2020-06-17
What started as one lecture turned into 20 days of traveling through the Philippines for UC Merced management Professor Russ McBride.
In December, McBride was heading to southeast Asia to connect with colleagues interested in expanding human consciousness and potential. As the Director of the Social Reality and Cognition International Research Group, McBride seeks to answer deep philosophical questions about how social theory is needed to understand the structure of social reality, especially in startups and businesses. “The goal is to one day have a theory for understanding the social world that compares to the framework we have for understanding the physical world. It’s an embarrassing secret that we’ve got nothing right now,” McBride said. Knowing that the Center for Information Technology in the Interest of Society (CITRIS) and the Banatao Institute collaborates with PCARI, the Philippine-California Advanced Research Institute, McBride reached out to the Philippines Development Foundation.
Excitement for his entrepreneurial research spread, resulting in 12 talks. “I was expecting a one lecture ‘fly by’ but there is a real thirst for entrepreneurial results in poverty-stricken Philippines.”
“Saint Louis University is in a town built on beautiful forested hills,” McBride said. “I would have loved to have spent more time up there.” But he had to keep going on the entrepreneurship roadshow, including one “hideous five-hour drive on bumpy, curvy jungle roads so bad that one passenger got sick in a sandwich
bag.”
Manila, Philippines
Criss-crossing the Philippines by car, bus, train and plane, McBride visited six universities, meeting with university presidents, faculty, engineering groups, and students.
The undergraduates he met were excited about doing real projects to make real money, as McBride has his UC Merced entrepreneurship students do. On the first day of his popular class, he tells his students go out and make $12,000 profit by the end of the semester or provide $12,000 in social good for the community. And they do — through fancy shoe sales, welcome-baby kits for single mothers, real estate, selling insurance, cutting hair, or designing and licensing products.
The Philippine government wants to reduce the rampant poverty in the country through entrepreneurship. The government and university leaders were intrigued by McBride’s debunking of the popular LEAN Startup technique, where products are iterated through customer feedback. “It’s dawning on incubators around the world that the standard entrepreneurship recipes are just not working,” McBride said. His alternative approach, ‘Functional Entrepreneurship’ involves creating agreements between people who assume rights and duties on behalf of the venture, social agreements that have not existed before.
“My favorite example is the famous Microsoft-IBM deal. IBM needed an operating system and Gates agreed to provide one.” McBride said. “Of course, Gates didn’t have one, had no idea how to get one, and couldn’t build one. But he got lucky and found one and negotiated a deal to buy it under a single company license but set up the other agreement with IBM to pay for every copy sold on every single computer.” These two simple agreements Gates designed later made Microsoft the largest company in the world.
Social agreements are the atomic pieces from which all ventures are built. Students have lots of practice consuming agreements that others design but little experience designing their own. Practicing novel agreements can help students overcome barriers to entering businesses. And those new connections crafted to their benefit are what make it possible for many to rise out of poverty.
“The culture of the Philippines poses some unique challenges to entrepreneurship,” McBride said. “There are wonderful, deep family ties, but if you only trust your family and friends for entrepreneurial advice, you won’t be successful. When you’re trying to build something neither you nor anyone you know has ever built before, it helps to be overly optimistic, and respectfully ignore those who are telling you to be ‘realistic’. ‘Realists’ didn’t discover the lightbulb, build Apple, discover special relativity, or build a new UC.”
When asked about gender dynamics in the Philippines, McBride said, “gender roles in the Philippines discourage female entrepreneurs more than the U.S. but it’s important to realize that sexism is a universal problem. I ran a study with venture capital investments in hypothetical companies where the entire investment packet was the same except for the picture of the CEO, chosen to be either a male or a female. There was a huge difference in money invested, depending on the sex of the CEO. It’s a serious problem.”
But there are reasons for hope, according to McBride: “If Functional Entrepreneurship is correct, then it’s all about communicating to build new social agreements and studies show that women often excel in communication skills.” Additionally, China can serve as an interesting role model for both the U.S. and the cultural challenge in the Philippines: “It’s seems almost impossible to find a female under 30 in China who is not opening a store, buying real estate, and day trading. It’s a completely different baseline expectation compared to the U.S. or the Philippines and, one that we can both learn from.”
McBride plans to return to the Philippines to work on policy and pedagogy of entrepreneurship. His roadshow inspired students to try new social agreements and see themselves as catalysts in their own novel business ventures.
Read the UCM story here.
University of San Tomas, Philippines