Founder & CEO, Hult Prize Foundation
The 2009 financial crisis served as a wake-up call for highly successful young Wall St. banker, Ahmad Ashkar, to rethink his life. Since then, he has channelled his considerable energies into creating and building the Hult Prize, a start-up accelerator for budding young social entrepreneurs, into a global grassroots game-changer.
THE BANKER WHO THINKS LIKE AN ENTREPRENEUR
We took the opportunity of his most recent visit to FMO to get his insights on impact finance and the young entrepreneurs who will have to step up and solve the problems created by a “failing system”.
How would you explain the Hult Prize’s extraordinary success?
We don’t focus on the 5% who are predestined for entrepreneurship, but finding talent amongst the 95% who never saw themselves as entrepreneurs. Helping them acquire an entrepreneurial mindset; and letting them see how entrepreneurship can be a means not just to economic independence, but also to social and environmental solutions. We give these kids the skills to be the solution to the problems they see in the world around them.
You operate in over 120 countries. Does the idea of entrepreneurship vary around the world?
Absolutely. In the West, the idea of an entrepreneur tends to be a unicorn building a billion-dollar business. But in emerging markets entrepreneurship is often about survival. A mother, for example, who has to find a way to pay her kids’ school fees. We try to keep the outcomes of the training we offer consistent, but you have to localise your methodologies. And the best way to do that is to use the common denominator all these environments have, and that’s human nature.
“In the West, the idea of an entrepreneur tends to be a unicorn building a billion-dollar business. But in emerging markets entrepreneurship is often about survival.”
You spend your life working with young people. How do you think they see the world?
I think it’s critical for anyone in development to understand that most young people, including myself, have grown up in a world characterised by war, famine, and social and economic crisis. Their attitude to the system — including universities, government, the private sector — is pretty consistent. Namely, that it will fail them. Working hard, getting good grades, not getting into trouble… these things don’t yield a life of economic security anymore. And in emerging markets around the world generations of talented young graduates are sitting on the sidelines.
As a result, young people are very sceptical; but that promotes entrepreneurship and I believe its what’s driving the sharing economy, which is all about young people doing business directly with one another. Because if you bypass the intermediaries, the institutions, you sometimes bypass the corruption and the inefficiencies, and can create the future for yourself that the institutions have failed to provide.
Finding employment remains especially difficult for young women. How do you strive to provide equal access and opportunities for future female entrepreneurs?
The emotional intelligence that women bring to an enterprise makes investing in women quite simply smart business. At the Hult Prize, we’re trying to create environments where women can thrive and feel comfortable. For example, we dorm women on our accelerator programmes separately and line up women mentors for women entrepreneurs — if they want those things. It’s about being culturally sensitive. In some countries, it’s also about providing an environment that reassures parents that their daughter will be safe. We focus on the business case for employing women, not mandates or quotas. I’m proud that my own leadership team is 50% women; and of examples like Gia Farooqi, former Hult Prize winner and CEO of Roshni Rides, a commuter carpooling platform in Pakistan.
“We focus on the business case for employing women, not mandates or quotas. I’m proud that my own leadership team is 50% women.”
How would you respond to a cynic who says the Hult Prize is a programme for the privileged: university kids?
First, let’s not forget that in many places the prospects for university students are dire: in Africa, for example, 70% of graduates don’t get jobs. But while we also partner and have set up programs open to people outside university, like the Changemaker festival, it’s true the Hult Prize focuses on university students. Why? Because I believe it gives you the most bang for your buck. Students have a unique four-year grace period to do something. And it’s during those formative college years you can get people to subscribe to the belief that business can be a force for good, and that the solutions to our environmental and social issues stem from business ideas.
What’s the thinking behind the 6 steps (ignite, educate, compete, accelerate, scale and connect) in the Hult Prize methodology?
Our methodology has been iterated over the last decade. It’s designed to address the fact that in most parts of the world setting up a business isn’t something you can just do by making a few calls and filling in some forms. These kids don’t have the knowhow, access, money or connections to even get a licence to get started. That entrepreneurial dream that many of us take for granted simply isn’t present. Hence we begin with inspiration. These kids know what the problems are, but we help unlock the realization that they don’t have to be dependent on the chronically-failing institutions around them, but can be part of the solution. Then we show them how. And then, if they’re the best team with the best idea, we give them the seed funding and network to implement their great idea. And finally, we publicly celebrate their success, hopefully inspiring others to follow their example.
How does the Hult Prize help cultivate local ecosystems that support and create social entrepreneurs? And do you feel there are others who should be taking a more pro-active role here?
We’re critical to the ecosystem for two reasons. First, because we sit at the front-end of the pipeline, the creation stage. Emerging markets in the Middle East & North Africa, South-East Asia and elsewhere are plagued by a lack of pipeline. Investors are forced to spread five-year investment periods over ten years due to lack of pipeline. The second reason is we give young people toolkits and play-by-play instruction to address the challenges of creating start-ups. All this best practice material is open source and available to anyone wanting to do something similar (the World Bank is now building our model into their government funding programmes as best practice). Our chapters on campuses in over 120 countries also give our thousands of volunteers and students access to a network of executives, academics and industry experts.
But we can’t do this alone, obviously. Others have to step up: governments and policymakers need to make it easier to be an entrepreneur; financiers and development banks need to deploy capital to young people; and other financial intermediaries need to make the risks associated with failure manageable. Today, for many entrepreneurs business failure could cost you your dignity, your freedom or even your life. More organisations should be giving young people a chance in a risk-free environment, like we do in a university setting.
“I think we’ll no longer need to discuss making capital cheaper for social entrepreneurs is because businesses that don’t have impact built into their core will go bankrupt anyway within the next decade.”
Some say the system should provide better incentives for ‘doing good’, by making the cost of capital lower for companies who deliver the transformations that people and the planet need. Do you agree?
My opinion on this has evolved over the last ten years. Money makes the world go round, but the reason I think we’ll no longer need to discuss making capital cheaper for social entrepreneurs is because businesses that don’t have impact built into their core will go bankrupt anyway within the next decade. Black Rock Capital, the world’s largest asset manager, announced recently that all of their portfolios moving forward will focus on impact and sustainability, presumably because they feel that’s the best way to maximise return for their shareholders. And they’re right. Because by 2060, 62 trillion dollars will be transferred to millennials, the largest inter-generational wealth transfer in history, with the first 5 trillion transferred by 2023. That’s significant because research repeatedly shows that 80% of young people favour products & services where they can see the impact, and 60% will pay a premium for it. And capital follows the market.
With 2030 only 10 years away, what role do you see for yourself in helping accelerate progress towards the SDGs?
Having built the enthusiasm on campuses worldwide for impact entrepreneurship, and then put the systems in place to ensure that enthusiasm translates into workable businesses, I now need a vehicle to start systematically investing in those young people and their great ideas — the third phase in my journey, if you like. So, using the SDGs as our North Star, our goal is to raise USD 1 billion over the next decade to invest in impact entrepreneurship by young people. To date we’ve invested only in an ad hoc way, which is why we’re so excited to be partnering with FMO, who over the past three years have really been our anchor as we’ve looked to scale up our investments.
“They need to think less like bankers and more like entrepreneurs, which is what we’ll be doing with this new fund.”
Financiers obviously have a key role in growing social entrepreneurship and scaling positive impact. Is there anything you feel they need to do differently?
In general, financiers need to be more innovative. And take risks. It’s counter-intuitive to work in development and be risk-adverse. In emerging markets there are very few lead investors. Financiers often struggle in nascent markets where the ecosystem is fragile or new. They ask dumb questions, like who’s going to provide the follow-on phases? When the lack of those follow-on phases is why they’re there as a development bank. They need to think less like bankers and more like entrepreneurs, which is what we’ll be doing with this new fund. To give you an example, take the terrible traffic congestion in Nairobi, which obviously damages the economy. Instead of focusing on why it’s not a good idea to invest there, we’d articulate the problem as a challenge that we’d present to young Kenyans to solve in a profitable way. If, say, 1,000 of them submitted their business ideas, would financiers be prepared to invest in the best five ideas? Of course they would! So we want financiers to think creatively about the challenges these young people face and believe in young people’s ability to defer the risk in an enterprise. The hedge is in the young people.
And finally, what has surprised you in the world that you wouldn’t have foreseen when you launched the Hult Prize Foundation back in 2009?
Well, I did predict then that businesses would need to focus on impact and sustainability to survive in the future, but I didn’t see it happening so fast. I thought it’d take another 50 years. So a decision like Black Rock’s to focus on impact and sustainability came as a surprise to me. A pleasant surprise, but a surprise nonetheless.
A failing system
During the interview, Ahmad tells a true story he heard from one of the Hult Prize students. He and his cousin were both bright, hard-working schoolchildren. Both got into Stanford, but only his parents could afford to send him there. Having graduated from Stanford with flying colours, he’s now working for McKinsey and his career prospects are stellar. His cousin’s parents did manage to put him through Kazakhstan’s best engineering university, but to do so had to sell all the family land, acquired through generations of hard work – a tough decision, but one traditionally seen the world over as a smart investment in the future. The cousin also graduated with flying colours but, because the Kazakhstani economy is so dire, he is now working as… an Uber driver. His family sacrificed everything to put him through college, he’s done everything asked of him and now he’s got zero prospects. As Ahmad says “That is a system that’s failing.”
More about the Hultz Prize Foundation hultprize.org and changemakerfestival.com
“The cousin also graduated with flying colours but, because the Kazakhstani economy is so dire, he is now working as… an Uber driver.”