When you consider where American technology innovation is happening in the United States, places like Silicon Valley or big cities on the east and west coasts might come to mind. As a fintech entrepreneur providing services to online lenders, my experience has found a thriving business community in places you might not think to look: American Indian Reservations.
Many American Indian tribes have been enormously successful launching sustainable businesses in high-growth industries. These tribes owe their success to the creation of well-fueled economic development processes. Indeed, some tribes are so singularly focused on business creation that once an enterprise is running, they bring on business partners to help with operations so the tribe can remain focused on the creation of their next new business.
Emerging entrepreneurs can learn a great deal from these tribes’ economic development efforts. Here are my Top 5:
1. Vet every opportunity. Here’s a story we’ve all heard before: Your research shows you have a great idea for a business. You’re confident it will make you the next Elon Musk. You pitch a trusted friend and she agrees: You are a visionary. You go for it. You launch your business, which folds months later.
As sovereign governments, Indian tribes don’t have the luxury of simply “going for it.” They are required to perform extensive diligence and research on an industry, the market, competition, risks, the regulatory environment, and their business partners. They build layers of institutional checks and balances in their economic development processes. After all of that, many tribes also require their members to vote approval to launch a new enterprise. The knowledge attained during this vetting process is priceless.
2. Disrupt… For examples of business disruptors who have changed an industry, look no further than Southwest Airlines, Spotify and Uber…or what American Indian tribes did in the gaming industry during the 1980s. They began offering new, convenient, safe, local gaming facilities to consumers whose demand for that type of entertainment was not being met by casinos in Las Vegas or in-home card games. Although it began as just a few tribes operating bingo halls for locals, tribal gaming today is a $30 billion industry, with over 350 tribal casinos operating on tribal land in 28 states. Find a way to re-invent or re-imagine a product or service, or fill an unmet need.
3. …but expect opposition. Disruption can be polarizing, and disruptors often find both passionate supporters on one side and stiff resistance on the other.
As sovereign governments, Indian tribes don’t have the luxury of simply “going for it.” They are required to perform extensive diligence and research on an industry, the market, competition, risks, the regulatory environment, and their business partners.
Detractors lined up when the Cabazon, two small California tribes, started offering bingo and poker games on their reservation land. The state government sued the Cabazon and the case landed in the Supreme Court of the United States. The Cabazon won the case and formed the bedrock for American Indian gaming, a huge industry that now supports hundreds of thousands of Indian and non-Indian families by creating jobs and funding needed social programs on reservations. Would Indian country gaming be where it is today, but for the Cabazon’s willingness to stand up to the state’s desire to preserve the status quo? Likely not.
4. Find strength in numbers. The idea of working hand-in-hand with your competitors may seem counterintuitive. However, there is a place for cooperation among competitors. American Indian tribes come together through trade associations to share best practices, educate the public and lawmakers about their products, and work cooperatively to ensure the sustainability of the industries in which they participate. The tribes have established thriving associations to help drive economic development and business creation – The National Center for American Indian Enterprise Development and best practices in the fintech arena with the Native American Financial Services Association.
5. Work around, not against limitations. Understanding your limitations, and knowing how to be successful in spite of them, is critical for small- to medium-sized business owners. While it is the inclination of many entrepreneurs to believe they can do anything, successful business owners acknowledge their limitations and work with them. Financial limitations change the amount you can invest in your business. Geographic limitations can influence everything from your hiring pool to shipping costs to rent. As you build your business plan, identify your limitations and figure out ways to succeed with them, not in spite of them.
In recent years, some geographically-isolated American Indian tribes, recognizing that the location of their reservations created physical limitations to economic development, started looking at opportunities in online financial services. The Internet has leveled the playing field for these tribes. They are successfully competing with mainstream financial service providers, participating in a multi-billion dollar industry and providing access to credit for the 71 million underbanked consumers in the United States.
In Indian Country, necessity breeds invention and, increasingly, innovation. Unlike your local government, which uses your tax dollars to maintain roads and hire teachers, tribes do not collect taxes. Many have found other ways to create revenue to fund their government. One hundred percent of profits from tribes’ businesses fund infrastructure improvements, affordable housing, education, senior care, health care and many other needed programs that are critical to the social welfare of the tribe’s most vulnerable members.
The culture and structure of Native American tribes has created a unique model of business excellence that offers a fresh perspective for businesses here and around the globe.
Mark Curry is the founder and CEO of MacFarlane Group which provides back-office support for Internet-based financial services companies. He is also the founder of ReformOnlineLending.org, a program to identify and bring to justice scammers who take advantage of consumers of the online financial services industry.