THE STATE OF ENTREPRENEURSHIP IN SOUTH AFRICA - THE KEY ARCHETYPES OF AN ENTREPRENEURIAL CULTURE - SABLE ...
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The State of
Entrepreneurship
in South Africa
The key archetypes of an
entrepreneurial culture
3rd Edition
White Paper; Deliberations and Key Findings
1intro FNB Business Banking is proud to once
again bring South Africa the third State of
I believe that it is this culture that sets us apart
from our peers and allows us to move quicker
duc
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
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
tion
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
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
CEO: FNB Business Banking
301 Approach and
Methodology
03 Main Panel
con
Presentation and Discussion
09 The Silicon Valley
Model in SA
ten
15 The Mothership
Model in SA
19 The External Trigger
Model in SA
ts 23 The Local Hero
Model in SA
27 Conclusion
29 Gallery
31 AcknowleDgements
5Approach
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. The Endeavor
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.
2Main 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.
4Entrepreneurship 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 Google. 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.
6An 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.
California, 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 Pacific Fleet, 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 the Saint
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.
8The Silicon
Valley
Model in SA
10South 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
Cape Town 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.
12The South African
funder and
venture capital
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 Triangles 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
14
can play an important role in encouraging an scared to share their ideas.
entrepreneur-friendly environment by incentivising
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.
16Successful 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
18The 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).
20Is 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.
22The 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.
24Identifying 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.
26Conclusion 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.
28Gal
lery
30EDITORS 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
ACK
Affiong Williams PRIMEDIA
Anchor
Entrepreneur Services, Endeavor SA
Mary-Anne Lakin
VIP GUEST SPEAKER
Rea Bantobetse Primedia Business Solutions
Marketing & Communications Intern, Endeavor SA Adrian Gore
e.tv
Chief Executive Officer, Discovery
Chairman, Endeavor SA
SPONSORS & Michelle Kirby
ORGANISERS Group Marketing & Corporate Social
NOW
PANELISTS
Investment, e.tv
FIRST NATIONAL BANK HEADLINE PANEL
Marcel Golding
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
LEDGE
Managing Director, Draft FCB
Provincial Head, FNB Gauteng Business School (USB)
Mariaan Van Kaam
Divan Botha Pedro Arboleda
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
MENTS
Chief Executive Officer, Sobethu Media
Susan Lasecki-Coiro
Executive Producer, Entrepreneur World
Thabi Mokoena Anglo American
Communications Consultant,
MEDIA
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
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
32BREAKAWAY 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
Eben Van Vuurren
Sean Walker (Facilitator)
DELEGATES & Marc Balkin
Royal Hairstyles Training Academy & Salon
ENDEAVOR 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
Peter Cowen
Pankaj Pema
White Paper; Deliberations
Optima
Rosemary Del Paggio
Robert Dennison
Gary Sandham
Elmarie Venter and Key Findings
Shaun Kroutz Christoph Andrykowsky
Coleus Richard Dewing Alex Antonites
Heidi Grimmer (Dr.) Endeavor South Africa
Bernard Chidzero
BREAKAWAY SESSION – Jerryanne Heath Diana Cumberledge
Mark Hiller Building 3 | 1st Floor | Parc Nicol Office Park | 3001 William Nicol Drive | Bryanston
Silicon Valley Model Jason Goldberg
Rehema Isa Telephone: +27 11 463 0992
Avela Gronemeyer
Karabo Kgomongiwe Email: info@endeavor.co.za
Prof Frikkie Herbst (Facilitator) Bongi Gumede
Lillian Maboya Website: www.endeavor.co.za
Professor of Marketing, University of Stellenbosch 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
3435
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