The San Jose Mercury News has a recent report about how mobile phones are going to be for India what the PC was for the US. Naturally, they quote the most passionate evangelist for the mobile web, my colleague and MD of Netcore, Mr Rajesh Jain. The matter that the article focuses on is of paramount interest in the context of India’s development: the mobile phone revolution in India.
Mobile phones are enabling technology. Precisely speaking, they enable markets by reducing transaction costs, as we economists are quick to point out. When you reduce transaction costs, you reduce friction and markets become more efficient. Efficient markets imply greater productivity and therefore more wealth creation. It warms the cockles of an economist’s heart to see people across the income spectrum use the cell phone. The guy making the kitchen cabinets in my apartment called up three hardware stores this morning and checked prices and availability of plywood without moving out of the apartment. The uses of the mobile phone is virtually limitless—from a jet-setting executive receiving an SMS update of his flight status from the airline, to the corner vegetable seller getting a request to deliver onions to apartment 205.
At its most general, cell phones are a subset of information technology tools. Of course, IT tools have a hoary history and a very large family. They include carrier pigeons, smoke signals, tom-tom drums, marathon runners, the telegraph, landline phones, radio, TV, satellites, the internet, and so on. As time goes on, the IT tools become more efficient. Compared to smoke signals, cell phones are more handy, can be used on dark and stormy nights, and are considerably less polluting.
Cell phone technology—more generally information technology—is definitely a gift of the gods when it comes to India’s economy. Sure IT enables the employment of thousands of Indians in BPO and call centers. But that accounts for a very small part of the Indian economy. The greater gains are when IT use is tightly integrated into the economy as cell phones have become in India. Yet, in some sense, what we have seen is only the first act of a three-act play. There is much more to come and if we at Netcore are correct, the mobile web will have an effect on the Indian economy similar to the one the internet had on the US economy. You ain’t seen nothing yet.
I appear to have gone off on a tangent. Sorry. I was telling you about the Murky News (as we like to call Mercury News) report. What caught my eye was a quote by Rajesh: “The next Microsoft, Cisco or Google of the world is going to come out of countries like India …” If I had a dollar for every time that I have heard Rajesh say that, I would be pretty well off. OK, maybe not well off, but I could certainly buy myself a neat gizmo. Anyway, the question is, how likely is it that the next MS or Google will come out of India?
One way to address that question is to ask what factors lead to the creation of a Google or a Microsoft and whether those factors are present in India today. The Silicon Valley in California is an incubator for world class innovative technology companies. Why is that? Perhaps it has something to do with the presence of world class universities. The August 21/28th issue of Newsweek has an article titled “World of Knowledge” which focuses on education and global universities. Newsweek’s ranking which shows “that the world’s top 10 includes eight American universities plus Oxford and Cambridge.” It goes on to note that “of the next 40, 22 are American, five are British, five are Swiss, three are Canadian, two are Japanese, two are Australian, and one is Singaporean.”
Curiously, the combined populations of the countries that account for the top 50 global universities in the Newsweek ranking approximate the population of India. Not one of the 272 universities in India figures in that list, however. Four of the top 10 universities are in California. Stanford (established 1885) ranks 2nd, California Institute of Technology (est. 1891) is 4th, UC Berkeley (my alma mater, est. 1868) is 5th, and UC San Francisco (est. 1873) is 9th.
Of the top 50 universities, 30 are American. Is it any wonder that the US leads the world in innovation and technology? And of the top 10, four are in California. Is it any wonder that within the US, California is the home of the Silicon Valley? Not just that, Yahoo!, Google, SUN, and a whole host of lesser known global firms have been born at Stanford University. Something in the water in northern California? Or does it have something to do with the universities?
[Just as an aside, I should add that UC Berkeley, my beloved alma mater, is a much better school than Stanford, which one must remember is after all a “junior” university. “Leland Stanford Jr University” if you must know the full name of that school. Mind you, I don’t have anything against Stanford. I slummed there for a year as a Reuters Fellow, as it happens. Stanford can’t be all bad compared to UC Berkeley, is what I say. Go Bears! 🙂 ]
My proposition is that world class innovative firms are built upon world class universities. And world class universities don’t spring forth fully formed like Athena out of Zeus’s head over night. It takes time to build them. I deliberately noted the dates of establishment of the various top universities. They are institutions that have a very long lead time. Time is an important factor. Admittedly they are built on real estate but the most important ingredient in the recipe for an university is ideas and ideals. Ideas and ideals come from very smart inspired people with acute vision.
So to me the sequence appears to be this: people with vision create universities in a conducive environment created by wise government; over time, the universities become centers of excellence; finally the universities give birth to Googles. Miss any of the elements in the sequence, and you will not find a Google, no matter how hard you search nor how devoutly you wish.
It is clearly possible that the next Google will come from India. It is not the possibility that is doubted. The question is how probable is it? It is always good to distinguish very clearly between “possible” and “probable.” It is possible but very highly improbable that the next Google will be out of India. Why? Because none of the links that form the mechanism for creating a Google is available in India.
Still, it is not too late. If we want India to produce excellence, we can get started on it now. It will take a 100 years or so, but then sometime we have to make a start. I am sure that we have visionaries in India. Next we need wise governance. Given the current political leaders, this one is a very difficult order. But let us hope and pray that one day we will become collectively wise enough that our government (which is a reflection of our collective will and wisdom) will be good. And then it will become not only possible but probable for India to give rise to a Google. I look forward to that day.