[00:04] Jennifer Wu: Hi everyone, thanks for listening to The Founder Spirit podcast. I'm your host, Jennifer Wu. In this podcast series, I interview exceptional individuals from all over the world with the Founder Spirit, ranging from social entrepreneurs, tech founders, to philanthropists, elite athletes, and more. Together, we'll uncover not only how they manage to succeed in face of multiple challenges, but also who they are as people and their human story. 

If this podcast has been beneficial or valuable to you, feel free to become a patron and support us on Patreon.com, that is P-A-T-R-E-O-N.com/TheFounderSpirit. As always, you can find us on Apple, Google, Amazon and Spotify, as well as social media and our website at TheFounderSpirit.com.

“So I resigned, neither of us had an income, we had two kids, mortgage to pay, almost at the end of any bank accounts, so it wasn't easy. But when you are going through it, it didn't feel that bad. In life people go through these hardships, but these hardships are what broaden your comfort zone... As long as you get to do what you want to do in life, everything else is a bonus.”

“The other lesson is in life, there are things that you control and there are things that you don't control. And if ever you find yourself in a situation where things you don't control are the reasons that you don't like, then just get out of the place, because that's a big opportunity cost.”

“There's only three things that are true when you try to do something - things always take longer than you thought, it always requires more money than you thought, and it's more difficult than what you thought, so there's only bad news. And so you have to be very optimistic, whether it's right or wrong, you somehow have to believe that tomorrow is going to better than today, and it's just that sheer optimism that bulldozes through a lot of the problems that you come across.”

Joining us today is the philosophical Gururaj “Desh” Deshpande, a serial entrepreneur, a venture capitalist and a true philanthropist. An Indian emigrant best known for founding Cascade Communications and Sycamore Networks, Desh is a pioneering figure who played a pivotal role in shaping data communications in the early days of the Internet. 

With an entrepreneurial career spanning over three decades, he is also involved with multiple ventures, including Tejas Networks, Cimaron, Webdialogs, Airvana, Sandstone Capital, A123 Systems and Curata. Recognizing the wealth gap created by entrepreneurship, he co-founded the Deshpande Foundation and the Deshpande Center for Technological Innovation at MIT with his wife to create sustainable, scalable social and economic impact in North America and India. 

Author of the book “On Entrepreneurship And Impact” and co-chair of the National Council on Innovation and Entrepreneurship under President Obama, Desh provided the founding grant for MassChallenge, National Science Foundation Innovation Corp, as well as Public Health Foundation of India. He currently serves as a Life Member of the MIT Corporation, as well as the President and Chairman of Sparta Group, a family investment office.

Just how did an immigrant who arrived with only $8 in his pocket achieve the ultimate American Dream, and then channel his riches into social entrepreneurship? Well, let’s talk to him & find out. 

Hello Desh, welcome to The Founder Spirit podcast! So wonderful to have you with us today and thank you for taking the time.

[03:47] Desh Deshpande: Thank you, Jennifer.

[03:48] Jennifer: Desh, growing up India, what were some of your formative experiences?

[03:53] Desh: Well, I was born in 1950, a long time ago, just about the time when the country had its independence and there was a lot of scarcity of everything. For example, everything was rationed, you'd get about 500 grams of sugar every month. If you wanted a phone, you'd have to wait for maybe 14 years. If you wanted a two-wheeler, it was like 25 years, so it was a world of scarcity. 

But I grew up in a very loving family, which is probably typical of a lot of the Asian families, so we never felt like we were never denied of anything. There was a lot of love, a lot of togetherness, and so it was just very happy memories of growing up India.

[04:39] Jennifer: I've heard that your father worked as a government servant and your mother wrote philosophy books. I think it's quite a unique combination of parenthood, how do you think that might have impacted your path?

[04:50] Desh: My mother was a teacher, she was one of the rare women who actually went to university those days, and so there was a lot of stress on education. And in fact, I remember as a kid, I would do my homework in the kitchen when she was cooking, and we really enjoyed doing that together and that always stuck with me. 

My dad was very busy, just trying to keep up with his work because he came from a little village and he had a pretty important job and it wasn't easy. So he would get transferred to all over the places, I went to whole bunch of schools, maybe 10 or 15 of them, and some of them in villages where the quality of the education was very poor. But because my mom was a teacher, I always kept up with everything.

And then finally when I had to go to university, it's pretty amazing that with that background and all the government schools and everything else, somehow I managed to get into pretty good colleges. So I think my mom had a lot of influence on my bringing up.

My dad, he's 98, so we're very fortunate that he's still alive, but he has become very philosophical. I lost my mother about twelve years ago and she was always philosophical, very articulate, very good communicator, but my dad was not into it.

But it's amazing how his transition… he's probably one of the best practitioners of philosophy that he believes in. And it's very interesting to see how that has brought him so much peace and good health and everything else.

[06:22] Jennifer: That's wonderful to hear because I think sometimes you get wisdom after a certain age and it's also good to hear that he's still around. I wasn't sure, so that's great. 

So speaking of getting into very good colleges, you graduated from the Indian Institute of Technology Madras in the early 70s, and then you moved to Canada to pursue a master's degree in electrical engineering. Can you tell us what your move was like? It must have been quite a culture shock coming from India that had rationing at the time, as you mentioned. 

[06:54] Desh: Jennifer, actually, it was the other way out. There were 250 people who graduated from my batch in IIT, and there are only three of us who had the opportunity to leave India because we couldn't have left without full scholarship. 

When you look back and say, how can you leave a country with $8 in your pocket? How could you go so far away where you don't know a single soul within 10,000 miles? All of these sound very dramatic. But actually, for me, everything was exciting - sitting in the plane for the first time, staying in a hotel for the first time and going to a different country, meeting people who are so different. 

So, fortunately for me, my whole life has been like that. It never looks like a challenge, it always looks like, wow, I'm so lucky I get to do all these things. And somehow that optimistic and positive view has stayed with me throughout my life, and I still enjoy that, fortunately.

I never felt like I was denied of anything or I was discriminated or not given opportunities. I always felt like, why is it that I'm the one who's been chosen to have this opportunity to experience things that are so different?

[08:08] Jennifer: Great. After you got your PhD, you started your career at a small subsidiary of Motorola. I believe working there had a big influence on your decision to pursue entrepreneurship as a career. Can you tell us what skills and learnings you gained from working at Codex? 

[08:24] Desh: You know, my life, it's all serendipity, it’s not like it was all planned. So I came and did my masters, and my professor went away to Australia, and my idea was to go back to India after two years. 

And so he said, hey, Desh, why don't you stay for another year and teach when I go away to Australia, you'll be a rich guy, you'll make a lot of money, and then you can go back to India. And I said, okay, I was 24 years old and I love teaching, and also I got voted as one of the best professors. And so at that point, I was convinced that I would still go back to India but be a professor. But you cannot be a professor without a PhD, so I stayed back and got a PhD.

And then as soon as I finished my PhD, there was a little struggling company in Toronto, very good technology. At that point, the best you could do was 300 bits per second on a telephone line. These guys had cracked a code to do 9,600 bits per second, which was magical. But the Canadian companies are usually not very good in marketing, finance and so on. So the company was really under trouble. 

So the head of engineering had to quit the company to come and teach at Queen's University, where I was doing my PhD. And just a couple of months before I finished my PhD, Motorola came and bought that little company in Toronto and they hired Peter Brackett to be the head of engineering again. And so Peter called me up and said, hey, forget all this research teaching, why don't you come here? It's a lot of fun. 

But because I knew Peter so well that I said, yeah, this makes sense. And so I landed up in Toronto working for them. And so over the next four years, we built that into $100 million business, went from 20 people garage operation to about 400 people. And it was quite a ride, nothing like what I had done in research or Master's or PhD.

And so in 1984, when I and my wife looked at it, we said, hey, if I can do this for Motorola, I should be able to do this for myself. And the only two places where there was this concept of venture capital was Silicon Valley and Boston. So we moved to Boston in 1984 and we've been here ever since.

[10:35] Jennifer: So after eight years at Motorola, you co-founded your first startup, Coral Networks in Boston, but you left within two years. Why did you decide to call it quits, your first company, and what was the decision process like for you?

[10:50] Desh: Yeah, I started a company with another co-founder, Frank Browns. And there was no ecosystem at that point, maybe there were 5 or 6 entrepreneurs in all of Massachusetts, (and) the biggest venture capital fund would be like $5 million or $10 million. And so if ever they funded you and something went wrong, they wanted to make sure that you hurt more than they hurt. A minimum thing was you had to go without a salary, at least for a year, before they said, oh, okay, we know you're committed. 

And so my wife also went to IIT, and she had a master's in computer science, so she kept her job and I quit. And for a year, we had two little kids, so it was not easy, but it was fun. And then after a year, dream come true, we actually got funded $3 million, which is a lot of money in those days. And then I got on the payroll, and my wife resigned because she had to at least look after the kids, and everything was fantastic. 

But about 3-4 months into it, I and my partner had a difference of opinion. And the difference of opinion had to do with time to market. We were trying to do something that's 10 times better than the competition. And as we started getting into the implementation, 10 times was very hard, 5 times was a piece of cake, 8 times was maybe doable.

So my approach was, let's do 5 times, which is more than enough to get into the market, and then we get the feedback to the market, and then we'll go from there, But my partner was a technical macho. He said, Desh, two more weeks, I know we can do it, and this went on for about six weeks. 

And then at that point, I knew and I was more the junior partner, I was like a new immigrant, and he was more an established executive in a company, first-time entrepreneur, but well-known, so I knew the board would pick his approach as opposed to my approach. 

And so one day, I was driving up to the company, and I remember I stopped at a gas station, called my wife, and said, I think I'm going to resign. And so she said, okay, if that's what you want to do, you should do it. And so I went and I told Frank that, Frank, I think we don't agree on this, and I don't want to hang around saying I told you. So, because who knows? You may be right, but those chances will diminish even more if I just hang around and keep saying I told you so. 

So I resigned, neither of us had an income, we had two kids, mortgage to pay, almost at the end of any bank accounts, so it wasn't easy. But when you are going through it, it didn't feel that bad. In life, people go through these hardships, but these hardships are what broaden your comfort zone.

Having grown in a very middle class, safe environment, getting exposed to a lot of these things really broadened my comfort zone, and then life didn't look that risky. And then it sort of appeared like, hey, what can go wrong? Nothing much. As long as you get to do what you want to do in life, everything else is a bonus. And so I think that's what led to the ability to do lots of different things when it's wrong.

[14:00] Jennifer: Yeah, they say true personal growth lies outside of your comfort zone - I think that’s a very good lesson to learn early in life.

Also, another insight is if you could already launch a product that is cheaper, better or faster than your competitor, then don’t wait for perfection. Being 5x better than your next competitor is good enough to go to market with and then you can always improve upon it.

[14:25] Desh: Yeah, I mean, even if you do two times better, that's more than enough to get into the market. And then you think you know the market, but you really don't until you really get the product out and start talking to a lot of people. When people really pay, that's when they really give you real input. And so there are two lessons - that's one lesson. 

The other lesson is in life, there are things that you control and there are things that you don't control. And if ever you find yourself in a situation where things you don't control are the reasons that you don't like, then just get out of the place, because that's a big opportunity cost. I could have hung around there for another two years and lost the opportunity. 

In fact, that's exactly what happened to that company. I went on and fortunately had another successful company, but that gentleman, he kept going for 4 years chasing that thing, and he raised a lot of money, but the product was still not there. Finally, the company got bought by Synoptics for $15 million or something, so it was like a fire sale. 

So I think if you find yourself in situations where there are things that you don't agree with that are beyond your control, there's not much you can do. You just have to get out and find another situation.

[15:43] Jennifer: In fact, actually, one of my favorite quotes is by Viktor Frankl where he said, if you're challenged with a situation that you cannot change, it's better to change yourself.

A few months later, after you quit, you started Cascade Communications, your second startup. I remember I had a network switch from Cascade back in the day, I probably still have it somewhere in my basement (chuckles). And for those young people out there who probably don't know what I'm talking about, can you tell us what it was like in the early days of Cascade? 

[16:14] Desh: Fortunately for me, I'd been in the telecommunications business by that time for about a decade. Not only did I have a PhD, but also been in the market. 

And what was happening was at that time, all the companies were building networks to make themselves more productive. So a network would be all the GMs (general managers) connecting all their branches so that employees can become more productive. Slowly it started extending to connecting their vendors and supply chain people, but these are all very captive networks. 

And when I looked at the telephony, the telephone networks were built by companies to connect their branches. And then of course, by 1988-1989 when I was starting my next company, there was no phone that couldn't connect to every other phone in the world.

So I said, hey, if this is true, then every computer has to be able to connect to every other computer in the world. So that was the big idea. Now, to be able to make that happen, networks had to go away from being private networks to public networks, because anybody should be able to connect to it. And the public networks had to be built with packet switches, not the phone switches. 

And so building packet switching for public networks became the idea for Cascade Communications. Fortunately, what happened was… this was 1990 when we got funded, but in 1992-1993, suddenly Internet popped up, and Internet is exactly what we were envisioning. Usually startups cannot really do a missionary sell and change the world in a different way, but what startups can do is anticipate the change and get ahead of it and accelerate and facilitate that change. 

So it just lucked out that Internet started at that point, and Cascade became the primary backbone provider for all the Internets. And so by the time we sold the company in ‘97, we used to carry 80% of the backbone traffic for Internet.

[18:24] Jennifer: Yes, I very much believe it because I used to see Cascade switches everywhere I went. (chuckles)

Given your last experience at Coral Networks, what lessons do you think you took away? What did you do differently at Cascade, besides being the sole founder of the company?

[18:42] Desh: Well, in Cascade, I think it's building the team, making sure that we're all together, we're focused on the same goal, and also building a culture of getting input from customers and outside, so that you don't get too internally focused. Because when you're doing a startup, we had probably about a dozen engineers, so all of used to work very hard and try to get these things done. 

But I remember first time I invited an expert, a consultant to come in and I had all the 13 people in the room. And when he said something may not be right, this may not work, that may not work, all that kind of stuff, it was very hard for the team to accept it. It was like, hey, we're the guys who are working so hard on this, we know what we're doing, who is this guy to come and tell us? 

And I think a lot of cases it was true too, because other people are not as deep as you are, because that's what you're breathing and living. But slowly the culture got built where we would have these things happen every month, very often. But then if we hear the same message 5 times, 6 times from other people, that is a good signal for you to rethink if what you're doing is the right thing. 

And so that culture got built where we’re constantly listening to the customers and responding to the opportunity and so on. Because speed is everything in startups and it's a trend that's happening, it's a growing market and first-mover advantage is everything.

[20:15] Jennifer: And it's interesting because you mentioned that in your book as well, you talk about building a winning startup culture and why you think it's so important. Because I've definitely experienced it in my last startup, having an egoless culture, being cohesive, working as a team to… when you're rowing the boat, making sure that everyone's going in the right direction or the same direction, and then listening to the customers. 

The culture of a startup or of any company is invisible, but as you said, its influence in producing the results is unquestionable. In a startup, some people take huge pay cuts to join a startup. Sometimes the culture may be the deciding factor for them for not leaving, to be honest, in my experience at least. 

[21:01] Desh: We talked about the third part, listening to the customers. But what do I mean by egoless culture? In a lot of organizations, what happens is you get people in the group that have big egos and when you have big egos, there is a very strong authorship of ideas - you know, this is my idea. 

And typically what happens is that when you make these decisions, you don't really know whether you’re right or wrong, because you make a decision based on the information that you have at that time. However, decisions become obvious whether they're right or wrong as time goes by.

If you have a culture with very big egos, even after you see that it's a mistake, it's very hard to correct it because the person who authored that idea, he's going to fight tooth and nail - he knows it's not the right idea, but he can't give it up. Whereas if you have an egoless culture where people really enjoy thinking through and making the right choices as they go along, you build value. 

So, for example, in a startup, you make a lot of very quick decisions. So let's say you make ten decisions a month, you get five right, five wrong, because you really don't know, it’s not like there's a lot of data and guarantees and so on. And some of them are right, some of them are wrong, so let’s say five are right and five are wrong.

But as time goes on, if you have a culture where the team has the ability to trim the bad decisions and just nurture the good decisions, the value gets built. If you have a culture that's a very high on ego, you standstill, you got five right, five wrong, and you're not willing to give anything up, and so you don't really build value. 

So it's very important that you all stay together. And the cohesiveness is very important for the same reason, because it's like a little canoe, and if you're not all trying to get to the same direction, the speed is zero. If you're all trying to navigate to the same direction, you do pick up speed, (it) doesn't mean that it's the right direction, but you now have the ability to actually keep this canoe moving so that you can direct it. 

So it's two different things - one is does the team have the ability to pick up the speed and get things done? And then as information becomes available, do you have the ability to correct it?

If you stand still, you may be constantly trying to point it to the right direction, but it doesn't work because if you don't have speed, you can't navigate. To be able to admit that you are wrong and you should be heading the other way, it's very important to build that culture. 

[23:40] Jennifer: I think that cohesiveness of the team also comes from first having an egoless culture, because you're more likely to attract very talented team members. 

And I think that egoless culture is so hard to create these days because it is invisible. It's part of the personality of the founder I believe, it comes from top down. Culture is not something that you can build from bottom up, in my opinion. So kudos to you, I love those three winning elements of building the right culture for the company. 

[24:15] Desh: Also, Jennifer, I think a lot of the people think that big decisions are made in the board meetings and big shots sitting coming together making these decisions. But that's not true. What I found is that if you build a culture that's right, it's all a question of choice. So the value is in actually thinking through and lining up the options that you have and how do you evaluate those options. 

But let's say you have two options, and if you don't fight over it, then what you do is you can just flip a coin and just pick one, so again there is no author for that decision that you're making. The only decision that you're making is that this is a decision that needs to get made today and let's not spend a lot more time thinking about which is a better decision.

So I think getting the whole group involved in all the decisions and making sure that there isn't one big shot who is calling all these shots is very important. Even though ultimately somebody has to be responsible for keep the train running, everybody feels like they're all a part of them. 

[25:17] Jennifer: You sold Cascade to Ascend Communications in 1997 for $3.7 billion. In your opinion, when should an entrepreneur exit from his or her venture?

[25:30] Desh: Well, it depends on the market situation, what happens is sometimes the markets start consolidating. When market starts consolidating, either you are the consolidator or you become a part of a bigger company, like we became a part of Lucent. At that time Lucent was a very large company and so I think it's a question of really the market. 

And sometimes it's more the interest of the entrepreneur know you get interested in other things and this is not what excites you and that doesn't mean you have to sell the company. You can hire the management team and if you feel comfortable with the team, they can run the company. But it's usually the market that decides whether you should be consolidating or not. Because it's by consolidating that, you create a better prospect for that company, for the employees and everything else. 

[26:22] Jennifer: Now you hired Dan Smith as the CEO of Cascade the second year into the venture, who also became a co-founder for your next startup, Sycamore Networks. I've noticed that over the past three decades of your serial entrepreneurship, you've somehow “avoided” being the CEO and preferring more the chairman role or focus on philanthropy. Was this by design and why did you not want to be the CEO? 

[26:51] Desh: Yeah, so in the first situation where I was doing Cascade, that was the first time entrepreneur building a company. I did have this feeling that I need to build a team so that I don't have to do everything. And if I have free time, there's no lack my commitment to the success of the company and I could add a lot of value. 

But also I was a young immigrant from India and those days it wasn't common for Indians to be CEOs and so the board was sort of constantly hinting that, hey Desh, you should get a CEO. Now of course the CEO of IBM, Google, Microsoft, they're all Indians, so now it's fashionable, but those days it wasn't. And so they kept encouraging that we should hire a CEO, somebody who's got a little bit more sales background and so on. And so I think that also motivated me to hire Dan Smith as a CEO, as I became the chairman. 

But then it turned out to be a fabulous experience for me, because I had CEO who was running the whole thing, but I was fully engaged. I was part of every decision that we made. But also I got to add value in things that the company wasn't able to focus on doing day-to-day stuff. 

And so I started Sycamore, and when we were getting ready for IPO, by that time, Dan was sort of tired of the other company, and so he had left. And so I called him up and said, hey, Dan, do you want to come here? And he said, sure. So that's how the second journey started. 

So now that I have a taste of it, all the organizations that they do, I don't become the CEO, I usually hire somebody else who can take that over, make it their team as much as it's mine, and there's huge leverage.

[28:41] Jennifer: Speaking of Sycamore, I remember (it) went public with about $15 billion in market cap. I think it also, on its first trading day, achieved the largest market value by any Internet related company, and also the fourth largest gain for (a) US stock, which is close to 400%. 

And for those people who haven't lived through the crazy Internet bubble in the late 90s, the company went public within, I think, 20 months after it was founded. Why did you take it public so quickly? Did you see the window of opportunity closing?

[29:17] Desh: No no, it's more window of opportunity opening. So what happened was Cascade was all about connecting every computer to every other computer. And by ‘97 is when we sold the company, I left the company right away and then I probably spent a year just mentoring a lot of the entrepreneurs in the Boston area. I must have mentored maybe 100-150 companies, that was my full time job. 

And then I came across a couple of these MIT engineers who were working on “optical”. And at that time, what used to happen is that the bandwidth used to be very expensive. If you wanted to get a connection between Boston and California at a few megabits, that would be like $1 million a month, very expensive. Between Cascade and Cisco and all of us, we used to spend billions of dollars working on a technology called quality of service, because you had very limited capacity of the network. 

But then when I looked at this fiber optic technology where you can take one fiber, which is as thin as a hair, and you can put 200 laser beams on it of different color, each laser beam you can blink at 10 billion times a second. So it's like just a massive amount of bandwidth. And so I said, this is the revolution we need to bring about, blow open this whole network and build a lot of capacity on the backbone. And so intelligent optical switching network became the tagline for Sycamore.

And also, not only was it expensive, it took about the telephone company six months to get a new line. So we said, instead of doing that, let's build this optical switching. So you create the capacity, but also you do the switching so that the provisioning time comes from 6 months to 6 days to 6 seconds to real-time. And also, if ever there's a cut in the fiber, it automatically re-routes. So intelligent optical networking became the opportunity. 

At the same time, the regulatory environment, AT&T used to have a monopoly, so they broke up AT&T. So a lot of the Regional Bell operating companies came up, and there were a lot of alternate access networks and so on. And the Wall Street was crazy funding all these companies, and so they were all valued based on how many customers they had, not necessarily on the profits they were making. 

And so the demand for what we were doing, I could see the demand. So the very first quarter when we started shipping the product, this is a complicated optical networking product, but the team was so good, we shipped within the first quarter. So the first quarter, the revenues were $10 million. Second quarter was $20 million, and then $30 million, $60 million, $90 million, $120 million, $150 million. So these were quarterly revenue growth. 

And there's no way we could have kept up with that demand if we hadn't gone public and raised that $1 billion. And because we raised that money, we were able to continue to hire 25 people a week. And so I think that the timing turned out to be perfect. And the team was so good that they continued to execute on that, because shipping $150 million a quarter within like 3-4 years, and these are all like hard deliverables. If something doesn't work, the network goes down. And so it was a remarkable experience. 

[32:42] Jennifer: However, once a high-flier years later, sycamore was hit hard during the economic downturn in 2008 and never recovered. So the company was acquired for under $20 million in cash, quite a humbling end. What, in your opinion, happened to Sycamore?

[33:04] Desh: Yeah so the technology always had a huge premium when it could do more than what was possible at that time. And as a result, you get 60-70-80% margins. And if you have margins, you can build companies in (the) US. 

But what happened was because Sycamore had a huge market cap, $50 billion or so, Lucent and Nortel and every venture capitalist had a Sycamore knockoff, and they invested very heavily in optical networking. So we were all capable of doing technology that could do terabytes per second, but the market demand was more for gigabits, so immediately all of that technology became commodity. When things become commodity, the margins drop down to 35-40%. And if the margins are 35-40%, the only way you can build successful companies are in China and India. And that's why I started Tejas Networks India. 

But fortunately, I think what Sycamore did was Sycamore had raised $1 billion, and we were very careful in not throwing it away. So we decided that at that point, it's better to just return that money to the shareholders and then merge it with Siemens for whatever we had. 

And so I think what happens is, if things become commodity and the value moved, the value in telecommunications in the early 80s-90s was being able to move the bits - that was the challenge. Once you could move these bits and megabits and gigabits and terabits, the value moved to adding value on top of those bits, like Google and all that kind of stuff.

And now of course, it's moving even further away and the world constantly keeps evolving, so it's not like there's a success and failure. Things will change, and you just have to adapt to the change.

[34:59] Jennifer: Let's switch gear a bit and talk about your philanthropic work.

I think it was in 1995, which is almost 30 years ago, that was when you and your wife, Jaishree, founded the Deshpande Foundation to support innovation and impact investment across India and North America. And it was quite innovative at the time, especially in terms of impact investing and social entrepreneurship in places like India. 

Can you tell us what motivated you? 

[35:31] Desh: So it's a journey. Now I can tell you a story which all puts it altogether. 

In ‘95, we set up the foundation because we (Cascade) went public, and it wasn't a lot of money, but it was more money than we had ever imagined. And so we said, hey, let's set up a foundation and start thinking about it, and we would write small checks. First time you write a check for $100,000 or something, it's like a gut wrenching feeling - wow, giving away this much money. And so that went on until Sycamore went public. 

And of course, after Sycamore went public, I just turned 50 and we had a lot more wealth. And I sort of decided that I don't want to be the entrepreneur or the CEO of any organization, I wanted to nurture other people who would have the same opportunity. And that's when MIT approached me, because Stanford was doing a very good job of connecting with the local entrepreneurship community, MIT was not - MIT was very isolated from the local environment. And because Sycamore was like a rising star at that time, they approached me and said, hey, do you want to join the MIT board? I did. 

And then I realized that if we had to create more opportunities for entrepreneurs, all the ideas for our companies like Cascade, Sycamore and so on, actually came from Bell Labs. And by year 2000, there was no more Bell Labs, and US taxpayers were spending $50 billion a year to fund research in universities, but not much was coming out of it. So our first philanthropic initiative was actually to set up that Deshpande Center at MIT to see if the innovators at MIT can actually come up with more ideas, so that the entrepreneurs can start companies. 

And the idea was pretty simple - the idea was instead of innovators innovating the whole thing and then the technology licensing offices go look for opportunities, you connect the innovator to relevance as they're innovating, so that when they finish completing the innovation, it's more likely that it'll have a pull in the marketplace. And fortunately, that became successful very quickly. Within four years or so, anything that went through the center was three times more likely to have an impact than otherwise. 

And then I used to co-chair a council for President Obama on innovation and entrepreneurship. So I got the opportunity to get a little closer to Washington, and so I worked with the National Science Foundation to roll out a program called i-Corp with the same concept nationwide that became successful very quickly. So it's a nationwide program in US now, and last year, 2,500 companies came out of it, particularly from Kansas and Indiana and Florida, as opposed to MIT and Stanford. All the universities, which get like $50 billion, are now slowly getting into this game of connecting relevance to innovation, having an impact. 

India now is spending many billions of dollars every year on research, but not much comes out of it. So six years ago, I and my wife, we set up an initiative India to replicate i-Corp in India. And it's coming along nicely and will probably take another five years before the government hopefully adopts it in a bigger way. But that was the beginning of the journey of promoting entrepreneurship in high tech.

[38:58] Jennifer: And in making sustainable social and economic impact, how does the approach differ in the US compared to a country like India? 

[39:09] Desh: It's not so much the difference in the countries, it's more… you can look at the world and 8 billion people, and there is 3 billion people who have disposable income, and 5 billion people don't have disposable income. And making a difference in the lives of those two groups of people is what everything is about - social entrepreneurship, universities, governments, everything. 

But the way you make a difference in the lives of those two groups of people is a little different. In India, that would be like 20%-80%. In US, it'll be 80%-20%. But when you make a difference in the life of the people with disposable income, you have to compete for the opportunity because they have the options. You cannot just go to them and say, hey, try this - you have to compete, you have to innovate, you have to show them that you have something that they've not seen before. And so innovation becomes very important. And when that innovation meets relevance, you have an impact. And that's the ecosystem that's gotten developed over the last 50 years for entrepreneurship and startups and everything else, which is what drives the GNP, GDP and everything else.

But when you want to make a difference in the lives of the people at the bottom, particularly if you go all the way to the bottom, they're just struggling to get through the day. So innovation doesn't mean anything to them. And you don't need a solution that's earth shattering, patentable, first time in the world, hugely competitive.  So that equation actually gets turned around and it becomes relevance plus innovation is equal to impact.

So you have to co-create this solution with them, you have to build capacity within those communities, and then you slowly start scaling it. And as you start scaling it, you'll get an opportunity to inject more and more innovation, more and more strategic thinking, financial planning, all the stuff that you do in the 3 billion people economy. 

But the mistake that most of the people do is they start with innovation. And unfortunately, it doesn't get them anywhere because they're constantly coming up with ideas that are more and more complex. And the people for whom they're coming up with ideas have no capacity to absorb.

[41:16] Jennifer: It's interesting because recently, my friend who runs an NGO, she went to India and they got a grant, actually from Stanford, because they work with prisoners in the justice system in India. And they realized that a lot of the prisoners can't actually read or write, so when they're signing, they actually don't know what they're signing. I think this is one of the typical examples of relevance, (so) they created an app so it could speak out what the text is.

So it's typical, one of these things where if you're not in that context, for those of us who are living in the Western world, it doesn't even come to your mind that this is what is happening in certain parts of the world. 

[41:58] Desh: Yeah, no, you're right. In fact, I think the goal for our foundation now is to really connect competence and the connectedness. 

So I think the big challenge in the world is how do you still motivate people to come up with good ideas, but how do you also connect them to the people who need them so that we are coming up with relevant solutions and also scale them in a way so that there is capacity that's getting built within those communities to be able to spread that.

Because unless you build that capacity and the ownership within those communities, your solutions don't scale. And so we started this program in India about 15 years ago and in US about 10 years ago, and it's very nice to see how some of it is showing a lot of promise.

[42:46] Jennifer: You're promoting entrepreneurship to people who are at the bottom of the pyramid, both in the US, and as well as India. And most of the time, these are maybe small businesses, but it creates livelihood, it gives people more meaning, more purpose to go on. 

And looking at how India has evolved over the last 10-15-20 years, how do you look at the future of India now that China, its main competitor on the global stage, is slowing down? What do you think the future holds for India? 

[43:26] Desh: In India when I left in 1973, there was a huge difference between India and, let's say, rest of the developed economies. And there was not much confidence in the young people that they could do anything big. 

But now the confidence is just amazing of the young people that they can take on the world. And I would say there's probably 2-3% of the population, which is still like 20-30 million people who are second to none in the world in terms of their competence, whether it's engineering or doctors or lawyers, journalists, any profession that you take. There are globally competitive talent in India, but that's maybe 2-3-4%. But then you have 80% of the people who are not a part of that whole economy.

So, one side, I think India needs to continue to spread that talent out to more and build the economy, unicorns and all that kind of stuff. But also the country needs to find newer and newer ways to bring those benefits to the people who are being left behind. 

And it's very exciting in India because I think India seems to have three things that's a rare combination. You have globally competitive people, so it's got the talent. You have huge problem facing right in your face - you could go to Mumbai, any big city or rural India. It's very obvious the poverty and suffering and what they have and what they don't have and everything else. So it stares at you every day. And the third thing is there is a lot of freedom in India - you can do anything you want, nobody stops you. As a combination of those three, India is coming up with lot of good social entrepreneurship programs that are scaling. 

For example, I work on a mid-day meal program in India where we serve 2.2 million mid-day meals every day, so we already served 4 billion meals, and that still continues to scale. We are working on a farm pond where you dig a hole that's 100 ft by 100 ft by 12 ft and that's enough rainwater to irrigate 5 acres of land, and it doubles and triples the income of the farmer. We've done 10,000 of them and we are on target to do 100,000 of them.

And when you have the scale, you can get the opportunity to inject a lot of innovation. So we have a rural transmission technology center that we built, which tracks 30 satellites, collects about a petabyte of data every month. And given any piece of land, we can re-create the history of water for the last twelve years so that we can ideally locate that farm pond and so on and make sure the farmer actually makes more money. He actually pays for the whole thing - he pays 20% upfront 80% in loan, and then he pays it back within a few years. 

So these type of solutions that can be implemented and it's scalable, I think, will start coming from India. And that's a beacon of hope for the bottom 5 billion people because there's no reason as to why these solutions that get developed in India cannot propagate to other parts of the world.

[46:37] Jennifer: And besides providing access to capital, how do you teach people to become entrepreneurs?

[46:43] Desh: Well, I think it's pretty simple. There are three types of people. People, when they see a problem, get all excited about it. There are people who see a problem and start complaining. And people who are oblivious to everything. And the only difference between a vibrant community and an impoverished community is a mix of those people. 

For example, MIT - when you were here, you could see how everybody is chopping at the bits to solve some problem for the world. In fact, their challenge is not having a good enough problem to solve, constantly they're struggling to convince you that their problem is the one that will save the world. But the end result of that is that in those communities, problems don't hang around too long, because if there is a problem, somebody is going to grab it and they're going to solve it.

In impoverished communities, problems become chronic. They get deadlocked, people try a little bit, they cannot solve it. So they feel victimized, they feel helpless, and then they start complaining. So a sure sign of an impoverished community, whether it's a community, a company, a nation, is that within 10 seconds the conversation goes negative - you can't do this, there's corruption, helplessness, so they only complain. 

So our whole foundation philosophy is to change the culture of that community, but the culture cannot be changed top down - you cannot do mandates and just say, you shall do this. So what you have to do is you have to pick five people who are more likely to succeed in those communities and somehow give them a hand to become successful. Then 5 becomes 10, becomes 500, becomes 5,000. At some point it has critical mass and it takes over. 

And typically in any of these cultural changes, you have reached a success point if you have changed a 1/3 of them who actually embrace the new approach, another 1/3 of them reluctantly accept it, and the last 1/3 will never accept, but that's okay. Over the course of time, the new guys will continue to accept and it'll change. 

So everything that we do, for example, we started a program in US called EForAll, entrepreneurship for all. This is about ten years old now. We started in Lower Lawrence (Massachusetts), so now we have 1,400 companies. 80% of them are owned by women, 30% of them are previously unemployed, and 70% of them are BIPOC (“black, indigenous and other people of color”). And so we are on target now to scale it to 50,000 companies by 2030. 

And my hope is that we will do the same thing what the world has done for the high tech entrepreneurship. When I was starting my company (in the) 80s, there are 5 or 6 entrepreneurs in Boston. But now it's so well developed that anybody in high tech, if he has a semi-decent idea, they'll be successful. 

That's not true with these bottom 20% of the population in US, they don't have access to capital, no incubators, no culture. But if you get it to a high enough number, then it'll be noticed and the ecosystem will start getting developed for them - access to capital and incubators and government programs like workforce development. For example, workforce development is still the old way of doing it - they go teach skills, hope that the big companies will come and hire them, and that isn't happening. So it's almost like in the new economy, you need a job maker for every 10-20 job seekers. 

So we need to repurpose that $4 billion a year workforce development in US towards job makers, not job seekers. So I'm hoping that we won't take 40 years. We have already been at it for 10 years that in another 10 years, in 20 years, we'll get to a point where anybody in that bottom 20%, because that 20% is not going to go away as the world automates, there'll be people who get automated, and so we need to create an ecosystem for them so that they find a purpose in life again. 

[50:31] Jennifer: Yeah, I love that. You're inspiring the community with role models, and that's how you move from an impoverished community to a vibrant community. 

I think what people don't really realize is that when you're at the bottom pyramid, because of survival, you can be very creative, you don't actually have to tell them which business to go into. But if you give them a little bit of capital, they know exactly what to do with that money.

[51:02] Desh: Yeah, no, you're right. To be a good entrepreneur, you need three things. You need to be able to take pain, you have to be able to do with what you have, and you need some skills. 

These people are extraordinary in terms of taking pain, because their pain is unimaginable. They know exactly how to do with whatever little they have. What they don't have is a skill. And so if you just give them a little bit of hand in that dimension, they become survivors. And it's not like they build huge companies, build companies with 5 people or 10 people, but that changes the culture of the community in some ways. 

There's a lot of NGOs in US alone, there are 3 million NGOs. But the NGOs start because they have a huge compassion. And this approach is very counterintuitive for them because an NGO typically says, who is the person who needs most help? So they always pick cases where the people are most disadvantaged, but trying to help those people to start with is very complicated.

So what happens is they get stuck and maybe they'll help 5 people, 10 people, 15 people. But it's very difficult for them to bring about a systemic change. Whereas the way we're doing things in India and in here (US), we're actually picking people who are more likely to succeed and then extend that to other people so that it becomes a part of the culture. So that's the difference between being a social worker and being a social entrepreneur.

[52:32] Jennifer: And I think entrepreneurship, as I've seen it, can be very contagious, because certain members of the community sees that other people are prospering, then they also get that bug.

[52:44] Desh: You're absolutely right, it’s addicting. Because I think in general, what I found is that once people change over from being a complainer to problem solvers, it’s so much more fun that you'll never go back and become a complainer again. 

[52:59] Jennifer: Right. Desh, what do you look for in a startup?

[53:02] Desh: Well, I think it's always the entrepreneur because like you have heard before, you always fund an A team with a B idea than an A idea with a B team because the ideas have to keep changing, they don't stay the same. And so you want people who are good listeners who have the ability to see reality for what it is. 

And the other two qualities are probably being optimistic and being a little naive because people who are too thoughtful, like professors or people who can think through everything. They don't make good entrepreneurs because they see too much risk in everything. So people have to be a little naive, they somehow have to believe that, hey, that's okay, I can get it done. And it's irrational, but that's an important quality.

The second one is there's only three things that are true when you try to do something, things always take longer than you thought, it always requires more money than you thought, and it's more difficult than what you thought, so there's only bad news. And so you have to be very optimistic, whether it's right or wrong, you somehow have to believe that tomorrow is going to better than today. 

And I’ve seen those people actually do very well because they don't give up that easily, they just keep trying. And it's just that sheer optimism that bulldozes through a lot of the problems that you come across.

[54:25] Jennifer: And similarly for you, everything is so simple, it’s very simple. (chuckles)

[54:30] Desh: Yeah, I count my blessing. How can I go wrong? I am always ahead with that $8 in my pocket, so I'm always a winner.

[54:40] Jennifer: That's right. (chuckles) And for the young generation who are today trying to be an entrepreneur and find their passion, what advice would you give them?

[54:52] Desh: Well, finding a passion is always the hardest thing, because you always say, hey, pursue your passion. But then people say, I don't have a passion. What is my passion? And the best way to get there, to find your passion is, number one, at least you can start eliminating all the things that you do in life which you're not passionate about. 

A lot of the times, particularly with the social media and everything else, people try to keep up with the Joneses too much. And when you start doing that, you’ve lost all your freedom.

To really find your passion, you need two things. Number one, you need a lot of freedom, actually, and the freedom both in terms of having a little bit of time as a white space, but also financial freedom. When do you get financial freedom? You get financial freedom when you have more than what you need. How much you have, that just depends on whatever you have, but you definitely control what you need.

So I would say people should just simplify their life to the point where they do have financial freedom and a lot of time so that there's enough white space to look around and really come to that self-realization in terms of what is it that they really enjoy. And if people really do things that they enjoy doing, then life is great.

[56:09] Jennifer: Everything is inside of you if you just had the time and space to think.

We're soon coming to the end of this episode. Desh, can you tell us what your favorite books are over the years?

[56:20] Desh: Recently, over the last few years, I don't read books anymore. I just listen to podcasts because I know how much effort all of you put in terms of producing these podcasts. I usually go for a walk every day, and so the most I look forward to is to listen to the podcast. 

If somebody mentions me a new book or whatever, it's not that hard to just Google that author and find a podcast where they summarize everything that they have to say in that book. So I get my walk done and I listen to the podcast. And it's been an amazing experience because every day I get to listen to something else and I'm looking forward to the walk because I get to listen to all of that stuff.

Right now, I’m listening to a lot of Lex Fridman, and it'll probably keep me busy for maybe 7 or 8 episodes, and then I move on to somebody else and somebody else. But it's amazing how you can leverage the creativity and the effort that so many people are putting in and squeezing everything out and all you get is the essence.

[57:24] Jennifer: So I also just want to mention that your book “On Entrepreneurship and Impact”, it's a very quick read, I finished it in a day. It's full of practical advice and nuggets of timeless wisdom for entrepreneurs, so I really enjoyed reading it. You said your mom wrote philosophy books, she would be very proud, it’s very philosophical at the same time. Yeah, and also do an audiobook as well.

[57:49] Desh: Okay, that's a good idea.

[57:51] Jennifer: There you go. And last but not least, what does the Founder spirit mean to you? 

[57:56] Desh: Well, like I said, listening to founders stories never gets stale because every journey is a slightly different journey. And it's not just one field. It's not just like technology or sports or social entrepreneurship or spirituality. It's very fascinating to listen to the stories of different people who have done so many different things. 

And it's almost like you get to live so many lives. You get to relive everything from their perspective and really opens your mind and broadens the way you think about the world, the way you experience everything that's going on in your own life. 

You bring out the best in those people, and being able to take all that and squeeze that into a few nuggets for the listeners, I think is very valuable. And so thank you for doing what you're doing and keep up the good work.

[58:53] Jennifer: Thank you. I appreciate that.

We're now coming to the end of our interview, and as you know, we end every episode with a quote. And for this episode, we have a quote from Mahatma Gandhi, an Indian lawyer, anti-colonial nationalist and political ethicist, 

“The best way to find yourself is to lose yourself in the service of others.”

Desh, thank you so much for coming on the podcast today and inspiring us with your work in both tech entrepreneurship as well as (a) social entrepreneur. And thank you so much for taking the time.

[59:29] Desh: Thank you.

[59:31] Jennifer: And if this podcast has been beneficial or valuable to you, feel free to become a patron and support us on Patreon.com, that is P-A-T-R-E-O-N.com/TheFounderSpirit. As always, you can find us on Apple, Google, Amazon and Spotify, as well as social media and our website at TheFounderSpirit.com. 

The Founder Spirit podcast is a partner of the Villars Institute, a nonprofit foundation focused on accelerating the transition to a net-zero economy and restoring planetary health.

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