Entrepreneurship

Learn from youth’s street smarts

Informal learning helps mould new leaders.

With Youth Day having been celebrated this week, at a time when the economy is in the state it is, I cannot help but be reminded of the increasing role that today’s young people will play in driving economic growth.

They are the leaders of tomorrow who must be groomed today. They will be responsible for ensuring that our businesses and institutions are led in ways that will help us revive growth and achieve the long-term goals of the country.

They will also need to learn how to become the kind of leaders who understand how to build an economy that creates opportunities for the youth, especially when all the numbers show that Africa will have the world’s biggest and youngest population of working age within a few decades. This is something we need to turn into an advantage, rather than a disadvantage.

We have not yet learnt how to enable our young people to start playing a bigger role in the economy. This is a puzzle that needs to be solved, otherwise we risk losing out on the value they could be adding to the country.

We can start by shifting how we perceive the experience and expertise of our youth. Much of the conversation is focused on how we should be giving people a chance to have even a year of formalised work experience, because this will significantly increase their chances of employability and inclusion in the formal economy.

Let us rather shift the conversation towards what we can learn from them based on their life experiences. Despite not having worked in the formal sector, many inspiring young people have achieved a lot on their own – learning far more than they would have learnt in a formal job.

We need to stop discounting the value of this informal learning – the street smarts you get from having hustled outside the formal work and schooling environment. Our township economy thrives on this. The world’s most respected school dropouts succeeded because they leveraged this informal learning effectively.

There is a ton of learning that takes place in these environments, but it is completely discounted when employees in the formal economy look at the CVs of job hunters.

As someone who has received the best of what the world has to offer in terms of formal higher education and work experience, I cannot help but note that, despite this, half of my expertise to date stems from my experience of having been an informal entrepreneur in my youth, leading projects which, at the time, were critical for survival in a poor community. Today, those experiences help me navigate the most complex of business problems. I use them to upskill those who did not have a chance to gain much informal learning because they grew up with everything formalised around them.

Let us start giving a chance to those who have not had access to formal opportunities but who have learnt much from having spent their lives thriving in informal settings, earning their street smarts.

In our country there are many inspiring young people who have been forced to look after large families long before they became adults.

Someone like that has learnt a lot about responsibility, probably far more than those who have eaten from a silver spoon all their lives.

These informally strong leaders are the kind of people this country needs, especially if we are serious about allowing different points of view to inform how we govern.

The old ways are clearly failing us, and the world is changing faster every day.

Futurists are talking about how we need to start a process of unlearning the old ways, which are no longer relevant in a world that is rapidly transforming.

We need to rewire our brains, and a good start would be to focus on informal learning.

We need those streets smarts to bring in fresh ways of thinking and the boldness that will challenge long-standing systems and processes that no longer work.

It is worth noting that part of the success of the youth of 1976 came from defying what was the norm then; how they thrived by leaning on informal channels of leadership, communication and co-ordination – all this in an environment in which their formal education systems were impaired.

Today we celebrate them.

But how about celebrating the youth of today who are trying to adopt the same mentality in order to succeed?

There are young people out there we need to open our doors for.

We need to do so if we are serious about finding new ways to revive growth.

Passion gives ideas a life of their own

On Sunday last week, I found myself on a panel adjudicating business pitches presented by entrepreneurs from around South Africa.

They entered the Legends in the Making Competition and won the opportunity to attend a weekend entrepreneurship boot camp in Pretoria organised by Somafco Trust, a social enterprise focused on youth development.

I was intrigued to see young people, mostly from underprivileged backgrounds, following their dreams and committing to build businesses. It was truly courageous of them to stand up, speak their minds and receive a barrage of questions from a panel of adjudicators.

Such behaviour puts them leaps and bounds ahead of those who have not even started turning their ideas into reality.

I have been coaching people on effective presentations for many years – anything from personal talks to presentations for the boards of big businesses.

One thing that I have found time and again is that the majority of the preparation time is incorrectly allocated towards the content and technical details of the presentation, and the delivery is overlooked.

This is especially true for entrepreneurs because they are challenged to spend hours and hours preparing the best business case, forgetting that there is more to the pitch than the document itself.

Several studies have shown that the least important part of communication is what you say – that is, the content.

Most of it is driven by numerous nonverbal factors such as tone and body language.

There are three such factors that are critical but quite often missed during pitches: expressing passion for the idea; remaining authentic and being aware of your audience.

Passion is everything. In fact, it is contagious. The more passion an entrepreneur can exhibit for their idea, the more this passion is infused into the audience.

Passion needs to be present all the time, not just when talking to potential investors.

The same is true for conversations with potential customers, suppliers, mentors and even family members who may still have the outdated mindset that going into entrepreneurship is a “crazy idea”.

When I witnessed young people expressing their passions last weekend, I found myself with a growing level of hope that young South Africans have the willpower needed to solve the frustrations that our society has lived with for many generations – frustrations especially detrimental to townships and rural communities. They shared business ideas that could reduce inefficiencies in the public healthcare system, transportation and, most importantly, education.

Passion goes hand in hand with authenticity.

The very word “pitch” misleads us to believe that we should be performing a show of sorts. A plot to hide our true selves for a few minutes. This is a fallacy.

It is more important to present the most authentic version of ourselves. No mask.

When people are deciding whether it is worthwhile to build a long-term business relationship with us, financial or otherwise, they have to see who we really are.

It is not the document or the product they will be investing in. They will be investing in the individual.

Brené Brown is a research professor who is famous for studying vulnerability and authenticity. She delivered one of the most popular TED talks of all time. In her book Daring Greatly, she writes that entrepreneurship is by definition synonymous with vulnerability, and if we shut down vulnerability, we shut down opportunity. She says we need to be able to tell the story of who we are with our whole hearts.

It’s critical to pitch from the heart. This is how we build connections with other human beings.

We need to have the courage to share our true stories, and be vulnerable enough to admit what we do not know.

I have learnt with time how to be authentic and vulnerable when I present to an audience. It can be difficult to expose your true self to others. But these are the moments when I feel most human. They are the moments I feel most connected to my audience.

Pitching is also about listening intently and remaining aware of the audience. Learning about the interests of the audience ahead of time empowers us to communicate in a manner that resonates well with the listener.

Listening gives us the chance to notice what the audience is passionate about and thus connect with them authentically on it.

When someone takes the time to talk to us about our business ideas, it means they want to create a win-win situation for us both.

I am not advocating for people to focus solely on the triad of passion, authenticity and awareness. It goes without saying that it is similarly important to get the basics right about the market, the competitive landscape and how your business will make money.

However, this triad of factors can help entrepreneurs set themselves up for greater success and lasting business relationships.

Angel investors must let start-ups learn from mistakes

The smallest cash infusion can make a big difference

It is puzzling that early-stage investing in new businesses in South Africa is not growing as fast as it should, irrespective of economic factors. It stays low year on year even with initiatives to foster an uptick, from the section 12J venture-capital class introduced by the state, to various “angel investor” networks driven by private investors.

We cannot wholly place the burden on investors – entrepreneurs need to play their part in being investor-ready and having the guts to put themselves out there and find the right financial supporters. This step is difficult for many, especially since being at an early stage might mean you have no clue how to present yourself and your product in an investable way.

Let us also put it down to the low levels of understanding nationwide of what it means to be an investable entrepreneur. Unless you are in a big city, with easy access to the great programmes available, your chances of learning how to be investor-ready are slim.

The factors that limit entrepreneurs are not enough to justify the consistently low levels of early-stage investment and support we see today. Everyone would rather bank on the entrepreneurs who have proved themselves already – much less risky, with a proven stream of revenue. Even then, investors still ask them to put down guarantees and collateral.

For angel investing to work, we need to shift our mentality. This is not the stage at which one needs to think about de-risking – this is about as high-risk a stage as you are going to find. The focus needs to be on the lessons that both the entrepreneur and the early-stage investor stand to learn along the way.

In Silicon Valley, for example, I was struck by how angel investors tended to back the same early-stage entrepreneur over and over again until they found a viable product.

When I asked why, they said the biggest gain was in seeing an entrepreneur learn from failure. You are not investing in the product, you are investing in the lessons that will one day enable that entrepreneur to build a sustainable business. Without trial and error, there is not much that will make that entrepreneur stand out in a sustainable way.

This kind of investment should not be viewed as a series of potential losses but as a series of potential lessons.

The investors also saw it as a dating game, a chance to get to know each other better. Early-stage investing is a multi-year commitment. You stick around until the venture reaches the initial public offering level, at which point you can cash in. This long-term approach to investment makes it clear that it is less about the product or the industry than about the entrepreneur.

I am often asked what industries I focus my own angel investments on and my answer is consistent: I am industry agnostic. I focus more on the person on whom I am making a long-term bet; on helping them figure out how to be most successful.

As the entrepreneur learns, so does the angel investor. You start getting a sense of the character traits to look for in an investee and better understand which ones align with your personality and aspirations.

An angel investor is not something you should be in the distant future when you have finally made it in life. The smallest cash infusion can make a big difference to lives.

I am a proponent of putting your money where your mouth is. It is clear that many mouths in the country see the necessity of increasing early-stage investment support. We need to see more money, however little, channelled in that direction.

Early-stage investing is much riskier than other types of investment but remains one of the only ways we stand to see a game-changing increase in the number of early-stage companies. These will eventually grow into ventures that will change the persistently low levels of entrepreneurship in South Africa.

Work not just to earn, but to learn widely

I recently revisited a set of childhood parables on financial independence written by Robert Kiyosaki and Sharon Lechter in the bestselling book Rich Dad Poor Dad. I remain intrigued that, almost 20 years after its initial publication and worldwide success, the majority of the book’s simple and relevant insights remain widely underutilised.

Even though many of us aspire to achieve wealth and financial independence, few of us choose the path that could get us there, such as owning a business or making strategic investments. As a result, our economy continues to suffer from low levels of entrepreneurship and high levels of unemployment.

Our society continues to define getting a job as a sign of success, when jobs should be seen as a means to an end, not the final destination. In fact, we should be choosing to be in a job because we want to learn certain skills that will help us become better multigenerational wealth creators.

This requires a complete mindset shift from the old mentality of choosing jobs based on what we stand to earn. Instead, we must focus on what we stand to learn. Many of us shy away from following through with our entrepreneurial aspirations because of a perceived lack of skills needed to get the job done.

As a result, we end up spending the rest of our lives in salaried jobs, momentarily excited by the next promotion or raise, instead of using the time as an opportunity to learn the skills needed to create our own wealth.

Income gained from a salaried job is often limited to a fraction of the value that you add to a business each day. In contrast, there is no limit to the income you can extract from utilising the skills acquired from a typical job. The value of skills can be timeless.

This mindset shift from money received to skills gained can be the game-changer that will increase the consistently low levels of entrepreneurship in this country – an important lever for addressing the unemployment challenge.

As a passionate investor in up-and-coming African entrepreneurs, I have noticed that spending time obtaining relevant skills can help reduce the anxiety that comes when entrepreneurs take the leap to start their own businesses.

The transition from a job to self-employment is far easier with the right tools in hand. For example, entrepreneurs are often required to be all-rounders and must be especially skilled at understanding and managing business finances.

Almost all companies have an accounting and finance function, but few people outside this department actively go there and ask to learn. Being in close proximity to people with complementary skills can present ample opportunity to learn from them.

Sadly, we live in a world where people are hardly ever taught about finances unless they are affiliated with the accounting profession. This should be a core part of the school curriculum.

If you are serious about your entrepreneurial aspirations yet have no clue how to manage money, you should use your time in the corporate world to learn how to do so from your peers. The same is true for human resources, or any of the other functions necessary to help a new business owner succeed.

There is a reason aspiring CEOs are often put on rotation programmes that allow them to work with the different functions of the company. This is because anyone running a business needs to have a decent understanding of all the departments they oversee. As an entrepreneur, you will similarly be responsible for all of these functions in your own business.

I am conscious of the upcoming internship and holiday work season, when many unemployed young people get opportunities for part-time jobs.

Let us encourage our young people to get out of the mentality of choosing these jobs based on their income potential. Instead, they must start choosing part-time jobs based on what they stand to gain in terms of skills and exposure.

They will soon realise that what they stand to learn from some part-time jobs far outweighs the potential salary.

At the very least, they will gain the work experience most employers seek. At the most, they will gain the skills they need to create their own wealth, become their own bosses and create plenty of job opportunities for others.

The man in the arena: Be a bold supporter, not a critic