Published : 2013-09-02 21:32
Updated : 2013-09-02 21:32
|Thomas D. Nastas|
|Illustration By Park Gee-young|
When the combination of these factors ― cultural shift, clonentrepreneurship, executable business models and capital mobilization ― come together, Korea will be able to “shine,” developing itself as a start-up nation, boosting job creation and generating new wealth to the likes of Silicon Valley and Israel.
VC-invested U.S. companies, for example, created 10 million jobs, accounting for 9 percent of total employment in the private sector in 2005. Their revenue of $2.1 trillion accounted for 16.6 percent of gross domestic product, according to Nastas’ “The GoForward Plan to Scaling Up Innovation” on Harvard Business Review.
Following are excerpts of the email interview with Thomas D. Nastas on clonentrepreneurship and innovative economy.
Q: What is clonentrepreneurship?
A: Clonentrepreneurship refers to entrepreneurs who clone or copy a business model from one country/market to another. Cloning is now spoken routinely in the digital market space since it is a “virus” of clones being deployed from one market to another. But recognize that “cloning” has been around for a long, long time.
Many criticize clones as being “unimaginative.” Yet in most countries clonentrepreneurs must innovate in logistics and payment systems to make cloning work in their country. In the U.S., I can purchase shoes for $40 and pay nothing for delivery. In Russia, it costs $150 to deliver shoes from Moscow to Vladivostok, an unacceptable cost since no one will pay a $150 delivery charge for a $40 pair of shoes. So cloners had to innovate in logistics, which meant innovations in warehousing, end of point distribution, couriers, etc.
Q: What made Israel so successful as a start-up nation?
A: Several reasons are cited, especially the Yozma investment scheme, but this was only successful because of the infrastructure (or ecosystem) building activities to increase the quality and quantity of investment opportunities for investors.
Much of the early Israeli tech came from the military, released to the private sector. Other success factors include an Israeli industrial policy that funded R&D to create deal flow and the unplanned creation of entrepreneurs.
The citizens of Israel live with risk. Israel lies in a region where it is threatened each and every day, with bombs, death and destruction, a cloud of risk hangs over the country. Dealing with such risk every day, every year, builds a culture that accepts risk as a condition of life ... to deal with the consequences of risk ― experiences useful in entrepreneurship too.
Q: How about U.S. Silicon Valley?
A: In the U.S., failure equals entrepreneurship, which gives the entrepreneur the freedom, second and third chances to raise funds. Investors willingly financing trial and error until the entrepreneur achieves success is the second characteristic which distinguishes investors in the U.S. from investors in most other countries, including in Europe.
Trial and error in developing a business model equals learning, and learning is accepted, especially when it results in a business unintended from the start. Google, Facebook and Groupon all emerged from first-generation business models which failed to generate customer traction with founders “pivoting” to other business models which achieved success.
Q: How can a country form a thriving ecosystem?
A: Cloning Western business models is only one direction for entrepreneurs and investors to pursue for profit. Government policymakers and their sovereign wealth funds can catalyze the start-up communities in other ways.
Riches earned from oil and other natural resources funded Russian initiatives like the $10 billion Russian Corporation of Nanotechnology, the $1 billion dollar fund-of-funds called the Russian Venture Company and the Russian Government’s multibillion dollar Skolkovo program ― to seed development of game-changing tech, investment and the creation of a new set of entrepreneurs.
Croatia is another small country with ambitions for more start-up communities. Its location on the Mediterranean is an ideal spot to transform selected areas of coastline into logistics, transportation and warehousing tech start-up centers to serve Central and Eastern Europe.
Thomas D. Nastas
Thomas D. Nastas, the founder and president of Innovative Ventures Inc., has been an entrepreneur, venture capital investor and mentor in the U.S., Canada, Europe, Africa, Kazakhstan and Russia over the last 20 years.
He advises the World Bank and the governments of Kenya, Uganda, Kazakhstan, Russia, Latvia, Slovakia and Croatia on VC investment and entrepreneurship.
By Park Hyong-ki (firstname.lastname@example.org)
Kim Joo-hyun contributed to this article.