Steven Koltai on International Development Projects.

Steven Koltai is the author of “Peace through Entrepreneurship: Investing in a Startup Culture for Security and Development”

Steven has had multiple careers. He has been a management consultant at McKinsey, the head of strategy at Warner Bros for ten years, and a successful entrepreneur.

His most recent career began as a senior advisor to the US Department of State under Secretary Hilary Clinton, where Steven conceived and launched the Global Entrepreneurship Program, based on the principles that joblessness leads to violence and unrest; and one of the best ways to reduce joblessness is to foster entrepreneurship in emerging markets.

After leaving the State Department, Steven has continued to advance that goal, and his consulting practice has supported entrepreneurship in over 30 countries, particularly Africa and Latin America.

Steven is a guest on Episode 23of Unleashed — How to Thrive as an Independent Professional.

We discuss:

• Advice for independent professionals interested in working in international development
• Process of getting funding for such projects
• Key success factors for projects to encourage entrepreneurship
• How Steven staffs up projects in these markets
• Some case studies, including an eight-sided box that increased revenue by 700%

For more on Steven’s work, go to www.koltai.co

Will Bachman: Can you tell me about your background and the work that you’re doing?

Steven Koltai: I’m a typical example of a person who’s had multiple careers that at first blush seem quite unrelated to each other. What I’m doing now is focused on developing entrepreneurship in emerging markets, particularly in fragile states. I started in 2009, when I joined the State Department as the first Senior Advisor for Entrepreneurship under Secretary Hillary Clinton, running a program which was the implementation of a major foreign policy initiative embodied in the speech that President Obama gave at Cairo University in June 2009.

Its central idea was the need to talk about things other than terrorism, and the importance of job creation for unemployed youth. I had retired from 30-plus years of previous work which included time on Wall Street, time at McKinsey, and working as an entrepreneur, but I have a background in international affairs and it was always what I was interested in.

I was with the State Department for three years, left and then continued to do entrepreneurship development. I’m also a guest scholar at the Brookings Institution, who published my book Peace Through Entrepreneurship, Investing in a Startup Culture for Security and Development.

What are some of the barriers to entrepreneurship in fragile emerging markets and what are you doing to help overcome those barriers?

My work is based on one or two very clear premises. The first is that there’s a straight-line connection between joblessness and instability, political unrest, and ultimately violence. Joblessness is the single biggest cause of violent conflict in the world, and it has been historically. Creating jobs is not only the single best way to both avoid and to prevent future violent conflict, but job creation is also highly influenceable. There are many examples in lots of places, not least of which is the United States, of job creation through entrepreneurship.

The second basic premise on which my work rests is what I call the Six Plus Six Model for Entrepreneurship Ecosystem Development. It’s the combination of things that must exist to create a healthy entrepreneurial ecosystem. There are six categories of activity and six categories of players, with the activities being identify, train, connect and sustain, fund, enable public policy, and celebrate, and the players being entrepreneurs, corporations, foundations, universities, NGOs, investors, and governments. All of these must be involved.

We follow three steps. First is diagnostic, using the Six Plus Six model as a mapping device. Then second is designing a program to bolster entrepreneurship given the particulars of that ecosystem and its strengths and weaknesses. The third is implementation.

Can you tell me about a successful element of your program that might come as a surprise?

We find that entrepreneurs in developing countries usually don’t have much support and don’t think it can be done here, wherever here is, because of its unique characteristics. One of the best ways to change people’s minds about that has been to cover the stories of entrepreneurs who are actually doing it in that country, so we have local journalists cover startups. We have experienced journalists train them on how to find entrepreneurs and how to cover them, and the result is increased heat and light on local entrepreneurs, which often inspire others to start.

Could you talk a little bit about how you recruit your teams?

I have a large network of resources and I’m always looking to expand it. For instance, I have a database of people who are interested in mentoring. You can go to my website, fill in a form and then you’re in the database. Mentoring is most often done remotely via Skype.

For hiring, all of the teams I work with are custom made. They’re specific to the geography that I’m working in, and I’m always hiring people for specific projects. They’re all contract 1099 consultants with the exception of two or three people who work with me regularly and everywhere. My number one criteria that I’m looking for is not so much subject matter as the kinds of skills people get after they’ve had experience in a major consulting firm for example. Journalists or former journalists are another source of talent. In my work, languages and cultural familiarity are really important. If you’ve never worked in a developing country it’s going to be very tough for you to do the sort of heavy lifting we have to do, because you’re going to spend most of your time being amazed that this is what life is like.

What have you learned about the role of geography on your success?

Entrepreneurship ecosystem development is actually hyper-local. The political and industry support that you need has to be local as well as national. I’ve learned the hard way that if you cannot quickly and easily identify a government champion who is supportive of increasing startup activity, you are almost guaranteed to fail. It’s extremely rare that you can be successful without that key element. Even though government in these countries is almost always corrupt, and corruption is the single biggest impediment to entrepreneurship activity in the developing world, government support is also indispensable. Otherwise you’re building a sandcastle at high tide.

Who are the clients in this type of international development work? Who are the funders, and what does the proposal process looks like?

This is what I spend most of my time working on: there are relatively few check writers who are interested in supporting this kind of work. There are an awful lot of people who talk about it and who recognize its importance. The hard part is finding the people who are prepared to pay for it and prepared to actually put their back into it. There are very few of those.

The principle funders so far have been official development agencies like the World Bank, like USAID, and its counterparts around the world. They’re the largest category of clients for this work, but it’s a tiny, tiny drop in the bucket of what’s required.

I spend a lot of my time and effort writing about this. I recently wrote a Harvard Business Review article, I’ve actually written several that you can link to on my website, www.KOLTAI.com, about the importance of entrepreneurship in solving the migrant crisis in Europe, the biggest crisis arguably confronting the European Union, and this affects everybody.

What do you think your greatest successes have been?

The first thing I want to say is never is the work that I do the only thing that moved the needle. It’s impossible for anyone to ever say that that was the thing that changed the equation. Having said that, I really do believe that in the Arab world broadly, but specifically in Egypt, in Jordan, in Tunisia, in Lebanon, when I look at the level of activity in the startup sector today versus eight years ago, it’s breathtaking.

One of the best books on this was written by Chris Schroeder, who wrote Startup Rising about the development of the Arab world. He came on one of the first entrepreneurship delegations I organized, which was to Egypt, and that was his first exposure to this. He went on to not only write a fantastic book about it but has also become a well-known international speaker on the subject, further raising visibility. I feel like I played a small part in that turnaround.

There are many other economies as well. I didn’t personally do the work, but Rwanda has been one of the greatest success stories in the world. It is the most decimated country arguably in modern history after the genocide which ended in ’93. In the 20 plus years since it has had the fasted economic growth in Sub-Saharan Africa, and I would argue that it is because entrepreneurship promotion was at the center of the government’s economic plan.

What are some ways for independent professionals to position themselves and get involved in project work in international development?

The old school way is that development institutions issue RFPs for projects all over the world. It’s still the single biggest way that works. These RFPs are published by each individual, but they’re also aggregated in a few sites. One of the best is www.DEVEX.com. The United Nations also has a DEV business site. Another is trade association of consultants and contractors who work in this space organization called the Aspen Network of Development Entrepreneurs, whose website is www.ande.org.

Then there are a lot of people like me, who are individual independent contractors or subcontractors. I’m a very small, boutique subcontractor and I only do entrepreneurship development, but there are several much larger firms, from Boos, to Deloitte, to Price Waterhouse Cooper, to EAI, Nathan Associates, AFT Associates, and those are just the Americans.

I’ll also throw in a shout out for the Ashoka Foundation. A number of Umbrex members have volunteered to mentor Ashoka fellows through the Globalizer Program, working with social entrepreneurs around the world. What is your biggest obstacle to progress?

There are lots of ways to get involved, but what there aren’t, unfortunately, are enough funders funding the work. That’s why I spend my time trying to make the argument, and it’s why I’m always looking for speaking engagements in front of potential funders, corporate groups, foundation groups, investors groups, to explain the importance of this work in the hopes that they will then start funding more of it.

Do you have any book recommendations beyond your own for someone who’s interested in learning about entrepreneurship in emerging markets?

At the back of my book there’s quite a long bibliography, so I won’t repeat all of that, but that’s definitely one place to go for this. There are several organizations, particularly university affiliated organizations, that work in this space where people can learn. The Center for International Development at the Harvard Kennedy School, where I’ve done some lecturing, the Legatum Center at MIT. I’m actually teaching a course based on my book and my work at Tufts, my alma mater, next semester. Other universities that have programs, the William Davidson Institute at the University of Michigan is focused exclusively on this area.

I have read that entrepreneurship is down in the U.S. Based on your Six Plus Six model, how do you evaluate entrepreneurship in the United States today?

Again, entrepreneurship is hyperlocal. If you look at the United States you’re going to get one picture, but if you look at specific geographies you get a very different picture.

In the U.S. we tend to think of entrepreneurship and Silicon Valley, but non-tech businesses have a history of creating many more jobs. You have to be more nuanced in how you assess the issue than just looking at nanotechnology startups in Silicon Valley and saying entrepreneurship is down. The other thing is that ecosystems age, and in different places at different times they have very different problems. The problems of aging baby boomers are very different than the problems of millennials. In the United States there are places like Detroit, like the Lehigh Valley in Pennsylvania, like central Florida where there are extraordinary, active, positive, strong ecosystems developing. Those are young and new ecosystems, as compared to Boston or San Francisco or Austin, so you have to be very specific.

Has there been any particular company that you thought was particularly impressive or exciting?

I have legions of them. In Indonesia there was a company in the cut flowers business in rural eastern Java, where ginger flowers grow wild. When you buy them in Seoul, Korea they sell for $50 a stem at retail. This guy was having a problem because he could sell his product as far north as Hong Kong which is about a six or seven-hour flight for about $7, but he couldn’t sell them as far north as Seoul or Tokyo because to get that high value price it had to be completely flawless.

We ended up working on a new kind of packaging solution, an octagonal cardboard box. Brought in an expert in perishable and fragile produce and came up with a new design which, parenthetically, also fit exactly the specifications of a larger air cargo container. It allowed the product to be put on a plane to Seoul, and increased his sales in the first year 10 times over.

The effect on the villages that lived around him whose people harvested the orchids and the ginger and other exotic flowers was immediate and breathtaking.

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