Good evening, I'm Homi Bhabha,
and I direct the Mahindra
Humanities Center.
And when an eminent faculty
member from the business school
accepts our invitation to
speak at the Humanities Center,
we know that the humanities
are back in business.
So it is a great pleasure
to have our dear friends
who you will now--
who will zap you with
wonderful ideas and thoughts.
You know, the whole
purpose of being here
is to be part of the discussion.
Trust, the subject of
Tarun Khanna's new book
could not be more
topical at the moment.
And the link between
trust and truth
and also alternative
truth I hope
will be explored in some depth.
Tarun's new book is
a concern with which
humanists and
business experts have
something to say to each other.
And indeed, it is
for that reason
that we have Caroline
Elkins, Professors Elkins,
I will introduce both
people more formally,
but Caroline is in the
history department as well as
the business school.
So we have a number of
bridging concerns and bridging
individuals here.
And this is exactly what we like
to do, to bring people together
from different parts
of the university.
The really important issue that
Tarun draws our attention to,
as I understand it,
is that, as he says,
trust is something that
communicates itself
most easily through
individual entrepreneurship
and individual agency.
That's the most, as it were,
friendly face of trust when
you can trust somebody.
But what happens when
you have to scale up
the question of trust?
When you have to
trust governments.
When you have to
trust institutions.
When you have to
trust corporations.
And in each of these
instances, you do not quite
have the face to face.
Although, you may try
to do it in many ways.
And, of course, one
of the prime tropes
of the media representation
of organizations
is actually the
face of the leader,
or the face of the worker,
or the face of the attendant,
that's the way in
which identification
is most often communicated.
That's the way in which
trust is built up.
Through television or
through advertisements.
And so my provocation is this,
and it's a small provocation,
that when Tarun argues
quite reasonably
that the solution
to the problems
caused by mistrust
usually lies ultimately
with the insights of an
individual entrepreneur.
And then he talks about
Sam Walton and Walmart.
He said Walmart sought to
compensate for the missing
retail infrastructure in what
was then small town America.
Indeed, very much like the
developing country settings
I consider in his book,
he considers in his book,
ultimately, Walton earned
the trust of tens of millions
of Americans who could reliably
find affordable merchandise
in thousands of hitherto
inaccessible locations.
And I think that is true.
But is there not
also the problem
that in setting up these
commercial [INAUDIBLE],,
much that was happening in small
town by smaller entrepreneurs,
by people who had a history
of the local ecology,
have often been displaced.
And that is the kind of issue, I
think, that from my perspective
I am very interested
in exploring today.
Of course, when these
large ocean liners sweep
into the smaller areas, there
is a great sense of mistrust
because people are displaced,
or practices, customs, trades,
are displaced.
So I think this is
something that's
very important from a
humanistic point of view.
Because for us, of course,
the convenience aspect
of the large conglomerates
which certainly
keep prices down, but also
standardize a number of things.
They produce a
standardization, and maybe we
need that for a certain
kind of survival,
but we also need
to question that.
Tarun Khanna is director of
the Lakshmi Mittal South Asia
Institute at Harvard, and the
Jorge Paolo Lemann Professor
at the business school
where he studies
the dive that the drivers
of entrepreneurship
in emerging markets as a
means of economic and social
development.
His many publications include
Winning in Emerging Markets
and Billions of Entrepreneurs.
And when he talks about
global entrepreneurship,
he knows what he
talks about because he
speaks several languages, and
he travels across the world.
He actually locates himself,
often with his family,
in specific places like
China to actually see
the efficacy of the
business machine
in the context of the
cultures that he is studying.
After Tarun speaks, we'll
have a short response
from Caroline Elkins.
Who will then pose some
questions to him before she
opens up a discussion with you.
Professor Caroline Elkins
is Professor of History
and African and African-American
studies at Harvard.
The founding director
of Harvard's Center
for African Studies
and visiting professor
of Business Administration
at the business school.
Her first book, Imperial
Reckoning: The Untold Story
of Britain's Gulag in Kenya,
was awarded the Pulitzer Prize.
And her forthcoming book
explores violence and the end
of the British Empire.
So here we have a historian
of business practices working
at the scale of the larger
business enterprises,
and then we have a historian
who is interested in business
practices and whose
landscape again,
is the landscape of empire.
Thank you both very
much for being here.
Tarun, Caroline,
please come occupy
these esteemed [INAUDIBLE].
[LAUGHTER]
Yes, thank you.
[SIDE CONVERSATION]
We are waiting for
the laptop to wake up
because Homi turned it off.
[LAUGHTER]
He doesn't even know that.
OK, great.
Thank you very much.
Carolyn and I
thought what we'd do
is I'd just spend maybe 10,
15, at most 20 hopefully, not
20 minutes, just
sharing the basic idea
of this book and then,
maybe a couple of stories.
And then, hopefully,
we can have more
of a dialogue and an exchange.
By training-- I mean I've
been at the business school
for 25 odd years,
and over this time
I work almost exclusively
in poor countries.
The poorer, the
better for my research
interests because my
intellectual interest
is in understanding really the
role of the individual actor.
What can an individual
do about the miasma
that you often find
yourself surrounded by,
and you can pick your
version of unpleasantness.
Corruption, instability,
fake news, whatever you want.
And my interest is really
less than in pointing fingers
at the government
and saying you're
corrupt because that's often
self-evidently the case,
or you have limited state
capacity, what have you.
Not that those are not
interesting questions
for the political
scientists et cetera,
but my own interest is
in sort of the expression
of individual agency
and creativity,
and what is it that you
can do to get around this?
This book is just a taking
pause exercise for me,
just reflecting on
some individuals
that I've been working
with for the last year.
So everybody in
this book is someone
that I've worked with
and respect and have
had the good fortune
to participate in
either in their success
or in some cases
their failures for
the past, let's say,
10 years for the sake of
argument, sometimes much
longer, sometimes shorter.
So it's really a taking stock
exercise for me, primarily.
And through that, I'm hoping,
through some simple narrative
is just to create a little
bit of a conceptual framework
also that's communicated
to the reader.
So that's the idea.
These are some of the concrete,
motivating cases, if you will,
that got me started on this
writing exercise roughly a year
and a half ago.
I've been very involved
in the attempts
by the government in China,
when I say government,
obviously that's an
amorphous entity,
but I mean different
levels of government,
attempting to do something about
what I refer to as the poison
milk scandal which gripped
China starting in about 2008.
And essentially it
was unscrupulous acts
by various entities
contaminating milk
to make it look like it had a
higher protein content which
then would allow
them to dilute it
and sell a mixture
of water and milk.
And it turned out to be
an insidious problem that
killed a number of infants
and compromised people's
immune systems and
so on and so forth.
And I like this problem,
it sounds odd to say,
I like this problem because
it's truly intractable.
It's been, despite the
machinery of the Chinese state,
it's been almost impossible
to completely eradicate.
And the second part
of the story is
that I ended up teaming
up with, working with,
a Chinese entrepreneur who
worked to address this and had,
I would say, a reasonable
success addressing it,
so that's just one
example of this.
What's another one?
I like this one, why
do multibillion-dollar
microfinance firms with
robust consumer bases,
think tens of millions of
typically poor women borrowing
small amounts of money on
a monthly basis from them
to invest in their
own livelihoods,
why do these companies
often completely collapse?
I am the main director
in one of the biggest
such microfinance
firms in the world
and had a ringside
seat in really
baptism by fire in the complete
collapse of microfinance
in a particular part of
India around 2010, 2011.
And I felt like I learned a
lot about trust and mistrust
and the creation
of trust and so on.
So that might be a good
example to learn from.
That particular one is
extremely controversial.
So there are lots
of people who are
on every side of every possible
view that you can hold.
So all I can do is tell
you what my view is.
And that the view is expressed
in the book in a fair amount
of detail, et cetera.
So as you can see, the
settings from which
I draw these stories in the
book are pretty wide-ranging.
They're not industry specific.
They're not really
country specific.
Except they tend to
be countries where
I have a very deep
immersion into the country.
China and India self-evidently
based on my past work
and ongoing involvement.
My chair at Harvard
is a Brazilian,
so I end up doing some work
in Brazil and Latin America.
And it's nice to have
Kerry as the interlocutor
here because Africa, though
conspicuously absent,
is one of my favorite
traveling grounds,
and to educate myself and so on.
So it would be nice to have
a conversation about some
of these ideas
playing out in Africa.
Now, the idea of the book--
Well, let me back
up for a second.
The idea of the book is that
if you think about something
as well-known, I
suppose in folklore now
as building Facebook
in the Harvard
dorms, that is, of course,
it's a difficult exercise,
but it's not it's
not as difficult
as it might be if you tried
to do Facebook in Bogota.
And the reason is that
Zuckerberg had access
to any amount of supporting
institutions around him.
Lots of risk capital,
if he needed it.
Lots of assessment firms.
Lots of talent in the university
system surrounding him.
Lawyers, people valuing
intellectual property.
You could come up with
a laundry list of 20
or 30 well-structured
support systems for profit,
not for profit, what
have you, that would
help him launch the enterprise.
Now, in 90% of the
world, maybe more,
these support
systems are missing.
So the question
becomes, what is it
that you do as an aspiring
creative person trying
to address, in that case,
it's not a social problem,
it's a particular problem of
connectivity that ended up
being insanely profitable.
But whether you're working
on a social problem
like maternal health, or you're
working on vaccine delivery,
or you're working on a get
rich quick scheme of some sort,
the point is that
you don't have access
to the supporting
infrastructure.
And I think that's an endemic
feature of every developing
country that I can
think of that I've
had the good and the
less good fortune
to be wandering around in.
So the crux of what
I argue in the book
is that in those
circumstances, it becomes--
the central task
of the entrepreneur
becomes not just to set
out to do what she set out
to do in the first
instance, but also
to compensate for
the inadequacies
around that particular time.
So I use this sort of cute
phrase in the book over
and over again because it
captures things, to me,
in a succinct fashion, that
it is not enough to create,
you also have to create
the conditions to create
in the first instance.
You have to somehow partially
or completely, for that matter,
compensate for the
inadequacies around you.
And in doing so,
typically what I
found is that those folks who
have embraced that mindset
end up creating what economists
call public goods, right?
So typically, we say
that the public goods
like basic primary
health, and primary--
and roads, and power
plants, and so on,
are the province of the state.
And the state should
provide those, and everybody
else free rides on them, and
that's the social contract
that you enter into.
That's what a political
scientist will tell you.
That's what economists
would tell you.
But the question
that I struggled with
is, what happens when
you're an aspiring
entrepreneur in such
places, and the state
is a corrupt, dysfunctional,
defunct, venal, bitter
adjective, and it's simply
not likely in your lifetime
to do what it's
supposed to be doing.
My argument is that
everybody is better off
if the individual
entrepreneur in those cases
engages in what I
sometimes referred to
as the partial private
provision of public goods.
In other words, get on with it.
Address the problem
that's actually otherwise
an endemic problem
for everybody.
In the course of it you
will create solutions
that typically other people
will then free ride on, right?
So one critique that I
get from this argument
all the time from--
What's a canonical
critic of mine?
--would be somebody
at the World Bank,
who would say that this is
a very unfair proposition
because you're putting
too much on the shoulders
of the would-be entrepreneur.
Not only do they have to
build a medical device firm,
but they have to solve all
these other issues around them,
and I agree with that charge.
Of course, it's more difficult
than building Facebook
in the Harvard dorms, but
that's neither here nor there
because my challenge
as a retort to that
is, tell me a better solution.
It's not as though
aid has worked.
It's not as though
multilateral donor programs
have worked particularly well.
Government corruption
isn't particularly
getting reduced over time.
So this is a tough proposition.
The task of the entrepreneur
in different places
around the world is
indeed more onerous
than it would be in
Cambridge, Massachusetts
or in the Bay Area.
But it remains the
most practical purpose.
Now, what the second
part of what I argue
is that in order to
be able to create
these conditions to
create, one of the things
that you have to do is
make explicit the objective
of fostering trust
in some ways when
you are surrounded
by several reasons
not to trust in some ways.
And to make that concrete,
I think what I'd like to do
is basically, take you
through one example.
The example of
microfinance just to make
it concrete from these ideas.
So I'll skip ahead
here and get to that.
I'll come back to this one.
This is one of my
favorite examples.
So do people know
what microfinance is?
Can you raise your
hand if you know?
Can you raise your hand if
you don't know what it is?
Somebody is lying.
Yeah, for sure.
Microfinance has
been-- actually,
it's as old as the hills.
It's been around forever,
in every society.
It's most popularized
by Muhammad Yunus
before he won the Nobel Prize.
And the idea is that there
is a self-help group.
There's typically
a group of women,
though doesn't have to be women.
Typically it is women in a poor,
sort of unbanked community, who
get together and essentially
traditionally would just
share their resources.
Somebody-- They would all
pool together the money
and lend it to
one woman one time
and another woman the
other time et cetera.
Organized microfinance
essentially
entails a formal
organization, which
may be a non-profit or a
for-profit organization,
coming in and saying, we will
lend you the money, right?
But we are going
to essentially--
because we have no way
to ascertain credit risk,
since there's no information
sources on whether lady
one or lady six is the right
person to receive the credit
or is credit worthy, we are
going to free ride on the fact
that you all know each other,
and you will police each other.
In other words, each loan
that we make to people
is a joint liability loan.
Everybody is collectively
responsible for the payback
of the loan.
So economists typically
break this down
and say in any lending
activity, there
is a information problem and
then a reassurance problem.
The information
problem is that I
don't know who's worth lending
to and who's a deadbeat.
And the reassurance problem
is that once I make that loan,
am I going to be sure that
she's going to pay me back?
In both cases, you're using
the existing social structure
of the village to solve those
problems because you don't have
any infrastructure to do it.
A microfinance firm
is just a company
that recognizes that
it can free ride
on the social structure of the
village to make these loans
and repossess them.
So now what happens-- this is
probably the world's biggest
microfinance firm, and I
sit on the board of this,
and I've shepherded it
through for the last 10, 15
years, 10 years.
But the interesting
episode here is
that around 2010 about 30%
of the loans that we made
through this company
to poor women
were in the state of
Andhra Pradesh in India
which is one of the southern
states in the country.
And the official interest rates
that we were charging women
at the time was around 25%,
28%, for a simple loan, which
turns out to be extremely
low when you compare globally
to interest rates
on these loans.
Now, the government was
providing loans ostensibly
at 5%, but in practice
what would happen
is that women would
always gravitate to us
and firms that were run like
ours, very systematically,
because they knew that they
could count on us to be there.
They knew that they could count
on us to behave ethically.
Not engage in unscrupulous
practices, et cetera.
Whereas with a
government official
there was a lot of corruption.
There were aside payments.
There was abuse of all
sorts of the women,
and so they stayed away.
Now, this company decided
that it would go public.
It was founded by a gentleman
named Vikram Akula who
was a political scientist, PhD
from the University of Chicago,
a very accomplished guy, and
built it up into this behemoth,
and decided he would
take it public.
In the course of it, it
was sort of India's biggest
public listing in a long time.
So it ended up being
worth billions of dollars.
So this guy got extremely rich.
This was like sticking
a finger in the eye
of the local corrupt
politician who
saw that he was being out
competed on the ground
since the women
wouldn't come to him.
And on top of that, this
upstart got really rich.
I want to make it clear
that I didn't get very rich.
I was just doing service.
But Vikram did get
extremely rich.
And so what the government did
when they realized that they
were not getting rich was,
exactly as elections are often
done in poor countries,
they got an army of Jeeps,
sat on the Jeeps with
the loudspeakers,
and started a campaign saying
all these microfinance firms
are guilty of
unscrupulous behavior.
You don't need to pay them
back because we are going
to be banning them anyway.
Now, the way
microfinance works is
if you're not paid
back on a weekly basis
or a bi-weekly basis your
balance sheet quickly
shrinks to zero, and you
can go bankrupt right away.
So despite having a
track record of seven,
eight years of
incredible service
to the women of this
particular state,
once the politicians
got into high gear
and spread this message that
there was really no need
to repay because we were
going to be banned anyway,
the women stopped repaying.
Not just us, but all
organized microfinance.
And within the
space of two months,
most organized
microfinance was driven
to the verge of bankruptcy.
Now, of course, the
politicians had no interest
in actually compensating for
driving out all these firms,
so credit dried down, suicide
rates went up through the roof
because women were driven
back to the money lenders
and so on and so forth.
So this is the crisis.
I'm sorry for the long preamble
that I had to say what it was
and how we got to
this situation.
There were arrest warrants
out for me, for the chairman,
for the CEO, for all the loan
officers, a bunch of our loan
officers got thrown into,
yes, got thrown into jail.
We had spouses and
elderly parents dying.
And so this is the situation I
found myself in as the person
having to deal with this.
You don't want to be
in an Indian jail.
This is a bad situation
because there's
no mechanism to come out.
It's Kafkaesque, and I
think that might be polite.
So the social fabric
in the village
is completely devastated.
Suicide rates have gone
up, arrests and trauma.
The global media is
busy writing stories
saying this is a travesty
because they were seeing
the way that we were
actually managing,
and they realized
what was going on.
So we op-eds in the Financial
Times, Wall Street Journal,
saying, you know the
state government has
got to stop this, and
do something better.
Well, the global media is
irrelevant in a local conflict.
Nobody in the streets
of Andhra Pradesh
reads the Financial Times, the
Wall Street Journal or anything
like that.
They read the local
vernacular media,
and I must say I was
completely stymied.
I didn't realize that there
was an entire vernacular,
of course, I knew intellectually
there was a vernacular media.
I could see it, but did
you realize that this
where the conversation was
going on in the background.
And that was printing
lies and innuendo,
and it just turned
out that it was
owned by the very same
politicians who had actually
started spreading the rumors.
Every single firm
in the industry
went bankrupt, except us.
We decided that we would
somehow stick it out.
And at that point, it was
pretty clear to myself
and my colleagues that
the fabric of trust
had irreparably
frayed at this point.
And that it was so easy for
unscrupulous politicians
to essentially poke a
hole in this carefully,
carefully set up over
five, seven years
business model that we
had cultivated over time
and had taken to material
success and success
for the 50 million odd women
that we were lending money to,
and whose lives had been
literally transformed.
I am actually extremely
proud of this company.
And the amounts of lives
that I think we've touched
is really quite something.
I'm sorry.
So here is what we actually
did to sort of rebuild
trust in some sense.
And this, the journey
that I'm describing,
is 2010 to 2018 now.
It's about a eight-year
journey, right?
First, we shrunk the company
to about one-third its size.
In other words,
we had to conserve
what little money we had.
The way this works is
you have a certain amount
of working capital and
capital flow coming in.
You're lending it out in
$50, $100, $200 amounts,
so even as little as $10
to millions of women.
But if you need the money
to repay other people
and maintain the fabric
of what you've built,
you no longer have
money lend out.
So that's what I mean
by saying we shrunk.
So we went from serving
50 million women
and making these
numbers, directionally
down to say 12 million
or 13 million women.
So the firm essentially
collapsed, but it was solvent.
The entire team committed
that we would not
quit because I felt that
if any of us walked away,
that would begin.
It's difficult for me
to communicate to you
the drama of the situation
because even in my home
in Newton Mass, we were getting
threatening lawsuit letters.
My wife would get
upset at me saying why
the heck aren't you quitting?
Because you get these
big fat subpoenas saying
show up in this court
et cetera Threatening
letters, voice mails,
the whole nine yards.
And all of us, the entire
senior management, and I
recognized that for
me it was actually
a lot easier because
I could always
leave Hyderabad, the city
where this was unfolding,
and come back to my
comfortable home in Newton.
But these guys were living
it on a daily basis,
on the ground with accusations
and counter-accusations.
None of these people quit.
We repaid every single bank
from whom we had borrowed money.
So we borrowed money
from the banks,
and then we lend it
out in tiny amounts.
Every single bank,
on time, no haircuts.
In other words, a haircut just
means that you owe a bank $50
and you say, hey
listen I can't pay you,
why don't you just
accept 25 bucks?
This is what-- What is an
example of a haircut right now?
Argentina is doing to
its global debtors.
It's basically saying
I really can't pay you,
so I'll pay less.
Do you want to take
it or leave it, right?
So we said we're not
going to do that.
We immediately shut down
our business in that state
because we could see
the corruption levels.
And then we took the high
road with the regulators
and the central bank governor,
the minister of finance,
personally going to
every single person
and saying this is
what's actually happened.
In the heat of the moment,
nobody believes you.
But you simply keep repeating
it and keep doing it
and so on and so forth.
Cut a long story short, we
recovered, this is 2010,
and this is today.
This is sort of the stock price.
You can see it's essentially
back to where it was.
It's a eight-year journey to
repair the torn fabric of trust
through individual
actions, right?
Now, with the
benefit of hindsight,
right, there are a
number of things that--
I won't go into details.
There are a number of things
that we could have done back
before the crisis started
that would have strengthened
the entire industry.
It would not have benefited
us disproportionately
but would have benefited
the entire industry.
That would have reduced
the odds of something
like this happening.
I wish I had the wisdom at the
time to have recognized that.
So an example of
this would be, there
were plenty of unscrupulous
firms in the industry that
were doing things like
resorting to coercive behavior
when repossessing the loans.
So when they would go to a
self-help group like the women
that you saw and they would
say, OK, you guys pay up,
and the collective would say,
it's difficult for us to pay,
so we're not going to pay.
They would beat them up.
So there were people who
did things like that.
We knew it, or I
believe that we knew
that other people
were doing this,
and we chose to be silent.
Including me, we
choose to be silent.
We didn't do anything about it.
And that came back to haunt
us even though we were not
engaging in unethical
behavior, there
were people in the
industry who were.
And I often ask myself now,
what should we have done?
And I don't really
know the right answer.
And I'm not--
I don't have enough
hubris to think
I could have stopped
it all, but I certainly
think we could have done more.
And that created an opening for
the unscrupulous politicians
to basically say,
there plenty of people
who are beating women
up, and so, therefore,
we should shut this thing down.
And in a very, very
narrow technical sense
they were correct because there
did exist a few people who
were doing that.
And we could have stopped it.
And so there are
a series of three
or four things that at the
level of conduct and structure
of the industry, I do believe
we could have done much more.
And that's what I mean
by saying creating
the conditions to create.
So if there isn't a policing
mechanism out there--
Another example that
makes it very concrete,
if there is a woman who
is borrowing from me
and finds that she can't
pay me, if there is no check
and balance she has
a strong incentive
to go to the next
microfinance firm
and borrow from
them to pay me back.
And then to go to the third,
and the fourth, and the fifth,
and there are these
little Ponzi scheme
like entities that are set up.
The only solution to that is
to have a credit registry where
anytime you make a loan it
gets recorded centrally,
so that the next
person who comes along,
when she asks for a loan can
check against the registry
to say, has this
person taken too much
is it beyond her capacity
to repay, et cetera?
We were contributing
to the credit registry.
Again, we knew that
other people were not
contributing to the
registry, but we
didn't do anything about it.
We fixed that problem.
So what I mean is that
the credit registry
is a good concrete example.
It's an institutional
mechanism to reduce
certain forms of
behavior that compromised
the entire structure.
It has to be created, in theory,
by the regulator who was asleep
at the wheel and didn't do it.
In theory, by the
political process
which is asleep at the
wheel and didn't do it.
We are the leading firm
in the industry making hay
while the sun shines.
We can see that the
infrastructure is lacking.
What I'm saying in
this book is that it
is our responsibility,
and actually
in our self-interest in
the longer run to do it.
But at the moment,
very few people do it.
So that's really the
message of the book
is that to build
enterprises that end up
being robust and trustworthy
when you're surrounded
by mistrust, in effect.
You have to go the extra mile
to cobble this all together.
Otherwise, it's not
going to happen.
So let me just stop
with that example
because there are
plenty of others,
and I think it captures
what I wanted to say.
OK.
You can leave this
nice picture up.
[LAUGHTER]
OK.
Sure.
Yeah.
Well, thank you Tarun,
that was wonderful.
And Homi, we thank you so much
for inviting me this evening.
Sarah and your entire team.
And I want to say a few
words about the book itself.
And then make a
few observations,
and then we can have a
chat about a few things.
But you said in your
introductory remarks
that this is just sort of
a taking stock exercise.
It's much more than that.
I think-- Well, Tarun it's
an extraordinary triumph
in so far as the book is a true
integration between somebody
who is a practitioner
consistently having
a ringside seat and who thinks
about the framing of this
and the conceptual framework
which I'll come back to.
Both with an academic and a
quantitative lens in many ways,
but as a humanist, right?
And so this picture is
actually perfect when I was--
Already in my
remarks, it's up here
because to give one example
you don't explicitly say this,
but you're talking about Victor
Turner and ritual processes
when it comes to
these centers, which
is what this is called up here.
And the ways in which there are
these consistent daily rituals
of these women
around microfinance.
The calling of the
meeting, all of this,
in order to create the capacity,
as you call the capacity,
to aspire.
And how successful that is.
Along with, of course,
the group pressure
and the rest to pay back
the loans and the like.
In other words,
it's a humanist eye
that you bring to
this because it's
much more than just the
graph that you saw there
that makes all of this work.
And we can also go back to
Brazil with the Bolsa Familia
where you talk
about, where Tarun
talks about the state-run
enterprise or entrepreneurship
if you will, which
I'll come to, where
a family had been lent money.
And long story short
there's this poignant scene
where after 25 years of
investing in new food machines,
investing in all
these kinds of things,
the couple for the first
time, and at this point they
had amassed a fair
amount of wealth,
so they could have done this
before, but for the first time,
and Tarun takes you
into the restaurant,
they go out for dinner.
And somebody serves them.
And I thought that
is somebody who
has been there on the front
lines as an ethnographer
seeing all this.
So I would be, I want to
go on to sort of some more
substantive things, but I would
be remiss in not saying this
because that's what makes
this book so important.
Particularly in
light of the fact
that over in my
life at HBS, I work
on Africa, a whole
range of things,
but I teach a course
on soft skills
which is taught to all
first-year MBAs at HOBS.
It's an entire course.
And you can swing
a cat right now
and hit a book on trust, right?
You know you go
to the bookstore.
You go to Heathrow in
the business section.
And they are organizational
behavior and management folks,
and you can kind of
reduce it all down
if you read several dozen
books, which I've done thus far.
Sort of the idea that
trust is a willingness
to be vulnerable in the
management context, right?
I have different things
that I would add to that,
but overall that's the
claim that many are making
in different kinds of contexts.
And you're doing something quite
different with the word trust.
And the intervention
that you're making
is outside of that
organizational behavior
capacity, which is a huge
field right now, to really have
a book that stands on its own.
And I think that there are a few
things that strike me within,
and you went through
some of them.
The conceptual framework.
The creating the
conditions to create
I must confess when I
first read that, I thought
to myself, well, what is?
You know I kind of
had to go back and--
But really this sort
of the even the gutsy
and creative
entrepreneurs can't merely
set out to create, right?
That they must in
the developing world,
and this is what's different
between the developing world,
and I even think sort
of Walmart and 50 years
ago, that they must create
these conditions to create.
That the foremost can condition
entrepreneurs must create
is to find and cultivate
whatever it takes
to induce this trust, right?
Because that's the currency
in which they're using,
and you clearly
pointed it out here.
And obviously, you take
us across the landscape
where it's not just what
you saw, but you know the--
Adam Smith says trust
was the hidden engine
the economic progress
in Wealth of Nations.
And you point that out to us,
and so this is in some ways
it's new, and it's not new.
But you're reminding
us of something
that is quite different
in the current landscape.
Second is the trust induced
in institutional arrangements.
You've talked
about some of this.
I think the web of
interconnectedness
and the issues, the scope
and scale of the complexity
the problems that the
World Bank says, hey
and you gestured to this.
How can you possibly
lay all this
at the feet of the
individual entrepreneur?
Well, I've seen them in Africa.
You have far more experience.
My work has been there
across different parts
of the continent.
The World Bank has
failed in their mission.
It's very easy to be a purveyor
of doubt in your theory
and in your charge to
individual entrepreneurs,
but the bottom line is that
much of what they have done
has failed.
And that the individual
entrepreneurs,
say look at a place like Kenya,
and Safaricom, and M Pace,
and Equitel, the mobile banking,
the fintechs are extraordinary.
They've transformed
people's lives,
and this has been all through
entrepreneurial endeavor.
Creating, as you say,
the conditions to create.
Two quick last points,
and then some questions.
One of which is, which
you gesture to here,
but I want to make sure
that people understand
within the book, this
isn't just about a book
of individual entrepreneurs
in the agency, which
you point out.
You do talk about states
as being entrepreneurial.
And you gesture to it
one of your last points,
but when we think about Aadhaar
India, the unique idea that's
created.
This new technology is
created and rolled out,
and they signed up
190 million users,
and they're hoping that
within a year or two,
they're going to have
600 million by 2014.
Well, by January 2017 they
had 1.3 billion users,
or pardon me, 1.1
billion, 200 million short
of the entire population.
And it was run
through the state,
and so your capacity
to understand all this
without sort of using the
red Herring consistently
about state corruption
I think is important.
So couple of questions for you.
I do want to talk to
you as an historian,
but I want to ask you
first about one observation
in this book is that most
of the solutions, not all,
but most are actually low
tech at the end of the day.
You talk about milk in
China, slightly different,
but milk in India,
low tech, right?
Women's co-ops.
Dr. Shanti in NH hospital,
at the end of the day,
he's doing some pretty
fancy surgery, but some
of his solutions, daily average
accounting and the rest,
low tech.
The microfinance.
So what do you
make of this Tarun,
in terms of there is a very
much getting back to kind
of the current trope of
the moment of this kind
of new Savior mode around tech?
That tech is the silver bullet
to solve all the problems.
Forget about the
ritual processes.
Forget about the
humanist approach.
Forget about frankly,
even some of-- all of this
that you're talking about that.
That you can do all this
not necessarily trust
front and center,
but most importantly,
it's dismissive of these
low tech in a solution.
So what are your
thoughts on that?
Thanks, Cary, for the book,
for the overall comment.
So one of the questions that I'd
put on an earlier slide which
I didn't use was to what
extent is a tech solution even
necessary or sufficient to
address a particular problem?
And my short answer is that
it's neither necessary nor
sufficient.
And maybe to explain
that succinctly
I'd go back to microfinance.
The same company where I'm
still the main board member
has become incredibly techie.
In other words, we have all
sorts of biometric systems
that we use to identify people.
We all sorts of
cashless delivery sort
of like you see in East Africa.
In some cases, even
leapfrogging what's
going on in other
parts of the world.
We have all sorts of algorithms
deciding the particular route
that the lending
officer takes when
he's going to visit 10 of those
groups in a particular day.
We have algorithms that
do fraud detection to say,
how come you suddenly saw a
spike of cash sitting here,
and no cash over there?
That looks really odd.
It's not what usually happens.
So there's an endless
array of things
that somebody we have within
the company has invented,
or that I have thought of, or
somebody else has thought up,
and we've put into
it put into play.
None of it would work
without the fabric of trust
that's sitting with those
women represented there.
Who ultimately, are policing
their own immediate ambience.
So what they do is they
make sure that nobody
in their circle is allowed if
they cannot get along with her,
right?
They cannot really look her
in the eye and trust her.
Nothing about the
tech has altered that.
No attempt to bypass
this structure
with a tech solution
directly has,
to the best of my
knowledge, really works.
The only exception I can
think of in some countries
in the Western part of Latin
America are places where there
has been a migration of women
like this receiving loans
of let's call it $50-100 and
amassing a credit history with
the microfinance firms by doing
it year over year for four
or years.
And then saying, even
though I have no collateral
to reassure you when
I want to borrow
say $1,000, at least I
have a history with you.
I've borrowed five
times, and I've
repaid it, so allow me to
get away from this group,
and take bigger
individual loans.
That's worked, but
there's no tax there.
It's just building the social
capital to be able to do that.
So I use that as a way
to illustrate the answer
that it's not that tech
doesn't have a role.
In the dairy example that I
started my comments out with,
my friend Charles Chao,
who is a Chinese guy who
built a dairy company and
solved the contaminated milk
problem, at least in part,
using a very high tech
set of solutions.
It's a viable
approach, and it worked
for him and it was successful.
But then you have
examples in India
where you also have
non-contaminated milk that's
worked with a low
tech trust solution.
So that's sort of been my view.
There are some-- You know,
I'm actually currently working
with a very intriguing Peruvian
entrepreneur in Brazil.
He lives in Brazil.
Who wants to
digitize the genomes
of all species in the Amazon.
That's pretty cool.
That's why I'm working on it.
It's cool.
I know that was a really
very sophisticated response
to say, other than that
sounds pretty cool.
No, it is pretty cool
because it turns out
to be something
like 0.1 0.2 percent
of known species in the Amazon
have their genome sequenced
so far.
So what Juan Carlos
is saying is,
given the cost of sequencing
the genome, which actually
originated around
here in the Bay Area,
has fallen from
millions of dollars
to about the cheapest
right now is just $1,000.
And it will probably go
down to 100 in a few years.
And now have now
mobile devices that are
starting to sequence genomes.
Why don't we create a structure
and go and digitize everything.
And the logic there
that he is thinking of
is a pure tech solution.
He's saying that the
indigenous people of the Amazon
get ripped off every day
by global firms who go in
and look for naturally
occurring substances
and active ingredients, make
drugs, make toothpaste, sell
it, but don't pay them anything.
And there's no
mechanism that they
have to assert rights over
their patrimony in some way.
So what he's saying is if
I digitize all the genomes,
right, and start writing these
so-called smart blockchain
contracts, so that
every time you
borrow a certain natural
ingredient because I know what
it is and each
natural ingredient has
a code type attached to it.
I could actually write a
contract saying every time you
use this, you have to pay me.
And suddenly the poor
people get something for it.
And that, in turn, would
give them an incentive
to preserve the biodiversity
as opposed to slash
and burn and cultivate cocoa.
So it would also
solve, since the Amazon
the lungs of the world, it would
also solve the global warming
problem.
Literally, it would solve
the global warming problem.
So I love that project.
It's insane.
It's a pure tech solution,
and it's not going to work.
[LAUGHTER]
And the reason it's not going
to work is that it is so--
You know, the fabric
is so littered
with the carcasses of
past violations of trust
that I just know it.
So that's the argument with
Juan Carlos all the time.
It's not going to work.
I'm going to work on it with,
but it's not going to work.
So we'll see.
So there are people who are
working on pure tech solutions.
And the fashion du jour these
days is just say blockchain.
Wherever you go,
somebody says blockchain.
That's the answer to everything.
It's absolutely true.
If you are an
historian and don't
know what you're talking about,
and you are in a business
meeting, just say blockchain.
And everybody is like,
OK, she's on point.
I learned that very early
on, blockchain, you know?
[LAUGHTER]
So it's a fun project.
No, it sounds amazing.
And--
It won't work.
Even if it doesn't work, it
still sounds pretty cool.
I want to come back to
your point about tech
about being generally
necessary but not sufficient,
and move us from the
Amazon to Africa.
And to think about--
because I think you gestured
to this in a way that
was immensely humble I thought.
And not entirely accurate
in some ways, right?
Because look, this
book spans multiple
continents and does
not touch upon Africa.
At the same time, I was
today having a lunch meeting
with somebody who's starting
a series A fund for Africa,
and there is actually, when you
look at it relative to funding
in the rest, India
and elsewhere, this
is a great space
to be in right now
if you're looking to invest.
With a general understanding
of people in this landscape
that Africa's 15,
or 20 years behind
for the most part
on many things.
For all kinds of reasons.
I don't entirely
agree with that.
I think Africa is
on the forefront.
And as we know on things like
mobile banking look, hands
down, no question.
But nevertheless, there
is a lag in other areas.
So I like to talk less about
the spectacular successes there
because we--
and some of this is
selfish, everyone.
We sit and chat about a lot
of this in different ways.
What I want to talk about is
lessons that can be learned.
Africa, in some
ways, is the last one
of up the ladder
on some of this.
Lesson's that can be
learned particularly
from some of the two or
three, as I see them,
pretty big failures.
First of which is Airtel
getting into Africa, right?
Sunil Mittal, his approach
completely misunderstood
the lay of the land.
My opinion, I think you
share that in some ways.
Driving assumptions
about the assets
was this sort of idea of
price elasticity and demand
being very high.
Basically, there was just
a misread of the consumer.
And so that would
be the sort of one.
The second is even a
case from this book which
I-- if you want one of the most
inspiring cases you'll ever
read, is about Narayana
Heart Hospital.
It's just will blow you away.
At the same time, it
triggered a while back,
as we were talking about
the other day, sort
free telemedicine facilities,
and in over 50 African capital
cities and pretty
low takers on this.
Just stunning when
you think about it.
Particularly given the success
of telemedicine in India.
And then thirdly, sort of
African, not necessarily about
Indians failing in Africa, which
were the first two, but how
microfinance just has
not scaled in Africa.
So maybe we can touch upon
them in different ways.
Perhaps on the
first two because it
does get to this larger question
about the degree to which we
think across borders or
think across continents,
do shared worldviews result
from shared histories?
And that there is this
larger issue of trust.
And to what degree did they miss
the boat on this, in your view?
And in what other
ways equivalently,
can the lack of trust
from contested narratives
historically undermine
some of these enterprises?
And so when I think of
Airtel and NH Heart Hospital,
I think of missed
opportunity in leveraging
some of these shared pasts.
And I'm curious if we can sort
of tie some of these strands
together before you
open to the audience,
what are some of your
thoughts on that?
So let's just pick one of those.
Let's pick the heart
hospital since that
is my all-time favorite case.
So maybe I can say a
word or two about--
Please do, because
it is extraordinary.
- About the case.
So one of the
chapters in the book
talks about somebody who is
a very close friend of mine.
I've worked with him
for 15 years helping
him build what is today the
lowest cost tertiary care
facility in the
world in Bangalore.
And to cut a long story
short, if a basic bypass heart
surgery in Boston costs
anywhere between--
Anybody have a number?
Bypass, what does
it cost in Boston?
Shout out a number.
[INAUDIBLE]
Half a-- No, wow.
My god.
She's bankrupted
there faster than--
it costs anywhere
between $60,000
$160,000 depending
on which funny money
system you're using because
our accounting systems
all messed up too.
But it's in the tens of
thousands of dollars.
In Europe, it's probably
15, 20 thousand dollars
because of the socialized
medicine et cetera.
So in this hospital, we're
able to do it for, today, $800.
So we're talking $100,000
down to a $1,000.
it's two orders of magnitude
less which is far, far, far,
far, far and away the lowest
cost heart surgery that you
could do anywhere.
There is no compromise
in technology.
It is actually more state
of the art than Mass General
because companies die to
have the latest technology
demonstrated in its place.
The success rates are higher
than our local hospitals here,
the best places.
So it's a hands down
amazing story of how the--
As it pertains to this
book, I use the example
to show how Davy, who's in
the name of the surgeon,
had to basically
create the conditions
to create, to make this
heart hospital happen.
In other words, had to
essentially compensate
for the impossibility
of patients
coming and finding
the heart hospital.
Providing social
services to take
care of people
that weren't there,
and pioneering medical
insurance in India.
Pioneer pioneering
satellite-based telemedicine
in India for the first time.
It's not like he set out--
I remember the
early conversations
when there was
nothing on the ground,
and we were sitting because
we had a common friend,
and he said, Tarun, I want
to be insanely ambitious.
We have to--
96 percent of the world
who have heart surgery
die, and that's not
morally acceptable,
so we've got to find
a way to do this.
And we just started
with nothing.
It's not like we start
up saying that we
are going to have
to do telemedicine,
we have to do medical insurance,
but you hit the roadblock,
and you realize that this is the
next thing that has to be done.
It's that simple.
This is the next thing
that has to be done.
And you look at the
state, and you realize
the state is defunct at best.
So you end up finding
the solution to it,
and over time you
stitch it together.
One of the--
What happened over time was
that a ton of African patients
started coming to the hospital.
Those who could travel.
A ton of Iraqis from
the Iran-Iraq conflict,
not the Iran-Iraq, but
the conflict in Iraq.
People from the Middle
East, different places,
began streaming
into the hospital.
So we had the idea, why don't
we just do free telemedicine?
We made an offer through the
Indian diplomatic services
saying in every capital city--
How many African
countries are there?
54.
53.
South Sudan's 54?
So in all, it was
53 at the time,
all 53 African capitals
let's identify a hospital,
create a telemedicine
facility, pay for it,
and make it so that
anybody who wants
at least the beginnings of a
diagnosis can just walk in.
And at a particular
hour of the day,
we would staff it from
Bangalore through satellites
and provide the diagnoses.
And of course, in many cases,
there's not much we can do,
but if it turns out that
there's a patient who
can make his or her
way to Bangalore,
then we can take care of them.
Cary was alluding to my--
still my shock that hardly two
of these facilities get used.
Nobody uses them.
It just continues to be an
amazing puzzle in my mind.
I haven't had time to go
do something about it.
Yeah, and I mean, one of the
things we've been musing about,
and this is just sort of
us bantering around ideas,
is thinking about the
degrees to which--
And this gets back
to thinking about
how you're conceptualizing trust
within the entrepreneurial and
business landscape, but
for us to be thinking it
not just across space
but across time.
And the degree to which this
sort of historically embedded
webs of trust between,
in this instance India
and not all parts of Africa,
predominately Eastern
and Southern, the degrees
to which, and this
would not be the
only case, right?
If we think about both other
organizations, companies
that have sought
to come to Africa
that have not been successful.
Where they have
not leveraged what
are sort of shared worldviews.
And obviously, we
know in some instances
they're fraught, right?
If you sort of think about
Uganda and elsewhere,
this is not true in
Kenya and Tanzania.
And in fact, the role of
the South Asian population
there has been an important
one in liberation struggles.
It's the same thing
in South Africa.
And so it just strikes
me when thinking
about these sorts
of global networks
that there is a degree to
which not all companies coming
from South Asia, and I'm
using this as an example,--
Sure.
--we can think about
Oman in the East Africa
where I think the Omanis
have been far more
effective at exploiting
historical ties in East Africa
where the largest
percentage of the Omani
foreign sovereign
wealth fund is invested,
and it's small relative
to other Gulf states,
is invested in
Tanzania where they
have these historical links.
And so they figured this out.
So I guess I'm just
saying, I think
there's a lot of opportunity.
And not to sort of say
to flatten this too much,
but I say--
because obviously
there's equivalently sort
of a lack of trust because
of contested narratives.
But I think when we add
that historical layer,
I'm curious your thoughts
on the big picture?
No it's--
[INTERPOSING VOICES]
It's extremely
interesting, and I
have to confess that despite
being a self-described history
buff just by reading
habits, I have
to confess that in both
the heart hospital story
and in the mobile phone
story, even though I
was an actor in
both those episodes,
it just never occurred to
me to leverage whatever
glimmers of knowledge I had.
And I certainly had enough
to know what I didn't know.
And to go out and find
someone like yourself,
as somebody who knows about
these sometimes shared
histories and sometimes
contested histories
to be able to both watch out
for misunderstandings that you
might inadvertently trigger,
which certainly happened
in the mobile company
case, and perhaps
the shadows of those knowledge
bases would have helped
would have helped the
heart hospital figured out
a way to address this.
So when I go home today, I'll
send a couple of emails like--
Trigger that particular one off.
Well, yes and I think--
It's a fair point,
I think, yeah.
Well look, you can only
cover so much territory
I think insofar as these lessons
in these emerging markets
are so incremental.
And the ways in which the
individual entrepreneur
has to have multiple
agencies to create
these conditions to create.
I think those who are
both observing and trying
to understand and the
rest when our toolkit has
to be expansive.
And for some of us,--
I mean, that's where I think
he gets back to collaboration
and maybe it's a nice moment
to open up a collaboration
amongst us as academics to
try to get at some of this
is, I think, hugely rewarding.
Because I come at
this as somebody
who is a recovering investment
banker from 25 years ago,
but otherwise my entire
professional life
has been in academia.
Having conversations
with you who
has been so instrumental,
not just in academia,
but in the practitioner world,
but the overlay between this.
Because especially,
when we get to sort
of these global flows of
capital and networks of trust,
they're immensely difficult to
unpack and understand, I think.
So--
That's great.
Thank you.
--say history matters.
Thank you.
[LAUGHTER]
Yeah.
It definitely does.
[APPLAUSE]
Tarun, thank you.
It's always a joy sitting
and chatting with you,
but I'd like to not
be selfish and open up
the floor to some questions.
Homi?
So thank you both very much.
It's very, very interesting.
[INAUDIBLE] To the
extent to which,
as I understood it
from your talks,
trust was focused around the
entrepreneurial activities
of individuals or
entrepreneurial institutions.
It seemed to me that it
was premised on a distrust
or mistrust of government.
So I can see exactly
why that would
be the case in many places.
But I'm interested in how
these activities actually
scale up to state
building, which
I think is very important.
Because you cannot--
The well-being of countries
cannot be left either
to entrepreneurs on the one
hand or NGOs on the other.
Which is, of course,
the other side
of this entrepreneurial
activity,
a kind of Ngo activity.
So in all these
situations, how does it
contribute to state-building,
to innovative notions
of citizenship,
of civil society?
All these are the
things on which
the stability of the nation
collectively will develop.
And of course, we do see some
public-private enterprises
in the cultural industries,
museums and so on.
But I still think
that from the little
I know of Africa, a little
more I know of India,
not that much more,
state building
is what is really needed.
This is the great
crisis of trust.
The citizens not being
able to trust the state.
The police force being the
center of the lack of trust.
And you can, as an
entrepreneur with the best
will in the world, only
control so much of that.
And then your set adrift
in the overwhelming--
--ocean
--ocean--
--mistrust
--of mistrust, oligarchic,
nepotism, corruption,
you can only be
honest brokers so far.
So really I wanted to
know about the connection
between these activities,
and I threw in the NGOs
as the other scale of them, the
other side, and long-term state
building, institutional building
practices, and good practices.
So I think that's a very
legitimate and fair comment.
It's not to say that the
illustrative stories that I
picked, not all of
which are successes,
there's lots of
failures in the book
as well, it's not to say
that that's going to address
every or even most of
the problems, but I do
think I'm not--
Your comment sounded
despairing, and I'm
by nature a congenital optimist.
So let me go back to the heart
example for a second, right.
So what's happening
increasingly is
that an entrepreneur
like that has built up
an enterprise that,
to my knowledge,
has never turned a single
patient ever, ever,
ever regardless
of ability to pay,
has acquired such
a high degree of--
is trusted so much that
he has the capacity now,
or his organization
has the capacity now
to begin to influence
state policies.
For instance, on
universal health,
on basic health insurance,
and things of that nature.
Not that he's going to go and
be the state, but at least
his machinery is credible enough
that he can stare it down.
So and it yet that occurs to
me that the government of India
in its infinite
wisdom finally decided
that it was going to put
a huge so-called luxury
tax on air conditioning.
Just some bright spark
and the government
said there should be a huge
luxury tax on air conditioning
because air conditioning
is used by wealthy people,
and we don't have that many,
so we don't we just soak
the rich in some ways.
Now this-- because so much of
a hospital is air conditioned,
it was going to
completely mess up
the economics of the HVAC
systems in the hospital.
So this guy had to go and
lead all the hospital systems
to go and make a representation
to withdraw this tax agreement
and had the credibility to
be able to do it and organize
sit-ins across the
country in a very
transparent and non-violent
manner that allowed a city
decision to be removed.
Now, that's not state
building, but it's contributing
to intelligent state policy.
And my experience
Homi, in all this,
is that even for the
governments that I characterize
as generally corrupt, and
certainly the Andhra Pradesh
government has to be right
up there as witnessed
in the microfinance
crisis, most governments
are filled with ordinary
people trying to ordinary doing
things, and a perfectly decent.
So I conceptualize the problem
as once you have something
that's working, can you find
the right set of partners
to help you to
take that to scale?
That's how I think
about it anyway.
Not that it's the not that
it's the solution, but I say,
it's a start.
And oh by the way,
what's a better solution?
That's fair.
I'm just thinking about how
the state can structure.
No, it's a very good--
[INAUDIBLE] The fact is that
more [INAUDIBLE] government--
Yeah.
--bureaucrats [INAUDIBLE]
In my experiences in India,
you are absolutely right.
Many of these
secretaries of ministries
are supremely [INAUDIBLE]
Of course, yeah.
Good, highly [INAUDIBLE]
Yeah.
Where they can, and I'm
sure that's true in Africa
too, where they can exclude--
Yeah.
--is the way they
are [INAUDIBLE]
by the political elites.
Or, just pointing
fingers at myself,
as I said in the
microfinance case,
I individually had the
capacity to do things
that I think would have
stopped that distress
with the benefit of hindsight.
Similarly, I think these
well-meaning nice bureaucrats,
I do believe in most
cases have the capacity
to do a lot more than they do.
But they don't because we all
get lulled into complacency.
That's just my feeling anyway.
I just also want to--
if it's OK, test
an idea too based
on the situation in Africa.
And I just have a
couple observations.
I think first, there
is, whether I'm
in Nigeria, or Kenya,
or South Africa,
there is a discounting
for this already.
Complete discounting.
And so, therefore, the
notion of a workaround
is just it's fully understood.
As opposed to, I think, the
crisis of trust in states
is a very Western
phenomenon in terms
of how it's impacting business
ways that at least, again,
my observation, is that take
an example Nigeria where yes
at the highest levels all
the things you described.
But by and large,
a few things one,
most who say middle-level
civil servants
are as we describe
here, but yet they
have to keep their jobs from
government to government.
And so, therefore, they're not
going to be risk-taking when
deals come in that
they frankly don't--
like say blockchain,
and you're going
to watch eyes roll back, right?
But in all seriousness, when
sort of these big PE guys
come in to do sort of
deals around telecom,
or major power plants, or
whatever the case may be,
they're incredibly complicated
in terms of the structure.
There's no capacity within this.
So this sort of educating your
middle-level civil servant
to get them to the point
that you need them.
So that you are creating
as the entrepreneur
the infrastructure of the
state is not created, right?
And so that's where
people's heads are at.
As opposed to how we're
going to solve the government
problem of state governance
because it's completely off
the table, and not
entirely, but somewhat.
Just a final point
with that, there's
the understanding, getting back
to Tarun's genius in this book,
of the value of trust
and the investment that
is made in social capital.
And so, therefore,
business days go
on for 14 hours, half
of which are spent
socializing in somebody's home.
All the time.
And so, therefore, this concept
of the creation this culture
of trust and social capital
in Western countries,
particularly in the
US, is something that
has been eroding dramatically.
And so I think--
What I think about
50 years from now
is sort of recreating what
Walmart replaced is actually
important because
these networks of trust
and the cultural conditions of
creating social capital are,
along with a crisis of
the state in the West,
are huge issues that
are simply not there
in places like Nigeria,
or India, or elsewhere.
Anyway, I've gone on too long.
I was just going to say in
response to Homi's comment,
that it seems to
me that thinking
about the impact of
the colonial state
on eroding ideals of
trust in the state--
Yes.
--it's a good topic
for consideration.
But I had a broader
question about what we
mean when we talk about trust.
So I admire the way
that people in the more
quantitative social
sciences can actually
define their terms quite
nicely by pointing to numbers
among other things, and I know
that in a business context
you can really measure
trust because it's
how willing are people to
invest in things, right?
You can measure the effects
of trust, not trust.
Yes.
Yes.
That's great that
one can do that,
but my question is how
does that form of trust
correlate to other
kinds of trust?
And I just wanted to invite your
reflections on, for example,
these women obviously
have some sort of trust
amongst themselves.
So I'm just wondering how as
somebody working in the realm
that you work in you think
about what trust means
as measured by the tools
that you use in comparison
to the ways that we might think
about trust existing or not
existing, being built
or not being built,
in other kinds of realms of
life and human relations?
I mean actually, I
mean, my impression
is that, conceptually,
it doesn't
seem to be that distinct.
I think that actually apropos of
the preamble to your question,
I think it's almost
impossible to measure trust.
You can measure the effects
of it in different ways,
and even that would be a
contested measurement exercise.
In fact, there are
social scientists,
I'm just thinking of
a couple of economists
University of Chicago who
publish all these papers that
are technically very adept
and purport to measure
some consequence of trust.
For instance,
comparing populations
from Northern Italy and Southern
Italy and saying this part
is less trusting and that part
is more trusting and so on.
At the end of the day, I
don't believe any of it
because a measurement exercise
is so riddled with assumptions.
So that's the first
thing I would say
is that it's a non-trivial
exercise, and none of it
actually purports
to measure trust.
In the same way that I think an
attempt to measure trust here
would be reduced to
some sort of, dare
I say it for fear of offending
some of my colleagues,
trivial survey type exercise.
How many times have
you met so-and-so?
Do you really trust them?
Would you share
your goat with them?
Or whatever your proxy is
for some measure of trust.
So I'm very skeptical about the
measurement exercise of trust.
I'm more sanguine
about the measurement
of the effects of
trust, and even that's
highly contested in my view.
And I don't think there's
any conceptual difference
between measuring
this kind of trust
and the corporate kind
of trust and so on.
Apropos the previous
conversation
of trusting the
state and so on, I
do think that's where your,
and that's what [? Miah ?] was
saying also, the colonial
heritage and the distrust that
has been left behind, that seems
like a fascinating topic that
just completely passed me
over when I was thinking
about this book in some ways.
It's something to come back to.
That's the next book.
[LAUGHTER]
I also think I would add
to the degree to which I
think the quantitative
side is absolutely right.
But what has struck
me, and it is maybe
because I really do come at
sort of-- even my engagements
with African businessmen
as the ethnographer,
and I sort of take copious
notes, and I go back,
and there's no science to this,
but the qualitative discussion
on it for all them, whether
they call it trust or set
social capital, that's front
brain for every single one
of them.
And I find the-- and I think
it's-- that there's all sorts
of things that I have sort
of spinning to my head,
and then in our conversations
together sort of bring them
to the forefront, about the
role of this in facilitating
the creation of all sorts of
things to make people's lives
better that are
not state related.
Because of the
inheritance of the past.
And the degree that which
social capital really
still matters in these
areas of the world.
And which it simply--
it does here but
in different ways.
I was going to say in
different ways, and it's far--
it's just different, right?
And so again, something
to be explored.
[INAUDIBLE] question/comments.
I was wondering when you were
discussing-- because you were
discussing in a
very broad sense,
you're discussing bringing
the example of Facebook.
I was wondering if you take
into account the fact that we're
privileged, race and ethnicity,
gender, that's something that's
very important.
I don't think that--
well, maybe, like I said,
I haven't read your book,
so I'm not sure.
And the other thing is my
research has been largely
focused on context
where the social fabric
or social solidarity have been
either weakened or destroyed,
and where it actually
fostered entrepreneurship
among young people.
And we can take
the case of Brazil,
the largest pool
of entrepreneurs
are actually black women,
and they're largely
excluded, socio,
economically, politically.
And as the government
actually goes worse and worse
with Bolsanaro
almost being elected,
it has pushed more black
women to be entrepreneurs.
So it actually proves
that the missed
the mistrust towards
the state has
pushed for
entrepreneurship because
of the source of survival.
So I actually found
the opposite to true.
So look at it as a section
of social solidarity,
entrepreneurship, and exclusion.
And so I would you
to discuss that
because you up some
examples, but I don't think--
You brought up the
example Bolsa Familia,
and I think that has
actually negative impact
on entrepreneurship.
And poor people are still
poor after many years.
Yeah.
I'm completely against it
So I'd like to have your--
Yeah, sure.
No, I think it's
reasonable comment.
Actually, the example of
Bolsa Familia in the book
is a negative example
exactly as you--
it's not a positive example.
I'm comparing it with a
social program in India that
has achieved much
more scale, and trying
to reflect in that chapter
on why Bolsa Familia had
some effect, but
certainly didn't
trigger entrepreneurship.
Perhaps for the same reason
that you're thinking about.
So leave that aside.
I think your broader
point of sort
of privilege and marginalization
in different senses
comes through in a couple
of stories in the book,
but I have to admit is
not a central aspect
of the stories in this book.
Primarily, as I
said before, this
is a taking stock exercise.
It's people that I happen
to be involved with.
But for sure, I mean
sometimes it's race.
In India, it would be caste.
Certainly, gender issues
in different ways.
Different communities have
been discriminated against.
All of that I think
meaningfully affects the extent
to which you can rely on
supporting structures to propel
yourself forward, right?
As a prosaic
example, you might be
part of a community that has
its own substitutes for missing
banking relationships,
but that's only
accessible to people
in their community,
so that positions
you very differently.
So I acknowledge
almost everything
that you said sounds
correct to me.
The one last thing
about the incidence
of entrepreneurship
among black women
that you said, I'm not
aware of those statistics,
one thing I would say
is that there should
be a distinction between--
I don't know what
the right term would
be, a coerced entrepreneurship
in some ways, which is you
don't get a job, and
there's nothing to do,
so you are forced into taking
some risk to fend for yourself.
Versus the sorts
of stories that I'm
trying to go after here which
is, how do you go from things
that are locally
successful, right,
which you might have been forced
into by distress in some ways
to creating impact at scale.
So almost all the
stories in this
are stories is not of individual
mom and pop entrepreneurs,
they are stories
of people who have
started that way have
affected tens of millions
of people at least.
And so it's a
really it's a story
of how to go from a localized
success to large-scale effect
on some social aspect.
On some aspect of society.
That's where I think
you have to begin
to cultivate these, what
I'm trying to argue,
is the cultivation of trust
in addition to solving
your particular problem.
I think it's--
other questions, no?
So I think in some ways
it's a wonderful point
to end on terror
and in terms of sort
of bringing us full circle
about the ways in which it's
not just about
individual agency,
but how you
rightfully point out,
the ringside seat to how this is
taken to scale and the effects
that these individuals
have ultimately
had on tens of millions.
And I think one of
the final points
I'd like to make is the
degree to which I am struck
by your book and your own
work of how on the one hand,
you have an eye
of somebody who is
the entrepreneur
and the businessman,
but who is driven by the
question about poverty
alleviation and making
people's lives better.
And I think that's
the other point that
underscores each and every
case study in this book,
and each and every company
with what you've been working.
So I think on that
score it's academic,
it's practitioner, and somebody
who really seems to me,
gets out of bed in the
morning with the idea
of how can we think
about business in ways
that can make
people's lives better
in the most genuine sense.
And so I ask everybody
to applaud Tarun,
this incredible contribution.
Thank you very much.
Thank you.
[APPLAUSE]
