Starting up in emerging countries can be a blessing and a curse.
On the one hand, the value of coming into a non saturated market increases the chances of being a big fish in a small pond. On the other hand, a lagging infrastructure, talent and local laws can be insurmountable obstacles to success and scaling.
For Manila-based Mario Berta, founder and CEO of Fly Spaces, the challenge, chaos and opportunity in an emerging market is infectious - and lucrative.
Berta has been building companies across Africa and Asia for years, and includes a stint as regional managing director at Rocket Internet on his resume. Whether in Angola or the Vietnam, he has identified several common characteristics across emerging markets that entrepreneurs should be mindful of when leaping into the deep end of a developing market.
Talent is extremely difficult to acquire. The economies of developing markets are growing fast, so when acquiring talent you’re competing with the big guys too - the new banks, the retail and real estate companies. Without much awareness of entrepreneurship, many may prefer the security of a stable job, 30 day holiday guaranteed, and life insurance.
You’ll need to be a heavy micromanager. Many of those hired may be fresh out of school and it’s their first job. So in these emerging markets, they’ll need to provide a lot of help, training and control. You may call it micro-management, I like to call it one-on-one coaching. The result, however, is a close relationship with your team. For example, I am the godfather of all the employees’ kids in Asia. I’m basically like a father to those guys.
It’s all about relationships. You need connections everywhere in the world, but in emerging markets especially. Industries and networks are very interconnected and rely heavily on personal connections when doing business. Being likeable, genuine and honest is doubly important. Tip: When you smile, and you should smile often, make sure it’s a Duchenne smile, not an Pan Am one.
Know the laws. Depending on the emerging country, there are some foreign ownership restrictions that you need to study.
Logistics can be a nightmare. Depending on the country, logistics can have a serious and direct impact on your business logistics. For example, at Rocket Internet when building ecommerce companies in an emerging market, we had to take into account that the Philippines had a credit card penetration around 3 percent, so we had to do cash on delivery. But blue collar workers earning $300/month, collecting $400 to $500 upon delivery, would steal the money and leave. Also in Manila, where you have the worst traffic on earth, transporting something from point A to point B can take you two days.
Being an entrepreneur is not a cool thing. There is only going to be one Elon Musk and one Mark Zuckerberg and most likely, we are not going to be one of them. There is a huge ‘wow factor’ in technology but I work in technology because it’s my passion. I also have a lot of very traditional businesses. I have a burger joint, a club, a bar. If you’re making money, then it’s sustainable.
The excitement of emerging markets is unique. When I’m away from Asia, I miss the energy and chaos and vibrance of Asian cities. Even though the traffic is terrible and there is a list of problems, the energy is great.
Feature image via BDL Accelerate Facebook page.