SESSION – Sanjeev Orie Mothership Model Mike Vacy Lyle DELEGATES & Eben Van Vuurren Sean Walker (Facilitator) ENDEAVOR Marc Balkin Royal Hairstyles Training Academy & Salon Roberta Carello SUPPORTERS Jan Eloff Christopher Whitfield Sunil Geness Batswadi, Endeavor Board DELEGATES Smiley Ismael Oupatjie Bakers Derek Kudsee Mncedisi Xego Samali Bosa Nteseng Maboe Royal Fields Tariro Bure Desmond Nair Lemekeza Chimangafisi Ashraf Patel Michael Lombard Jamie Clyde Pankaj Pema White Paper; Deliberations Optima Peter Cowen Gary Sandham Rosemary Del Paggio Elmarie Venter and Key Findings Shaun Kroutz Robert Dennison Christoph Andrykowsky Richard Dewing Coleus Alex Antonites Endeavor South Africa Heidi Grimmer (Dr.) Bernard Chidzero BREAKAWAY SESSION – Jerryanne Heath Diana Cumberledge Building 3 | 1st Floor | Parc Nicol Office Park | 3001 William Nicol Drive | Bryanston Silicon Valley Model Mark Hiller Jason Goldberg Telephone: +27 11 463 0992 Rehema Isa Avela Gronemeyer Email: [email protected] Prof Frikkie Herbst (Facilitator) Karabo Kgomongiwe Bongi Gumede Website: www.endeavor.co.za Professor of Marketing, University of Stellenbosch Lillian Maboya Carlton Jones Business School (USB) Glen Mabunda Vincent Joyner Nhlanhla Madalane Paseka Kalaku Vinny Lingham Sinothi Maphumulo Nicki Koorbanally Yola.com, Endeavor Entrepreneur Cynthia Mkhombo Rosie Motene Richard Mkhombo Brian Muzarewetu Andrea Böhmert Matsi Modise Aida Mwaniki Hasso Plattner Ventures Africa Khumo Morolo Moloto Nchabeleng Yogavelli Nambiar Sipha Ndawonde Dr Adicuala Anu Ayanda Ndaba Richard Parker TIA Shingai Ngara Jamila Payne Phumlani Nkontwana Mfundo Piti Keet Van Zyl Thabo Ntseare Leora Anne Rajak Powered by VC Lereko Ntshona Seison Reddy Tokollo Phahlane Shelley Roberts Tumi Pitsie Muhammed Sayed Vincent Prior Tebogo Skwambane Jovan Regasek Brenda Twala Vuyo Wandile Shimange Paballo Vilakazi Dadirayi Agnes Sibanda Jane Woodhouse Ntsasa Tholoana Esther Njiro Marc van Olst Di Wood 34 35