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I'm Carl Olrich, vice dean of
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entrepreneurship and innovation at the
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Wharton School and I'm very lucky to be
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able to interview today Kadir who's the
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founder of two amazing institutions,
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Grammine Phone and the Legatum Center at
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MIT. Welcome. Thank you very much. Great
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to be here. You know I want to take us
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back to your origins. Tell tell us a
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little bit about where you came from. I
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I came from Bangladesh but uh I came
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from a relatively smaller town called
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Jasur and uh I grew up there and I
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happened to have gone to a boarding
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school inside Bangladesh but um
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um since you're asking the what has
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impacted on me which I guess we could
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come to is uh that one year of my life I
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was somewhat of a urban uh kid uh but in
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1971 when there was a war in the
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country. I went to the rural area for my
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family did and um we I had experienced
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the actual rural conditions in
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Bangladesh during that year. So I my
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friends were often u children of
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peasants and other small farmers and
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that had always had an impact on me and
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so that's I I talk about that. Yeah. And
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how did you end up in the United States?
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Um, I guess I was an entrepreneur. I I
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don't know. But uh my father died when I
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was 14 years old and I somehow aspired
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to get a good education and I my mother
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and uh had provided some funds but I
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managed to get to the US with some
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scholarships and eventually I got uh
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better and almost full scholarship and
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uh so that's how I simply tried myself.
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Yeah, that's a that's a common path for
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some of our most successful
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entrepreneurs in the United States and
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and so you you there there are a lot of
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others who've taken that path and and
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like the many of those others you also
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achieved some entrepreneurial success.
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So I wonder if you could tell us a
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little bit about Grammy and Phone. Sure.
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uh Gramm fund right now is the largest
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company in the country uh in Bangladesh
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and it has 55 million subscribers.
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Sometimes in the stock market it's
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valued some7 billion dollars. But uh if
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I go back it was really uh for four or
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five years I tried to convince people
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that this is a good idea this is
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something to be pursued and it took
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quite a while to convince that but I
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think if we want to go back to its
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origin uh it's good that you asked me
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about my personal origin uh those
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impacts had certain u germ of thoughts
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that eventually gave rise to uh gramming
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phone and um and this is why I think
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it's important that no matter how we
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rigorously we think about problems uh
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deeper at a deeper level passions are
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important because it drives us to find a
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logical solution but uh even behind
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logic you may have uh a passionate u
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pursuit which gives rise to finding a
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logical solution. So in my case, I knew
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that I came to America and there were
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extraordinary opportunities here uh in
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the United States. I managed to go to
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good schools with scholarships and
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whatnot, but I uh also had in mind the
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conditions I've seen in Bangladesh and
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so therefore I always on the lookout for
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uh good ideas that could do something
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about it. So two really important ideas
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uh stuck me in I was doing that. One is
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that um the economic progress does not
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necessarily come from um pouring capital
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into it or something but rather people
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becoming more efficient uh in managing
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their tasks or getting better at it. So
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it's a question of improvements or or
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skills but also how uh let's say in a
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sense economic progress can come out of
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thin air. I I'll give you the point. Um
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so for instance I was actually attracted
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to Adam Smith because he mentioned uh
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Bengal which is Bangladesh. Twothird of
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Bengal is Bangladesh. That is how I was
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originally drawn to it. And he mentioned
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an interesting thing. He said in
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antiquity three places had good um um
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good wealth and they were ancient Egypt,
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Bengal and Eastern China. And he
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attributed those things to uh inland
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navigation. And his point is that people
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could exchange and through inland
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navigation um tra specialize in exchange
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and divide in division of labor and
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through that wealth is created and
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through that uh there was he called it
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opulence in antiquity and that has drawn
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me and that I as a result I always
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became a fan of Adam Smith but what is
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interesting is that many things come out
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of division of labor. many good things
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okay including inclusivity because if I
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want to specialize in something I have
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to give up something else to you okay so
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that gives rise to inclusivity now be
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but what is interesting of all of that
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is that
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it's uh it's something I learned over
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time I frankly didn't grasp it all over
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immediately but uh but I did see the
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inland navigation as a means of
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communication that naturally certain
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places had certain other places didn't
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have. Okay. But separately I had another
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I'll come back to the another Adam Smith
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point but separately I had another uh
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important thing I observed is when I was
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an undergraduate I was part of a uh
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college team. I mean I was the only
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token student representative in this
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team that decided on buying a $3 million
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computer. Okay. and one big mainframe
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that took a whole room full of
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machinery. And then in the when I was
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doing my graduate studies here at
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Wharton, okay, I was in decision
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sciences with computers. We learned all
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sorts of applications of computers. But
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the key point is there's this Moors law
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that's driving down costs and processing
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power is getting squeezed more and more
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into the same chips. But the Moors law
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means the prices of this processing
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power is declining rapidly which means
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countries that doesn't have very much
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capital these machines are going towards
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them. Okay. So I actually tried in the
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middle of ' 80s with another brother of
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mine. We created a Bengali word
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processor. Okay. But later on we
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realized that that it was an interesting
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innovation to take. But I'm trying to
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show you the evolution of this that um
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the Bengali word processor people
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couldn't use at least not not the masses
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because um it's a um most people do not
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know how to read or write. Okay. But an
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event took place in my life in the 93.
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By this time I've been trying to be a
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budding investment banker. And the point
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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
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we just had some rudimentary networks.
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So we didn't have to exchange floppy
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disc and cumbersome activities. So we
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could send data from one to another etc.
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And one time it broke down and I was
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waiting for someone to come and fix it.
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But that reminded me of a day in 1971
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22 years earlier. This is in 93 or so.
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And I um remember my mother sent me to
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get some medicine from this rural
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setting. And uh I was from a middle-ass
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family. My father was a lawyer and all
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these things. But uh in this setting, I
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walked 10 kilometers to get this
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medicine. And when I went there, the
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medicine man wasn't there. So I walked
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all afternoon back. And as a result I
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remembered that unproductive day sitting
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in New York while having waiting for
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someone to come and fix my network and
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kind of said you know networks help. So
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if you are connected you can get things
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done and if you don't get connected then
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you don't get things done. So this
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inland navigation earlier in my mind I
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went back to all those things and I
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realized a new thing which is that two
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things. One is the microchips are
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getting squeezed in into phones. In the
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early '90s they were becoming digital
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phones. Before that cellular phones were
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analog phones. But at this point I also
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realized a powerful point from Adam
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Smith that there were many things that
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come out of division of labor
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and division of labor gives rise to
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productivity. So just like I experienced
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that if I had connections I could
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produce more and perhaps pay for the
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phone service. Similarly, this is
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confirmed by the one of the most
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profound economies, okay? That the it
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will promote division of labor if we can
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connect with each other. Otherwise, I
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cannot really divide and do one part and
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you do another part, we can exchange.
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But what he made also he said the market
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the extent of the market dep tells you
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how far you'd be dividing. So let's say
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I start focusing on fishing but I will
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stop there and not necessarily go any
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further and fishing only salmons. Okay.
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If the market is small okay if the
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market is bigger and bigger then I can
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uh specialize narrower and narrower but
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that means and all the other good things
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come out of this division of labor.
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Okay. But if we did that then other
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means of connectivity profoundly impacts
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on the size of the market. So the point
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is the the ways to connect determines
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how far the market will be and how far
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the division of labor will advance.
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And all of this made sense to me. So
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ultimately I realized that if the the
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Moore's law is bringing down the price
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of connectivity, connectivity would be a
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profound force of of transforming these
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countries and it became so I became so
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convinced of this because of these
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insights of these other people. I'm
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basically stealing their ideas. I
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basically said hey I have to stay put on
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this. So I stayed for five six years
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convincing various parties to come
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together and create this company. I
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jokingly say that that's how I lost my
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hair. Now it's it's amazing because
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you're really saying not only does
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private enterprise and entrepreneurship
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contribute to an economy but particular
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kinds of innovations these connectivity
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innovations. Exactly. Exactly. So it's
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it's little bit like this. You see I I I
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like analogies to understand what's
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happening. Let's say if I take a bucket
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of water, if I drop a a drop of ink,
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even without stirring, it will get
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absorbed. And so if it is something
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favorable,
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the molecules other molecules will
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receive them. So in other words, people
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will accept them. But if you put a let's
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say a drop of water, oil, it may not go
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very far. Okay? So if you find the right
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technology
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then it will be grabbed by people okay
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and the whole water will get transformed
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okay the the whole economy gets
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transformed so the I think the cell
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phone was such a thing because it's
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fundamentally a elementally human to
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connect and and produce more and gain
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more sometimes it's consumption I want
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to contact my friends and see how it is
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doing but sometimes it's production
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namely I want to save time and produce
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more etc. So it depends on how it is but
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it is very elemental and at the same
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time the cost of these things radically
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going down things automatically come
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together and so it's the question of
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bringing it together
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and seeing that it's um frankly to me
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it's almost surreal but if it is like a
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country like Bangladesh everybody knows
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is one of the lowest income countries um
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there right now we have 110 million
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phones
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And when I started
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it had a quarter million fixed ones.
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Okay. So it's a really a profound change
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to know to say the least. Yeah. Now I I
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wonder if you could speak to the
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barriers to entrepreneurial innovation
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in developing economies. You've spoken
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very eloquently about the power of
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enterprise in developing economies. What
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do you see? What have been the the
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barriers the legacy barriers? Yeah. All
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all innovations I think human beings
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cannot radically absorb something
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completely radically new. It's hard.
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Okay. So uh similarly innovations has to
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ride on other things. Okay. So for
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instance I there were a lot of things I
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sorted out in my head and I said this is
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why I'm talking about these insights and
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I said this is what gave me the
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resilience the patience to try it
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because I believed in those insights
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and those insights were logical and made
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sense to me but there are actual
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practical problems okay and perhaps you
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were asking about that but one of those
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practical problems is lack of other
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things. So for example, let's say I
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bring a good car but without the highway
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I cannot drive the car. Okay. So
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internet for example in the same early
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1990s internet were spreading in this
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country very rapidly. It was very easy
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to notice. Um so people already had
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computers, they had modem, they had
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telephone lines, they could easily call
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up something and internet was spreading.
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But the real problem in poor countries
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is that you don't have those other
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infrastructures. Now because of
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colonialism
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uh and subsequent adriven statedriven
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development central uh centralized
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planning even if it's not a communist
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country tend to be the case it is tend
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even in India you'll see different
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states and within those states there is
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central and so usual pattern in these
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countries are one central city
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often being um supporting a big in um
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bureaucratic infrastructure
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and vast parts of rural areas uh
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relatively underdeveloped with no
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infrastructure and what happens it
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creates a vicious cycle because because
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the infrastructures are there everybody
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develops things within that area okay so
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even if you want to start something you
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don't want to go out in the rural areas
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and uh not have your children go to good
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schools so you kind of avoid that okay
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but this case here is the problem I knew
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through Mo's law and through the Adam
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Smith thing that this is ultimately
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useful because it's Mo's law would say
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it's it would it would be viable
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everywhere and Adam Smith said it will
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be useful everywhere okay so then the
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problem is that how can I break that
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vicious cycle because I too do not have
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engineers to go out in the world where
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there's nothing or there is no lack of
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electricity all these problem and this
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is why I try to latch on to another
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organization that may have calm
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infrastructure and this is why I went to
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microcredit programs and somehow
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Bangladesh was blessed with good micro
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credit programs and Grammine Bank for
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instance had um 10,00 branches I thought
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oh maybe I could put the cell towers
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over there and this is why by the way
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our name has become in their honor
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Grammine phone okay but my original idea
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was gonophone which means phones for the
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masses and the daring see because I'm
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bringing this insight It's because that
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is how I projected it's will be feasible
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because I was talking about phone for
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the masses in a poor country when only
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1% of Americans had mobile phones in the
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days I I started this process. Okay. So
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but again I was basing myself on those
00:16:54
insights. Okay. But coming back to this,
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this is why I try to the one of the
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problems you're talking about is the
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ecology being poorer. Okay. To bring
00:17:07
something new. Okay. So, if you have an
00:17:10
let's say Amazon.com is a company that's
00:17:12
selling books or other things, but
00:17:14
people have credit cards. Well, you can
00:17:16
base that on you need those other
00:17:18
infrastructure to bring about a new
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thing. And this is not a conceptual
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problem. It's a practical problem that
00:17:25
you need to solve. And so Grammine Bank,
00:17:28
not only I could find those sites where
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I could potentially put cell towers and
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some some infrastructure to help out
00:17:36
that process, but also there were
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borrowers and eventually I developed an
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idea and I proposed it to Grammine Bank
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that they would give money to somebody
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to borrow uh borrow small amount of
00:17:48
money, $100, $200 to buy vegetable
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growing facilities or ducks or chicken
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or a typical loan was a cow loan. And so
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I said, you know, the cell phone could
00:18:00
be a cow because somebody could borrow
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$200
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um instead of a cow, get a phone and the
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phone would serve the village, but it
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would pay the p it would be a business
00:18:12
for that person. And that idea was was
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um was a little crazy, but it was
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considered illogical.
00:18:20
But so the founder of Brain Bank,
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Mhammed said, "Why don't you see if you
00:18:24
can make it happen?" So I quit my job. I
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went there and I flew around the world.
00:18:30
I got some seed funding from New York
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and uh I faced many rejections. But
00:18:36
eventually I managed to convince the
00:18:38
Norwegian telephone company. Ah they
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came and interestingly they have never
00:18:42
been to Asia before. Wow. This is
00:18:44
Teleno. So Teleno and they were very
00:18:46
reluctant to come and subsequently they
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saw this is a great opportunity and
00:18:51
today they are very big in Asia. Yeah.
00:18:53
So I want to I want to talk about that
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for a minute because the normal view of
00:18:58
entrepreneurship in the developing world
00:19:00
that says that that is the view held by
00:19:02
most of us in the developed world is
00:19:04
that all this great stuff gets invented
00:19:06
in the developed world and then it
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trickles down to the to developing
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economies. Is are we missing something?
00:19:12
Is there a different way to view this?
00:19:14
Well, in this case, it somewhat trickled
00:19:16
down. Yeah, somewhat but rapidly
00:19:18
trickled down because of the Moore's law
00:19:21
which says which is which is only a
00:19:23
decade later the same amount of
00:19:25
processing power becomes 200th or so.
00:19:29
Okay. So you can even if we throw out
00:19:32
all the details it becomes $100 becomes
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$1 in 10 years. That does go down
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rapidly. That's one issue. Okay. And the
00:19:42
other is that it is so fundamentally
00:19:44
useful. It's an egalitarian thing. So I
00:19:46
was totally wrong in chasing computers.
00:19:50
Okay, that's when I realized that no
00:19:52
when I when I saw that connectivity is
00:19:55
helpful, I also realized at the same
00:19:58
time that it's and Adam Smith and all
00:20:01
that is there but you know it's a
00:20:03
culmination of a lot of things but the
00:20:05
other point is it's egalitarian.
00:20:08
Everybody can talk. Okay. And so in a
00:20:12
way there is an irony of all this. The
00:20:15
point is the cell phones are actually
00:20:17
computers. So the computers have entered
00:20:20
these markets in the disguise of a
00:20:23
phone. Okay? And so so because the voice
00:20:26
communication is the killer app, okay?
00:20:28
And everybody can talk. But now what is
00:20:31
happening is that these computers are
00:20:34
now that they're there, they're kind of
00:20:36
a Trojan horse that can do all sorts of
00:20:38
other things. Okay? And so when you say
00:20:41
trickle down, yes, but if you look at
00:20:44
Telenor's example,
00:20:46
yes, typically a let's say a um western
00:20:51
company goes to Asia, first they go to
00:20:54
Hong Kong, Singapore, Japan or something
00:20:57
and then they will go to poorer and
00:20:58
poorer places that would I would say
00:21:00
trickle down. Okay, for whatever reason,
00:21:03
maybe because I banged on their door for
00:21:04
many times, okay, they somehow came to
00:21:07
Bangladesh. Okay, before they went to
00:21:09
any other uh Asian country, okay, and
00:21:13
frankly it took them few years. They may
00:21:14
not admit it now, but it took them few
00:21:16
years to there were some very good
00:21:18
people who did this. But what I'm trying
00:21:20
to and it got endorsement from the top
00:21:22
of Telenor. But I personally think it
00:21:25
they thought it's a good thing to do.
00:21:28
Okay, socially, socially speaking, okay,
00:21:31
but they had some officially some
00:21:33
motivation to make money, but they also
00:21:35
thought it's a good thing to do. After
00:21:36
all, Norway was the poorest Western
00:21:40
European country and now they their
00:21:43
things they have developed very well and
00:21:45
fast after World War II. Norway was the
00:21:48
poorest country in Western Europe. Okay,
00:21:51
now by the way it's very expensive place
00:21:53
to go and okay so what I'm saying they
00:21:56
they may have had little bit of that
00:21:58
mindset and they have seen their own
00:21:59
country develop. So they came and after
00:22:02
four five years they saw this is indeed
00:22:04
becoming very profitable and so now they
00:22:07
have close to 200 million subscribers in
00:22:10
Asia. So Bangladesh, Pakistan, India,
00:22:14
Myanmar they had gone to Thailand,
00:22:16
Malaysia etc. But the bottom line is
00:22:19
what is an interesting thing that has
00:22:22
evolved not necessarily I saw it all
00:22:24
that the the western world is providing
00:22:28
an innovation
00:22:30
but the low so-called low-income country
00:22:34
is providing a market and I think that's
00:22:37
a very healthy dubtail arrangement
00:22:40
interest of both worlds and that is an
00:22:43
interesting model that uh American
00:22:46
business schools should look at and so
00:22:48
it's not and what I like about it
00:22:51
there's another aspect of it that is
00:22:52
interesting it's not necessarily selling
00:22:57
um consumer goods okay again consumer
00:23:00
goods have their own good purposes but
00:23:01
the point is this is empowering people
00:23:04
so somebody is spending let's say two
00:23:07
pennies to make a phone call and is
00:23:09
saving him a quarter worth of time then
00:23:12
he is advancing by 23 cents okay so
00:23:16
these people are actually advancing. So
00:23:18
I personally think that the cell phone
00:23:21
revolution in Bangladesh is at least
00:23:24
producing I can show some back of the
00:23:26
envelope calculation uh at least
00:23:28
producing $20 billion a year to say the
00:23:31
least. Okay, because it's simply
00:23:33
millions of people if more oper
00:23:35
efficiently. So what I'm trying to say
00:23:37
if we have productivity tools
00:23:41
supplied by western innovations then let
00:23:45
the innovators make money and let the
00:23:49
low-income people provide the market but
00:23:51
they also advance. Yeah, both are
00:23:53
advancing. Okay. Today I would say that
00:23:57
Bangladesh is giving uh more aid to
00:24:00
Norway through dividends than uh Norway
00:24:04
might be giving some aid to Bangladesh
00:24:07
and you know this is um I think that's
00:24:09
the way it should be. I mean we are a
00:24:10
bigger country uh we are warm bigger
00:24:13
country they are a small cold country. I
00:24:16
think it's perfectly good arrangement.
00:24:19
So interesting. So you're saying
00:24:21
something actually quite profound. I
00:24:23
think again we would often characterize
00:24:26
impact entrepreneurship, right, as
00:24:28
people want to do good in the world.
00:24:30
They want to use entrepreneurship and
00:24:32
enterprise as the as the vehicle. You're
00:24:35
saying something slightly different,
00:24:36
which is that in some cases pure greed
00:24:39
actually is is is fine. That that in
00:24:42
fact some of these opportunities are
00:24:43
exceptionally valuable economic
00:24:45
opportunities. I think so. But again, we
00:24:48
can restrain ourselves with our
00:24:50
conscience. Okay. But remember the
00:24:53
ultimate restraint comes from people. So
00:24:57
sometimes we are may we may restrain
00:25:00
ourselves through our own internal
00:25:02
police and say oh I won't go there and I
00:25:04
will restrain my greed. But the as
00:25:07
people become more empowered through
00:25:10
economic uh wherewithal they are also
00:25:13
able to create more checks and balances.
00:25:16
So ultimately it is a good thing. But
00:25:19
what I'm also trying to say is that if
00:25:21
we find fantastic innovations, okay,
00:25:25
that are empowering at the bottom, then
00:25:28
those innovations
00:25:30
are to be embraced and people advance
00:25:34
this way. And remember another thing,
00:25:35
this kind of capital, we're not talking
00:25:37
about Marxist worries. We're not talking
00:25:39
about a big factory where some
00:25:41
capitalist may potentially quote unquote
00:25:44
exploit people. We're talking about
00:25:46
people simply uh becoming more efficient
00:25:49
with their fellow citizens. Okay? And as
00:25:52
a result, all the value they create
00:25:55
often acrew to them themselves. Okay?
00:25:58
And at the same time, there's a viable
00:26:00
business. The business makes billions of
00:26:03
dollars in revenues and very good
00:26:05
dividends. Okay? So, but this can be a
00:26:08
model for other kinds of innovations
00:26:11
that are perfectly in sync with each
00:26:14
other's needs through innovations. But
00:26:16
there's another one other issue.
00:26:18
Remember, cell phone was not invented
00:26:20
for the poor countries. Okay? So, too
00:26:23
much planning is not necessarily
00:26:26
necessary. Okay? It was an unintended
00:26:29
consequence. What I'm saying is that we
00:26:32
need to go into the reservoir of various
00:26:34
innovations we have in this in the first
00:26:37
world and pick out those that we can
00:26:40
tweak and make it available for uh lower
00:26:45
income people and their income
00:26:48
automatically rising is is uh then they
00:26:52
can buy things from the western world
00:26:54
more even not just the phones they can
00:26:56
buy generators they can buy other
00:26:57
things. So what I'm trying to say that
00:26:59
what is really necessary is remember the
00:27:03
two things that are already existing in
00:27:05
on the ground two things one normal
00:27:07
human desire to improve your lives that
00:27:11
desire is very much a has a role in this
00:27:14
because without that they wouldn't use
00:27:16
the phone that's one. Okay. The other is
00:27:18
there is entrepreneurial energy.
00:27:21
Both of these are often squandered if
00:27:25
these tools are not found.
00:27:28
with the tools both can be unleashed. I
00:27:31
I want to I want to turn our attention
00:27:33
to those young people who are in
00:27:36
developing economies. We're taking very
00:27:39
much the perspective here we are saying
00:27:40
in the United States talking about
00:27:42
entrepreneurship in a developing
00:27:43
economy. Well, I want to close by by
00:27:45
speaking to our audience that's outside
00:27:47
the United States, outside the developed
00:27:49
world. What advice would you give to a
00:27:51
young entrepreneur who's growing up in
00:27:53
Bangladesh or Pakistan or or my my own
00:27:56
example is is itself could be followed.
00:27:58
I mean I I mean I'm I'm not trying to
00:28:01
sell myself but what I'm trying to say
00:28:02
is that I can I I'm more authority on
00:28:05
myself. The point is the point is I got
00:28:09
an education in the west. That's one.
00:28:11
Okay. And therefore I was informed.
00:28:14
Okay. And I I tried to think clearly of
00:28:17
what is necessary. Okay, that's those
00:28:20
are one. But nowadays that is easier
00:28:23
than when I try to educate myself. There
00:28:26
was no internet for example. So now you
00:28:28
can even sit in Pakistan and learn some
00:28:30
of these things. That's one. The other
00:28:32
point is that it's um uh that that you
00:28:36
don't you could remember I was saying
00:28:40
you need one thing to get to the other
00:28:41
thing. Remember let me show you one
00:28:44
aspect of that. the fact that cell
00:28:46
phones now exist through my work or
00:28:49
other people's work then that should
00:28:52
make their lives a little bit easier and
00:28:54
get the information. You can also read
00:28:55
the internet through the smartphone now
00:28:57
as an example. So, so you can get lot of
00:29:00
things that didn't exist before,
00:29:03
but it's always important to get an
00:29:05
education to think clearly and think
00:29:08
about things that might be available in
00:29:10
the west that can be adapted in the in
00:29:14
the in the lower income countries. But
00:29:16
again there may be other ways of solving
00:29:18
problems but this is the one I found to
00:29:21
be um profoundly transformative and also
00:29:24
things can hang together around that
00:29:27
kind of economic interest dotelling.
00:29:29
Okay. Well thank you so much. It was so
00:29:32
interesting and inspiring. Thank you.
00:29:33
Thank you very much. Thank you.
00:29:46
[Music]
