Care2 Editor’s Note: Below is a guest post from Sam Goldman and Ned Tozun, who co-founded D.light Design, an international consumer products company that serves customers without access to reliable electricity. D.light has sold tens of thousands of solar lanterns, providing bright light to over 300,000 individuals in India, East Africa, and around the world. Sam and Ned are winners of a 2009 SVN Innovation Award, which recognizes the work of cutting-edge social entrepreneurs. Social Venture Network (SVN) catalyzes collaboration among the world’s leading social venture entrepreneurs to create transformational innovation, growth and impact. Are you an innovative social entrepreneur? SVN is accepting applications through midnight on April 15 for the 2010 SVN Innovation Awards. Click here to apply.
By Sam Goldman and Ned Tozun, co-founders, D.light Design
There were essentially two big questions when we first came up with the proposal for D.light Design, a social enterprise dedicated to providing solar lighting and other consumer electronics products for families without access to electricity:
1) Why be a for-profit business as opposed to an NGO?
2) Could your vision be just too ambitious to succeed?
Our response to both of these questions is rooted in the breathtaking scope of the challenge D.light is trying to address: 1.6 billion people in the world do not have access to electricity, and hundreds of millions more only have intermittent electricity. As you might expect, these households also are among the poorest globally, and live in some of the most remote and least developed regions of the world. They make up the majority of what has become known as “the bottom of the pyramid.”
Living without electricity negates any possibility of accessing many of the products and technologies that are completely taken for granted in fully electrified, more affluent countries, such as cell phones, refrigerators, microwaves, fans, televisions, computers and light.
Light is something that comes to many of us so easily—literally by the flick of a switch—that we may have never thought about why it matters. Those who have never had access to bright, reliable, non-polluting electric light know very clearly how this limits their existing quality of life as well as their prospects for the future. Life without light means that everything stops when the sun goes down: no more working for the adults to make more income; no additional time for children to study and increase their learning; no opportunity to travel, to do housework, to socialize with family and friends.
Currently many households without electricity must use kerosene lanterns for light. Besides being extremely dim and ineffectual, kerosene lamps are also dangerous and expensive to maintain. Some households in Africa spend as much as $10 a month on kerosene oil, which can be one-third or more of their monthly income. In fact, the kerosene industry is a global behemoth earning $38 billion per year.
So the beginning of the response to the first question posed above is that a market for affordable, alternative lighting solutions to kerosene exists. Families, especially extremely poor families, are already spending a huge amount of their income on light and other energy-related needs. In our field research around the world, we have consistently heard from families who believe that bright, reliable light is important for their economic and educational prospects, and they are willing to pay for it.
For D.light, the existence of this market is a platform for us to accomplish our social mission of enabling families without access to electricity to have the same quality of life as those with electricity. By setting ourselves up to earn a continuous, and hopefully growing, stream of revenue, we are poised to be sustainable but also immensely scalable. Our vision—which prompted the second question above—is to become the world leader in consumer products for families without electricity. We hope one day to be the first social enterprise ever to go public.
But it’s not just about the profits: Being a for-profit company makes us accountable in ways that make our business stronger and our products better. We are accountable to our top-notch Silicon Valley and Indian investors, who help us run more efficiently and effectively, whittling down unnecessary costs while developing strong processes and hiring excellent staff. We are accountable to our customers, who are empowered to vote through their purchasing decisions whether or not they see our products as meeting their needs at a price they can afford. We also constantly need to push the envelope in terms of distribution and after sales service in developing world markets, because it is imperative that the D.light brand be synonymous with quality at every step of the customer experience.
Our latest product, the Kiran, is a great example of what a for-profit business with a strong social mission can accomplish. As the world’s most affordable quality solar lantern, the development of the Kiran was possible because we didn’t just want to create something good; we wanted to design the best low-cost solar lantern available in the world. Our VC investment gave us the capital to build an excellent product design team, who diligently spent time with potential customers in India and Africa, and came away with a very clear understanding of how this product could be highly functional, attractive, and affordable for our customers. The exceptional demand that we’ve seen for the product from all corners of the globe since its October 2009 launch undoubtedly communicates that we have designed something that is unique and an excellent value.
Perhaps it would help to look at the alternative: Prior to D.light’s arrival on the scene, there have been quite a few admirable and extremely well-intentioned efforts to provide solar lighting to households in developing countries, mostly driven by aid or development agencies. This seemed to be the natural order of things, as the goal was to make and distribute products that would have a high social benefit for extremely poor households in developing countries.
But there were a few challenges inherent to the model: Because the cost and design of the products were driven more by donation dollars than by what end users could afford, the products ended up being overdesigned and extremely expensive, ranging from $50-$100, well out of the range of what families could afford on their own. The other obvious challenge was that, once the funds dried up, the projects came to a grinding halt and no additional families could be helped. As a result, all of these efforts combined, spanning more than a decade, have only made a small dent in addressing lighting needs for the 1.6 billion people without access to electricity.
In contrast, in less than three years of operation, D.light has opened four field offices across two continents. We have launched an entire product line of solar lighting products at various price points, all meticulously designed and manufactured specifically for the needs of rural households in developing countries. As of the end of February 2010, we have sold hundreds of thousands of units in over 30 countries around the world, improving the lives of at least 1 million people.
Granted, this is still only a fraction of the potential customers we want to serve. Which is why we have to dream big. To be a company that serves over 1 billion customers, we have to be a truly global company that has the drive, talent, and resources to design and distribute excellent products at affordable prices. We want to develop more innovative products; increase our distribution reach in depth and breadth worldwide; broaden our servicing and maintenance infrastructure to redefine customer service in BOP markets; prove that the social enterprise model definitively works.
Why dream so big? Because only then can we improve the quality of life for 1.6 billion people, and by so doing, we can change the world.