Billionaire software tycoon Bill Gates has compared his company’s model to that of giant mobile money transfer service M-Pesa, which promises supporting companies profitability.
According to Microsoft’s boss, the process of encouraging other companies to offer services in return for profits in a new product is the hardest part with Safaricom having to convince retail stores to sign on as agents instead of the telecom companies.
He said: “Consider the example of M-Pesa, Kenya’s mobile-banking service that allows people to send money via their cellphones. M-Pesa first needed to invest in many brick-and-mortar stores where subscribers could convert the cash they earn into digital money — and back into cash. This real-world infrastructure will be necessary until economies become completely cashless, which will take decades.”
He added that without omnipresent cash points, M-Pesa would be no more convenient than traditional ways of moving money around.
“At the same time, it was impossible to persuade retail stores to sign on as cash points unless there were enough M-Pesa subscribers to make it profitable for them,” he said.
Gates compared this to the early years when Microsoft was sprouting and hardware manufacturers were working separately with software developers.
By offering a platform where both would cooperate and betting on future volumes, he says, Microsoft came to life.
“This kind of bootstrapping is exactly what we had to do at Microsoft Corp. in the early years of the personal computer. No one wanted a machine unless there was software, and no one would create software unless there were machines. Microsoft convinced both hardware and software companies to bet on future volume by showing how our platform would change the rules,” he explained.
Gates is optimistic that technology will play the biggest role in poverty eradication in the poorest regions of the world.