Ilustration: sasha.k
More than twenty million Brazilians are starting their own businesses, shunning the security of traditional career paths in a sign that attitudes towards entrepreneurship are quickly changing.
The corporate lure of steady pay, benefits and the possibility of advancement (even if very slow), has always been high in a country with a history of economic and political upheaval. In contrast, the path of entrepreneurs, business owners and innovators has been seen as too risky, and the stigma of failure too great.
But not any more.
"The word entrepreneur -- empreendedor in Portuguese -- is a very recent addition to Brazilians’ vocabulary. Until a little less than a decade ago the word simply didn’t exist," said Rodrigo Teles, a director for the Brazilian unit of Endeavor Institute, a non-profit organization that promotes entrepreneurship in emerging markets.
Entrepreneurs in Brazil have traditionally been called empresarios, or "businessmen", a term that often carries a more pejorative coloring, Teles explained.
“The empresario still has a bit of a negative image," he told FT Tilt, noting that in Brazil's popular soap operas empresarios were often the anti-heroes and evildoers.
Marcus Andrade, is among the new class of Brazilians who see that image as antiquated, and is among the entrepreneurs counted in the 2010 Global Entrepreunership Monitor (GEM) report, which surveys entrepreneurial attitudes, activities and aspirations around the world.
Andrade, 28, together with a partner and their own funds, launched in 2010 Guidu.com.br , an online restaurant and entertainment guide with a growing following in São Paulo and Rio de Janeiro.
"I avoided working in large companies because I have always believed I would be just another warm body there," he told FT Tilt. "I did actually work for a multinational once, but it just reinforced my views: I wanted to be an entrepreneur and there was no better time to become one."
Andrade and Guidu illustrate the shift in mindset which, combined with increased access to financial and intellectual resources devoted to fostering business ownership, is sparking an explosion of entrepreneurial activity in Brazil.
The GEM report found that about 21.1m Brazilians are currently engaged in entrepreneurial activity. Among emerging economies, only China, according to the report, has a higher number in absolute terms, at 132m.
GEM classifies Brazil as an "efficiency-driven" economy, meaning a country with a considerable degree of industrialization, and where capital intensive organizations are dominant. In 2010, the country ranked third in business startups among other efficiency-driven economies.
The GEM figures show that 17.5 per cent of Brazil's working-age population (18-64) is involved in Total Early-Stage Entrepreneurial Activity (TEA). The survey was conducted with 175,000 people in 59 countries:
Source: GEM, 2010 Global Report (attached).
And here's the evolution of (TEA) entrepreneurial activity in Brazil between 2002-2010:
Source: GEM 2010 Brazil Report (attached).
Agents of economic development
Despite the existence of institutions such as SEBRAE -- which aimed to spread entrepreneurial culture among the population, including through national radio broadcasts -- the connection between entrepreneurial activity and socio-economic development has not been emphasized in the country until recently.
"There were not a lot of role models to look up to," said Andrade. "In places like the US the culture is more friendly towards entrepreneurs and it is actually 'cool' to be one. But here, when I was growing up the biggest entrepreneurs were people like Abilio Diniz from Pão de Açúcar or the Odebrecht family. Their companies are so massive... they are just too distant from the reality of most young people in universities."
As Brazil's economy boomed -- lifting 30m people out of poverty in less than 10 years, broadening the access to information, and expanding disposable incomes -- the image of the unscrupulous empresario has started to transform into that of the entrepreneur who generates opportunities, jobs and growth.
The creation of government financing programs such as Juro Zero (Zero Interest) and changes in regulations concerning business ownership and simplified taxation, such as the so-called General Law of 2006, also helped. Now, there are almost 6m small companies registered in Brazil that account for 20 per cent of Brazil's GDP and 17m jobs, according to data by federal tax authorities published by IT portal Convergencia Digital.
“The country has made great strides not only in regards to general attitudes towards business owners, but with the creation of all kinds of education and financial support systems," said Sergio Risola, a director at CIETEC. Since 1998, the institute, which is connected to São Paulo University, has helped "incubate" over 200 companies and channelled over R$60m ($39m) in funds to start-ups. The institute is currently working with 152 associate companies.
Brazilian small businesses have always had to improvise "just to survive," said Luiz Evandro, a partner at the advertising company Volcano Hotmind, which he founded in 2009 with Luiz Tastaldi, a former executive at a multinational ad agency. But now Brazilians "have the means" said Evandro, "and that's part of the surge of entrepreneurship in Brazil."
Fear of failure
One cultural aspect that has yet to completely turn around in Brazil is the "failure stigma."
Historically, Brazilians haven't been able to see failure as part of a learning process, and GEM's 2010 report acknoweldeged that "fear of failure" is still a major factor weighing on individuals' willingness to start a business.
"It is very common, even for the most successful entrepreneur, to have one or two ventures fail throughout his career," Andrade said. "That doesn't mean the entrepreneur is a failure. But in Brazil, to close down a company may still carry a bit of stigma."
Outdated laws may be partly to blame, Risola at CIETEC said.
"The bureaucratic process of shutting down a company here is so complex, so cumbersome, and it takes such a long time, that it may haunt you for several years, if not decades," he said. "To change that will be another major breakthrough for Brazilian entrepreneurs."
See also:
To escape the broken system, go it alone - FT.com
[VftG] Growth and challenges in LatAm e-commerce - FT Tilt
Comments