Monday, November 22, 2010

A Fistful of Rice - Vikram Akula and microfinance

"Doing well by Doing Good"

Why do some people succeed wildly while others, who seem equally capable, flounder?

When I first read about Vikram Akula in WSJ's front page back in 2006, I remember thinking about this question. I was only generally interested in the idea of microfinance.

Back in 2006, to satisfy myself, I reached for the easy answers – attributing others' success to some combination of luck and talent.

But this book, "A Fistful of Rice" by Vikram Akula shows me a lot more of why he succeeded. And why my simple answers are wrong. I have previously read a couple of books on micro-finance (including A Billion Bootstraps which I liked very much) but Akula's book is different.

Akula is a surprisingly good writer and story-teller, and I found his book very easy to read. (My wife was the one who spotted the book and brought it home, but I commandeered it and read it right away.) Ultimately, this is not at all a 'micro-finance' book, but it is a book about one idealistic guy who uses micro-finance as a backdrop to pursue his idea relentlessly, and ends up making a big difference in the world.

It is fascinating to look at India through the eyes of someone like Akula, whose parents are India-born, but who himself grew up in the US, in Schenectady, NY.

Most of the world heard about Vikram Akula (and his company SKS) when he became an "overnight sensation" in 2006. But the real story is what came before that, and all the hardships that he had to put himself through, starting in the 90's.

As an idealistic young man, right after graduating from Tufts, Vikram chose to go to India, to spend a couple years in rural Andhra Pradesh. He volunteered to hand out small loans and learned about the world of the poor. He maxed out his personal credit cards to pay for his expenses. With the best education in the world (Tufts, Yale and the Univ of Chicago) he could have had any job he wanted to, but he forsake all that to pursue what he believed in.

Entrepreneurs take risks that the rest of us shy away from. One particular example struck me as an example of why he has succeeded at such a grand scale. Even though he only devotes a page to this, I found it very telling.

After having watched the horrendously difficult account-keeping efforts of Grameen (in Bangladesh) where they struggle with notebooks and paper, Akula gets convinced about the need for automation and software to grow his operations. Even though his company, SKS has existed only for 2 years, and his total loan portfolio is only $25,000, he sets aside $250,000 for software development. Now, that is true power of conviction.

The other thing that struck me was how he had to ask his friends and family for small loans, so convinced was he about his model. He spends hours pitching to people and then they hand over $50 or $100. (An echo of exactly what Greg Mortensen went through, which he writes about his Three Cups of Tea.) Asking our friends and family for money is not something most of us want to do.

And when all the planets are aligned, good things happen. Along the way, Akula gets grant-writing advice from Michelle Obama back when she was a community volunteer in Chicago, his work is observed by Rahul Gandhi (a young leader of India's Congress party) and he gets written up in the media, which the WSJ picks up. Soon, he gets invitations from Bill and Melinda Gates, and a procession of Silicon Valley VC's come knocking.

Vikram Akula makes a very strong argument for "doing well by doing good" i.e. that it is perfectly okay to profit from lending to the poor. (The poor are not dumb, he says, nor do they want handouts. Mostly, they just need a little capital.) I happen to subscribe to this line of argument.

The book's last chapter, titled "Google Territory" is especially gratifying to read. Having built up such a vast consumer base, he is now able to do so much in terms of bringing amenities, medication, cell phone technology and education opportunities to India's rural poor.

Readers who are curious about micro-finance, about realistic attempts to make a dent in ending poverty, and most importantly about how one dedicated person can indeed make a difference should read this book. (176 pages, but you can read it easily in 2-3 sittings)

There seems to be no quick short cut to success. People succeed because they are fearless about the size of their vision, their belief in it, and are willing to put in 10-15 years of their life effort into what they believe in. They succeed because of sheer tenacity, where the rest of us easily give up.

Related post: All or Nothing Players

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