Chapter Three

Technology

People typically use the word technology to refer to an electronic gadget of some kind, though its meaning encompasses far more than devices that buzz and blink. In its purest sense, technology is defined as problem-solving know-how, a craft or skill (Technik in German) used to invent new tools and methods for converting raw materials into goods and services.

Technology comprises a range of disciplines, including science, art, engineering, machinery, software, and technical skills. It is the medium of invention; we use it to see, know, and do more than nature allows on its own, such as growing and preserving food all year round, flying through space, extending life spans by more than forty years, splicing atoms, or growing beating hearts in a Petri dish.

Technological advances, and the learning that propels them, are additive. Every pioneering innovation is built on the back of every discovery that's come before it. The trigonometry practiced by ancient Babylonians gave Archimedes the tools to create the mathematical solution for pi (Archimedes' Constant), a formula for advanced geometry that was employed in making the telescope Galileo used to determine that the sun, not Earth, is the center of the universe, which was the basis for Newton to measure the speed of light, a phenomenon Einstein sought to explain by looking at subatomic particles, giving rise to a new branch of scientific study, quantum physics.

Whether you realize it or not, this succession of scientific knowledge is manifest in all buzzing and blinking electronics we depend on. Quantum physics is at play in the transistors (aka semiconductors) that power all the electronic devices we use every day, from cell phones and computers to automobiles and televisions. Quantum physics makes it possible for you to receive GPS navigation in your car, to get laser surgery, and to play your favorite music and movies on a CD, DVD, or Blu-Ray media player. Quantum physics is also paving the way for many of the new energy technologies, such as solar batteries and fuel cells, on which our future depends.

We use technology to shape civilizations, build infrastructure, win wars, and feed and clothe and transport people. We use it to communicate and express values, to play and innovate, to cook, clean, and care for our loved ones. We use it to manufacture goods, to increase productivity, and to customize environments, and we use it in teaching, in rituals, in science and art.

The profound influence of technology on society and culture is exemplified by Iqbal Quadir's story.

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It was in 1971 that the Quadir family moved from their hometown of Jessore, Bangladesh (called East Pakistan at the time) to a small, rural village where thirteen-year-old Iqbal's grandparents lived. It was a move away from the violence of the cities, where so much of the fight for liberation was focused, to a more peaceful setting where the Quadir children could be relatively safe and remain focused on their education. Although Iqbal and his family lived there just one year, the experience opened his eyes to the challenges most Bangladeshis have to overcome daily. With little money and even less infrastructure in the villages, where the vast majority of the country's population lives, just the simple act of running an errand can become an all-day affair.

One day, Iqbal experienced this hardship firsthand when his mother sent him to get medicine for his younger brother, who was sick. This required a six-mile hike to another village. It took Iqbal the better part of a day to reach the pharmacy, which, he discovered when he arrived, was closed. The pharmacist was out on an errand of his own that day. It was a lost day of studying for Iqbal, a lost sale for the pharmacist, and, had his brother been seriously ill, potentially a lost life. His experience would change the course of Iqbal's life and, in turn, the future of Bangladesh.

This memory was in full focus for Iqbal years later when, working as an investment banker on Wall Street, he experienced a day of frustration that reminded him of how he had felt when he made that fruitless trip to the pharmacist so long ago. On this particular day, the computer networks had gone down, and without the intranet connection (this was before the days of the Internet), he couldn't do his work. Although the two experiences were worlds apart in so many ways, it dawned on Iqbal that what they had in common was profound. His insight: communication technologies increase productivity by helping people coordinate their work and resources. When people can make more stuff more easily, there's more wealth for everyone in the system. It hit Iqbal that this equation of communication technology and productivity, and productivity and economic growth, could shift reality for poor countries like Bangladesh.

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It was a flash of sudden insight for Iqbal, in which pieces in a puzzle came together to complete a whole picture: “Connectivity is productivity.” It was one of those magic moments that releases a flood of ideas and focuses one's purpose. In that moment, Iqbal realized that the most striking difference between his countrymen in Bangladesh and his colleagues on Wall Street was the technology. In that moment, Iqbal committed himself to bringing telephony to Bangladesh.

The economic impact of one simple technology, the telephone, on villages was obvious: had he had a telephone on that long-ago day in his childhood, Iqbal could have called ahead for the pharmacy's hours. He knew that a telephone would allow farmers to get regular market updates and help them stay on top of changes in demand and pricing. They could also coordinate pick-up and delivery for more efficient planning and operation. In short, Iqbal realized that ease, speed, and reach of information are absolutely essential, no matter what business you're conducting.

Iqbal also recognized that the people of Bangladesh would have to improve their own circumstances, and the only way that could happen was if the tools of production were put directly in their hands. People's creativity, work ethic, and entrepreneurial appetite would take care of the rest.

This last point was critical. Economic development for the world's poor has typically come in the form of charity, loans, or grants to governments, disseminated by large not-for-profit agencies (such as the World Bank and the International Monetary Fund). Yet ever-increasing amounts of aid from rich countries to poor countries has achieved no measurable difference in the standard of living.

Throughout history, technological innovations have allowed humans to scale production. Fishing nets give us more than one fish at a time. Plows yield a better harvest than working the land by hand. Mills use the power of rushing water to turn more stones that grind grain in large volume. Bicycles democratized transportation. Sewing machines jump-started manufacturing. Steam engines enabled distribution of people and goods.

And so it goes.

Over the course of human history, we've used technology to intensify our productive power and, therefore, our prosperity. Technologies often rearrange societies, as agrarian and industrial technologies most certainly did. And every technological advance has also chipped away at the power held by caliphs, autocrats, and emperors, effecting an incrementally more democratic distribution to the people,1 in large part because the technology itself has been distributable. These principles were integral to Iqbal's vision: the power to change a person's life and, ultimately, the course of a nation could be delivered in something as small as a cell phone.

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Once the idea of bringing telephony to Bangladesh occurred to Iqbal, it took over his life. He immediately left his job as an investment banker and gave his full-time attention to figuring out how to bring so-called decentralized connectivity to the poor. There were many very real barriers to this vision, which Iqbal knew would have to be addressed if the plan were to work. His business model would have to solve three central problems:

When Iqbal began his research in 1993, Bangladesh had only one phone per five hundred people, and virtually none in rural areas. To get a phone, a person had to wait five to ten years before one was granted, and it came with a $500 connection fee. The only service that was available was analog, the phones often didn't work, and the provider was the only one in the country.

It took Iqbal four years to work out a plan. During that time there were partnerships that fell through, government applications to wade through, infrastructure to update. And, most important, he had to figure a way to distribute these phones and make them affordable to people making a dollar a day.

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Another organization in Bangladesh had arrived at a novel solution for making resources available to the poor: Grameen Bank. Founded by Muhammad Yunus in 1976, Grameen Bank (in Bangla, grameen means “rural” or “grassroots”) had established a system of microlending to the poor that had been extremely successful in improving the lives of many Bangladeshis.2 Grameen Bank introduced a model of finance for villagers who were otherwise stuck paying exorbitant finance charges to middlemen and unable to keep much of the money they made from their wares. The innovation in this model was that Grameen Bank didn't require collateral but rather a set of promises to ensure repayment. A typical loan might allow a family to buy a cow to work the fields and provide milk to sell. The family would increase their income and be able to repay the loan.

Iqbal looked at this model and posed a simple question: “Why can't a cell phone be a cow?” In other words, why couldn't microloans be made for the purchase of a phone in the same way they'd been for grain or livestock? As his experience of walking to the pharmacy illustrated, telephony has immediate economic impact: if poor people were able to save an unnecessary journey as a result of a single phone call, and used that time instead to generate income, then the economic impact would be profound. With cell connectivity, for instance, farmers can maximize their profits by getting real-time prices at distant markets; shepherds can call a vet or order medicine. One study concluded that the total lifetime cost of an additional phone (including the cell tower and switching gear) was about $2,000, but that each phone enabled $50,000 of increased productivity. Because the gain in productivity greatly outweighed the initial cost of the phone, loans for phones made sense.

Grameen Bank became a critical partner in the implementation of this program. As an established and respected organization in Bangladesh, it was able to attract investors and to work with the Bangladeshi government for licensing. And because Grameen Bank had branches in many villages around the country, it also offered a structure for distribution.

The other part of the puzzle was a hardware issue, which was solved by a partnership with Telenor, a leading telecommunications company in Norway that understood the value of entering a large market, one in which the need for telephony was obvious. Most telecommunications companies had shied away from such a proposition, believing that poor people were a bad investment. If they can't afford to feed their families properly, how can they possibly afford a phone? With Grameen Bank and Telenor, Iqbal had figured out how telephones could generate income for all: for the people, for the bank, for the telecommunications company, and, as incomes rose, for the government as well.

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Iqbal recognized that beyond improving the lives of many Bangladeshis, making technology accessible on a mass scale would be transformative for the country.

In the hands of everyday citizens, technology can increase per capita income, grow local economies, and increase freedoms and democratic processes. What's more, as farmers living in rural Bangladesh realize greater production for themselves, an economic ecosystem will grow around them. Businesses are needed to distribute and service the phones, jobs are created to build and maintain the cell phone towers, and as more money comes into individual families, there is an increase in demand for goods and services.

Grameenphone was launched on March 26, 1997, Bangladesh's Independence Day. Today, Grameenphone provides cellular service throughout the country and, with more than thirty-seven million subscribers (as of March 2012), is the largest telecommunications company in Bangladesh. The phones have created access for one hundred million people, as many of them are community phones. The company has done very well for itself, generating more than a billion dollars in revenue annually. As Iqbal had foreseen, the investment in Grameenphone has indeed been transformative for Bangladesh in a number of ways:

Iqbal's vision was centered on empowering individuals to improve their own circumstances and, collectively, to grow a healthy economic ecosystem that lifted the country as a whole. Cell phones were just the vehicle for that kind of transformation, which is illustrated in the story of one of Grameenphone's earliest subscribers, Monowara Talukder. In a 2010 article printed in Dawn, Pakistan's largest media outlet, the Associated Foreign Press reported that Talukder was one of the first people to sign up for a mobile phone when phones arrived in Bangladesh in 1997. The mother of four was willing to risk what she considered a big investment in order to turn her vision of a successful herbal tea company into a reality. (You may have seen her teas, Tulsi, on the shelves of whole foods grocers.) Her phone served as an all-in-one business hub, used to market her teas, take orders, and oversee distribution, all without an office or showroom. By 2010, she had built an empire that employed fifteen hundred farmers and sent her product as far away as Australia, Kuwait, and Nepal—a feat achieved by text messaging on a battered old Nokia cell phone to propel growth. As she said, ”I went to a green trade fair [recently] and put up posters with my mobile phone number on. Now I am getting all these orders from overseas.”

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When Iqbal began his venture, people thought he was crazy. He jokes that a common response he heard was, “Cell phones are for yuppies.” Now, in the wake of Grameenphone's success, the chorus is “Cell phones were low-hanging fruit.” Both reactions are characteristic responses to disruptive innovation: on the front end, the idea challenges our current assumptions about how things work, so is thought to be “crazy” or, at a minimum, excessively risky. But once an innovation has been adopted, it seems obvious. This is as it should be.

Iqbal Quadir did not invent the cell phone. Nor did he invent the economic argument that bottom-up empowerment is what transforms societies. His contribution was a combination of foresight and fortitude that, together, birthed a business model that is profitable and sustainable precisely because it offers so much leverage to so many people.

Features particular to the cell phone supported its widespread adoption:

Iqbal had the ability to spot trends in technologies that would shape the future. He saw, in the midst of the emerging markets in fast adoption and microcredit, the opportunity to bring what he calls his “connectivity is productivity” principle to life for the people of Bangladesh.

The model of success of Grameenphone is not exclusive to Bangladesh, however, and has since been replicated widely in Asia and Africa. Through this model, mobile phones and broadband connectivity are penetrating many underdeveloped areas that, like rural Bangladesh, don't have electricity. These technologies powerfully intensify individual production and make Iqbal's case that we can do more for people through cultivating business opportunities at the level of the ordinary citizen than we can through top-down aid that keeps power in the hands of the few.

Iqbal calls the economic empowerment of the individual “the real horse that can pull all the other carts”—the carts being education, jobs, infrastructure development, social change, and political reform. We are all witnesses to this principle as, around the world, cell phones and social media have been instrumental in the organization of relief efforts, revolutions, and calls for transparency in business and government.

A conviction that realizing his vision was possible, and a commitment to see it through—in the face of so much skepticism—were significant parts of Iqbal's success. He kept at it for four years, presenting the business as an economic opportunity. The biggest barrier, according to Iqbal, was a deeply entrenched mythology about the world's poor: poor countries have no resources; the poor don't have discretionary spending; they aren't concerned with brands; they aren't good credit risks; and so on. Perhaps the biggest myth of all is that government needs to subsidize technological development (which implies aid and the top-down administration of it), when in fact there is good money to be made enabling the productivity of the poor.