In our product design class ME105, we frequently have guest speakers and lecturers. For the first 30 minutes of class, each team gives their elevator pitch as the guest asks questions and critiques the pitch. For the next hour or so, the speaker then talks to usabout his/her latest social venture or start up.
This week, we had the pleasure of meeting John Howard, who graduated from Caltech with a B.S. in mechanical engineering and economics. When one of the student teams pitched their idea, a Lyft-like service for rickshaws in India, he half-jokingly gave them the above advice. While it’s not the most feasible idea, John has a point. You can’t foresee the problems that might arise when you’re trying to run a company based in India from the comforts of your air-conditioned LA office. Field research is pretty essential. But more on that later.
Since John graduated in 2006, he’s co-founded Duron Energy, a home solar company for the rural Indian market. Currently, he’s working on Jhana, a start-up aimed at helping entrepreneurs manage their companies.
One of Duron’s home solar products
Our product design class is in its second phase now; while the first term (winter) was focused on product development and engineering, the second term (spring) is more concerned with developing an effective business model, approaching potential investors, and marketing the product. John decided to share what he’d learned about the perhaps less glamorous and less innovative aspects of entrepreneurship.
Here’s John’s list of 10 things he’s learned about social enterprises for developing countries:
1. Lots of problems out there that technology can help solve…
For example, over 3 billion people worldwide live with poor or no grid electricity, even though it’s practically required for modern life: light, communication (cell phones), entertainment (television), comfort (fans and air-conditioning), etc. The next best alternatives for people are diesel generators and kerosene lamps, but these solutions are unreliable, unhealthy, and environmentally unfriendly. With that in mind, John and his partners created DURON, the first affordable all-in-one solar-home system, specifically marketed for the Indian market.
2. …but technology is usually only a small part of the solution.
When we visited India for our field visits, we went to the Rann of Kutch, where salt pan workers spend 10 hours a day wading through very concentrated salt water in the grueling heat. The direct exposure to brine causes several health problems, and many workers’ feet are bloated and covered in sores. Despite the downsides to their method of salt mining, the workers take pride in their work, as they should, and several attempts by NGOs have been unsuccessful in creating a shoe/ foot covering to protect their feet in the saline water. The workers complain that the NGOs’ solutions are too cumbersome (heavy boots) or too different from the methods that the workers have grown accustomed to. One group in our class has decided to tackle this problem, and when designing their shoe, they’ve been especially concerned with the salt pan workers’ social and cultural sensitivities.
3. You can do it… (really) …
John can attest to this: after two years, his company had sold 10,000 products and had 5 offices and 80 employees.
4. … but it’s not for everyone.
To work on his start-up, John left his cushy life in Silicon Valley to live in rural parts of India for 2 years. Not everyone can pull off that kind of lifestyle change.
5. You need to go where the action is.
John is a huge proponent of this idea, because he learned the most vital information only after living in India and understanding the social and cultural norms. He mentioned that he assumed each Indian state would be fairly homogenous, so he could tackle the Uttar Pradesh market and the Karnataka market separately. While each state in India has its own cultural identity, regions within each state also have vastly different cultures at times. You can’t pick up on these nuances by just studying a map of the country.
**6. Social enterprises / startups are pretty much the same as regular startups. **
Ken, our professor, stresses this point a lot: just because we’re making something for a lower socio-economic market in India does not mean that our customers will be willing to buy something ‘cheap.’ Our products still need to be ergonomic, trendy, and cleverly designed, because people from all walks of life take pride in the things they own.
A previous speaker we had this term told us an interesting story. A couple years ago, he was trying to sell low-energy light bulbs to slums in India. To figure out how many light bulbs to sell in one pack, he decided to do some field research to estimate how many bulbs the average household would need. Turns out, the answer is 3. Most homeowners placed one bulb in the kitchen area, one bulb near the bed, and one bulb right outside of the home. When he asked people why they’d need a light bulb outside of the house, he learned that people wanted their neighbors to see their fancy new light bulb. It had become a status symbol of sorts, and even people who previously had no light in their homes were willing to use one bulb not for function, but for social reasons.
**7. Most important decision is your co-founder(s). **
As John put it, you’re basically getting married to this person.
8. In developing countries, the only thing you can be sure of is that you’ll be wrong.
John told several anecdotes of times when the company faced problems they didn’t anticipate. Here’s the most amusing one:
The Duron kit comes with one solar panel, which the user is responsible for installing: i.e. placing it on the roof of the home to face the sunlight. Much to their surprise, some users would place the solar panel upside down or up against a wall. While the necessity of having the panel face the sun seemed obvious to them, clearly there was an education component they hadn’t anticipated. Most people in rural India are unaware of solar technology. So, they decided to include a visual guide with each kit to fix the issue. Turns out it solved the problem!
9. Need a great local team or partner.
Managing 140 field salespeople is not easy, so a local partner and team was essential to Duron’s success.
10. You’re building an organization, not a product.
After two years, Duron had over 140 field salespeople and 80 employees. John soon learned that managing an entire organization is much more difficult than he’d anticipated. To address the problem, he’s since created Jhana to help other entrepreneurs like himself learn how to manage a start-up.
If you’re interested in hearing more about my product design class, let me know!Next week, I plan to write about how a new company might deal with competition.
That’s all for now,