At a time when global technology behemoths such as Google, Facebook and Amazon are increasingly making long-term bets to serve India’s underserved, their Indian counterparts are unwilling to take a similar view due to lack of immediate returns. AMIT CHANDRA, Managing Director at Bain Capital Private Equity, in an interview with Alnoor Peermohamed says that Indian companies and entrepreneurs should not miss the opportunity to solve problems of the next billion even if they don’t make as much money when they serve the top and middle of the pyramid. Edited excerpts:
You say that there’s no lack of money to be invested in the social sector in India, but a lack of systematic problem solving that we usually see in for-profit firms. Can you explain that?
I personally feel that funding is less of an issue. The issue actually has been more about the inability of people to imagine what the problem is. Often it has been the inability of the right people to think about solving a problem, and to put together an organisation behind them or a combination of the two that has resulted in a lack of funding. We’ve seen that when folks come up with solutions which are impactful and bring together teams which are credible, funding does appear, whether it is from philanthropic sources, CSR or from the government.
Why do you think it has been hard for people to find the right problems to solve? A billion Indians need clean drinking water, that’s not a very hard problem to identify, though it may be very hard to solve.
In my mind, there are some problems which are in the domain of the government because markets cannot solve them. So to expect the market to intervene and solve everything is irrational. The government has to step in. However, where I think the role of philanthropy can be very relevant is in demonstrating what credible solutions are. What we need is people who are both wealth creators as well as exceptional thinkers to step up and not just be the armchair critics of governments.
Have there been any instances of philanthropy showing the government the right way?
I think often we’ve not had that really happened in India and that’s been part of the problem. In some cases, we’ve not had people really think about the bottom of the pyramid opportunities in a credible way. Microfinance is an example of a success — the cost of capital and availability of credit issue has been addressed to a large extent by the explosion of microfinance. There are a lot of areas where the markets have simply failed to provide credible solutions. People need to think about solving the problems of people at the bottom of the pyramid in a more credible way. Maybe they don’t make as big profits as they would serving the middle or the top of the pyramid, but they still make decent money.
Global technology firms like Google and Facebook are beginning to focus on the bottom of the pyramid. They obviously see something there and these are companies that have to make huge profits. So one can argue that it can be a lucrative market?
People with a long-term orientation will serve the bottom of the pyramid very differently and these are the companies that take a very different view on this. They’re deep-pocketed and they take a ten, twenty years view on a market and go around serving it. There are very few groups and entrepreneurs in India that have that ability to do that. In some cases, folks like Tata and Reliance have followed that approach saying that they will take a long-term view and go after things which will serve underserved customers, even if they don’t make money for the next ten years.
If we look at global universities, they are working on solutions for some of the problems that are affecting countries like India. Do you think India will lose an opportunity if we don’t invest in finding solutions for our own problems?
In my view, we need more people to work on addressing some of these problems. If Indian institutions are not going to do it, then global institutions working on these solutions is great. But there’s a very pressing need for Indian institutions to orient themselves to solving problems that impact the Indian societyThe IITs and IIMs must choose to engage with Indian society at a much deeper level and with a greater sense of urgency. I think this is imperative.