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Deshpande says philanthropy in India is getting more organized, and applying technology and innovation can dramatically change things. Photo: Hemant Mishra/Mint
Deshpande says philanthropy in India is getting more organized, and applying technology and innovation can dramatically change things. Photo: Hemant Mishra/Mint

People must become problem solvers: Gururaj Deshpande

The social innovator and philanthropist on trying to solve India's problems from afar, and using technology in the social sector

Entrepreneur-turned philanthropist Gururaj Deshpande, or Desh as he is known, is on a mission to create problem solvers for India, for which he has spent nearly $70 million (around 470 crore today) since 2007. The founder of multibillion-dollar companies Sycamore Networks and Cascade Communications Corp., Deshpande is now creating a name for himself in the social sector. He was named “Distinguished Non-Resident Philanthropist" by Forbes in 2014 for his social innovation sandbox initiative. Through this, he has helped create 80,000 such problem solvers in the past decade and is now leveraging his connection with the Massachusetts Institute of Technology (MIT), where he serves as a life member of the governing body, to bring innovations from the best technical minds to the farmers in Hubli, Karnataka.

Deshpande was in India to host the Development Dialogue 2016 in Hubli in February. Edited excerpts from an interview:

As an NRI (non-resident Indian), what draws you to solving problems in India?

A lot of philanthropists are NRI entrepreneurs and entrepreneurs are primarily driven by bringing about a change. It’s pretty exciting to start on that clean sheet of paper and make something happen. The kick you get out of doing philanthropy is not very different from when you build a for-profit. Just being able to bring that change to the world is what drives me.

Does being away from India make things complicated?

In some ways it is easier. It is easier to think of different approaches. When you go from India to America, out-of-the-box thinking is very natural there and that’s part of the reason why immigrants make good entrepreneurs. So if you want to bring new approaches to philanthropy, being far away in a way makes it easier. When you live here, you see the problems every day and it can get daunting and you tend to become a little negative. When you are far away, you don’t fight those issues every day and it is easier to hold the course. Being away has its own merit.

How challenging is it to execute what you want to do, from a distance?

For me it has been pretty easy because I’m taking a bottom-up approach. Old philanthropy model is one where you look at what people need and come up with policies and solutions, and to me that hasn’t worked.

There are three types of people in the world. The first type is oblivious to everything, some who see a problem and complain, and some get excited about a problem. The only difference between an impoverished community and a vibrant community is the ratio of these people. So if you look at Boston or Silicon Valley, entrepreneurship is so much in the air right now that everyone wants to solve a problem. In a lot of ways they don’t have good problems to solve. But the good thing is everyone is looking for a problem to solve. As a result, no obvious problem (both social and business) that has a solution remains unsolved as there are so many people wanting to do something about it.

When you come to impoverished communities, lots of people complain, because problems are chronic and deadlocked. And people don’t see an easy solution to these and feel victimized. They feel someone else needs to solve the problem. So the whole culture transforms to the one where people sit around complaining. So, the approach we are taking is to slowly encourage people to become problem solvers. Once someone becomes passionate about a problem and starts thinking about it feverishly, and the moment you see a solution, that’s the aha moment. It marks the transformation from being a complainer to a problem solver. And once people transition, they don’t go back because it is so much more fun to be solving problems.

Is the challenge in India then really to create enough problem solvers?

Yes. With the social innovation sandbox, we are creating the opportunity for people to come together and solve problems. And if they are capable of solving problems, if they have to scale solutions, we help them with the capital.

We have a programme for college kids, where they pick a problem and solve it, and we have 4,000 such students. We also work with people who have big ideas—we have 50 such (organizations) like Akshaya Patra and Agasthya Foundation. We work with them the same way we work with a company.

In the social sector, only a few solutions end up being scalable…

In for-profit, they have to find the sweet spot where the customer is willing to pay, if not, the company is out of business. The customer feedback loop is a very powerful tool to make sure you have performing assets. And even if you find a sweet spot, you have to constantly execute to keep up with competition; else the free market will drive you out of business. Execution is a given in for-profit.

In a non-profit, the people you try to help, they are not paying for it. So organizations get into pleasing the donor and it starts falling apart and execution suffers. So of all the NGOs you have, 95% are useless because there is no way for mergers and acquisition or Chapter 11. They are the land of the living dead.

There are only three ways to scale these organizations financially—free market economy, government funding and charity. Most of the interventions are a combination of all the three, but making the beneficiary pay for what you do is a very powerful tool because it makes it scalable, and the person demands—as a result your product will not be the same product every year and you have a market force created.

Bringing some of these tools to the non-profit is very important. We need to bring the execution excellence to the non-profit sector.

What excites you about philanthropy in India?

It is getting more organized, and applying technology and innovation can dramatically change things. India is well positioned for that play and I’m hoping it’ll become mainstream. I’m excited about India. At least 1% of the population is globally competitive. That means, 12 million world-class professionals, and if a small per cent of that population gets excited about social entrepreneurship, you will have a globally competent talent being able to apply themselves to social problems.

The social problems are massive and it is hard to escape. As a result, India can come up with scalable solutions and at costs and scale the world has never seen before. So I think India can be a beacon of hope for five billion people who are not well-served in the current economy.

But the social sector has not been able to leverage technology and innovation?

Not as much as we should. The pace of innovations has picked up because of connectivity. Some of them are for high- end of the market and some are targeted at the lower end. The reason why it does not have an impact is because, innovators tend to be isolated and they come up with solutions in vacuum. They don’t know the customer.

So we need to create intermediaries that connect the innovators with the people in need.

Ratan Tata funded start-up fellows at MIT, and the intention was these people would do their masters at MIT and also do something good for India. Some of them came to Hubli and they wanted to help famers with small landholdings, they found soil testing to be crucial. Right now very few farmers do it. They are developing a small reader and strip that tests the soil, and it won’t cost a lot of money.

Every farmer need not know about it, but the intermediaries can help with that information.

We need to create more such connections. We can have the best scientists thinking about soil testing, but there isn’t an easy way for them to test the relevance.

Sandbox is a way to connect innovators to people on the ground with problems.

What is the difference you notice between philanthropy in the US and in India?

The Rockefeller (Foundation) and Mellon (Foundation) introduced the concept of philanthropy and did a lot. And it is worth about $300 billion a year. But in some ways, it is a lot of old type of philanthropy. Big foundations, run by professionals, become bureaucratic and it loses its charm. There is a lot of movement towards venture philanthropy and into making things self-sustainable.

But there is a lot they can learn from India. The work in the social sector in India is dynamic. When leading philanthropists come to India, hoping to help India, they are surprised at things here and come back with a different insight about philanthropy. Not too many philanthropists in the US think about solving the whole system problem. In India, the number is so large, you cannot solve problems in a small way.

Does the Foreign Contribution (Regulation) Act norms complicate things for NRI philanthropists?

I don’t have anything against the country making sure we don’t get money for funding terrorists. But we need to ease up the process. When it is a broad stroke, it is like a lathi charge and even the good guys get hit. We had a conversation with (finance minister) Arun Jaitley when he was in Washington. So any change in easing up the process will be welcome.

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