Linda Rottenberg on the Future of Social Entrepreneurship

Posted by Madeline Reddington /April 2, 2015 / Advisors, Entrepreneurial Advice, FounderTalk, Hot Topics

Linda2_twitterLinda Rottenberg used to be known around Silicon Valley as “la chica loca” for suggesting that developing countries were ripe with budding entrepreneurs. Years later, she’s CEO of Endeavor, a non-profit company that mentors high-impact entrepreneurs across Latin America, the Middle east, Africa, Europe, South East Asia. In fact, Rottenberg’s quite comfortable stepping beyond the norm. Last year she published her book “Crazy Is a Compliment: The Power of Zigging When Everyone Else Zags.” Rottenberg is this week’s featured FD:Advisor and gave FounderDating some insight into the emerging market startup community, juggling chaos and what it means to be a social entrepreneur today.

What made you want to start Endeavor?

I was living in Argentina, taking a taxi and learned my driver had an engineering degree but was driving a cab. When I asked him ‘why’ he said there were no jobs for him, that the government and the big companies wouldn’t have any use for anyone with his skills. This was the mid-90s, when back home everyone was talking about Yahoo! and Netscape and I thought the situation was just really ridiculous. It turned out that not only were there no venture capitalists or mentors for entrepreneurs, but at that point there was no commonly used word for entrepreneur in Spanish or Portuguese. When I came home, everyone was still focusing on micro credits and getting things like $50 loans to people planning very small companies. That was great but it wouldn’t address people who were really dreaming big. So I decided, along with a partner, to start Endeavor and focus on the high-growth, high-impact entrepreneurs in developing markets.

Do you think that a company needs to be non-profit to be a social enterprise?

No, you don’t need to be a non-profit to be a social enterprise. Tweet this

I’ve changed my mind on that. And the world has changed. We’ve just raised a $35M passive co-investment fund, so we’re now investing alongside lead investors in our entrepreneurs. I never set out to start a non-profit. But when we were starting out, if we set up a fund only as a for-profit we would only be able to invest in one or two entrepreneurs per country. We wanted to build an ecosystem; we wanted to  help create a culture that supports these big dreamers and to do that we had to solve the trust problem and to do that 17 years ago it made sense to be a non-profit.

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I think today things are different with B corporations and the younger generation wanting to do well and do good and not seeing a problem with non-profits adopting business skills or businesses doing things that benefit society. In fact, they mandate it. They won’t work for companies that don’t have a social purpose. So today I think of Endeavor as a hybrid. The companies we support are fully for-profit, but they are giving back, and being philanthropic, so for me I feel like we were among the many pioneers that were creating this kind of hybrid sector that seemed bizarre 20 years ago when the for-profit versus non-profit divide was so vast. That membrane is slowly melting away, and everything is becoming more fluid. Our goal is to be completely self-sustaining based on the success of the very entrepreneurs we support. And we think that’s a great model going forward.

What do you see as the role of non-profits among social enterprises today?

I’ve always looked at non-profits as almost R&D for particular problems and that ultimately most of those investments need to pay back somehow. When I was starting out, non-profit seemed kind of inefficient, mission-driven and not business-oriented. Conversely, businesses seemed solely profit-focused, unwilling so to do anything for social good except have this one person in a broom closet on the side doing corporate social responsibility. I think both of those stereotypes really don’t fit anymore. I know social entrepreneurs who are just trying to solve a problem and they want to incorporate societal returns into their model but they’re very businesses oriented. And I think if you want to hire talent today, if you want customers today as a business, you have to be focusing on your societal contribution.

What are some of the biggest changes you’ve seen in tech over time and how has that impacted how Endeavor works?

Well now our markets are saying “Hey wait a minute, we’ve emerged!” And I think it’s now so obvious to so many people that countries like Brazil, Argentina, Turkey and Indonesia can have great entrepreneurial companies. So we’ve gone from 20 years ago there literally not being a word for “entrepreneur” to people saying I’m an idiot because I don’t know the word.

The other thing is people are realizing, even in Silicon Valley, that it’s not just about software and ecommerce and apps. So many of the great companies that we’ve seen in so many of these markets are using technology, to power traditional industries. They’re in food and beverage, hospitality, manufacturing–and that they’re doing things in a more modern way, but it’s not only about “who’s got the next app.”

One of the problems I’m seeing with American entrepreneurship– it’s always about chasing the next “unicorn.” Tweet this

If Endeavor’s trying to bring one thing to the conversation, it’s that you need these high-growth companies in all these other industries that really are delivering things people need in a scalable way.

Why did you decide to launch inside the US recently?

Actually I was outvoted on this, but I’ve now got the passion of a convert because I was wrong. Luckily, I have a board and a team that outvotes me, and that’s okay. We had launched endeavor in Greece and Spain after the European crisis and people came and said “Wait a minute, if you’re no longer just in emerging markets–if you’re in Europe, why not the US? We have problems too.” And I kept joking, “but those are the submerging markets!” The Knight Foundation and some private sector business leaders came to us and said “look, we want to build a world class entrepreneurial community, you guys have the model that knows how to help the scale up, everybody else focuses on the startups.” We’ve found some great companies so far, and so we’ve actually just launched our second and third US offices in Detroit and Louisville and now have about 10 more on our list that we’re considering. We continue to launch in our traditional markets as well.

What kinds of patterns do you see in working with startups in these different pinpoints across the globe?

What might be surprising is how much we’ve learned about family dynamics over the years. I always say that Endeavor 101 is how to fire your mother-in-law gracefully. So many companies, equity structures and organizational charts are so dysfunctional. The next generations’ taken over, but the father’s still in charge or there’s an in-law, things like that. And then there are different motivations–one wants a lifestyle business, one wants to grow, etc. Often times what we’re doing is getting in there and helping them create shareholder agreements and deal with the personal relationships that are holding the company back.

What’s one piece of advice you would give to a young entrepreneur just starting out or starting to scale?

To entrepreneurs I would say is that hard is normal. I always expected it to get easier after the initial startup phase, and then I realized that hard is normal and chaos is your friend. Tweet this

The best entrepreneurs I’ve seen both in terms of the startup phase and scaling, have worked with chaos. When the world goes upside down, entrepreneurs turn things upright. Big businesses can’t be agile, so when things get chaotic, they retrench. And that’s when entrepreneurs lurch forward. So I’ve always told people to look for these moments of chaos and make friends. And then expect things to be tough. If it’s too easy, that’s when I think you should be a little nervous.

Connect with Linda Rotternberg and more social entrepreneurship advisors 


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