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FIP 60: David Auerbach Interviews Samir Ibrahim of SunCulture

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This week, Samir Ibrahim is David’s guest on the Finding Impact Podcast. Samir is CEO and Co-Founder of SunCulture which designs and sells solar-powered irrigation systems that make it cheaper and easier for farmers to grow fresh fruits and vegetables. This innovation has pioneered a system that delivers water directly to crop roots, increasing yield by 300% and reducing water usage by up to 90%. They are changing prospects for farmers across Kenya where only 4% of the land is currently under irrigation and yet over 80% of country is considered arid or semi arid and therefore unsuitable for purely rain-fed agriculture.

On this episode you’ll learn:

  • The importance of a “North Star” or guiding principles for your company. SunCulture’s fundamental goal is to increase household productivity. Fulfilling this goal for their customers is at the core of every decision that they make.
  • What problem are you trying to solve? Samir and his business partner asked themselves 3 questions before actively pursuing their business plan: 1) Does this make economic sense for a for-profit business? 2) Does this make economic sense for farmers? 3) Does the technology work? When they got a ‘Yes’’ to all 3 questions, they knew they were ready.
  • Are you ready to take a risk? Samir tells us about what it was like for him and his family when he made the decision to leave NYC and his comfortable job at PWC to move to East Africa and start SunCulture.
  • Do you have to decide between achieving bigger social impact vs. bigger returns? Samir tried not to separate commercial aspirations and social impact aspirations. His team focuses on running a business while simultaneously having as much impact as they can.
  • Samir tells us about the process of deciding on what type of customer SunCulture wanted to serve. SunCulture’s product is very expensive ($5000, which was half the price of competition, but nonetheless, very expensive). He gives the example of Tesla and how SunCulture tried to mimic their model. Start expensive, stay relevant, high-quality product, and overtime bring the price down.
  • How do you measure impact? Often founders and investors have very different metrics. Investors – How many widgets are you selling? Founders – How many jobs are we creating? Important that your investors’ values are aligned with yours.
  • Working with investors (as a co-founder) is a marriage. Don’t try and force relationships. Early compatibility is important and fundamental values must align.
  • Stick with your north star! Samir tells us about the importance of having your investors buy into the long-term view. Help paint the picture for them and wait for the right people.
  • When they were building their products they focused on: relevance -> quality -> affordability. In that order. For example, relevance – what does your customer need? Samir and his team didn’t have enough information to start this design process so they set out to answer this question first and foremost.
  • SunCulture is as customer centric as it gets. They didn’t have enough data points to know what was needed so they put a plan in place to get their data directly from farmers. What is relevant to a farmer? (How deep to you pull water from? How much water? What services? Etc.)
  • He admits they have learned a lot along the way. A big learning is that it is not responsible to let price drive specification. You need to let specification drive price. Investors often want you to make a product for a certain price point, but Samir warns that this is not how you build products that make sense for customers.
  • SunCulture is dedicated to building solutions for their customers with their customers. It’s important that their customers are actively engaged in this process.
  • SunCulture has built feedback loops with their customers in order to keep getting data. When it is decision time – you are not making the decision, but the customer is (based on the data and feedback that you have collected over time.) Important to create and invest in these channels to allow this dialogue to happen.
  • Path to success is through the customer. At the end of the day – Samir and his employees are not farming. His customers are using the products and they know what they need best!
  • If you are not close to your customer, you are going to have a hard time succeeding. It is important that everyone on your team feels this way too.

Links to Resources:

Connect with Samir:

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

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FIP 58: David Auerbach Interviews Premal Shah of Kiva

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Once again, David Auerbach takes the mic to find out from other social entrepreneurs how they go about making critical decisions. This week, Premal Shah of Kiva is David’s guest. Premal is President and Co-Founder of Kiva and is a long time friend and mentor of David. For the few who don’t know, Kiva is the world’s first online lending platform connecting online lenders to entrepreneurs across the globe. We’re honoured to have Premal on the show.

On this episode you’ll learn:

  • How Premal approached David when he was working at the Clinton Global Initiative, and how that first encounter contributed to an incredible chain of events that got Kiva on Oprah’s radar, and which gave Kiva the most impressive endorsement any organization could want.
  • We learn about Premal’s early life and the various insights on that journey that were motivating forces to him co-founding Kiva. One was working at PayPal for six years and seeing the unfolding opportunities of eCommerce. Another was how eBay, which was connecting two strangers to buy and sell items, was taking off worldwide.
  • Premal shares why he left PayPal to start Kiva, which he saw as a “can’t not do” idea.
  • David reflects that when the idea is so strong, and so “can’t not do”, doing it full time doesn’t seem risky at all. This insight has also been validated in David’s interview with Andrew Youn (FIP 56) and Lauren Russell Nkuranga (FIP 57).
  • David digs into how Kiva made the decision to offer 0% interest free loans instead of return seeking loans, which could have scaled Kiva much faster. Premal says “Scale for scale’s sake doesn’t necessarily mean impact”. Premal believes the major gap in the financing landscape is risk capital for social enterprises in the pioneer gap (see link below), who might be post-grant stage and pre-commercial.
  • He goes on to suggest that so-called impact investors seeking de-risked deals with 7% IRR are unwilling to invest in early-stage social enterprises. They made the loans 0% to position Kiva’s loans as over-performing donations not under-performing investments.
  • They formed this opinion over time. At the beginning, they simply wanted to build a website for a small group of people who wanted to invest in a small business on the other side of the world, without having to jump through many legal hoops that come with lending money for profit.
  • The framework they use at Kiva for evaluating big decisions is breadth x depth x duration. Breadth being number and types of businesses they invest in; depth being the level of impact the business is achieving with its solution i.e. the level of poverty they’re reaching with their product; duration being: can Kiva endure (or ‘sustainability’), and this last one relates to the decision on whether Kiva remains a purely philanthropic model or not, or something in between.
  • David digs into how Kiva made the decision to expand, which is a decision that every social enterprise faces at some point. Premal said they set out to determine whether the decision to expand into the US was growing the pie or dividing the pie. Since their research found that 2% of US philanthropy goes overseas, and they figured they were growing the users on Kiva, they might end up increasing the amount of philanthropy going overseas.
  • Premal mentions Jeff Bezos who refers to decisions as either one-way doors or two-way doors, in regards to decisions that you can’t go back on.
  • Most decisions can be made within predefined boundaries or frameworks, such as those given to portfolio managers which guide them in the decisions they’re permitted to make in their role. Other decisions are new and outside existing frameworks so need to be debated appropriately within the organization with the best available data at hand.
  • Premal admits to wishing he was more resolute in the past when making decisions and having the courage to say to those who disagree to feel they can leave if they’re not on board. But he feels it also helps to classify decisions as either one-way to two-way doors. Decisions that are part of an organization’s discovery are not final and can be validated by actual data. This compares to those that are ‘no going back’ type decisions, which are more difficult to make.
  • Premal recommends the book ’15 Commitments of Conscious Leadership’ to help you and colleagues get into the discovery mindset.
  • When there’s ambiguity in a decision, Premal suggests breaking the decision into smaller pieces. A big bet can be very costly, but if you break it into smaller parts, you can fail faster and cheaper.
  • In making decisions, the job of leaders is to get the team into the right mindset, referring to the mindset of discovery (in many cases) and getting away from the feeling that you have to be right.

Links to resources:

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What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

 

FIP 57: David Auerbach Interviews Lauren Russell Nkuranga of GET IT

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David Auerbach of Sanergy is on the mic again this week interviewing Lauren Russell Nkuranga, Founder and CEO of GET IT, a text-to-order model for food-service distribution in Rwanda. Lauren first moved to Rwanda in 2012 on assignment with the Nike Foundation where a three-month placement soon turned into a two-year placement. During her time in East Africa she saw so much opportunity for business in Rwanda, so when Nike asked her to return to the US she made the bold move to leave her job and pursue a business plan that she had been nursing since moving there. Lauren launched GET IT in 2014 and has been transforming food procurement and distribution in East Africa by connecting frontier-market farmers, producers, and manufacturers to formal markets.

On this episode you’ll learn:

  • Lauren’s path to founding GET IT – which started as a retail food service delivery model and quickly evolved.
  • The key for Lauren and her team was starting simple. Send an SMS, and food will arrive at their house. They sourced their food from farmers directly and connected them to formal markets.
  • Lauren started with $5000 and an idea – in the early days she was doing deliveries out of the back of her car trying to figure out the retail market on the fly.
  • When she introduced fresh fruits and vegetables to the catalog, Lauren noticed she was getting orders from restaurants, commercial kitchens and hotels in the area. She began asking chefs if there was anyone else doing this sort of thing for their industry. To her surprise, there wasn’t!
  • Lauren calls this an “invisible industry” as it was hard to see this gap from the outside looking in. She admits that she discovered this gap entirely by accident and takes us through the pros and cons of the retail market (families and individuals) vs. B2B (restaurants, commercial kitchens and hotels).
  • Retail model was cash based which she found to be messy and required more chasing for payments. If a customer found one bad avocado she would have to worry about them potentially never using her service ever again.
  • B2B model ended up working more smoothly. B2B clients could post-pay through invoices and digital payment. She also found that retention was smoother and orders were bigger and more consistent. It was easier to develop stronger relationships with restaurants and companies.
  • In discovering this new market, Lauren and her team had to change the way they talked about themselves as a company. They had to make an internal “pivot” though to outsiders their service was the same. David and Lauren have a good chat about how maybe it was less of a pivot and more of an evolution for GET IT.
  • Through all of this, they focused on the simple things and fine-tuned their logistics and operational capacity. They saw this as a way to differentiate themselves from any potential competition.
  • GET IT’s first major capital investment was in cold chain technology (aka a really really big fridge). At first, they would visit the farmers markets in the morning and deliver the food later that day. This would save their customer a trip to the farmer’s market, but not earn them a very a big margin. They found that they had to invest in the infrastructure in order to really differentiate themselves. Robust cold storage meant that they could buy in higher volume and have more straight forward logistics and fulfillment.
  • With this investment GET IT has been able to de-couple themselves from the grid – they can go 2 days without electricity and 5 months without city water! They are truly building a company that meets the need of the market.Their ability to face these challenges head-on are a big part of the reason why competition hasn’t been quick to move in and in part have led to deeper margins and better returns for GET IT!
  • Lauren shares how she “got her board on board” with her big ideas. The key for her was getting them to understand the day-to day. She had board members in with her fulfilment team filling orders to try and understand the true operational challenges that they faced. Operations and logistics are the core of their model and she doesn’t want her board to lose sight of that.
  • Usually you want these board visits to go perfectly… but David shares that when small problems arise it is more reflective the challenges a company faces.
  • Lauren talks about expanding – they want to make sure that they are doing a really great job in one place before they considering moving into the next market. It is important to her to have a really tight model. Start small, and stay focussed.
  • Lauren wants to bring everyone on her team on the long term journey and has toyed with different ways to motivate various people. She has found that shift workers and middle management are more motivated by immediate and short term goals, however, senior managers are motivated by the bigger picture goals and moving into new markets.
  • Lauren is a big believer in getting ahead of issues before they are issues. Listen to your gut!
  • Lastly, Lauren couldn’t do what she does without her weekly calls with her board. She says these 15-30 minute check-in are really helpful to her and her team. They are able to talk through problems and day-to-day issues before they have time to grow.

Links to resources:

Connect with Lauren:

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

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FIP 56: David Auerbach Interviews Andrew Youn of One Acre Fund

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David Auerbach of Sanergy has taken the mic this week, not only to give Andy a vacation after a full year of non-stop podcasting but also to dig into a topic he’s pondering with Sanergy right now. He’s interviewing his old buddy Andrew Youn of One Acre Fund about decision making. But he also covers what led him to start One Acre Fund, how they think about scale and expansion, about failure and how their general partnership co-ownership structure has created the right conditions for leadership cohesion within the organisation.

On this episode you’ll learn:

  • Andrew’s path to founding One Acre Fund was studying at Northwestern Business School, working as a Management Consultant, and then Founder of One Acre Fund.
  • Andrew feels that being in business school was a safe place for him in which he could experiment with entrepreneurship and find out whether his idea is promising enough to turn it into a full time job. The same was true for David who started Sanergy while at business school, and felt that if all fell through, he still had an MBA to fall back on. He calls this ‘afraidycat entrepreneurship’ ?. Andrew believes you don’t need to go to business school to experiment with a new idea but it can be done whilst doing a full time job.
  • One Acre Fund measures themselves against scale, impact and cost effectiveness. They currently have around 7,000 staff, providing services to 600,000 farm families each year, who are seeing approximately 50% improvement in their profitability. But this is small compared to the size of the problem, which they estimate at 50 million small holder farmers in Sub-Saharan Africa that they could support.
  • Social entrepreneurship models like those of Sanergy’s and One Acre Fund’s are promising, but they’re currently a drop in the ocean compared to the size of the problem. Andrew believes you should think about the stage of a social enterprise in terms of decades, since you can expect it to be a marathon, instead of a short term sprint, to solve such a problem.
  • How a project went wrong at One Acre Fund, of introducing passion fruit to farmers’ crops. It was too complicated, too costly and disrupted their focus. He learnt the lesson to always deliver as much impact to farmers for as simply as is operationally possible, to support scale.
  • To avoid rolling new things out without sufficient attention to the impact on cost, operations and scale, One Acre Fund have setup a trial pipeline. In terms of expectations, the team knows that anything that gets tested won’t have any meaningful impact until at least 3-4 years later.
  • How One Acre Fund made the mistake in their first few years of over promising to funders, but they’ve now learnt to set realistic targets and routinely beat them.
  • The key is to be really ambitious over the long term but not the short term. Instead, be really realistic that short term goals can be surpassed, which also contributes to good morale internally.
  • David talks about how Sanergy are approached constantly to expand to new countries, and he wants to hear from Andrew, how they think about expansion. One Acre Fund has four principal expansion strategies. (1) Expansion to support existing operations in a really robust way; (2) expansion to support more families with their existing operations and footprint. (3) expansion within existing countries. (4) expansion to new countries.
  • New country growth investigations start with a desk study, then a three month field visit, a pilot with hundreds of farmers, then thousands of farmers.
  • We talk about One Acre Fund’s expansion into Rwanda through a government partnership. They look for systems change programs where they can plug into.
  • We discuss how One Acre Fund manages differing opinions within the team, and ensures that everyone moves in the same direction. Andrew puts much of the cohesion of the senior leadership team down to nurturing talent from within, despite the temptation to bring in highly skilled international hires.
  • One Acre Fund believes they will grow faster when there’s a high degree of ownership amongst the 18 key leaders of the organisation, which is why One Acre Fund is structured as a general partnership. This also helps with decision making, so general partners are trusted and responsible to make the right decision for the company.
  • Andrew’s advice for decision making for early stage entrepreneurs is (1) try and (2) patience. “Try” meaning to keep learning and test before moving forward. And “patience” because it might seem slow at the beginning but in the grand scheme of things, scale comes much later. Andrew’s mantra has been “it’s a gift to have a really huge problem when you’re small.”
  • Instead of reading many books to learn, Andrew tries to have at least one advisory call each week with someone he’s trying to learn from.

Links to resources

Connect with Andrew Youn

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!