Global Entrepreneurship: Inefficiency as Opportunity in the Developing World
09/21/2006 7:00 PM KresgeAlex (Sandy) Pentland, PhD '82, Toshiba Professor of Media Arts and Sciences, and Director of Human Dynamics Research, MIT Media Lab; Damien Balsan, SM '02, VP Business Development, WAY Systems ; Rick Burnes, Co-founder, Charles River Ventures; Iqbal Quadir, Co-founder and Director of the MIT Program for Developmental Entrepreneurship; Randy Zadra, Managing Director, Institute for Connectivity in the AmericasDescription: Where aid programs and government policies fail, small-scale business people armed with the latest technology can succeed.
Damien Balsan perceived that in developing nations, ordinary -bottom of the pyramid" merchants -- taxi drivers, plumbers, electricians -- could grow their businesses if they could accept secure credit card payments. So Balsan equipped mobile phones with a card reading stripe and pulled together a credit network. After first testing his notion in the U.S., he headed overseas. Balsan found the formula works just as well in China, where -merchants are happy to take your cards when visiting the Great Wall." In Mexico, mariachi bands now accept plastic, and even salaries can be managed through cell phones in South Africa, via -guys on oxcarts." Balsan's next target is the Avon ladyãpart of a vast army of direct sales vendors: 13 million in the U.S. alone and rising rapidly elsewhere in the world.
Randy Zadra brought the internet to customers in developing nations back in the mid 90s, when it was a -battle to get resources dedicated to emerging markets." Zadra realized that these economies were often based on inefficient communication, transportation or financial networks. He turned these deficits into opportunities. One of his programs provides improved ways for foreign workers to send money back to their home countries. Throughout Latin America, these remittances amount to $36 billion per year. Zadra enables bank users to send videos and voice mail back and forth as well. Another program provides electricity in small rural villages, using low cost LEDs, recharged by the people themselves. -It's putting the base of the pyramid to work," says Zadra.
Venture capitalist Rick Burnes believes -that backing pure technology is a sure way to lose money," but that companies will succeed if they -clearly identify a market need and customer demand." With the developing world, -deep knowledge of local markets and cultures is critical to success." The only way to stimulate more entrepreneurial activity in these regions is by -working from the demand backwards." Burnes suggests employing -returnees," the people who come to the U.S. for work or school, and then go back to their countries of origin. -These people understand both worlds and can be particularly effective in getting new organizations started."
-Poor countries are poor," says Iqbal Quadir, -because a vast number of things are wasted _ including people and time." Quadir, who marked well the success of the Grameen Bank (provider of microcredit loans to poor people in Bangladesh) -realized the telephone could be a weapon against poverty." He developed a -phone for the masses," whereby a poor villager takes out a loan to buy a phone, sells phone calls to neighbors, then pays off the loan and earns additional income. In Bangladesh, this venture has provided phone access to close to 100 million people, and improved the lives of micro-merchants. Grameen Phone's total impact on his nation's GDP, Quadir believes, is probably three times larger than the foreign aid it receives, which often lands in the pockets of corrupt officials.
About the Speaker(s): Alex (Sandy) Pentland is a pioneer in wearable computers, health systems, smart environments, and technology for developing countries.
He is a co-founder of the Wearable Computing research community, the Autonomous Mental Development research community, the Center for Future Health, and was the founding director of the Media Lab Asia. He was formerly the Academic Head of the MIT Media Laboratory. Pentland was chosen by Newsweek as one of the 100 Americans most likely to shape the next century.
Host(s): Alumni Association, MIT Enterprise Forum
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