Why People Are Poor Part 1

I’m sitting at a small independent internet cafe writing this post.  Its a basic place and highlighted to me one reason why countries/people are poor – and sometimes it doesn’t take much effort to get people to create wealth for themselves.

The cafe is using Internet Explorer 6.0 – a version that expired a few years ago (latest is 8.0).  I asked the cafe owner why he doesn’t upgrade to version 8.0 and he says that no one really asked for it.  I know that surfing would be a better experience for myself and others if he upgraded – but as no one asked he never bothered.

Next door to the cafe is a small burger joint.  The place is a little messy but its cheap.  It was empty when I went there and there were 3 waiters just hanging around chilling.  If you walk in to a McDonalds it is always spotless.  You won’t see people hanging around as every employee is made to be busy the whole time they are there.  If there are no customers they are likely to be cleaning something.

McDonalds and the other American franchise chains have built the processes so that the millions of employees that work there are producing value for every hour they are at work.  You might be making $5 per hour but they ensure that you are producing at least $6 worth of value every hour.  In a lot of the non-chain smaller restaurants around the globe (especially in the developing world) every employee is not maximized.  When there is no work they might just sit around.  They might even work longer hours than at McDonalds and get paid less.

Creating wealth is about creating value.  When times are quiet what can you do to improve your restaurant?  This cafe owner could upgrade all his computers to explorer 8.0 or Firefox or Google Chrome – all this wouldn’t cost him anything except a little time.  It would create a better experience for his consumers and this would eventually translate into wealth for himself – perhaps he could start charging more or perhaps more people are likely to use his cafe.  He has the time and the resources to do this.  A better surfing experience means I’m more likely to be addicted to his brand.

Soon what will happen though is a professional company like McDonalds will see this opportunity and open up a franchise.  Then a consumer like me is likely to use McInternetCafe as I know it will have the latest version of internet explorer, the toilets are likely to be clean and I will get a good service for my money.

Small business owners need to be continually educated in their industry.  This guy needs to know the best browsing practices.  Your restaurant needs to know how to up sell dessert or drinks to your customers to maximize profit.  How to keep people coming back.  Otherwise you end up losing business to the big corporates that bring in the processes and the templates which get the best value from their employees.

The last few decades has been about the corporates.  They have made a few people really rich and slowly taken over small business.  I see a big comeback for the small business.  Its easier now to create your brand than ever before.  Whereas McDonalds might have hired the best brains to research the best way to up sell food to customers – now any small business owner can Google “best restaurant practices” and get all the knowledge to make her business as successful as McDonalds.  Or spend $20 at Amazon and buy a book written by someone that has all the knowledge.

Again it comes down to education – it doesn’t take major investment – 80 % of the benefits can be made by simply knowing how to create better value for customers.  If we want to help create wealth for people we need to help them see how they can do it for themselves. To post a video on YouTube in Swahili that explains how to make more money from a restaurant.  To write a blog post in urdu that explains how to make more money from a cafe.

The good news for you is that the more wealth that is created the more customers are likely to exist for when you launch your product or service.  The developing world isn’t really a market for Amazon yet.  Godaddy doesn’t have many web hosting customers in the developing world.  Google doesn’t make much money from adwords in countries that don’t have credit cards.  Once these people start getting into the economy (through education) than there is more wealth for you – whether you are sitting in London or Silicon Valley.

About the Author

Amir Anzur

2 Comments

  1. Raza Ali

    I don’t know if being more tech savy will get you more business.. No doubt, one needs to be proactive about tech, but the very rate at which these things keep changing means that I have to not only be savy but be obsessed. I for one find it difficult to keep changing my phone at least twice a year. Not sure if that’s the reason I’m poor.

  2. Hey Raza,

    Agreed – we have to balance as when you get into the “must have whats shiny and new” spirit you end up adding more stress for yourself – e.g. feeling bad when you don’t have the absolute latest car/phone/shoes or whatever.

    Sometimes old school and the simplicity of the developing world is what I like – rather than being constantly stressed about getting the latest wii/nintendo or whatever electronic gadget…

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