Cultural Recipe for an Entrepreneur?

Part of my work in Ecuador has been to evaluate the entrepreneurship “climate” in the Amazon and throughout the rest of the country.  It is no secret that Ecuadorians in general are very entrepreneurial, as proven by the Yachana High School students’ social business plans.  I’ve mentioned before that the Global Entrepreneurship Monitor (GEM) even ranks Ecuador as 7th in the world for Total Entrepreneurial Activity (TEA).  But hold on for a hot second… if this is the case, then why isn’t Ecuador pumping out innovative, high-potential ventures left and right?  Because there are two main types of entrepreneurship throughout the world: necessity-driven (emprendimiento tradicional) and opportunity-driven (emprendimiento dinámico), and Ecuador happens to practice the former much much more than the latter.

Necessity-driven entrepreneurship  usually entails setting up a small business selling basic product(s) or service(s) because there is no employment elsewhere due to lack of education, geographic location, economic state of the country, etc.  Necessity-driven ventures in Ecuador usually employ 2 – 3 people from the same family, and often provide similar products and services to other small “pop-up” businesses close by. This type of entrepreneurship typically leads to small, local businesses.

Opportunity-driven entrepreneurship occurs when someone has the ability to choose between employment and setting up their own venture.  An example from Ecuador would be a group of Amazon guides getting together, discussing the need for a tour operator in a specific region, and setting up their own independent travel agency.  Without the agency, they would each still theoretically have a place of work.  This type of entrepreneurship is conducive venture-level enterprises that could potentially scale throughout the nation or even internationally.

The prevalence of necessity vs. opportunity–driven entrepreneurship in a country can be influenced by many social, political, and economic factors.  I have also come to believe that it is heavily influenced by culture.  And from my time spent in and out of Ecuador over the past few years, I’ve begun to realize that certain culture’s tendencies may be more conducive to opportunity-driven entrepreneurship than others.  I realize I’m making what many may consider a bold statement here, but read me out.

When you think of an entrepreneur, you think of someone who’s not afraid to take risks and break the norms a little bit, who’s comfortable with lots of gray area, and who’s very independent-minded.   Obviously, this type of person comes few and far in any setting, but certain cultural dimensions may make him / her more common in some countries than others.

Geert Hofstede, a Dutch social psychologist and anthropologist, has spent nearly his entire professional career identifying how cultural dimensions vary from country to country and across geographic regions.  In my research I’ve decided to look at 3 out of the 6 dimensions in Ecuador and compare them with the United States, which has historically generated a slew of successful entrepreneurs comparatively, and Chile, which is considered to be on the most competitive economies in Latin America and is quickly rounding the corner on one the most innovative (

The first dimension is Power Distance – “the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed equally” (Hofstede).  The higher the score, the more a culture accepts inequalities and strict hierarchies as a fact of life.  The lower the score, the more a culture expects a democratic approach to power relations and isn’t afraid to step outside the lines.  Ecuador has a power distance score of 78, while the US has a score of 40 and Chile 63.  This signifies that relative to the other two countries, Ecuadorian culture generally operates within very strict social and organizational hierarchies, which not only creates bureaucratic disasters but can also intimidate those in lower social or organizational positions from speaking up with new ideas.

Por ejemplo, I usually work on my laptop at the Yachana Lodge’s bar where there is reliable wifi and a consistent electrical current.  We recently got a new bartender, Pepe, who is a gem of a person and has really made my working afternoons quite enjoyable with his crazy tourist stories and attempted jokes in English.  One day, Pepe decided that he wasn’t comfortable with me charging my laptop when lots of tourists were around for fear of spilling something on it, having it in is way, etc.  Totally fair, right?  Right.  Well, I actually never heard this tid bit of information from Pepe, but rather from the lodge general manager, who heard it from the assistant manager, who heard it from the head chef, who heard it from Pepe.  Deciding to go directly to the source, I approached Pepe to ask if we could work out a schedule as to when I could charge my laptop.  He said of course, and that he had wanted to do that from the beginning.  BUT…. that we would have to get it approved by the kitchen manager, who would need to get it approved by the assistant manager, who would then need to run it by the general manager.  Remember the game telephone?  Where the more people you have the more the orginal sentence gets distorted?  I’m sure you can imagine the communication rat race that ensued.

Pretty accurate.

Uncertainty Avoidance is the next dimension, which is “the extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these” (Hofstede).  The higher the score, the more your culture makes sure to avoid any sense of ambiguity.  Ecuador has a score of 67, the US 46 and Chile 86.  Latin American culture in general does not tolerate uncertainty well, and this is most noted in their averseness to risk and eagerness to provide any other answer besides “I don’t know.”

In Ecuador, I see it in our students who become frustrated and almost uncomfortable with open-ended questions.  I see it with young entrepreneurs who prefer to copy a business model they saw work down the street rather than go with their gut feeling to try something new.  And I hear it almost daily with the response “Ya mismo!” (Soon!) if I ask a question with the word “When?” in it, even if who I’m asking has no idea “when” whatever I’m asking about will actually happen.  Anything to not be responsible for leaving me in a state of uncertainty…  Just 4 days ago myself and two other Yachana volunteers were left waiting at a bus stop for 4 hours thinking that “ya mismo” a bus would come.  We should have known that no one really knew anything about why all the buses disappeared that afternoon.

The third cultural dimension is Individualism vs. Collectivism which measures “the degree of interdependence a society maintains among its members.”  It has to do with whether “people’s self-image is defined in terms of ‘I’ or ‘We’” (Hofstede).  The higher the score the more individualistic a culture is, and the lower the score the more collectivist it is.  Ecuador is one of the most collectivist societies in the world with a super low score of 8, while the US has one of the highest scores of 91.  Chile falls in the lower quarter with a score of 23.  Extremely collectivist societies place a heavy importance on harmonious group relationships and seek to avoid conflict at all costs.  The term “group” could mean anything from an extended family, to an organization, to a race or ethnicity.  In Ecuador, I have seen this in the form of small enterprises over-hiring family employees as the expense of the business so as to not have to say no to their relatives.   I have also witnessed this cultural tendency when Ecuadorian consumers decide against reporting bad business practices in order to avoid upsetting their neighbors.

I do not mean to shed a negative light on the beautiful people of Ecuador by sharing these little stories.  Rather, I wanted to highlight how a country’s traits and characteristics can seriously play a role in the development of an “entrepreneurial” culture.  Of course, the scores assigned to each culture by Hofstede do not mean that one is better or worse than the other.  They simply highlight how each is different.  Neither are these scores fixed, as cultures are continuously morphing and changing parallel to others that are morphing and changing simultaneously.  It should also be noted that these indices paint a picture of the culture as a whole, and do not represent the traits and characteristics of individuals.  I have met some amazingly innovative and non-traditional Ecuadorian entrepreneurs during my time here who honestly shatter the cultural dimensions that have been assigned to their country.

Programs like EmprendEcuador (Startup Ecuador) are working to push Ecuadorian cultural toward one that is more entrepreneurial by offering financial services that minimize risk, building relationships between existing entrepreneurs, and encouraging members from all pockets of Ecuadorian society – rural, urban, men, women, Kichwa, mestizo, etc – to try something new and different.  And while it’s only 2 years old, I can already see glimpses of it working!

Well, ladies and gents… The countdown has begun.   I only have 10 more days in Ecuador.  As always, leaving here will be bittersweet.  I hope everyone had a happy holiday season, and can’t wait to continue working on Village Capital Ecuador stateside =)

Source –

Read up, folks!

I’m loving this weekend’s news coverage of “Bottom of the Pyramid” business solutions, so I thought I would share some of my favorite articles.

After a great week of social enterprise visits, entrepreneur meetings, and project proposals in Quito (more on these awesome adventures in a later post), I’m more than ready to head back to Yachana tomorrow… this time armed with an arsenal of insect repellents and light layers.

Coming up…

On Thursday I’m starting a “Village Capital Junior” program at the high school, whereby the students will create their own mini-social enterprises and peer review each other’s work along the way.  At the end of three weeks, they will have (hopefully!) learned how to create a business model, pitch their business idea to classmates, and identify key success factors for a successful enterprise.  The peer-selected winners of “Village Capital Junior” may even have the chance to present their business ideas to the Yachana Directors for a chance to take out a small loan and put their business plan into action!  I’ll be sure to relay the results.

Starting this week and continuing through the next month, I’ll also be conducting research and administering surveys on the adoption of social media sites in the Amazon.  The US has already seen the impact that sites like Facebook and Twitter can have on personal relationships, commerce, and mass communication.  Not to mention, the unprecedented voice they can give to a politically charged nation.  Living in an area that is on the cusp of adopting google, facebook, youtube, and all other off-spring of broadband internet is pretty exciting, and therefore worth researching!

Oh, and by popular demand, more baby otter footage 🙂

Probably the cutest thing in the entire Amazon





 We’re flying by the seat of our pants down here in Ecuador these days. Lots of last minute meetings, travel plans, school changes, misunderstandings, and project alterations.  Honestly, it’s been a roller coaster and I’m just now starting to “enjoy the ride.”  For those who know me well, you can imagine it took some time for me to forego my google calendar that schedules my day in 15 minute increments and the notion that I could expect a meeting to start on time.

It’s quickly becoming apparent, however, that Ecuador has operated this way for quite some time and more importantly, doesn’t really see anything wrong with it.  Granted, spontaneity, complete neglect of foresight, and living in the moment each have their perks.  Little setbacks here are commonly followed by a mere “meh” or “oops.”  And In the words of my favorite entrepreneur in Ecuador, Douglas McMeekin – founder and president of Yachana, “If I sat around and took the time to 100% think through it all (all being the entire Yahana Foundation) it would have never gotten done.”  That may be true…

But over the past few weeks I’ve seen how the “go with the flow” Ecuadorian mentality can also lead to major inefficiencies, organizational setbacks, and most importantly, loss of opportunity.  Perhaps it’s the cultural tendency to think mostly in the “short term,” or Ecuador’s age-old habit of making quick fire decisions without really, well… thinking or communicating (i.e. throwing out 7 presidents in 10 years without stopping to wonder how that may look to investors wanting to invest in a “politically stable” country).

Below you’ll find three “Oops” instances from my first month in Ecuador that may help to illustrate exactly what I’m talking about.  They each vary in the severity of their consequences, but all could have possibly been prevented with a little previsto (foresight), planificación a largo plazo (long-term planning), rendición de cuentas (accountability), and comunicación (I shouldn’t have to translate this one….).  I really don’t know if Ecuadorians will ever adopt such practices, nor do I think it’s anyone’s place to tell them they should.  But the consequences are difficult ignore, and if left ignored Ecuador will continue to struggle in its effort to transition from an emerging market to one that is developed, self-sustaining, and thriving; not to mention delay the interest of impact investors who so whole-heartedly want to see countries like Ecuador realize their hidden potential.

Example 1

I walk up to a friend from Mondana (community where Yachana is located) and notice that the strap of her cotton bag is becoming unraveled and hanging on by a thread.

Me: I notice your bag is becoming unraveled.  I know how to fix it if you have some thread and a needle. Want me to help?

Girl: Oh yes, it’s been unraveling for a few days now.  But no thanks, I’ll just wait and fix it when it breaks.

Me:  Well if you want I could fix the tear and reinforce the rest of the strap, that way it will last longer and you won’t have to worry about fixing it if it breaks while you’re away from home.

Girl: Really? You know how to do that?  How interesting.  Thanks, but it’s still not broken yet.  I’ll just wait. 

Me: ………

I haven’t seen her in a few days, but I can guarantee that strap has surely broken by now.  And I doubt she was carrying around a needle and thread, because that would be downright crazy…

Example 2

My friends and I are about to cook dinner at our hostel in Tena, and have invited a few amigos who were staying elsewhere to join us.  The kitchen is outdoors, in a common area, and open to hotel guests.  Out of respect we thought we would mention to the hostel owner that we would be having some friends over.

Us: Señora, we´ve invited some friends over for dinner and wanted to let you know.  We’ll be very quiet and clean up after everything.  Your outdoor kitchen is amazing and we’d love to show our friends.

Señora: What? No, only guests can use the kitchen.  Your friends cannot come. I built that kitchen for paying customers only.  (she finally allowed our friends to come over, but only because I think she felt bad that we had already bought all the food…)

Obviously I’m not about to tell a Señora how to run her business.  But the kitchen has been built and is therefore a sunk cost.  Allowing a few non-customers to enjoy the space alongside hotel guests would not have cost the owner a single extra penny.  In fact, by allowing friends of guests to enjoy the hostel’s new common spaces she is essentially employing more mouths to spread the word about her business for free!  You can’t buy that kind of word-of-mouth publicity in the tourism industry.  But the curse of the short-sighted Ecuadorian business owner continues….

Example 3

This example is perhaps the most heartbreaking of all, but it also represents a wonderful lesson in communication, accountability, and organizational sustainability.

At Yachana, which is a considerably well-run organization compared to others in Ecuador, I’m still a little confused as to who exactly is in charge of what, and what exactly each department is responsible for at the lodge.  This became even more apparent after a serious storm this past Sunday when the Napo River rose so high and grew so wide that low-lying houses, buildings and moored boats were in serious danger.



As soon as river started to rise early Sunday morning, boat owners from around the community began to bring their canoes to higher, more secure ground.  And rightfully so – since there are no roads and the community relies on its canoes to travel to/from the market, school, and elsewhere.  But what about Yachana’s boat – the 30-person, dual-motor, covered fiber-glass canoe that brings tourists (aka income) in and out of Yachana multiple times a week? Who is responsible for keeping that boat safe? The hotel manager?  The higher ups in Quito? Whichever boat operator is on duty?

By about mid-day, the river was raging.  Actual trees were being ripped out of the ground and carried down the river.  By the time Yachana’s boat operator decided he should probably move the boat to safer ground, it was too late.  Upon trying to nudge the boat into a small cove, the current caught the tail end of the canoe and whipped it around horizontally so that the whole boat was sideways.  Unable to regain control against the current, the boat was forced against a tree and endured hours of river-beating until it was actually flipped upside down from the force of the current.

Bye-Bye, boat.

While witnessing this tragedy I had an enlightening conversation with one of the lodge’s staff members…

Me: Who is in charge of keeping the boat safe?

Staff member: I’m not really sure.

Me:  Oh.  Well who will tell the hotel management in Quito the boat is destroyed?

Staff member: I’m not really sure.

Me: Oh. Is boat insurance available in Ecuador?

Staff member: (laughing) I’m not really sure, but probably not.

Me: Uh oh.  So who pays when something like this happens?

Staff member: I’m not really sure.

Me: And how often does the river flood like this?

Staff member: Oh, at least once a year. 

So essentially, it is certain that the river will show its fury at least once a year.  It’s 100% going to happen. But have measures been taken to put someone charge and establish a contingency plan in the event the river tears up more than just trees?  Nope.

Mental note – there is a business opportunity in the boat insurance industry in Ecuador.

Hay un Chevrolet Para Todos

“There’s a Chevrolet for everyone, ” read an advertisement at one of the many car dealships that are popping up in downtown Quito. My immediate thought after reading that was, “Good Lord I hope not….” Don’t get me wrong – I don’t have anything against Chevrolet, nor do I really know that much about the company. But what I do know is that never in my life have I seen more traffic (and I’m from Chicago… the land of endless construction) than what I’ve witnessed over the past few days in metro-Quito. On my way home that same day while sitting in more traffic, I saw an advertisment that said “Compra Petro-Ecuador” (Buy Ecuadorian petroleum), and later that night I watched a public service advertisement practically beg Ecuadorians to vote AGAINST drilling for oil in the Yasuni National Forest. Now Ecuador, I know you need to dream big… but how you ‘gonna put every one of your 14 million citizens in a Chevy, ask them to buy Ecuadorian gasoline (which is in limited supply as it is), and all the while cease drilling for more oil in your precious forests?? Looks like Ecuador is about to (if they haven’t already) find themselves in a sticky situation. Let’s dive in a bit deeper…

4 years ago when I was studying here, it took about 15-20 minutes to get from my town of Cumbaya to Quito – a distance of about 10 miles. Not bad, right? Today, on my way to Quito, it took 15 minutes to move less than… wait for it… a QUARTER MILE! Is this for real?? Needless to say I was incredibly late for my appointment, even according to Latin time. Traffic is pretty standard in most big cities, and I get that. But Ecuador’s population has only grown by less than 2% in the past 10 years, and mostly in rural areas. So how is it that all this traffic came about (not to mention, increased greenhouse gas emissions less than 50 miles from the edge of the world’s lungs…aka the Amazon rainforest)?

Well, as is happening in a lot of emerging markets that have experienced economic growth from oil exportation, consumerism is the new fashion drug. If you can afford a car, or at least the loan payments that Ecuadorian banks will gladly offer you at criminal interest rates, then you mostly have a car or two. Public transportation? Forget it… Why ride with those of a lower economic status when you can turn a blind eye to the have-nots and relax in an air conditioned car (when its sunny and 65 outside) listening to American one hit wonders from the 80’s? No, no, no… you would not be caught dead on a public bus. As my host brother relayed to me this morning, having a nice car for everyone who drives in your family is a status symbol. For instance, if you have two children both of driving age who go to the same university, they’ll probably each take their own cars to school. (I know this happens in the US as well, and I don’t agree with it there, either).

Now the busses in Ecuador aren’t exactly the nicest vehicles you’ve ever seen. They can be very crowded and loud. But they’re cheap ($0.25 a ride), get you pretty much everywhere you need to go, and yesterday got me to my appointment sooner than any car could have since most busses have their own lane.

In Ecuador’s defense, they did try to implement a program called “Pico y Placa.” This program basically dictates which days your car can ciruclate in Quito during rush hour (pico), based on the last number on your license plate (placa). In theory, it sounds good. But in practice, instead of taking the bus on certain days of the week, those who could afford it just bought another car or two making sure the license plates allowed them to drive all days.

Some of you might be asking why they just don’t widen the roads? While this is definitely an option in certain places, and its being done.  But Quito rests in the middle of the Andes mountains, with the surrounding metro area below in the valley. To get up to Quito is to take a series of switchbacks…. and when was the last time you saw a 6-lane switchback up a mountain?

The worse thing of all of this is that because of all the traffic, it takes the the city busses that go between the valley and Quito a longer time to complete each route. And because each bus now can’t pick up as many passengers in a day as it used to, there are talks of raising bus fares to compensate for the loss in profits. The majority of people who ride the bus are of the lowest economic class in Quito. A fare increase for them means a decrease in the little expendable income they have for themselves and their families. This alone is one of the many factors that assists in widening the gap between the rich and the poor in Ecuador.

While there is a solution to this traffic problem, it’s not a simple one. I’ll most certainly be thinking about it on my way to Coca (in the Amazon!) tomorrow morning. The next time you’ll hear from me I’ll probably be writing from my hammock overlooking the Napo river. As always, sending muchos besos y abrazos!