This article may sound familiar. A shorter version of this article was published in The Business Standard on 26th November 2024. This is the original longer version that I shared with TBS and had to shorten to meet the length requirement. I am publishing the full version here. You can read the TBS version here.
In 2019, Valentina Assenova of the University of Pennsylvania published a paper titled “Why are Some Societies more Entrepreneurial than Others? Evidence from 192 Countries over 2001-2018.”
We presume that if a country invests in R&D, has a strong STEM education system, has abundant capital, and has pro-business policies, you have fertile ground for a thriving entrepreneurship ecosystem. However, Assenova's research suggests otherwise. Instead, the study finds that cultural and social norms play a greater role in determining the level of entrepreneurial activities in a country. "The evidence shows that the strongest predictors of cross-national variation in entrepreneurial activity were normative, with social norms being the most strongly associated with entrepreneurialism and rates of organizational founding," observes Assenova in the paper. The paper shows that "societies that value and reward performance and endorse status privileges had on average higher rates of organizational founding…."
If this is the case, we need a complete overhaul of policy thinking around how we can accelerate entrepreneurship in Bangladesh. Along with infrastructure and investment, we must also focus on the normative reality in society and across our policy landscape.
At Future Startup, we have been writing about entrepreneurship and business in Bangladesh for more than 10 years. When we first started publishing interviews with founders and analyses on businesses back in 2011/2012, the mainstream connotation of entrepreneurship was broadly negative. The dominant view was that if you don’t come from a privileged background you can’t build a successful business in Bangladesh.
Additionally, people generally viewed businessmen as corrupt and greedy.
Both of these perceptions have a basis in reality. In Bangladesh, meritocracy doesn't always lead to the best outcome for individuals. Your background, family status, closeness to power, group affiliation, and a host of other factors limit one's access to opportunities. Like national politics, everything follows a dynastic norm that has created an extreme concentration of wealth and power—exacerbating the country's overall inequality and making social mobility difficult.
This reality has started to change to some extent in recent years under the pressure of technology and globalization. Technology has made exploring opportunities without permission or patronage from the powerful possible, making the playing field relatively equal for all. This has resulted in a fascinating startup movement in Bangladesh. However, this movement could have reached a completely new level if we had the cultural imperatives in favor of entrepreneurship.
To that end, to accelerate entrepreneurial activities in Bangladesh, along with policy changes, we need meaningful cultural changes. While we have seen certain changes over the last few years, such as more people are now interested in entrepreneurship, the broader normative reality remains the same. We are still not a meritocratic society. The social support structure remains skewed towards the privileged. Unless we can change this normative structure, meaningful acceleration of entrepreneurship will remain elusive no matter what policy decisions we make.
In this article, I explore 15 cultural changes that can lead to an acceleration of entrepreneurship in Bangladesh.
Bangladesh is not a meritocratic society. Of course, there is no perfect meritocratic society. It is not realistic to expect one either. You can think of it as a spectrum where in some societies meritocracy takes precedence whereas in others merit and performance don’t take precedence. In Bangladesh, the culture is of Mama and Khala. Everything depends on who you are and where you come from. This sentiment is pervasive everywhere, from public to private organizations. Performance doesn’t always lead to the best outcome for individuals. This means people are not encouraged to work hard, improve, or do their best, which is exactly the opposite of being entrepreneurial.
Bangladesh needs cultural optimism and a habit of seeing upsides in things. Optimism is an essential quality of entrepreneurs. As a society, we are rather a bit cynical and prefer to see the negative side of others. While this is nothing unique to our society, it appears to be more pervasive in our society than otherwise.
Cynicism leads to many limiting behaviors. You generally perceive the world as a difficult and unjust place, which the world probably is. But operating with a cynical outlook in an already difficult world does no good to anyone.
A direct implication of this is a failure to imagine a better world. Imagination is the most critical ingredient of innovation and entrepreneurship. If you see the world from a negative outlook, nothing appears possible. You not only doubt and discard your ability to imagine a better future, but you also do the same with the abilities of other people.
Cynicism leads to all kinds of sabotage behaviors. You not only self-sabotage, but you also sabotage other people. Cynicism is also the source of malevolence. You can’t stand the success of others.
Successful entrepreneurship ecosystems are optimistic to a fault. Silicon Valley is often accused of unbridled enthusiasm and optimism. For being not in touch with reality. Entrepreneurship is precisely that. You imagine a new reality and go for it. Unless you’re some sort of lunatic, you are unlikely to go after some dream that appears impossible to everybody else.
We need to raise our bar of optimism if we are to create a vibrant entrepreneurship scene in the country. It does not have to be everybody but it is a must for the community that deals with the entrepreneurship ecosystem. We have to learn to encourage weird ideas, impossible-seeming dreams, and visions.
Local conglomerates and corporations should invest in local startups and businesses and learn to take collaboration as a strategy for expansion. We have seen companies like PRAN, WALTON, and Golden Harvest trying new ventures in the tech space. Our understanding suggests that while large companies have certain general advantages, their advantages put them in a disadvantaged position when it comes to startups. These large companies would do far better investing in startups instead of trying everything themselves. Investing in high-potential startups can be an excellent diversification strategy and hedge against disruptive risks.
This is an extension of earlier point number 3. In Bangladesh, we have a tendency where companies and people tend to try to do everything themselves and often shy away from collaboration. This of course originates from the reality that we are a low-trust society (the next point). However, unless we learn to collaborate as a society and by extension companies learn to collaborate, meaningful venture building will remain a challenging ambition.
We’re a low-trust society. This is not an indictment against the inherent goodness of Bangladeshis. Bangladeshis are some of the best people on earth. At the same time, we’re a low-trust society in the sense that we don’t usually see potential in other human beings in a positive light. Trusting someone we don’t know by either giving them support or getting support from that person is still a tall order for us. This has a lot to do with our history and culture. But it has many real-life consequences.
One, people don’t generally help other people from outside of their network. It has to be the same school. Same village. Same corporation. Same social class, etc.
Of course, this is not unique to Bangladesh, it is true for many other societies as well. In Silicon Valley, people from Stanford and similar backgrounds receive better opportunities. But at the same time, Silicon Valley is a highly meritocratic community where people go out of their way to help each other. To make introductions. To donate. This has been one of the defining traits of these clusters of innovation across many parts of the world where people go and find the support they need.
Of course, nothing comes easy. Out of hundreds of people who are seeking help, a few might eventually find it. But regardless, the chance of you getting picked up by someone if you’re doing good work is much higher in those places. This is not the case in Dhaka. It is quite dynastic like most of the things in Bangladesh. People generally don’t help people who come from outside of their circle. I routinely see where people don’t get access to opportunities because they don’t come from the same social class or are well connected.
I understand the arguments in favor of this reality. People generally tend to go along with people they know. Investors prefer to invest in a company where they know the founders or founders come through a mutual connection that the investor values. It makes decision-making easier and reduces risk.
However, in Bangladesh, how this plays out doesn’t necessarily play out in good faith. Instead, people go with their network or social circle even when there is no logical reason to do so. It happens because they prefer their people to get the benefits even when someone else may be more deserving of that opportunity.
I think we need high trust and a highly serendipitous environment where chance encounters happen and lead to meaningful breakthroughs.
Local businesses and wealthy people should support entrepreneurial people and entrepreneurship-related initiatives through philanthropic initiatives. Across times and societies, philanthropies have played an important role in advancing innovation and entrepreneurialism. In countries like the US, thousands of grants and philanthropic initiatives support entrepreneurial initiatives. The same is true for our neighboring country India. Relative to that, while many Bangladeshi wealthy people donate to and invest in charity, the initiatives of effective and productive philanthropy in areas like entrepreneurship, and social problem-solving remain shamefully insignificant.
Entrepreneurs should be celebrated and respected. Our local university curriculum should teach about local entrepreneurs and businesses.
We should normalize failure as a society. Similarly, people should have a minimum safety net to fall back to when they fail at ambitious entrepreneurial projects.
Support can be many things. I see a few things as extremely valuable: exposure to ambition, access to mentorship, access to connections, and access to money.
It’s still expensive to start a company in Bangladesh. Trade license fees can be made nominal. Company incorporation fees can be made nominal. All of these services can be made digital. All these changes are not easy and come with a lot of caveats. My point is that we can take a nuanced approach to these policy regimes and dramatically make them entrepreneur-friendly and less expensive for people without compromising other policy priorities in relevant instances. Successful businesses are net positive for societies. I’m not talking about crooked businessmen here. Most businessmen are good and honest and produce net benefits for society. The majority of successful people are nice people at heart. They want to do good. And when that happens, it benefits the country and the society. It creates employment, contributes to GDP, and so on. Moreover, you can design more progressive policy interventions to offset inequality. The alternatives are not any better. It is good for the government.
Lowering fees for many of these services may cause short-term revenue loss for the government but the long-term upsides are infinite. It makes sense for the government to forego the small revenue they receive from companies in the process of registration and should see the revenue they can get if there are more successful companies. That’s just one example. There are many such areas where the government can make small changes and help accelerate the growth of startups and entrepreneurship.
Bangladesh’s startup scene remains highly concentrated within a certain group of people. This is nothing unique to Bangladesh. This is the case in the US. In India and many other places. But there are also places where they are doing a better job by creating opportunities for more people and opening the gate to more people.
We are just getting started. It makes sense that we’ll start imperfectly. But it is also a good time for us to set the stage right and make an effort to build a more inclusive and open ecosystem.
We should make active efforts and design policies so that more people can access the opportunities designed for startups. Incubators and accelerator programs and government initiatives to support founders should make it easier for diverse people to access these opportunities.
We should not build a startup ecosystem with just people from highly educated backgrounds, living in the tri-state areas in Dhaka. It would be such an unfortunate and sorry state if we do that. It would not only be unjust, but it would also equally limit our potential.
I understand that many people want to argue that it is all about talent and abilities. I agree. Only the people who have abilities and drive will make it in the world of venture building. But it is myopic to the verdict that only people with expensive higher education living in the tri-state areas have the required capabilities.
Malcolm Gladwell wrote about the role access to opportunities plays in the life of people in his excellent book Outliers. It will be in our interest to learn these lessons and open our world and expand our net so that our progress and development touch more people.
We can’t decide about talent but we can change who gets access to opportunities and who doesn’t. It harms no one when we open the doors to more people. If only capable ones survive the race, that's perfectly fine when you allow everyone to compete on equal terms.
Innovation cluster in industrial policies is a widely practiced concept. We should study RMG, pharmaceuticals, and other successful industries in Bangladesh. We should study other innovation/entrepreneurship clusters around the world and take lessons from those. We should study the successful founders in Bangladesh such as the founders of Square, Beximco, Akij, Pran, and others, and try to understand what helped them succeed.
There have been substantial studies on the nature of clusters across the world. It has been found that almost everything happens in clusters.
Eric Weiner offers a fascinating look into this phenomenon in his excellent book The Geography of Genius: A Search for the World's Most Creative Places from Ancient Athens to Silicon Valley. He tracks down all the major clusters across history and tries to offer a coherent story and explanation for why clusters happen.
We have clusters of industries and innovation in today’s world as well. Tech is Silicon Valley. Movies and entertainment in LA. RMG in Bangladesh and so on.
Studies suggest clusters make it easier for an industry to flourish for various reasons. It helps the concentration of talents, ideas, and resources and ensures the free flow of resources and ideas.
But how do these clusters begin? What causes these clusters to form?
I think our policymakers should spend time understanding these phenomena and designing policies that can transform sporadic actions into clusters.
Actors looking to build a vibrant tech startup ecosystem in Bangladesh will be wise to look at the RMG sector in the country.
We should back and encourage more ambitious and original projects. We shouldn’t punish people for thinking outside of convention.
The world is memetic. Due to our cultural tendencies, we’re more so as a society. Our education system and culture have a lot to do with it. First-principle thinking is uncommonly rare. This has many implications. In our case, we don’t see many unique startups. By unique I don’t mean unique in the sense of idea alone. It is hard to find anything under the sun that someone before you has not considered.
But you can be unique in how you execute. You can approach the same problem in a hundred different ways.
Take, for instance, Edtech. There are several companies but everyone seems to be doing everything. Simply because, in my reading, someone else is approaching edtech the same way. Whereas we could have many distinct edtech companies doing many interesting things.
I understand these challenges are not linear and I can write whatever I see without acknowledging the real challenges in the market. I recognize that it is always easier said than done. But I would still argue that there is room for doing far better.
Instead, we have a startup ecosystem with highly homogeneous startups. In most instances, companies tend to follow each other head to toe. You can do a hundred different things in edtech. The same goes for all other verticals. There are other problems in the market as well that can offer excellent opportunities. Unfortunately, serious explorations are hard to come by.
Then there are also tendencies to bring ideas that worked in other markets. This is however a two-way road. Founders are incentivized to think alike. Investors also sometimes tend to look for similar companies they see in other markets. While this theory is slowly coming to end, this remains a dominant approach in Dhaka.
At the same time, as a society, we don’t appreciate it when someone tries something out of convention. While it is true for all societies. Probably because I swim only in this water, it feels like we are more conservative and less imaginative as a society and don’t appreciate imagination as much.
People use many parallels for the Bangladesh startup ecosystem. Some people say we are similar to India. Others say we are much closer to Indonesia. Albeit there are many significant similarities. But one important distinction between these two markets and Bangladesh that we often overlook is the availability of opportunities for talents to train early.
One thing going for these two markets is that they have excellent educational institutions and their people get opportunities to work for world-class organizations right out of college. You can find all the big consulting firms, tech companies, and other big companies from all over the world in these two markets. Local talents get excellent opportunities to learn and grow in these organizations. This offers excellent early training grounds for ambitious people and better prepares them for entrepreneurial or other journeys.
In turn, it makes finding talents easier for startups. If you want to build a high-growth organization, move fast and break things, you must have high-quality people who can execute on a high level.
Contrary to that, our people get limited opportunities when it comes to getting these experiences in their early years. This is a challenge for startups in Bangladesh, affecting both the qualities of founders and their teams.
This has other second-order consequences such as access to networks, resources, mentorship, various supports, perception about a market, and capital.
Then there are longer-term challenges. Two aspects of it: are the education system and brain drain. Our education is broken. It is failing to produce good talents. We have excellent people. No doubt about it. Bangladeshis across the world are doing excellent work. But that is not happening in the country. Science education has been in consistent decline for many years. Access to quality teachers is unevenly distributed. Except for certain schools in major urban hubs in the country, most schools don’t have adequately qualified teachers.
We hardly see any meaningful change in the education system. Often things are done whimsically without proper empirical evidence. The overall education system needs to improve. Science education should receive greater emphasis and quality education should be accessible across the country.
The second challenge is brain drain. Young people are increasingly moving abroad. With the rise of remote work, Bangladeshis are increasingly taking remote jobs in multinational companies. These are long-term challenges that need long-term strategic investments. That’s why we should look into these challenges immediately and get to work so that we can see a better talent landscape 10 years from now.
Successful business ecosystems take a long time to build. It is a hard problem and takes a ton of trial and error before you land on something that finally helps you to take off. Compared to that, Bangladesh's entrepreneurship scene as we view it today is at its nascent stage. We have a long way to go. However, if we focus on the right interventions and run the right experiments, we can accelerate the ecosystem's growth before we lose our stamina and give up trying.
