Shruti Rajagopalan — On Spotting Talent, And Making Sense of Rising India (#152)

104 min read
Shruti Rajagopalan — On Spotting Talent, And Making Sense of Rising India (#152)

Shruti Rajagopalan is an Indian-American economist. She leads the Indian political economy research program and Emergent Ventures India at the Mercatus Center at George Mason University. She also hosts the Ideas of India podcast.


[4:19] WALKER: Over the past twelve months, I've developed an utter fascination for India. So who better to learn from than someone who, among many other things, hosts a podcast called Ideas of India? Shruti Rajagopalan, welcome to the podcast. 

RAJAGOPALAN: Thank you so much, Joe. It's a pleasure to be here. 

WALKER: So, Shruti, for the next 2 hours, I'm going to be your student.


WALKER: And this is going to be a very selfish conversation. I'm going to ask you all of the questions that I've been pondering recently. And I'm conscious that I'm probably treating you maybe not so much as like the Oracle of Delphi but the Oracle of Delhi. You like that?

RAJAGOPALAN: I'm okay with that. 

WALKER: You grew up in Delhi, right? 

RAJAGOPALAN: I grew up in Delhi. 

WALKER: So please feel free to pass on any of my questions, because I realise if someone put me in this position with respect to Australia, I probably wouldn't be able to answer all of their questions. 

So, nevertheless, thank you in advance for helping me to better understand India. 

First question: is it coherent to even have understanding India as a goal, given how heterogeneous India is? To what extent does it make sense to seek to understand “India”. 

RAJAGOPALAN: To a very high degree.


RAJAGOPALAN: We've come a long way, not just in terms of having a consistent geographical boundary, in terms of how India looks today, and that hasn't changed very much other than minor areas. But for a very long time, everything sort of roughly south of the Himalayas and north of the Indian Ocean from time to time has come under one group of people, right? So you can go back a few millennia and you can think of something like the Mauryan Empire that had most of India under its rule. Something more recent is like the Mughal Empire

The modern day Indian geographical boundary is probably closest to what came with the East India Company and the British Crown. That seems to be what the modern day rhombus shape is taken from. 

But there is a lot of commonality between these different, plural groups. So of course they're different religions, they speak different languages and so on.

But because of a particular kind of syncretic living over, say, two or three millennia, they've somehow managed to figure it out and they worked out how to chug along.

And depending on when you look, sometimes it's going splendidly well, sometimes everyone is warring with one another and there's a lot of strife and there's a lot of drought and famine and so on. 

But largely, I think there is something that holds them together. 

Now, having said that, of course, I grew up in New Delhi, I grew up actually in neighbourhoods where there were a lot of post-Partition refugees, as they call them — refugee colonies. But they were basically post-Partition Indians who came from the Pakistan side of Punjab and settled in colonies in New Delhi. And there's a lot more commonality between those neighbours of mine and, say, modern day Afghan tribes. 

On the other hand, I'm Tamilian, my ancestors are from what is modern day Tamil Nadu. And you would find a lot more overlap between certain cultures in Cambodia or Indonesia; of course with Sri Lanka, because they had a big Tamil population and so on. 

So there are parts of India where they have a lot more overlap with something that seems quite foreign, and Tamilians have a lot less in common with Punjabis relative to, say, the Afghan border with Punjabis. 

But largely this entire group has managed to find something in common. 

WALKER: They're united in their syncretism. 


WALKER: I like that. 

RAJAGOPALAN: At least that's the effort, right? 

[8:25] WALKER: Right, yeah. Most of them at least. 

So a step function change occurred in the amount of attention that I pay to India about a year ago, as a result of reading a Substack article of yours called ‘Why everyone should pay more attention to India…’, which is fantastic and I recommend to everyone. 

So at the outset, can you sell me on the bull case for India? Can you just outline the basic bull case? 

RAJAGOPALAN: It's a very large number of people, it's a very young group of people, which means over the next 50 to 70 years, this is the group that will exert a lot of influence. Of course, the elite among them already exert a lot of influence because they end up being the CEOs of the major tech companies in the United States, prime ministers of Indian or South Asian origin in various parts of Europe and the UK, and so on. 

But even those who are not the elite will drive things forward. So if you think about something like machine learning, think about something simple like how do we get a better tool to diagnose cataracts? India literally will have the largest number of eyeballs to train that algorithm. 

So this includes people who are probably not the elite. It's already driving all the YouTube algorithms because of a similar reason: largest number of eyeballs, relatively low opportunity cost culture among the non-elite. 

So there are obvious reasons, depending on what you're after, that India could be the largest provider of certain kinds of labour, it could be the largest provider of certain kinds of attention, if you're looking at all these big platforms. It could be the defining force in how democratic institutions look in the global south. I think to a very large extent it already is. 

And suddenly, thanks to the Internet revolution and everything that's going on in the developed parts of the world, India is having its moment with startup entrepreneurs. And I think you've seen a little bit of that on your last trip to India. I see a lot of that closely when I work with Emergent Ventures grantees. 

And there is a certain kind of untapped entrepreneurial talent in India that I think will really drive very interesting entrepreneurial solutions for the next, say, 40 to 50 years. 

The other reason is: America doesn't solve problems for developing countries necessarily. I mean, the technology Americans produce, of course, it diffuses to other countries. But it doesn't specifically solve problems of how do we eliminate problems of, say, open defecation or how do we resolve air pollution, and so on. 

Indians are grappling with those problems, and they are trying to solve those problems at scale. And if Indians can solve those problems for India, then there's a very good solution next for northern Africa. And the moment there's enough income, GDP per capita and entrepreneurial talent in sub-Saharan Africa, that will filter to sub-Saharan Africa. 

So I think for many reasons, this will be the driver of the world. And just sheer numbers, I think. 

WALKER: On the point about sheer numbers, a few statistics from your article really impressed me. So, as people probably already know, India has a similar population to China, about 1.43 - 1.44 billion people. But I believe China's population has now already peaked, whereas India's won't peak until 2065. And the other factoid in your article that really caught my eye was that, globally, one in five people below the age of 25 is from India. 


[12:12] WALKER: So what advice would you give me, a young Australian, for learning about India? 

RAJAGOPALAN: I think you're already doing all of it. I think it's useful to actually get to know Indians, especially people who are most interesting to you. So that's the nice thing about a country with scale, right? Whatever interests you, you will find a group of Indians who share that interest and who will also share insights on other margins and probably invite you home for dinner and feed you a great meal. 

I think it's extremely valuable to visit India and travel in India. First, there are a number of really beautiful places to visit. The heritage is exquisite. It's hard to get to oftentimes, but it's really exquisite. Australia is a relatively new country. I mean, I've seen plaques when I went to Sydney and Brisbane and so on, outside a pub that will say, oh, it stood here for 180 years, or something like that. 

I mean, now you're talking 2000 years. The places we visited in Chennai on the field visit with Emergent Ventures, they were all 1000 years old, these carvings. Just very accessible. Anyone can just go there and check this out. So I think there's a lot to see visually, there's a lot to experience culturally. 

I think the other reason to pay attention – and this is going to come to Africa too – India has been an experiment at scale in pluralism. And I think all the developed economies which are now trying to encourage immigration, which are trying to encourage a certain kind of pluralism and still hope to keep their institutional and democratic fabric intact, I think there's a lot to learn from India – both in terms of the kinds of mistakes Indians have made in the past and also how they navigate some of these issues. So I think that would be the other reason: the governance system, the rules. 

Also, India is entertaining. Indian Twitter is bananas. 

WALKER: Yeah, it's a scary place at times. 

RAJAGOPALAN: Also very meme-worthy. 

[14:21] WALKER: Two of my favourite experiences in the last however many years have been India. Like top five experiences. So I've done two trips there in the last twelve months, one being the Emergent Ventures unconference in Chennai in August of this year. But the first time I went to India was just by myself at the end of last year. One of my goals for 2022 was: I need to go to India and just set foot on the ground. And I went to Delhi and Bangalore. 

Before I arrived, I tweeted out that I would be there and if anyone wanted to meet up to DM me. Turns out I have at least three Indian podcast listeners, and I met up with a couple of them and it's just a sheer joy recalling those memories. 

Like, one guy toured me around bookstores in Delhi – Bahrisons and some of the other bookstores. I met his family, we had lunch. Another guy took me out to Gurgaon, the kind of satellite city  / tech village outside of Delhi, and still keeps in touch. I told him we were doing this podcast today, bounced some ideas with him. He probably sends me an article every two weeks, even a year later, because he knows I'm interested in India. So just really lovely experiences and lovely people. 

If I've already been to Delhi, Bangalore and Chennai, where should I go on my next trip? 

RAJAGOPALAN: What are you optimising for? 

WALKER: I guess just learning about India broadly, which I realise is kind of vague, but I'm at the point where I don't have more specific goals than that with respect to travel. 

RAJAGOPALAN: I think it's useful to go to places like Banaras (or Varanasi). It's in Uttar Pradesh, which is one of the poorest states, but it's also the holiest city for Indians. So there's a lot to see in terms of exotic culture, or what seems exotic, even to me, actually. And there are beautiful temples. It's literally on the banks of the Ganges. But on the other hand, you will also see a startling amount of poverty and just how far behind some Indians are relative to the others that you have met probably in big cities or the Indian diaspora that you've met in the United States and Australia. So I think that might be an interesting experience, sort of to see the other side, to see what schools they go to, how they live, what their problems are, what their aspirations are. 

A trip to the mountains. They're my favourite place. I encourage everyone to go up north.

WALKER: To the Himalayas. 

RAJAGOPALAN: Absolutely. And, I mean, pick your spot. But I really like Ladakh. It's the desert side of the mountain. It's sort of in what used to be the state of Jammu and Kashmir. Now Ladakh is a separate territory. And there's a big Buddhist influence there, so there are lots of monasteries. Most of the parts of Ladakh that I find interesting are at about 8,000 to 10,000 feet above sea level. So it makes it interesting, it makes it hard to breathe. It's just like a completely different experience. 

I love the coastal towns. I love Kerala. I love anywhere in Kerala. I would go to Mumbai if you haven't been. It's chaotic and it's vibrant. And to me, because I've lived in New York City for a long time, I love New York, I love Hong Kong. And Bombay – or Mumbai now – has the same vibe as the others. So it's just a lot of people and a lot of talent and a lot of entrepreneurship and a lot of people doing their own thing, all jammed into a tiny space, which makes it fun. It's also home for me. My husband's from there, my in-laws still live there, so I'm there all the time. (My parents live now in one of the suburbs of Delhi.) So, yeah, it just feels familiar. Really cool place. 

[18:17] WALKER: Should I be using the Desi names for Indian cities? So should I be saying Bengaluru instead of Bangalore? 

RAJAGOPALAN: Well, if you should, I should. I'm a little bit frozen in time, actually. Yeah, Mumbai now, because it's been so long that I try to say the Desi name. But I think it's okay. I think the goal is always to be understood. I think people understand when you say Bangalore, and they'll understand when you say Bengaluru. Yours is probably going to be like higher-level problem with Indian names and the accent. It might be a little bit easier to use the colonial name. I don't think it's a big deal. 

[19:03] WALKER: Okay. What are the most non-obvious cultural differences that Western people should be aware of when interacting with people India? 

RAJAGOPALAN: I think one thing there's just an underappreciation for is how important caste is in everyday life. And that's probably because most people Americans encounter are from the upper castes. And if you're from the upper caste, it's a non-issue what your caste is to some extent. But it's really part of everything, from your name, the way you pronounce it, your dialect, what you eat, where you live, who you're allowed to marry, even if it's someone you choose, right? So who are you allowed to choose? I know that sounds strange, but that's the sort of Indian thing. So I think there's just an underappreciation for that. 

There's just so much variation once you dig into India and once you start looking into, hey, why does that family cook their food differently from this family? Why do these people eat meat and the others don't? Or why do they live in this neighbourhood and they don't live in a slightly better part of town? Everything has to do with caste. The profession, of course, which is pretty well known. 

WALKER: I was intrigued to learn that even at the Indian Administrative Service, the IAS, which is India's public service – incredibly prestigious roles. You basically kind of have like tenure for life. On the first day, the number one question that the trainees are trying to answer is, what is everyone's caste? Because they're trying to ascertain potential marriage partners. 

RAJAGOPALAN: Well, and also social status and hierarchy, right?

WALKER: Ah, of course. 

RAJAGOPALAN: Everyone wants to know the pecking order wherever you go, right? You meet a group of economists, they'll try and suss out where you got your PhD. And if it's at an elite institution, which elite professor did you work with? And is that more elite or less elite than the ones they worked with? There's a pecking order in every group dynamic. And the pecking order in India, even if we say it is determined by something else, the underlying order is always caste. It is standing on that foundation of caste, because everything from the income and wealth levels…

I'm not saying there is no social mobility in India. In fact, post-liberalisation, it is the most disenfranchised in some sense who made the largest gains, because of access to markets and just economic growth being the tide that lifts all boats. So next week on Wednesday, we have a Dalit economic sociologist scholar called Chandra Bhan Prasad, who's going to come to Mercatus and talk about this. So it's not that there's no social mobility, but everything is very much pre-determined, in one sense, by your caste. All other movements are on the margin. 

WALKER: And for people wondering, “Dalit” is the modern, politically correct term for an untouchable. 


WALKER: There are about 270 million Dalits living in India today. 

RAJAGOPALAN: That's exactly right, yeah. 

[22:16] WALKER: Why haven't Westerners shown the same concern for the Indian caste system and the plight of Dalits as they have, for example, for apartheid in South Africa, or for Palestine? 

RAJAGOPALAN: I think there are two possible reasons. I haven't studied this area, so it's hard to say. I think so much of the American gaze on others’ disenfranchisement is based on race and some kind of a binary which is fairly easy to identify visually. So race and gender are the two binaries of disenfranchisement that has driven the American concern for those who are disenfranchised. And I don't think they can identify caste quite as easily as Indians can. So Indians will know someone's caste just by the way they speak, the neighbourhood they're from, their last name, the way they pronounce their first name and so on. That's fairly invisible to Americans. So Americans can't tell an English-speaking Dalit from an English-speaking upper caste member. And to that extent, that disenfranchisement becomes a little bit invisible. And I think the narrative or the preconceived idea in America is that if you can't visually spot it and discriminate, then it must be something one can overcome. But I think now there's a greater understanding of this problem. 

And I think, second, they've just not come across many Dalits. Most of the immigration to the United States, especially after the H1B changes in the early ‘90s and the tech boom, they were all upper caste. In fact, they were overwhelmingly, initially, Brahmins from the southern part of India. And these were disproportionately large numbers of engineers compared to their proportion of population, and found great opportunities. They happened to be English-speaking, and the world kind of opened up. So I think just less interaction. The more they start interacting with Dalits, I think that nuance can probably come in and it will start changing. 

I see that happening with the understanding of Islam. I think that has improved dramatically, say, in the last 20 years, post 9/11. And I hope that will happen for other cultures, too. 

[25:06] WALKER: Yeah. To what extent is the question “What is this person's caste?” kind of lingering in the back of the mind of even an attendee at an Emergent Ventures India unconference? And how does that factor into your thinking as a conference organiser? Is it something that you care about? Is it something you want to mitigate? Something you're indifferent to? 

RAJAGOPALAN: So let me tell you, on a very practical level, people care about other people's caste, even if it's not explicit, because in any situation where you have to share food, different castes have quite different eating practices, and this is obviously more of a concern for those who are in the upper caste and who are vegetarian. So oftentimes, at least the ostensible explanation that I have been given by my friends and cousins in India is “It's not that we're interested in someone's caste, it's that we don't want a situation where we offend someone or we are offended because we are in a situation where we're eating something that makes us uncomfortable and so on.” So that's the very pragmatic reason where it comes in, where it's sort of in everyone's minds, either explicitly or implicitly. And it is a question of: if we're going to be breaking bread together, are we really doing this or are we not doing this? How are we doing this? 

But I think it's also a marker of social status. Typically, the upper caste have gained the most in the last 75 years. They were the group that were lettered, right? The Dalits weren't allowed to learn how to read and write. So when you come to a situation where a colonial administration says, okay, we're going to train a new generation of Indians in the ways of administrating a colonial setup, the people who were obvious contenders for that were those who had already had some education. So usually they spoke multiple native tongues, and then they also started learning English. There's actually a word for this. In the 18th and 19th century, it was called “Dubashi”: someone who speaks multiple languages. 

And then that goes further down. So my great-grandfathers spoke English and their native tongue. As did my grandfathers, as did my parents and so on. So that's the group that ends up gaining the most from liberalisation, ends up gaining the most from foreign direct investment, ends up gaining the most from World Bank hiring in India, and any such thing. So I think that is something that became a marker for status. So we knew that the upper caste members are also the most educated. They happen to have the main opportunities both in India and abroad. And therefore, that's the group we must associate with. And anyone who doesn't sound or look like that, they must not be very good or they must not be of that much use to my plans. So here, caste is very much in the background. No one's actually discriminating on it. But you've met 20-something entrepreneurs. When they're in a room, they care about “What can I get out of this social connection? Are they going to be an input into my work? Are they going to help me raise funding? Are they actually going to help me build a better product?” 

And everyone does it to some extent, except in India all those questions, if you keep peeling the layers, the final back spine of that, the explanation will be buried in caste. 

WALKER: How many languages do you speak? 


WALKER: Tamil Nadu. Hindi. English. 

RAJAGOPALAN: Tamil. Hindi. English. 

WALKER: Sorry. Tamil. Hindi. English. Tamil Nadu is the state. 

RAJAGOPALAN: Nadu means state. 

WALKER: Yeah. I'm still learning. 

RAJAGOPALAN: You're doing very well. 

[29:00] WALKER: Thanks. Why is so much good Indian food situated in hotel restaurants? So, in Australia, and from my experience, the US as well, high quality restaurants are generally not attached to hotels. But my experience travelling India is that is where I would get the consistently best-quality food. If I'm correct, what's the explanation for that? Is it that the high-quality food costs a certain amount to produce, and then that requires high discretionary incomes which only tourists can provide consistently at the moment?

RAJAGOPALAN: One, I don't think that's correct, actually. I don't like the Indian food in five star restaurants. I actually actively avoid them. I think the food is too rich. I think it's quite different from what we eat every day and what feels like comfort food to me. And I might also be an outlier because I really love street food, and they try to make a version of it in all these posh hotels, but it's not quite there. But it's still very high quality. So it's not that you're getting bad food, it's that I don't go to five star hotel restaurants to eat when I'm in India. I go to strange joints that you would be like, “You're really eating there?” But the food's very good. And because I have local context, I know it's clean.

But I think it's also very good because Indians with very high levels of disposable income like eating Indian food. And this is unlike other places: like if you travel in other parts of Asia or, say, Africa, a lot of the people with very high levels of disposable income are actually the expats. And they may not be that interested in eating the local cuisine at a quality level or at a presentation level or in an ambiance that's really posh. But I think Indians are at that level of income. 

And it's really hard to make Indian food very badly in India. I mean, people who can make it well are everywhere. So if you're a five star hotel owner who has even their basics figured out right, you can probably get a pretty decent chef. So the food will never be bad. 

But do I think it's the best food? I'm not so sure. I don't even mean best food per rupee spent. I don't think it's the best food, actually. 

[31:27] WALKER: Well, that doesn't surprise me. The second claim. But the advice I've received is to avoid street food in India. So what principles should I follow to get good street food? 

RAJAGOPALAN: Well, one, it's not bad advice, okay. Because you're probably going to get sick and you probably visit India for a few days. You don't want your entire trip to be torpedoed by Delhi Belly or something awful. So it's largely good advice. I think as long as you avoid ice, raw fruits and vegetables and water, you're fine. Most people know that they should drink bottled water, but they always forget the ice, and the ice comes from somewhere disgusting. And raw vegetables, you're in trouble. 

But cooked food, especially if it's made freshly in front of you, I think most street food, you'll be fine. 

But if it has an uncooked portion or it's very watery and it's got all these chutneys and things which are raw, and a fluid situation, I would avoid that. Unless you're Tyler [Cowen]. His stomach is lined with iron. He can eat anything. He's eaten in places I wouldn't eat at, and he's totally fine. 

[32:43] WALKER: Good microbiome. So I know this because you responded to a tweet of mine earlier this year in which I solicited Indian book recommendations, but two of your favourite Indian fiction books are Rohinton Mistry’s A Fine Balance and Vikram Seth's A Suitable Boy. I read A Fine Balance many years ago, back in high school, and I absolutely adored it. 

RAJAGOPALAN: Adore is not a word I use for that. It broke my heart, just so many times. But I know what you mean. It’s beautifully written, but it's heartbreaking. 

WALKER: It’s tragic, yeah. Poignant. So what did you like about each of those books? 

RAJAGOPALAN: I think the thing I like about both books is they're this intergenerational saga, which is how the Indian epics are told. So if you've read Indian epics, they're like intergenerational large families, lots of different characters coming and going, and they are very good at describing a milieu. And I think both books do that very well. 

WALKER: They're both very long. 

RAJAGOPALAN: They're both very long. They are multi-generational. And I think Vikram Seth's A Suitable Boy has a lot more characters than A Fine Balance. So that's one thing I like about it. 

The second is I think both are about a time period from… I wasn't born in that time, but I know a lot about it because my parents were around and my grandparents were around, and we all lived in the same home. So I've heard a lot about it, but I never heard it in this sort of modern EnglIsh literature sort of language. It was just the stuff that they told me. But to read it in this novel form, the way we read Russian literature or English literature, that I think… Because you know how these colonial education systems are, right? You grow up reading literature that is not from your time and space. So to find something that is familiar to you but is written in that language, I think is very interesting. 

So I love both books. I love these crazy sagas across generations. I'm a sucker for it. My husband likes to kid that he hates reading any book where there's a family tree that you have to keep going back to. And I love books like that. So I love One Hundred Years of Solitude. I love A Suitable Boy – first two pages are a family tree and then there's an appendix. 

WALKER: What excites you about that? 

RAJAGOPALAN: I think just the story has to be told from multiple points of view. I think that's the exciting thing. If a story which is of that breadth had to be told from just one person's point of view, that would be really hard. 

So I also like stories which are told from one person's point of view or only last a day. Like, what's that book? One Day in the Life of Ivan Denisovich?

WALKER: Right. I've never read it. I know the book. 

RAJAGOPALAN: Alexander… Solzhenitsyn?

WALKER: Solzhenitsyn.

RAJAGOPALAN: Oh, my God. I am mispronouncing so many words right now. That book, for instance, is not this kind of crazy, layered story with lots of different points of view. But that's the powerful thing about that book. It's just like one person telling you about the most mundane things. And it is gut-wrenching because it's talking about something much larger. 

But I love stories if you're talking about a lot of breadth and complexity, anything that can be told from lots of different points of view, I love that stuff. And Vikram Seth does that really well. There is only one protagonist driving the story, but all these other side characters that come and go, you learn about what are their incentives? What are they trying to do? What are they trying to accomplish? And it's really fun.

[36:30] WALKER: On this point about a sprawling Indian kind of dynastic saga, how can large Indian families help explain the relative success of the Indian diaspora in America? 

RAJAGOPALAN: So there are two parts to the diaspora question. One is just, they are elite, they're well educated, they did really well. And I think that has less to do with Indian families. I think that has more to do with the fact that India's education system is just designed for selecting the cream. That's how it was designed. Macaulay wanted to select the cream of the English educated to run the civil services. Then Nehru came in. He wanted to select the cream to become engineers and doctors to fit into the part of the socialist planning machinery. And we've just kept that going. And now selecting that cream has benefited American companies and Silicon Valley and firms across the world, because someone's already done the selection, so now we just need to make sure we incubate the talent. 

But I think the large Indian family bit explains why they get to the top. So there's some literature on this, and I think the title of some of these papers is “the bamboo ceiling”. So they talk about how Asian Americans, relative to South Asian Americans or Indians (who are the overwhelming part of that group), Asian Americans are very well represented in sort of the mid levels and upper levels of law firms or tech firms and so on, but not so well represented when we consider the top job. And Indians tend to be almost overrepresented when it comes to the top job. 

WALKER: Think of people like Sundar Pichai. Et cetera, et cetera. 

RAJAGOPALAN: Exactly. Indra Nooyi. Sundar Pichai. Parag Agrawal, who got booted out of Twitter very unceremoniously. 

WALKER: The CEO of Microsoft. 

RAJAGOPALAN: Oh, yes, Satya Nadella. So these are typically the people. I believe Starbucks has a new Indian CEO. I can't recall his name, but we're hoping he stops them from calling it chai tea latte, because tea is chai. 

But, you know, jokes aside. So there's almost like an overrepresentation for the top job. And I think being part of a large Indian family and also just living in a very plural environment teaches us from a very young age: how do you navigate a complex system? And I think large companies are complex. There is some built-in hierarchy. There is a cultural code you need to crack. You need to learn how you talk to your peers, you need to learn how to talk to the janitor, you need to learn how to talk to the board, you need to learn to talk to the people like your bosses and those above you and to clients and customers. And I think that Indians learn from a very young age. The way I speak with my grandparents is not the same way that I speak with my parents, is not the same way I speak with neighbours. And now if we start getting into people, different people, not in a family hierarchy, but in a social or economic hierarchy, the way you speak with people who come and they are your housekeepers or your gardeners or your chauffeurs, is not the same way you would speak with your boss. And in India, that's very clear. And people learn it at a very young age. And it's a cultural code you learn how to crack without even knowing that you're cracking it. And I think that's very helpful in very large companies. 

[40:07] WALKER: That's so interesting. What's a good development economics book? It doesn't have to be about India per se. Could be any development economics book, but one that would help me understand India. 

RAJAGOPALAN: Well, I think the best development economics book, even today, is An Inquiry into the Natura and Causes of the Wealth of Nations that Adam Smith wrote. 

WALKER: Great. 

RAJAGOPALAN: Does that help us understand India? I think it does. I think it helps us understand everything. 

A development economics book that'll help us understand India better? I need to think a little bit more about that. I'm trying to think about stuff that was written specifically for India and I think that may be a bad idea. 

WALKER: Why so? 

RAJAGOPALAN: Because most development economics that's been written for India in the last few decades is all about redistributing and randomised controlled trials or something else that has nothing to do with development, that has to do with measurement and redistribution and things like that. When I think of development, I think of how can South Korea go from being sort of the third-poorest economy in the ‘50s to, I don't know, GDP per capita that's 60% of United States in 2023. That's an extraordinary miracle. So what is the book that explains that, I think is the book that explains everything. And I think a lot of books on trade explain that very well. And I think all the classic books, like The Wealth of Nations, would explain that very well. 

[41:49] WALKER: To what extent would understanding India's Constitution be a good way for me to understand India generally? 

RAJAGOPALAN: If you understand India's Constitution, tell me and explain it to me, please, because that has been a lifelong endeavour. I think it's very helpful if you're trying to understand certain kinds of institutional quirks and craziness. So if you understand why India's election system is so messy, or if you want to understand why every electoral constituency in India is of a different size depending on which state it's in. Right. Or if you're trying to understand why the Supreme Court functions the way it functions, the answer is always buried somewhere in the Constitution. You just have to find it. So if that's the endeavour, then understanding the Constitution is extremely helpful.

But it is a very complex document. Most people say this with pride. I don't. It is the longest Constitution in the world. It's extremely complex. It's got, like, 395 or 400 articles. It has twelve appendices or schedules attached at the back. It has more exceptions than it has rules, which I think makes for a terrible constitutional document. So it's not necessarily a good Constitution, but it's very complex. So trying to understand it is a huge investment. 

So I would say make that investment if you're studying specific institutional quirks. But if there's one area that you want to deep dive into, it's always useful to check out, hey, what are the constitutional provisions that affect that? Because there's definitely some crazy buried in there that's causing the problem. 

WALKER: Right. And maybe start with a secondary source rather than the Constitution itself? 

RAJAGOPALAN: Always start with the secondary source. The Constitution is incomprehensible to someone who hasn't taken multiple classes in constitution law, which I did when I was in law school. And, yeah, maybe I regret it now. 

[43:50] WALKER: I don't know if you know this, Shruti, but Australia's constitution is notoriously hard to change. 


WALKER: Yeah. Okay, so we've had 45 national referenda – that is, votes to change the Constitution – in the 122 years since our federation in 1901, and only eight of those have succeeded. So that's a success rate of, like, less than 18%. We just had one that failed a few weeks ago, actually. 

RAJAGOPALAN: What was it about? 

WALKER: It was about adding a Voice to Parliament, to the Constitution, a voice that would represent Indigenous Australians and would be able to make representations to the Parliament on behalf of Indigenous Australians relating to issues that pertain to them. 

RAJAGOPALAN: But a voice in the sense… is that like electoral seats in the parliament or? 

WALKER: No, just an [advisory] body. It failed. Part of our kind of long story of Indigenous recognition and closing the gap between those outcomes. 

So the key reason why is there's a very high hurdle to pass: that is, a double majority. So you need a national majority plus a majority of voters in a majority of states. And that's obviously a vestige of our federation, where the smaller states wanted to protect their position relative to the larger states. In contrast, as you know, the Constitution of India has undergone 105 amendments in the 73 years since its adoption. I don't know what kind of success rate that translates to because I don't know the number of proposed amendments... 

RAJAGOPALAN: Very high. Maybe six have failed. That's it. 



[45:26] WALKER: Wow. So India's Constitution is one of the most frequently amended constitutions in the world. To what extent is that the result of the fact that it, as you said, contains so much detail? It's the longest constitution in the world. It contains a lot of detail that in Australia would just be put in legislation. Or on the other hand, to what extent is it the result of a relatively easy amendment process? Like, how much weight should we put on each of those factors? I'm not even sure if they're conceptual alternatives, but how should I think about this? 

RAJAGOPALAN: So I'll tell you how I think about it, and maybe you can tell me if that makes sense. 

WALKER: Yeah. 

RAJAGOPALAN: So one of the reasons it's had so many amendments is definitely that it's easy to amend. So the Indian Constitution, one, because it's so long there are three subclauses in the amendment provision. There are parts of the Constitution that can be amended by simple majority, what it takes to pass regular legislation, and those are mostly administrative parts. To add or change like a border boundary, or to add or change some minute detail on appointing someone. All that stuff is simple majority. 

The majority of the Constitution, the amendment procedure says that it's a dual requirement. You need a majority of the total membership of the House with at least two thirds present and voting. So let's say if you have a council of 100 people, if all hundred show up, you need 67 votes, right? If only 51 show up, you need all 51 votes. So that's the dual nature of the requirement. 

So if you have a government which has reasonable numbers in Parliament in terms of constituency seats, the government can quite easily carry the day by making side deals with others to either ask them not to show up that day, which will drop the number of people present and therefore the majority requirement comes down. And in the past, like in the case of Nehru, Indira Gandhi, they actually had more than 67% of the numbers of the House. So those amendments passed quite easily. So it's a relatively easy amendment procedure for that reason.

There are very few clauses – this is the third part – there are very few clauses in the Constitution that require ratification by the states. And this is a simple majority in the state legislature of half the number of states. Most states in India are unicameral. And a simple majority in a small unicameral state – we're talking about like 20 votes or something – like it's pretty easy to manipulate, bully by those amendments. Not hard. 

And the fact that India was centrally planned and also fiscally very centripetal, that is, the Union government controlled the purse strings, meant that the state legislatures and the state governments were always at the mercy of the Union Cabinet. You're never short of state governments that will do your bidding because you control the purse strings or you control other things that are coming to them. So that’s the overarching picture of how easy it is to amend the Constitution. 

The second reason, I think, it was a simple amendment procedure is the moment the Supreme Court of India said that now they will also decide if an amendment is valid or not, which is kind of like a judicial ratification – we can open it up after it's passed and ratify whether it's right or wrong. The moment the Supreme Court said that it has the power to do that, the number of amendments reduced per year, or per decade. So an easy amendment procedure for sure. 

Now, is it because of its length? I'm not so sure that's the case, because it's not that different parts of the Constitution were amended because they were affecting different parts and there was too much specificity. What we observe is that there's a small number of clauses that's gone through a lot of amendment. 

WALKER: Oh, interesting. 

RAJAGOPALAN: And usually it's the Bill of Rights. This is the chapter called ‘Fundamental Rights’ in the Constitution. So some of my dissertation work was on this, and I argued that at least the first four decades, which is the time period I was looking at, the reason for frequent amendments was socialist planning. Socialist planning requires you to break the rules of generality. It requires you to break the rules of equality. It requires you to basically break a lot of rules that are enshrined in fundamental rights to constrain the state. 

But you can't constrain a state that needs to do socialist planning. That's the entire point of that state, right? They need to be able to take from Peter and give to Paul, and they need to be able to treat Peter and Paul differently, not just reasonable classification differently, but like, actually substantively differently. 

And those were the sorts of interventions that led to a lot of amendment of the Constitution, lots of affirmative action amendments, because newer and newer groups want to be included in the protections that were initially only afforded to the Dalits and what were known as the Scheduled Tribes but were the Indigenous tribes. So those were the sorts of things that constantly underwent change. And for that reason, I think it's because the state wanted to be unconstrained and not bound by rules. Now, whether it was for a good reason or a bad reason is up for question. I think it was terrible that they amended the Constitution so frequently. Lots of people actually laud the Nehru and Indira Gandhi vision of constantly amending the Constitution to make sure that the government's socialist agenda was furthered. So that depends. But, yeah, I think that's the core reason. 

[51:28] WALKER: Well, that is an excellent explanation. Thank you. So, yeah, just to dwell on this a little further, people from federations like Canada and Australia who use referenda processes to alter their constitution will note that India, while being a federation, has this different process. And so the framers of India's Constitution presumably made that decision very deliberately. 


WALKER: And what's your hunch as to why they made it so easy to amend? 

RAJAGOPALAN: So I'll tell you what my hunch was and what I've uncovered. 

WALKER: Okay. 

RAJAGOPALAN: So initially, I started thinking about this question about 10, 12 years ago. And like I said, my dissertation work was on amendments to the Constitution. And Dick Wagner, who's one of the now retired professor emeritus at George Mason, he worked very closely with Jim Buchanan, one of my academic heroes, was on my dissertation committee. 

WALKER: Oh, was he? Cool.

RAJAGOPALAN: Yeah. Just randomly asked me one day, I think it was after my proposal, or maybe during my proposal defence, he said, “But why did they choose such an easy amendment procedure? You have no explanation for that.” And I was like, that's a good question, Dick. And I'm still trying to answer it. So Dick always asks questions that you take 15 years to figure out. And I started digging into that question, and my initial explanation was: what is the predominant view of the constitutional framers? That they were all part of this Indian nationalist movement. They were sort of hallowed. They'd all gone to prison for years and years because of the colonial government throwing them in and out of prison because of sedition laws and so on. And they finally came upon and created this hallowed Constituent Assembly. And they were also socialists. They knew that you can't have a Constitution that constrains the government too much. 

But they never thought too much about entrenching constitutional rules or having a difficult amendment clause, because they thought none of them would commit a fraud upon the Constitution. In fact, these phrases are in the Constituent Assembly debates: “We don't expect any Government of India that's elected by the people to commit a fraud upon the Constitution.” 

The second ostensible reason that came up in the debates was the Constituent Assembly of India was elected on a very limited franchise. I think only 28% of Indians were allowed to vote in those elections because you needed to own property and pay taxes, and there were all these rules. And they thought that that's unfair to bind the hands of future governments that are elected by universal franchise. And India is exceptional in that sense. At the birth of the Republic, India had universal franchise, universal adult franchise. 

So those were the reasons. And I completely believed them. I was like, yeah, they said it, that makes sense. 

But I'm trained as a public choice economist, right? And I'm trained in the Austrian tradition. I've studied socialist planning and things like that. So that sort of thing kept going on at the back of my mind. So my first question was, why are we treating them like these hallowed angels? And why aren't we treating them in the standard public choice way, which is they are self-interested political actors? So I started modelling the question that way. And then the second reason I realised was, unlike, say, self-interested actors, who wrote the American Constitution, where they were all property owning men. In fact, sometimes the property even included slaves – they included human property, not just land and chattel. They wrote a constitution that protects their interests. 

Now, this is a group of avowed socialists. But they're also political actors. And I said, that's got to have something to do with how they chose the rules. And I'm increasingly of the view that the Indian Constitutional Assembly chose differently because it was a group of socialists who obviously knew that you couldn't bind the hands of their own government or future governments from redistributing and so on. So the rules had to be simpler. But the other reason is they also had an expectation that they will be the rulers. And this is what took me a long time to track down. So I recently, in the last few months, I made a list of all the Constituent Assembly members. I cross-checked them with election records and saw how many of them stood for elections in parliamentary elections in the first general election, which happened about 18 months after the Constitution was written and adopted. And then the second list I check is how many of them stood at state level legislature elections. And then I look at political appointments, because one of them became the President of India, which is not elected directly by the people. So I said, let's make a list of these. 

And 211 out of 305 members held either elected political office – so either they were in the Lok Sabha, which is the lower house, or they were in the upper house, or they were in the state legislatures – and about ten of them were appointed as very important political appointments, so like a governor of a state or the President of India and so on. And that's two thirds of them. Which means they were also political creatures who were expecting to be in power, because the standard constitutional economics models tell you: you constrain the hands of the government because you want to prevent bad things from happening to you. But if you expect to be in power right away, then do you still constrain the government? 

So I think that's where the reason is hidden, that they were both political actors who were expecting to be in positions of power very soon and they were socialists, which means that only the Bill of Rights doesn't get that extra protection which it does in every major Constitution. Every major Constitution will tell you we entrench the Bill of Rights. But in India, other weird things are entrenched. Federalism, judiciary, how we change the tax system and things like that are entrenched, but not the Bill of Rights. So I find that quite interesting and different from my own priors and definitely different from how anyone else describes this literature. 

[58:06] WALKER: That is fascinating. Because this might seem counterintuitive to some people, the reason why socialism leads to not entrenching the Bill of Rights in the Constitution is that you need to ride roughshod over some of those rights in pursuit of socialist redistribution and other policies. 

RAJAGOPALAN: Absolutely. So I'll give you a very simple example. One of the reasons that there were certain changes made in the very first amendment of the Constitution is they were trying to do large-scale land reform in India. Right? There's an actual case, it's Kameshwar Singh. Sir Kameshwar Singh vs the State of Bihar. Sir Kameshwar Singh is one of those old feudal aristocratic lords who made a deal with the East India Company through the permanent settlement – I'm talking late 18th century, early 19th century. Managed to get, I don't know, 5000 square miles of land under his control. What started out as a tax collecting family actually became de facto owners of that land. He was part of the Constituent Assembly of India. 

And the question was, we need to do large-scale land reform and we need to take land from these rich zamindars and give it to poor zamindars. But herein lies the problem. Not all zamindars are Kameshwar Singh. The amount of land he controls is like the size of the Kingdom of Brunei. Whereas most zamindars control maybe a couple of hundred acres of land. Which means the way we expropriate from Sir Kameshwar Singh to redistribute to regular folks, we can't punish the average garden variety aristocracy quite the same way. So the State of Bihar wrote legislation which was specifically targeted towards one dude, which is Kameshwar Singh. And they wrote land reform is allowed according to our Constitution. The Constituent Assembly members had already made provisions to make sure that land reform is acceptable, eminent domain laws don't get in the way of that and so on. 

But there it said that the compensation principle is that for rich landlords, they would only receive one 20th of the compensation as poorer landlords. Which means Kameshwar Singh is going to get one-twentieth of the compensation per acre of land versus the neighbouring regular zamindar. And he took it all the way to the Supreme Court. And of course the court said, that's crazy. That violates Article 14, which is equal protection under the law. 

But that was exactly the point. They intended to violate that, to do what they needed to do. So that's the sort of thing. 

So when we say they ran roughshod over the Bill of Rights, I don't think they intended to do that. But they were also politicians. They were standing for elections. This is not elections by a limited franchise of landowning class the way it has been everywhere in Western Europe, the United States, Canada, Australia, like everywhere else in the world. The developed part of the world never started with the universal adult franchise. 

99% of Indians involved in agriculture, which was already about 90% of the population, were landless farmers. So those are the people you're going to be asking for votes and now you can't disappoint them. So you got to do the land reform, but the Constitution stands in the way of doing the land reform. So how do we do this? There was one group of people who said, throw this Constitution out, it's rubbish. These are people who want communist revolution and these are like the really avowed Marxists and so on. 

One group of people who were like the social conservatives said, look, we need some other organising principle because this clearly violates equal protection under the law. And then there was a third group of people: people like Nehru, people like Ambedkar, said, we need to find a compromise solution. Let's make an amendment to the Constitution and adjust a little bit, and that way we can make sure Kameshwar Singh doesn't get what he wants. Everyone gets what they want. The landless peasants suddenly get land and everything. So it's politics by compromise, except it's happening on the constitutional stage, and that's why you have so many amendments. 

So it's a lot of fun to read Indian constitutional history. It's what I do for fun – and work. 

[1:02:27] WALKER: Sounds like a rollicking history. So the Indian Supreme Court has struck down some amendments as unconstitutional and it developed a basic structure doctrine in this case called Kesevanandra Bharati v the State of Kerala. And that doctrine says that amendments cannot be made to the basic structure of the Constitution, meaning that Parliament can't change certain features of the Constitution as identified by the Supreme Court. 


WALKER: So there's this fight in India over constitutional change with the Parliament on one side and the courts on the other.

RAJAGOPALAN: The order of events is right after the Constitution is adopted the very First Amendment happens for situations like Kameshwar Singh. By the way, the compromise solution on that is really interesting. They attached a new appendix right at the back of the Constitution called the Ninth Schedule, because it was after the first eight Schedules. And the Ninth Schedule, it's Article 31B, it basically says, anything added to the Ninth Schedule cannot be invalidated by judicial review, even if it's in violation with the fundamental rights. So basically it's like a backdoor. How do you add something to the Ninth Schedule? Constitutional amendment. It started with a list of, I think, 13 statutes. It became 285. And this is the stuff I tracked in my doctoral work. I have a paper out on this in the Journal of Legal Studies. So it's just batshit crazy. I mean, I don't even know how to describe this in a sane, coherent constitutional language. 

So it started there, and that got challenged and then the courts and Parliament kept going back and forth on who is the custodian of the Constitution? How much are you allowed to amend? Because it became very clear that in pursuit of the socialist agenda, they were really chipping away at some of the most fundamental protections that the Indian Constitution afforded to its citizens. So that's how it started. 

Then it got a little too much, and then Nehru died. And that generation of the old nationalist statesmen who had all been in prison and fought for the freedom of the country and framed this hallowed Constitution, that generation was slowly fading and no longer in Parliament. 

And then the next generation that came along were clearly quite corrupt. And so the Supreme Court said, this is nonsense, we're not having any of it. So they passed an opinion in Golaknath, this was in 1967, where they said that the Parliament can't have an absolute authority to amend any portion of the Constitution. That was the part that you read. 

And then Indira Gandhi came back and she changed the wording of Article 368, which is what you read out. And then that got re-challenged in 1973, which was Kesavananda. And I think Kesavananda became precedent, like really strong precedent, after The Emergency. I think, 1980, there were a couple of cases, Minerva Mills case, Waman Rao, these were all cases on property and nationalisation of Sikh textile mills and things like that. Those cases established Kesavananda as precedent, saying that you can amend the Constitution but there's a basic structure that can't be amended. Now, here is the hilarious thing about Kesavananda. And you've met my colleague Shreyas Narla. We're going to see him right after this. He's working on a paper on this because this year is the 50th anniversary of Kesavananda Bharati

So what we're finding is the original Kesavananda Bharati case said that there is an unamendable portion of a Constitution, but we won't tell you what it is. It is stuff like some of the Bill of Rights. Not all of them. Some of them. It is stuff like federalism, independence of the judiciary, separation of powers, the preamble, some core areas of the Constitution. But we're not going to tell you exactly what that exhaustive list is. When we see it, we'll tell you. That's why I call Kesavananda Bharati the judicial ratification clause that's attached to the amending procedure. So you amend all you want, then it's going to come to us, and then we will tell you if that amendment passes or doesn't pass. So that's effectively a judicial veto. So that's how that case panned out. 

Now, we are looking at all the amendments that have happened since Kesavananda. So what we are tracking is how many amendments happen. Were they challenged in the Supreme Court? Did the Supreme Court strike it down? And did they strike it down because of the basic structure? They could have struck it down because of some procedural incongruity or something else. The only times that something has not passed the Kesavananda test, that is, the only amendments that were struck down by the Supreme Court, were the ones that limited the domain of the judiciary. Everything else went. 

So, according to me, the only way I understand Kesavananda Bharati is: judges are self-interested and the only thing Parliament is not allowed to amend is restricting the domain, authority, power, or status of judges. Everything else, they will find some way to accommodate how it gets incorporated. There'll be some compromise solution. 

[1:07:39] WALKER: Well, the next question I was going to ask you was, how can a public choice theory lens help us interpret this fight between Parliament and the courts? And I guess that partly answers my question. 

RAJAGOPALAN: So one is, I mean, judges, like all other political actors, elected or not, are self-interested creatures. That is the core lens, I think, that I bring to the table. 

But now we can start looking specifically at judges' incentives. And a very key problem in the Indian Constitution is judges – especially Supreme Court justices – are allowed to take on posts after retirement. And the Indian Supreme Court is not like the American Supreme Court. For most of your listeners, it's not just nine judges, justices, who get a lifetime appointment. I think right now, the current bench strength is 31, if I'm not wrong, 31 or 33. And they sit in groups of two, three, five, in different combinations, and they usually get elevated around the age of 60 or 62. 

So it takes a while to build the capital to get to the Supreme Court. Most justices come to the Supreme Court after they've retired or they've completed a High Court term, and the retirement age in the High Court is 62. I think the average tenure of a Supreme Court justice is 22 months or something like that. So it's kind of a revolving door of people. And the retirement age in the Supreme Court is 65. And you still have plenty of good years left after 65. 

So what ended up happening is there are a whole number of tribunals that started getting introduced, and the way those statutes were written were: a retired Supreme Court justice is the one who can occupy this post. So you now have something like a National Human Rights commission, you have XYZ tribunal. So retired High Court and Supreme Court justices get those jobs. 

So now we've created a situation where there is a government job waiting, potentially, at the end of a Supreme Court term. And the problem with independence: we always focus on how they're appointed. We never ask what happens after they leave. There are a couple of excellent papers on what happens after they leave. And I think Shubhankar Dam, Madhav Aney and Giovanni Ko, I think they wrote a paper on this where they look at the last six months of opinions given by Supreme Court justices and whether they swing in favour of government, and if they therefore get a government position after that, and they do. 

So that's the kind of thing public choice can sort of really illuminate, which is, let's start looking at Supreme Court justices like regular people, with all the sort of interests and problems and biases of regular people. Let's stop thinking of them as these omniscient, benevolent creatures that we assume them to be. And then I think the nonsense that happens in the Indian Supreme Court suddenly starts coming into sharp focus and it becomes clearer what's going on. 

[1:10:45] WALKER: So if Australia's Constitution is frozen in time, and India's Constitution, or at least specific parts of it, are altered too readily, which problem would you rather have? If I offered you the choice to swap your problem for ours, would you take it? 

RAJAGOPALAN: Unclear. Because I don't think the Australian Constitution is frozen in time, except in text. I think constitutions like Australia, constitutions like the United States Constitution, textual changes are very difficult, but they're being rewritten every day by the judiciary, right? So much has been changed by judicial interpretation. So, basically, what happens is, if you make it very difficult to amend the Constitution through a particular procedure in a particular fora, then people will go to a different fora. And now you see, in the United States, look at questions like Second Amendment rights, which are now entirely being debated in courts, because it's a non-starter to actually go back and change the text of the Constitution. So when they happen in courts, suddenly you start worrying about who's on the bench, and then you start worrying about which political party is supporting whom. 

In no other country do you see a major question for presidential candidates about their choice of justices that they would like to elevate to the bench. The kind of power that's given to a Supreme Court justice in the United States is extraordinary. And it's not because that's inbuilt into the American system, and it's not because they have lifetime appointments. It's because the formal Constitution is very difficult to change, so you have to do it by interpretation. So it's going to happen one way or another. 

So this is a very vague and Hayekian and answer, but it'll come down to culture, and it will come down to political norms and political culture. And I think no matter how good the procedural rules in India, unless we fix that problem, I don't see the story ending particularly well. 

WALKER: Are you cool if we go till five? Or 530? 

RAJAGOPALAN: I'm all yours. 

WALKER: Thank you so much. 

RAJAGOPALAN: I cleared my evening for you. 

WALKER: Oh, you're amazing. Thank you. Okay, let's talk about talent selection. 

RAJAGOPALAN: Talent selection?

[1:12:58] WALKER: Yes. So we first met because you run Emergent Ventures India, an offshoot of the EV programme run by Tyler [Cowen]. And EV India provides grants and microgrants to jumpstart high reward ideas that advance prosperity, opportunity, liberty, and the well being of Indians. 

So I won an EV grant in January of this year. 

RAJAGOPALAN: And we're using it right now. 

WALKER: We're using it right now. And I don't know, but I think I'm the only Australian. That could be entirely wrong. I'm not aware of any other Australians. 

RAJAGOPALAN: I wouldn't be surprised if you are the only Australian. 

WALKER: Yeah. But, at least, I was included in the EV India unconference rather than the American one. I guess I'm just geographically closer and that India conference kind of became like a catch-all for some other regions as well. 

RAJAGOPALAN: And your interest in India and my interest in India. 

WALKER: And my interest in India, of course.

RAJAGOPALAN: Which I was aware of when I invited you. 

WALKER: Oh, I didn't know that. Great. Well, thank you. So, EV India kicked off with the first cohort of winners in April 2020, and you've since had five cohorts, for a total of about 130 winners. First up, I just want to say I was, without exception, utterly impressed by every grantee I met at the conference in Chennai. These kids were just so amazing and so sociable as well. Like really cool.

RAJAGOPALAN: They’re my favourite people. 

WALKER: Amazing people. 

RAJAGOPALAN: I have been accused of being misanthropic, but that is a group I'm really thrilled to hang out with. 

[1:14:31] WALKER: Me, too. So that is why that conference – or unconference, I should say – was in my very top experiences of the last several years. 

In what ways is identifying Indian talent the same as identifying Western talent, for example, American talent? 

RAJAGOPALAN: I wouldn't know, to be honest. I kind of got into the talent identification business by accident, and I think Tyler just kind of nudged me into it and it worked out. So we continued doing it. So initially, the way it happened was I had nothing to do with EV, actually. I came to Mercatus as a senior research fellow. I was supposed to build out a programme studying the Indian political economy. That's what I was doing. And Tyler started getting these incredible applications from India. And he's always, I don't know… he knows what's going on before anyone else knows what's going on. I don’t know how he does that. So he felt something special is going on, and he would send those applications to me and say, hey, take a look at this and take a look at that. 

And then I think for a couple of them, he was travelling maybe, and couldn't schedule the call with them. And, you know, we schedule it really quickly from the time an application hits the system. So I think I did a couple of those calls with them and I gave him my feedback. 

WALKER: Right. So this is, like, even before April 2020. 

RAJAGOPALAN: This is before April 2020. I think this was, like, fall of 2019. I moved here in November 2019. So thereabouts. So I would give him my feedback and he said, oh, we should do an EV India, and you should look at these applications. And I was like, that's a terrible idea. I don’t know anything about talent. I don’t know anything about anything. I don’t know anything about philanthropy. I don’t know anything about startups. So that's my natural reaction to these things. 

And I think around the same time, we got a small grant or a tranche of money just for India. I don't remember the exact dynamics of how that worked out, but I think it was like $100,000, which was given for Indian talent or something like that. And Tyler said, you choose for this.

And I said, okay, 100,000 doesn't seem like a huge amount of money, and if I screw it up very badly, it's not the end of the universe. I'm not tanking a programme or anything. It's a few bad bets, so I can test that out. 

And so I started doing that and COVID hit. And suddenly, you know, Mercados was also doing fast grants, it was also doing COVID prizes, and there was just so much work to be done to support COVID initiatives in India. And I was kind of really looking at it both as a researcher and also just as a commentator on what's happening in India, that I just got into that world through that network and then never stopped. And apparently I pick good talent. 

But if you ask me how, or if you ask me how Indian talent is different from Western talent, I'm not trying to be difficult. I honestly have no clue. I have no clue what the thing is. 

WALKER: Well the question was, how is identifying Indian talent the same as identifying Western talent? 

RAJAGOPALAN: I've never identified Western talent, so I honestly don't know. I guess, I mean, identifying all talent to some extent is the same. You're looking for very similar qualities, right? Especially for something which is a moonshot sort of grants programme. You want people who are a little bit different from what everyone else is doing, people who think differently, people who pursue bigger questions, people who have a massive amount of ambition, lots of hustle, who have an imagination and who dare to think a little bit differently from others. I think those things are very similar. If you ever attend an EV unconference outside of India, you'll notice that the people are different, but the vibe is very similar. And this also surprised me and Tyler. The first EV India unconference, both of us were surprised that, oh, it's the same vibe and they're all weird. We don't know how or why, but they are. So, yeah, I think that's what unites all of them. 

[1:18:36] WALKER: So I looked through all 130 winners. 

RAJAGOPALAN: Oh, wow. I should do that. 

WALKER: And my impression was that there seemed to be a way higher proportion of, I guess, prosocial projects than among EV grantees at large. Maybe like, impressionistically, more than 80% of the projects were prosocial. Is this correlated to you as a talent selector, to where India is at as a country at the moment (like the whole extensive versus intensive growth thing), or to historical contingency because of COVID and a lot of grants going to solve that problem. Something else? What is that correlated to? 

RAJAGOPALAN: I think two things. The second part of EV's mission, other than the moonshot part, which is absolutely true, is we also like to fund grants and ideas that are unlikely to receive funding easily. And in India, a lot of the prosocial stuff doesn't end up receiving funding as easily, especially in the early stages, even if it's for-profit, because an obvious app for one more thing on your phone is much more easy to get funding for or raise money for than solving air pollution or solving the problem of recycling plastic or something else. So even though the proportion of for-profit companies in the prosocial part of EV India is incredibly high – like virtually very few of them, other than education – there are hardly any that are not-for-profit, but much harder for them to find funding. 

So I think that's one part that it is correlated to. These were the people who were doing something different from the usual, just another SaaS company, just another SaaS startup in Bangalore, which looks like a browner version of a SaaS startup in Silicon Valley (or maybe not, actually – they all look about the same), which is going to get relatively easy venture capital funding. Our group is slightly different from that. 

The way in which it's correlated to me, I think, especially when I think a little bit more deeply about this, I think it has to do with my research. So one of the things that I found in my political economy research is that in India, the state is kind of upside down, right? The state doesn't do law and order, externality problems like air pollution, providing all your basic sewage, clean water, recycling, picking up garbage. The state doesn't do that stuff, but the state provides, like, free LPG natural gas cylinders, or like, free toilets or something. So it doesn't do a very good job of providing, what are standard economics public goods, and it ends up providing private welfare entitlements to very large numbers of people. And there are historical reasons for this, there are political economy reasons for this.

But a consequence of that is that a lot of the public goods gap in India is filled in by the private sector. So you were talking about how you visited Gurgaon. Alex Tabarak and I have a paper on this, on how Gurgaon is basically like this private city. I mean, in Gurgaon, the number of private security personnel are like a hundredfold more than the state police machinery that provides security. So in every aspect, the private sector stepped in, whether it was electricity, whether it was water, whether it's law and order. The fire station in Gurgaon is a completely privately owned and run fire station. It's kind of funny. I went and met the fire chief there, and I was talking to him, and I said, why did you have to start a private fire station? And he kind of chuckled, and he said it in a very Indian colloquial way, so I'll try to translate it. And he said, “We have billions of dollars worth of investment. We have high rise buildings. The government's fire station is fighting with pichkaris, which are water pistols, whereas we actually have very large rigs, which have, like, 80 foot ladders and rigs. It can actually put out a fire in a high rise building.” This is a very entertaining guy. 

So this really comes from that point of view that in India, there is both a very high demand for private sector solutions for all these public goods and public bad problems. Poor families spend a large chunk of their disposable income on private education, even though there's a free public school right next to them, because it's so terrible. They spend a large proportion of their income on getting water through private tankers, because the government water service is rubbish. They buy private air purifiers, especially in New Delhi – all the slums have now started getting some kind of air purification system, because their kids keep falling sick. 

So I knew that there's a market for this stuff because I had studied it, and I also knew that this generation. I don't know what they're called. Millennials. Young millennials. 


RAJAGOPALAN: Gen Zs. Yeah. The Gen Z entrepreneurs in India, they want to solve all these problems because they can't breathe, right? They're tripping over garbage the moment they walk out of their house. So even though they're relatively privileged, they have engineering degrees. Some of them are, like, building amazing hardware solutions. They want to solve these problems. They don't want to make just another gadget for rich people. And I somehow managed to put together the fact that there is a consumer market for it and there are people willing to do this for profit. How do we make sure we get them started? 

Whereas I think a lot of the venture capital firms just didn't fund them because they thought there's no market for it. Like, we have an incredible company called Praan. They make hyper-local air pollution solutions. They tried for Y Combinator, and I can't remember who, but someone at Y Combinator who's probably sitting somewhere in Northern California or something, said, but is air pollution really that big a problem at scale that people will buy this stuff? 

And today, as we are speaking right this moment, the AQI in New Delhi is, like, 590 or something. No one can breathe. 

[1:24:51] WALKER: Can I just quickly interject? I picked up, I don't know, it was the Hindu[stan] Times or something when I visited Delhi last year and was reading it at breakfast at Juggernaut (a very nice southern Indian restaurant in Delhi). And I took photos of this, because I was trying to learn about what issues concern people: every second ad in this newspaper was about air purifiers. 

Two of Joe's photos

RAJAGOPALAN: There you go. Right? So there's a huge market for it, but someone who is either venture capital in Silicon Valley, or venture capital in India but heavily influenced by venture capital in Silicon Valley, is now going to wonder, why would we fund such a thing? 

The second problem is hardware solutions take very long to go from very early product development to MVP stage, before you set up a manufacturing unit, and then you can do it at scale and so on. So they need much more early stage support. So they all came to Emergent Ventures, and I was happy to pick the very best of that talent. 

WALKER: Fantastic. 

RAJAGOPALAN: So some of that is correlated to me, but I think that's the best explanation I have that makes sense. 

[1:25:59] WALKER: So, if you'll recall, after the southern Indian wedding themed dinner on the first night of the unconference, you, me, Tyler and one other person were having a conversation. And this person asked Tyler, what are the three things that all EV winners have in common? And Tyler replied that they are, number one, smart, number two, determined, and number three, a little bit weird. And I couldn't help but notice a fourth attribute among the Indian grantees, and I think the best word for it is earnestness. Is this your experience too? And is that related somehow to the higher proportion of prosocial projects, or is it separate? 

RAJAGOPALAN: I think it's separate. These people, the group that you met in Chennai, if they were in the United States or Australia or in the developed world, they would have been scouted. They wouldn't need EV and they wouldn't need me. They would have been chosen as the super talented in their middle school class, they would have been in a high school STEM incubator, they would have been in college incubators. Someone would have picked them up somewhere. And both the scouting infrastructure in India is non-existent, and the incubation infrastructure, which is nascent, is a little bit broken. It's quite broken, actually. So a lot of these people are incredibly talented, but there's nowhere for them to go, and there's no obvious channel that will put their faith in them. 

This won't be surprising to you: the way I end most of my EV calls, especially the successful ones, is the first thing they tell me is, thank you for believing me. They don't even say thank you for believing in me. It's just, oh, you understand the problem I'm trying to solve and you trust me and you truly believe that what I'm doing is important and valuable and all the things that I believe. And I think that's where the earnestness is coming from. No one else has quite recognised that. People who have recognised it haven't supported it because we don't have an obvious channel to support it. 

So it ends up looking like a group of people who are very earnest and have enormous amounts of gratitude, for that community because they kind of got their first big sort of boost of not just funds, but the faith in the fact that their project is doing something valuable from there. 

And the second is, I mean, you must have noticed this in India: India is very ageist, okay? For a country as young as it is remarkably ageist in a very damaging way. So only 7, 6.5% of the Indian population is over 65. Two thirds of Indians are below 30. And yet we don't have faith in young people. We don't believe them when they're trying to do something weird. We don't give them the funds. All the money, all the privileges, end up going to the super credentialed, super experienced older people. And I think that's the other reason why that's happening. 

And I think that translates into earnestness in that group setting, which is everyone has so much gratitude. Everyone is so sincerely trying to work on something. They see that sincerity mirrored in everyone else in that community. And as a group, you're absolutely right. That seems to be one of the cultural sort of norms in that group. 

[1:29:26] WALKER: Given the low opportunity cost, does EV India market itself in India? 


WALKER: Why not? 

RAJAGOPALAN: I think part of the EV test is that they find us, right? We want the people who are up at two in the morning, who have exhausted every other thing, who are scraping the bottom of the barrel on the internet, and then end up with us and figure out that, oh, okay, I will fill this form, too, and see and take my chances and figure out how to get it done. 

WALKER: I see. 

RAJAGOPALAN: I think that's part of the test. And I will get too much crap if we market it, and the signal-to-noise ratio will be stupid. The numbers in India are too large and the opportunities are too few. 

WALKER: True. It would become unmanageable trying to filter those applicants. 

RAJAGOPALAN: No, I mean, they'll be easily filtered. I can tell the crap quite easily. The terrible applications are very easy to spot, but it's still a huge imposition on the system and everyone who manages the system and then the server that accepts the application, all of those things start becoming a little bit nutty. 

[1:30:30] WALKER: Yes. Roughly what percentage of Indian EV winners do you think heard about EV because they were already Marginal Revolution readers or inhabit those kind of intellectual worlds? 

RAJAGOPALAN: In the early cohorts, virtually all of them. So, like, probably the first couple of cohorts, everyone was an MR reader or they knew an MR reader or their parents were an MR reader, and that's how they found out about it. 

The later cohorts, very few. They started getting into MR only after they won Emergent Ventures. And they found out because they are in networks of entrepreneurs or people who are doing these social projects and education sector and so on. And then you go on LinkedIn and someone's written an EV gratitude post or something, and they're like, oh, that's an interesting opportunity. And they get in touch and say, oh, I think I should apply for that too, and stuff like that. 

The best advertising we have for EV is EV winners. They are so proud of that community. They talk about it at different fora and that ends up pulling a lot of people from different places. 

My personal fear when I started doing EV was all my friends are going to come and ask for money. Friends and acquaintances, right? Because India is this tiny world. The Indian elite is like a few thousand people and we all know each other and it's terrible. So I was very nervous about that. And the thing about EV that's thrilled me the most is I didn't know most EV people before I gave them the grants. I don't know most EV applicants. And they come from places that are unusual. Our ratio of people from smaller towns is better than any scholarship programme in India. It's crazy how many people come from small towns. They move very quickly. They figure out the moment they get the EV grant, they're able to move to Bangalore, which is necessary. You need to plug into a bigger system. 

But a lot of people who are non-native English speakers, I've done so many EV interviews in Hindi because I can see that there is difficulty in expressing themselves and they're getting very nervous about that. And I will just immediately start speaking in Hindi and then they will get comfortable and they will switch to Hindi. So I've done that loads of times. And they're very talented, so it's never mattered. 

And most EV people also didn't know each other when we did the first EV unconference. So I know that this is not an echo chamber where everyone comes from one small network of MR readers, or everyone came from the same incubation programme for startups or something like that. So it's quite diverse and I take a lot of pride in that. 

WALKER: I couldn't tell from the website, but do you also accept applications in Hindi, like the written application part? 

RAJAGOPALAN: I don't think so. 

WALKER: You only get English? 

RAJAGOPALAN: Yeah, we only get English. Easy enough for most people. There's Google Translate. 

So I never harshly judge an application for not having great English. So that's on me. But there are enough online tools that people can overcome that barrier in India. 

[1:33:32] WALKER: Right. Does being the kind of person who is an Indian that reads blogs like Marginal Revolution also correlate to having talent in some way? 

RAJAGOPALAN: I think it correlates to being weird in the sense that they're not reading the usual stuff that their peer group is reading. The MR reading, I have a funny story. This actually happened at the Chennai conference. It happens now at every conference. So people are always curious, oh, how did you meet Tyler, and how did you get into EV? This is always a story that people ask me, all the EV winners, and I have to tell it again. And I say, oh, you know, I met him in such and such time, many moons ago. And how did you know about him? I was reading Marginal Revolution. They're like, oh, when did you start reading Marginal Revolution? And I'll say something like 2005, and they'll say, “Oh, I wasn't born then.”

And then that's when, like, my heart sinks and I'm like, okay, then I guess I'm old and you are younger than my Marginal Revolution brain. I've been reading it that long because, I mean, a lot of them are younger than 19 years or 18 years. 

And MR also celebrated its 20th anniversary in Chennai. In fact, they recorded their 20th anniversary podcast there, so it was just funny. 

But I think it does correlate to being weird. I don't think it means that they are any more talented than the next person. And nor does it mean that the people who don't read MR aren't talented. It's just they operate in a different group setting and they've read different stuff. 

[1:35:02] WALKER: Why are so many chess grandmasters from Tamil Nadu? 

RAJAGOPALAN: I don't know. I think it's because of Vishy Anand. Because what ends up happening in Indian sports, and you don't just see this in chess – like you see a lot of wrestlers coming from Haryana – and so what ends up happening is the Indian sports infrastructure is extremely broken. And if there is a success story from a particular region, then the people in that particular region are like, “Oh, if he can do it, my child can do it. Oh, he started a new coaching centre for wrestling or cricket. Oh, let's send my kids there.” And they obviously know the system. They know how to enter international championships and so on. And then all their students know, get plugged into that. And even people now who want to be wrestlers outside of Haryana know that's the best place where you're going to meet the most competitive wrestlers in India. So let's go there for six months and get trained and so on and so forth. 

So I think that has that anchor effect, not just in chess, but in a lot of sports that are not team sports. You see that in shooting. You see that in archery. Lots of archers in India, unsurprisingly, come from the Indian Army. So there's clearly a cohort of people who train for that. There's an intergenerational or, like, an institutional memory on how to do this, where someone can guide you and mentor you. 

And I think Vishy Anand's success just cracked that space open. And the second thing is, he's been around for so long. When I met him in Chennai, I told him, I was like, you ruined my childhood, because I mean, he's not that much older than me. Maybe ten years, maybe 15. And he started playing when he was a teen. And there used to be Hindu Newspaper’s children's magazine was called Young World, and he’d be featured in that every other week because it was a fortnightly magazine. And our parents are like, “You can't even get 90% in your maths test. Look at this kid. He's a grandmaster.” I actually told him, I said, “You know, you effectively ruined all of our collective childhoods.” Like, for all Tamilian kids from a particular area whose parents were reading the Hindu.

The recent pool of talent that you see from Tamil Nadu, they've all been mentored by him at his chess academy. Maybe not all of them personally, but they've been through the beats of his chess academy. The Chess Academy was very much part of scouting their talent and incubating their talent and making sure they have the means to go to all these different sort of world championship platforms, and they end up playing a lot. So I think his effect has a lot to do with it. 

WALKER: Yeah. So one third of Indian chess grandmasters are from Tamil Nadu. 

RAJAGOPALAN: Doesn't surprise me for that reason, Tamil Nadu is also one of the richer states. Chess is a rich school child's sport. You need a good education system for it. You need a particular kind of incubation. Increasingly now, you need excellent internet and digital infrastructure because so much of chess playing is happening online. You need good computers. So Tamil Nadu also checks all of those boxes. Unlike some remote village in the Himalayas where you have sketchy internet connection. 

WALKER: Or even, like, Uttar Pradesh, the state you told me that I should visit on my next trip: 200 million people – eight Australias – but not a single Indian chess grandmaster. 

RAJAGOPALAN: Yeah, they have bigger problems. 

WALKER: Very poor state. 

RAJAGOPALAN: Yeah. The day they produce a few chess grandmasters, that would be lovely. It means their GDP per capita has risen to a level that sports are encouraged and kids have good schooling. And chess is part of the package. 

WALKER: Yes. It’s part of the package.

RAJAGOPALAN: That's the big thing, right? In any sport, the sport has to be part of the education package, either from the family or from the school. Otherwise, how else do we get introduced to this stuff? So no sport is played by poor poor people in India. It's always, at best, it is lower-middle class. We have some success stories in cricket especially where you have people who are literally playing street cricket and they got scouted and they got picked up and so on. But very tough for stuff like chess. 

[1:39:20] WALKER: Where are the talent hotspots in India at the moment? You mentioned Bangalore. Are there any other ones?

RAJAGOPALAN: I think all the big cities, you know, Bangalore, Mumbai, New Delhi, Chennai. Because they have the infrastructure to attract both the human capital, the financial capital, the physical capital, all of it. You can easily get office space, you can easily get other people to move to that city to join your startup and so on. So I think those end up being natural hubs. 

Outside of the big cities, I see them from everywhere. But they very quickly move to one of the five or six big cities. 

WALKER: Yeah. Where are the underrated hotspots? 

RAJAGOPALAN: Pune. Nashik. They're like a couple of hours from Mumbai. They end up being very interesting. The big cities in Kerala, unsurprisingly. Where else have I got? Increasingly, I think we have a couple of winners from Bhubaneswar, which is in Odisha, which is a relatively poor state, but it's the capital city, it's the largest city in Odisha. So that's a place where I've gotten some interesting applications. I'm very thrilled about that. But they leave Bhubaneswar the minute they get the grant. Yeah, but largely big cities. They move to the big cities very quickly. 

[1:40:38] WALKER: Right. One of your recent grantees, Ray Amjad, is prototyping scalable tools for finding and supporting the lost Einsteins and Marie Curies of the world. I love this mission. I've often ruminated on this question over the years, because obviously it's a tragedy, both for the individuals and for the world, when such talent is wasted. If you had to choose, where would you search in India for potential Ramanujans: the villages or the cities? 

RAJAGOPALAN: The villages. Because in the cities, there is a much higher chance that they are getting scouted. It's not a 100% chance. There's still a decent probability that they belong to a low income family. They don't go to a great school. But if you're a Ramanujan level of genius in a big city, someone will spot you. But if you're Ramanujan level genius in a village, it's very tough, even now. 

But you know, I wouldn't go looking for the Ramanujans in the first place. That's not my big thing. I'm thrilled that it's Ray's big thing, and I completely 100% back him. I'm thrilled that he's doing this. 

But I think – this is now speaking only for myself – if I have such a specific goal, I would worry too much about the trade-offs between the type one and type two errors. The false positives and the false negatives. I worry very little about false positives. I'm like, okay, so we gave someone a grant who didn't turn out to be a Ramanujan. That's fine. Which is why I run Emergent Ventures. But false negatives are a very big problem for me. I would not want too many false negatives, whereas when you're picking Marie Curies and Ramanujans, you don't want any false negatives because you want only the geniuses. So I think that's a fundamentally different project. I think it's worth doing, but I'm not the right person to do it. 

WALKER: Wait, just let me get that clear. So when you're finding the Ramanujans, you don't want any false negatives because it's like finding a needle in a haystack, right? But you don't worry so much about the false negatives. 

RAJAGOPALAN: I don't, because I'm like, okay, we didn't find the Ramanujan, but I'm pretty sure we still supported a very talented individual who maybe didn't turn out to be a genius, but did a lot of social good. So the way my mind is sort of geared towards the question, I'm just interested in a broader breadth of talent, and I worry about misallocation of talent more generally than picking that really special genius. I don't even know if I'd know how to identify them. But Ray has a much clearer picture of what he's identifying, so he's the right person to do that, if you know what I mean. 

WALKER: I should talk to him about this. I’m interested in this.

RAJAGOPALAN: He's great. He's fantastic. 

WALKER: Let me offer a pushback to your point that you would search in the villages. So I had Stephen Wolfram on my podcast recently, and I asked him how many potential Ramanujans go undetected in the world today. And in his answer, he made the point that to become a Ramanujan, you actually have to have a certain degree of development – and Ramanujan himself went to decent schools and learned maths. 

RAJAGOPALAN: Same school as my father in law. 

WALKER: Oh, really? 

RAJAGOPALAN: They were both, I think, the head boy or whatever is, like, the highest scoring individual of their cohort. So my father in law's name is on that long list many decades after Ramanujan. But it's a thing he is deeply proud of. 

WALKER: Right. Because Ramanujan was from Tamil Nadu. Yeah, of course. But Wolfram's point was that without that education, your Ramanujan-esque abilities can't reveal themselves. So I was wondering, given the different educational attainment levels in rural India, where about 900 million Indians live, versus the cities, maybe that would actually factor against searching for Ramanujans in the villages because people don't have sufficient education to reveal their Ramanujan-like abilities. 

RAJAGOPALAN: Fair. But I don't think what you are saying and what I'm saying are that different. So let me explain. I think a certain level of education... I mean, the whole search for a Ramanujan is conditional upon that. And you are right, that level of educational attainment is more likely in a city. But the trouble is in villages the scouting infrastructure is missing. The eyes that can spot the Ramanujan is missing. So, conditional upon the same kind of educational infrastructure in, like, maybe a poor slum in a city versus a reasonably decent school in a village, you are much more likely to spot that talent in a city than in a village, because you will have better teachers in the city. The class size will be larger in a city. There will be more competition. There will be rich people in the neighbourhood who will say, we are having a scholarship for the math-talented kid from the poor family and so on. So all of that exists in the city much more than it exists in the village. 

So conditional upon a Ramanujan existing, less likely to be found in a village, which is where I would look. But you're absolutely right that it's more likely that a Ramanujan would exist in the city in the first place. 

[1:46:24] WALKER: Okay, that makes sense. How many of your interviews have you done in person, or are they all over Zoom? 

RAJAGOPALAN: Virtually none in person, actually. Yeah, very few in person. 

WALKER: Any at all? 

RAJAGOPALAN: Maybe one or two because of COVID and I don't live in India. I think there was one person who was visiting Washington, D. C. when they had applied. I didn't know that they were in Washington, D. C. So when I set up the call, they said, “Oh, I happen to be in this area. Do you actually live near George Mason?” And we met at Northside Social, which is right here, and had coffee. And another one, I think, just before the pandemic had broken. Tyler asked me to speak with someone when I was in India because he was evaluating them. So I think just a couple of... I can literally count on my fingers in one hand how many. 

WALKER: Do you worry you miss any information by not meeting people in person? 

RAJAGOPALAN: No. In fact, they would do worse if they met me in person. 

WALKER: Oh, interesting. 

RAJAGOPALAN: I'm impatient. You can hang up. You can get out of an awkward situation more easily when it's over the phone. I don't even do video calls. I just like plain, simple audio calls. I don't want visual cues. I don't want anything. I just want to just old school talk to a person, get a sense of who they are. 

WALKER: Interesting. 

RAJAGOPALAN: Yeah. But that's more about me than the talent. 

WALKER: Okay. Does that mean you're bullish on remote work? 

RAJAGOPALAN: No, not at all. 

WALKER: Right. 


WALKER: So there are other reasons counting against it. 

RAJAGOPALAN: Yeah. But I don't think applications everywhere in the world have always been remote. Application selections, admissions processes. Other than, like, the first two years when Harvard was set up, when everyone came from the neighbouring area. It's not like we do admissions in person all the time. So it's always remote. We found good ways of figuring that out. 

[1:48:17] WALKER: Okay. How much of the application assessment is judging whether you actually find the proposed project or idea valuable as distinct from the person's talent and their ability to deliver it? 

RAJAGOPALAN: Every time I have picked a winner because I liked the project but I wasn't sure of the person, it has gone horribly wrong. Not horribly wrong, basically it didn't turn out as I would have hoped for. I don't think any of my grantees have gone horribly wrong. No one's scammed us, no one's defrauded us. No one's run away with the money. No one's done evil with the money. So it hasn't gone horribly wrong, but it hasn't gone as I expected. 

Every time I have picked the person, even though I was not 100% on the project, it's actually gone really well. Because talented people very quickly figure out what they're getting wrong and they solve for it, and EV is very flexible. 

We don't need them to submit a plan and then stick to that plan and then submit revisions like the San Francisco Housing Board or something. So we're quite easy that way and flexible. So I would say that in my earlier winners, the first few months, I was focused a lot on the idea and not just the person. And the longer I've done this, the more I care about the person and their qualities and less about the idea. 

[1:49:35] WALKER: Right. So as someone who's a relatively new talent selector and hasn't for all of her bets seen, or many of her bets seen, a full cycle, how do you know whether you're taking the right amount of risk? 

RAJAGOPALAN: This is a funny question. So very early on, maybe like first six, seven months that I was picking EV India winners, Tyler came and asked me and he said, “Your India winners are great. They're all succeeding. Are you taking enough risk? Where's the failure rate?” And I thought about it really carefully. So I went back. And that's a very Tyler question to ask. No one else would ask that question, right? If things are going well, usually they leave it alone. So I went back and actually looked at all the people that I didn't give the grant to and said, why didn't I give it to them? Was it because they were too risky and they were too out there, or was there something else that was problematic? 

And oddly enough, when I had done the assessment that time, none of the rejections had to do with riskiness of the project. It had to do with just the person not having a very fleshed out idea. And most of the times, actually, it was because it wasn't a risky enough project. It was just too cookie cutter boring do we really need one more of this in the world kind of rejection? And then I was like, okay, I'm comfortable with the risk I'm taking. 

But I would say to a new talent scout, it's useful to keep doing that exercise every six months. I keep going back and looking at my rejections and then looking at, was that the right call? And why did I do that? And do I still feel that way six months later, having done more grants and so on and so forth? 

WALKER: Interesting. 

RAJAGOPALAN: So I don't stand by all my winners, necessarily, because with time, you know, which ones didn't work. But I do stand by all my rejections. Not because they weren't talented, actually; even the rejections for Emergent Ventures is an incredibly talented group of people. It's usually they're not working on moonshot ideas. They're working on something quite basic and boring, likely to be funded by something, someone else. And oftentimes it's like, oh, just another boring paper on topic X that is already boring and overloaded with nonsense. 

[1:51:52] WALKER: Yeah. So I imagine at some point you'll do follow-up analysis on how the grants have panned out, whether that's those kind of six monthly reviews or something more sort of formal and substantial. When that happens, what concrete metrics will you be looking at to assess success? 

RAJAGOPALAN: So, a few different things. So I'll start with just the winners pool, not looking at the rejected pool, but I do think it's important to pay attention to that if I'm doing, like, a full assessment, I should also look at the bets I didn't make and was that the right call? But just talking about the bets that I did make, I think the first thing I would do is if the project, roughly as it was stated, does it exist and did it manage to sustain itself? Because we only give money at a very early stage. So an important test is the market test, right? Did they manage to get to the point where they wanted to get and did Emergent Ventures help them succeed in getting to the market test and then succeeding or passing the market test? I think that's one. This is especially for the for profit people. I would really look at that. Do they exist? Did they raise other money? Did they become profitable businesses? Many of them have already become profitable businesses and raised other money. 

Then I would look at the cases where that's not true. That is, either they didn't succeed with that project or they abandoned that project, or they tried the project and something went wrong. And then the next stage I would look at is, did they continue to be entrepreneurs? Sure, that didn't work, but did they do the next thing? And did they succeed at the next thing? Because that tells me that my talent identification is the right one, even if the project identification was the wrong one. Because we are in the talent business, we're not a venture capital company. We are not actually taking a stake in the projects that panned out and then turning a profit out of that. So given that we're philanthropists and we care about talent, I would care about, was it the right talent? Am I happy that we supported that talent? Did they go on to do something amazing next, even if the EV grant failed. And that would be mainly for the for-profit people. 

For the not-for-profit people, I think I'll have to come up with a better metric. In each sector it would be a different metric for how do you judge talent in that sector? Because you can't quite compare people who are playing a team sport with someone who is running the 100 metres race or something. I think I'll have to come up with a rubric, but I don't think it'll be a very difficult rubric. I think success in each sector kind of announces itself and, you know, what it looks like or what you were hoping for. And I think I'd follow that instinct.

But I'll definitely do that exercise. It's worth doing. And once I finish that, I think I'll go back and look at the rejection pool. 

WALKER: Interesting. 

RAJAGOPALAN: Yeah. And see people who did really well and after they did really well, I mean, I think a lot of them would do well, but that's not how I would think of my own. I wouldn't think of that as my failure. I would think of it as, was that a grant that should have been EV and then work through that. Would they have been valuable to the community? Are they doing something that other EV people are doing? Did I just not see it? So I think that's what I'd like to look for. 

WALKER: Right. It'd be interesting how much of them doing well is endogenous to being rejected. Like, it sort of put a fire in their belly and they thought, “I'm going to prove her wrong.”

RAJAGOPALAN: Yeah, but I think a lot of them would do well. And honestly, I say this all the time to EV winners. They always come and tell me – like, again, the gratitude thing – “Oh, my God, we exist because of you.” And I'm like, that's absolutely untrue. One of the remarkable things about EV winners is that they would be doing what they're doing even without EV. It would be a little bit harder, maybe a lot harder, for some of them to raise early stage money. But every single one of them has the ambition and the hustle to have gotten where they need to get because of EV. So I don't think we help them succeed in a huge way. We give tiny sums of money. I think our main input is the belief that we think that they can do it. So now they think that they can do it. 

No one knows me, really. So it's not like my opinion is like this really important opinion, that if I say they are not talented or they got rejected, they think “I will prove them wrong.” They probably just think it wasn't a good fit. And that's usually the case. So I don't think anyone's out there… I mean, if I can put fire in rejection pile's belly, amazing and I’m much more influential than I had originally imagined. But I would be surprised if that's the case. 

[1:56:46] WALKER: Fair enough. So, the reason that emergent ventures unconferences are called unconferences is that the attendees set the agenda. So it's a very organic, bottom-up kind of Hayekian process, where we all put post-its on this whiteboard, where we suggest the topics of the breakout rooms. And then you can choose which rooms you want to go to. And you can also just get up and leave. 

RAJAGOPALAN: You vote with your feet. 

WALKER: Yeah, you vote with your feet.

So I've never been to a US unconference. 

RAJAGOPALAN: It's exactly the same. 

WALKER: Yeah, I can imagine. And I spoke to people who had been to those. But I guess I'm thinking here in terms of the flavour or the culture of the conference, not necessarily the format. You can correct me if the premises are wrong here, but I seemed to observe two differences between how I imagine or heard the US unconferences operate and how I experienced the unconference in Chennai. The first was that – and this is where, while I was universally impressed by the attendees and the one on one conversations I had, I was probably very mildly surprised to the downside with the breakout room discussions. And there were two things I observed. One was that the topics seemed to be a little more generic, kind of like self development type “What does success mean?” style topics. 

And the second was that people really stuck to the topic and the conversation didn't drift or digress. And I was wondering, if you had to boil it down, is the cultural dimension here like individualism versus conformity, or what's the relevant dimension? And I guess I would apply conformity to the first observation in the sense that I guess people are choosing those more generic topics because they're kind of being altruistic in a way and second guessing what they think other people will want to hear, rather than being unapologetically weird like most Americans. 

RAJAGOPALAN: I think that’s part of it. But I think it's also got a lot to do with politeness and hierarchy. There's a little bit of nervousness about putting a topic that's really out there and weird that you think no one will be interested in, then no one will come to your session, then everyone will judge and think you're crazy. Whereas the US EV group, if you post the topic which is so out there that no one came to it, they would think it's a win. Like, in a group of weird people, they are the weirdest of the weird people, right? Or like two people came to it, they're like, “Oh, we're the same kind of weird. And that's clearly more special than the generic kind of weird.” So there's a confidence issue and a conformity issue, for sure. 

But I think the other part of it, and this has been worrying me about EV India more generally, is we have an education system which is very unidirectional. You study these six things and you succeed in school, and then you study these six things in college and you succeed and so on. And there isn't a lot of focus on very broad reading. I'm talking even in the most elite schools, you read the things that you're told to read to get the grades in that class, and then you carry on. So a lot of the learning that the young people in India are doing is off the internet. And it's not necessarily by reading books or absorbing music or culture or scripture or religion or something like that. 

It’s: “Oh, to solve the problem of this hardware design, I go look on the internet and then I also find these six tangentially related things and I sort of master that.” So they're very monomaniacal in a sense, which is a typical tendency of builders. And EV India has a higher proportion of people working with hardware and builders, like physically building objects, than EV United States. So I think that monomania has something to do with the lack of breadth. I also think that it's very young, the EV India group. So we don't have the senior people who are philosophers and rabbis and sort of like musicians. We've just not managed to attract that group. It's not like they all applied and I rejected them. We just don't have those interesting people and we do have that in EV United States. 

So I think those are some of the reasons the conversations tend to be quite different. I will say this, I don't mean it very pejoratively, but maybe a little bit: a lot of EV United States overlaps with the effective altruism community and there it's almost a signalling thing of how bizarre your topic of discussion is. It's mimetic. And then not being mimetic is its own kind of mimetic and signalling device. So I think some of the weird topics are not necessarily stuff that people really want to discuss. 

WALKER: Yeah. Like these contrarian hot takes that are just super niche for the sake of showing how smart you are. 

RAJAGOPALAN: Yeah. So there's some of that going on, and we don't have that going on in India at all. Like, no one thinks that is a sign of being cool or elite. Thank God for that. So I think there's a little bit of that. 

But you're right, it's much too polite, to my disappointment. They are quite conformist in a social setting. In a one on one setting, they kind of go out there. But in a social setting they're very careful, they're very conformist, very polite. 

In fact, in the first EV, I think for the first half of the day, people didn't get up and leave. And I remember, like Tyler and myself making a point of just getting up and leaving mid sentence almost to show that we mean well, we are not dissing anyone, we just think there are other conversations that might be a better fit for us. And then people started doing it. 

But I think the first couple of hours no one did it. I got very worried. It's like, why aren’t people leaving? Why are we all trapped in this room? 

[2:02:59] WALKER: So I interviewed Tyler on my podcast last year, and I asked him how he spotted your talent as a talent spotter. 

RAJAGOPALAN: Oh boy. Did he say Indian classical music or something like that? 

WALKER: He did indeed. He said your deep appreciation for Indian classical music led him to think of you as a talent spotter. What do you think it was about Indian classical music that was such a good marker of your talent as a talent scout? And can you think of a subject area for which having a lot of expertise would not be a good indicator of ability for talent selection? Could I just go on a three-hour rant about how curtain rods are made? Every word of it could be true. Would that have the same diagnostic value? 

RAJAGOPALAN: So, one, I think Tyler overstates the Indian classical music thing. I mean, I'm not saying he's lying, but I would not put that much weight on it. I think there's more to it. 

So let me explain this sensibly in a way that doesn't offend you or Tyler or anyone else. My mother's an Indian classical musician for a living. This is what she does. She was a member of the All India Radio Symphony Orchestra, the Indian Classical Symphony Orchestra, and that's what she did her whole life. I grew up my whole life with musicians and live music. My husband jokes that I'm like the erstwhile kings and princes in India, because when I'm in my parents' home, I'll say something like, ma, leave your door open, and I'll wake up to her rehearsing in the morning. And I woke up to music every day. I also learned from her. So I've learnt Indian classical music. I'm terrible at it, but I did grow up with it, and I have an appreciation for it. 

So when Tyler says that my ability to decode Indian classical music is a sign that I’m, like, brilliant or talented, I just put less emphasis on it, because to me it's like speaking Tamil or speaking Hindi. It's just something I grew up with. I take zero credit for it. It's not like I went looking for a complex musical system and then tried to learn it or master it. In fact, even though every tool was given to me to master it, I couldn't be even basic and mediocre at it. But I do have a deep appreciation for it. I have a deep interest in it. And I love it. It's the most familiar. It's home for me. 

And when we do exchange notes on the kinds of classical music we like, I'm sure he thinks that I've given him a brilliant recommendation, but to me it seems a lot less brilliant on my own, because I probably derive it from somewhere that I grew up with. I don't think it's original to me. I guess that's what I'm saying. 

So that's the reason I think I underemphasize that aspect. 

But I think what Tyler means – now I'm not speaking for him, but I'm just guessing – my hunch is Indian classical music tends to be very complex. There's a lot of improvisation within a given set of rules and scales, and the ability to kind of track that or follow that and appreciate the nuance of that probably means that it's a type of person who has an affinity for complexity or who's comfortable with complexity, who's comfortable with a lot of improvisation and so on. And I think that's a good thing for the sort of mind who is scouting talent. 

Coming to your example about curtain rods, I would love that person, actually. I would pick them because someone who is so obsessed with curtain rods that they can talk about it for 3 hours and not lose interest and is that monomaniacal and driven is going to be amazing on curtain rods, and that's great. If their project is curtain rods, I would be thrilled. 

WALKER: But you would be picking them as a talent spotter? 

RAJAGOPALAN: Oh, as a talent spotter, maybe not. Maybe not. But as a talent, I would love them. 

WALKER: So there's something special about Indian classical music? 

RAJAGOPALAN: I think so, yeah. 

[2:06:57] WALKER: I wanted to ask you this. Can you sell me on the claim that Indian classical music is one of the great cultural achievements of humankind? 


WALKER: What would be your elevator pitch? 

RAJAGOPALAN: It is spontaneous order where the bad stuff has been weeded out and the good stuff has been elevated, over a millennia. So what exists now is great. Maybe there was other stuff that existed before which was good and got lost or we tossed it or something like that. But what exists now is never bad, because it would have been weeded out. Against the false positive, false negative thing, right? 

WALKER: Does Tyler know much about Indian classical music? 

RAJAGOPALAN: Oh yes. Tyler knows much about everything, I think is the way I think about it. But about Indian classical music in particular? Yes. The very first time I had lunch with Tyler in a restaurant that's not too far from where we're sitting. 

WALKER: Was it Mama Chang's? 

RAJAGOPALAN: No, it wasn't. Mama Chang didn't exist that time. I am talking in about 2006, which was the first time I visited George Mason. And I was a summer fellow at IHS, which is a few floors below us. And Tyler had given a lecture in India, I think, the previous year. And I had been reading Marginal Revolution. And like a good libertarian girl, I attended the lecture. And at the end of the lecture, I must have gone and said,”Thank you, Professor Cowen, that's an excellent lecture. I think I'm coming to Mason next year.” And I think he said something like, “Sure, look me up. I'd love to meet you and have lunch.” And I never thought he'd actually do it or remember me. When I came here, I did write him and he said, “Sure, I remember you. Let's meet at such and such place and have lunch.” 

When I met him then he talked about… So I told him about my mum being a classical veena player, and he said, “I love Balachander,” who is like one of the foremost Indian classical veena players that ever existed. So he just went straight to the very best of a very niche instrument that I'm talking about. Like, the number of great veena players in the world is in two digits, okay? So the number of players of veena, even at an amateur level, is only in the three digits. So it's not the violin that everyone plays it. It's not the piano everyone learns in school. It's a very niche instrument. Very old. Very few people played that style. And he knew the best in that.

WALKER: How easy is it to falsify signals – whether your talent is for talent spotting or anything, like talking about curtain rods? 

RAJAGOPALAN: I think it's easy to fake weirdness, and a lot of people are doing it. And because it's so easy, it's also become easy to spot who's faking weirdness. So I think that whole, like, “Oh, I will be crazy. I already know this person loves…” Someone who's listening to your podcast eventually applies for EV, and they're like, “Oh, Shruti would love if I'm crazy deep into a topic for 3 hours. So let me try.” I think that's fakable. Why someone would want to do it beats me, but sure. 

I think it's also spottable. I actually think my best skill as a talent scout is what I learned teaching economics for so many years, which is people who bullshit. As a professor, you know three questions in if someone's bullshitting you or not, and that's the exact skill that I use in every interview. People who unravel three questions in are definite rejects. 

[2:10:26] WALKER: Would Tyler say that's your unique edge as a talent spotter? 

RAJAGOPALAN: I've never asked him. I've honestly never asked him the question. In fact, I still think I'm not good at this, and he thinks I'm crazy. 

WALKER: You’re too humble. 

RAJAGOPALAN: Not really. It's so hard to judge. Compared to whom? I'm the only person doing the gig. So how do I know if I'm great or good or even passable? I’m literally the only person doing it. That's why I don't rate myself very highly. But I've never asked him. I can ask him. 

[2:10:56] WALKER: Is Ravi Shankar overrated at this point? 

RAJAGOPALAN: No. No. I think he's correctly rated. He was a genius. If he's overrated at all, it is as a player. But as a composer, he is still, I think, slightly underrated. Especially among the younger kids who may not have heard that stuff. But he's not overrated, no. 

WALKER: Who's one other Indian classical musician I should listen to as someone new to Indian classical music? 

RAJAGOPALAN: Do you like instrumental music more, or do you like vocal music more? 

WALKER: Let's say instrumental. Because I don't think I'll understand the words. 

RAJAGOPALAN: No, you don't have to understand it. I just meant, do you like to hear people singing?

WALKER: Generally, okay. Yeah. 

RAJAGOPALAN: I don't understand a lot of the words. 

WALKER: Oh really? Are they in Sanskrit?

RAJAGOPALAN: Sometimes they're singing in Telugu or Sanskrit or something. I have no clue what they're singing. 

WALKER: Okay, then generally I would prefer singing. 

RAJAGOPALAN: So, in Indian classical, there are two kinds. One is the Hindustani classical, which comes more from the north. And there is the Carnatic classical which comes more from the South. So, do you want people who are alive or anytime. 

WALKER: Anytime. 

RAJAGOPALAN: I think among Hindustani classical singers the greats are Bhimsen Joshi, who are always phenomenal. Among the women, someone like Kishori Amonkar. I can write these names down for you. Anytime you listen to them, you know this is some exceptional singing talent. Amongst the most contemporary ones, I really like a young lady. She's Ajoy Chakrabarty's daughter. I can't believe I can't remember her name. It starts with K. I'm annoyed by myself. I was just listening to her yesterday and she's fantastic. 

In the Carnatic side, among the young singers, there's a duo, they’re sisters, called Ranjani–Gayatri. Just exceptional. I heard their concert recently. Amongst the instrumentalists, I think in Carnatic classical, Lalgudi Jayaraman. He was a violinist. Incredible composer. One of the greatest greats we've had. Among the modern day, I mean, you have Zakir Hussain, who is probably one of the greatest living Indian classical musicians. He plays the tabla. Someone who recently passed away, his name is Karaikudi Mani. He used to play the mridangam, which is the Carnatic style of playing the drum with both hands. I'll send you a list of names. These are exceptional people. 

[2:13:44] WALKER: Thank you, I look forward to listening. In what ways could the quality and intricacy of Indian classical music be connected to Indian excellence in tech? 

RAJAGOPALAN: Not sure they're very connected. I think there is a certain kind of complexity in Indian culture anyway. And even if you haven't learnt Indian classical music or been exposed to it too much, you might have come across that complexity and pluralism in the food or in the multiple languages, or the multiple religions, or the fact that big cities end up being a melting pot. Engineering colleges end up being a melting pot. So I think they come across it in some other way. So it's not clear to me that there is a direct relationship. 

Some people think so because there's a lot of software talent, especially in Silicon Valley, which comes from certain communities which are like Tamilian Brahmins, Telugu Brahmins, and so on. And these are communities where you also learn classical music very young. So we all learned classical music young. Even if my mother hadn't been a musician, I would have had to learn it, because that's just what these families do. I learned Indian classical dance because all young girls learn it. So I think there's an overlap, but I don't think it's causal. 

WALKER: A few final questions on talent. 


[2:15:08] WALKER: What do you think is Tyler's most non-obvious quality as a talent scout? 

RAJAGOPALAN: Generosity. He is just incredibly generous. I mean, the project is generous. He's a busy person with so many interests, and he could have been doing something else with his time, but he takes such an enormous effort, not just in terms of looking at applications and things like that, but mentoring each and every person. He is so generous in the follow up. Once you are an EV winner, you sort of always have access to Tyler and me and others. So I don't know if it's visible to everyone, but just incredible generosity. 

WALKER: Yeah. I would have to second that. I had lunch with him yesterday, and yeah, just so giving with his insights. 

RAJAGOPALAN: And also just his effort is always to raise everyone's ambition level. 


RAJAGOPALAN: And the one thing he's incredibly generous with is his belief in others. And we come from a culture, especially within the academy, especially in economics, where actually belief in others is almost like a low status thing. Scepticism in others and finding flaws in other people and putting them down and showing how you have very fastidious tastes and you like very few things, that's the high-status marker. And Tyler has never been that person. He's always gone the other extreme. He's just incredibly generous with students, with young faculty, anyone he meets, all the EV winners. Even people outside of EV that I know who know Tyler well, that's been their experience. 

WALKER: He's very positive-sum as well. 


[2:16:58] WALKER: Are there any points about the general theory or craft of talent selection that you and Tyler disagree on? 

RAJAGOPALAN: What would be the craft of talent selection? 

WALKER: And that could even be a flawed premise. 

RAJAGOPALAN: I don't think we disagree on much on the talent selection part. If anything, I worry that we agree too much. I always tell him I'm worried. When he confirms something that I'm trying to do or I'm struggling with, I'm like, “Are we too alike? Do I think too much like you. Should I be thinking differently?” I don't think we disagree much. 

[2:17:39] WALKER: So I view you as a very talented writer, and I noticed that in a lot of your podcast interviews for Ideas of India, or at least in the early ones, you finish by asking the guest about their writing habits. To what extent do the actual details of someone's writing routine matter, as opposed to just having a routine at all? 

RAJAGOPALAN: So I'm thrilled to hear you compliment my writing because it's very hard, even now. I find it difficult to write. I find it difficult to write well. I find it difficult to write a lot. And I always feel like I should be writing more. I should be writing now. I should be writing better. So the reason I'm asking those questions is usually to figure out how to do better myself. So that's where the question is coming from. 

I do agree with you that having a routine is more important than the details of the routine. But the other reason I would put that question in is that a lot of my audience is students and people who are writing about policy, who are going to graduate school right now, who are young academics and so on, and they are struggling to write. And hearing the same quirk in someone else's routine might be a wonderful thing, and they say, “Oh, I do that too. Maybe I can keep doing that more. I also try to do X or I also try to do Y.” So that was the reason I had the question in. 

I have benefited a lot from the answers. And I have a routine and I try and stick to it as much as I can. 

But I agree with you, having a routine is more important than what it is. It should just fit the person and it should fit their life, and it should do the best for them. 

WALKER: Yeah. Have you seen this Gwen blog post about writing routines


WALKER: I'll send it to you. 

RAJAGOPALAN: I should read that. 

WALKER: Gwen looks at about 400 different writers and some of the literature around famous writers, and finds that there's not really a clear winner, for example, for the time of day portion or aspect of the routine. Yeah, I think after you listen to a few of your interviews and you realise everyone gives their own version of a routine, the kind of Straussian reading of that question is like, it doesn't matter, just do it. Do something. 

RAJAGOPALAN: Yes, exactly. And do what works for you. Throw some spaghetti on the wall, try a few different things, and then once you figure out what works for you, just stick with it and master it, I think, is the key. 

[2:20:03] WALKER: So in our final 30 minutes, some questions about India's economy and India generally, to finish. So Russian expatriates don't seem to give money, portions of their incomes, back to Russia, friends and family in Russia, as much as Indians seem to give back to India. Should we view that as reflecting the fact that Indians are just more bullish on their economy than Russians are on theirs, and so they don't perceive it as a money sink, or how do you interpret that? 

RAJAGOPALAN: That would be part of it, surely. I think the other part of it is selection of who's leaving. Because I think in a lot of the communist or post communist regimes, the people who are leaving are just so off-put by the political or power situation in a given country. They are leaving Russia, they're not getting attracted to the United States. They would have left Russia and gone anywhere else. Whereas in India, it's like, we wouldn't leave India if it weren't for the great opportunity that we're getting in the United States. We're not just leaving. So I think that's a big question: did people leave, or did people get attracted to the United States? And that's why. I think among Indians, it's a lot about they left for opportunity; they didn't leave because they were unhappy in India. 

[2:21:32] WALKER: You mentioned earlier that there can be blind spots on the part of venture capitalists with respect to India around things like air quality. But thinking at a more general level, what do most Western venture capitalists get wrong when investing in companies in India? 

RAJAGOPALAN: They overestimate the size of the market, I think. So the way India's digital revolution has taken place is very upside down. So the digital revolution happened in the developed world after they had reached a certain GDP per capita, and then everyone could afford phones and then you could afford, like, large-scale laying out the fibre cables for the internet and all the things that got built on top of it. In India, Uttar Pradesh when you go to Varanasi and when you go to the poorest parts of Uttar Pradesh and Bihar, you'll have excellent internet. You may not have water. But you'll have [internet]. So the numbers that are constantly thrown around are that India has 860 million people plugged into the digital space through smartphones – at least one in each household. And India has the largest number of young people. So an edtech company has a potential market size of, I don't know, 300 million or something like that. 

I think that's a huge overestimate, because the number of people who have the internet in India the way we think of comparably in the US, is only about 25, 30 million. Only they have the same kind of disposable income. They are the people who watch Netflix, who will get an Amazon subscription and so on. So I think Sajith Pai had a lovely report on this recently. It's called the Indus Valley Report, like Silicon Valley, but for India. So that's the spin on it. And I think he estimates that it's about the size of Taiwan: India A, as he calls it. And the group that does quite a bit of spending on the internet is about 200 million, maybe even slightly lesser. And then the next billion are not really spending that much money on these things. So doing another DoorDash and doing another Uber for India – that's what the VCs are looking at, because they think: “We have Uber here. California is 40 million people. India is 860 million people with smartphones.” That is not a one on one translation.

WALKER: “Total addressable market: huge.” Actually, they're just investing in the Taiwan that lives in India. 

RAJAGOPALAN: Yes. And even the Taiwan that lives in India, that's smaller than California, right? And poorer than California. So now we really need to think about that question. So I would say that's one thing they get wrong. 

So what's been happening in the US is we take all the public goods as given, right? I mean, maybe not anymore in California, but largely the fact that there will be clean water, there will be a sidewalk to walk on, there will be basic law enforcement, there will be some efforts to mitigate air pollution, so on and so forth. There's not, like, crazy shooting on the street. You have some basic situation under control. That's taken for granted. And then it's about the private sector supplying all those other things, and within that, there's a digital space where the private sector really comes in. In India, it's kind of flipped over. The private sector still needs to build a lot of hardware design solutions which are just taken for granted in the United States. So those things don't get picked up. So when I say, what are VCs getting wrong, I have to tell you both what they fail or misunderstand, but also what they're not picking. And I think they're not picking enough hardware solution space. And it's probably because when it comes to software, there's virtually no product risk, right? It's like a few young developers who get together for a few weeks, drink Red Bull, eat pizza, they come up with a software solution. So the real risk you have is market risk. You don't have much product risk. Whereas when it comes to hardware stuff, like this air pollution device and so on, they think that you have product risk and you have market risk, whereas I think there's very little market risk there. You've been seeing multiple air pollution ads for products when you just read the morning paper. But the product risk is quite high and they don't know how to understand that, because the VC world is so plugged into digital goods and not physical big manufacturing related goods. 

So I think there's a mismatch there, and I hope they catch up soon because these are like $20 bills lying on the table. By the way, even Indian VCs don't capture it. So it's not just the American VCs getting it wrong. The Indian VCs mimic American VCs. The people who really fund those solutions are the angels in India. The angels have their brains switched on. They have built these things before. They know how to pool their money, they know how to de-risk product development, they know how to think about it. Whereas the VCs are only thinking about product-market fit, which is a very vicey influence on VCs more generally. Not that they got it wrong, they've done it splendidly well. But it may not have a one-on-one fit for India where you only worry about market risk and you think we'll only fund things where there's no real product risk. 

WALKER: What a fascinating answer. 

RAJAGOPALAN: I'm glad you find it fascinating. I think I'm stating the obvious but yeah.

[2:27:24] WALKER: Fascinating to me at least. So if India doesn't catch up to the US's current GDP per capita in the next, say, 50 years, what will the most likely reason for that be, if you had to boil it down to its most basic explanation? 

RAJAGOPALAN: Bad regulation. And when I say bad regulation, I mean in an overarching way. I'm including tariffs and taxation and all of that stuff in it. We have a very complex regulatory framework which basically breaks down a country that has so much potential for scale and it just clamps down on that. And most of the regulation, because it comes from a period of sort of like socialist hangover, is anti-scale.And I'm not just talking about competition laws; I mean everything. Your labour laws are such that they will punish a firm that gets too big, because the regulation for firms with over 100 employees and over 300 employees is a whole other level of crazy than one that has below 10 employees. So most firms in India prefer to be small because the regulation punishes being big. And that is very problematic generally. 

Also, the more complex you are, the harder it is for small firms. So if you both punish scale and you're complex, it means small firms get, like, double taxed. Because for small firms, it's harder to make sense of this crazy world. Which means then you need to start greasing palms and you need to spend a lot of money in corruption money or bribe money to get going. So I think that's where I would pin down most of the problems. 

So if we can get the regulatory system, which includes tariffs, taxes, everything, right, I think India can really accomplish something fantastic. Everything else will fall in place, I guess. 

WALKER: And are you optimistic?

RAJAGOPALAN: About the regulation simplifying? Not as much as I am about the talent. So the talent scouting part of my job is just sheer joy – 100% happy happy. The economist part of my job, where I'm writing papers on how screwed up system X is or system Y is – it's interesting work to do because the space is so complex and interesting, but it's just filled with pessimism and nihilism. 

[2:29:48] WALKER: Speaking of which, if we think about progress in India as a sort of race between state capacity and civil liberties, is there an intermediate period over the next several years where more state capacity would actually be bad because civil liberties are simultaneously backsliding on not keeping pace? Are we at that margin yet? Or where is it? 

RAJAGOPALAN: We're not there yet. In fact, I think in India and the Indian set-up, more state capacity is good for civil liberties, because a lot of the harm on minorities and political speech and all of those things, it's happening because we have these horrible laws which are being enforced in a very discretionary way. If the horrible laws were equally enforced on everyone, we're not China, it's a democratic country, the government will get booted out the next day. So the fact that it is discretionary because of low state capacity, because the police doesn't have time to process everyone, because the courts can't get to a case within ten years, which means they're going to punish people differently – the arbitrariness and the discretion that creeps in is, I think, because of low state capacity. Because if we were high state capacity and doing this, then the rules would change. 

WALKER: Right. Is this the concept of India as a flailing state? Like, is executive discretion kind of a consequence of that? 

RAJAGOPALAN: It is definitely a part of it, but it's not the only part of it, I would say. I think the flailing nature of the state has a second aspect, which is India is like a very large country run by very few people, and that has always been the case. So, East India Company, when you read about what it looked like after the Battle of Plassey – so this is William Dalrymple; I know he's been on your show a few times – if you read The Anarchy and things like that, it's like 250 company officers who are all mostly between 18 and 30. They're like young, rowdy boys. 250 of them are in charge of running this country. And that's how it starts. And then, of course, the company develops more capacity, eventually more oversight, and then the Crown develops more capacity. 

But between colonial rule and central planning, it's always been a few hundred people right at the top in New Delhi who are in charge of everything. That group tends to be quite talented, but because that's how the system's always been run, we never developed state capacity at the local level and the state level. So some states have developed more capacity than others, like Kerala, because erstwhile kingdom was the Kingdom of Travancore, and those princes were very elevated and modern and so on, and they developed it. But that's not been true everywhere. 

So that state capacity problem of not developing at the lower levels, I don't think that just has something to do with discretion or the consequence of arbitrariness and discretion. I think that's just plain and simple we were too obsessed with central planning, we never had fiscal federalism, we need to switch to a model where we genuinely raise and spend taxes at the local level, we genuinely become federal, not just in name. And I think then that problem goes away. But it doesn't solve the problem of arbitrariness. For that, the statute books have to be changed. So I think there's some overlap, but they're not exactly the same thing. 

[2:33:20] WALKER: I see. So, in that same conversation we had after the southern Indian themed wedding dinner in Chennai, Tyler shared this idea that he views Indian history as moving in slow motion. He doesn't see so many sudden turns in Indian history, and India can go centuries without such turns. I'm curious to hear your view on this theory of Indian history. Do you share it? And why or why not? 

RAJAGOPALAN: I do share it when I look at the past. When I look at the future, I'm a little less certain, and I'll tell you why. We've never had a period when all Indians were so plugged into the same digital space. 


RAJAGOPALAN: So a very large part of India sort of chugging along slowly and even though it's a monolith, there's some overlap in culture and we all sort of get along and there aren't too many sudden changes – that has been in a world without this kind of connectedness. And I don't know if the connectedness will change that. I'm not saying it will, but I think the jury is out on that. If you look at the Timur Kuran literature on preference falsification and cascading and tipping points and things like that, that's become much more possible with this kind of connectedness in India. And so that's what makes me unsure about whether the changes will always be this slow. I expect there could be sudden changes because of this, but it could also flip the other way. So you could have change and then people could flip back to the status quo. So it's just hard to say. I think this space that we're in is just too new. We've never experienced it at this kind of scale in India. So just very difficult. 

WALKER: Yeah. Interesting. So I was going to ask you about how India's massive smartphone penetration might speed up Indian history, because now everyone's connected. And to borrow a term from complexity theory, it's like these phase transitions can happen more frequently now. So is the historical reason for the slow-moving nature of India's history just the kind of diversity of India or complexity of India? 

RAJAGOPALAN: Definitely part of it. Diversity and complexity is part of it, because if you're thinking about, let's say, thought experiment, I'm not speaking of any particular millennia or a particular regime. Let's say there are a bunch of people who show up in India who think, “Oh, there’s a nice place to settle down and maybe govern.” Sure, they can govern like a relatively small area. They become rich. They say, okay, now we need to conquer the neighbouring place and the neighbouring place and the neighbouring place. It's going to take a fair bit of time, and it did take a long time on saddleback or without cannons or without radio and things like that. It sped up after independence and after World War II because of radio and broadcasting. It was this phenomenal, dramatic change in terms of transactions costs of reaching people. And we are seeing that again today. So I think the diversity and complexity and just high transactions costs to navigate that diversity and complexity in the past, which is not clear to me is quite the same in the future. 

[2:36:46] WALKER: Given India's vast complexity and the syncretic nature of the Indian mindset, if I can put it that way, which I assume gives many Indians, like, an innate appreciation for complex systems – at least many Indian intellectuals. Are you surprised that adherents of the Austrian school seem to be underrepresented among Indian economists. 

RAJAGOPALAN: I am. Both Austrians and public choice theorists. Because when I was growing up, everywhere I looked, I saw corruption and rent seeking, and I was like, why aren't there more public choice people coming out of India? And the same thing with the Austrians. 

But I think on the Austrians, I have a better answer, which is the curriculum was completely controlled by the state. So, for instance, when I first came to the US and I started my PhD, I mean, I didn't start my PhD programme immediately, but now I'm talking about 2008, 2009. When I start my PhD programme, Peter Boettke, who's one of the economists at George Mason and one of the foremost Austrian economists in the world, he would ask me, “Shuti, how do you know so much about the Soviet Union side of the calculation debate?” And I would tell him, “I didn't know it was the calculation debate. I just learned the Soviet side of the story.” And I don't think we heard of Hayek in the debate. And von Mises was a footnote. There is actually a footnote in Market Socialism that Lange and Lerner write about: “Oh, we'd like to thank Professor Mises for pointing out this tiny detail.” Never come across these people. And I studied undergraduate economics between 2001 and 2004, so it's fairly recent. I'm not talking 1950s. So I think they just didn't allow any Austrian thought to penetrate. 

Now the Austrian economists who are coming out have basically learned that, thanks to the digital revolution, all this stuff is available online. Hayek has a huge footprint online because Hayek has captured the imagination of economists and other disciplines, intellectuals in other disciplines. So, yeah, it always surprised me. But this is the explanation I have. 

[2:38:59] WALKER: Interesting. Okay, penultimate question. We were talking about the massive smartphone uptake in India. So two thirds of Indians have access to a smartphone. And that's going to increase to 95% by 2040.

RAJAGOPALAN: Yes. That's the expectation. 

WALKER: That's the expectation. So when you compare that widespread adoption today with your experience trying to make long distance telephone calls as a child... So you have, for context, you have this really funny Substack post on what it was like trying to make those landline calls in the past in India and how that was sort of represented through Bollywood and Hollywood. Reflecting on examples of such rapid progress like that, at a personal level, how does that affect your perspective on life? Because for me, I probably haven't experienced such progress in my life, living in a developed country like Australia. Do you feel you're more of an optimist, you're more positive-sum?

RAJAGOPALAN: Oh yeah. Absolutely. I am such an optimist when it comes to these things. These sort of things, they still thrill me. When I go to India and I see like 500 horrible cable TV channels, I wouldn't watch any of them, but it thrills me that they exist. Walking into a big retail store with lots of different kinds of chocolate. I grew up the first eight, nine years of my life with two kinds of chocolate. I remember the first time I held a Kit Kat. I remember the first time I held a Pepsi. So that stuff just thrills me no end. I still think it's magical that all that exists in India, that there's so much digital stuff for everyone to consume, so much of it is free. And so much of the consumer goods revolution has been reaching high quality, latest technology stuff in the hands of people who, relatively speaking, don't have that high income. So that just thrills me. It makes me an optimist. I'm a techno-optimist in that sense. I am a market optimist in that sense. I'm just thrilled by it. Yeah. 

And I'm a big believer in progress. The fact that we have a vaccine within, I don't know, a few days, the blueprint for a vaccine within a few days of the pandemic spreading – even before it had spread globally, we had the blueprint for a vaccine – that stuff just thrills me to no end. The fact that my dad and I chatted for an hour about the malaria vaccine being a possibility. 

WALKER: That’s so exciting. 

RAJAGOPALAN: Yeah. Because he grew up in a time when he knows people who've died from malaria. So it's just extraordinary that that stuff is happening. It just thrills me no end. 

[2:41:39] WALKER: Final question, what are you working on at the moment, and where can people find you and your work online? 

RAJAGOPALAN: I have a website. If they Google me, they'll find me. They find me on Twitter, all the usual stuff. 

And what am I working on right now? I'm pretending to write a book. And I say pretending because it's slow. It's very slow. I'm writing a book on property rights and eminent domain in India. And I'm trying to understand why… So it makes sense that India didn't have strong protections against eminent domain or compulsory acquisition during the socialist period. Even makes sense that it didn't have it during the colonial period. But post-liberalisation, you can't have a market economy built on a scaffolding or a foundation that doesn't have strong private property rights. 

But in India, the free market people and the right wing people who want development and industrialisation actually are in favour of willy-nilly acquisitions and easy acquisitions because they think India's rules for changing land use from agriculture to industry to services is just too complicated. So it's great if the state can come in and take land from Peter and give to Paul. Nehru and fellow socialists did it to take land from Sir Kameshwar Singh and give it to poor peasants. Now we take land from poor peasants and give it to, I don't know, the Ambanis and the Tatas and so on. 

And I just find it surprising that there isn't a deep understanding that to have the kind of market economy we wish to build, you need strong property rights, which includes limits on the state, on what they can and cannot take. 

So I'm trying to trace the history of why we have such bad rules. Why didn't the constitutional framers do better? Once they wrote something down on paper, why did it change from 1950 till now? So I'm trying to do that big picture, tracing that question over the bigger picture or the longer arc of history, and it is going very slowly and it is very difficult to write a book. So that's been my experience. So that's what I'm working on right now. 

WALKER: Well, Shruti, thank you so much. I've learned so much from you. This has been a real treat.

RAJAGOPALAN: Thank you so much for having me. This was a pleasure. It's always good to see you and I love your podcast. 

WALKER: Thank you.