Anirudh Suri

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Are Entrepreneurs the New Freedom Fighters of India? Kanwal Rekhi, VC

TRANSCRIPT

Kanwal Rekhi: Entrepreneurs are the new freedom fighters of our India, those fighting for India’s economic freedom, freedom from hunger, from poverty. Finally, India is getting smart. Can we imagine having a million entrepreneurs by 2030? Can we imagine having ten million entrepreneurs by 2047?

Anirudh Suri: Mr. Rekhi was the first Silicon Valley Indo American founder and CEO to take a venture backed company public on the Nasdaq. He was also one of the founders of TiE, The Indus Entrepreneurs, which has since become one of the largest global mentoring networks for Indian entrepreneurs around the world. He’s now the author of a recently launched book about his own journey, Groundbreaker.

Kanwal Rekhi: Between 1947 and 1991, India spent 300 billion dollars on public sector industry. India spent only 1 billion dollars on all the IITs in that time frame. When you invest in people and their brains, the benefits are immense.

Anirudh Suri: India should have a soft power policy of setting up an IIT in Nairobi or Lagos.

Kanwal Rekhi: If I were a policymaker in India, I would be setting up a thousand IITs. Every Indian should have an IIT grade education. The brand of India changed in my lifetime from a land of snake charmers and beggars to an entrepreneurial, technological powerhouse. This is becoming a two player AI race. What role does that leave for other countries in the Global South, Africa, Asia, India? Indians will implement all the IT solutions for everybody, everywhere. Nobody else has the manpower.

Anirudh Suri: Where do you see the binding constraints for India in creating that kind of ecosystem?

Kanwal Rekhi: Capitalism is the politics of wealth creation. Socialism is the politics of wealth distribution. You cannot distribute what you don’t have.

Introduction

Anirudh Suri: It’s my honor and privilege to have someone here with me whom I have admired, whose work I’ve seen during both my time in the States and now from India, someone who has inspired many generations of entrepreneurs, Mr. Kanwal Rekhi. It is my real pleasure and honor to welcome you to our podcast today. Welcome.

Kanwal Rekhi: Well, thank you. It’s my honor, it’s my pleasure.

Anirudh Suri: There’s so much I’d like to cover with you today, but what I want to start with is the thing that has maybe shaped your journey the most: entrepreneurship. I think it’s a word that maybe fifteen or twenty years ago wasn’t so much in the Indian lexicon as it is now, but of course you’ve lived and breathed entrepreneurship for several decades. You’ve spoken about your journey in your book at length, but what I want to ask is: over the several decades you’ve watched entrepreneurship evolve, not just in the US but in India and other parts of the world, how have you seen it evolve from the age of PCs, to the internet, to now the age of AI?

The Evolution of Entrepreneurship

Kanwal Rekhi: In the early days, when I did my startup back in 1982, it was, by and large, technology based entrepreneurship: PC boards, networking software. Now a lot of entrepreneurship is around services built on top of that technology, the apps, the app based services, the Ubers. There’s been an evolution because the technology has developed and diffused, and those platforms are now being used to offer services, and also to organize the unorganized sector, to bring fragmented market players onto a platform. There’s been quite a bit of evolution there, but technology entrepreneurship is still around, just not as much in India as in the US.

Anirudh Suri: Do you expect the nature of entrepreneurship to change again as AI becomes the predominant technological driver, the way it changed from the PC era to the internet era, with the aggregation of markets and marketplaces, the Amazons, the Ubers, the Olas, and in India’s case now, the delivery apps?

Kanwal Rekhi: It’s very hard to anticipate, but technology takes strange turns from time to time. The beauty of entrepreneurs is that they imagine what the customer or the market may need, and then they experiment, and that can take you in a direction you never even thought of. AI is opening up all sorts of new possibilities. Avatars, for instance: instead of you attending the meeting, your avatar attends the meeting. Instead of you being on the Zoom call, your avatar is on the Zoom call. All sorts of things will happen. AI is a very new, exciting field, but I have no idea where it will take us. The simple things are obvious, like “help me read this contract,” but what’s possible beyond that is limitless.

Technology, Geopolitics, and War

Anirudh Suri: The other change I want to ask you about, as we were discussing earlier, is that my own book, The Great Tech Game, is about how technology is intersecting with geopolitics, and how technological competition has arguably become the main geo-economic and geopolitical competition of our times. You see the US and China locked in a race for technological leadership, much like industrial-era nations were locked in a race for industrialization. Are you finding that technological entrepreneurship is also being shaped by the fact that technology has become so geopoliticized?

Kanwal Rekhi: It’s very interesting to watch what’s happening in Ukraine, the drone warfare. Drones have equalized things very quickly. The old idea of tanks and ships can be very easily neutralized with drones, and much more cheaply, more agile too. You learn something new and immediately implement it. Technology is now getting into everything, and the nature of war is changing as a result. You don’t disable the other side’s infrastructure with tanks anymore, you use the internet. Do you remember the story a few years ago, where a thousand centrifuges enriching uranium in Iran were taken over by Israel? Stuxnet ran them at high speed until they burned out. So technology is changing every aspect of geopolitics. Becoming a superpower means something different now than it used to.

Anirudh Suri: Is your sense that governments today, because of these geopolitical concerns and technology being such a central part of that battle, are tracking and driving tech entrepreneurship more than when you started out? Or was geopolitics always shaping what was being done, even back then?

Kanwal Rekhi: America has always been driven by geopolitics. The Cold War drove technology, the investments in chips, and all the investments made to support the space program, the space race at the time, and that spilled over into civilian use. The internet was initially DARPA. The whole TCP/IP internet was built to create a network that could survive on the battlefield. When we adapted TCP/IP for the real world, it was thought not to be fit for it, but it turned out to be. The tech wars and Cold War geopolitics have always driven technology.

In India, we didn’t play a smart game until recently. We bought equipment from overseas, we put our faith in other people’s supply chains. But lately, the Indian armed forces are starting to depend on Indian entrepreneurs. We’ve opened up defense to entrepreneurs, we’ve opened up space to entrepreneurs, we’ve even opened up the nuclear sector to entrepreneurs. Finally, India is getting smart, finally realizing that we should let entrepreneurs imagine what’s possible, let them know the problems we’re facing, and let them come up with solutions. Geopolitics is going to be driven by entrepreneurs.

The Global Battle for Talent

Anirudh Suri: Another key dimension of this intersection of technology and geopolitics, I think, is the geopolitical battle over the best talent. Technology is ultimately built by human talent, by entrepreneurs. You were part of a generation from India, and many generations after, where we used to talk about brain drain, where some of the best Indian talent immigrated abroad. That still happens today. The US, of course, has been the beneficiary of that from all over the world, not just Indian talent, but the best talent from everywhere. How do you see that geopolitical battle over talent evolving, given that alongside this technological revolution there are concerns on the other side around immigration, societal integration, and inequality driving a very different kind of backlash?

Kanwal Rekhi: When the Russians launched Sputnik and beat America into space, the Americans were spooked. They thought they were way ahead of the Soviet Union. My dad used to say the Russians are ahead of us in space, what if they put an atom bomb up there? We don’t have enough engineers, we don’t have enough programmers. So they changed the law in 1965. Until then, they only allowed immigration from Europe, but Europe didn’t have any engineers or programmers to spare, so they opened it up. Indians and Chinese very quickly came to America. I went there too, and America benefited immensely. There are five million Indians in America now. Twenty-five percent of all engineers in America are Indian Americans, and twenty-five percent of entrepreneurs are Indian Americans too. Geopolitics played a major role in that.

I was being interviewed by the BBC in London in 2001, and they asked, “How come you went to America? Surely Indians would have preferred to come to England, surely you knew us better.” My answer was very straightforward: yes, we knew you better, as in servants and butlers. England wasn’t letting engineers and programmers into the country as immigrants in the sixties. They had effectively banned it, you were only allowed into England if you were a servant or a waiter. If you were an engineer or a doctor, no, they didn’t want you replacing their engineers and doctors. So they suffered for it. Australia went through the same thing. America ended up with all the smart people, but then there was a race, and everybody opened up to Indians.

Lately, though, things are a little weird. America isn’t sure it wants more engineers and doctors. My sense is this won’t last very long, because American dependence on foreign talent, especially Indian talent, is fairly absolute. You cannot imagine America functioning without Indian talent. We helped build Silicon Valley, we’ve been there from the start. And the AI revolution, if you look at the founding teams, Indian talent is driving AI even in America. You have a lot of Indian founders, Indian researchers. The top people at Google, at ChatGPT, are Indian, or of Indian origin.

Anirudh Suri: What does all of this mean for today, given the historical context you’ve had the benefit of seeing, that previous era where geopolitics drove some countries to attract talent and others to resist it, with major economic implications for both? What are the lessons for India in this?

Kanwal Rekhi: America became the most innovative country because it prioritized and attracted talent. There was a former president of NASSCOM who used to say that brain drain is much better than brain in the drain, meaning our brains went out, but we built a brain trust. India has built a brain trust, because those people went to America, went to the best universities, got really trained, and are now doing important things.

How does India benefit from that? People like me are coming back, and more people are coming back than before. But China had a very organized program, called the “sea turtle” program, where they went to people in America and said, “Please come back, we’ll give you the same salary and benefits you have here.” They weren’t just using patriotic appeal, they were using economic appeal too, saying, “You’re making a million dollars a year as a professor and researcher here, we’ll replicate the lab you have here in China.” China was able to attract talent that way, and India hasn’t done that yet. Maybe India should think about how to attract some of these people back. You can’t just say “come back” to a bureaucratic system and expect people doing top notch work to suffer through it.

But China didn’t do this until they got rich, and China is five times richer than India today. So maybe our current state of affairs isn’t so bad. As we keep getting richer as a country, this will become a more natural thing to happen.

The Role of Governments

Anirudh Suri: Let’s talk about the role of government, Mr. Rekhi. As you mentioned, even in the Cold War era, government drove a lot of tech innovation and entrepreneurship for military or geopolitical needs. But there’s another side to government, which is regulation. The government can be both an enabler of innovation and a regulator of it. Today, as industrial strategy makes a comeback, and as technological competition over AI heats up between the US and China and other countries, governments feel that if they don’t do enough, they’ll be left behind. But the natural corollary is that they also tend to over-regulate sometimes. There’s this whole question of how you balance regulation with innovation for a technology like AI, which is also seemingly very high risk. What are your views on that?

Kanwal Rekhi: In India there was a third thing too. The government owned a lot of businesses, a lot of technology. And the government does need, especially for national defense and geopolitical reasons, to ensure some level of self-reliance in defense. You can’t depend on others to supply you with everything. So I fully agree the government should do some level of enabling, empowering, directing, investing. But by and large, the government should find a way to internalize R&D in the private sector. It should find a way to enable entrepreneurs to take bigger risks, and let them play, because innovation is the outcome of a free mind, the imagination of a thinker. Innovation doesn’t just happen on command, somebody has an aha moment.

So how do we enable a large number of people? I’ve been preaching lately that India is a country of 1.4 billion people, and we’ve finally allowed entrepreneurship to happen, but we only have 200,000 entrepreneurs in India. That’s a very small number, a drop in the bucket. Can we imagine a million entrepreneurs by 2030? Ten million by 2047? To have ten million entrepreneurs, maybe you need twenty or thirty million to try, and two-thirds of them drop out. So you cannot have what we have now, a 160-page definition of entrepreneurship, where you need to be certified by some government-sanctioned body that you have “innovation.” These are dumb things. Nobody knows what innovation is until after it has already happened, until you look back and say, “oh, that was pretty innovative.” So you have to let it happen.

The other thing I want to mention is that entrepreneurs need money, and lots of entrepreneurs need lots of money. If I want a million entrepreneurs, and each one needs, say, $100,000, that’s 100 billion dollars of venture capital I need to provide. Where does that come from? If I want ten million entrepreneurs, that’s a trillion dollars of capital. So how do we, as a country, roll out the red carpet, cut the red tape, and get the world’s savings flowing into the Indian entrepreneurial ecosystem? Right now it’s very hard, very painful, to invest in India. The Indian government wants to build a VC system in India, but the policy discourages foreigners from investing in India while they’re trying to build that system. Why can’t we have foreigners invest while we’re building the Indian system? Why don’t we change the tax rules? In America, if you invest in a startup, there are zero taxes on your first exit, neither the entrepreneur nor the investor pays taxes. That’s not true in India. America is way ahead of us there, and they still incentivize both investors and entrepreneurs, whereas in India we tax everything.

There’s this unholy fear of foreigners owning our IP, and an unholy fear that the rich are getting richer. But entrepreneurship, by definition, will produce winners who become rich, and you have to be happy about that, and hope for the trickle-down effect, whether it’s them plowing profits back into the ecosystem or becoming venture investors themselves, who understand the process.

I think the fundamentals aren’t clear yet. We don’t have a policy being made with purposefulness. Let’s define the role of what we’re trying to do. We’re trying to become strategically self-reliant, but we’re also trying to create tens of millions of jobs. India has a very large young population that needs opportunity. It turns out 800 million people are being fed by the Government of India, and I’m glad we’re able to do it, but our role ought to be figuring out how we make these 800 million people self-reliant, self-employed, so we don’t have to feed them. So the first thing has to be turning entrepreneurs loose to create jobs in India on a massive scale, while the government funds some defense work and strategic IP development. The bulk of the work has to be creating jobs.

Anirudh Suri: That’s what can drive, as you’re rightly saying, the bulk of the Indian population forward. And as India gets richer, it will have more money to invest in R&D.

Kanwal Rekhi: As India gets smarter, remember, if you succeed by the time you’re thirty, thirty-five, forty, you still have thirty or forty years of life ahead of you, and now you have resources, you’re free, you have experience, and you’ll take bigger risks.

Constraints and the Path Forward

Anirudh Suri: So where do you see the binding constraints for India in creating that kind of ecosystem, lots and lots of entrepreneurs, some very innovative, some doing more service-driven entrepreneurship, a whole mix? What’s still the binding constraint you find?

Kanwal Rekhi: There’s no difference between service entrepreneurs and technology entrepreneurs, they all create jobs, they all create wealth. If you start to fixate on needing IP or technology alone, where would India be without Wipro, Infosys, and TCS? They’re the ones paying for the oil we import. They’re all services-driven entrepreneurs. I remember people used to say, “oh, these guys aren’t entrepreneurs, they’re techno-coolies.” Give me more of them. I don’t think we should fixate on the type, as long as we’re creating jobs in India, wealth is being generated, and that’s fine.

The real problems: we were socialist in the seventies and eighties, government-owned, license-permit raj. We got rid of the bit in ’91, but we’re still very bureaucratic. The ICS was set up to rule India, and the IAS is the successor to that body, and it hasn’t been reformed. They’re still ruling us. The government somehow doesn’t trust the people. It’s not that it hasn’t changed, but there’s a lot of room for improvement. Nobody is smart enough to know what the right thing for India is. Let the millions of entrepreneurs try, let them fight in the marketplace, let them win or lose there.

The AI Landscape

Anirudh Suri: Mr. Rekhi, let me now change tack and start talking in detail about how the AI landscape is evolving. We’ve touched on the big picture items, how entrepreneurship is evolving, how geopolitics and tech have intersected, the role of government, entrepreneurs building a vibrant economy, and the constraints India faces. But now the new big thing in the world of technology, for better or worse, is AI. India recently hosted the India AI Impact Summit in Delhi, and over the last two or three years India has also been trying to evolve its own AI strategy, as the world gets absorbed in yet another competition over AI leadership, especially between the US and China. Talk to us, from the vantage point you’re seeing it, about how the AI landscape is evolving. What are the main contours of that landscape?

Kanwal Rekhi: This is technology that took thirty or forty years to develop and is finally maturing to the point where it can be used productively. The underlying hardware and software platforms have become powerful enough. I remember AI research being done in the sixties and seventies, one of my mentees did his PhD in AI at Stanford. India didn’t participate, wouldn’t have been able to, and it doesn’t matter, right? Here we are. We’re back to where we were in the nineties with respect to IT. We didn’t build the databases, we didn’t build the compilers, we didn’t build any of that stuff, but we were a big beneficiary of the IT revolution once it took off.

Anirudh Suri: Were we the biggest beneficiary, Mr. Rekhi, though? It was great for India, but were we the biggest beneficiary, or were the companies that developed the underlying technology the biggest beneficiary?

Kanwal Rekhi: A very big one, let’s not say the biggest, we were a very big beneficiary. Compared to what other sectors and industries we were doing in India, the fact that the IT services industry arose out of nowhere, with no investment from the Government of India, is incredible.

When technology starts to diffuse through society, everybody needs to implement it, all companies, small and large. And there’s no manpower anywhere in the world spare to do that. That’s going to be the opportunity for us again. Indians will implement all the IT solutions for everybody, everywhere. Even in the AI era, Indian engineers, Indian manpower, will help companies, enterprises, small and big, adopt AI. That’s a real niche we can continue to hold. Nobody else has the smart manpower. Europe will need it, the US will need it. What you should see is very high quality jobs being produced for Indians in that space. It may appear we’re helping them, but those jobs impact India too. Remember, the whole IT revolution led to a large number of smart people who were very much on top of what the world needs, on top of all the latest tools, and they’ve become entrepreneurs now, doing things themselves. So the knowledge you absorb while implementing is the knowledge you need to become an entrepreneur. This is natural for India. India is a large country, it needs these jobs, it has a large number of smart people. Let’s make those smart people productive very quickly, and some of them will emerge as entrepreneurs.

As India gets richer, and China is five times richer than India, it ought to be investing in a thousand IITs, funding more research in IITs. That’s not done yet, but it’s also not going to feed people right now, it’s not going to create jobs right now. Research, R&D, IP development is a thirty- to forty-year cycle. Think about the weight loss drugs we’re using now, the GLP-1s. When was the research done? In the seventies. They discovered those proteins then, and it took another thirty or forty years to figure it out. So I think our need is to make sure we get rid of poverty, that we have jobs for all Indians, that we use our smartest people well. We should be proud, the brand of India changed in my lifetime from a land of snake charmers and beggars to an entrepreneurial, technological powerhouse, even though we’re not developing the underlying technology, that shift is still very strong.

Anirudh Suri: For you, would the brand in thirty years be the same, or would you expect it to evolve into something different, given the immediate need, as you rightly emphasize, is jobs?

Kanwal Rekhi: When the British took over India, we were the world’s largest, most productive, most creative, most entrepreneurial economy. Twenty-five percent of the world’s GDP was India’s. When they left, we were down to about two or three percent, I’m using an approximate number. The tragedy of India was that from 1947 to 1991, we didn’t rely on our entrepreneurs, and our share of world GDP kept falling. Now, since ’91, we’ve changed, and we’re back on the scene. We’re about three and a half percent of world GDP now, and we’ll be the third largest economy pretty soon, within five years.

I’d be happy being third largest, but should we try to be number two, or reclaim our number one spot, the one we held back in 1800? My point is we should go for the number one spot, with a fifty-year long-term plan, and it’s going to be done by our entrepreneurs. How do we educate every Indian to an IIT level? How do we enable ten percent of Indians to become entrepreneurs? And how do we start developing a culture of R&D without worrying about the short term, thinking thirty or forty years out? The results will start to show. That’s what China did, by the way. China absolutely depended on American technology and American capital early on, but they played the long game.

Anirudh Suri: So in a way, what you’re recommending, if I can summarize it, is a combination of short-term focus on job creation, employment, education, and wealth creation for our large population, along with a slightly longer-term R&D and innovation focus, with an eye on the technologies of the future, not just the technologies of the past.

Kanwal Rekhi: Yes, we shouldn’t reinvent the wheel. Let me give you an example from the telecom sector. Sam Pitroda and I used to debate this in the eighties and nineties. Sam wanted to develop our own IP, our own switches, our own everything. He set up C-DOT, and ten billion dollars were given to him by Rajiv Gandhi’s government. What he came up with was, “one phone per village is affordable.” He told me in a debate once, “one man, one telephone is a wasteful Western luxury that India can ill afford.” I kept saying we need to adopt cheap, reliable technology and diffuse it, and let every Indian have phone service. He won the first argument, I won the second. When Vajpayee came to power, he adopted my approach, and that revolutionized India. We didn’t develop any technology there.

So this whole debate that’s very much alive in India today, whether we should be an AI innovation player, an AI adopter, or an AI diffuser, whether we should play the innovation big boys’ game or be the “use case capital,” what I’m hearing you say, Mr. Rekhi, is: do both.

Kanwal Rekhi: Do both. In the short term, adopt, adopt, adopt, diffuse, diffuse, diffuse, but at the same time, have the China-like long-term focus. We cannot be dependent on everybody else forever, but we have to depend on others now.

Anirudh Suri: That’s right, because I think one of the key lessons from the colonial era is that over-dependence, or being constrained geopolitically, militarily, or otherwise, leads to exactly what you described, going from 25% of world GDP down to 2%. So in a way, you have to unshackle the constraints of dependence, without necessarily being worried about adopting technology from outside. Drone technology has proven you can build very strong offensive and defensive capability very cheaply.

Kanwal Rekhi: No, I’m saying do that. We have an absolute guarantee that nobody will attack us, we have nuclear arms, we have missiles, nobody will dare. We can’t attack Pakistan because they have nuclear arms either. So there’s a defensive capability you build very quickly once you have that. But that doesn’t feed the people. Pakistan is begging for money all the time while they have nuclear arms. India is doing much better than Pakistan. I think our total defense posture needs some attention. We don’t have any offensive plans to go take over Thailand, Malaysia, or Sri Lanka, so we don’t need offensive capability, but we should be well prepared. Defense will also become a very big export. If you build better drones, there are many countries in the world that could benefit from India being an exporter of defense technology, and we’re starting to do that now.

But the core problem we need to solve is how to make sure there’s no poverty and no uneducated person left in India. You cannot have India and Bharat, one side modern and confident, moving forward, and the other stuck in the mud. You cannot have a body where one arm is strong and one arm is dead, your body is weak and unhealthy when one arm or one leg is dead. That’s the problem in India. We need to pull people out of poverty. How do we drive entrepreneurship in third and fourth tier cities?

Let me tell you a couple of stories. We recently set up a rural entrepreneurship center in Nizamabad, near Hyderabad, I was part of it. Our goal was to train entrepreneurs who could help villages and smaller cities bootstrap themselves. These are smart people, no less smart than we are. There was this young guy, twenty-two years old, who went from his village to do his BTech at one of the regional engineering schools. He came back and became one of the resident entrepreneurs at our center, then went back to his village. He quickly realized the village was stuck in the mud, no electricity, they still used oil lamps. So he started using solar panels and batteries, electrified all the houses. Then he looked at the tools and implements people used, they were primitive, so he started improving them. Within eighteen months, the productivity of the village doubled, and neighboring villages started asking for help too. So he set up a company. This year he did five crores in revenue, and he says he’ll do fifty crores within the next two to four years.

Anirudh Suri: You know, Mr. Rekhi, that reminds me of a chapter in my own book, where I write about how, within an hour and a half of Delhi, the capital of India, you can see vestiges of multiple great games, as I’ve called them in the book, still coexisting. You have people still playing what I call the agrarian game, people playing the small trading game, people playing the great industrial game, and then, of course, sitting here in Gurgaon as we speak, companies playing the great tech game. Somehow all of them coexist in India in a very small radius, and Delhi expands, into Noida, into Gurgaon, and you can see these strips of different eras layered together.

Kanwal Rekhi: We need to enable and empower our youngsters to become entrepreneurs and solve local problems using the latest technology. Policy frameworks should be thinking along those lines.

The Global South and AI

Anirudh Suri: One of the other focus areas I want your views on, Mr. Rekhi, is the role the Global South is going to play in the whole AI race. One of the key concerns arising in other parts of the world, outside the US and China, is that this is becoming a two-player AI race. What role does that leave for other countries, especially in the Global South, Africa, Asia, India? How do you envision them participating and benefiting from this race?

Kanwal Rekhi: China has used the Belt and Road Initiative to spread its soft power, but that is a form of near-colonialism, the old moneylender model: I’ll loan you money, you’ll never be able to pay me back, and then I’ll take over your assets. It’s the old zamindari system, essentially. India should play a different game. India should have a soft power policy of setting up an IIT in Nairobi or Lagos, setting up a TiE chapter, maybe an STP center in Tirupati, with a twenty-year plan. That’s what we did with TiE, that’s how we went from being a land of beggars and snake charmers to a land of entrepreneurs. It’s not going to help you tomorrow, but it will help you the day after tomorrow. India should become the conduit for training these people, an intermediary in that space.

My basic view is that India is a noble experiment: free, democratic, and finally also market-driven. At the time of independence, our founding fathers got the politics right, constitutional democracy with universal suffrage, and that poor, illiterate, diverse country has sustained democracy well across eighteen election cycles. But we drew inspiration from the Soviet Union and Fabian socialism, and we didn’t get the economics right.

I want to redefine capitalism and socialism for you. Capitalism is the politics of wealth creation. Socialism is the politics of wealth distribution, and you can’t distribute what you don’t have, you have to grow the pie first. We ended up adopting socialism when we didn’t have any wealth, and we kept everybody poor. So I want to define entrepreneurs for you differently: entrepreneurs are the new freedom fighters of India, just as we had freedom fighters who won us political independence, entrepreneurs are now fighting for India’s economic freedom, freedom from hunger, from poverty.

Anirudh Suri: Very nicely put, Mr. Rekhi, and framed very well. As someone who has worked in the same fields of entrepreneurship and venture capital and technology, I couldn’t agree more.

Is AI a Bubble?

Anirudh Suri: Let me ask you one more question before we move to some personal life lessons. Are we today, in this era of AI, focusing too much on AI? Is there a risk that AI is a bubble, that we’re so focused on it that we’re ignoring other very substantive technologies we should be paying attention to?

Kanwal Rekhi: This goes back to the telephone story I told you earlier. We ought to be adopting a variety of technologies to help our masses, whether in healthcare, education, or food, that’s a must. Otherwise you end up with an India where we can put a man in space, but half of Indians are still starving. It can make you feel good, but we can’t continue that kind of model forever. We should do research in AI, we should follow the technology, but we should also keep some attention on the fundamentals.

Anirudh Suri: From your vantage point in Silicon Valley, and knowing India so well, other than AI, over the next five, ten, or fifteen years, what are the other technologies India and Indian entrepreneurs should focus on? Going back to that longer-term strategic focus you mentioned.

Kanwal Rekhi: If I were a policymaker in India, I would be setting up a thousand IITs as the number one priority. Every Indian should have an IIT-grade education, without that, you won’t get anywhere. Our biggest resource is our brains, and we need to make sure they’re sharp, and then let entrepreneurship happen on a massive scale. Let’s not obsess about picking specific technologies, let the entrepreneurs figure out what the world needs, let them decide, by being in the marketplace and solving problems customers actually have, winning and losing there. Let the market decide.

Let me give you a bit more history. Between 1947 and 1991, India spent 300 billion dollars on public sector industry. India spent only 1 billion dollars on all the IITs put together in that time. You can do the ROI calculations, the 300 billion dollars didn’t even return enough to cover inflation. When you invest in things like factories, you feel good, you feel like you’re building something, but when you invest in people and their brains, the benefit is far longer term and far more immense. That’s what happened in China too, by the way. China and Vietnam have near zero illiteracy, they emphasized education and healthcare over everything else. It’s never too late to do the right thing.

Life Lessons

Anirudh Suri: Let me now ask you about some broader life lessons, given the immense experience and exposure you’ve had with technology, mentorship, and immigration from one country to another. One question: do you expect immigration to be a key priority for Indian youngsters going forward, given what we’re seeing in the world today?

Kanwal Rekhi: Our generation had no jobs. We came out of the IITs and there were no suitable jobs. America opened up and we went and made the most of the opportunity. This generation doesn’t have that problem, there are jobs, there’s opportunity, there are entrepreneurs, the economy has grown, entrepreneurship is happening, India has opened up. So the problem we had back then is different now. We were welcomed, America thought they needed people. Americans have the absolute right to decide they don’t need anybody, the absolute right to be silly and stupid about it if they don’t think they need it. We don’t have a birthright to go to America, and Americans don’t want Bangladeshis or anyone else coming and taking their best jobs and becoming CEOs. So things have changed, and to me, that’s for the better for India. Let the smartest people stay here, let them go back to the village, we have to figure out how to bootstrap ourselves in this new era, and that problem will be solved by smart Indians. We don’t have Harvards and MITs and CMUs, so we do need to keep sending people to study, but we need to find a way to make sure they come back.

Anirudh Suri: Let me also ask about the relationship people are having with technology now. It’s a different set of questions, but the relationship between humans and technology, when it was a few devices, some PCs, was very different, large technological systems, space, large computers. Today, of course, it’s in the hands of everyone, from smartphones to ChatGPT to AI companions. Given the decades you’ve seen this relationship evolve, what advice do you have for younger generations navigating their relationship with technology, how to not become over-dependent, how to have a healthy relationship with it?

Kanwal Rekhi: I’m not a philosopher, but from my perspective, you cannot let technology dehumanize you. Human beings are social animals, we love music, we produce music, we love relationships, that adds to your quality of life. Technology is a productivity-enhancing tool, it can make you more productive. We never have to ask for directions anymore, GPS takes you there. It’s amazing how much productivity improvement has happened in India, look at the India stack, UPI, the digital public infrastructure, it’s amazing. But we need more philosophers speaking on this too. You can’t do without technology, those villagers need more technology, not less.

As I put it in my book, I see technology as a key factor of production today. You need people, you need space, and you need technology too, as a productivity enhancer, a force multiplier. The villagers are stuck in the mud partly because they don’t have access to it.

Anirudh Suri: I’d add two things: one is productivity enhancement, and the second is market integration. Today a small manufacturer sitting in rural India can very easily connect with an exporter and participate in the market. People who don’t participate in the market don’t create wealth, and they get left out, and they stay poor. The average American farmer is thirty to forty times more productive than the average Indian farmer.

Kanwal Rekhi: Correct, and there are other issues too, land size, holdings, and so on. But I completely agree, the integration of technology into agriculture should be much faster. I don’t think we should adopt the American model of large, fully mechanized farms, but we can use technology to improve yields by a factor of two, three, or four very quickly, better soil analysis, better drip irrigation, better water usage, more solar. We can use technology to make Indians a lot more productive in every walk of life. Being more productive means we produce more, and there’s more to go around.

Here’s the fundamental thing: democracy and markets are a matched pair, they’re both about choices. Democracy lets you vote for candidate A or candidate B, political freedom. In the marketplace, you vote every day with your rupees for product A or product B, service A or service B, it’s all about choices made by the masses. When you introduce socialism, you have a handful of people deciding what’s good for you, you can only have an Ambassador car, a phone is a luxury item, somebody is limiting your choices. That’s the problem we had. We Americans, and I include myself now, are no smarter than Indians, we’re no harder working than Indians, but we got a head start for a longer period. India is finally there now, it’s just a matter of time before the markets produce enough wealth. And the beauty of democracy is that the rules of the road aren’t fixed, if the rich are getting richer and the distribution isn’t broad enough, we have a mechanism, democracy, to change the laws.

That’s what happens in a functioning system, you go from the politics of wealth creation to the politics of wealth distribution, and back again. In America in the eighties, people said, “Germany and Japan are getting ahead of us, we need to lower taxes,” and that’s what happened. Then later people said, “the rich are getting richer, we’re not getting our share, let’s tax the rich, let’s regulate, let’s redistribute.” Create, distribute, create, distribute, that’s how you ratchet things up. We can’t worry so much that we stop creating.

Closing and Recommendations

Anirudh Suri: As we conclude, and as we try to end every podcast, I’d like to ask for suggestions of other people we should speak with, other podcast guests, from anywhere in the world, and also any books you’d recommend for our listeners, beyond your own new one, Groundbreaker.

Kanwal Rekhi: There are lots of smart people out there. There isn’t a single person in Silicon Valley who has been honored with an Indian civilian honor, not one Padma Shri, even though they’re impacting India’s story enormously. There’s a message there. There are a lot of people in Silicon Valley you should talk to, because they’re at the forefront.

We need to put entrepreneurship front and center in India, think of these people as our nation builders, our freedom fighters, not just as people getting richer and richer. The rich have to get richer so we can tax them and redistribute, and then enable the rest of society to have a chance too. What happens when you regulate, tax, and redistribute too much is the economy slows down, and then people say, “Germany and Japan are pulling ahead of us again, we need to deregulate, lower taxes, and start creating again.” The pendulum has to swing back and forth, and that mechanism exists in India. It doesn’t exist in China. I think China will eventually have a moment where the stresses that have built up have no outlet. India is largely stress-free in comparison, because of democracy. I’m not saying it will happen tomorrow, but there will be some kind of implosion in China eventually, like we’ve seen happen in Iran. When you have no outlet, when a handful of people are making all the decisions, eventually something has to give, and that’s the moment India should be ready to capitalize on. India should have this thirty, forty, fifty year long-term plan.

Anirudh Suri: This has been fascinating, Mr. Rekhi. Thank you so much for taking the time today to be with us, but more importantly, thank you for everything you’ve done over the last several decades for entrepreneurship, both in terms of what you’ve built yourself, and the entrepreneurship you’ve helped mentor and unleash in others.

Kanwal Rekhi: India is a noble experiment. A country that large, that poor, that illiterate, has sustained democracy for over eighteen cycles. India and China are two massive experiments running side by side, let’s check back in fifty years.

Anirudh Suri: Well, thank you so much, and I hope future generations can learn from the various lessons you’ve drawn from your own experience. Thank you so much.

Kanwal Rekhi: Thank you. Thank you.