How startups in emerging markets are having a disproportionate impact on economic growth
When I told my New York colleagues that I was moving to Bangladesh to work at a startup, reactions ranged from puzzlement to concern. Pathao, the startup in question, has grown from a small parcel delivery business to Bangladesh’s largest ridesharing platform in just under three years. However, it is not (yet) a Manhattan household name. My friends worried of stomach bugs, travel woes and political unrest — but by far, the most common question they had was why.
There comes this equally wonderful and angst-inducing point in your mid-twenties when the path before you stops looking like a single lane. After two years as a management consultant at McKinsey & Company, I was like many of my peers ready for a career transition. As we pondered next steps, we were forced to evaluate what was important to us. One common motivator that emerged in these conversations was a desire to make a positive social impact. I am hardly the first person to say this: survey after survey suggests that today’s workforce looks for purpose in its work above all else.
One common path to finding a sense of purpose is to work at a nonprofit, a potentially rewarding option I first considered. Yet I knew from my experience serving nonprofit clients that the day-to-day could be challenging. Nonprofit roles have some of the highest turnover rates of any industry — even when adjusting for pay and qualifications. Unlike startups, which raise their money in time-bound fundraising rounds, most nonprofits need to continuously raise money for their operations. This is can eat up a substantial portion of the talent’s time and mindshare. In addition, donors in the last decade have held recipients increasingly accountable for delivering results. Although this is largely a positive trend, generating the myriad of indicators and reports that donors require takes further focus away from operations. Finally, nonprofits often have a limited risk appetite, perhaps understandably so. It is one thing to try and fail at building a business; it is another to fail at delivering aid after a hurricane because the organization was trying something new. As a result, though, nonprofit workers may sometimes feel trapped in a static organization.
As I was considering my career options, I stumbled onto Alter, a tech venture capital firm dedicated to scaling up promising startups in growth markets. One of their flagship programs is the Alter Fellowship, which offers young professionals like myself the opportunity to work with innovative portfolio companies like Pathao for a period of 3 to 12 months.
A few interviews and a lot of soul searching later, I felt ready to take the plunge. Would working at a startup in Bangladesh give me the sense of impact I was looking for? I didn’t know for sure when I boarded my flight to Dhaka — but a few months into working at Pathao, I can confidently say that working at a startup in an emerging economy is an incredible way to maximize your individual impact and find a clear sense of purpose in your work.
Institutional voids and the opportunity for knock-on impact
To understand what I mean, take a closer look at Bangladesh. With a staggering 7% growth in GDP last year, the country has quietly but consistently ranked among the fastest growing economies in the world. It’s hard to fully visualize what 7% yearly growth looks like until you walk the streets of Dhaka. Every alleyway here seems to be exploding with new businesses. From multi-million dollar tech startups to trendy coffee shops, entrepreneurs are scrambling to keep pace with the demands of a massive, urbanizing middle class with money to spare.
The growth in a market like Bangladesh is such that it feels like all these businesses are growing the size of the pie together, not fighting for a slice. Consider Pathao: we pay most of our tens of thousands of riders using bKash, a nationwide mobile payment solution that only popped up 8 years ago. In turn, Pathao is used by hundreds of small businesses. I shop for most of my clothes here on Facebook pages, buying from entrepreneurial young designers who send me their purchases on (you guessed it) a Pathao bike. These designers in turn work with mom and pop tailors, who are no longer constricted by the physical limitations of their neighborhood. Because there is still so much uncharted territory, every successful new business has the potential to fill in an institutional void that in turn enables new businesses to success.
The knock-on effects go far beyond direct operational synergies. When Pathao raised its $10M USD pre-series B round, it was the largest foreign investment in a Bangladeshi startup at the time. Since that success story, investors have started paying attention. Foreign direct investment jumped a staggering 33% between 2016 and 2017, with investors increasingly comfortable backing earlier stage companies. It’s incredibly motivating to know that my work towards growing Pathao directly contributes to growing economic opportunities in Bangladesh as a whole.
If you’re still not convinced, consider the incredible leapfrogging dynamics at play in a market like Bangladesh. 70% of internet traffic here comes from mobile devices, almost twice as much as in the United States. How did Bangladesh make the transition from laptops to mobiles so fast? Simple — it never had to transition. By the time the country was ready to invest in its Internet infrastructure, the technology was already developed enough that it could leap right past the growing pains of landlines and move straight to a world class 3G network. It’s a script that has played over and over again in fast growing markets. Seoul’s subway system puts New York’s to shame, and China is decades ahead of my native Switzerland as far as mobile payments are concerned.
What most people don’t often think about is that leapfrogging also applies to business models. Startups in emerging economies can take the lessons learned from their predecessors and skip right through the initial trial and error process, tackling the next set of cutting-edge problems instead. Take food delivery: when Pathao expanded into this business last year, it took a hint from successful players like Postmates or Uber Eats. There was no need to replicate the multiple iterations of user interfaces or pricing structure that these companies went through. Instead, Pathao quickly moved on to the next frontier of business challenges. For example, how do you get small neighborhood restaurants with limited Internet know-how to jump into food delivery? In our case, a field team painstakingly collected physical menus from thousands of small restaurants around Dhaka and uploaded them into our app. In only a few months, the platform has seen triple digit growth and is now delivering more meals than major metropolises like Singapore. It’s this type of leapfrogging that has enabled local startups like Ola in India or mPesa in Kenya to not only keep pace with seemingly much better funded competitors, but to even introduce brand new business lines adapted to the local market and win.
Finding purpose in work
So how is this all tied to finding a sense of purpose at work? The closest analogy I can think of is that building a business in a market like Bangladesh feels like watching Silicon Valley on 10X speed. I go into meetings feeling that every decision has the potential to have an outsized impact not just on our company, but on Bangladesh’s entire ecosystem.
It may sound crazy, but think for a minute — in its entire lifetime, Pathao has gathered funding that adds up to only a quarter of the yearly budget of an organization like the United Nations Development Program in Bangladesh. With that funding, Pathao’s founders have created a meaningful source of income for tens of thousands of riders and saved Dhaka’s populations millions of hours in traffic jams. This does not even capture the knock-on economic and funding opportunities that it has enabled for other businesses.
There will always be a need for nonprofits in the aftermath of natural disasters, or to adjust the inequalities that the private sector creates. However, many individuals like myself are concerned their impact will be limited by the structural constraints of these organizations — which is why programs like the Alter Fellowship have emerged. If any of this speaks to you, consider working for a startup in an economy like Bangladesh’s. Between the downstream opportunities created by the business and the incredible leapfrogging opportunities at play, you will find the impact of your work magnified. You just may find it too exciting to leave!
Sarah Fellay is a member of the inaugural class of Alter Fellows. Based in Dhaka, Bangladesh, she is currently working with Pathao, Bangladesh’s largest mobility platform. Prior to joining Alter, she worked in McKinsey & Company’s New York office after graduating from Harvard University. She was born in France and grew up in China and Mongolia.