Entrepreneurs to replace Rent-Seekers

I am convinced that Mexico (and this argument applies to the rest of Latin America) must become a country of entrepreneurs and leave behind a reputation of rent-seekers, oligopolistic economies, in order to really achieve its full potential. What do I mean?

I am not romanticizing entrepreneurship nor belittling the achievements of hundreds of business people that head today’s large corporations in the region. But a new understanding of value creation needs to become the dominant paradigm.

Decades of macroeconomic crisis generated short term horizons in creating wealth, and a belief that whoever was craftier, aggressive, and well connected could extract value by inserting themselves in a giants-dominated value chain. We have all heard of the 10%-men, the “coyotes & comisionistas” that have infiltrated state-owned companies, that add cuts and double margins to products and services, or the companies that charge abusive prices in opaque structures, on the false understanding that their connections make them “clever businesspeople” that “find opportunities to get rich” with a society that applauds the status while paying the costs.

The rent seeker operates as if rules don’t apply to her. The entrepreneur acts as if all rules can be questioned for the benefit of all.

Simultaneously, among those “without connections” entrepreneurship flourished, as the last alternative, with a “changarro” policy that incentivized informality, subsistence but not the formation of companies nor employment.

There’s a general conception in Mexico that businesses don’t grow for lack of financing. Some truth to it, but I think the biggest obstacle has been a misconception of what role a business person plays in her community, & to change her objective from survival to transcendence in benefiting many.

Businessmen and women have a privileged position in society to rebuild trust, by providing opportunities, social bonds, a common identity, and purpose. We all want this. We can scape the prisoners' dilemma by emphasizing the long term, repetitive nature of the game called life.

This new set of entrepreneurs understand the importance of adequate compensations, of taxes, of compliance, and that they win by innovation and creating value for consumers, not by inhibiting competition or manipulating the rules to their favor.

Mexico doesn’t need changes in government to prioritize this new guild of entrepreneurial leaders, a new generation of self-made businesspersons that lead with exemplary values: honesty, social commitment, innovation, value creation, and long-term maximization for all stakeholders

High-impact, tech entrepreneurship has reached a tipping point and many founders are becoming business leaders that inspire new generations. Yet for Mexico to change, the business sector needs to be un-stigmatized, with its needed position in society, and be up to the challenge.

The businesswomen and men that will become Mexico’s leaders in thirty years are being entrepreneurs today. Let’s recognize their work, praise their ethics, demand the highest standards from them, and place business and its social benefits back in the role its needs to fulfill, for the country to thrive for each and all of us.

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Fernando Lelo Larrea

Venture Capital Investor. Entrepreneurship. Economics. Seeking Innovation & Impact.