‘India needs 10 million entrepreneurs solving problems of a billion people’

In America, when Gururaj Deshpande speaks on entrepreneurship, not only does the President himself listen, it even becomes law sometimes, as did the JOBS Act. But in India, Desh, as he is popularly known, is on a different mission. He listens intently, looking for people with ideas to solve Indian problems and to provide them a sandbox to test them. That’s the idea behind the Deshpande Foundation’s Development Dialogue, set for its eighth edition on February 6-7, at Huballi, his hometown, Desh tells S. Raghotham in an interview. Excerpts:

How do you view the start-up scene in India from your MIT/Silicon Valley vantage point Silicon Valley has a lot of focus on software, but it is branching off into other areas, like what Tesla is doing. You need that diversity in entrepreneurship. The world needs 75 million entrepreneurs, India needs 10 million, and we need them in lots of different sectors.

That’s why, Indian entrepreneurs should not think narrowly just in terms of hardware, software. They should really think, how do we use all these technologies to solve problems in India. In doing so, if you go to the very bottom of the pyramid, then it becomes a social enterprise. But there are more than 300 million people who are capable of paying, and so you can start a lot of companies in education, healthcare, logistics. I hope people will experiment with lots of different ideas as opposed to just sort of doing IT.

But there are no real problem-solvers. All the start-up noise in India, luring all the great brains from the IITs, seems to be about creating one more e-commerce site or app. Well, I am in Boston. And MIT here distinguishes itself in that sense. You can either solve a problem, or you can make things, say buying and selling, more efficient. You need people to generate more energy, more food, generate new materials, fresh air, fresh water. Those are all real problems. Not that IT is not a real problem, but you need the real economy where you are creating things, and you need the IT economy to make the real economy more efficient.

There's innovation happening on both sides. If you look at the innovation happening in materials science, it's pretty massive. Just like IT is impacting e-commerce, supply chain, etc., over the next 5-10 years, you will see a lot of the materials science and life sciences starting to impact a lot of things. These are all platform technologies that people can use and create a lot of new businesses. People from the IITs, IISc, people with good education and brains must get into solving real problems.

What’s the Huballi Development Dialogue What do you hope to achieve there Our philosophy behind the Development Dialogue is very simple: There are three types of people in the world. Some people are oblivious to everything, some people see a problem but do nothing, some people see a problem and get all excited about it. And the only difference between a vibrant community and an impoverished one is the ratio of these people.

In Silicon Valley, entrepreneurship is so vibrant because everybody wants to solve a problem. And because there are so many people doing that, if there's an obvious problem that needs to be solved, it will get solved. Whereas in an impoverished community, the problems become chronic, they get deadlocked, and people don't see a way to solve them. Then they feel victimised and start complaining about it.

So, the only way you can fix impoverished communities is to move people from complaining to actually getting excited about problem solving. So, that's what the Sandbox, the key activity during the Development Dialogue, is all about.

So, instead of going to the area and saying, "Oh, let me do a top-down study, and tell you what exactly is important for you, and let me tell you what the solution is", this is really getting people excited within the community, within the sandbox to start solving problems. But obviously, they are not fully capable of solving their own problems. So, first is to get them excited, give them a taste of what it is like to solve a problem, and then you give them a little bit of financial help, innovation and management help and that kind of stuff.

So, the sandbox is really a sort of lab for people to test their ideas, and then if something works, then you build channels to distribute the solution widely. The theme for the conference this year is "innovate globally, execute locally". So, we will also look at how we can duplicate across different parts of the world solutions that work. That’s the Development Dialogue conversation this year.

You have picked one particular place – Huballi – and you are trying to solve a lot of problems there. Why not do it the other way – pick one big problem and solve it in many different places That's the approach that a lot of philanthropists have taken in the past, that's the approach the government takes, where they come in and say, this is the most important problem, this is the solution. As soon as you do that, I find, people go, “Hmmm..ok, let’s see you do it”. Then, when you present the solution, they go, “It’s good, but not good enough”. The problem is, they don't own the solution.

We are saying, I don't care what problem you want to solve -- and if you don't want to solve a problem, that's also fine -- but if you want to, tell me, where's your passion. So, slowly, I want them to own the solution. And then, when I say, “hey, that's not good enough”, they say, "no, no, no. It's pretty good. Let me tell you why". Ownership of the solution is important. The key is their wanting to solve the problem. Nobody is pushing them to. That's the new angle here in the social innovation sandbox.

There is a lot of good stuff happening in Huballi and Belagavi. Aerospace companies, networking gear makers, etc. How do you see the place shaping up Let me put it this way: Of the 7 billion people on the planet, there are two billion on the top and five billion at the bottom. In the last 50 years, the global economy has been driven by the two billion, but that market is saturating. In the next 50 years, it will be driven by the next five billion. Of that, a billion people are right here in India, and in places like Huballi, Dharwad. So, to me, when we talk about Make in India, there are two important questions to be asked: who do you make for, and what do you make. I am hoping that in places like Huballi, Dharwad, Belagavi – because those people live right there, they have access to customers, they know their problems, their relevance -- entrepreneurs will come up with new solutions for those people. I am hoping they will combine the technology, the new practices, innovation, etc., to solve the problems of those billion people. And if they actually solve problems and build companies, those companies can export to the other four billion people in the wor ld.

You were a key member of President Barack Obama’s innovation council. What did you recommend to him How is the US faring on innovation The US has always been very good at innovation and entrepreneurship, and way ahead of competition. But now, it's a question of necessity. New jobs are created by young companies, jobs are lost by the old companies, bigger companies. So, the only way job creation is going to happen is by boosting innovation. That's why they set up this committee.

Actually, there are two parts to boosting job creation: one is start-ups, encouraging new companies to come up; the second is, speed-ups, helping companies that are showing promise grow faster. Speed-ups is also very important, not just start-ups.

So, the question was, how do you do start-ups and speed-ups To do that, you need four things -- you need entrepreneurs, you need ideas, you need mentors and you need access to capital. We came up with policies for all four.

Access to capital, in fact, I wrote the recommendations, to which both Republicans and Democrats agreed and which became the Jump-start Our Business Start-ups or JOBS Act, essentially a law to encourage funding of small businesses by easing securities regulations on these businesses.

The Sarbanes-Oxley Act of 2002 had become very cumbersome, so we sort of lessened the regulations on new companies. New companies don't have to be compliant with Sarbanes-Oxley and that kind of stuff. So, reduced the regulatory burden. And then, there is crowdsourcing for capital, that got approved in the JOBS Act and recently, SEC eased its regulations. There were also some recommendations for tax concessions for start-ups and so on. So, access to capital was one big part.In terms of ideas, US taxpayers spend about $150 billion a year on research, because that’s what creates new ideas. We wanted that $150 billion to have more impact, as opposed to big ideas just staying in the lab. In some ways, the Deshpande Center at MIT was clearly focused on that. A lot of the practices that came out of that Center actually became a part of the National Science Foundation, National Institute of Health and other government agencies, where you connect ideas to relevance to have a bigger impact. So, they have thrown up lot of new programmes to turn ideas into reality.

Basically, new knowledge transfer networks Yes. The old practice was, you came up with the whole idea, and then the best among them got a patent, and then the technology licensing office would try to peddle it. Like the CSIR in India. That was the way engineering was 50 years ago. So the big part of the Deshpande Center at MIT was to change that whole practice to say, instead of coming up with the whole idea and then looking for an application, if you want impact, get connected to the marketplace as you bake the idea.

Then you will have a natural pull in the market because it's directed into some burning problem in the world and it’s more likely that it will lead to something. So, that was on ideas.

For promoting entrepreneurship, we did a programme called Start-Up America, which was more like doing a tour celebrating entrepreneurship and all that kind of stuff, inviting entrepreneurs to the White House...

Do you need to do that in America Oh yes, absolutely! Because we need entrepreneurship to happen in a bigger way. We create roughly four million jobs with new companies, we have to start creating eight million, perhaps as many as 20 million, jobs a year. So, we need more and more of it.

And then, mentors. We launched a programme called the Innovation Corps. There was a thing called the AmeriCorps, wherein 20-year-olds, after they graduate, give a year of their lives to serve a social cause. Innovation Corps is more experienced people, VCs, entrepreneurs, mentoring as a part of their national service. They help other entrepreneurs become successful. Fortunately, the US has a lot of successful entrepreneurs. So, that worked out to be a good programme. So, it's really bringing those core elements together -- access to capital, entrepreneurs, mentors and ideas.

So, how does the Start-Up India programme measure up I think, Digital India, Make in India, Start-Up India are all good programmes. I just hope that they don't look back at China and Taiwan, and then just look at Make in India as just doing a lot of these PCBs and manufacturing and that kind of stuff. That was a game that was good 35 years ago. Now, I am hoping they will redefine what Make in India -- we need some manufacturing capabilities, of course -- but we also need this new design capabilities, coming up with products, this new entrepreneurship, so we can sort of combine all the three -- Digital India, Start-Up India, Make in India -- and start coming up with solutions for our billion people. You know, that's what excites me.

Do you see that happening, because all the brouhaha about Start-up India seemed to be about tax concessions I think, in terms of easing regulations PM Modi -- I don't know if he publicly said that -- but his idea of eliminating one regulation every day, I like that idea. That can be a lot of help. We tie ourselves too much. Just untangling ourselves from a lot of this regulatory thing is good.

Secondly, I hope the government doesn’t get involved in picking winners and losers. That was a big part of the recommendations we made in the US. Government officials, universities, whenever they think they need to promote entrepreneurship, they make that mistake.

The government should just reduce friction for entrepreneurs – even that, not eliminate all friction – and letting a lot of them play the game.