What I Deserve

I live in a wealthy community in a wealthy country. I had, and have, a stable, supportive family and access to world-class education. I am male and I am white.

Last week, as part of my time with the Acumen India Fellows, I spent some time 135km outside of Hyderabad, in the villages surrounding the town of Kosge.  We were there to understand the issue of marginalization of rural women, and to do so we spent time in villages, with women’s self-help groups, visiting schools and talking with NGOs and the police force and with doctors in public hospitals.

We split up into four groups, and as luck would have it I ended up in the village that seemed completely stuck, where little progress was being made, and where it felt like there was little hope for improvement.

A village where every single woman said that she is beaten by her husband.

A village whose women, when asked what a woman should do if she is regularly being beaten by her husband, responded, “be patient.”

A village where payment of dowrys is on the rise, and where dowry deaths still occur.

A village where girls often get married when they are 12 or 13 years old, and where it is hard to figure out if that is as terrible as it seems or if, in fact, betrothal protects a young girl from sexual predators.

A village whose public hospital, 4km away, has exactly one young doctor, in her 20s, who is on call 24/7, and no additional nursing or medical staff we could identify, working in a hospital whose annual budget, according to the doctor, was less than $2,000 a year.

Returning home from this trip, on the way back from JFK airport, I was talking to my driver who was originally from Guyana. He described life in his country simply, “If you are born rich, you will die richer. If you are born poor, no matter how smart you are and how hard you work, there’s no chance for you, you will always be poor.”

Yes, it’s true, I have the choice, each and every day, of how to live my life, of how hard to work, of what opportunities to pursue, what risks to take, and what my attitude is going to be. I have agency and to some extent I reap what I sow.

But the fundamental point is that I live in a place and a time, and I was born in a place and a time, where my actions yield results. And for far too many people, including the women we spent hours sharing stories with, talking about hardships and often laughing through the discomfort of it all, every force in the world is undermining their ability to realize even some small fraction of their human potential.

It’s so easy to hide from the realities of the world, how cruel and unfair it still is for so many people. And while it is natural to insulate ourselves from these harsh, cruel, ugly realities, it strikes me that we cross a line – the line between self-preservation and delusion – when we start telling ourselves that we deserve the lives we have.

We don’t.

We have the lives that we have, we played some small part in creating them, and it is our choice, every day, to do what seems right to us with the gifts we have been given, however big or small.


A New Epistemology of Solving Complex Problems

I’m in India, spending the week with the Acumen team and with the Acumen India Fellows for their fourth seminar. Last night, at the end of the first day of seminar, we were joined by Vijay Mahajan, one of the most esteemed social sector leaders in India. Vijay is the founder of Pradan, which he ran from 1983 to 1993, and was then the founder of BASIX which grew to be one of the largest microfinance organizations in India prior to the microfinance crash in 2010.

Vijay is a truth-teller, who speaks plainly and without adornment about his experiences. Our conversation was an intimate one – just us (20 India Fellows, me, Jacqui Papineau and Bavidra Mohan, together with Vijay and his colleague, documentary film-maker Girish Godbole), with Bavidra interviewing Vijay before an open Q&A.

Upon hearing Bavidra’s first question, around lessons about leadership, Vijay paused and thought hard for what must have been 20 seconds before responding. Just watching such an esteemed individual, who must have been asked a similar question hundreds of times, really stop and think before giving an honest answer was a display of humility and respect for our group that itself spoke volumes.

From that moment on, everyone in the room was silently hanging on Vijay’s every word, with most scribbling furious notes of Vijay’s pithy insights. My single biggest takeaway stemmed from a comment Vijay made early on in the discussion, when he said:

Anything that could be solved with single variable maximization was solved in the 20th century…we need to create a new epistemology of complex problems for the 21st century.

I’ve always felt that impact investing and social enterprise are something brand new. If this work is going to realize its true potential, we are going to need to think about two-variable approaches – or, better stated, leadership that embraces opposable mind thinking and sees potential where others see only contradiction.

I must admit, until last night I had not aspired to creating a “new epistemology” but I think Vijay is on to something. Ultimately we need a strong theoretical and analytical grounding to explain what it would mean to take truly new approaches to solving centuries-old problems, problems that are based as much on caste, social exclusion, geographic marginalization, and politics as they are on simple microeconomics. And, as Vijay reminded us, such a theoretical underpinning is not entirely new. Indeed, in 1956 economist Herbert Simon developed the notion of “satisficing” rather than “maximizing” behavior as being a more accurate description of how individuals and firm managers behave. Perhaps we need more satisficing firms of we are to solve this new batch of problems.

Indeed, the more I think about it, the more it strikes me that Vijay’s statement summarizes the core fault line within impact investing and social enterprise: is impact investing just about extending the market, a chance to extent single-variable (profit) maximization to areas where it hasn’t yet reached? Or is single-minded profit maximization (versus profit achievement), as a binding constraint, anathema to the real task of tackling social issues?

There’s no doubt that there is work to be done on both sides of this fault line. It is an overstatement to say that all single variable maximization problems were solved in the 20th century, and there are huge emerging swaths of the population – hundreds of millions of people – who are optimally situated to benefit from the extension of 20th century approaches to them. However, I believe that impact investing will fall far short of its potential if it limits itself to this approach (indeed, isn’t it just “investing” to find businesses that fit age-old criteria and invest to help them grow)? What I am seeing after nearly eight years doing this work is that that, outside of narrow verticals (e.g. financial services on mobile platforms), the social sector leaders who are working to reach marginalized populations do not act as if single-variable maximization is enough.

By the way, it bears mention (lest anyone jump to conclusions) that just because one agrees that a narrow profit-maximization mindset is not enough does not predetermine anything about what business models need to look like, what form an organization should take (for-profit, non-profit, or some other form), or even about financial returns. Rather, this is a conversation around what sort of problem one believes one is working on, and an assessment up-front of whether the tools that we created in the 20th century are up to the task of tackling the problems of the 21st century.

Vijay’s closing thought, with which I heartily agree, was that “we cannot build great theory if we keep on reporting practice wrong.” Our challenge, from the outset, is to have the audacity to imagine the world as it could be, and the humility to share the real lessons of what it takes to create large-scale social change. Vijay certainly shared his real lessons with us, and I know that I and the Acumen India Fellows will follow his lead in continuing to take problems head-on, and honestly share what we are learning with other practitioners, so we can all build a better future.

(And maybe, just maybe, we will eventually find a way to develop a PhD 21st in the Epistemology of Solving Complex Social Problems…)

Dispatch from Padrauna, India (Part 3)

[here are the links to Part 1 and Part 2]

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.

A Husk system (the brown stuff is rice husks)

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.

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Dispatch from Padrauna, India (Part 2)

[if you missed Part 1, you can read it here]

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.

Karthik Chandrasekar (Acumen Fund) and Gyanesh Pandey (Husk Power Sysetms)

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.

Husk Power's systems use rice husks (that brown stuff) to generate power

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.


What we pay, what we get

Lots of inspirational moments today at the Global Philanthropy Forum (live webcast here).

It’s too much to try to capture in one post, but my parting reflection from today is how continually humbled I am by the accomplishments of Aravind Eye Hospital, the recipient of this year’s Conrad N. Hilton Humanitarian Prize. Founded in 1976, Aravind pioneered high-quality, high value, low cost service for low-income customers. They have built a truly remarkable organization that has revolutionized not only eyecare in India but our conception of what is possible. Some statistics:

  • Of the 37 million people globally who are blind, 15 million are in India
  • Aravind has served more than 3 million people since inception, and currently serves more than 300,000 per year
  • The majority (60-70%) of Aravind’s customers pay a reduced cost or nothing for eye surgery
  • The average medical doctor performs 300 surgeries per year; the average Aravind doctor performs more than 2,000
  • Among other inspirations, Aravind’s founder Dr. Venkataswamy attended McDonald’s Hamburger University to learn about standardization and quality control.
  • Interocular lenses cost $200, so Aravind decided to manufacture them themselves, and now sells them for $3 apiece (at a profit)
  • 15% of all ophthalmologists in India have been trained by Aravind
  • Aravind is profitable

When we talk about scale, innovation, doing the impossible, creating massive change to fight preventable illness, this is what we mean.

A closing thought, shared by Dr. William Foege (who among other things is credited with creating the strategy that eradicated smallpox): philosopher Soren Kierkegaard tells a parable of two robbers who entered a jewelry store and stole nothing; the only thing they did was switch the price tags between the costume and the real jewelry.  The customers never noticed.

So too, Dr. Foege opined, in the modern world the price tags have been switched.  We ascribe the highest value to a small group of people who receive exceptional, unprecedented levels of monetary reward, and consistently undervalue the work of nurses and teachers and social workers and people who live lives in service of others.

In closing, a video about Aravind:

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What’s in Vogue in India

Thanks for everyone for staying tuned while I was out on vacation.  And now back to our regularly scheduled programing.

The New York Times ran a story on Sunday about an appalling decision by Vogue India to run a series of photos of poor people wearing high fashion items:

An old woman missing her upper front teeth holds a child in rumpled clothes — who is wearing a Fendi bib (retail price, about $100).

A family of three squeezes onto a motorbike for their daily commute, the mother riding without a helmet and sidesaddle in the traditional Indian way — except that she has a Hermès Birkin bag (usually more than $10,000, if you can find one) prominently displayed on her wrist.

Elsewhere, a toothless barefoot man holds a Burberry umbrella (about $200).

As if the photo shoot weren’t a bad enough idea, Vogue India editor Priya Tanna’s responded to criticism by saying, ‘“Lighten up.”  Vogue is about realizing the “power of fashion” she said, and the shoot was saying that “fashion is no longer a rich man’s privilege. Anyone can carry it off and make it look beautiful.”’

The problem is, treating people like props is a rich man’s privilege.  And it’s an ugly one.

I guess you have to admire Ms. Tanna for sticking to her guns on this one, instead of coming out and admitting that this was a gross error of judgement?  Vogue didn’t even bother to name the people in the shoot, though they did give details of each of the fashion accessories.

I’d venture to guess that Vogue India editor Priya Tanna has never sat down and talked to a person struggling to make ends meet, and I’d bet good money that none of her close friends face any real economic hardship.

The first step towards addressing the differences and inequality in the world is addressing the problem.  But real momentum will come when we break down the illusion of separateness and difference in the world.  This story is a reminder of how far we still have to go, and it’s especially worrysome coming out of  a country that is as well-positioned as any to bring hundreds of millions of people out of poverty.  The pace of change would quicken immeasurably if the new mega-rich in India took up the mantle of change en masse.

The need for maternal care in the developing world

Photo by John Tucker, Acumen Fund Fellow

On a recent trip I took to India and Pakistan for Acumen Fund, I had the chance to visit LifeSpring Hospitals, which provides high-quality, low-cost maternal care. I wrote a blog post about this titled “Can a Hospital be a Breakthrough Innovation?” about my visit there on Mother’s day.

The more I’ve learned about the need for high-quality, low cost maternal care, the more I think that LifeSpring could be a blueprint for addressing an important, prevalent, but under-addressed health problem globally.

In India alone, only 43% of women are cared for by a skilled attendant during childbirth, and India’s 117,000 maternal deaths annually is the highest number in the world. The chances, over a lifetime, of an Indian woman dying due to complications in pregnancy and childbirth are 1 in 70. This makes an Indian woman 5 times more likely to die in childbirth than a Brazilian woman; 18 times as likely to die than a Chinese woman; 70 times as likely as an American woman; and 250 times as likely as a Swedish woman.

I don’t think I truly understood what poor access to maternal services means until I read this article from the Disease Control Priorities Project, which I learned about on Owen’s blog. Here’s an excerpt (be warned, it’s pretty graphic):

In developed countries, fistulas occasionally happen from surgical accidents or radiation therapy and are promptly repaired. Few in those countries have ever heard of the condition. But across much of the less developed world, fistula is an ordinary hazard of childbirth for many women and a permanent blight on countless lives. In those countries, obstetric fistula overwhelming results from obstructed labor, which occurs when the baby cannot pass through the mother’s birth canal because it either does not come head first or is too large for her pelvis. In the developed world, prompt medical intervention, often including Caesarean section, permits a delivery safe for both mother and child. But thousands of times each year in poor countries, birthing women receive no such aid and their labor is a futile agony lasting up to five days, with uterine contractions constantly forcing the baby, usually head first, against unyielding pelvic bone.

Long before the mother’s torment ends, however, the unremitting pressure kills the child. It also cuts off the blood supply to the soft tissues of her vagina and other organs trapped between the baby’s skull and her pelvis. Eventually these tissues also die, forming one or more fistulas, and the baby’s head softens sufficiently for the stillborn child to pass from her body. Should she survive, the mother soon finds urine, feces or both leaking unstoppably from her vagina. In about a fifth of cases, the woman also suffers nerve injury that can cause a condition called footdrop, which prevents normal walking. Constant contact with urine or feces irritates and infects her skin and other tissues. Her kidneys, bladder, or other nearby organs may also be damaged. Her menstrual periods may stop, rendering her infertile.

The article goes on to describe that, in addition to this physical and psychological damage, the mother often becomes a social outcast. It is stories like this that give me a real sense of urgency about the need to find, nurture and grow enterprises that are finding solutions and positioned to grow, and grow fast.

1298 Ambulance in India

[Editor’s note: this post was originally published on the Acumen Fund blog]

I recently received Dial 1298 for Ambulance’s first newsletter. 1298 is an ambulance service in Mumbai. In 2007, Acumen Fund invested a $1.5 million for an equity stake in 1298, to fund expansion of their service. Since then, 1298 (the number you call when you need an ambulance) has grown faster than expected in Mumbai and is already expanding their service to two new districts in Kerala. The company has captured a lot of press attention, with coverage from the Economic Times, DNA, the Hindustan Times, and others. 1298 currently has 51 ambulances which have taken more than 50,000 trips since inception. The service is world-class, modeled on the London Ambulance Service (down to the forms the paramedics fill out on the ambulance).

Before 1298 launched its service, Mumbai had only about 12 working ambulances that fitted with intensive care equipment (which were primarily linked to specific hospitals); 9 out of 10 trips were to transport dead bodies. These weren’t ambulances; they were hearses.

1298 is one of a number of Acumen Fund investments that defies easy classification. The operating ˜special purpose vehicle” organization is structured as a for-profit business. This business uses cross-subsidies (the rich customers pay more for ambulance rides; the poor pay less or nothing) to achieve a social mission. And the supervising umbrella organization “Ambulance Access for All Foundation” is a non-profit. (Got it?)

The cross subsidy model is simple and ingenious. Patients who want to go to a private hospital in a full-service ambulance – staffed with a doctor – pay 1,500 rupees (about US$35). Those who go to public hospitals pay either half price or nothing. This way, it’s not up to 1298 to decide who can and cannot afford to pay. 1298 is committed to a social mission of having 15-20% of the company’s calls be free or reduced cost.

Why all this complexity? Mumbai is a giant, teeming city with unbelievable wealth and extreme poverty. 1298’s structure and social mission allow it to offer ambulance service for all in a financially sustainable manner. So now, anyone in Mumbai who needs an ambulance can dial 1298 and, thanks to the magic of GPS and Google Maps, one of 51 world-class ambulances arrives in about 15 minutes to provide care and transport. Wow.

So what is 1298? Classifying it as a “social enterprise” seems to sell it short, since 1298 is becoming the provider of ambulance service for all of Mumbai, a city of 22 million people. However, because of its social mission, 1298 now finds itself the recipient of donated ambulances from non-profit ambulance services that were not financially viable. By combining world-class operational skills with a social mission, 1298 can take on private invested capital (from the likes of Acumen Fund) as well as donations in kind from individuals and NGOs. Their social mission allows them to partner in ways a profit-maximizing business venture never could.

It is easy, seeing 1298’s success so to date, to underestimate what 1298’s founders, Shaffi Mather, Sweta Mangal, Ravi Krishna, Naresh Jain and Manish Sancheti, have accomplished. As co-founder Ravi Krishna described when we met a few months back, “Doctors told us we were insane to try this. Others said it was impossible. When I heard this, I knew we couldn’t go wrong. What’s wrong with an insane man trying to do the impossible? You have to succeed more than people say you will. And now everyone wants to copy us.”

Replication in other cities is now front and center for 1298; hopefully, their success will serve as a model to others interested in creating a new mold of what enterprises can accomplish to bring service to all.