Silicon Valley based author and writer Sarah Lacy has a new book out, and if you are an entrepreneur, you will want to read it. Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit from Global Chaos is about the new breed of entrepreneurs in emerging nations who create companies that change lives and lift thousands of their fellow countrymen out of poverty. They are just as driven and arrogant as American and European entrepreneurs, but they are operating in chaotic areas of the world—and they are using the online communications infrastructure, globalization phenomenon, and turmoil in their own countries to grow, prosper, and thrive.
I read chapter 1, and I was blown away by Sarah’s assertion, which she backed up, that the innovation of Silicon Valley specifically and United States generally are about to be eclipsed by the innovation coming out of India, China, Brazil, Southeast Asia, and Africa. Here’s why:
These entrepreneurs have an inkling of how modern venture capital works. They know tiny companies can become huge powerhouses quickly. They know high risk can be highly rewarded. They know David can beat Goliath. And this new global entrepreneur has three big advantages.
The first one is the home field advantage. Americans may wish the next few decades’ growth was in the American heartland where the demise of manufacturing has left millions unemployed and local economies sputtering, but it’s not. It’s in emerging markets.
Goldman Sachs first argued this point to Wall Street in 2001 with a paper entitled “Building Better Global Economic BRICs,”2 in which the investment bank predicted that Brazil, Russia, India, and China would make up more than 10 percent of the world GDP by 2010. By 2007, it was already 15 percent. So much for the all-important G7 nations of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States; by the middle of this century, the seven largest economies in the world will be China, the United States, India, Brazil, Mexico, Russia, and Indonesia.
The second advantage is that in today’s globalized world, money and talent don’t have boundaries; they flow where the opportunity is. And the flow has already started to the emerging world. Right now, there is more than $100 billion in venture capital and private equity hungry to make money off the developing world, especially after the zero stock market growth over the last decade in the United States.
Meanwhile, many of the immigrants who came to the United States over the last few decades seeking opportunity are returning home. Duke Researcher Vivek Wadhwa expects hundreds of thousands of immigrants will return home to China and India in the next five years. Many more are getting shoved out of the United States by an increasingly hostile attitude toward immigrants and H-1b Visa holders. Still more who might have come to the United States a few years ago for college or graduate school aren’t coming now. The year 2009 was the first year that foreign-born admissions to top U.S. grad schools fell.
The final advantage is the hardest to quantify: These emerging markets and their entrepreneurs have nothing to lose. When a country, industry, or entrepreneur has nothing to lose, it is freed from all the normal restrictions of the way things are usually done. Having nothing to lose gives one the luxury of starting with a clean sheet of paper and far more freedom to take risk—or, as it’s called in business circles, a greenfield opportunity. It’s the reason South Korea has better broadband than the United States ever will. It’s the reason I can get a clear cell phone signal amid pygmy huts in central Africa but not in my living room in San Francisco. It’s the reason Japanese cities are connected by futuristic bullet trains that New York and Los Angeles may never have.
Sarah spent 40 weeks traveling around the world, discovering and meeting with the emerging entrepreneurs who are the focus of this book. Interested to hear their stories? You can buy the book now from Amazon.