How This Entrepreneur Is Turning a Profit in Developing Countries
In The Business of Good, serial and social entrepreneur Jason Haber intertwines case studies and anecdotes that show how social entrepreneurship is creating jobs, growing the economy, and ultimately changing the world. In this edited excerpt, Haber tells the story of one entrepreneur who figured out how to help the developing world while creating a profitable business for himself and his partner.
No matter the sector, business opportunities are now ripe in the Base of the Pyramid (BoP) -- the largest and poorest worldwide population. The only question is who will harvest them. D.light cofounder Sam Goldman intends for it to shine on 100 million people by the start of the next decade,
Goldman’s imagination was sparked by kerosene. In the developing world, this combustible hydrocarbon is frequently found in the home for everyday uses, including lighting. Goldman was working in the Peace Corps in Benin, Africa, when he witnessed firsthand the hazards of kerosene. Upon returning to the village one day, he saw a boy covered in leaves and herbs who had third-degree burns all over his body. In the darkness of the house, he had accidentally knocked over some kerosene, it became combustible, and the resulting fire caused the burns. It could have been worse -- the neighbors’ house was made of mud, not straw, so the fire didn’t engulf the home and put the village at risk.
Goldman was bothered by the heavy amount of kerosene use in the village. He figured there had to be a better, safer way for villagers to light their homes and saw an opportunity for a business that could provide this alternative. “I’d been writing companies in the U.S. and Europe that had been producing LED headlamps or other battery-powered LED products to say ‘Hey, there is a massive market here. How can we do business together? I’ll be your distributor!’ ” Not one company bothered to respond.
So he started researching alternative lighting sources. He experimented with an LED and stopped using kerosene altogether. It changed his life in Africa. People in the village asked where they could get the light and how much it cost. Goldman knew this was more than a good idea -- this was a business.
Over the years, he had witnessed the huge amount of money thrown into the developing world in the form of aid. While some of it was helpful, it was hardly efficient, and any change it brought was slow moving. What brought powerful and lasting change was capitalism.
“When you become much more free market and capitalistic, things change so fast,” he says. “[I knew] it was going to happen one way or another, and we could do it properly so it would have the most benefit for the poor and vulnerable.”
Goldman returned to the U.S. and enrolled in Stanford’s Entrepreneurial Design for Extreme Affordability class. There he met Ned Tozun, and together they committed themselves to making a solar product that would provide a safe, clean, and affordable solution to those living in the BoP with their new venture, D.light.
This was an enormous undertaking. First, the product didn’t exist. D.light would need to create an affordable device that consumers would spend their hard-earned money on. Second, the category didn’t exist. There was no such thing as a safe lighting alternative market. Third, the brand didn’t exist. But by overdelivering on a great product, D.light felt it could overcome those hurdles. As Goldman explains, “What we’ve done that nobody else had cracked was make a sub $10 product that has unbelievable quality and destroys the current alternative, and do all the things you need to do to get them to people to touch, feel, and use the product.”
Kerosene isn’t cheap, and it isn’t even a great light source but two billion people rely on it as a light source. Where some might see an intractable problem, D.light saw a market. In a marvelous feat of engineering, in 2008, D.light brought to market solar lanterns that were durable, powerful, and beautifully designed.
The market reaction was powerful -- the demand for D.light’s array of solar products has been insatiable. The company has more than 51 million customers in over 60 countries. Thirteen million school-aged children now have solar-powered lighting for reading. The net savings to its customers, from using D.light products instead of traditional ones, is more than $1.8 billion. Replacing kerosene with solar has also prevented the release of more than 4 million tons of carbon monoxide into the atmosphere.
There’s a simple element to D.light’s product that helped the company grow so quickly. It was selling light. “The first day you take it home, you realize the benefits, and they’re obvious,” Goldman says. The life improvement is abundantly clear. It isn’t like changing a water system and then telling someone they won’t get sick later or bringing a new curriculum into a school so the child will learn a vocation. This product provides instant gratification and validation. This advantage helped the company grow, as did its other, equally important advantage: timing.
Everything came together at precisely the right moment for D.light. LED prices dropped. Solar panel prices dropped. Battery prices dropped. “We are in the perfect market,” Goldman says. “We had this technology convergence happen for totally separate reasons, exactly at the time that the social enterprise space exploded.”
Most of D.light’s customers aren’t used to being consumers. Many grow their own food and haven’t entered the global economy. But that’s starting to change. Not only are they now becoming consumers, but they’re also becoming smart consumers with the ability to purchase products that are safe and beneficial for their lives.
While attending the Global Entrepreneurship Summit in Kenya during summer 2015, President Obama declared, “Africa is on the move.” After delivering his remarks, he met with several social entrepreneurs, including Goldman, who gave him a demonstration of the D.light solar lamps. “With you right here in Kenya, we are launching a game changer,” Goldman said to the president when he approached the D.light demonstration booth outside the summit. He held up a rugged square-shaped product and gave it to President Obama. “It’s called the A-1. It’s small; it’s tough. You can drive a car over it; you can throw it off the White House roof.”
“Oh, I’m not going to do that,” quipped the president, who marveled at the size and strength of the device. “And this will last me all through the night?” he asked Goldman, who assured him it would.
D.light is already more than halfway to its 2020 goal of transforming 100 million lives in the developing world. Transformative change often involves introducing a new product or service to the developing world. Other times it entails bringing products to the developed world at the hands of highly skilled workers in the developing world. By serving as a global matchmaker of social change and innovation, one nonprofit is taking artisan empowerment to a whole new level.