Mohammad Yunus: Building Social Businesses To Eliminate Poverty

Mohammad Yunus was in NYU last week to speak to b-school students about social businesses. Yunus, who started the microfinancing company Grameen Bank, has extended Grameen to various other ventures. Yunus doesn’t own a single share in all the Grameen companies he has helped create. He said he did it because he saw a problem and wanted to solve it.

• Yunus started Grameen Bank in the late 70s, a bank fully owned by borrowers. The first loan was for $27. Today, Grameen Bank is lending about $100 million per month.The lenders are 97 pct female. Grameen microfinance banking reaches about 80% of Bangladesh’s poor. Grameen Bank has now expanded to school and college tuitions, it has awarded about 34,000 scholarships.
• They noticed a lot of Bangladeshis were suffering from night blindness in the late 70s. The problem was lack of Vitamin A in their diets. They had 2 options – eat more vegetables or consume vitamin tablets. So Grameen got into vegetable farming, and quickly became the biggest seed company. Night blindness diappeareed from Bangladesh.
• For a country that had little phone penetration, Grameen Phone was started with the vision of putting phone in the hands of poor illiterate women. Fortunately there are only 10 numbers to learn, said Yunus jokingly. Grameen Phone employs about 3,000 women and has captured 55% of mobile market share. It is largest mobile phone company in Bangladesh.
• Only 30% of Bangladeshis have access to electricity. So Grameen created Grameen Shakti, a solar energy company. Grameen Shakti has since sold over 200,000 solar units. Their goal is to sell 1 million solar systems. Grameen Shakti has about 8,000 employees, of which 4,000 are ‘engineers’. They are not really engineers by education, but dropouts who have been technically trained to assemble and maintain solar systems. He said, by calling them ‘engineers’, both employees and customers feel good about the title. Solar panel costs very high, about $3.5 per watt. If it comes down to $2 per watt (cheaper than kerosone), every home in Bangladesh can be powered by solar.

Mohammad Yunus at NYU signing books

Yunus believes there’s a flaw with the for-profit model where profit maximization and increasing shareholder value is the primary motive, it assumes that humans are money-making robots. However, human beings are not single dimensinal. Selflessness and happniness derived from making other people happy is the ultimate goal for some, hence social businesses. NGOs and non-profits take money from donors and spend it, hence not self-sustainable. On the other hand, social businesses have a cash flow. While the businesses themselves can be profitable, the shareholders only recover costs. They don’t make a profit or earn dividends. Earnings are retained in the business or used to extend the business or enter new markets.

Yunus partnered with Danone (Grameen Danone) to produce yogurt in Bangladesh. The yogurt has additional essential nutrients and is targeted towards Bangladeshi children. By de-emphasizing packaging and cutting marketing costs, the company can sell good quality yogurts for cheap. To take it to the next level, Yunus insisted Danone come up with containers that were bio-degradable and edible. His argument – after all, poor people were paying for the container!

Bangladesh has a serious water problem, drinking water there has high arsenic content. Grameen partnered with Veolia, world’s leader in water services, to bring water to masses at very affordable prices, enough to recover costs.

Yunus piece of advice – take your profit maximizing glasses for a day, and switch to social business glasses. The world looks very different!

India: A Services Based Economy

More Kiran Karnik, who as I mentioned in my previous post, was the closing keynote speaker at the Indian Business Conference 2008.

As the former President of Nasscom, Karnik focussed on IT and its benefit to society and also on India’s attempt at shifting from a service based economy toward manufacturing.

India’s GDP: 22% agriculture, 54% services

IT-BPO exports = 40 billion dollars = 5.5% of GDP

Distribution of exports by region: Bangalore 36%, Delhi/Noida/Gurgaon 17%, Mumbai/Pune 15%
How is IT benefiting the Indian society?
* Gender Equality: Young women earning at par with male counterparts.
* Good work ethic: Long working hours in a professional work environment.
* Application towards public service and social causes: NGO emergency services, online payment of bills, online rail reservation, etc.
Total organized labor force in India = 15M; IT accounts for nearly 2M direct jobs, and 7-8M indirect jobs (support/household services).

As a services-based economy, India is losing out on its two competitive advantages:
* Rupee getting stronger against the dollar.
* Wage inflation – salaries rising 15-20% every year.

Problems with the education system in India:
* Individualized – no group projects or class discussions; the only team work is when students decide to collaborate during exams (cheat)!
* Poor talent pool – Only 25% grads are suitable for direct employment, the remaining 75% varying degrees of training.

Photo courtesy: NYTimes.com from a recent article about debt collection services moving to India.

How to say “I’m going to stab you in the gut” in Indian?

Stephen Colbert picked up a story by LA Times – one of the world’s 7,000 distinct languages disappears every 14 days, an extinction rate exceeding that of birds, mammals or plants. At least 20% of the world’s languages are in imminent danger of becoming extinct as their last speakers die off, compared with about 18% of mammals, 8% of plants and 5% of birds.

One such language facing extinction is Sora, spoken by 288,000 natives in South Orissa in eastern India. More information here on the Living Toungues. The Sora language is unique in that entire sentences maybe expressed by one word. David Harrison, the guest on Colbert Report show, borrows a word from Sora to prove his point – phu-phoon-kun-tam, which in English translates to “I’m going to stab you in the gut”.

Who says you don’t learn anything from Comedy shows? Watch the video clip here, very funny! I only wish Comedy Central didn’t screw up in writing the description text for the video. India has 22 official languages and hundreds of regional languages and dialects, but none called “Indian”.

Fire In Princeton Meadows And Hyperlocal Content

Finally got the time to upload this picture I took 3 weeks ago.

A fire broke out in Princeton Meadows, a strip mall in Plainsboro, last month. The fire originated in a bakery, Hot Breads, and completely burnt down 4 stores. Also gone is the popular pizzeria, Al Jons, which had been in the neighborhood for almost 17 years. Like me if you don’t read local community newspapers or websites, where do you go for hyperlocal content? Try Topix.

For those that haven’t heard of Topix, it is to hyperlocal content what Google News is to world news and Techmeme is to technology news.  Topix crawls over 50,000 sources for hyperlocal community news.  More on Topix’s about page here.

I talked to some Topix folks at the Web 2.0 conference in SF and the biggest issue they were facing was the lack of hyperlocal advertising dollars. Topix has some Google ads, but the local pizza shop owner or dentist is less likely to open a Google Adsense account anytime soon. Topix also had a free classifieds section, but then there’s Craigslist.

What Can Orkut Do For Your Love Life?

When I was India in January 2007, my friend Akshay Chikodi asked me if was on Orkut. Frankly, he said, if you’re not on Orkut you don’t exist! So I created a profile on Orkut.

Couple things I don’t get about Orkut:

• What is it trying to be – a social networking tool? dating site? First thing you create a profile, you see this message - Next steps: Are you single? Tell everyone what you are looking for to get orkut working for you!
• It looks like a developer’s prototype when compared to Facebook.

But obviously, it is definitely doing a few things right. Read Gautam’s post here, Alexa ranks Orkut second in India followed by Yahoo. Orkut on last count had over 57.4M users, 15% = 8.6M Indians on Orkut. Even though it seems a bit on the higher side, it nevertheless is a great tool for people search. People search online is catching on and I don’t think there exists a better database of Indians in India and abroad – profiles with real names, pictures, bios & interests, life/event updates and a listing of every other friend on Orkut.

Some Orkut demographics from here:

• Over 15% of Orkut profiles are Indians (Brazil on top with 55%, followed by US with 19% users).

• 70% users are between ages 18-30.

• less than 20% are either married or committed (42% no answer, 36% single)

• 65% are on Orkut for friends, 18% for dating

The last bit of info is very interesting. Given that a majority of users are between ages 18-30 and single, is Orkut big enough to challenge the hugely successful martrimonial and dating websites? Same for Facebook, can it be the end of Match.com and the likes? Why pay a premium for meeting other singles if you can “poke” or “send teasers” for no charge? Or is that too creepy for some users?

Orkut’s help section on “What can Orkut do for your love life?” here. If you’re on Orkut, I’d love to hear from you.

Majority of NYC sewer manhole covers “Made in India”

For all those proud New Yorkers that claim to know every bit about the city history, I can almost guarantee a good bar conversation. Here’s how it usually goes:

Q: How many years have you lived in the city?

A: Over 5 years

Q: How many miles do you walk each day?

A: About a mile or two

Q: Did you know a majority of NYC sewer manhole covers are imported from India?

A: No way! You’ve gotta be kidding me! Did this just happen?

Most of New York City’s 600,000 manhole covers and the many hundreds of thousands all over the US come from India. And foundries in and around Kolkata claim a big chunk of that business. Indian companies began supplying manhole and sewer access covers to the US almost four decades ago. But in recent times their business has gone up manifold as they charge only a third of what US makers demand for the same work.

Read more here and here.

Thomas Friedman redefines the flat world

I attented the Personal Democracy Forum last month.  New York Times columnist, Thomas Friedman, in his keynote announced the addition of 3 new chapters to this popular book “World is Flat” (3rd edition) . 

Mahatma Gandhi once said, “Be the change you want to see in the world”.  That was Gandhi’s message to 250+ million Indians, challenging them to organize and rise up against the British rule.

Thomas Friedman reading out his new chapter announced, “If it’s not happening, it’s because you’re not doing it”.  This is the new form of Citizen Activism in the age of Internet and Technology.  Users have all the necessary tools (read blogs, forums, feeds, widgets) to organize virtual campaigns and put pressure on the big corporations and governments.

Check out the recorded version of Friedman’s keynote here.

More on the flat world and this from the perspective of employers – Back in the days, people wrote and presented their resume as a proxy of who they’re.  Today, companies can go on the internet and gather the information themselves.  The human proxy has been dropped and entities are more transparent.

How much can you hate?

I watched Anurag Kashyap’s Black Friday a couple months back, and I’ve been wanting to write about it. Kudos to Anurag for making this gutsy movie. The movie has been reviewed by many, so I really have nothing to add in that space. But I’ll say this – if you watched the movie and didn’t feel a sense of renewed patriotism and a rush of adrenaline, there’s something wrong with you!

I couldn’t but wonder if there’s anything I could personally do to bring justice to Mumbai bomb blast victims. If nothing else, create an online site with a “hate meter” that encourages users to vote for the most hated person. And take it a step further and attach a utility to that hatred, e.g. I’d say Dawood Ibrahim in jail is worth a $1000 to me personally. A few thousand participants and now you’re talking. I even found a site that asks its users “How much do you hate this Tory”?

So why didn’t I work on the idea? A couple days later, the rush of adrenaline was gone. That kind of hatred is impulsive and short-lived, not sustainable. If it were sustainable, I’d be one of those people blowing buildings and market places.