The Education Problem: Raj Reddy (Part 14)

Raj and I engage in a conversation debating the potential uses and benefits of providing high speed network connectivity to rural areas. In the process, we have some disagreements on microfinance models, but agree on the end goal of the killer app: providing a livelihood to the poor population.

SM: The question is, by selling a few baskets or some milk from a cow, are there any profits left, or are you just creating a sustenance model? RR: I am saying that whatever it is, you have to create a business model. I propose a franchising model. Let’s say I want to set up a flower business. If I am going to fund you, I will give you a franchise in your village to grow flowers, and I will also hire and train your people on management and so on.

What I am proposing is that there are four proponents to successfully executing a venture; knowledge, money, management and marketing. It is what I call KM cubed. If you are willing to work hard and put in twelve hours a day (8 hours for working and 4 hours for learning) I will cover everything else. You will have your own franchise.

SM: I think franchise would work. I am not convinced, with due respect, about the micro equity model. I am convinced about the franchise model. RR: They both go hand in hand. First I do a new franchise. To open a traditional franchise you have to go to a bank and get money, hire people, train them, be the management and be the sole employer.

What I am proposing is, there are four stakeholders besides the owner. The owner who gets 60% of the company, which means they will keep 60% of the profits. The other stakeholders are the people who provide the knowledge, the people who provide the marketing, the people who provide the money, and the people who provide the management. They each get 10% of the profits. There is no exit strategy; you have to stick with it for the rest of your life.

SM: I agree with this. An equity model works in this. I think pure micro finance or micro credit is in a much smaller scale. It is in terms of buying a cow, getting and selling milk. RR: If I am in a village, and I want to set up a restaurant. I need a couple of lacs, but if I go to a bank they will say that I am too big of a risk. On the other hand, if you are to set up a franchise model like McDonalds, and you are going to set up village restaurants. Now it can be much more structured and financed.

SM: The point that I am trying to make, Raj, is that the killer application for this device, no matter what form this device takes (cell phone, microcomputer), the killer app is going to be somewhere in the realm of finance or business. That will make a difference in their livelihood. RR: Let me rephrase what you just said. I have nothing to do with money. It is if you can get me a job.

[To Be Continued]

[Part 13]

[Part 12]

[Part 11]

[Part 10]

[Part 9]

[Part 8]

[Part 7]

[Part 6]

[Part 5]

[Part 4]

[Part 3]

[Part 2]

[Part 1]

This segment is part 14 in the series : The Education Problem: Raj Reddy
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