At long last we’ve arrived at the launch of Season 2! We already learned so much by hearing from deeply insightful social change leaders such as Rebecca Masisak of TechSoup, or Nithya Ramanathan of Nexleaf. We saw how challenging it is to design and implement tech solutions for good, even with the best of intentions. Importantly, we learned about the importance of Human Centered Design, i.e. of putting people before software. 

We now continue our journey with a renewed emphasis on data: What it means to own data, or to use it to benefit the people who produced it. We’ll be looking at how digital technology can help take us just a few steps closer towards the Sustainable Development Goals. And, as always, we’ll learn about what not to do: What are ways in which developing digital “solutions” can go wrong. 

Our first guest is Owen Barder, who’s had a distinguished career as a civil servant in the UK Treasury, the UK Department of International Development, as private secretary to the Prime Minister, Vice President of the Center for Global Development, and now CEO of Precision Development. One of the key insights from our conversation is: How do you navigate market failure, especially when the stakes are sky-high? People like Owen are able to think both big picture and in terms of operational efficacy. When the Invisible Hand downright ignores the needs of a particular group of people, perhaps those who are too poor to access goods they desperately need (such as medicine), the typical choice between government vs. private firm vs. third sector completely breaks down.

Owen and innovators like him operate at the highest echelons, crafting and implementing new models that go beyond a single ideology in order to tackle some of the most formidable global economic challenges.

Here is Part 1 of our conversation.

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Transcript

Jim Fruchterman [00:00]

Welcome to Tech Matters, a biweekly podcast about digital technology and social entrepreneurship. I’m your host, Jim Fruchterman. Over the course of this series, I’ll be talking to some amazing social change leaders about how they’re using tech to help tackle the wicked problems of the world. 

We’ll also learn from them about what it means to be a tech social entrepreneur, how to build a great tech team, exit strategies, the ethical use of data, finding money, of course, and finally, making sure that when you’re designing software, you’re putting people first. 

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My first guest is Owen Barder, the CEO of Precision Development. The exciting thing about my conversation with Owen is that we covered most of the issues that are behind the need for nonprofit technology for social good. 

So we decided to break my interview with Owen into two parts. First, talking about Owen’s journey as a social entrepreneur, including what he did before he became the CEO of Precision Development, and the work that Precision Development is doing in agriculture for the poorest farmers in the world. 

Owen and I are going to dive deep into some of the central issues that are underneath the entire rationale for the existence of the nonprofit technology for social good movement. First, that market failure is real, that poor farmers in the developing world are not going to get the same kinds of services that farmers in Europe or North America get. 

We’re going to talk about how you can actually solve these problems. How do you overcome market failure? Not only are we going to look at it in terms of software and data, but we’re also going to examine it in terms of other forms of intellectual property. 

Owen had the privilege of working on some of the very first advance market commitments, how to get for-profit companies, that is, pharmaceutical companies, to develop products that actually met the needs of the poor, by having government philanthropy promise to buy their new products. 

We’re also going to dive into that very common exit option for great social entrepreneurs, which is have the government take over responsibility for your innovation. Since so many digital public goods don’t have a great revenue model or a great profit model, sometimes it really is the province of the government to take them on.

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So Owen, could you give us a two or three sentence description of what Precision Development is as an organization, what you guys actually do and where? 

Owen Barder [2:23]

Precision Development is a social enterprise that provides information to smallholder farmers through their mobile phones, either through voice messages or text messages. 

We work in 11 developing countries, low-income countries, some of the biggest, poorest countries in the world. And the aim is to increase the productivity of farmers to close the yield gap, the gap between what farmers could be producing and what they are producing, by providing them with actionable, customized, relevant, timely information. 

Jim Fruchterman [3:02]

And why the focus on farmers? Why agriculture, as opposed to some of the other issues in the world that you could have tackled? 

Owen Barder [3:09]

We began with agriculture partly because most of the world’s poorest people are smallholder farmers. And their main source of income is what they’re growing. And if you want to make a difference to the lives of the world’s very poorest, most marginalized people, then helping them increase their incomes from farming is an important way to do that. 

And there’s been a change in the last few years that many of those people would not have had mobile phones 10 years ago. And that opens up an enormous opportunity to help a group of people who would benefit from having this information. 

But we’re not only focused on agriculture, we’ve been piloting an education program. We’ve done some work in nutrition with good effect. And we’re looking at climate change and environmental services. 

Jim Fruchterman [4:02]

So let’s go a little bit deeper about your journey, because you didn’t come to development as sort of your first career. So it would be great to get some of the backstory that led you to leading Precision Development. 

Owen Barder [4:16]

I began in the Treasury – the British Treasury – as a civil servant thinking about how to make the British economy more efficient, how to make public services more efficient. And I learned a lot there about both why markets sometimes don’t work and why we need governments to step in, but also sometimes why governments don’t work and why we need to leave things to the market and the private sector. 

Jim Fruchterman [4:43]

So you’re in the Treasury, you’re working on big economic issues for a nation, and then things got even more interesting, as I understand. 

Owen Barder [4:53]

That’s right. I was responsible for managing the public expenditure control process: which bits of government should get more money, which should get less government. It wasn’t me deciding that, I was supporting ministers who made those decisions, but we were providing the analysis and the evidence and shepherding the process along. 

When we were visited by a delegation of South Africans, Nelson Mandela had just become President in South Africa. And one of the questions that they were asking is, how do we do a better job in South Africa, or after apartheid, of building effective public services? 

And they asked us to lay on a course, a training module for them, which I organized in London. And at the end of it, they said to me, do you want to come to South Africa and help us set up a Treasury here in South Africa to do in South Africa the kind of things that you’re doing in the UK? 

And I suppose I… took about half a breath before I said yes. You know, this is the Mandela government, this was at a time when we all wanted the Rainbow Nation to succeed. 

And within a couple of months, I was on a plane down to Pretoria to work with an absolutely outstanding team of South African officials on setting up a treasury in South Africa. And that brought me back into international development, and applying some of the skills and ideas that I’d learned in the British Treasury. 

Jim Fruchterman [6:33]

Wow. And you said, brought you back into international development. What was your heritage that you were alluding to? 

Owen Barder [6:40]

So, as a teenager, I had spent four years visiting Ethiopia during the famine in the 1980s. The famine, you know, “We Are the World” for American listeners. “Do they know it’s Christmas” for British listeners. The terrible events of the early 1980s. I had been in Ethiopia at that time for family reasons. 

And I had visited a refugee camp on the border with Somalia and seen hundreds of thousands of desperately poor, very hungry people waiting for food. And I’d traveled around the country and got to know Ethiopia well and come away with the, you know, obviously a very deep impression on me to see such terrible suffering. 

But also a deep impression on me that these are solvable problems and that they are the most important problems in the world to solve. It’s very hard once you’ve been in a situation like that to really obsess about whether the, you know, Department of Education education’s budget should go up by 1% or down by 1% when at the back of your mind you’re thinking that there are people dying of hunger. 

Once you start thinking about these problems, it’s very hard to stop. 

Jim Fruchterman [8:11]

So, but your career in the civil service wasn’t over. So you came back from from South Africa and as I understand it, had a couple of very exciting roles making making change. So, could you tell us a little bit more about those, because I know that’s essential to this path that led you into international development at Precision Development. 

Owen Barder [8:33]

That’s right, so, in South Africa, I had the experience of helping a country write a budget and develop a budget system with very low resources, much, much less money. 

Every government has much less money that it would like. But obviously in middle income and low income countries, the problem is much more acute and it became really clear to me there that the things that we did in places like the US and the UK of managing change and bringing about change by compensating the losers, by making sure that you make sensible changes but you don’t leave anybody worse off. 

You just can’t do that in a country where you just don’t have enough resources. And so it’s much harder and it’s a much more complicated task. So I came back from South Africa to work in Tony Blair’s office in #10 Downing Street as his Economic Affairs Advisor. 

And there’s that Hamilton song about “being in the room”. It was obviously a fascinating time for me because I was in the room. Again, I was supporting others who were making the decisions. But it’s an immense privilege to see how decisions are made and have some influence over them. 

And I again came back to the British Civil Service, which gave me huge opportunities, determined to continue to make change in the UK. We have enormous problems still here of poverty and inequality and poor public services as with any rich country. 

And before I’d left for South Africa, I’d actually started the UK government’s first website. And I was briefly the owner of the “dot gov dot UK” domain until somebody in the cabinet office spotted that I had it and that they were to have it instead. 

And in #10, I was responsible for a range of things, including economic policy, but also including policies about modernizing government, improving government and the role of information technology. 

Jim Fruchterman [10:53] 

So here we are, we have these sort of linkages, right? You’re in economic policy, you have one of the most senior roles in the civil service. And then you also went into sort of working on how to deploy money in smart ways to accomplish things that might not otherwise happen in global health. And I find this a fascinating area. So could you tell us a little bit more about that? 

Owen Barder [11:18]

An economist by the name of Michael Kremer, then at Harvard, who went on to win the Nobel Prize partly for this work, was thinking about the question of why is there no malaria vaccine? 

And the reason he was asking that question was that he caught malaria while working in Kenya and was lying in a hospital bed with fever. And while the rest of us would have been thinking about, you know, our recovery, he was thinking about the economics of investment in vaccines. 

And his, you know, it’s painfully obvious when you say it, but it was a staggering insight. The problem is that people who get malaria around the world are nearly all far too poor to pay for a vaccine. 

And so the market for malaria vaccines fails. If you were to spend… it costs about a billion dollars, maybe a billion and a half to develop a new vaccine, put it through clinical trials, get regulatory approval. 

You know, the cost per dose of the vaccine is typically very, very low. But the cost of developing it is, you know, north of a billion dollars. So one reason why most pharmaceutical companies don’t spend money developing malaria vaccines is that it’s not obvious how you would get your R&D costs back. 

And as sort of the fact that sticks in my mind is that we spend roughly 10 times as much researching cures for baldness as we do researching cures for malaria, because rich people in my country and yours, Jim, will buy cures for baldness. But there’s just no market for the R&D for malaria vaccine, even though it would have immense value to the world. 

Jim Fruchterman [13:16]

Textbook market failure. Yep. 

Owen Barder [13:17]

Right. So Michael’s idea, which was staggering really, was, well, what if somebody, maybe rich country governments or some international organizations or the Gates Foundation or somebody promised that if a malaria vaccine was developed, we would buy it. Right, so that suddenly, instead of looking like, you know, I’m going to invest all this money and there’s going to be no one to buy it. What if we said, well, if you develop it, we would buy it. 

So maybe we can turn what looked to companies look like poor consumers, maybe we can make them look like rich consumers, even though they’re not rich consumers. Maybe we can get companies to invest in solving this problem simply by making a promise that if you were to develop a vaccine, we’ll buy it from you. 

And what you can show with sort of pretty simple back of the envelope maths, although we did a more complicated version of it, you can show that the cost benefit of buying a malaria vaccine if someone makes it is astronomically high. 

Now, we had an interesting problem, right, which was that Michael had said this, it was a brilliant idea. And a lot of people shrugged and said, well, it would never work. Because what if I make a malaria vaccine and then you don’t buy it? 

And, you know, which one if one of two of us make it, which one are you going to buy? And what if one’s better than the other? There are a whole lot of kind of, “how would you actually do this” problems. 

You’ve got this brilliant inspiration, there is a problem here and there’s a solution. But then you’ve got a lot of work to do pegging down the details to figure out how to actually make that work. The hardest of which turned out to be, how do you contract? You need a contract. I definitely will buy this. But how do you contract? 

Jim Fruchterman [15:10]

For something that doesn’t exist yet. 

Owen Barder [15:11]

And you don’t know who you’re contracting with, right? You don’t even know who it’s going to be. I’m going to contract with everybody? You have to form a queue and sign a contract with me? How does that work? So we had some really interesting problems to solve. And my role in this was not being the brilliant thinker, but “Hey, Owen, go and figure out how you would actually do this”. So we made it work. We worked through the details, and me bringing my, you know, I used to work in the Treasury, I used to work in the Prime Minister’s office, I know how governments work. I know how we can enter contracts and how you manage the risks and the uncertainties and where it sits on the government budget and all these things. 

And we persuaded a group of countries and the Gates Foundation to come together and make a promise, not for malaria, as it turned out, but for pneumococcal disease. If somebody developed a version of a vaccine that was for pneumococcal disease that was good for the developing country versions, the strains of pneumococcal disease across the developing world, that that group of governments would buy one and a half billion dollars worth of that vaccine. 

By making a legally binding commitment, we brought two big Pharma drugs companies, vaccine companies, into the business of developing, producing, selling that vaccine. And in so doing, we made that vaccine available years ahead of when it would have ever come to being available. 

And that idea, that policy has saved somewhere north of seven million lives so far, probably near 20 million, just by making that commitment. 

Jim Fruchterman [16:50] 

And something tells me that after the million and a half dollars, a billion and a half dollars was spent, they kept selling this vaccine because it became the new normal in global public health. So something tells me you made a market where there wasn’t one. 

Owen Barder [17:04]

That’s exactly right. And what we were able to do, I mean, the issue here, as with many things, and your listeners will be familiar with this in the tech world, this is an example of something where there’s a big upfront cost of developing the thing. And then very, very low cost per user of selling it or delivering it to millions or hundreds of millions of people. 

Jim Fruchterman [17:30]

Well, and of course, you know, you’ve hit the nail of the tech for good field on the head. I mean, this is exactly what we do. And the great thing about being in the software business is you don’t need one and a half billion dollars to create excellent software, but the economics are pretty much the same: Upfront investment, low marginal cost, and you can go to scale. And, you know, I’m here in Silicon Valley. This makes a lot of billionaires when you’ve got a viable market. But I think what we, certainly you and I do, is we lead nonprofit organizations that make those investments thanks to donors and other supporters. And then the world reaps the benefit of that public good. 

So let’s pivot to how you came to the software business after playing, and let’s say, much bigger dollar, pound, absolute numbers fields. 

Owen Barder [18:21]

The same Michael Kremer who developed the advance market commitment, as we dubbed it when we developed it for vaccines, had also been doing some work on the value of sending simple messages to smallholder farmers using their mobile phone. 

And he was working on sending text messages in Kenya. Another Harvard colleague, Sean Cole, was working on sending voice messages in India. And in both cases, they found that with relatively simple and staggeringly cheap messages, you could provide information to farmers that enable them to increase their yield. And that meant higher incomes. And that, for people who depend entirely on their farm for their income, or mainly on their farm for their income, that can be a significant improvement in wellbeing. 

It can make the difference between, “Do I need to send my daughter out to the fields to increase the harvest?”, or “Can I send her to school?” The important thing is that once you’ve figured out how to send people these messages, the cost of adding another farmer to your database is very, very close to zero. 

At worst, the cost to us is paying somebody, paying a carrier to take the text message. But if you think in social terms, the actual cost to  society is literally zero, right? It uses existing redundant capacity in the system. 

And if you can send people take some messages and their income goes up and world production of food goes up and hunger goes down and girls go to school, what do you kind of think you would really want to do that wouldn’t you? 

Jim Fruchterman [20:10]

That seems like a pretty good buy, yeah.

Owen Barder [20:10]

That seems like a good deal, right? And Michael and Sean both specialize in impact evaluation. So they had run some RCTs, some Randomized Control Trials, that showed that the farmers that were getting the service randomly selected did better than the farmers that were not getting the service randomly selected. 

Jim Fruchterman [20:31]

So basically they had proven that this worked in pilot kind of level studies and then said let’s start a nonprofit organization to scale this up and asked you to join them to sort of help power that expansion to take this from thousands of farmers to millions of farmers. 

Owen Barder [20:50]

That’s exactly right. I mean, I they had set up the organization and it was functioning and it was then and is now doing great work. And I was brought on board to think about how do we build on this, how do we expand it? 

But also how do we not just use sort of the textbook economics ideas that I’ve just been describing about benefit cost ratios and Randomized Control Trials. But what would the tech industry do to provide this service to millions of smallholder farmers. 

And of course, one question immediately arises, why isn’t the tech industry doing this? And the answer, as with vaccine manufacturers, is these people are really, really poor. It’s really hard, you can’t charge them for this service because A) they don’t have any money and wouldn’t pay for it, and B) the transaction cost of trying to get money off them in a world that mainly doesn’t have mobile payments is gonna exceed any revenue you’d get. 

So there’s no direct market selling this stuff to people. And yet these are people who’s yield gap, the gap between what they’re producing now and what they could be producing. In many cases, they’re producing like a third of what their land could sustain, what they ought to be able to produce with the right use of the right seeds, the right fertilizer, the right agricultural strategy. 

Jim Fruchterman [22:18]

Who’s the third party payer that’s going to underwrite this great public good and do the pre-capitalism market development work? 

Owen Barder [22:28]

There are two parts to that, right? And most public goods are paid for by governments. 

Now, you could rely on philanthropists to provide public goods. People who have made their money in the market and decided to do something else, right? And America has more of a tradition of that than European countries. 

Or you could rely on governments and… I think most of us are used to the idea that government should provide public goods like highways. And indeed, in most countries in the world, there is some effort on the part of government to provide information to farmers. 

Jim Fruchterman [23:07]

Yeah, agriculture extension has existed for 150 or 200 years in these developed countries. 

Owen Barder [23:13]

Exactly. And indeed, one of the first digital, it’s not really digital, one of the first extension services in this country, and arguably one of the most successful, was that the British government has an agricultural adviser on the BBC’s longest running radio soap opera, which is called The Archers, which is set in a fictional farming village. 

And they use, since the Second World War, they’ve used it to provide little tidbits of agricultural advice through the medium of the soap opera. And to this day, there’s a government advisor to this radio soap. 

So government extension is, you know, the provision of public goods, and you can argue about what isn’t a public good and where the boundary should be, but it is a legitimate function of government. 

And the fact is that a lot of countries spend a lot of money on this. So in some ways, this ought to be a, you know, this is a bit like the no-brainer of if you had a vaccine, would you buy it, right? If you had a way to reach people with information at almost no cost, would you pay for that? The answer to that is, sure, you know, why wouldn’t you? The big upfront investment in this case is data science and technology. 

The technology isn’t that exciting. It’s, you know, using a phone system to send voice messages or text messages. But you have to still build that system and maintain it and update it and figure out how to interact with different telephone systems around the world. 

And we’ll be updating that over time as more very poor people have smartphones, we’ll be thinking about apps and so on. So there’s a software development piece. But more importantly, there’s a data science piece, right? 

What tech companies do is spend a lot of time looking at how users engage with their software or their service and observing what they do and figuring out how to make the service more useful to them. 

What is the problem that the user is trying to solve? What’s the journey they’re on? How can I get them to where they need to be quicker? How can I remove the frictions involved in signing up or engaging with the service or getting value from the service? You know, and tech companies, are real good at this stuff. They do something like the equivalent of the Randomized Controlled Trial I was talking about earlier. They do the AB testing, randomly separating these two different versions of it and seeing how different people react. 

And you can get very quick information. And of course, governments aren’t real good at doing that kind of stuff. So the way we’ve got to this is, in the long run, this is a service that’s up and running and effective and demonstrating real value and is not that expensive to run, then you want the governments to pay for that ongoing service, right? So public good is not that expensive. It’s a lot cheaper than the alternatives that they’re paying for. They should do that. It’s a big ask to ask an extremely poor country to pay for often Western educated, not always, data science and tech people to do the investment and the R&D to make the system work well or to write the software. 

We’re not ideological about this. There are lots of different ways of doing this, but broadly speaking, our model is upfront catalytic investment to design and build great services from philanthropic donors. 

And our sustainability model is provide a service that’s so good and so cheap per additional user that it can be delivered at scale, not at a huge cost, and that that would typically be paid for by the government of the people who are benefiting. 

And sometimes we get some, again, particularly US folks sort of rolling their eyes and saying, well, expecting continued government funding isn’t really a sustainable business model. It kind of is, right? For public goods, that is the sustainable business model for public goods. 

Jim Fruchterman [27:21]

I mean, government spends so much more than philanthropy spends. So I think, and I think this is a very common exit option, as it were, from, I mean, you need philanthropy to get things going, because governments aren’t venture capitalists. But as you point out, if they’re paying so much for ag extension services with human beings, if there’s a digital alternative that is nearly as good and costs a fifth or a tenth or a hundredth of cost, you would think that over time, more and more governments would look at that as a smart buy. 

Owen Barder [27:53]

That’s exactly right. One of the political economy challenges, of course, is that if a government does have extension workers, people who go out in their land cruisers and advise farmers, and they have managers and managers who manage the managers and trainers, you have a very large number of people whose livelihood and whose prestige and position in society is founded on in personal agriculture extension. 

And it turns out that they’re not wildly excited about being told that digital ag is, you know, maybe not quite as good, but a whole lot cheaper, because a whole lot cheaper means you’re not going to employ them anymore. That’s what a whole lot cheaper means. And so if you’re the agriculture minister and you call up your head of extension and say, I’ve heard about these, these, you know, digital folks, what do you think? 

The answer is very often not, that’s a great idea, you know, what should I go and look for a new job? It’s, this is a terrible idea, boss, for the, you know, for eight very compelling reasons. And, you know, so we have to figure out how to partner with governments. 

And the truth is that we don’t need to replace in-person agricultural extension, right? And one thing that we can do is leverage in-person agricultural extension. So having these people train people to use digital services as a second, you know, if you have a problem understanding the message you’ve got on your mobile phone, come to me and I’ll help you apply it, right? 

So you can, you can increase their effectiveness and their usefulness, and get much more bang for your buck for from both the digital and the in person service, right? But, you know, both for real world reasons, but also for tactical reasons, it’s not great to go to government since AI, you can stop doing all that and fire all those people. 

Jim Fruchterman [29:56]

So I think we’ve got the background. Let’s talk about where Precision Development is today. 

Owen Barder [29:56]

We’re currently serving five and a half million smallholder farmers in 11 countries, which makes us one of the bigger agricultural extension services. 

We have a cost per farmer, if you take all our costs and divide by all our farmers and these costs vary from service to service, but we’re down at around $1.25 to $1.50 per farmer per year. So that’s pretty cheap. 

Keep it sort of two orders of magnitude less than a classic, a bit more than two orders of magnitude less than a classic in person agricultural extension service. 

Jim Fruchterman [30:44]

Who’s never going to get to all those people. 

Owen Barder [30:48] 

Clearly can’t, right? Not scalable, right? Yeah. One of the projects that we’re, and approaches that we’re especially proud of is we’ve just handed over a two million farmer service to the government of Odisha in India, in the east of India, where it was a Build, Operate and Transfer agreement where the Gates Foundation, to my point about financing models, funded the setup costs, our costs of getting it going. 

The government of Odisha funded from day one the operating costs of running the service. 

Jim Fruchterman [31:24]

Now, wait a minute. Isn’t Odisha like one of the poorest states in India? 

Owen Barder [31:27] 

It absolutely is. Very agricultural. So this is tens of millions of extremely poor farmers. Agriculture extension is run by state government rather than national government in the federal government in India. So, but it’s worthwhile for them because this is such a huge part of their state’s income, the income of their citizens to spend a modest amount of money paying for a digital extension service for their farmers. 

So we set that up with the government of Odisha, trained their staff, built the system. And a couple of months ago, they took it over to, to run it. 

Jim Fruchterman [32:16]

You know, it’s this, this idea that an exit option, is very common in the tech field because you’re trying to become rich. And so you want to be sold to a public, you know, Google to buy your company in the nonprofit sector. It’s very uncommon. People tend to think of their organization doing the work forever. And you’ve just described saying, “No, no, no, we would love to turn this over to the government of a state”. 

They’ll go on to serve millions of people and we don’t have to worry about that anymore. So the social good has happened and someone else is going to scale it up and we can now turn our attention to the next target of opportunity, the next million farmers that need this kind of capability. That’s terrific. 

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To hear the rest of the interview, be sure to follow the Tech Matters podcast on Spotify or Apple Podcasts or your favorite podcast platform where we’ll be publishing part two in just two weeks. 

For transcripts and related articles, check out our website at techmatters .org. And is there something that you found particularly insightful about this episode? Be sure to let us know by sending an email to [email protected]. We’ll pull together all of the thoughts from our listeners and try to address them before the end of the season. Thank you so much for listening and see you next time. 

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As we launch this latest season of the Tech Matters podcast, I want to be sure to thank the following funders for their generous support of Tech Matters, our nonprofit, noting that the content of this podcast is solely the responsibility of me and Tech Matters: The Patrick J. McGovern Foundation, Okta for Good, Schmidt Futures, The Skoll Foundation, and Splunk.