20 The Data-Driven Countdown Clock to End Extreme Poverty

20 The Data-Driven Countdown Clock to End Extreme Poverty

Did you know 1.1 people escape poverty every second? The World Poverty Clock uses data to countdown toward Global Goal #1, no poverty. 

Episode Summary

In this episode, we talk with Kris Hamel, Chief Operating Officer at World Data Lab. World Data Lab sources high-quality data and then makes the data come alive in the form of interactive tools, such as the World Poverty Clock. Here’s a podcast summary:

  • 1:45 What is the mission of World Data Lab?
  • 8:15 What is WorldPoverty.io, and why did you join World Data Lab?
  • 13:00 Why did you choose Global Goal #1?
  • 14:50 What is the current state of poverty and how can we remove it?
  • 18:30 How does the tech work?
  • 14:45 How does the business model work for World Data Lab?
  • 27:50 What are some of your biggest 90-day challenges?
  • 32:00 What do you see for the future of impact data in general?
  • 36:30 How can someone get involved?

We’ll focus on how World Data Lab addresses Global Goal #1, no poverty. At worldpoverty.io you can see a real-time estimated number of people living in extreme poverty. Listen in if you’re interested in learning more about interactive data tools and how to help eradicate poverty. 💯

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The Mission

World Data Lab is a social enterprise operating out of Austria. They are set up to do 2 things:

  1. Income: How much do people earn?
  2. Demography: Where are people likely to live?

“We view these 2 domains as the two biggest questions people will ask themselves, so governments and development organizations will be interested in this data.” 

That’s why the data is important. As World Data Lab sources high-quality data internationally, their job is to get the data peer-reviewed and then make it visual and simple to understand. Their poverty clock shows how many people are living in extreme poverty every single day. You can actually see animated little people escaping poverty, and how close we are to increase the “escape rate” from 1.1 people to 1.6 people per second, which is the rate that would have us reach Global Goal #1 by 2030: to reduce poverty from 8% to 6% of the global population.

“No one can credibly talk about trying to solve SDG #1 (no poverty) or any of the SDG’s if we don’t know the reality of the current situation or the likely future situation… we can design development interventions to try to solve what’s likely to happen. So that’s what our maps give you.”

Kris’ Story

Kris has worked in the development space for 15 years, and worked as a project economist at the World Bank Group. He did infrastructure projects like hydroelectric dams and finance projects to fund them. As he spent time around people with the influence and power over governments, Kris got interested in how best to make a difference.

He then moved to work with the UN on more grassroots initiatives to support marginalized people. Kris was able to see the difference between how to make an impact through large intermediary organizations, and how to make a difference from the bottom up.

He concluded that the real currency is through data “it’s most important give people access to data and help them use data to help them make decisions.”

Why Global Goal #1?

Here are the reasons World Data Lab chose to tackle Global Goal #1: No Poverty:

  • It is a quantified, specific goal that can be tracked
  • Tackling this goal will impact multiple other Global Goals dramatically
  • We can use data on this goal, whereas other goals are more aspirational or broad and less quantifiable.

However, we’re not quite on track to reach the goal by 2030:

  • Currently, there are 630 million people on the planet who make less than $1 per day
  • By 2030 it will still be around 415 million. That is progress, but it’s far from eradicating poverty.
  • Asia will eradicate extreme poverty as a region by 2030, which is huge. Extreme poverty is people making less than $1 per day.
  • So, extreme poverty will be isolated to Africa. The good news is, we can target very specific areas of development as organizations with an aid budget.

“The thing we’re trying to do now with the poverty clock is to get to the next level… we want to tell you which countries in which regions need the most targeted aid.” The data becomes a critical decision-making tool to address poverty where it counts.

The Tech

Kris sees the tech as a 2-step process.

  1. Advance the data and tech familiarity and usage as a 20th-century phenomenon – with visual data clocks and easy-to-read dashboards. They intend to use the data available now and design the best use cases to collect and show it.
  2. Gather data more efficiently. Move from surveys as the sole-source of information and use more reliable and granular techniques to gather information, like satellites and sensors.

Kris shares that gathering and showing data has been a political issue in the past. Governments want to allocate aid funding based on political preferences rather than where the aid was most needed. So as data collection and distribution improves, the politics become less of a block to accomplishing Global Goals.

Sustainability

When developing the poverty clock, it has been important to create a sustainable business model to keep the tech up to date and drive traffic to the website. So, the World Data Lab partners with organizations who find this data valuable.

In the next 90 days, the World Data Lab has 2 goals:

  1. To go deeper than just what survey data can provide.

“What we really want to do is go down to the village level. So our challenges are developing new methods to process satellite imagery data – teach machines how to recognize different attributes in a daylight picture.”

2. Develop games where people upload pictures and information that will crowdsource data.

“We’ve got the platform, now we can improve the credibility of the data and the visual maps we’re working with.”

What’s it going to take to get to 1.6 escape rate (people per second)?

Kris says that the biggest gamechanger for poverty actually isn’t economic growth. “Another place to look is human capital – the extent to which education can be focused on, and transitioning graduates with skills into jobs – that will have the most direct impact on poverty and infrastructure.”

To get involved:

  1. Read the methodology and send feedback.
  2. Go to the world poverty clock and drill down on the country, and check the numbers.
  3. Become an affiliate partner to represent World Data Lab locally, and help develop the next data tools. Contact them at hello@worlddata.io.

Takeaways

Chandler shares his top takeaways at the end of the show:

  1. The role of credible data in society. “It’s tough to know the real information and find legitimate numbers from credible sources about the Global Goals. I love the world data labs put the world poverty clock together and they’re going to expand to other SDGs.”
  2. As a social entrepreneur “I gotta say my favorite part about this tool is just seeing the real numbers behind these grand challenges.”
  3. Asking the right questions. As Kris mentioned, with the current solutions we have as a planet, we’re behind pace to eradicate extreme poverty off the planet by 2030. So, that means there’s a gap in the marketplace. Here are some questions to close that gap:
    1. Who are the top players?
    2. What solutions are out there?
    3. What are the top solutions that have the most leverage?
    4. What do they need to scale faster?
    5. What does your mind think about?
    6. How does the data change the way you see your business if you’re working to tackle global goal #1?
19 Spring: The Startup Growth Company Behind 350 Impact Entrepreneurs

19 Spring: The Startup Growth Company Behind 350 Impact Entrepreneurs

Spring has helped 700 entrepreneurs launch over 350 business globally. In this episode, we talk to Co-Founder and CEO Kieth Ippel to hear how Spring’s growth programs work.

Episode Summary

Keith Ippel is the Co-Founder and CEO of Spring. Spring helps social entrepreneurs make an impact with their Incubator, Accelerator, Peer to Peer learning network, and their Funding Roundtables. Here’s what we cover:

  • 2:20 How Spring started
  • 3:30 Spring has worked with a LOT of entrepreneurs… how?
  • 5:45 What does it take to start a social venture?
  • 15:30 What are the top lessons Keith has learned?
  • 26:45 Keith’s proudest company wins
  • 37:30 Impact investing tips and the Global Goals

Spring is taking on Global Goal #8, decent work and economic growth. Listen in to hear some of the top lessons learned while working with these social entrepreneurs, and the key things to know as you look to raise for your social venture.

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Keith shares what it takes to start a social venture, and what Spring looks for in entrepreneurs they want to work with.

“We’re looking for entrepreneurs who are highly inquisitive, sharp, have a trememndous amount of hustle, are coachable, are able to articulate their why, and understand that they’ll need to create some white space in their industry in order to create growth. Our heart is really for people who want to change the world… it requires a deeper resillience to get impact-driven products and services to the world.”

How Spring’s Programs Work

Spring’s programs are set up to work locally in the cities they have a presence in, and they are headquartered in Vancouver.

  • Incubation: Pre-launch, idea validation, setting the path to launch. 6-12 weeks. Guest speaker and teaching heavy, classic models.
  • Acceleration: Post-launch, helping people prepare for scale and capital raising. 3-6 months. Mentoring and capital raising education.
  • Funding Roundtables: Educating impact entrepreneurs to get the check.

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Finding Success in Fundraising Rounds

Kieth shares with us that the biggest gap they are trying to fill for social ventures is targeting the right impact investors.

“Our entrepreneurs are good at target marketing for their customers, but not so much for investors. Most investors have criteria for who they are looking for.”

The rest, he says, is helping them get the paperwork right. How to create a cap table, how to break down and manage a due diligence folder, how to do a negotiation and ultimately how to get 8-12 investors to sign the same deal.

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Should We Pre-Sell? Or Go for Funding?

“That is the million dollar question!” Kieth says,

When it comes to raising money for our business, there are several ways we can go.

  1. Our own back pocket
  2. Friends and family
  3. Pre-selling
  4. Selling shares of your company

Selling shares of your company is expensive, especially if you don’t have revenue or credibility data. Kieth advises to get all of that data together to prove that you can get users, understand your key metrics, grow a team and company, and prove your model. “That will make it easier to find the right investors for you, too,” he says.

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Top Lessons from Working with Social Entrepreneurs

  1. The paperwork is universal. These are the four main ways investors fund a business.
    1. Common shares
    2. Convertible notes
    3. Safe agreements
    4. Preferred share deals

The entrepreneur should be agnostic to what type the investor chooses. Each one can be great or terrible for a company, depending on how the terms are set up.

2. Be cross-border fearless about finding the right investor.

“You’ve said the most important thing: raising money is a business. It requires a sales process. Run it like a business. Run it like a funnel.”

He explains, “There’s a top of funnel, there’s stages that you go through with gates, you’ll need to ask for 10x what you need at the top of the funnel in order to get what you need at the bottom. And frankly, investors value being treated that way, because it increases the communication and efficiency of the deal.”

Better to Build an MVP or Fundraise Right Away?

“The more that you can prove, the more confidence you’ll have to go raise as an entrepreneur.”

At the end of the day, Kieth says, if you’re working under a million dollars of revenue then the investor can only invest in you. After the first meeting, all other follow up meetings will be all about

  1. Can I trust you and your team with my money?
  2. Are you asking smart questions?
  3. Are you adaptable?
  4. Are you showing progress?

So, the more that you can push to MVP, they more you’re showing that you and your team are capable, adaptable, and pushing toward the finish like. You have to display your resilience and perseverence towards that. Sometimes a landing page with an email signup to get a million interested buyers!!

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The No-Fail Investor Trust Plan

Kieth says 50% of the preparation is for the first meeting. The following 50% is planning for the 3-6 months after the first meeting to the next meeting, in order to show maximum progress and exceed your investors’ expectations.

So, plan for your first meeting with an appropriate deck and sales pitch training. Then, plan your growth stages between the first meeting and second to prove your progress.

And, how can you get to the MVP as cheaply and quickly as possible? It’s not about how to do it all, just get to MVP with less time and less money and you will succeed. The more money you have leftover, the more time and margin you have to adapt.

“Apple computer started in a garage with 2 guys. If they can do that, you can.”

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Which companies is Spring Super Proud of?

  1. Social Nature: transforming the way people get food. 

Anna was lazer focused on getting her ideal investor, and the 3-6 month plan to keep investors engaged and invested.

2. Nada: the zero-waste grocery store. 

This grocery store has an underlying platform that could enable all grocery stores to strip all consumer plastic waste. They were strategic and balanced their raise across multiple platforms. They took loans, won a contest, did a killer crowdfunding campaign, and raised several good investment rounds as well.

“The best rounds with the highest investment have all been female founders. They are incredible at preparing ahead. They know their stuff when they go in. And they’re more natural in sharing their impact WHY. For all the female founders listening to this, go for it. And here’s a challenge for the men: take some best practices from the women around you.”

Another example is Emily with LegWorks, who was fearless about being cross-border with her investors and being prepared for rounds. They are now able to sell their products globally.

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Growing Impact Investing

“Human nature is hard-wired to make the world a better place.”

Kieth says what works is to get rid of the term impact. Smart investing isn’t some exclusive thing to do with money, Kieth says, so to change the terminology will lower the entry and remove the cognitive bias to make impact investing mainstream.

Kieth emphasizes telling the success stories of impact companies and investment rounds to show the world of investors and partners that the “impact sector” is not only viable but worth being personally involved as a player. Telling the success stories captivates the market who still thinks traditional philanthropy is the only way to make impact.

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Impact Investing and the Global Goals

In order to really tackle the Global Goals, Kieth says, it will take more collaboration. Most of the companies Spring works with have no idea how many countries and markets they could impact, if they were fearless about going cross border for customers and partners and teams.

“My encouragement for investors is to know that cross-border deals are going on every day. Set aside a part of your portfolio for Cambodia, Belgrade, Canada… wherever you find values-aligned opportunities. That’s how we’re going to change the world.”

Takeaways

  1. Your investors are customers as well. They need to align with your values because they’re buying the future potential of your company.
  2. Build an ideal investor avatar, and be ready to turn down investors who are not aligned.

Thanks for reading and listening – please COMMENT with the biggest questions you’ve had about starting a social venture, and check out spring.is to see more of Spring’s awesome impact companies.

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18 Empowering and Employing Talent in Africa

18 Empowering and Employing Talent in Africa

The average age in Uganda is 16 years old, and the unemployment rate is over 60%. Nationally, 400,000 people graduate university each year in Africa while only 80-100k jobs open up! In this episode, we will talk about the online platform that closes that graduate-to-career gap.

Episode Summary

We talk with Eddy Vaisberg, the COO of Fuzu. Fuzu is a career platform where 500k active users can discover their talent, get the skills they need to fully unleash their potential and find a career they love. We will talk about:

  • 3:00 The unemployment challenge
  • 7:30 How Fuzu aims to help graduates and employers
  • 26:30 The technology behind Fuzu
  • 46:30 The business model
  • 48:45 The global goals they are tackling

Find out how Fuzu tackles 3 Global Goals: Global Goal #8, decent work and economic growth for all, Global Goal #10, reducing inequalities, and Global Goal #1 of taking on poverty through the power of jobs. Listen and enjoy!

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The Unemployment Issue

Eddy explains the numbers of the education to job-entry gap.

“What you’re looking at is a bunch of young people coming into their own, looking over the next 5-10 years to start building their careers to push the continent forward. But at the same time we don’t have the ecosystem to support them yet. What you see is this great push toward education… however, unfortunatly, the quality of that education is not at the level of the States, or Europe, or Asia. So when they come out of higer education they are not ready to jump into the job market. 70-80% of these graduates are not ready to contribute. And there’s nothing that bridges that gap between education and unemployment.”

Here are some of the stats:

  • Kenya: 40% unemployment for the last 3 years of graduates
  • Uganda: 65% unemployment for recent graduates
  • 400k people graduating in Uganda, 1% of the population per year. But only 80-100k jobs open up each year.

Eddy talks about the infrastructure in the US, Europe and Asia to get graduates into jobs, like mentors, peer groups, career counseling, and internships. Africans need further training before they can even go into an internship, and African companies are only accepting 3-5 years of experience.

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How Fuzu Closes the Gap

Here are some of the initiatives happening to help Africans close this employment gap:

  • Large companies like Microsoft running intensive trainings
  • Government and organizations looking at this problem intensively

But even with many initiatives, the scale of the education-to-employment gap poses the biggest problem.

“750 million people will enter the job force in the next 25 years. These initiatives can’t provide the tools and solutions that can solve this problem across the millions. For us it’s about how we support millions of aspiring junior professionals with tools, career advice, and mentorship to address the problem for Africa.”

Fuzu is intended to be a deep, personalized, catered technology experience to enrich the job seeking journey and unleash the potential of millions of graduates.

A Digital Career Companion

Here’s what will make Fuzu stick:

  • Hosting the best job openings
  • Contributing the best career content: how to write an email, how to do an interview, how to drive a discussion or lead a meeting
  • Supplementing the experiential knowledge that is lost in multiple-choice-test style education

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Fuzu and the Global Goals

Eddy emphasizes equal opportunity as an important focus for Fuzu (Global Goal #5). In oder to address the multiple Global Goals they care about, Eddy says that the platform must be the most engaging and opportunity-rich platform experience available.

“We’re trying to leverage all of the analytics to drive a merit-based hiring approach. In order for us to drive our mission, to have graduates and junior professionals utilize their potential and become a leader in the continent by providing the best job opportunities. So what we do is we give employers access to their personality, their talents and core competencies, and their experience.”

The user experience and analytics on Fuzu addresses 2 problems:

  1. Eases the unknown element of recent graduate hiring
  2. Mitigates the referral network approach of hiring – which is exacerbated by the tribe network and gender biases in Africa

“This way we force our employers to hire on merit, so everyone has an equal opportunity to get a great job.”

How It Works

  1. The employer creates a job search with detailed skills and personality requests
  2. The platform scrapes all 500k users to find matches
  3. Fuzu reaches out to the top 1000 potentials for the job by email
  4. Users apply through the platform
  5. The platform ranks applicants from 1-100 based on the accuracy of matching
  6. Employers review applications and select a new employee

“You don’t have bus drivers applying to be your accounting manager, or 5-year marketing managers applying for entry level customer service positions.”

The Business Model

Fuzu makes the platform accessible to anyone to use the tools and take the courses. For the employers, the platform has a freemium model, and for applicants, there are certain paid features like creating a CV.

“We don’t want to limit anyone from dreaming, growing, or being found. Most of the monetization is on the employers side, where we have large companies on an annual contract to ingrain us into their hiring process, and manage the hundreds of hires they engage per year.”

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Scaling Fuzu

Here are Fuzu’s main points of focus to scale:

  1. Market expansion, to disrupt and enter a market ready for a new solution. This means going into West Africa, South Africa, and other areas. “You can only enter a market once. So we’ve got to make a big splash,” Eddy says.
  2. Enriching the experience to become the #1 career companion and CRM.

“We see Fuzu as a tool for building the economies and create more people that are ready to make a contribution. It will become a self-fulfilling cycle of job creation… and we want to impact and touch as many people as possible.”

Takeaways

  1. Wow, the education system isn’t giving real-world skills! How do we decide how we’re educating youth?
  2. What is it going to take to change the education system?
  3. We can tackle poverty and economic development by equipping young people to stimulate the economy from the bottom up.

www.fuzu.com

17 Powering Africa Sustainably with Solar Mini-Grids

17 Powering Africa Sustainably with Solar Mini-Grids

600 million Africans do not have access to electricity, and most of them burn fossil fuels inside their homes. Is there a way to power off-grid homes and businesses sustainably?

The Green Mini-Grid Facility Kenya (GMG Kenya) provides grants and technical assistance to mini grid developers, to expand energy access to rural communities in Africa. In this episode, we talk with Nakul Sharma, a senior associate at I-Dev international and one of the lead managers of the Green Mini Grid Facility (GMG Facility Kenya) project.

 

Episode Summary

  • 5:00 What is the Goal of the GMG Project? | Find out how this company plans to get power to the pockets of homes and businesses who are not connected to a grid.
  • 11:30 Why is a Power Grid Important? | Find out what life is like off the power grid, and what it takes to get power to people who live on less than $4 per day.
  • 17:00 African Resources | Africa is the world’s largest geothermal resource, so why is expensive diesel fuel so popular?
  • 21:00 The Mini-Grid Solar Business Model | See how GMG Facility addresses the biggest problem in their market: demand for power.
  • 27:00 Maslow’s Hierarchy | Kenyans priorities food first, then education. But when they can save 25% of their daily income, priorities shift.
  • 36:45 A Business Model that Puts Itself Out of Business | With enough mini-grids, the governments and industry in Kenya will see rural areas as viable to connect to the grid. How will GMG Facilities stay in business?
  • 42:00 Global Goal #7: Clean Energy for All | Nakul asserts that although access to sustainable power is clearly in the future, it will take time.

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Most countries have a national electrification plan. This program was created to cover the communities that were not included in the program. Some are so rural that it isn’t economically feasible to add the communities to the grid.

The households they help are the lowest income households with no electricity access. They use kerosene and flashlights to operate at night and cook. The mini-grids use a standard solar or hydro technology, and 400-500 households and businesses can be powered.

Nakul says that if their company is successful, the mini-grids they create will create a larger grid and make the community viable to connect to the existing governmental grid. “Success for this sector means that we connect these communities to the larger grid.”

“So essentially, it is GMG Facility’s job to put ourselves out of business.”

GMG Facility also covers funding: they pay for 50 percent of the cost of the panels, batteries, and hardware. Then, they help the communities and businesses raise the remaining 50% to pay for the grid. The idea is to use the funding and the development to generate interest in the sector: developers, investors, and governmental interest in connecting these communities to the grid.

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Why is a Grid Important?

“What we’re seeing in the lowest end of that spectrum are some really cool innovations. What is the key issue for someone making less than $2 or $3 per day? It’s affordability.”

Nakul talks about a recent innovation in buying power in whatever increments you can purchase it, as you need it. So for agricultural communities where income is seasonal, they can buy power when they need it.

Previously, the lowest increment you could buy power was $0.50 per day, which is half to a quarter of the daily income. So, integrating a “pay as you go” business model was critical for affordability.

African Resources

The African continent doesn’t need more coal or dirty fossil fuel. “Kenya alone has the worlds largest geothermal resource currently because it sits on the rift valley. I don’t know the science of it but I know it creates a hell of a lot of steam.” Steam turbines create energy from these rifts as well as hydroelectric power from dams as electricity resources.

However, diesel is the most widely used resource in Africa. It’s both the dirtiest and the most expensive resource. Nakul is optimistic though that Africa has the most opportunity for using clean energy since so much is available at a lower price than diesel.

“A commercial and industrial stand-alone solar system for a business can produce power for $0.04-.07 per kilowatt hour, while diesel provides power at $0.40 per kilowatt hour. The general electric grid can provide power at about $0.15 pkh… So, the opportunity is enormous,” Nakul asserts.

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The Minigrid Solar Business Model

Affordability is the main deciding factor in the success of the mini-grid business model. Developers go from house to house collecting payments, and GMG Facility had to come up with a way for developers to be compensated dependably.

“When your power bill comes in, you also get the option to pay-as-you-go with credits in advance of the month. You can also use mobile money and pay with your phone. This way, when the mini-grid developer goes around and physically collects payments, he isn’t put off week after week when families cannot pay. Instead, they can pay with their phone or pay as they go in advance.”

Nakul shares the main driving question to the business model: “How do we create demand?” He says there are 2 models the company is looking at to answer these questions.

  1. Traditional model: developer driven. In this model, the developer finances the equipment teaches a business or family how to use the equipment, and manages the grid and the implementation.
  2. Enterprise-driven model: In this model, you look at a larger company (like an aquaculture company and see what they need. Then, you set up a mini-grid right next to that commercial complex to provide power to all of its related facilities. This way, the company provides 70% of the demand for the mini-grid to break even, and the remaining 30% of the profit comes from the demand for rural businesses and families.

 

Maslow’s Hierarchy

Those at the lowest income bracket in an emerging market have problems at the bottom of Maslow’s hierarchy – food, shelter, and

basic health. Nakul suggests that energy is a basic need for education, connection to the internet, and communication to generate income. As GMF has interviewed families though, they have found that they typical expenses priorities are food first, and then education expenses second. Since kerosene, diesel, or a flashlight are viable options when you’re living on less than $4-$5 per day, the demand for energy decreases as funds decrease.

But there are health repercussions of using kerosene. The oil burns and produces smoke that can cause asphyxiation in the lungs.

Nakul talks about the World Bank study to link the use of fossil fuels to deaths or health hazards. He says they couldn’t find strong evidence for the health risks, and therefore clean energy companies need to focus on the economic benefits.

“Kerosene costs 50 cents per day. A stand-alone solar home system costs 50 cents per day for only 420 days,” Nakul says. So after a bit more than a year, you own the system. Each system is good for about 20 years.

“We’re Putting Ourselves Out of Business”

Nakul creating a scaling strategy for a business model that will be irrelevant once it works: Once GMF successfully connects many smaller mini-grids to the larger grid, the mini-grid developers won’t be needed.

Nakul’s idea is that the developers will be the distribution channel for power from the main grid to get to the mini-grids across Africa.

“We already have the distribution structure, so let us supply it to the households.”

One of the problems, Nakul says, is that even when the grid arrives it isn’t as dependable as a larger city grid. Eventually using the mini-grids as power distributors from the main grid is a great way to mediate reliability and rural access problems.

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Global Goal #7: Clean Energy for All

“Africa is probably where India was 20 years ago.”

He says it’s a matter of time before off-grid communities will be connected to the grid. As technology costs go down over time, power will be more and more available to emerging markets and those who have never been able to pay for energy.

He also mentions the critical step of Government endorsement and funding of power into the commercial and private sectors. Nakul leaves us with a recommendation to get involved at a personal level in the clean energy sector through crowdfunding, so check out these crowdfunding sites:

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15 The High-Impact Tech Platform for Goods Transportation

15 The High-Impact Tech Platform for Goods Transportation

Lori Systems is a logistics coordination platform that connects Cargo Owners and Transportation in East Africa. Find out how the company addresses Global Goals 1, 8 and 9 in this episode.

Summary

In this episode, Chandler interviews Ron Okello, the head of product marketing and PR at Lori Systems. Ron shows us how Lori Systems solves a major economic problem in East Africa: the relative cost of moving goods across East Africa is one of the highest in the world.

  • 4:30 How the Platform Works | Lori Systems is a logistics coordination platform that seamlessly connects Cargo Owners and Transportation.
  • 13:30 Why Does the Data Matter? | With data on transporter reliability and costs, the company helps suppliers optimize their business.
  • 19:00 Business Model Insider | Ron talks about three pillars of their business: tech, operational excellence, and customer service.
  • 27:00 Tech in Africa – Who Will Survive? | Hear the two main industries ready for tech innovation in East Africa.
  • 32:30 Timeline for Exponential Technology | Ron expects exponential tech to come sooner than we think.
  • 40:45 Lowering Costs, Alleviating Poverty | Find out how problem-solving in the cost margins can shift a whole economy.

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Lori Systems was founded in 2016 by Joshua Adam Sandler, a South African Native and Harvard Alumni. When they saw the inefficiencies in the transportation industry, they created a platform to revolutionize logistics in Africa.

Platform features:

  • Manage invoicing and operations
  • Visibility of where the trucks are
  • Rates for product moves
  • Which cargo is coming and going, and the cost
  • Access to consistent cargo
  • Centralized control system and reliability enforcement
  • Consolidation of providers, products, trucks, and feedback on driver compliance
  • Journey and performance monitoring
  • Push notifications telling their driving habits and arrival times

Formerly, there was no certainty that trucks would show up when a company would call them to transport products. This way, the product companies and warehouses can dependably transport their products and optimize their business based on the data in the platform.

Getting from point A to B in East Africa is not as easy as ordering Uber Eats. Most cities in Africa have unmapped, unpaved areas between them. This makes driving and delivering product challenging.

“The driver is our number one priority. His compliance and reliability is important to us.”

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What do you do with the data?

“Every month we have a sit-down with our clients, and have a conversation about performance. We give feedback and they give feedback, based on the data. We better ourselves and also scale with the data.”

Lori Systems decreases the cost of goods for their customers by 15% just in lowering transport costs. “When we do this we will be able to realize more of the global goals – bettering economies and reducing poverty.”

Lori Systems address the Economic Development Global Goal by providing transporters consistent wages, and also they address poverty by reducing the cost to move products.

“The biggest goal for me would be Industry Innovation and Infrastructure. We looked at the challenges within that goal, and we come in to bring the innovation to streamline the process and make it more efficient.”

Business Model Insider

“We are centered in 3 pillars. We have technology to drive decision making, Operational excellence to operate teams, and customer service – which is the biggest one if you ask me. The beauty with Lori systems is that 33% of a move cost goes into fuel. And how we solved that problem is through fuel financing. We provide them with fuel to execute the job, and when they come back they give us the invoice. Then, we handle the documents with the clients and ask for a contract.”

This means it’s an all-around win for the transporters. They have fuel, insurance and access to consistent cargo.

“We map out your future for you. On your journeys we are looking for your return journeys, or move you from town B to town C because we have a new customer there. We always make sure that your trucks are constantly moving. I can’t begin to stress how much time we save the transporters.”

Tech in Africa – Who Will Survive?

“Tech cannot solve all our problems. It needs to be supported by people.”

Ron talks about crowdsourcing solutions to the industry, since it’s an industry “build on relationships.” He sees opportunity in the growing workforce and the government’s support of indigenous companies.

Ron suggests that any tech company oriented toward the Global Goals will be more likely to make it. Agriculture and logistics will especially thrive in African markets.

Another area of tech opportunity is tech for finance. Any technology that can help create access to capital or make fund transfer simpler will go over well.

“In a nutshell, as long as its a problem that you can solve, the industry is ripe and open to solutions.”

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Timeline for Exponential Technology

Ron explains that on the financial side, exponential tech could arrive “sooner than we think.” Blockchain is growing in Africa since transparency is an issue in developing markets. “Self-driving cars may take awhile,” he says, since the infrastructure to support exponential tech in transportation is still developing.

Trust is a key factor in adopting exponential tech, Ron says, even if the market is ready. Moving from carrying groceries on your head to riding a hoverboard is an unlikely leap.

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Expanding Impact

As far as Lori’s expansion, Ron talks about moving into Uganda next. Expanding the company requires partnerships and tackling the infrastructure issues in the country. How will they bank? What roads will they use? Though Lori will have the advantage of access to landlocked ports, they will have to create partnerships to allow imports and navigate the existing infrastructure.

Lowering Costs, Alleviating Poverty

Though costs of goods increase as their source companies move more inland, Lori is able to maintain consistent pricing because of the services they offer. Ron says it costs 4x the amount to move product in Africa as compared to the United States.

Takeaways:

  • Moving things is expensive! Margins are a critical problem-solving opportunity in an emerging market.
  • What margins have you planned for in creating a business in an emerging market? How will increasing volume impact those prices and margins?

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14 Building Business in Kenya with Mobile Money

14 Building Business in Kenya with Mobile Money

The Kenyan manager of Metta shares about the business climate in Nairobi and talks about how technology improves the emerging markets by solving simple problems.

Summary

  • 6:45 What is the startup landscape in Nairobi Kenya? The small population and scarcity of talent and resources impact which businesses thrive.
  • 18:45 What is M-Pesa and why is it such a big deal? M-Pesa is mobile money sent through text. It makes business safer and easier for Kenyans.
  • 26:00 What are the biggest challenges to starting a business in Nairobi? Companies have to be solving an immediate, critical problem and avoid government corruption.
  • 31:00 How does technology impact building a company in this ecosystem? The technologies that work are very simple and they solve a pertinent problem.
  • 37:30 What will it take for people to get access to basic needs and address the Global Goals? Maurice talks about social impact companies that give people jobs while they address systemic problems.

Full Post

Maurice Starts with the vision of Metta:
All entrepreneurs to have an equal opportunity and access to resources across the globe. To do that, we form partnerships in the middle east, Asia and Africa so that by 2025 each of those markets are connected and able to move from a nascent to an established entrepreneurs ecosystem.

Currently, Metta is located in Hong Kong and Nairobi. They will be starting in Bali and Thailand soon, and they have representatives in 14 countries. Through the virtual platform, their members can log in and meet each other.

“If I was to predict, I would say probably South America will be next for us.”

Metta is not just a place where entrepreneurs come together, but a place for them to find resources, community, and mentorship.

“We are limited in terms of mentorship to grow businesses into unicorns, and limited in terms of investment opportunities. We’re also limited in terms of finding talent. …So, we’re offering something different than coworking spaces and accelerators. We’re offering shared resources.

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Business in Nairobi

“The difficulty you face in East Africa is that we are a very small population. Within even the small market the people are at the bottom of the pyramid.”

Maurice talks about the market in detail: “Since technology innovations are new to the market, there’s very little investment in those projects in Kenya.” Many of the people are involved in NGOs and are refugees from other countries. So, the mentality, Maurice says, is “Gimme gimme gimme.” Startups and investment are a new conversation.

What does success look like for startups in Africa?

The successful companies, Maurice says, are companies who don’t mind sharing. Also, they are the ones creating solutions for people living on $1 per day or less. The individual entrepreneurs who are successful are the ones who take meetings and go to events frequently. They spend money to get talent, too.

“They do spend an arm and a leg to get the talent they need. But you need a good team who can hold fort while you go to brave the fronts of getting investment.”

First World Problems

Maurice teases about first world problems that Americans deal with versus survival problems that Africans deal with. “Do we even have a road?” he laughs.

It is easier for an expat to start a business in Kenya because they can look at what businesses worked in their country, and bring those same business models back to Kenya.

The Benefits of Starting a Business in Kenya

Maurice lists the benefits for founders in Kenya:

  • Payments are transmitted so quickly through M-Pesa
  • The weather is good and Nairobi is beautiful
  • Kenya needs businesses and startups
  • Most Kenyans speak 3-4 languages. English, Swahili, language from schooling (Japanese, French, etc) and one of the 14 tribe languages.
  • Moderately expensive to live there, but more stable than neighboring cities and countries.
  • Many expats and company headquarters based in Nairobi as well.

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M-Pesa

Here’s the basic outline of the power of M-Pesa:
  • No internet access needed
  • Money transfers through text
  • There are 100k agents or dresser-sized ATM’s to get money
  • Banks are now partnering with M-Pesa to put your money in your M-Pesa wallet

Interestingly, there are still 70-80% cash transactions in Kenya, but the technology is spreading rapidly. M-Pesa was a major need in Kenya because opening a bank used to be for the rich. The minimum deposit for a bank account is $100, so it was too much to open and maintain a bank account for most Kenyans.

Also, carrying money is dangerous in underdeveloped countries. So M-Pesa provides a measure of safety.

Challenges of Doing Business in Nairobi

Maurice says that in order to be successful in Nairobi, you have to be solving an immediate, critical problem. He notes key areas that impact business growth in the country:

  • Security
  • Infrastructure
  • Addressing an immediate need
  • Avoiding corruption – caution when interfacing with the government

“Funny enough, we’ve had the most recent political assassinations of any country. That was an eye opener. Also, Europe is 35 years behind Silicon Valley, and Africa is 10 or 15 years behind Europe. But I think right now, it’s coming of age.”

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Do Tech Companies Survive in Emerging Markets?

“The fundamental thing people are forgetting is that you are solving a problem first, before you introduce the tech. So over here you find that the technologies that work are not that advanced. They are very simple and they solve a pertinent problem.”

Problems like “How to get milk to a place that has a lot of bananas” – these are the simple technologies that work in Kenya.

Blockchain has been recently introduced to address corruption in the government, and Maurice says that is a huge step. “It’s simple but very very key.”

As far as exponential technologies, Maurice says they are present and it’s a matter of time before they begin to spread. Adaptability is the issue, though. For example, in order for Uber to spread to Kenya, people have to know how to use Google Maps. Google Maps hasn’t been adopted yet, and the country isn’t well mapped. Once distribution, basic data, and familiarity with basic applications are established, exponential tech can grow. “10-20 years, I’d say,” says Maurice.

What It Will Take To Address the Global Goals

“It’s already started” Maurice says. He talks about social impact companies that give people jobs while they address systemic problems.

 

Takeaways

  1. M-Pesa: 30 million people rely on M-Pesa for their transactions through their flip phones.
  2. So, wherever you go, you’ve gotta have a financial foundation!
  3. M-Pesa addresses the corruption and banking problems that made starting a business next to impossible.

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