Innovating From Within Developing Economies: Build What You Know

Many entrepreneurs seem focused on solving “first-world” problems for wealthy audiences. I’m often asked whether fostering startup growth in developing areas helps steer some of that creativity to a more global audience.

To think through this question, I’d like to share a few cases of entrepreneurs from emerging economies contacting me for feedback on their ideas.

A young founder wrote to me. His country was going through a civil war. There are people in refugee camps. There is minimal access to computers or the internet, to say nothing of basic infrastructure. There are huge foundational problems in his community, including war, famine, disease, human rights abuses, and of course limited communications technology.

He wanted to build an online social network to compete with Facebook…

I heard from a technically strong team in a sparsely populated part of the developing world. Where they live, many people work in natural resource extraction. Their families work in those industries, too. There is low smartphone and e-commerce penetration.

They wanted to build a shopping app…

First-world problems impact startups in other ways, too. Another startup I got to know in an emerging economy was building recycling businesses for local women in need of extra income. Their value proposition was strong, but they kept getting invited to speak at events, often hosted by international organizations. The founders were flattered and always accepted. And the events themselves looked like elite ways to meet investors and get publicity. However, that never happened.

So these founders ended up satisfying another first-world problem—finding enough people to speak at events. Unfortunately, they neglected their core business to the point that they had to shut it down.

Even though the above founders were from emerging economies, they were swayed by first-world problems. The frustrating thing about these examples was that in each case, there seemed to be a big opportunity where the potential founders had experience and a local customer base. They might have used their background and local knowledge to build something that few others would consider. They might have used that local niche to start growing a large business. They might have gone to the bottom of the pyramid and then built upward.

But instead, they spent their time on typical problems that could have fit within any major tech hub or were pulled toward distracting activities.

As someone who spent time working in developing economies, this is something that bothers me.

Be too influenced by tech news and you become a tourist in your own home, more aware of and interested in happenings of distant lands than in the glaring problems of your own backyard and those addressable by your own background. Be used as a prop by visiting event organizers and you’ll get attention, but not necessarily from your customers.

As global as we are today, where we are located influences what we know about the rest of the world. There are important innovation centers in many locations, but there is sometimes less awareness of these centers because of issues of language and culture. If you come from a “first-world” innovation background, you might be less likely to notice the innovation of other styles.

My guess from speaking with the above founders was that they were swayed by the international stories they read. If the typical startup that gains lots of awareness focuses on first-world problems, then that’s where people naturally look. Newsworthy businesses get noticed, copied, and accepted as the goal.

That might not be the best path forward.