On the rise of the Indian-origin CEOs
How Nehru’s Socialism funded Silicon Valley’s Capitalism
With Parag Agarwal‘s ascent to the top job at Twitter there have been plenty of mentions of the rise of “The Indian-origin CEO” in Silicon Valley.
There are many — mostly unscientific — theories about this phenomenon. But setting aside these untested attributions, there is a complex and interesting history. Read on if you enjoy understanding how history unfolds in counterintuitive ways.
Our story starts in 1947, the year India gained its independence from a few centuries of British colonial rule. Our protagonist is independent India’s first premier Jawaharlal Nehru, a lawyer educated in England, deeply influenced by a popular political movement of the time — fabian socialism (more on this later).
Nehru had to make a call on what social and economic system this newly minted nation of 340 million souls, impoverished by a corporation that entered the country under the guise of trade but had cunningly become overlords, will follow.
The cruelty of the East India Company and failure of the feudal system had already placed laissez-faire styled Capitalism very low on his list of options.
This era also coincided with the short window when the large anti-capitalist experiment called USSR was showing great success.
This chart may seem shocking three decades after falling of the Berlin Wall, but this is pretty characteristic of extractive institutions, where there is an “apparent” progress in the early days before the imminent collapse.
Under these circumstances, our protagonist chose to go with a philosophy he was introduced to during his days in England. Fabian socialists believed in principles of socialist democracy (vs monarchy and imperialism) and getting there through reform (vs revolutionary overthrow). In a world that looked like the sets of a Dickensian novel, they supported minimum wage, better working conditions, and a welfare system which included a national health service, and a national education system.
Nehru, a rationalist, emphasized on STEM education to catapult masses from archaic unscientific beliefs to the 20th century. For administrative continuation from colonial days, or anglophilia, or from the lack of a singular dominant language in this hyper-diverse country, English (a language spoken by almost none), became the lingua franca for all things official and elite. Public institutes, most notedly the Indian Institutes of Technology or IITs, were established under this system. In 1956, Nehru attended the first graduating ceremony of the first IIT. In his commencement speech he says:
“Here [...] stands the fine monument of India, representing India’s urges, India’s future in the making. This picture seems to me symbolical of the changes that are coming to India.”
As fate would have it, there were changes coming to the US too!
IITs are notoriously selective and admissions are based purely on a test. It doesn’t matter if your parent paid for the library building or is the Director of the institute. This (almost truly) meritocratic system helped in economic mobility and inspired generations of Indians by giving them the hope that if they worked hard, they could get into an IIT (which usually leads to a decent paying job) and alleviate their family’s poor economic condition (which was true for a vast majority of Indians until 2000s).
Parag where we started this story graduated from an IIT. So did Google CEO - Sundar Pichai, IBM CEO — Arvind Krishna, PAN CEO and ex-SoftBank COO — Nikesh Arora, ex- Cisco and Motorola CTO — Padmasree Warrier and countless others.
The success of the IIT brand would in the future create demand for more “Indian technologists”, supplied by hopeful millions trained at other public and private institutions. These include the remaining immigrants in Patrick’s tweet: Microsoft CEO — Satya Nadella and Adobe CEO — Shantanu Narayen.
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Meanwhile, the other aspects of Nehru’s socialist experiment were failing miserably. Socialism, now our antagonist, had created a fat bureaucracy feeding on welfare. Coupled with poverty this was a deadly combination. Corruption seeped into every aspect of the Indian life. Enterprise creation was DOA. The economy stayed flat for almost four decades while Nehru’s successors dabbled with unapologetic authoritarianism. Meanwhile, other countries that started at the same point post WW-II were flourishing.
Into this environment, hordes of overqualified men and women entered the job market. Frustrated, the ones who could, left for any place that cared for their skills.
Half way across the planet, a year after Nehru’s commencement speech at IIT, Fairchild Semiconductors was formed by a group of engineers unhappy with their former manager. Alumni of this company would go on to found successful tech companies (like Intel, AMD) and VC firms (like Sequoia, KPCB) who provided fuel for an explosion of technology companies, all in need of talented technologists.
One of the partners at KPCB was Vinod Khosla (also an IIT-ian), who was asked to wait for 7 years to get a phone line when he tried to start a venture in India. He would go on to found Sun Microsystems and Khosla Ventures in Silicon Valley. He celebrated Parag’s CEO appointment with this tweet:
Churchill wouldn’t have expected the “beastly people” of India to be at the helm of the world’s most popular corporations. But here they are — despite his best efforts at racial subjugation and oddly because of it.
Capitalism of the 1600s encouraged colonialism which destroyed the colonies but centuries later created the right environment for a friendlier version of itself in one of the colonies. It also created counter systems like socialism which had some good social aspects (like free education for the masses) but failed at a version of it (like the inefficient centrally controlled production). This created supply of highly qualified masses in a place with no opportunities, forcing them to look for greener pastures. In the case of India, adoption of English and a push on STEM, created the goldilocks condition to produce supply for the Silicon Valley labor market. And that’s how Nehru’s socialism funded Silicon Valley’s capitalism.
Today, the flywheel of supply of skilled immigrant labor, demand for consumption from immigrants, and innovation from diversity makes this case stronger every day.
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Takeaways:
- Capitalism-Socialism is a fluid spectrum. Stop thinking of it as a binary.
- Open borders lets the right people be at the right place, for the global good. So, encourage immigration.
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Bibliography:
- Ages of Discord, Turchin
- Americana, Srinivasan
- Ascent of Money, Ferguson
- Empire, Ferguson
- How Innovation Works, Ridley
- Nehru, Tharoor
- Saving Capitalism from the Capitalists, Rajan
- The Rise and Fall of Nations, Sharma
- Thinking in Systems, Meadows
- Why Nations Fail, Acemoglu & Robinson
