Tarun Khanna - Trust: Creating the Foundation for Entrepreneurship in Developing Countries

Praise for Trust

Trust deals with entrepreneurs across the developing world, where creativity is sorely needed. Khanna weaves together stories of conventional and social enterprises in the private sector and in government. He recognizes the enormous promise of technologybut to be used wisely. A highly readable and must-read narrative!

Nandan Nilekani, cofounder of Infosys Technologies and Founding Chairman, Unique Identification Authority of India (Aadhaar)

Trust is central to any enterprise, and this is especially true across countries in Latin America and the developing world, as Khanna suggests it must be. We work hard to build and maintain it with our customers, employees, bankers, suppliers, investors, and public authorities. Trust is by far more important than simply counting on the rule of law or our institutions. It is the vital underpinning of our growth and prosperity through thick and thin.

Woods Staton, Chairman, Arco Dorado, Mexico

Khanna studies the core of the matter for entrepreneurship in emerging markets. Entrepreneurs in such markets face a friction-full environment. As a friend of mine says, We live in a market economy with Soviet scaffolding and because of this everything needs to be negotiatednothing happens by itself. And why does this happen? The answer is lack of trust!

lvaro Rodrguez Arregui, cofounder and Managing Partner, IGNIA, Mexico

Khannas book is right on target in spotlighting the supreme importance of trust not just in private entrepreneurship but in all connections between entrepreneurs and government, civil society, and people. As Khannas examples compellingly demonstrate, building and maintaining healthy levels of trust is crucial for human progress.

Muhammad Ali Pate, former Minister of State for Health, Nigeria

Khanna skillfully and convincingly argues that trust is a core part of the enabling environment that civil society and the state must foster to enable enterprising individuals to help themselves. I would recommend it to all interested in private sector development.

Emmanuel Jimenez, Executive Director, International Initiative for Impact Evaluation (3ie), India

Challenges abound across the developing world, and its up to us to address them and not wait for the government or for charity. My experiences as an entrepreneur across Africa make me appreciate Khannas focus on weaving a web of trust to get everyone focused, very practically, on how ventures get built and how they scale across large populations. I hope young people everywhere are inspired by this books can-do spirit.

Mo Ibrahim, founder of Celtel International and founder and Chair, Mo Ibrahim Foundation, Africa

TRUST

Other books by Tarun Khanna

Winning in Emerging Markets:
A Road Map for Strategy and Execution

Billions of Entrepreneurs: How China and India
Are Reshaping Their Futuresand Yours

Creating the Foundation for Entrepreneurship in Developing Countries

TARUN KHANNA

Trust

Copyright 2018 by Tarun Khanna

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed Attention: Permissions Coordinator, at the address below.

Ordering information for print editions

Quantity sales. Special discounts are available on quantity purchases by corporations, associations, and others. For details, contact the Special Sales Department at the Berrett-Koehler address above.

Individual sales. Berrett-Koehler publications are available through most bookstores. They can also be ordered directly from Berrett-Koehler: Tel: (800) 929-2929; Fax: (802) 864-7626; www.bkconnection.com

Orders for college textbook/course adoption use. Please contact Berrett-Koehler:

Tel: (800) 929-2929; Fax: (802) 864-7626.

Distributed to the U.S. trade and internationally by Penguin Random House Publisher Services.

Berrett-Koehler and the BK logo are registered trademarks of Berrett-Koehler Publishers, Inc.

First Edition

Paperback print edition ISBN 978-1-5230-9483-7

PDF e-book ISBN 978-1-5230-9484-4

IDPF e-book ISBN 978-1-5230-9485-1

2018-1

Book producer and text designer: Steven Hiatt/Hiatt & Dragon, San Francisco.

Copyeditor: Mark Woodworth. Proofreader: Tom Hassett. Cover designer: Mayapriya Long. Illustrations: Mahima Kachroo. Indexer: Theresa Duran.

To Mom and Dad

I have been studying entrepreneurs in developing countries for about two decades. Initially my work was with incumbent enterprises, often in the form of large family-run businesses. Along the way, though, it was curious to see how the new kids on the block nonetheless forced their way into contention, despite having the deck stacked against them. Established companies had much readier access to scarce money and talent, and they knew how to deal with often-corrupt corridors of power. But that did not stop new entrepreneurs from finding chinks in the armor of the old guard.

Then, less than a decade ago, I began supporting young entrepreneurs as an angel investor, and soon after, I started my own enterprises in the developing world. I connect and advise the surplus talent and a flood of ideas in Cambridge, where I work, with the huge opportunities and need for insight in the developing world.

I have found this work to be intensely creative... and exhilarating! In fact, I find entrepreneurship-in-the-field and my academic work to be entirely symbiotic, if perhaps unusual (or so Im told).

In this short book, comprising a few illustrative stories, Ive tried to distill some of the patterns Ive found. None of the stories here are about my own ventures, though the accounts are informed by them. Rather, these are individual entrepreneurs and settings Ive studied and worked with in myriad capacities, usually each in multiple ways and for a few years, and sometimes for more than a decade.

The themes in the chapters also directly inform my own entrepreneurial efforts. For example, coming face-to-face with the visceral distrust that consumers routinely display when looking for all manner of daily consumablessuspecting vendors of either being incompetent or unscrupulousled me to co-found Aspiring Minds, a machine-learning talent assessment firm that uses technology to certify the quality of talent all over Asia, operating from its offices in Beijing, New Delhi, and Manila. Aspiring Minds helps cement trust in the ecosystem by connecting youth to economic opportunities.