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Online entrepreneurship proving powerful tool to bust business barriers facing Native Canadians

MONTREAL — Mike David’s start as an entrepreneur was the same as many on the Kanesatake reserve: running a tax-free, Mohawk-manufactured tobacco shop.

“I was in the cigarette industry, which is probably cliché by now,” he said. “I’ve lived in a native community all my life so I know the obstacles and the barriers we face when finding employment in surrounding cities.”

The economic challenges facing native communities across Canada include being chronic underfunding, sometimes having limited outside access in remote locations, as well as difficulty finding work.

David later started a housing rental business on the reserve and discovered the power of online tools such as virtual assistants and search engines for market research. This gave him the idea that the Internet could be a place to address the challenges faced by native entrepreneurs by allowing them to work from their home communities while making connections around the world.

Although he didn’t want to continue selling cigarettes for a living anyway, that task sparked a passion for entrepreneurship that the web better fulfilled.

“To me, (the web) made perfect sense. It bypasses all of the obstacles and sometimes discrimination we have to face,” said David, who wrote the Native Business Playbook, a book and podcast project promoting online entrepreneurship.

According to the 2011 Census, more than 38,600 of the 1.4 million First Nations, Métis and Inuit people have their own businesses, but that’s an increase of more than 85 per cent since 1996.

The Canadian Council for Aboriginal Business said in a 2011 report that the number of aboriginal business owners and entrepreneurs is growing at five times the rate of self-employed Canadians overall.

Although the potential for businesses to be decentralized through Internet access is hardly unique to indigenous communities, location can be of particular importance for those living on reserves as designated by Canada’s Indian Act or other treaties, along with anyone who has a connection to their traditional territory.

For example, sourcing capital is difficult for native entrepreneurs on reserves. The Indian Act prohibits reserve property from being owned by non-band members, making it impossible for banks to give loans against someone’s home in order to start a business.

“You get into a situation where if somebody defaults on a loan, there’s no way for the bank to seize the asset,” David said. “It comes down to not having the collateral.”

Going online allows entrepreneurs to bypass a lot of the steps traditionally involved in starting a small business, he adds, such as going to a bank, securing funding and opening a retail location.

On the other hand, one possible advantage for those whose businesses are based on reserves is the possibility of not paying income tax to the government.

David said this bonus could play a part in the overall big picture, but doesn’t think it’s usually the main advantage because of the complexities involved: each transaction is different depending on who the buyer and seller are, and where they’re located.

Although David’s project is still in its initial development, online native entrepreneurship in Canada has roots that go back to the Internet’s early days.

Driving on the Honoré-Mercier Bridge from Montreal, about halfway across the St. Lawrence River, the red-and-yellow flag of the Mohawk Warrior Society has been unofficially raised above the plain road sign for the Kahnawake First Nations reserve.

John Mahoney / Monrtreal GazetteJohn Mahoney / Monrtreal GazetteKahnawake Court building on River Road in the Mohawk community of Kahnawake where Mohawk Internet Technologies was the world’s first hosting facility intended exclusively for gaming when it was constructed.

Past the main road in the Mohawk community of about 8,000, where dozens of shops advertise discount cigarettes, is an office built like a high-security fortress called Mohawk Internet Technologies. Inside is a state-of-the-art server facility where bundles of turquoise cables flow across the ceiling into rows of metal cabinets that manage the data for some of the world’s largest online gambling sites.

In 1999, at a time when even the most tech savvy only had dial-up Internet at home, the community band council’s Kahnawake Gaming Commission began offering gaming licences to online casinos. By 2007, about 60 per cent of the world’s online gambling traffic ran through servers in Kahnawake.

Mohawk Internet Technologies — or MIT as it also known — was the world’s first hosting facility intended exclusively for gaming when it was constructed.

“We’ve been at this for what may have been a lifetime in terms of Internet years and the way we measure technology versus conventional brick-and-mortar industries,” said Chuck Barnett, who sits on MIT’s board of supervisors.

According to Canada’s Criminal Code, only the provincial government is authorized to hand out gaming licences. However, the Mohawk community has long argued that it has the right to provide space on its servers to house online casinos under section 35 of Canada’s Constitution, which protects traditional native rights.

The Mohawks argue they are a sovereign nation, and therefore have the right to operate casinos. Last year, Kahnawake opened Mohawk Online, the first gaming site to be based on the reserve, instead of just being a data host.

“All of the money that is generated through Mohawk Online is put back into the community,” Dean Montour, the site’s chief executive, said. “It’s pumped into programs, special projects, organizations that are not funded through the federal government.”

Although MIT once had hundreds of gambling sites on its servers, today it has less than 30 because more jurisdictions around the world have opened up to online gaming. This, Montour said, has pushed MIT to evolve into cloud computing, which he sees as already being at the centre of the next digital revolution.

“That’s going to give birth to industries that we aren’t even aware of yet,” he said. “At MIT, we’re in the perfect position to lead the charge on that.”

Because Kahnawake is located between Montreal, New York and Toronto, Barnett said MIT is able to tap into the region’s major fibre-optic networks.

“We’re not on the backroads of the Internet,” he said. “We’re on a four-lane expressway.”

First Nations University of Canada president Mark Dockstator said Kahnawake is a good example of a successful native online business, though many communities — particularly in the North — are limited because they don’t have that access to reliable, affordable and fast Internet.

Other online businesses, however, don’t need quite the same bandwidth as gaming sites to take advantage of the Internet.

Artist Heather Abbey has found that out by herself. During the last months of her pregnancy, she had to spend most of her time in bed and was unable to get out to craft shows to sell the feather earrings and beadwork she used to supplement her scholarship at the First Nations University of Canada in Regina.

“I knew that other people had to be facing the same problems as single parents, or as elders in a community with limited mobility, or just as artisans in northern and remote communities as well,” she said.

Abbey started looking for solutions and after sourcing advice on Facebook found other artisans faced similar limitations because they had to sell their work in person, often travelling to powwows in remote communities while carrying everything to be sold.

“It’s a struggle for many artisans to put their stuff in a bus across the city, never mind across the province or beyond,” she said.

With no business experience at the time, Abbey said she didn’t even realize this idea of crowdsourcing was actually market research. Feeling confident by the business opportunity she saw, she took money from her scholarship and savings and borrowed a little from her parents to hire an agency to make her first website a platform for native artists to sell their crafts.

“If they have some sort of Internet through the band office, they can empower themselves by creating their own gorgeous and unique art, but also setting their own prices, uploading their own photos and shipping their own products,” she said. “They can have control of their own artistic future.”

Screen grabScreen grabThe home page for Heather Abbey’s Indigenous arts and crafts retail site.

Abbey signed up for her first business competition held by Saskatchewan-born investment banker and Dragon’s Den panellist Brett Wilson, where she finished as runner-up.

“I didn’t have a full idea yet, but he wanted to encourage me,” she said.

That was the first of 11 business competitions she would enter, every time receiving a bit more capital.

Artists began signing up for the site that would become Shopindig.ca, and charged a small subscription fee and commission on each item sold.

Abbey thought the funds would be enough to cover hosting the site and payment transactions, but the business quickly became a victim of its own success. Sales became more expensive with clients coming from as far away as Egypt and Australia.

“My little website started crashing,” she said. “I wasn’t bringing in the money I needed to actually make my website work.”

After tweeting the business model and redesigning the website, Abbey said Shopindig is now in the testing phase with only a few artists listed, though she has interest from more than 100 indigenous startups, entrepreneurs and artisans from across Canada and the U.S.

“I receive a lot of referrals because everyone has a cousin, friend that does some sort of indigenous art or knows someone that does,” she said.

“I see people everywhere selling their art, the value it brings to communities and how important it is to continue cultural teachings and storytelling.”

On Nov. 14, Abbey once again pitched her business to Wilson at a competition and this time, she won.

“It all came full circle,” she said.

Financial Post

Original Article

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