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I'm Carl Olrich, vice dean of entrepreneurship and innovation at the Wharton School and I'm very lucky to be
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able to interview today Kadir who's the founder of two amazing institutions,
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Grammine Phone and the Legatum Center at MIT. Welcome. Thank you very much. Great
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to be here. You know I want to take us back to your origins. Tell tell us a little bit about where you came from. I
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I came from Bangladesh but uh I came from a relatively smaller town called Jasur and uh I grew up there and I
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happened to have gone to a boarding school inside Bangladesh but um um since you're asking the what has
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impacted on me which I guess we could come to is uh that one year of my life I was somewhat of a urban uh kid uh but in
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1971 when there was a war in the country. I went to the rural area for my family did and um we I had experienced
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the actual rural conditions in Bangladesh during that year. So I my friends were often u children of
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peasants and other small farmers and that had always had an impact on me and so that's I I talk about that. Yeah. And
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how did you end up in the United States? Um, I guess I was an entrepreneur. I I don't know. But uh my father died when I
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was 14 years old and I somehow aspired to get a good education and I my mother and uh had provided some funds but I
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managed to get to the US with some scholarships and eventually I got uh better and almost full scholarship and
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uh so that's how I simply tried myself. Yeah, that's a that's a common path for
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some of our most successful entrepreneurs in the United States and and so you you there there are a lot of
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others who've taken that path and and like the many of those others you also
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achieved some entrepreneurial success. So I wonder if you could tell us a little bit about Grammy and Phone. Sure.
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uh Gramm fund right now is the largest company in the country uh in Bangladesh and it has 55 million subscribers.
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Sometimes in the stock market it's valued some7 billion dollars. But uh if I go back it was really uh for four or
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five years I tried to convince people that this is a good idea this is something to be pursued and it took
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quite a while to convince that but I think if we want to go back to its origin uh it's good that you asked me
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about my personal origin uh those impacts had certain u germ of thoughts that eventually gave rise to uh gramming
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phone and um and this is why I think it's important that no matter how we rigorously we think about problems uh
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deeper at a deeper level passions are important because it drives us to find a logical solution but uh even behind
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logic you may have uh a passionate u pursuit which gives rise to finding a logical solution. So in my case, I knew
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that I came to America and there were extraordinary opportunities here uh in the United States. I managed to go to
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good schools with scholarships and whatnot, but I uh also had in mind the conditions I've seen in Bangladesh and
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so therefore I always on the lookout for uh good ideas that could do something about it. So two really important ideas
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uh stuck me in I was doing that. One is that um the economic progress does not necessarily come from um pouring capital
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into it or something but rather people becoming more efficient uh in managing their tasks or getting better at it. So
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it's a question of improvements or or skills but also how uh let's say in a
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sense economic progress can come out of thin air. I I'll give you the point. Um
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so for instance I was actually attracted to Adam Smith because he mentioned uh Bengal which is Bangladesh. Twothird of
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Bengal is Bangladesh. That is how I was originally drawn to it. And he mentioned
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an interesting thing. He said in antiquity three places had good um um good wealth and they were ancient Egypt,
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Bengal and Eastern China. And he attributed those things to uh inland navigation. And his point is that people
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could exchange and through inland navigation um tra specialize in exchange and divide in division of labor and
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through that wealth is created and through that uh there was he called it opulence in antiquity and that has drawn
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me and that I as a result I always became a fan of Adam Smith but what is interesting is that many things come out
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of division of labor. many good things okay including inclusivity because if I want to specialize in something I have
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to give up something else to you okay so that gives rise to inclusivity now be but what is interesting of all of that
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is that it's uh it's something I learned over time I frankly didn't grasp it all over
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immediately but uh but I did see the inland navigation as a means of communication that naturally certain
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places had certain other places didn't have. Okay. But separately I had another
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I'll come back to the another Adam Smith point but separately I had another uh
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important thing I observed is when I was an undergraduate I was part of a uh college team. I mean I was the only
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token student representative in this team that decided on buying a $3 million computer. Okay. and one big mainframe
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that took a whole room full of machinery. And then in the when I was doing my graduate studies here at
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Wharton, okay, I was in decision sciences with computers. We learned all sorts of applications of computers. But
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the key point is there's this Moors law that's driving down costs and processing
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power is getting squeezed more and more into the same chips. But the Moors law means the prices of this processing
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power is declining rapidly which means countries that doesn't have very much
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capital these machines are going towards them. Okay. So I actually tried in the middle of ' 80s with another brother of
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mine. We created a Bengali word processor. Okay. But later on we realized that that it was an interesting
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innovation to take. But I'm trying to show you the evolution of this that um
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the Bengali word processor people couldn't use at least not not the masses because um it's a um most people do not
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know how to read or write. Okay. But an event took place in my life in the 93. By this time I've been trying to be a
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budding investment banker. And the point is that um I I noticed that uh we I was
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to work in a a small firm that had um uh we just had some rudimentary networks. So we didn't have to exchange floppy
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disc and cumbersome activities. So we could send data from one to another etc. And one time it broke down and I was
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waiting for someone to come and fix it. But that reminded me of a day in 1971 22 years earlier. This is in 93 or so.
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And I um remember my mother sent me to get some medicine from this rural setting. And uh I was from a middle-ass
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family. My father was a lawyer and all these things. But uh in this setting, I walked 10 kilometers to get this
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medicine. And when I went there, the medicine man wasn't there. So I walked all afternoon back. And as a result I
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remembered that unproductive day sitting in New York while having waiting for someone to come and fix my network and
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kind of said you know networks help. So if you are connected you can get things done and if you don't get connected then
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you don't get things done. So this inland navigation earlier in my mind I went back to all those things and I
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realized a new thing which is that two things. One is the microchips are getting squeezed in into phones. In the
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early '90s they were becoming digital phones. Before that cellular phones were
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analog phones. But at this point I also realized a powerful point from Adam Smith that there were many things that
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come out of division of labor and division of labor gives rise to productivity. So just like I experienced
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that if I had connections I could produce more and perhaps pay for the phone service. Similarly, this is
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confirmed by the one of the most profound economies, okay? That the it will promote division of labor if we can
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connect with each other. Otherwise, I cannot really divide and do one part and you do another part, we can exchange.
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But what he made also he said the market the extent of the market dep tells you how far you'd be dividing. So let's say
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I start focusing on fishing but I will stop there and not necessarily go any further and fishing only salmons. Okay.
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If the market is small okay if the market is bigger and bigger then I can uh specialize narrower and narrower but
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that means and all the other good things come out of this division of labor. Okay. But if we did that then other
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means of connectivity profoundly impacts on the size of the market. So the point
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is the the ways to connect determines how far the market will be and how far the division of labor will advance.
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And all of this made sense to me. So ultimately I realized that if the the Moore's law is bringing down the price
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of connectivity, connectivity would be a profound force of of transforming these
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countries and it became so I became so convinced of this because of these insights of these other people. I'm
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basically stealing their ideas. I basically said hey I have to stay put on this. So I stayed for five six years
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convincing various parties to come together and create this company. I jokingly say that that's how I lost my
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hair. Now it's it's amazing because you're really saying not only does
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private enterprise and entrepreneurship contribute to an economy but particular kinds of innovations these connectivity
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innovations. Exactly. Exactly. So it's it's little bit like this. You see I I I
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like analogies to understand what's happening. Let's say if I take a bucket
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of water, if I drop a a drop of ink, even without stirring, it will get absorbed. And so if it is something
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favorable, the molecules other molecules will receive them. So in other words, people
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will accept them. But if you put a let's say a drop of water, oil, it may not go
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very far. Okay? So if you find the right technology then it will be grabbed by people okay
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and the whole water will get transformed okay the the whole economy gets transformed so the I think the cell
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phone was such a thing because it's fundamentally a elementally human to connect and and produce more and gain
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more sometimes it's consumption I want to contact my friends and see how it is
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doing but sometimes it's production namely I want to save time and produce more etc. So it depends on how it is but
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it is very elemental and at the same time the cost of these things radically going down things automatically come
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together and so it's the question of bringing it together and seeing that it's um frankly to me
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it's almost surreal but if it is like a country like Bangladesh everybody knows
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is one of the lowest income countries um there right now we have 110 million phones
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And when I started it had a quarter million fixed ones. Okay. So it's a really a profound change
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to know to say the least. Yeah. Now I I wonder if you could speak to the barriers to entrepreneurial innovation
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in developing economies. You've spoken very eloquently about the power of enterprise in developing economies. What
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do you see? What have been the the barriers the legacy barriers? Yeah. All all innovations I think human beings
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cannot radically absorb something completely radically new. It's hard. Okay. So uh similarly innovations has to
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ride on other things. Okay. So for instance I there were a lot of things I sorted out in my head and I said this is
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why I'm talking about these insights and I said this is what gave me the resilience the patience to try it
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because I believed in those insights and those insights were logical and made sense to me but there are actual
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practical problems okay and perhaps you were asking about that but one of those practical problems is lack of other
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things. So for example, let's say I bring a good car but without the highway
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I cannot drive the car. Okay. So internet for example in the same early 1990s internet were spreading in this
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country very rapidly. It was very easy to notice. Um so people already had computers, they had modem, they had
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telephone lines, they could easily call up something and internet was spreading.
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But the real problem in poor countries is that you don't have those other infrastructures. Now because of
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colonialism uh and subsequent adriven statedriven development central uh centralized
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planning even if it's not a communist country tend to be the case it is tend
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even in India you'll see different states and within those states there is central and so usual pattern in these
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countries are one central city often being um supporting a big in um bureaucratic infrastructure
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and vast parts of rural areas uh relatively underdeveloped with no infrastructure and what happens it
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creates a vicious cycle because because the infrastructures are there everybody develops things within that area okay so
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even if you want to start something you don't want to go out in the rural areas
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and uh not have your children go to good schools so you kind of avoid that okay but this case here is the problem I knew
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through Mo's law and through the Adam Smith thing that this is ultimately useful because it's Mo's law would say
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it's it would it would be viable everywhere and Adam Smith said it will be useful everywhere okay so then the
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problem is that how can I break that vicious cycle because I too do not have engineers to go out in the world where
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there's nothing or there is no lack of electricity all these problem and this
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is why I try to latch on to another organization that may have calm infrastructure and this is why I went to
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microcredit programs and somehow Bangladesh was blessed with good micro credit programs and Grammine Bank for
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instance had um 10,00 branches I thought oh maybe I could put the cell towers over there and this is why by the way
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our name has become in their honor Grammine phone okay but my original idea was gonophone which means phones for the
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masses and the daring see because I'm bringing this insight It's because that
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is how I projected it's will be feasible because I was talking about phone for
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the masses in a poor country when only 1% of Americans had mobile phones in the days I I started this process. Okay. So
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but again I was basing myself on those insights. Okay. But coming back to this, this is why I try to the one of the
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problems you're talking about is the ecology being poorer. Okay. To bring something new. Okay. So, if you have an
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let's say Amazon.com is a company that's selling books or other things, but
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people have credit cards. Well, you can base that on you need those other infrastructure to bring about a new
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thing. And this is not a conceptual problem. It's a practical problem that you need to solve. And so Grammine Bank,
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not only I could find those sites where I could potentially put cell towers and some some infrastructure to help out
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that process, but also there were borrowers and eventually I developed an idea and I proposed it to Grammine Bank
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that they would give money to somebody to borrow uh borrow small amount of money, $100, $200 to buy vegetable
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growing facilities or ducks or chicken or a typical loan was a cow loan. And so I said, you know, the cell phone could
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be a cow because somebody could borrow $200 um instead of a cow, get a phone and the
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phone would serve the village, but it would pay the p it would be a business for that person. And that idea was was
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um was a little crazy, but it was considered illogical. But so the founder of Brain Bank,
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Mhammed said, "Why don't you see if you can make it happen?" So I quit my job. I
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went there and I flew around the world. I got some seed funding from New York and uh I faced many rejections. But
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eventually I managed to convince the Norwegian telephone company. Ah they came and interestingly they have never
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been to Asia before. Wow. This is Teleno. So Teleno and they were very reluctant to come and subsequently they
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saw this is a great opportunity and today they are very big in Asia. Yeah. So I want to I want to talk about that
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for a minute because the normal view of entrepreneurship in the developing world
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that says that that is the view held by most of us in the developed world is that all this great stuff gets invented
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in the developed world and then it trickles down to the to developing economies. Is are we missing something?
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Is there a different way to view this? Well, in this case, it somewhat trickled down. Yeah, somewhat but rapidly
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trickled down because of the Moore's law which says which is which is only a
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decade later the same amount of processing power becomes 200th or so. Okay. So you can even if we throw out
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all the details it becomes $100 becomes $1 in 10 years. That does go down rapidly. That's one issue. Okay. And the
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other is that it is so fundamentally useful. It's an egalitarian thing. So I
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was totally wrong in chasing computers. Okay, that's when I realized that no
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when I when I saw that connectivity is helpful, I also realized at the same time that it's and Adam Smith and all
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that is there but you know it's a culmination of a lot of things but the other point is it's egalitarian.
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Everybody can talk. Okay. And so in a way there is an irony of all this. The point is the cell phones are actually
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computers. So the computers have entered these markets in the disguise of a phone. Okay? And so so because the voice
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communication is the killer app, okay? And everybody can talk. But now what is happening is that these computers are
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now that they're there, they're kind of a Trojan horse that can do all sorts of
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other things. Okay? And so when you say trickle down, yes, but if you look at Telenor's example,
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yes, typically a let's say a um western company goes to Asia, first they go to
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Hong Kong, Singapore, Japan or something and then they will go to poorer and poorer places that would I would say
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trickle down. Okay, for whatever reason, maybe because I banged on their door for
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many times, okay, they somehow came to Bangladesh. Okay, before they went to any other uh Asian country, okay, and
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frankly it took them few years. They may not admit it now, but it took them few years to there were some very good
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people who did this. But what I'm trying to and it got endorsement from the top
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of Telenor. But I personally think it they thought it's a good thing to do. Okay, socially, socially speaking, okay,
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but they had some officially some motivation to make money, but they also thought it's a good thing to do. After
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all, Norway was the poorest Western European country and now they their things they have developed very well and
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fast after World War II. Norway was the poorest country in Western Europe. Okay,
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now by the way it's very expensive place to go and okay so what I'm saying they
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they may have had little bit of that mindset and they have seen their own country develop. So they came and after
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four five years they saw this is indeed becoming very profitable and so now they
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have close to 200 million subscribers in Asia. So Bangladesh, Pakistan, India, Myanmar they had gone to Thailand,
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Malaysia etc. But the bottom line is what is an interesting thing that has evolved not necessarily I saw it all
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that the the western world is providing an innovation but the low so-called low-income country
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is providing a market and I think that's a very healthy dubtail arrangement interest of both worlds and that is an
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interesting model that uh American business schools should look at and so it's not and what I like about it
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there's another aspect of it that is interesting it's not necessarily selling
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um consumer goods okay again consumer goods have their own good purposes but the point is this is empowering people
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so somebody is spending let's say two pennies to make a phone call and is saving him a quarter worth of time then
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he is advancing by 23 cents okay so these people are actually advancing. So I personally think that the cell phone
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revolution in Bangladesh is at least producing I can show some back of the envelope calculation uh at least
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producing $20 billion a year to say the least. Okay, because it's simply millions of people if more oper
00:23:35
efficiently. So what I'm trying to say if we have productivity tools supplied by western innovations then let
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the innovators make money and let the low-income people provide the market but they also advance. Yeah, both are
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advancing. Okay. Today I would say that Bangladesh is giving uh more aid to Norway through dividends than uh Norway
00:24:04
might be giving some aid to Bangladesh and you know this is um I think that's
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the way it should be. I mean we are a bigger country uh we are warm bigger country they are a small cold country. I
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think it's perfectly good arrangement. So interesting. So you're saying something actually quite profound. I
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think again we would often characterize impact entrepreneurship, right, as people want to do good in the world.
00:24:30
They want to use entrepreneurship and enterprise as the as the vehicle. You're
00:24:35
saying something slightly different, which is that in some cases pure greed actually is is is fine. That that in
00:24:42
fact some of these opportunities are exceptionally valuable economic opportunities. I think so. But again, we
00:24:48
can restrain ourselves with our conscience. Okay. But remember the ultimate restraint comes from people. So
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sometimes we are may we may restrain ourselves through our own internal police and say oh I won't go there and I
00:25:04
will restrain my greed. But the as people become more empowered through economic uh wherewithal they are also
00:25:13
able to create more checks and balances. So ultimately it is a good thing. But what I'm also trying to say is that if
00:25:21
we find fantastic innovations, okay, that are empowering at the bottom, then those innovations
00:25:30
are to be embraced and people advance this way. And remember another thing, this kind of capital, we're not talking
00:25:37
about Marxist worries. We're not talking about a big factory where some capitalist may potentially quote unquote
00:25:44
exploit people. We're talking about people simply uh becoming more efficient
00:25:49
with their fellow citizens. Okay? And as a result, all the value they create often acrew to them themselves. Okay?
00:25:58
And at the same time, there's a viable business. The business makes billions of
00:26:03
dollars in revenues and very good dividends. Okay? So, but this can be a model for other kinds of innovations
00:26:11
that are perfectly in sync with each other's needs through innovations. But there's another one other issue.
00:26:18
Remember, cell phone was not invented for the poor countries. Okay? So, too much planning is not necessarily
00:26:26
necessary. Okay? It was an unintended consequence. What I'm saying is that we
00:26:32
need to go into the reservoir of various innovations we have in this in the first
00:26:37
world and pick out those that we can tweak and make it available for uh lower income people and their income
00:26:48
automatically rising is is uh then they can buy things from the western world more even not just the phones they can
00:26:56
buy generators they can buy other things. So what I'm trying to say that what is really necessary is remember the
00:27:03
two things that are already existing in on the ground two things one normal human desire to improve your lives that
00:27:11
desire is very much a has a role in this because without that they wouldn't use
00:27:16
the phone that's one. Okay. The other is there is entrepreneurial energy. Both of these are often squandered if
00:27:25
these tools are not found. with the tools both can be unleashed. I I want to I want to turn our attention
00:27:33
to those young people who are in developing economies. We're taking very much the perspective here we are saying
00:27:40
in the United States talking about entrepreneurship in a developing economy. Well, I want to close by by
00:27:45
speaking to our audience that's outside the United States, outside the developed
00:27:49
world. What advice would you give to a young entrepreneur who's growing up in
00:27:53
Bangladesh or Pakistan or or my my own example is is itself could be followed. I mean I I mean I'm I'm not trying to
00:28:01
sell myself but what I'm trying to say is that I can I I'm more authority on
00:28:05
myself. The point is the point is I got an education in the west. That's one.
00:28:11
Okay. And therefore I was informed. Okay. And I I tried to think clearly of what is necessary. Okay, that's those
00:28:20
are one. But nowadays that is easier than when I try to educate myself. There was no internet for example. So now you
00:28:28
can even sit in Pakistan and learn some of these things. That's one. The other
00:28:32
point is that it's um uh that that you don't you could remember I was saying
00:28:40
you need one thing to get to the other thing. Remember let me show you one aspect of that. the fact that cell
00:28:46
phones now exist through my work or other people's work then that should make their lives a little bit easier and
00:28:54
get the information. You can also read the internet through the smartphone now as an example. So, so you can get lot of
00:29:00
things that didn't exist before, but it's always important to get an education to think clearly and think
00:29:08
about things that might be available in the west that can be adapted in the in the in the lower income countries. But
00:29:16
again there may be other ways of solving problems but this is the one I found to
00:29:21
be um profoundly transformative and also things can hang together around that kind of economic interest dotelling.
00:29:29
Okay. Well thank you so much. It was so interesting and inspiring. Thank you. Thank you very much. Thank you.
00:29:46
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