Friday, June 28, 2013

Prof. Muhammad Yunus: The Power of the Simple & The Logic of a Social Business

I had interviewed a well-known Venture Capitalist who argued that all good businesses are social businesses too - since they create new jobs & wealth, pay taxes, etc. Though I had tracked the debate around micro finance (the Grameen vs SKS way), I remained convinced that the split between "for profit" and "social ventures" was an artificial one. Until I came across the "Story of Khan Academy" (in which founder Salman Khan makes it clear that there is no revenue model to the venture and it relies on grants from folks like Bill Gates and others).Now, via his recent talk at the LSE, I learnt from the original "Social Businessman" - Prof. Muhammad Yunus - the fundamentals of his Simple but undeniably Powerful approach. By the way, he does not like depending on grants (since such ventures are not "self sustaining") and insists on creating a "businesses" (which covers costs) but just not something that shareholders take money out from).

Some amazing vignettes from the speech:
  • How he told unemployed Bangladeshi youth that they were "privileged folks"! That they need to be job creators not job seekers.
  • The importance of creativity and imagination: Like Science Fiction precedes Science, we need "social fiction" to precede society. Example: Think of a world when there is no Poverty and you need to visit a "Poverty Museum" to understand what it was about (like we do for Dinosaurs)!
  • Unemployment is artificial: "Have you ever seen an unemployed animal? If you have, it's most probably owned by a Human!"
  • His views on why Poverty and Unemployment are not created by People, but Systems (institutions, policies, etc) that are wrongly designed. "Look at the banks! Even 2/3rds of the world's population does not have access to banking system. Credit is only for the privileged")
  • "If you introduce me as a 'A Banker to the Poor', when someone from a large Bank comes over, would the legitimate way to introduce him not be 'A Banker to the Rich?' If he's just a Banker - and not a Banker to the Rich - then I just look like a funny guy who lends to poor people! But, actually he's the funny guy - who lends money to people who already have lots of it!!"
  • "Law creates the mould and the mould creates the shape." We need a new law that governs banking for the poor (in each country) to shape the kind of institutions we need.. That will legitimize our business  - like in Bangladesh where the law allows us to accept deposits and therefore, we do not have to kowtow to the diktats of any external investors.
  • Grameen's Social Business partnerships with MNCs like Danone, Veolia and Adidas
  • His response to journalists who asked him: "Isn't Danone using you?": "Oh God!, I didn't know that. I thought I was using them."
  • Microlending in New York (at 15% declining interest rates)
  • His Social Fund in Haiti and solution to the garment industry tragedy in Bangladesh 

The Audio (podcast) version can be downloaded from here

Sunday, June 16, 2013

"We have more lawyers than you have employees"

Finally, a story about the advantage of being a Large Company. Take that, Clayton Christensen!

From a podcast interview with Jay Shapiro, founder of an Singapore-based online ad agency called Blue:
Jay: We were Blue Sphere Interactive and around, I guess 2001, EDS, Ross Perot's company, decided they really wanted to get into the internet...And sure enough a couple of months later EDS launched this small start-up spinoff with 2,700 employees called Blue Sphere. And they were marketing to HP, we were doing HP. So I sent them a lawyer's letter saying please cease and desist, you're causing confusion in the market. We're Blue Sphere, we had trademarked the name already and everything. And they sent us back this fantastic lawyer's letter. I still have it. It said thank you for letting us know. Please be advised we have more lawyers than you have employees. We suggest you change your name.

Andrew: Is that really what they said?

Jay: Yes. They actually put it in a letter. I cannot believe it. And so we became Blue, which is a much better name anyhow. So that's how the venture was born.

Andrew: Oh, what a great letter to send out. It's ballsy, and it's painful, and it's wrong, and it's great.