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How GrameenPhone Was Created

Iqbal Quadir, founder of GrameenPhone and the founder and director emeritus of the Legatum Center for Development and Entrepreneurship at MIT, shared how Grameenphone was created and what it takes to make something of consequence. The story is an excerpt from this interview here.

The journey

I came from Bangladesh, from a relatively smaller town called Jessore. I grew up there and went to a boarding school inside Bangladesh. I was somewhat of an urban kid. But in 1971, when there was a war in the country, my family went to the rural area and I experienced the rural conditions in Bangladesh that year. My friends were often children of peasants and other small farmers. That had always had an impact on me, so I talk about that.

My friends were often children of peasants and other small farmers. That had always had an impact on me, so I talk about that.

I guess I was an entrepreneur. My father died when I was 14 years old, and I somehow aspired to get a good education. My mother had provided some funds, but I managed to get to the U.S. with some scholarships. Eventually, I got almost a full scholarship, and so that is how. I simply tried myself.

My mother had provided some funds, but I managed to get to the U.S. with some scholarships. Eventually, I got almost a full scholarship, and so that is how. I simply tried myself.

How Grameenphone came into being

GrameenPhone is the largest company in Bangladesh. It was really for four or five years I tried to convince people that this is a good idea, it is something to be pursued. But I think if we want to go back to its origin, it’s good you asked me about my personal origin. Those impacts had certain germ of thoughts that eventually gave rise to GrameenPhone.

Two really important ideas have stuck me into doing that. One is that the economic progress does not necessarily come from pouring capital into it, but rather people becoming more efficient in managing their tasks. It’s a question of improvements or skills. But also how, in a sense, economic progress can come out of thin air.

For instance, I was actually attracted to Adam Smith because he mentioned Bengal, which is Bangladesh, that is how I was originally drawn to it. He said in antiquity, three places had good wealth: ancient Egypt, Bengal and eastern China. He attributed those things to inland navigation, and his point is that people could exchange through inland navigation, specialize in exchange and divide the division of labor, and through that wealth is created. Through that, there was what he called “opulence” in antiquity.

I became a fan of Adam Smith. What is interesting is that many good things come out of the division of labor, including inclusivity, because if I want to specialize in something, I have to give up something else to you.
Separately, I had another important thing I observed. When I was an undergraduate, I was part of a college team that decided on buying a $3 million computer — one big mainframe that took a whole roomful of machinery.

When I was doing my graduate studies here at Wharton, we learned all sorts of applications for computers. But the key point is that there is this Moore’s Law that says processing power is getting squeezed more and more into the same chips, which means the prices of these processing powers is declining rapidly, which means that these machines are going to countries that do not have very much capital.

So I actually tried, in the middle of the 1980s, to create a Bengali word processor. But we realized that the masses couldn’t use it because most people do not know how to read or write. But an event took place in my life in 1993, and by this time I had tried to be a budding investment banker.

I was working in a small firm that had just some rudimentary networks, so we didn’t have floppy discs and cumbersome activities. One time it broke down, and I was waiting for somebody to come and fix it. That reminded me of a day in 1971, 22 years earlier, when my mother sent me to get some medicine from this rural setting.

I was from a middle-class family, my father was a lawyer, but in this setting, I walked 10 kilometers to get this medicine. And when I went there, the medicine man wasn’t there. I walked all afternoon back.

I remembered that on productive days, sitting in New York while waiting for someone to come and fix my network, and kind of said, networks help, so if you are connected you can get things done. If you don’t get connected, then you don’t get things done. And I realized two new things, which is that microchips are getting squeezed into phones in the early ’90s as they were becoming digital phones.

Before that, cellular phones were analog phones. I also realized a powerful point from Adam Smith, that there were many things that come out of the division of labor, and division of labor gives rise to productivity. But he said the extent of the market tells you how far you would be dividing.

Let’s say I start focusing on fishing, but I will stop there and not necessarily go any further in fishing only salmon if the market is small. If the market is bigger and bigger, then I can specialize in narrower and narrower.
The point is, the ways to connect determine how large the market will be and how far the division of labor will advance. All of this made sense to me, so ultimately I realized that if Moore’s Law is bringing down the price of connectivity, connectivity would be a profound force in transforming these countries.

I became so convinced of this because of these insights into these other people. I am basically stealing their ideas. I basically said, hey I have to stay put on this. So I stayed for five or six years, convincing various parties to come together and create this company. I jokingly say that is how I lost my hair.

Read our collection of coverage on Grameenphone here.

Ayrin Saleha Ria works at Future Startup as a full-time Research Associate. She has a background in Applied Sociology. Before joining the FS team, she worked and volunteered with a number of social organizations. As someone who comes from a social science background, she takes a deep interest in research around important social-economic challenges in our society. A voracious reader, Ayrin is passionate about working for the betterment of society, takes a deep interest in human society and behavioral science, and loves books.

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