Iqbal Quadir is the founder of GrameenPhone and the founder and director emeritus of the Legatum Center for Development and Entrepreneurship at MIT. He sat down with Karl Ulrich, vice dean of entrepreneurship and innovation at Wharton, to talk about his self-made journey from growing up in one of the poorest countries in the world to building a global business. In many ways the embodiment of the entrepreneurial spirit, Quadir explains how everything connects.

An edited transcript of the conversation appears below.

Karl Ulrich: I want to take us back to your origins. Tell us about where you came from.

Iqbal Quadir: I came from Bangladesh, from a relatively smaller town called Jessore. I grew up there and went to a boarding school inside Bangladesh. I was somewhat of an urban kid. But in 1971, when there was a war in the country, my family went to the rural area and I experienced the rural conditions in Bangladesh that year. My friends were often children of peasants and other small farmers. That had always had an impact on me, so I talk about that.

Ulrich: How did you end up in the United States?

Quadir: I guess I was an entrepreneur. My father died when I was 14 years old, and I somehow aspired to get a good education. My mother had provided some funds, but I managed to get to the U.S. with some scholarships. Eventually, I got almost a full scholarship, and so that is how. I simply tried myself.

Ulrich: That is a common path for some of our most successful entrepreneurs in the United States. I wonder if you could tell us about GrameenPhone?

Quadir: GrameenPhone is the largest company in Bangladesh, and it has 55 million subscribers. Sometimes the stock market is valued at some $7 billion. It was really for four or five years I tried to convince people that this is a good idea, it is something to be pursued. But I think if we want to go back to its origin, it’s good you asked me about my personal origin. Those impacts had certain germ of thoughts that eventually gave rise to GrameenPhone.

This is why I think no matter how rigorously we think about problems, at a deeper level passion is important because it drives us to find a logical solution. Even behind logic, you may have a passionate pursuit, which gives rise to finding a logical solution.

In my case, I knew that I came to America and there were extraordinary opportunities here in the United States. I managed to go to good schools and get good scholarships and whatnot, but I also had in mind the conditions I have seen in Bangladesh. I was always on the lookout for good ideas that could do something about it. Two really important ideas have stuck me in to doing that. One is that the economic progress does not necessarily come from pouring capital into it, but rather people becoming more efficient in managing their tasks. It’s a question of improvements or skills. But also how, in a sense, economic progress can come out of thin air.

For instance, I was actually attracted to Adam Smith because he mentioned Bengal, which is Bangladesh, that is how I was originally drawn to it. He said in antiquity, three places had good wealth: ancient Egypt, Bengal and eastern China. He attributed those things to inland navigation, and his point is that people could exchange through inland navigation, specialize in exchange and divide the division of labor, and through that wealth is created. Through that, there was what he called “opulence” in antiquity. I became a fan of Adam Smith. What is interesting is that many good things come out of division of labor, including inclusivity, because if I want to specialize in something, I have to give up something else to you.

“No matter how rigorously we think about problems, at a deeper level passion is important because it drives us to find a logical solution.”

Separately, I had another important thing I observed. When I was an undergraduate, I was part of a college team that decided on buying a $3 million computer — one big mainframe that took a whole roomful of machinery. When I was doing my graduate studies here at Wharton, we learned all sorts of application for computers. But the key point is that there is this Moore’s Law that says processing power is getting squeezed more and more in to the same chips, which means the prices of these processing powers is declining rapidly, which means that these machines are going to countries that do not have very much capital.

So I actually tried, in the middle of 1980s, to create a Bengali word processor. But we realized that the masses couldn’t use it because most people do not know how to read or write. But an event took place in my life in 1993, and by this time I had tried to be a budding investment banker. I was to work in a small firm that had just some rudimentary networks, so we didn’t have floppy discs and cumbersome activities. One time it broke down, and I was waiting for somebody to come and fix it. That reminded me of a day in 1971, 22 years earlier, when my mother sent me to get some medicine from this rural setting. I was from a middle-class family, my father was a lawyer, but in this setting I walked 10 kilometers to get this medicine. And when I went there, the medicine man wasn’t there. I walked all afternoon back.

I remembered that on productive days, sitting in New York while waiting for someone to come and fix my network, and kind of said, networks help, so if you are connected you can get things done. If you don’t get connected, then you don’t get things done. And I realized two new things, which is that microchips are getting squeezed into phones in the early ’90s as they were becoming digital phones. Before that, cellular phones were analog phones. I also realized a powerful point from Adam Smith, that there were many things that come out of division of labor, and division of labor gives rise to productivity. But he said the extent of the market tells you how far you would be dividing. Let’s say I start focusing on fishing, but I will stop there and not necessarily go any further in fishing only salmon if the market is small. If the market is bigger and bigger, then I can specialize narrower and narrower.

The point is, the ways to connect determine how large the market will be and how far the division of labor will advance. All of this made sense to me, so ultimately I realized that if Moore’s Law is bringing down the price of connectivity, connectivity would be a profound force in transforming these countries. I became so convinced of this because of these insights of these other people. I am basically stealing their ideas. I basically said, hey I have to stay put on this. So I stayed for five or six years, convincing various parties to come together and create this company. I jokingly say that is how I lost my hair.

Ulrich: You are really saying that not only does private enterprise and entrepreneurship contribute to an economy, but also particular kinds of innovation — these connectivity innovations?

Quadir: Exactly. I like analogies to understand what is happening. Let’s say I take a bucket of water, if I [put in] a drop of ink, it will get absorbed. If it is something favorable, other molecules will receive them. But let’s say you put a drop of oil, it may not go very far. If you find the right technology, then it will be grabbed by people and [all of the] water will get transformed. The whole economy gets transformed.

“If we have productivity tools supplied by western innovations, then let the innovators make money and let the low-income people provide the market. Both are advancing.”

I think the cellphone was such a thing because it is fundamentally, elementally human to connect and produce more and gain more. At the same time, the cost of these things is … going down, things automatically come together. It is a question of bringing it together, and seeing that it is, to me, almost surreal. Everybody knows Bangladesh is one of the lowest-income countries, and right now we have 110 million phones. When I started, it had a quarter-million fixed phones, so it is a really profound change, to say the least.

Ulrich: You have spoken very eloquently about the power of enterprise in developing economies. What have been the legacy barriers?

Quadir: I think human beings cannot radically absorb something completely, radically new. It is hard. Similarly, innovation has to ride on other things. There were a lot of things I sorted out in my head, and I said this is what gave me the resilience, the patience to try it because I believed in those insights. Those insights were logical and made sense to me, but there were actual, practical problems.

One of those practical problems is the lack of other things. Let’s say I bring a good car, but without the highway I cannot drive the car. In the early 1990s, the Internet was spreading in this country very rapidly. It was very easy to notice. People already had computers, modems, their telephone lines. They could easily call up something. But the real problem in poor countries is that you don’t have those other infrastructures. Now, because of colonialism and subsequent aid-driven, state-driven development, centralized planning tends to be the case. Even in India you will see different states, and within those states there is centralization. A usual pattern in these countries is [to have] one central city, often supporting a big bureaucratic infrastructure, and vast parts of rural areas that are relatively underdeveloped with no infrastructure.

What happens is it creates a vicious cycle. Because the infrastructure is there, everybody develops things within that area. Even if you want to start something, you don’t want to go out in the rural areas and not have your children go to good schools.

Moore’s Law would say it would be viable everywhere, and Adam Smith said it would be useful everywhere. Then the problem is, how can I break that vicious cycle? Because I, too, do not have engineers to go out in the rural areas where there is nothing. This is why I tried to latch on to another organization that may have some infrastructure and why I went to micro-credit programs. Bangladesh was blessed with good micro credit programs. Grameen Bank, for instance, had 1,000 branches. This is why, by the way, our name has become in their honor GrameenPhone. My original idea was GonoPhone which means “phones for the masses.”

One of the problems you are talking about is the ecology being poorer. Let’s say is a company that is selling books and other things, but people have credit cards. You need that other infrastructure to bring about a new thing. This is not a conceptual problem, it is a practical problem that you need to solve. With Grameen Bank, not only could I find those sites where I could potentially put cell towers and some infrastructure to help out that process, but also there were [potential] borrowers.

Eventually, I developed an idea and proposed it to Grameen Bank. They would give money to somebody [who would] borrow a small amount of money, $100, $200, to buy vegetable-growing facilities or ducks or chickens. A typical loan was a cow loan. I said the cell phone could be a cow, because somebody could borrow $200 and instead of a cow, get a phone. And the phone would serve the village but it would be a business for that person. That idea was a little crazy, but it was considered logical. The founder of Grameen Bank said, “Why don’t you see if you can make it happen?” So I quit my job and flew around the world. I got some seed funding from New York. I faced many rejections, but eventually I managed to convince the Norwegian telephone company — Telenor Group — to [help]. Interestingly, they had never been to Asia before.

“Think about things that might be available in the West that can be adapted in the lower-income countries. There may be other ways of solving these problems, but this is the one that I found to be profoundly transformative….”

Ulrich: The normal view of entrepreneurship is that all this great stuff gets invented in the developed world, then it trickles down to developing economies. Are we missing something? Is there a different way to view this?

Quadir: In this case, it is somewhat trickle down but rapid trickle down because of Moore’s Law .. so $100 [worth of computing power] becomes $1 in 10 years. That is one issue. The other is that it is so fundamentally useful, it is an egalitarian thing. Everybody can talk. In a way, there is an irony to all of this. Cellphones are actually computers, so the computers have entered this market in the disguise of a phone. But now, what is happening is that these computers are kind of a Trojan horse that can do all sorts of other things.

If you look at Telenor as an example, typically a Western company goes first to Hong Kong, Singapore, Japan or something, and then they will go to poorer and poorer places. That, I will say, is trickle down. But for whatever reason, maybe because I banged on their door many times, they somehow came to Bangladesh before they went to any other Asian country. They may not admit it now, but it took them a few years. There were some very good people who did this, and it got an endorsement from the top of Telenor, but I personally think they thought it’s a good thing to do, socially speaking.

After World War II, Norway was the poorest country in Western Europe. Now, it is a very expensive place to go. They may have had a little bit of that mindset; they have seen their own country develop. Now they have close to 200 million subscribers in Asia. What is an interesting thing that has evolved is that the Western world is providing an innovation, but the so-called low-income country is providing a market. I think that is a very healthy dovetail arrangement, [in the] interests of both worlds, and that is an interesting model that American business schools should look at. It is not necessarily selling consumer goods. Consumer goods have their own good purposes, but the point is that this is empowering people. Somebody is spending two pennies to make a phone call, and it is saving him a quarter’s worth of time, then he is advancing by 23 cents.

I think that the cellphone revolution in Bangladesh is at least producing $20 billion a year. If we have productivity tools supplied by Western innovations, then let the innovators make money and let the low-income people provide the market. Both are advancing. Today I would say that Bangladesh is giving more aid to Norway through dividends than Norway might be giving some aid to Bangladesh. I think that is the way it should be. We are warm, bigger country. They are a small, cold country, I think it is a perfectly good arrangement.

Ulrich: You are saying something quite profound. We would often characterize impact entrepreneurship as people wanting to do good in the world and using entrepreneurship and enterprise as the vehicle. You are saying something slightly different, which is that in some cases pure greed is fine. That, in fact, some of these opportunities are exceptionally valuable economic opportunities.

Quadir: I think so. But again, we can restrain ourselves with our conscience. Remember, the ultimate restraint comes from people. We may restrain ourselves through our own internal police, but as people become more empowered through economic wherewithal, they are also able to create more checks and balances. Ultimately, it is a good thing, but what I am also trying to say is that if we find fantastic innovations that are empowering at the bottom, then those innovations are to be embraced and people advance that way.

Remember another thing: We are not talking about Marxist worries. We are not talking about a big factory where some capitalist may potentially exploit people. We are talking about people simply becoming more efficient with their fellow citizens. As a result, all of the value they create often accrues to themselves.

At the same time, there is a viable business. The business makes $1 billion in revenues and very good dividends. But these can be a model for other kinds of innovations that are perfectly in sync with each other’s needs through innovation. Cellphones were not invented for the poor countries, so too much planning is not necessarily necessary. It was an unintended consequence. We need to go in to the reservoir of various innovations that we have in the First World and pick out those that we can tweak and make available for lower-income people. With their income automatically rising, they can buy things from the Western world more even. Not just the phones, they can buy generators, they can buy other things.

The two things that are already existing on the ground is the normal human desire to improve their lives. That desire very much has a role in this, because without that they would not use the phone. The other is there is entrepreneurial energy. Both of these are often squandered if these tools are not found. With the tools, both can be unleashed.

Ulrich: I want to turn our attention to those young people who are in developing economies. What advice would you give to a young entrepreneur who is growing up in Bangladesh or Pakistan?

Quadir: My own example itself could be followed. I am not trying to sell myself, but what I am trying to say is that I have more authority on myself. I got an education in the West, therefore, I was informed. I tried to think clearly of what is necessary, but nowadays that is easier than when I tried to educate myself. There was no Internet, for example. Now you can even sit in Pakistan and learn some of these things.

The other point is, remember, I was saying you need one thing to get to the other thing. The fact that cellphones now exist through my work or other people’s work, then that should make their lives a little bit easier in getting the information. You can get a lot of things that did not exist before, but it is always important to get an education, to think clearly. Think about things that might be available in the West that can be adapted in the lower-income countries. There may be other ways of solving these problems, but this is the one that I found to be profoundly transformative, and things can hang together around that kind of economic interest dovetailing.