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Global Entrepreneurship: Inefficiency as Opportunity in the Developing World

Moderator: Alex (Sandy) Pentland PhD '82
Damien Balsan SM '02 Randy Zadra Rick Burnes Iqbal Quadir: September 21, 2006; Running Time: 1:27:50

About the Lecture

About the Lecture

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 lady—part 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.

Lecture Details

Location: Kresge Auditorium

About the Speakers

Moderator: Alex (Sandy) Pentland PhD '82

Toshiba Professor of Media Arts and Sciences, and Director of Human Dynamics Research, MIT Media Lab

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.

Damien Balsan SM '02

Vice President, Marketing and Business Development, Way Systems

Damien Balsan has more than 15 years of experience in the telecommunications, mobile, bank card, and payment industry. He started his career in Mexico at France Telecom, then held several positions at Gemplus, the No1 smart card manufacturer.

Balsan graduated with a Master's degree in Management from MIT Sloan. He was a semi-finalist in the MIT 50K Business Plan.

Randy Zadra

Managing Director, Institute for Connectivity in the Americas Visting Fellow, MIT Program in Developmental Entrepreneurship

The Institute for Connectivity in the Americas (ICA) was created for promoting and funding hemispheric innovation in the application of information and communication technologies in the Latin American and Caribbean region.

Zadra previously held senior management positions at Teleglobe in Montreal, Quebec and Washington, D.C. and has founded two Internet start-ups, focusing on providing accessible Internet in developing countries. He has also worked with the Ministry of Industry in Canada, in international trade development and policy. Currently he is the Telmex visiting Fellow at the MIT Media lab where his work focuses on information technology and emerging markets.

Zadra has a Master’s Degree in Public Policy from Carleton University, a Bachelor’s degree in Economics and Political Science from the University of Windsor, and a diploma in international affairs from L’Université de Grenoble.

Rick Burnes

Co-founder, Charles River Ventures

Over the last 15 years, Rick Burnes has focused on investments in the fields of communications and information services. Among the successful investments he has led are: Cascade Communications, Chipcom Corporation, Epoch Systems, Abacus Direct, Summa Four, Concord Communications, Prominet, Aptis and Sonus Networks.

Apart from venture capital, Burnes has been active in community organizations. Currently he is Chairman of Boston's Museum of Science, Chairman of the Entrepreneur's Foundation of New England, Vice Chairman of Sea Education Association and Director of The Boston Foundation. Rick Burnes Rick Burnes was a co-founder of Charles River Ventures in 1970 and has played a major role in the firm's development into one of the country's major venture firms with offices in Waltham, Mass. and Menlo Park, California. Over the last 15 years, Rick has focused on investments in the fields of communications and information services. Among the successful investments he has led on behalf of Charles River are: Cascade Communications, Chipcom Corporation, Epoch Systems, Abacus Direct, Summa Four, Concord Communications, Prominet, Aptis and Sonus Networks. Apart from venture capital, Rick has been active in community organizations. Currently he is Chairman of Boston's nationally recognized Museum of Science, Chairman of the Entrepreneur's Foundation of New England, Vice Chairman of Sea Education Association and Director of The Boston Foundation. He is a past Chairman of the Board of the Middlesex School.

Burnes holds a B.A. in history from Harvard College and an MBA from Boston University.

Iqbal Quadir

Co-founder and Director, MIT Program for Developmental Entrepreneurship

Iqbal Quadir founded GrameenPhone, the largest telephone company in Bangladesh. From 2001-2005, he was a fellow at Harvard's JFK School of Government, teaching how technologies can affect change in developing countries. He is now co-founder and director of the MIT Program for Developmental Entrepreneurship, and organizing projects providing electricity, fertilizers, and potable water in Bangladesh and other countries.

He received an M.B.A.(1987) and an M.A. (1983) from the Wharton School at the University of Pennsylvania and a B.S. with Honors (1981) from Swarthmore College.