They might be anywhere in the world right now, but they’ve probably stood out their whole lives because they’re committed to social change, to empowerment and because they walk through the world with grace and humility.
They’re the kind of people who get things done in all sorts of crazy situations, the kind of people who keep their wits about them no matter what and no matter where, the kind of people who just seem to connect with others no matter where they go.
These are the kinds of people who might make up the next class of Acumen Fund Fellows. Applications opened today. Hear from Fellows in their own words – click on this video.
My last night in Hyderabad, 100 people gathered at the Acumen Fund offices for an informal community event at which I and my colleague, Karthik Chadrasekar, spoke. It’s always exciting to see such a large turnout and interest in our work, and I was struck particularly with the number of people I met who are working on entrepreneurial ideas to deliver power and light.
It’s not surprising, given the staggering numbers: 500 million people in India alone without reliable power (and 3 billion globally); 1.5 million deaths annually from indoor air pollution; and the poor typically spending 15% of their income on dirty, low-quality fuels – more than is spent on healthcare or education.
But of course all big solutions start at the beginning, not the end…with one system or pilot or idea that works so well that it is built to grow. And to make it all happen, you need the right person, or people, with a vision of how to make the impossible possible.
The idea behind Husk Power Systems came from Gyanesh Pandey who, together with his partner Ratnesh Yadav, began tinkering with renewable fuel solutions for the poor in 2002. By 2007, Gayanesh and Ratnesh had settled on biomass as their preferred fuel source and had set up shop in the Indian state of Bihar, where Gyanesh is from. Bihar is part of India’s “rice belt” so rice husk is abundant, as is poverty.
But no one had ever built an end-to-end system here that generates power and delivers it to villagers’ homes at an affordable price.
Husk Power Systems began as an NGO, the Samta Samriddhi Foundation, that built one mini-system and wired the surrounding village. The system uses rice husks to power turbines to create electricity, and the business model is powerful in its simplicity: create small-scale infrastructure (wires to thatch homes strung on bamboo poles); a predictable and reliable power supply from 6pm to midnight; and sell customers two CFL (compact fluorescent) bulbs at a price that they can afford.
Or, as it is sold to the villagers: the cost of electric light to your home (which has never been delivered in the thousands of years this village has been here) is 300 rupees for the connection (about US$6) and less than 100 rupees (US $2.50) per month.
Uptake has been swift.
In every village we visited, house after house after house was bathed in the cool blue glow of CFL lights. Homes in villages that had been dark or powered by kerosene for thousands of years were lit up. And not just some of them. Nearly ALL of them. 80% or more of them in every village we entered.
Demand – for this product, with this reliability, at this price – is not an issue, which sets Husk apart from nearly all of the businesses that serve the poor in the developing world.
This helps explain the pace of Husk’s growth: they had two systems installed by the NGO by early 2008, and a little more than 2 years later they have nearly 50 systems serving more than 100,000 people and growing at an accelerated pace. The plans to scale are aggressive, with the goal of reaching hundreds and then thousands of systems in the next few years. And that will bring its own challenges – of acquiring more turbines and building and maintaining more systems and building the salesforce and collecting payments from customers and training thousands of mechanics.
But what I find so exciting is to see a business serving the poor with a core model that works so well, one in which promise of meeting a need is matching up with the reality on the ground – high demand , hugh penetration, and high satisfaction from low-income customers, with underlying economics that work. Having seen hundreds of businesses around the globe that aim to do just this, I know how rare it is.
And if business solutions to poverty are going to work on any sort of scale – not just delivering products to some but addressing social issues at their root – we need to start asking ourselves this question of market penetration. All too often we look at the company level and ask if it is selling enough at a low enough cost to make the business work. This itself is hard enough. But for so many social problems, large-scale change will only come when market penetration (even if the market is just one village) – for safe drinking water, primary education, sanitation, vaccines, maternal care, etc – reaches 70%, 80%, 90%, even 100%.
It is this depth of adoption that will fundamentally alter the infrastructure of people’s lives.
As the sun rose over the deep green rice fields around us, hundreds of people were walking along the highway and amongst the rice paddies, starting their day – squatting, walking, sitting, and waking. That’s one aspect of India that feels different from nearly everywhere: no matter where you go, it feels like there are always a lot of people going about their business.
1 in 6 people in the world lives in India, so any social issue in India is, by definition, a big one. The Indian state of Bihar, India’s poorest, has a population of 85 million, 80% of whom have no reliable access to electricity, 58% of whom are under the age of 25, and 85% of whom live in rural areas. And this is just one state – with a population larger than the UK, France, Italy, Spain, or Germany – in a country of 1.1 billion people.
When people talk about what will ultimately break the back of poverty – philanthropy or market-based solutions, or some combination of the two – I’m inexorably drawn back to these sorts of numbers. They makes me ask how anything could possibly grow to touch hundreds of millions of lives without some sort of economic engine that works. It feels impossible. The imperative, then, is to find a way to make markets work in service of social change in places like Bihar.
Lighting and cooking solutions are a great place to start, because villagers already spend 10-15% of their income on fuel (for dirty, unsafe kerosene lamps and for open stoves that spew noxious smoke in people’s homes), and because 1.5 million people a year die globally from respiratory conditions resulting from indoor air pollution – 50% more than from malaria.
The opportunity and the need here is huge.
Acumen Fund has two investees that are working to crack this problem: D.Light, which sells solar lights to replace kerosene lamps, and Husk power, which is bringing power directly into people’s homes. So when six-foot-two Gyanesh Pandey, CEO of Husk Power Systems, casually rolled into the (VERY bare-bones) Skylark Hotel in Padrauna wearing shorts, a white t-shirt, and a big smile on his goateed face, I wanted to know how and why he is solving a problem that no one else has managed to tackle.
What comes across quickly in conversations with Gyanesh is that markets are working in a limited way even in Bihar: villagers are buying kerosene, fertilizer, seed, alcohol and clothing, so even people making just a few dollars a day have some small amount of cash that they’re spending. This means that the goal isn’t to wave a magic wand and introduce markets where they don’t exist; the goal is to understand the village-level economy – and the mindset of people living there – well enough to offer solutions that will work to improve lives.
It turns out Gyanesh, who has a BS in Electrical Engineering from IIT Varanasi and an MS in Electronics Engineering at Rensselaer Polytechnic Institute, grew up in a village in Bihar, and he’s quick say, with a twinkle in his eye, “Hey, if I don’t work on these problems, who will?”
Gyanesh started tinkering with renewable fuel solutions for the poor in 2002, and in 2007 he and his partner Ratnesh Yadav set up and funded an NGO, the Samta Samriddhi Foundation, to build one mini-system that would provide power to 2-3 surrounding villages at a price villagers could afford. Gyanesh and Rathnesh figured that if the price were low enough and the reliability high enough, they could sell power and 1-2 lightbulbs to villagers who would be all too happy to give up their kerosene lamps.
In 2008, based on promising early results, Gyanesh and Ratnesh set up Husk Power as a for-profit company, and less than three years later Husk has installed and is operating more than 40 ultra-small systems that are providing power to more than 100,000 people, and Husk plans to grow to 5-10x their current size in the next few years.
I often end up running for trains, so it was no real surprise that I found myself in the Delhi train station with just four minutes to spare, having to run from Track 1 to Track 16 against the crush of hundreds of passengers advancing in the other direction. It was only when I caught a glimpse of my colleague Karthik Chadrasekar’s eyes that I realized that our 2:45 train might leave on time and without us – never mind that just minutes before we’d confirmed online that the train was running two and a half hours late.
A short, breathless sprint later, we bounded down the steps and onto platform 16 at exactly 2:45, and, seeing the train start to move, dove into the steamy, overstuffed third-class cabin. A couple of minutes later, the train ground to a halt, affording us the chance to jump out again and head to the front of the train to our much-more-spacious second-class seats. Just as we plopped down, the massive, iron beast groaned its way out of the Delhi station – just 14 hours to go until our scheduled arrival in Gorapkhur.
Karthik, Molly Alexander and I were setting out on a two-day excursion to visit Husk Power Systems, an Acumen Fund investee that is providing power to some of the poorest areas in the northeast Indian state of Bihar. Like most Acumen investees, Husk is doing what others said could not be done – provide power in rural India in an economically and environmentally sustainable manner.
All very exciting, but first we had to get there, and the best way to get there is a 700 km train east from Delhi to Gorahpkur followed by a two hour drive to the town Padrauna, where we’d arrive in (hopefully!) 16 hours’ time, just a few hundred kilometers away from the Nepalese border. Just a week prior, I was in North Carolina for a family vacation, and I couldn’t help but feel a shot of traveler’s whiplash at how much ground and how many worlds I’d crossed in such a short period of time.
I’d heard lots of stories about Indian trains – the crowds, the mayhem, the lack of safety – and while the many stations we passed along the way were a sight to behold, with hundreds of people splayed out and settled in on colorful cloth and plastic squares, seemingly settled in for the night, the ride itself was singularly uneventful (might I have felt differently without a native Hindi speaker as a travel companion?). And so, after some long conversations with Karthik and Molly and all-too-little sleep, we rolled into the train station in Gorahpkur at 4:30am, foggy from the lack of sleep but still in high spirits.
A few heated cellphone calls later, Karthik located our driver, and we piled in to a little, nimble Tata Indica for our two hour drive to Padrauna. I would have given anything for a bit more sleep, but the road (full of both speed bumps and holes) and our driver (for whom two trucks coming head-on in the other direction was not cause to waver) were enough to dissuade me from that plan. So we quietly watched the sun rise over rich, green rice fields bursting with monsoon rains, while all around us hundreds of people began their days, mostly squatting in fields and at the side of the road to relieve themselves (less romantic, but that’s reality)…
Tonight at 7pm, PBS NewsHour will air Part 2 of its interview with Acumen Fund founder and CEO Jacqueline Novogratz. This segment will focus on Jamii Bora, the Kenyan microfinance organization which has built the Kaputei housing development outside of Nairobi. They are an incredible organization and I’m sure the segment will provide a glimpse into the fabulous work they do.
I participated an interesting conversation tonight of about 30 people all interested in the “impact investing” space which, broadly defined, is focused on taking an investment-based, market-based approach to solving major social problems. Acumen Fund, where I work, is one of the pioneers of this space, and we’re excited to see the growth of the sector, especially in the last few years.
Tonight’s conversation started with a question – “what are the limits of philanthropy?” And while I thought this was an interesting question to kick off discussion, I thought it was a misleading starting point for a conversation about how to use patient investment capital for social change.
It’s not about what’s wrong with philanthropy. Rather, we opened our tool box one day a few years ago and discovered a strange new tool – using the markets and an investing mindset to make social change. What we’re all in the process of trying to figure out is, “What’s this tool for? Where can it best be used?” I don’t know if philanthropy is a hammer or a screwdriver or an awl, but I do know that we can waste a lot of energy trying to figure out all the things that other tool cannot do, energy that would be much better spent holding this new tool in our hands, playing with it, trying it out in different situations, and honestly looking at the fruits of our labor.
Where does this tool work? Where does it do a fabulous job? And where does it prove to be awkward or misshaped or just plain inappropriate?
This new tool alone isn’t going to solve all our problems just like philanthropy doesn’t and the markets don’t either (nor does microfinance; nor does infrastructure; nor do projects for women and girls). But those who spend their time mastering this new tool, apprenticing and toiling and honestly assessing what they have worked to build – these people will show us the way forward.
I recently came back from a weeklong trip to Europe and was swapping stories with my wife about the week. She admitted what I already knew, that my five-year-old son has started to really notice my absence when I travel for work.
“But,” she said, “It’s actually really easy to explain to him why you’re away. I say to him that Daddy is out helping get money to help pay for things like safe water to drink or a safe place for a mommy to have her baby for people who need it. And he understands that and it makes sense to him.”
First, I was overwhelmed by this kind of support from my family.
Second, I noticed that, even to me, this is not exactly how my week felt.
Of course I was talking about the work that Acumen Fund does and explaining to people why supporting Acumen Fund helps bring about large-scale change to persistent social problem. But, even for me, it is easy to get caught up in the process of it all and lose track of that very simple, very important, very basic connection.
A friend of mine who serves on a number of nonprofit boards recently told me that, in her opinion, there’s no better way to tap into your original passion for a cause than to sit in front of someone else and ask them to support that cause financially. It forces you to get to the root of why you think that cause matters, to share that original passion with someone else, and to invite someone else to have the same sense of exhilaration and purpose that you feel in being part of that organization – that cause – every day.
Somehow, in the midst everything it takes to do the work – getting introduced to the right people, meeting with them, sharing your story – you can get so caught up in the process that the original purpose gets out of focus.
It helps to remember, every day, “this is why I do this.”
Yes, the act we’re engaging in is raising money, but the thing that’s really happening is that another person has safe water to drink, or a proper place to give birth, or a more productive farm, or a vaccine for a life-threatening disease, or a school that will provide them with opportunity in their lives…and all of this thanks in part to the work you’re doing.
If we can tap into that original passion – in ourselves and in others – I’m sure we can unleash a different kind of energy, and I’m sure that we can overcome all our fears about putting ourselves out there and asking people to walk our path with us.
Unexpected result: learning by doing; seeing what does and doesn’t work with direct fundraising appeals; being touched and moved by old friends, readers, and family who chose to participate in ways large and small.
I’m off to celebrate. Have a great weekend, and thank you for all you did.