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Transcript: Entrepreneurial hotbeds ‘popping up like mushrooms’

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KARL MOORE: This is Karl Moore of the Desautels Faculty of Management at McGill University, Talking Management for The Globe and Mail. Today, I am delighted to be speaking with Tarun Khanna, who is a professor at the Harvard Business School and the director of Harvard's South Asia [Institute].

Good afternoon.

TARUN KHANNA: Good afternoon, Karl. It's nice to be here.

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KARL MOORE: Tarun, one of the things you have been studying is looking at entrepreneurial ecosystems and how do we encourage those to be more successful. What are some of the key learnings you have got from that?

TARUN KHANNA: Karl, entrepreneurial ecosystems, ever since the Silicon Valley came into being, people have tried to imitate this idea of an ecosystem until the cows come home.

By and large, I think that most attempts have not been successful because the secret source appears to be quite difficult to find. But I think it is rather like, the perfect being the enemy of the good, and that we ought to be happy with modest clusters of activity and not hold ourselves to Silicon Valley-like success – because remember, the value emerged over multiple decades – and begin to seed entrepreneurial hotbeds wherever an opportunity might arise.

I think there are multiple possibilities to this. I was recently in Nairobi in East Africa looking at some incubators, and also in Bangalore looking at some other examples, and they are popping up like mushrooms just about everywhere.

Some of them are non-profit incubators where a foundation has put some money in and the local government has some seed capital. Some of them are for-profit incubators where the idea is that you build something that is interesting, you show that you can attract talent, that you can mobilize small amounts of capital, that you can facilitate, in a very rudimentary sense, the meshing and mélange of ideas that you need to create the enterprises, and that you can then sell the better ones, if you will, to somebody who can take it the next mile – that is all it is.

I am a lot less bent out of shape than most people are about whether somebody is making money out of the incubator or not making money off the incubator. The important thing is that when you walk into the physical space, because it usually does have to be in a physical space even if there is a non-physical [component] to it, you should sense the energy and enthusiasm in the room and you do.

It is either happening or it is not, and you can just walk in and within five minutes you know that this is a buzzing thing or it's not a buzzing thing. If it's not a buzzing thing, then you have to shut it down and start over and do something different, as it seems to be very hard to tweak around the edges and come up with something.

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But I am just amazed – well as an academic I shouldn't be amazed, but as a human I am just amazed – that you go to places that you would never associate with buzzing entrepreneurial ecosystems and, at least, young kids in all these places that I mentioned before look just like the kids in Cambridge, Massachusetts, or Palo Alto, [California], and why shouldn't they?

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