There are two paths before us:
I believe that entrepreneurs must choose a path towards one of two worlds…
A “Silicon Valley” World
A recent article in The Economist points out that during the Industrial Revolution thousands of people, not having any capital of their own for machinery, laboured at low wages for others - and so the rich became richer while the poor become poorer.
Today, thousands of young people work insane hours for little or no pay as entrepreneurs, in the hopes of being acquired by a larger company. Those that do will become moderately wealthy, while others will fail and return to jobs with corporates. Big companies will acquire the best technologies from the winners, who need their capital, and will go on to become even richer - accelerating the emergence of a world where 1% of the population owns 40% of the wealth, as in America today.
In this world “investors have won, and their dealings with the entrepreneur class now look far more like the dealings between management and labour.”
Is this the world we want? In this world entrepreneurs exist only to create innovations that larger companies will exploit to create an even more inequality in our society. There is only a top and a bottom - with wealth concentrated at the top with a few, and most people labouring at the bottom. If we are to avoid this we need to create…
A “community of craftsmen” world
There is another possibility. In this world entrepreneurs build small, highly profitable companies by solving real needs in the world. They take pride in being “master craftsmen” who provide a series of innovative solutions to pressing problems. They form a prosperous middle-class that makes a vital contribution to society.
Is this possible? Well the fourth-largest economy in the world, Germany, is built on just such a network of small, highly skilled companies called the Mittelstand. These companies are typically privately owned and are often family businesses with an apprenticeship model, which produces highly skilled workers.
Economic and business historians have been increasingly giving Mittelstand companies more and more credit for Germany's economic growth. These small companies employ 70% of all employees in private business in Germany, and contribute to Germany being the world's second largest exporter. They focus on innovative high value products and are leaders in various worldwide niche markets.
While the Mittelstand companies in Germany operate in the industrial realm, I believe we can build a Mittelstand of “digital companies” for Africa. To do this we will need to focus not on developing “hits” and making millions but on developing people and companies, not on exit strategies but on long-term growth, not on ‘successes’ but on creating a vibrant community of entrepreneurs working…