Rottenberg realized that she’d found her niche. “I loved the fact that this field was raw territory. At the time, no one knew what this was. So there was something about feeling part of a new movement that was very exciting for me,” she recalls. Indeed, although social entrepreneurship was first used in the academic literature on social change in the 1960s and 1970s, the term was not yet in widespread use. By the 1990s, that had begun to change.
As an increasingly interconnected world facilitated the spread of ideas, organizations like Ashoka were better able to gain a foothold, share best practices, and demonstrate the benefits of their models — and they did so at an opportune time. The gulf between the world’s rich and poor was rapidly expanding; there was a growing sense that neither government nor the private sector could solve all of the world’s problems. “Many services and sectors lay beyond companies’ visible self-interest. Harnessing markets to serve the world’s poor, or even to help grow a global middle class, simply did not factor into the bottom line,” Rottenberg told Harvard’s 2009 Social Enterprise Conference. “Social entrepreneurs rose up and attempted to bridge these gaps.…We calibrated and navigated a new balance between government and the private sector.”
And although they often operated as nonprofits, social entrepreneurs saw themselves as distinct from traditional nonprofits. “Social entrepreneurs are problem solvers, not idealists. We’re driven by innovation, not by charity. And we don’t believe in handouts. We use entrepreneurial strategies to achieve social change,” Rottenberg has said.
Game-Changing Wealth Creation
Eager to gain insight into Latin America’s economic and social complexities, Rottenberg struck up conversations everywhere she went. One day, a taxi driver in Buenos Aires told her he had a Ph.D. in engineering. “What are you doing driving a cab?” she asked. He looked at her blankly in the rearview mirror. There were no jobs, he said. No opportunity. His Ph.D. was as useful as a flat tire. “So why don’t you become an entrepreneur?” Rottenberg asked. “What’s an entrepreneur?” he responded. Rottenberg was dismayed to learn that the words for entrepreneur and entrepreneurship were literally missing from the Spanish and Portuguese lexicon. “There was no sense of the possible,” she recalls. “There was all this talent, but there were no role models, no venture capital, no networks.” What’s more, the business culture stigmatized risk and failure.
Rottenberg also came to realize that there was a yawning gap between the private-sector equity that bankers were funneling to a small group of the country’s elite and the kind of financing she was promoting at Ashoka for the poorest of the poor. “Microfinance and microcredit were doing great work in terms of poverty mitigation, but they weren’t really producing the kind of game-changing wealth creation that was necessary to build a middle class,” she says. Someone, she believed, needed to meritocracize wealth and make it possible for people with profitable, scalable business ideas to develop those ideas — even if they hadn’t been born into their country’s elite.
The model for filling this gap in wealth creation took shape in early 1997, when Ashoka sent Rottenberg to Harvard on an MBA recruiting mission. While there, she ran into Yale classmate Peter Kellner, an investor in eastern Europe’s emerging markets. Over coffee in Harvard’s sleek Shad Hall, Rottenberg and Kellner discussed their shared belief that emerging markets were untapped sources of innovation, and that entrepreneurship was a powerful catalyst for wealth creation. As they talked, Rottenberg grabbed a napkin and began scribbling notes.