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What is a mentor and why do you need one

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October 26, 2020 8 min read

This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process.

This story originally appeared on Incmty

If you are an entrepreneur and are looking for the support of someone with experience and knowledge to help you overcome challenges, the accompaniment of a mentor is what you need to achieve your goals.

INCmty spoke with Juan Pablo Bustamante, former CEO of Grupo Vital , made up of companies – such as Omnia Médica, Control Vital, Plan Vital, Omnialab and Humana Vital – dedicated to health care and with operations in several Latin American countries. In addition, he was recognized as Mentor of the Year 2019, by Endeavor Peru . Next, he tells us about the topic: ‘ Mentor, the best ally for success’ .

Image: Via LinkedIn

INCmty: From your own experience as an entrepreneur and Endeavor mentor, how do you define the figure of a mentor in the ecosystem?

Juan Pablo Bustamante (JPB): The mentor must know how to ask the right questions to guide the entrepreneur and his team to solve problems or identify opportunities. He is someone who anticipates adversity. In addition, it is a support that has experience in a certain field and its only satisfaction is helping others to achieve their goals. The mentor can also share his social capital, that is, his network of contacts to generate more value for the entrepreneur.

INCmty: When you started as an entrepreneur, how was your experience with your mentors?

JPB: Much about the passage. I believe that the essential role of the mentor is to accompany and give advice. Sometimes the role of the entrepreneur is a lonely role, and you have many fears and insecurities. And not necessarily the mentor should give you all the answers, but help you find the ones that are inside you. I believe that the entrepreneur will always know more about the business than the mentor. But for it to go from an idea to a company, that support is necessary. Sometimes the entrepreneur just needs to be heard, not the answers. In addition, always advice or support is essential to move forward.

INCmty: How to start and maintain a good relationship between entrepreneur and mentor?

JPB: There are two components: trust and chemistry. Trust is something that is granted from the beginning and it is up to both parties to maintain and care for it. If one of the two has an excessive ego, they will not be able to take advantage of the relationship. We must also consider that, in the relationship between entrepreneur and mentor, knowledge does not occur unilaterally; even sometimes the mentor learns more from the mentee than the other way around. It is also important to develop skills to know how to read people, to understand what is behind some insecurities and fears to get the most out of the relationship between both parties. However, the ‘chemistry’ component is real, and sadly not all relationships will work. Although that doesn’t mean that mentoring doesn’t work. If you have confidence and chemistry, the sky is the limit.

INCmty: Who chooses whom?

JPB: I think they meet, the same thing that happens in a relationship. In my case, for example, I have been fortunate to work with more than 30 Endeavor companies (from Peru, Colombia, Puerto Rico, Brazil, Argentina, Ecuador and the United States). In some cases, that relationship transcends the environment from mentoring to friendship. And many times what I learn from entrepreneurs is more than what I can contribute, because they manage to transmit energy, passion, determination and knowledge to you. Working with entrepreneurs is a breath of fresh air because you understand and learn about a new sector, challenges and technologies. It is a wonderful win-win relationship.

INCmty: From your perspective and with the experience you have in the Latin American market, what is your analysis of the figure of the mentor in the ecosystem of the region?

JPB: There are many figures within the ecosystem: entrepreneur, mentor, investor, academic, SMEs, startups, scale-ups. Each with a function. In the case of Latin America, there are many opportunities and much to do, although unfortunately in the countries of the region there is informality and corruption that prevent the growth of companies. We also have little regulatory support from governments. Ultimately, what kills a company is a lack of working capital. This vision of the real problems of companies with many years in the market and that have a certain stability can help entrepreneurs to advise them.

INCmty. Do you think that for Latin American entrepreneurs it is better to have a mentor who is from the region?

JPB: When it’s a product or service with a very technical, technology or platform theme, mentors from anywhere in the world can work. But when you have a product or service that implies that your growth or development unfolds in a Latin American, European or Asian ecosystem, it is important that it is someone from the region. In the case of Latin American countries, we grapple with issues such as inflation or bureaucracy, which are specific to the region. Therefore, there a mentor who knows this context can help or advise you based on their experience. Even have a mentor from the same country where you start.

INCmty: From your point of view and based on the mentoring you have given, where do you think entrepreneurs are failing?

JPB: In the case of Endeavor, where I have been working with scale-ups (companies with traction) for two years, what we want is to find the inflection point, so that they can grow 10 times more. On the other hand, in the case of entrepreneurs, it also depends on the moment in which they are. For example, to a recent college graduate who wants to start a business, I would tell him to take a risk. And from my experience, I can say that persistence and resilience is more important than talent or the million dollar idea. Success is often about continuing to insist and reinvent yourself, listening and moving on. Once the entrepreneur overcomes different stages and difficulties, there also the accompaniment of the mentors is very important because the path is a roller coaster of emotions, and the mentor stabilizes the situation.

When you have little experience and a lot of passion, feelings sometimes win you over, so you maximize the problems that can be perfectly minimized with the help of a mentor. Mentors have the opportunity to recycle our mistakes, sometimes as a therapeutic way. This without taking away the importance that the entrepreneur has to make mistakes, because many times more is learned from the mistake than from the success.

INCmty: Final message to the INCmty community

JPB: Each figure can find its role within the ecosystem. In the case of students, they already come with the chip to undertake and be their own bosses. Learning and undertaking have to come hand in hand. I recommend that you start small and dream big. Get together with people who add value to you. Team up with people who complement your skills and learn to be resilient. Success is in persistence and determination. In the case of SMEs, the real value they have in the Latin American economy is often not recognized. Unfortunately, tax regulations are lacking for SMEs to take the leap they need to grow even more. In the case of investors and corporations, investing in startups and sacel-ups is a very interesting way to diversify investment portfolios, to develop a nose to identify which may have a better future than others, and that is good for everyone. For their part, corporations are timidly beginning to explore corporate venture capital , so it is a way to grow without losing sight of the main business lines.

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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