“I think the biggest point of failure when we’re looking at entrepreneurs—and remember, these are entrepreneurs that are solving problems of poverty, with people who often have, not only have very little income, but very little confidence—is they come in thinking they have this solution,” Novogratz said at Fortune’s Most Powerful Women Summit in Riyadh. She is the founder and CEO of Acumen. “That, for me, is a big red flag.”
“Particularly with young people, they think I really want to have purpose and build a business that’s going to make change and their role models are often Silicon Valley companies where you IPO in three years or even 18 months. Maybe if you’re selling lattes on the internet, not if you’re trying to do a distributed water for low-income people in rural areas,” she said.
“If you haven’t immersed, gotten close, and understood the problem from the perspective of the people that you are there to serve, game over.”
The 64-year-old American entrepreneur, author, and pioneering figure in social impact investing, added that young people who think “I really want to have purpose and build a business that’s going to make change,” but look to Silicon Valley for their models, is another cause for concern.
Novogratz said on stage that many privileged young people who’ve “never operated anything in their lives” ask her how they too can become impact investors.
“What I tell them is to go work in operating companies, we have 2000 of them across the world,” she advised. “They’re in rural areas. You’re not going to get paid anything.”
“What it means to work on the line, actually go into villages, to work in a place where you don’t speak the language, you might actually contribute to something. You’ll be forever changed.”
Novogratz’s work began in 1986 when she quit her analyst job at Chase Manhattan Bank on Wall Street to venture into the world of philanthropy.
She started out working across Africa as a consultant for the World Bank and UNICEF, where she helped found Rwanda’s first microfinance institution, Duterimbere, at just 25 years old.
“One of the greatest gifts of my life was getting to live in Africa when I was very young.”
