Redirecting The Fires of Innovation
Alexandre Lazarow, Author of the Book “Out-Innovate” Delivers Poignant Insights On The Shifting Global Startup Landscape
Startups fuel robust economies. In the U.S. names like Tesla, Apple, and Amazon are synonymous with creativity and innovation.
For decades, the epicenter of entrepreneurial activity has been Silicon Valley. But according to venture capitalist Alexandre Lazarow, a seismic shift is occurring. Thanks to explosive advancements in the world of technology, startups can sprout up anywhere —- from Denver to Detroit to Delhi to São Paulo.
On the heels of this emerging trend, however, is the realization that the blueprints and stories of startup success are still primarily gathered from Silicon Valley. It’s here where the conventional prescriptions of what a startup roadmap are considered the norm.
In his just-released book Out-Innovate: How Global Entrepreneurs - from Delhi to Detroit - Are Rewriting the Rules of Silicon Valley (Harvard Business Review Press, April 2020) Lazarow asserts that this prevailing paradigm is due for a revisit based on the rapid advancement of startup ecosystems in global economic centers outside of the valley.
In this new world, asserts Lazarow, startups will have to contend with a fresh set of political, economic, infrastructural, and capital barriers that will challenge their vision and resolve. Given these developments, he believes that entrepreneurs must employ creative strategies that build industries rather than disrupt them. Further, says Lazarow, companies must approach their startups with a global mindset given that local markets are often too small to scale.
Ultimately, resiliency and sustainability are the name of the game, according to Lazarow, as opposed to a growth at all costs mentality.
In this brief interview with Lazarow, he expounds upon his views and their impact on the narrative of Out-Innovate:
Can you offer us a brief introduction to your professional journey?
Sure. By day I'm a venture capitalist, investing in startups both in the U.S. and around the world, today with Cathay Innovation and previously with Omidyar Network.
Outside of work, I teach entrepreneurship at the Middlebury Institute for International Studies in Monterey, California. It was there where I kept assigning my students books on entrepreneurship. But I discovered that these books were all highly specific to Silicon Valley. Many of my students were going to move home, outside of the Valley or to an emerging market to start their businesses. They all wanted to build different businesses in different contexts. So, I always had to contextualize what I was sharing with them.
So how did this inform your decision to write Out-Innovate?
I believe that the best entrepreneurs operating in Detroit, Chicago, Amsterdam, Delhi, or Nairobi have more in common with the best entrepreneurs in a place like Sao Paolo very than in San Francisco. And yet, no one was telling their stories. So I embarked on a quest to interview 200 people, resulting in my book: Out-Innovate: How Global Entrepreneurs - from Delhi to Detroit - Are Rewriting the Rules of Silicon Valley.
What is the book’s major theme?
I affectionately refer to it as the “new playbook for innovation and startup success.” The aim of it is to look at the emergence of this space beyond Silicon Valley which has long been seen as the prime locale for new business launches.
Published by Harvard Business Review Press it was one of three finalists for the best-emerging business theme category, a competition co-hosted by McKinsey and The Financial Times, organizers of the Business Book of the Year Award. “Out-Innovate” was also named a "Top Book To Inform Your Technology And Innovation Strategy” by Forbes and was the #1 venture capital release on Amazon.
I’m curious to hear your thoughts on the potential impact of the COVID-19 global pandemic on business innovation worldwide?
Great question. In fact, many of the lessons in the book are more germane today than ever. In Silicon Valley, entrepreneurs operate in a particular context of abundance - with plentiful capital, an unrivaled depth of trained startup human capital, and by-and-large a stable macroeconomic environment.
Outside of Silicon Valley, the context is different in that they have to search for ways to turn constraints into advantages. Global entrepreneurs weave sustainability and resilience into the business model. So as we shift our gaze towards survival, lessons are to be found in these developing locales.
Moreover, these global entrepreneurs are apt to build distributed teams in order to leverage the world for talent. So as we shift to a world of work from home, it is no surprise to see that the leaders for this are outside of Silicon Valley.
You assert that entrepreneurs must be creators who build industries rather than disrupters who change them. Can you elaborate on this point?
A disproportionate number of the new frontier start-ups I have worked with focus on providing services that meet universal human needs. That’s especially true for emerging market companies.
A study by Village Capital determined that out of the nearly 300 unicorn start-ups in the United States, only 18% were focused on health, food, education, energy, financial services, or housing. Conversely, my analysis of leading start-ups in Latin America, sub-Saharan Africa, and Southeast Asia reveals that far more (up to 60% of a sample in sub-Saharan Africa) target those basic human needs.
Outside of Silicon Valley, entrepreneurs are Creators - building products and services for new mass-market segments as opposed to disrupting poorly functioning markets. We have many challenges in the US and the world. The way to solve them is through this “Creator” mindset.
So in closing, what 3-5 trends do you believe will emerge over the next 12-18 months on the innovation landscape?
First, in recognizing that the Silicon Valley playbook is not universal, we’ll shift our gaze toward learning from the best global entrepreneurs
We’ll no longer chase unicorns, but rather camels: the latter startups that still focus on growth but weave sustainability and resilience into their businesses from day one
Distributed teams will be here to stay and will increasingly become a best-case practice among many startups
The best businesses will weave social impact into the fabric of their organizations
Innovation will increasingly be distributed around the world, with many of the best entrepreneurs coming from across the US and the world versus primarily Silicon Valley.
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